May 10, 1996
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, 1996.
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, 1996
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 17,037,767 shares were
outstanding on April 30, 1996.
An exhibit index appears on page 17.
Page 1 of 22 Pages
<PAGE>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
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..................................18
Signature.....................................................................19
</TABLE>
Page 2 of 22 Pages
<PAGE>
<TABLE>
<CAPTION>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) March 31, December 31,
ASSETS 1996 1995
------------- -----------
(unaudited)
<S> <C> <C>
Cash and due from financial institutions....................................................... $238,015 $226,205
Interest-bearing deposits in financial institutions............................................ 100 151
Investment in securities:
Securities available for sale (at fair value)............................................. 182,723 190,092
Securities held to maturity (fair value of $1,328,914 in 1996 and $1,268,518 in 1995)..... 1,311,249 1,250,802
Federal funds sold............................................................................. 45,000 21,160
Loans.......................................................................................... 1,592,994 1,586,861
Less reserve for possible loan losses.......................................................... 41,406 39,305
----------- -----------
Loans, net.................................................................................. 1,551,588 1,547,556
Bank premises and equipment, net............................................................... 88,526 81,442
Other real estate owned, net................................................................... 4,662 4,824
Accrued income receivable...................................................................... 30,970 29,380
Other assets................................................................................... 46,532 42,609
----------- -----------
TOTAL ASSETS......................................................................... $3,499,365 $3,394,221
=========== ===========
LIABILITIES
Deposits:
Non-interest-bearing demand deposits...................................................... $839,364 $888,382
Interest-bearing deposits................................................................. 1,928,380 1,887,407
----------- -----------
Total deposits........................................................................ 2,767,744 2,775,789
Federal funds purchased and securities sold under repurchase agreements........................ 329,938 227,094
Dividends payable.............................................................................. 3,745 3,273
Other liabilities.............................................................................. 27,631 23,193
----------- -----------
TOTAL LIABILITIES.................................................................... $3,129,058 $3,029,349
----------- -----------
SHAREHOLDERS' EQUITY
Common stock................................................................................... $2,800 $2,800
Capital surplus................................................................................ 64,665 62,635
Retained earnings.............................................................................. 310,377 306,075
Net unrealized gain (loss) on securities available for sale, net of tax effect of ($14) in
1996 and ($605) in 1995.................................................................... 35 1,137
----------- -----------
Total................................................................................ 377,877 372,647
Treasury stock at cost, 561,929 shares in 1996 and 564,304
shares in 1995, and unearned restricted stock compensation.................................. 7,570 7,775
----------- -----------
TOTAL SHAREHOLDERS' EQUITY........................................................... $370,307 $364,872
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY........................................................... $3,499,365 $3,394,221
=========== ===========
The accompanying notes are an intergral part of these financial statements.
</TABLE>
Page 3 of 22 Pages
<PAGE>
<TABLE>
<CAPTION>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts, unaudited) FOR THE 3 MONTHS
ENDED March 31,
1996 1995
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans....................................... $34,986 $26,986
Interest-bearing deposits........................................ 2 3
Interest and dividends on investments-
U.S. Treasury and agency securities........................ 15,689 17,370
Mortgage-backed securities................................. 3,927 2,792
Obligations of states and political subdivisions........... 1,832 1,750
Federal Reserve and corporate securities................... 62 445
Interest on federal funds sold................................... 443 459
---------- ----------
TOTAL................................................ $56,941 $49,805
---------- ----------
INTEREST EXPENSE
Interest on deposits............................................. $17,182 $13,829
Interest on federal funds purchased and securities
sold under repurchase agreement............................ 3,944 2,304
---------- ----------
TOTAL................................................ $21,126 $16,133
---------- ----------
Net interest income.............................................. $35,815 $33,672
Provision for possible loan losses - 100
---------- ----------
Net interest income after provision for possible loan losses..... $35,815 $33,572
---------- ----------
NON-INTEREST INCOME
Gains on sales of securities $ - $ -
Other non-interest income........................................ 8,697 8,636
---------- ----------
TOTAL................................................ $8,697 $8,636
---------- ----------
NON-INTEREST EXPENSE
Salaries and employee benefits................................... $16,824 $15,044
Occupancy of bank premises, net.................................. 2,116 1,891
Other non-interest expenses...................................... 13,965 12,229
---------- ----------
TOTAL................................................ $32,905 $29,164
---------- ----------
Income before income taxes....................................... $11,607 $13,044
Income tax expense............................................... 3,570 4,099
---------- ----------
Net income....................................................... $8,037 $8,945
========== ==========
Earnings per share $0.47 $0.53
========== ==========
Weighted average actual number of
shares outstanding............................................ 16,945,934 16,737,960
========== ==========
The accompanying notes are an integral part of these financial statement.
</TABLE>
Page 4 of 22 Pages
<PAGE>
<TABLE>
<CAPTION>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
For the 3 Months Ended
March 31,
1996 1995
------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................... $ 8,037 $ 8,945
Adjustments to reconcile net income to cash provided by (used in)
operating activities:
Depreciation.............................................................. 2,213 1,881
Provision for reserves for possible loan losses........................... - 100
Provision for losses on OREO and other problem assets..................... 65 3
Amortization of intangible assets and unearned restricted stock
compensation........................................................... 883 916
Amortization of premiums and discounts on investment securities, net...... 2,535 3,559
Net gains on sales of OREO and other property............................. (181) (323)
Deferred tax expense (benefit)............................................ (1,329) (873)
Increase (Decrease) in accrued income taxes............................... 4,268 4,647
(Increase) Decrease in accrued income receivable and other assets......... (3,960) (1,139)
Increase (Decrease) in accrued expenses and other liabilities............. 46 1,557
----------- ------------
Net cash provided by operating activities................................. $ 12,577 $ 19,273
----------- ------------
Cash flows from investing activities:
Proceeds from maturities of investment securities held to maturity........... $ 101,110 $ 68,962
Proceeds from maturities of investment securities available for sale......... 6,638 4,434
Purchases of investment securities held to maturity.......................... (165,021) (4,404)
Net (increase) decrease in loans............................................. (3,951) (13,962)
Net (increase) decrease in federal funds sold................................ (23,840) (4,872)
Proceeds from sales of OREO and other property............................... 210 283
Capital expenditures......................................................... (9,297) (3,387)
Net cash (paid) received in business acquisition............................. - (3,695)
Other........................................................................ 164 986 0
----------- ------------
Net cash provided by (used in) investing activities.......................... $ (93,987) $ 44,345
----------- ------------
Cash flows from financing activities:
Net increase (decrease) in non-interest-bearing demand deposits.............. $ (49,018)$ (10,091)
Net increase (decrease) in interest-bearing deposits other than
certificates of deposit................................................... (2,929) (73,020)
Net increase (decrease) in certificates of deposit........................... 43,902 6,001
Net increase (decrease) in federal funds purchased and securities sold
under repurchase agreements............................................... 102,844 (7,267)
Exercise of stock options.................................................... 1,014 -
Sale of common stock under employee savings plan and dividend
reinvestment plan......................................................... 529 2,533
Dividends paid............................................................... (3,273) (2,639)
----------- ------------
Net cash provided by (used in) financing activities.......................... $ 93,069 $ (84,483)
----------- ------------
Net increase (decrease) in cash and cash equivalents............................ $ 11,659 $ (20,865)
Cash and cash equivalents at the beginning of the period........................ 226,356 204,234
----------- ------------
Cash and cash equivalents at the end of the period.............................. $ 238,015 $ 183,369
=========== ============
Interest income received........................................................ $ 55,351 $ 51,658
=========== ============
Interest expense paid........................................................... $ 20,492 $ 15,448
=========== ============
Net federal income taxes paid................................................... $ 650 $ 306
=========== ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 5 of 22 Pages
<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. 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, 1995.
CONSOLIDATION
The consolidated financial statements of the Company include the accounts of
Whitney Holding Corporation and its wholly-owned subsidiaries, Whitney National
Bank, Whitney Bank of Alabama and Whitney Community Development Corporation. All
adjustments have been made which, in the opinion of management, are necessary to
fairly state the financial results for the interim periods presented.
RESTATEMENT AND RECLASSIFICATION
Prior period information has been restated to give effect to a merger
completed in March 1996 which has been accounted for as a pooling of interests.
Certain balances in prior periods have been reclassified to conform with this
period's financial presentation.
LONG-LIVED OPERATING ASSETS
Effective for 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121 which prescribes the accounting for impairment of
long-lived assets used in operations, such as bank premises and equipment,
certain identifiable intangibles, and any goodwill related to these assets. In
general, the statement requires recognition of an impairment loss when the
carring value of these assets exceeds the undiscounted cash flows estimated to
be derived from the use of the assets. The statement also prescribes the
accounting to be followed when an entity plans to dispose of such long-lived
assets. Adoption of this statement had no material effect on the consolidated
financial statements.
EMPLOYEE BENEFIT PLANS
SFAS No. 123, "Accounting for Stock-based Compensation," became effective
for 1996. Among other provisions, this statement established a fair value based
method of accounting for stock-based compensation, including the award of stock
options. As provided for in SFAS No. 123, the Company has elected not to adopt
the fair value based method for measuring stock-based compensation cost to be
included in its results of operations, but will continue to follow prior
generally accepted accounting principles. Beginning with the consolidated
financial statements for the year ending December 31, 1996, the Company will
make pro forma disclosures of net income and earnings per share determined as if
the fair value method had been applied in measuring stock-based compensation
cost.
Page 6 of 22 Pages
<PAGE>
(2) MERGERS AND ACQUISITIONS
During April 1996, the Company entered into separate agreements and plans of
merger with the American Bank & Trust ("AB&T") of Pensacola, Florida and with
Liberty Holding Company ("LHC"), the parent of Liberty Bank, also of Pensacola,
Florida. AB&T, with assets of $60 million, and Liberty Bank, with assets of $51
million, will be merged into a newly-chartered national bank to be formed by the
Company in Florida. Each of these mergers is intended to qualify as a tax-free
reorganization and to be accounted for as a pooling of interests. Shareholders
of AB&T will receive Whitney Holding Corporation stock with a value of $10.25
million and LHC shareholders will receive $14.0 million in Company common stock,
with each total subject to certain adjustments. Shareholders of AB&T and LHC
must each approve their respective transaction. Consummation of each transaction
is also subject to approval from appropriate regulatory agencies, a due
diligence review by the Company, and other customary conditions to closing. The
mergers are expected to be completed during the third quarter of 1996.
On March 8, 1996, Whitney Holding Corporation completed its merger with
First Citizens BancStock ("FCB"), the parent of First National Bank in St. Mary
Parish ("FNB"). FNB, which was merged into Whitney National Bank, had total
assets of approximately $243 million, including $147 million in loans, and total
deposits of $214 million at the closing date. FCB shareholders received 2.03
million shares of Whitney Holding Corporation common stock with a market value
at the time of approximately $63 million. Holders of FCB stock options as of the
closing received options to buy approximately 192,000 shares of Company common
stock at a weighted-averaged exercise price of $11.64. The merger has been
accounted for as a pooling of interests.
On February 17, 1995, Whitney Bank of Alabama, a then 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 beginning
in the first quarter of 1995.
(3) 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 22 Pages
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
Whitney Holding Corporation earned $8.04 million for the first quarter of
1996, or $0.47 per share, including the effect of $2.3 million in after-tax
expenses related to a merger completed in March 1996. Before merger related
expenses, the Company earned $10.3 million or $0.61 per share. For the first
quarter of 1995, the Company earned $8.95 million or $0.53 per share.
Taxable-equivalent net interest income increased $2.2 million or 6.5%
between the first quarters of 1995 and 1996 while the taxable-equivalent net
interest margin declined from 4.99% in 1995 to 4.75% in 1996. Non-interest
income improved slightly to $8.7 million in 1996 from $8.6 million in 1995.
Non-interest expense was $3.7 million or 12.8% higher in the first quarter of
1996 compared to 1995, largely as a result of completed merger expenses
totalling approximately $2.8 million.
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, 1996 and 1995.
1996
Before Merger
1996 Related Expenses 1995
------ ---------------- ------
Return on average assets 0.94% 1.20% 1.16%
Return on average shareholders' equity 8.76% 11.23% 11.11%
Non-performing assets increased $2.0 million in 1996's first quarter from
year end 1995 to $16.5 million at March 31, 1996. This total is $5.2 million or
24% below the level of non-performing assets at March 31, 1995. The reserve for
possible loan losses was $41.4 million on March 31, 1996, an amount which
represented 351% of non-performing loans and 2.6% of total loans. At year end
1995, the reserve coverage was 405% of non-performing loans and 2.5% of total
loans.
For the first quarter of 1996, average earning assets were $3.12 billion, a
net increase of $300 million from $2.82 billion in the first quarter of 1995.
Quarterly average loans outstanding grew $405 million or 34% between 1995 and
1996 while the average investment in securities decreased $105 million or 6.7%
as maturities were used to fund loan growth. At March 31, 1996 earning assets
totalled $3.13 billion compared to $3.05 billion at December 31, 1995.
Average total deposits increased $134 million or 5.2% in the first quarter
of 1996 to $2.72 billion when compared to the total of $2.58 billion in 1995's
first quarter. Total deposits at March 31, 1996 were $2.77 billion, virtually
unchanged from year end 1995. Short term funds obtained through purchases of
federal funds and sales of securities under repurchase agreements, net of
federal funds sold, increased on average by $133 million or 71.7% between the
first quarters of 1995 and 1996. The quarterly increases in average total
deposits and average short term borrowings from 1995 to 1996 both supported the
growth in average loans over this same period.
On March 8, 1996, the Company completed its merger with First Citizens
BancStock, the parent of The First National Bank in St. Mary Parish ("FNB".)
FNB, which was merged into Whitney National Bank, had total assets of
approximately $243 million, including $147 million in loans, and total
deposits of $214 million at the closing date. The merger has been accounted
for as a pooling of interests and prior period information has been restated to
present the combined financial results.
Page 8 of 22 Pages
<PAGE>
In April 1996, the Company announced it had entered into merger agreements
with two banking institutions operating in Florida, one with American Bank &
Trust of Pensacola, Florida ("AB&T") and one with Liberty Holding Company
("LHC"), the parent of Liberty Bank, also of Pensacola. These institutions have
combined assets of approximately $111 million and operate five banking locations
in the Pensacola area. AB&T and Liberty Bank will be merged into a
newly-chartered national bank to be formed by the Company in Florida. The
Company will issue common stock with a total value of $24.25 million in
connection with these transactions, subject to certain adjustments. Each of
these mergers will be accounted for as a pooling of interests. Consummation of
each transaction is subject to the approval of respective shareholders of AB&T
or LHC, approval from appropriate regulatory agencies, a due diligence review by
the Company, and other customary conditions to closing. The mergers are expected
to be completed during the third quarter of 1996.
In January, 1996, the Company announced negotiations to enter into a
definitive merger agreement with New Iberia Bancorp, parent of The New Iberia
Bank which has assets of approximately $260 million and branches in Iberia,
Lafayette and Vermilion Parishes in southern Louisiana. Completion of
negotiations and initiation of a plan of merger are still pending.
The Company declared a dividend of $0.22 per share in the first quarter of
1996, payable April 1, 1996. This is the same as for the fourth quarter of 1995
and a 10% increase over the $0.20 per share dividend declared in each of 1995's
first three quarters.
Page 9 of 22 Pages
<PAGE>
FINANCIAL CONDITION
Loans
The Company reported growth in average loans outstanding for the first
quarter of 1996 of $405 million or 34.0% when compared to the first quarter of
1995. Total loans outstanding of $1.59 billion at March 31, 1996 were $6 million
above the total outstanding at year end 1995 and $346 million or 27.8% above the
total of a year earlier. The Company's loan growth reflects both the continued
favorable economic conditions in the Company's market area, which is primarily
southern Louisiana, Mississippi and Alabama, as well as a focused effort to
market the Banks' retail and commercial loan products.
All categories of loans experienced solid growth from the first quarter of
1995 to the first quarter of 1996. Commercial loans, other than those secured by
real estate, increased approximately $165 million or 27.3% between 1995 and
1996. Loans secured by commercial and other non-residential real estate
collateral increased approximately $115 million or 31.0%. Loans to entities
involved in manufacturing and wholesaling exhibited the strongest growth,
although the overall increase was well distributed over diverse industries.
Retail mortgages grew by approximately $63 million or 38.1% between these
periods, largely as a result of the successful promotion of new retail loan
products, while loans to individuals, which include various consumer installment
and credit line loan products, increased $3 million or 2.8%.
Deposits and Short-Term Borrowings
The Company's average deposits increased $134 million or 5.2% to $2.72
billion in the first quarter of 1996 from $2.58 billion in 1995. As is shown in
Table 1, non-interest-bearing demand deposits increased $30 million or 3.8% in
1996 as compared to 1995. This table also shows that average time deposits,
which includes both core deposits and certificates of deposit of $100,000 and
over, increased $175 million or 26.2% between 1995 and 1996. The growth within
the time deposit category came both from core deposits of under $100,000 which
increased $42 million and from a $128 million increase in certificates of
deposit of $100,000 and over. Time deposit growth was particularly strong in the
Company's south Alabama market, although all of the Company's market areas
experienced increases.
First quarter average savings, NOW and money market account deposits
decreased $71 million or 6.3% between 1995 and 1996. Despite a moderate decline
in market interest rates during 1995, higher-rate investment alternatives were
available to these lower-cost depositors during the past year which fostered
disintermediation of some deposit funds.
The Company's short-term borrowings consist of purchases of federal funds
and sales of securities under repurchase agreements. Such borrowings are both 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 1996, average short-term borrowings increased $133 million
compared to the same period in 1995, an increase which is partly attributable to
the promotion of repurchase agreements in connection with an expansion of the
Banks' cash management services. The Company's average short-term borrowing
position, net of federal funds sold, was $286 million for the first quarter of
1996 and $154 million in 1995's first quarter.
Investment in Securities
The Company's total investment in securities was $1.49 billion at March 31,
1996, a increase of approximately $53 million or 3.7% from the December 31, 1995
total of $1.44 billion. The average total
Page 10 of 22 Pages
<PAGE>
investment securities portfolio outstanding decreased $105 million or 6.7%
between the first quarter of 1995 and the first quarter of 1996. Funds from
maturing investments, particularly U. S. Treasury securities, have been used to
satisfy increased loan demand between the quarterly periods.
The mix of average investments has remained relatively stable, with U. S.
Treasury and government agency securities, excluding mortgage-backed issues,
representing between 75% and 80% of the totals. The weighted-average maturity of
the overall portfolio of securities was 32 months at March 31, 1996 as compared
with 28 months at March 31, 1995. As is shown in Table 1, the weighted-average
taxable-equivalent portfolio yield for the first quarter of 1996 was 6.06%, an
increase of 13 basis points from the 5.93% yield in the first quarter of 1995.
Securities classified as available for sale constituted approximately 12% of
the total investment portfolio at March 31, 1996 compared to 13% at year end
1995. These securities are reported at their estimated fair values in the
consolidated statements of condition with the unrealized gain or loss reported,
net of tax, as a separate component of shareholders' equity. The remaining
portfolio securities are classified as held to maturity and are reported at
amortized cost. The Company maintains no trading portfolio.
Asset Quality
Overall asset quality exhibited a trend of steady improvement over the past
several years. As is shown in Table 3, non-performing assets increased $2.0
million in 1996's first quarter from year end 1995 to $16.5 million at March 31,
1996. Substantially all of this increase is the result of the downgrade in the
credit rating of a single borrower. The total is $5.2 million or 24% below the
level of non-performing assets at March 31, 1995. For the first quarter of 1996,
the Company successfully recovered $2.9 million of previously charged-off loans.
As is shown in Table 2, during the same period the Company identified $0.8
million of loans to be charged off as uncollectible against the reserve for
possible loan losses, resulting in a net recovery of $2.1 million. The Company
was also in a net recovery position of approximately $1.2 million in the first
quarter of 1995 when recoveries totalled $2.6 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. No
provision or reserve reduction was required for the first quarter of 1996. The
small addition to the reserve in the first quarter of 1995 reflects a provision
recorded by the pooled institution. The reserve for possible loan losses
represented 351% of non-performing loans at March 31, 1996. At year end 1995
this reserve coverage was 405%.
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 from oil and gas royalties and
real estate operations, was approximately $215,000 for the first quarter of 1996
and $46,000 in the comparable period in 1995. Future dispositions of these
assets may result in the recognition of substantial gains.
Page 11 of 22Pages
<PAGE>
Capital Adequacy
The Company's regulatory capital ratios increased slightly between December
31, 1995 and March 31, 1996. 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, 1996.
<TABLE>
<CAPTION>
Required for
March 31, December 31, well-capitalized
1996 1995 institution
------------ ----------------- ----------------
<S> <C> <C> <C>
Tier 1 risk-based
capital ratio 17.31% 17.26% 6.00%
Total risk-based
capital ratio 18.57% 18.52% 10.00%
Tier 1 leverage
capital ratio 9.95% 10.08% 5.00%
</TABLE>
Page 12 of 22 Pages
<PAGE>
RESULTS OF OPERATIONS
Net Interest Income
Taxable-equivalent net interest income for the first quarter of 1996
increased $2.2 million or 6.5% as compared to same period in 1995. The net
interest margin decreased to 4.75% in 1996 from 4.99% in 1995. A combination of
factors contributed to these changes, the components of which are detailed in
Table 1.
First quarter taxable-equivalent loan interest income increased $8.1 million
or 29.8% in 1996 from the first quarter in 1995. This increase was driven
entirely by the $405 million growth in average loans outstanding between these
periods. The increase in interest income from loan growth was partially offset
by a decrease in the quarterly effective loan portfolio yield of 39 basis
points, to 8.82% in 1996 from 9.21% in 1995. Market interest rates trended lower
throughout 1995 and early 1996, and bank prime rates decreased 75 basis points
from the first quarter of 1995 to the first quarter of 1996. Approximately 40%
of the Company's loan portfolio reprices with changes in prime.
Taxable-equivalent interest income on investments securities in the first
quarter of 1996 decreased $0.8 million or 3.5% compared to the first quarter of
1995, a decrease which is consistent with the $105 million reduction in the
average investment in securities between these periods. Because of its maturity
structure the effective yield on the Company's investment securities portfolio
is not as immediately responsive to rising or falling market rates as are its
loan yields. The effective portfolio yield was 6.06% for the first quarter of
1996 and 5.93% for the comparable period of 1995, an increase of 13 basis
points.
The net increase in quarterly taxable-equivalent interest income between
1995 was $7.2 million or 14.2%. The overall effective earning-asset yield in the
first quarter of 1996 was 7.47%, an increase of 15 basis points from 7.32% in
1995's first quarter.
Interest expense increased approximately $5.0 million or 31.0% in 1996's
first quarter as compared to the same period in 1995. This increase reflects in
part the impact of the $236 million increase in average total interest-bearing
liabilities outstanding between these periods. The increase also reflects the
rate structures of the markets in which the Company has made acquisition since
the beginning of 1995 and a shift in the deposit mix toward time deposits, a
shift which is also partly attributable to recent acquisitions. The overall cost
of funds rate on interest-bearing liabilities was 3.82% for the first quarter of
1996 and 3.30% in 1995's first quarter, an increase of 52 basis points.
Other Income and Expense
Non-interest income, adjusted to exclude net gains from sales of foreclosed
real estate, increased $213 thousand or 2.6% to $8.5 million in the first
quarter of 1996 from $8.3 million in the same period of 1995. Income from
service charges on deposit accounts, which accounted for approximately half of
non-interest income in each of these quarters, decreased $188 thousand or 4.5%
from 1995 to 1996, primarily because of a decrease in fees charged to business
related accounts. The reduction in the Company's FDIC deposit insurance
premiums, as discussed below, led to a corresponding reduction in the deposit
insurance assessment on business accounts and was partly responsible for the
decrease in business account service fee income.
The Company continued to expand its automated teller facilities during 1995
and the first quarter of 1996. Fees generated from ATM operations increased $151
thousand or 55% in the first quarter of 1996 over the same period in 1995. Fee
income from credit card related operations and from services which
Page 13 of 22 Pages
<PAGE>
support the international activities of the Company's customers increased
between these periods, reflecting both economic conditions as well as enhanced
products and successful marketing efforts. Income from the Company's secondary
mortgage loan operations also was higher in the first quarter of 1996 reflecting
in part a more favorable interest rate environment than during the first quarter
of 1995.
Non-interest operating expenses were $32.9 million in the first quarter of
1996, including $2.8 million in expenses related to a completed merger. This
represents an increase of $3.7 million or 12.8% over 1995's first quarter total
of $29.1 million.
Salaries and employee benefits expense totalled $16.8 million for the first
quarter of 1996 compared to $15.0 million for the first quarter of 1995, an
increase of $1.8 million or 11.8%. Approximately $0.8 million of this increase
relates to nonrecurring personnel costs incurred in connection with the merger
completed in March 1996. An additional $0.4 million of this comparative increase
was related to the new banking operations opened in Alabama in mid-February of
1995. The remaining increase in 1996 of $0.7 million or 4.7% is attributable to
regular merit increases, staff additions and various employee and management
benefits and incentives.
Non-interest expenses other than personnel-related expenses increased $1.9
million or 13.9% between the first quarter of 1995 and the first quarter of
1996. Excluding approximately $2.0 million in expenses related to the completed
merger in 1996, there was a small net decrease in these non-interest expenses
between the quarterly periods.
In 1996 as compared to 1995, the dramatic reduction in the premium charged
for FDIC deposit insurance during the second half of 1995 was responsible for a
$1.4 million reduction in the Company's quarterly deposit insurance expense.
Occupancy expense increased $225 thousand or 11.9% in the first quarter of 1996
reflecting both the expansion of the Company's branch network, primarily in the
south Alabama market, and the ongoing program to upgrade the appearance and
functionality of its administrative offices and a significant number of the
Company's existing branches. Enhancements to the Company's data processing
systems and automation capabilities during 1995 as well as the continuing
expansion of its ATM network contributed to an increase of approximately $300
thousand or 13.0% for 1996 in the quarterly expense for furnishings and
equipment. Various other expense categories increased a total of approximately
$800 thousand in 1996, including a $200 thousand increase related to certain
legal settlements.
Income Taxes
The Company provided for income taxes at an overall effective rate of 30.8%
for the first quarter of 1996 and a 31.4% rate for the comparable period of
1995. 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.
LIQUIDITY AND OTHER MATTERS
Liquidity
The Company and the Banks 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
Page 14 of 22Pages
<PAGE>
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, both as a source of
funding for certain short-term lending facilities and as part of its services to
correspondent banks and certain other customers. Neither the Company nor the
Banks have accessed 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, were virtually unchanged in the first quarter of 1996 compared
to the same period in 1995. Core deposits comprised approximately 85% and 90%,
respectively, of total average deposits for both of these periods.
As of March 31, 1996, approximately $342 million or 26% of the portfolio of
investment securities held to maturity was scheduled to mature within one year.
An additional $183 million of investment securities was classified as available
for sale at the end of 1996's first quarter, although management's determination
of this classification does not derive primarily from liquidity considerations.
The Banks had $946 million in unfunded loan commitments outstanding at March
31, 1996, a small decrease of $2 million from the level at December 31, 1995.
Contingent obligations under letters of credit and financial guarantees
increased $8 million between these dates to a total of $89 million at March 31,
1996. Available credit card lines were $35 million at March 31, 1996, virtually
unchanged from year end 1995. Draws under these financial commitments should not
place any unusual strain on the Company's liquidity position.
Page 15 of 22Pages
<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,
1996 1995
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
-------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Loans (tax equivalent) u(1),(2).............. $1,596,782 $35,120 8.82 % $1,191,481 $27,052 9.21 %
-------------------------------------------------------------------
U. S. Treasury securities.................... $777,056 $10,800 5.57 % $1,002,194 $13,478 5.45 %
U.S. government agency securities............ 327,828 4,889 5.98 266,986 3,892 5.83
Mortgage-backed securities .................. 244,152 3,927 6.48 163,679 2,792 6.55
State and municipal securities
(tax equivalent) u(1)................... 134,156 2,805 8.39 131,055 2,693 8.22
Corporate bonds and other securities......... 4,602 62 5.40 29,911 445 6.03
-------------------------------------------------------------------
Total investment in securities u(3)........ $1,487,794 $22,483 6.06 % $1,593,825 $23,300 5.93 %
-------------------------------------------------------------------
Federal funds sold........................... 31,910 443 5.57 % 31,519 459 5.91 %
Interest-bearing deposits.................... 143 2 5.67 230 3 5.29
-------------------------------------------------------------------
Total interest-earning assets.............. $3,116,629 $58,048 7.47 % $2,817,055 $50,814 7.32 %
-------------------------------------------------------------------
Cash and due from financial institutions..... 189,493 186,932
Bank premises and equipment, net............. 84,670 71,061
Other real estate owned, net................. 4,769 7,065
Other assets................................. 77,346 78,579
Reserve for possible loan losses............. (40,341) (37,498)
------------ ------------
Total assets............................... $3,432,566 $3,123,194
============ ============
LIABILITIES
Savings deposits............................. $462,468 $3,087 2.68 % $497,729 $3,284 2.68 %
NOW and MMDA deposits........................ 591,794 2,987 2.02 628,014 3,029 1.96
Time deposits................................ 845,120 11,108 5.27 669,855 7,516 4.55
-------------------------------------------------------------------
Total interest-bearing deposits............ $1,899,382 $17,182 3.63 % $1,795,598 $13,829 3.12 %
-------------------------------------------------------------------
Federal funds purchased and
repurchase agreements...................... 317,996 3,944 4.97 % 185,206 2,304 5.05 %
-------------------------------------------------------------------
Total interest-bearing liabilities......... $2,217,378 $21,126 3.82 % $1,980,804 $16,133 3.30 %
-------------------------------------------------------------------
Demand deposits, non-interest-bearing........ 817,919 787,603
Other liabilities............................ 29,245 28,355
Shareholders' equity......................... 368,024 326,432
------------ ------------
Total liabilities and shareholders'
equity.................................... $3,432,566 $3,123,194
============ ============
Net interest income/margin
(tax equivalent)u(1)...................... $36,922 4.75 % $34,681 4.99 %
========= ======= ========= =======
<FN>
u1 Tax equivalent amounts are calculated using a marginal federal income tax rate of 35%.
u2 Average balance includes nonaccruing loans of $8,677 in 1996 and $14,040 in 1995.
u3 Average balance includes unrealized gain (loss) on securities available for sale of $1,685 in 1996 and ($7,510) in 1995. These
amounts, primarily associated with mortgage-backed securities, are excluded in calculating the yield.
</FN>
</TABLE>
Page 16 of 22 Pages
<PAGE>
<TABLE>
<CAPTION>
TABLE 2.
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
RESERVE FOR POSSIBLE LOAN LOSSES
(by quarter, in millions, unaudited)
1996 1995
------- -------------------------------
1st 4th 3rd 2nd 1st
------- -------------------------------
<S> <C> <C> <C> <C> <C>
Reserve balance, beginning of quarter......... $39.3 $36.1 $41.3 $39.4 $36.3
Reserves provided through acquisition......... - - - - 1.8
Provision for possible loan losses:
Expense of providing loss reserves........ - 0.3 - 0.1 0.1
Reduction of loss reserves................ - - (9.9) - -
Loans charged off............................. (0.8) (0.5) (0.5) (1.1) (1.4)
Recoveries.................................... 2.9 3.4 5.2 2.9 2.6
------- -------------------------------
Reserve balance, end of quarter............... $41.4 $39.3 $36.1 $41.3 $39.4
======= ===============================
TABLE 3.
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
NON-PERFORMING ASSETS AND OTHER SELECTED DATA
(end of quarter, dollars in millions, unaudited)
1996 1995
------- -------------------------------
1st 4th 3rd 2nd 1st
------- -------------------------------
Loans accounted for on a nonaccrual basis......... $10.2 $8.1 $9.3 $13.9 $14.5
Restructured loans................................ 1.6 1.6 - - -
------- -------------------------------
Total non-performing loans........................ $11.8 $9.7 $9.3 $13.9 $14.5
------- -------------------------------
Other real estate owned, net...................... 4.7 4.8 5.4 6.2 7.2
Other foreclosed assets........................... - - - - -
------- -------------------------------
Total non-performing assets....................... $16.5 $14.5 $14.7 $20.1 $21.7
======= ===============================
Net gain on sales of OREO......................... $0.2 $0.1 - $0.5 $0.3
======= ===============================
Reserve for possible
loan losses as a percent of:
Total non-performing loans..................... 351% 405% 388% 297% 272%
Total loans.................................... 2.6% 2.5% 2.6% 3.1% 3.2%
Non-performing loans as a percent of
total loans.................................... 0.74% 0.61% 0.67% 1.04% 1.16%
Non-performing assets as a percent of
total assets................................... 0.47% 0.43% 0.46% 0.63% 0.69%
</TABLE>
Page 17 of 22 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
Exhibit 10.9 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Robert C. Baird, Jr., effective July 26, 1995
Exhibit 10.10 - Long-term incentive program, incorporated by reference to
the Company's 1991 Form 10-K
Exhibit 10.11 - Executive compensation plan, incorporated by reference to
the Company's 1991 Form 10-K
Exhibit 10.12 - 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
Page 18 of 22 Pages
<PAGE>
Exhibit 10.13 - 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 10.14 - Directors' Compensation Plan, incorporated by reference to
the Company's Proxy Statement dated March 24, 1994
Exhibit 10.14a - Amendment No. 1 to the Whitney Holding Corporation
Directors' Compensation Plan
Exhibit 10.15 - Agreement and Plan of Merger between Whitney Holding
Corporation and First Citizens BancStock, Inc., effective September 28,
1995, incorporated by reference to the Company's 1995 Form 10-K
Exhibit 10.16 - Retirement Restoration Plan effective January 1, 1995,
incorporate by reference to the Company's 1995 Form 10-K
Exhibit 21 - Subsidiaries
Whitney Holding Corporation owns 100% of the capital stock of Whitney
National Bank and Whitney Bank of Alabama. All other subsidiaries considered
in the aggregate would not constitute a significant subsidiary.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed the following current reports on Form 8-K during the
quarter for which this report is filed:
Current report on Form 8-K dated January 19, 1996, filed on January 19, 1996
(Item 5 - Other Events), the Registrant's decription of its securities
registristered under the Securities Exchange Act of 1934, as amended.
Current report on Form 8-K dated Janyary 24, 1996, filed on January 26, 1996
(Item 5 - Other Events), announcing that the Registrant and The New Iberia
Bancorp, Inc. would negotiate a definitive agreement for the aqquisition of
The New Iberia Bancorp, Inc. by the Registrant.
Current report on Form 8-K dated March 8, 1996, filed on March 25, 1996
(Item 2 - Acquisition or Disposition of Assets), announcing the completion
of the Registrant's acquisition by merger of First Citizens BancStock, Inc.
As permitted by Items 7(a)(4) and 7(b)(2) of Form 8-K, the Registrant
omitted from this filing the financial statements of the business acquired
and the pro forma financial information required by the form, each of which
will be filed by amendment to this current report on Form 8-K.
Page 19 of 22 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 10, 1996 By:/s/ Edward B. Grimball
------------------------ ---------------------------
Edward B. Grimball
Executive Vice President &
Page 20 of 22 Pages
<PAGE>
AMENDMENT NO. 1
WHITNEY HOLDING CORPORATION
DIRECTORS' COMPENSATION PLAN
WHEREAS, Whitney Holding Corporation, a corporation organized
and existing under the laws of the State of Louisiana (the "Corporation")
adopted the Whitney Holding Corporation Directors' Compensation Plan (the
"Plan"), first effective as of April 27, 1994;
WHEREAS, the Corporation now desires to amend the Plan,
Section 10.3 of the Plan permits such amendment, and on July 26, the Board of
Directors of the Corporation approved such amendment, to be effective as of the
June 30, 1996 Stock Transfer Date (as defined in the Plan), subject to the
approval of the shareholders of the Corporation;
NOW, THEREFORE, effective as of June 30, 1996, the Plan shall
be amended as follows:
I.
Section 4.2 of the Plan shall be restated, in its entirety to
read as follows:
"The number of shares of Common Stock transferred by the
Corporation to each Director for receipt or deferral hereunder
as of each Stock Transfer Date shall be 300, which amount
shall be subject to adjustment, from time to time, as provided
in Paragraph 3.2 hereof."
II.
Notwithstanding the foregoing provisions of this Amendment No.
1, the transfer of additional Common Stock hereunder shall be expressly
conditioned upon the approval of this amendment by the shareholders of the
Corporation.
EXECUTED in multiple counterparts, each of which shall be
deemed an original, this 28th day of February, 1996.
Page 21 of 22 Pages
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 238,015
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 45,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 182,723
<INVESTMENTS-CARRYING> 1,311,249
<INVESTMENTS-MARKET> 1,328,914
<LOANS> 1,592,994
<ALLOWANCE> 41,406
<TOTAL-ASSETS> 3,499,365
<DEPOSITS> 2,767,744
<SHORT-TERM> 329,938
<LIABILITIES-OTHER> 31,376
<LONG-TERM> 0
0
0
<COMMON> 2,800
<OTHER-SE> 367,507
<TOTAL-LIABILITIES-AND-EQUITY> 3,499,365
<INTEREST-LOAN> 34,986
<INTEREST-INVEST> 21,512
<INTEREST-OTHER> 443
<INTEREST-TOTAL> 56,941
<INTEREST-DEPOSIT> 17,182
<INTEREST-EXPENSE> 21,126
<INTEREST-INCOME-NET> 35,815
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 32,905
<INCOME-PRETAX> 11,607
<INCOME-PRE-EXTRAORDINARY> 11,607
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,037
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
<YIELD-ACTUAL> 7.47
<LOANS-NON> 10,247
<LOANS-PAST> 915
<LOANS-TROUBLED> 1,622
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 39,305
<CHARGE-OFFS> 825
<RECOVERIES> 2,926
<ALLOWANCE-CLOSE> 41,406
<ALLOWANCE-DOMESTIC> 36,636
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,770
</TABLE>
