-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SXBOjj7dB3RcS/0ymsdNKI3nuHAddh0CsPfHlyr5Hdb3AP8B+lyEUgJPecJwJAvB xvrq0dRgvFqLw2MB3JpbsQ== 0000106926-00-000003.txt : 20000516 0000106926-00-000003.hdr.sgml : 20000516 ACCESSION NUMBER: 0000106926-00-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WHITNEY HOLDING CORP CENTRAL INDEX KEY: 0000106926 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 726017893 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-01026 FILM NUMBER: 633196 BUSINESS ADDRESS: STREET 1: 228 ST CHARLES AVE CITY: NEW ORLEANS STATE: LA ZIP: 70130 BUSINESS PHONE: 5045867570 MAIL ADDRESS: STREET 1: 228 ST CHARLES AVE CITY: NEW ORLEANS STATE: LA ZIP: 70130 10-Q 1 10-Q May 15, 2000 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, 2000. This filing is being effected by direct transmission to the Commission's EDGAR System. Sincerely, /s/ Thomas L. Callicutt, Jr. ------------------------------ Thomas L. Callicutt, Jr. Executive Vice President and Chief Financial Officer (504) 552-4591 TLC/drm ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 - -------------------------------------------------------------------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period Commission file number 0-1026 ended March 31, 2000 WHITNEY HOLDING CORPORATION (Exact name of registrant as specified in its charter) Louisiana 72-6017893 (State of incorporation) (I.R.S. Employer Identification No.) 228 St. Charles Avenue New Orleans, Louisiana 70130 (Address of principal executive offices) (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 12 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 ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 30, 2000 - -------------------------- ----------------------------- Common Stock, no par value 22,591,023 ================================================================================ WHITNEY HOLDING CORPORATION TABLE OF CONTENTS Page - -------------------------------------------------------------------------------- PART I. Financial Information Item 1: Financial Statements: Consolidated Balance Sheets 1 Consolidated Statements of Operations 2 Consolidated Statements of Changes in Shareholders' Equity 3 Consolidated Statements of Cash Flows 4 Notes to Consolidated Financial Statements 5 Selected Financial Data 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - -------------------------------------------------------------------------------- PART II. Other Information Item 1: Legal Proceedings 21 Item 2: Changes in Securities and Use of Proceeds 21 Item 3: Defaults Upon Senior Securities 21 Item 4: Submission of Matters to a Vote of Security Holders 21 Item 5: Other Information 21 Item 6: Exhibits and Reports on Form 8-K 21
PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WHITNEY HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - ------------------------------------------------------------------------------------------------------------------------ March 31 December 31 (dollars in thousands) 2000 1999 - ------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from financial institutions $ 204,465 $ 230,690 Investment in securities Securities available for sale 336,926 206,932 Securities held to maturity, fair values of $1,028,889 and $1,060,340, respectively 1,058,784 1,084,931 - ------------------------------------------------------------------------------------------------------------------------ Total investment in securities 1,395,710 1,291,863 Federal funds sold and short-term investments 30,599 18,691 Loans, net of unearned income 3,765,725 3,673,047 Reserve for possible loan losses (48,552) (44,466) - ------------------------------------------------------------------------------------------------------------------------ Net loans 3,717,173 3,628,581 ======================================================================================================================== Bank premises and equipment 172,587 169,715 Intangible assets 76,455 33,317 Accrued interest receivable 35,772 30,694 Other assets 55,418 50,837 - ------------------------------------------------------------------------------------------------------------------------ Total assets $ 5,688,179 $ 5,454,388 ======================================================================================================================== LIABILITIES Non-interest-bearing demand deposits $ 1,281,941 $ 1,230,509 Interest-bearing deposits 3,303,867 3,078,889 - ------------------------------------------------------------------------------------------------------------------------ Total deposits 4,585,808 4,309,398 - ------------------------------------------------------------------------------------------------------------------------ Short-term borrowings 480,534 541,357 Accrued interest payable 15,142 12,389 Accrued expenses and other liabilities 42,382 34,141 - ------------------------------------------------------------------------------------------------------------------------ Total liabilities 5,123,866 4,897,285 - ------------------------------------------------------------------------------------------------------------------------ SHAREHOLDERS' EQUITY Common stock, no par value Authorized - 100,000,000 shares Issued - 23,745,512 shares 2,800 2,800 Capital surplus 140,902 141,512 Retained earnings 469,452 461,025 Accumulated other comprehensive income (4,837) (3,483) Treasury stock at cost - 1,177,542 and 1,171,458 shares, respectively (40,883) (40,678) Unearned restricted stock compensation (3,121) (4,073) - ------------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 564,313 557,103 - ------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 5,688,179 $ 5,454,388 ======================================================================================================================== The accompanying notes are an integral part of these financial statements.
- 1 -
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - ------------------------------------------------------------------------------------------------------------ Three Months Ended March 31 - ------------------------------------------------------------------------------------------------------------ (dollars in thousands, except per share data) 2000 1999 - ------------------------------------------------------------------------------------------------------------ INTEREST INCOME Interest and fees on loans $ 75,554 $ 62,703 Interest and dividends on investments U.S. Treasury securities 1,901 3,098 U.S. agency securities 7,517 7,530 Mortgage-backed securities 7,673 7,772 Obligations of states and political subdivisions 2,442 2,227 Federal Reserve stock and other corporate securities 125 188 Interest on federal funds sold and short-term investments 369 1,182 - ------------------------------------------------------------------------------------------------------------ Total interest income 95,581 84,700 - ------------------------------------------------------------------------------------------------------------ INTEREST EXPENSE Interest on deposits 29,536 25,979 Interest on short-term borrowings 6,046 3,966 - ------------------------------------------------------------------------------------------------------------ Total interest expense 35,582 29,945 - ------------------------------------------------------------------------------------------------------------ NET INTEREST INCOME 59,999 54,755 PROVISION FOR POSSIBLE LOAN LOSSES 2,500 1,000 - ------------------------------------------------------------------------------------------------------------ NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 57,499 53,755 - ------------------------------------------------------------------------------------------------------------ NON-INTEREST INCOME Service charges on deposit accounts 6,869 6,612 Credit card income 3,669 2,777 Trust service fees 2,243 2,048 Secondary mortgage market operations 431 984 Other non-interest income 4,104 2,805 Securities transactions - - - ------------------------------------------------------------------------------------------------------------ Total non-interest income 17,316 15,226 - ------------------------------------------------------------------------------------------------------------ NON-INTEREST EXPENSE Employee compensation 21,071 20,358 Employee benefits 4,241 4,028 - ------------------------------------------------------------------------------------------------------------ Total personnel expense 25,312 24,386 Equipment and data processing expense 5,558 5,265 Net occupancy expense 4,260 4,036 Credit card processing services 2,608 2,091 Postage and communications 2,027 1,903 Ad valorem taxes 1,675 1,521 Amortization of intangibles 1,168 973 Legal and professional fees 898 1,127 Other non-interest expense 6,749 6,544 - ------------------------------------------------------------------------------------------------------------ Total non-interest expense 50,255 47,846 - ------------------------------------------------------------------------------------------------------------ INCOME BEFORE INCOME TAXES 24,560 21,135 INCOME TAX EXPENSE 7,997 6,839 - ------------------------------------------------------------------------------------------------------------ NET INCOME $ 16,563 $ 14,296 ============================================================================================================ EARNINGS PER SHARE Basic $ .73 $ .61 Diluted $ .73 $ .61 WEIGHTED-AVERAGE SHARES OUTSTANDING Basic 22,610,768 23,445,367 Diluted 22,669,130 23,519,378 - ------------------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of these financial statements.
- 2 -
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Accumulated Unearned Other Restricted Common Capital Retained Comprehensive Treasury Stock (dollars in thousands, except per share data) Stock Surplus Earnings Income Stock Compensation Total - ------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1998 $ 2,800 $ 138,848 $ 428,880 $ (272) $ (4,613) $ (4,682) $ 560,961 - ------------------------------------------------------------------------------------------------------------------------------- Comprehensive income: Net income - - 14,296 - - - 14,296 Other comprehensive income: Unrealized net holding loss on securities, net of reclassification adjustments and taxes - - - (124) - - (124) - ------------------------------------------------------------------------------------------------------------------------------- Total comprehensive income - - 14,296 (124) - - 14,172 - ------------------------------------------------------------------------------------------------------------------------------- Cash dividends declared, $.33 per share - - (7,741) - - - (7,741) Exercise of stock options - 548 - - 235 - 783 Sales to dividend reinvestment and employee benefit plans - 623 - - - - 623 Restricted stock grant and other activity, net - (104) - - (160) 945 681 - ------------------------------------------------------------------------------------------------------------------------------- Balance at March 31, 1999 $ 2,800 $ 139,915 $ 435,435 $ (396) $ (4,538) $ (3,737) $ 569,479 =============================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1999 $ 2,800 $ 141,512 $ 461,025 $ (3,483) $ (40,678) $ (4,073) $ 557,103 - ------------------------------------------------------------------------------------------------------------------------------- Comprehensive income: Net income - - 16,563 - - - 16,563 Other comprehensive income: Unrealized net holding loss on securities, net of reclassification adjustments and taxes - - - (1,354) - - (1,354) - ------------------------------------------------------------------------------------------------------------------------------- Total comprehensive income - - 16,563 (1,354) - - 15,209 - ------------------------------------------------------------------------------------------------------------------------------- Cash dividends declared, $.36 per share - - (8,136) - - - (8,136) Exercise of stock options - (44) - - 188 - 144 Sales to dividend reinvestment and employee benefit plans - 37 - - 740 - 777 Restricted stock grant and other activity, net - (603) - - (1,133) 952 (784) - ------------------------------------------------------------------------------------------------------------------------------- Balance at March 31, 2000 $ 2,800 $ 140,902 $ 469,452 $ (4,837) $ (40,883) $ (3,121) $ 564,313 =============================================================================================================================== The accompanying notes are an integral part of these financial statements.
- 3 -
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31 - ---------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) 2000 1999 - ---------------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income $ 16,563 $ 14,296 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,686 5,482 Amortization of intangibles 1,168 973 Provision for possible loan losses 2,500 1,000 Deferred tax benefit (171) (630) Net (gains) losses on sales and other dispositions of surplus property (421) - Net gains on sales and other dispositions of foreclosed assets (45) (21) Provision for losses on foreclosed assets 13 42 Increase in accrued income taxes 7,093 7,668 Increase in accrued interest receivable and prepaid expenses (7,906) (7,536) Increase (decrease) in accrued interest payable and other accrued expenses 2,419 (3,385) - ---------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 26,899 17,889 - ---------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Proceeds from maturities of investment securities held to maturity 39,026 115,152 Purchases of investment securities held to maturity (12,948) (206,493) Proceeds from maturities of investment securities available for sale 6,329 23,628 Purchases of investment securities available for sale (18,368) - Net (increase) decrease in loans (48,413) 76,964 Net (increase) decrease in federal funds sold and short-term investments (11,908) 10,806 Proceeds from sales and other dispositions of foreclosed assets 437 240 Proceeds from sales of surplus property 1,018 - Purchases of bank premises and equipment (3,158) (11,110) Net cash paid in business acquisition (50,399) - Other, net (867) 22 - ---------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (99,251) 9,209 - ---------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Net decrease in demand deposits, NOW, money market and savings deposits (10,097) (63,846) Net increase in time deposits 124,789 5,542 Net increase (decrease) in short-term borrowings (60,823) 53,053 Proceeds from issuance of stock 902 1,167 Purchases of treasury stock (1,193) - Cash dividends (7,451) (7,015) - ---------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 46,127 (11,099) - ---------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (26,225) 15,999 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 230,690 214,963 - ---------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 204,465 $ 230,962 - ---------------------------------------------------------------------------------------------------------------------------- Cash received during the period for: Interest income $ 92,624 $ 80,739 Cash paid during the period for: Interest expense $ 33,091 $ 30,240 Income taxes $ 830 $ - - ---------------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
- 4 - WHITNEY HOLDING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The consolidated financial statements include the accounts of Whitney Holding Corporation and its subsidiaries ("the Company"). All significant intercompany balances and transactions have been eliminated. Certain financial information for prior periods has been reclassified to conform to the current presentation. In preparing the consolidated financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial condition, results of operations, changes in shareholders' equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions. 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. These financial statements should be read in conjunction with the Company's 1999 Annual Report on Form 10-K. NOTE 2 - EARNINGS PER SHARE The components used to calculate basic and diluted earnings per share are as follows:
- -------------------------------------------------------------------------------------- Three Months Ended March 31 - -------------------------------------------------------------------------------------- (dollars in thousands, except per share data) 2000 1999 - -------------------------------------------------------------------------------------- Numerator: Net income $16,563 $14,296 Effect of dilutive securities - - - --------------------------------------------------------------------------------------- Numerator for diluted earnings per share $16,563 $14,296 - --------------------------------------------------------------------------------------- Denominator: Weighted average shares outstanding 22,610,768 23,445,367 Effect of dilutive stock options 58,362 74,011 - --------------------------------------------------------------------------------------- Denominator for diluted earnings per share 22,669,130 23,519,378 - --------------------------------------------------------------------------------------- Earnings per share: Basic $ .73 $ .61 Diluted $ .73 $ .61 - --------------------------------------------------------------------------------------- Antidilutive stock options 478,250 331,750 - ---------------------------------------------------------------------------------------
- 5 - NOTE 3 - MERGERS AND ACQUISITIONS On February 18, 2000, the Company completed its acquisition of Bank of Houston for cash of $58 million. At the acquisition date, Bank of Houston had $180 million in total assets, including $44 million in loans, and $162 million in deposits in two locations in the Houston, Texas metropolitan area. Applying purchase accounting to this transaction, the Company recorded $44 million in intangible assets, with $8 million assigned to the value of deposit relationships with a nine-year estimated life and $36 million to goodwill with an estimated life of twenty years. Bank of Houston's operating results since the acquisition date are included in the Company's financial statements. The pro forma impact of this acquisition on the Company's results of operations is insignificant. NOTE 4 - CONTINGENCIES The Company and its subsidiaries are parties to various legal proceedings arising in the ordinary course of business. After reviewing pending and threatened actions with legal counsel, management believes that the ultimate resolution of these actions will not have a material effect on the Company's financial condition or results of operations. - 6 -
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA - ----------------------------------------------------------------------------------------------------------------------------------- 2000 1999 -------------- ------------------------------------------------------------------ (dollars in thousands, except per share data) First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter - ----------------------------------------------------------------------------------------------------------------------------------- QUARTER-END BALANCE SHEET DATA Total assets $5,688,179 $5,454,388 $5,234,148 $5,195,037 $5,219,955 Earning assets 5,192,034 4,983,601 4,796,142 4,753,520 4,740,511 Investment in securities 1,395,710 1,291,863 1,307,607 1,386,932 1,406,550 Loans 3,765,725 3,673,047 3,488,000 3,365,957 3,193,257 Deposits 4,585,808 4,309,398 4,198,244 4,195,289 4,198,358 Shareholders' equity 564,313 557,103 547,504 556,075 569,479 - ----------------------------------------------------------------------------------------------------------------------------------- AVERAGE BALANCE SHEET DATA Total assets $5,559,059 $5,310,400 $5,232,588 $5,236,898 $5,192,831 Earning assets 5,089,265 4,869,097 4,793,980 4,782,107 4,728,438 Investment in securities 1,347,835 1,298,451 1,359,601 1,409,089 1,387,704 Loans 3,715,427 3,560,119 3,419,433 3,287,766 3,239,464 Deposits 4,417,950 4,213,370 4,196,385 4,233,337 4,183,433 Shareholders' equity 564,010 554,529 554,920 564,147 567,651 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT DATA Interest income $95,581 $91,031 $88,238 $85,844 $84,700 Interest expense 35,582 32,482 31,286 30,352 29,945 Net interest income 59,999 58,549 56,952 55,492 54,755 Net interest income (TE) 61,553 60,048 58,418 56,899 56,120 Provision for possible loan losses 2,500 1,750 2,000 1,250 1,000 Non-interest income (exclusive of securities transactions) 17,316 18,136 17,271 16,030 15,226 Securities transactions - - - - - Non-interest expense 50,255 50,277 48,078 47,962 47,846 Net income 16,563 16,689 16,335 15,100 14,296 - ----------------------------------------------------------------------------------------------------------------------------------- KEY RATIOS Return on average assets 1.20% 1.25% 1.24% 1.16% 1.12% Return on average shareholders' equity 11.81% 11.94% 11.68% 10.74% 10.21% Net interest margin 4.85% 4.91% 4.85% 4.77% 4.79% Average loans to average deposits 84.10% 84.50% 81.49% 77.66% 77.44% Efficiency ratio 63.72% 64.31% 63.52% 65.77% 67.06% Reserve for possible loan losses to loans 1.29% 1.21% 1.25% 1.23% 1.28% Non-performing assets to loans plus foreclosed assets and surplus property .72% .46% .37% .38% .48% Reserve for possible loan losses to non-performing loans 187.79% 291.87% 370.13% 365.92% 301.15% Average shareholders' equity to average assets 10.15% 10.44% 10.61% 10.77% 10.93% Shareholders' equity to total assets 9.92% 10.21% 10.46% 10.70% 10.91% Leverage ratio 8.99% 9.99% 9.92% 10.06% 10.35% Tier 1 capital ratio 11.65% 12.75% 12.95% 13.32% 14.00% Total capital ratio 12.80% 13.83% 14.05% 14.37% 15.07% - ----------------------------------------------------------------------------------------------------------------------------------- SELECTED COMMON SHARE DATA Earnings Per Share Basic $.73 $.74 $.72 $.65 $.61 Diluted $.73 $.74 $.71 $.65 $.61 Dividends Cash dividends per share $.36 $.33 $.33 $.33 $.33 Dividend payout ratio 49.12% 44.60% 45.69% 50.52% 54.15% Book Value Per Share Book value $25.01 $24.68 $24.27 $24.14 $24.28 Tangible book value $21.62 $23.20 $22.75 $22.61 $22.73 Trading Data High stock price $36.66 $39.25 $39.75 $41.75 $38.25 Low stock price $31.50 $33.50 $33.25 $35.63 $32.19 Closing stock price $32.63 $37.06 $34.38 $39.75 $36.91 Trading volume 2,237,876 2,068,524 1,866,193 2,625,862 2,809,867 Average Shares Outstanding Basic 22,610,768 22,598,930 22,827,599 23,194,136 23,445,367 Diluted 22,669,130 22,674,065 22,903,782 23,278,545 23,519,378 - -----------------------------------------------------------------------------------------------------------------------------------
- 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Whitney Holding Corporation ("the Company" or "Whitney") and its subsidiaries and on their results of operations during the first quarters of 2000 and 1999. The operations of the Company's principal subsidiaries, Whitney National Bank and Bank of Houston ("the Banks,") constitute virtually all of the Company's consolidated operations. This discussion and analysis highlights and supplements information contained elsewhere in this Quarterly Report on Form 10-Q, particularly the preceding consolidated financial statements, notes and selected financial data. This discussion and analysis should be read in conjunction with the Company's 1999 Annual Report on Form 10-K. Certain financial information for prior periods has been reclassified to conform to the current presentation. OVERVIEW Whitney earned $.73 per share in the first quarter of 2000, a 20% increase over the $.61 per share reported for the first quarter of 1999. Net income of $16.6 million in 2000's first quarter was 16% higher than the year-earlier quarter's total of $14.3 million. Return on average assets was 1.20% for the first quarter of 2000, and return on average shareholders' equity was 11.81%. For the first quarter of 1999, these returns were 1.12% and 10.21%, respectively. In the fourth quarter of 1999, the Company announced its pending acquisition of Bank of Houston. This transaction closed on February 18, 2000, when Whitney purchased 100% of the stock of this $180 million-asset institution for cash of $58 million. Applying purchase accounting to this transaction, the Company recorded $44 million in intangible assets that will initially generate approximately $2.7 million in amortization expense on an annual basis. Whitney's results include Bank of Houston's earnings since the purchase date, which were not significant for purposes of presenting pro forma financial information with respect to this acquisition. Excluding the after-tax effect of the amortization of purchased intangibles acquired in this and previous transactions, Whitney earned $.77 per share in the first quarter of 2000, compared to $.64 per share in 1999's first quarter. The following key items impacted the current quarter's results: o Net interest income (TE) increased 10% from the first quarter of 1999. Loan growth and the ability to fund earning assets with a stable mix of interest-bearing and non-interest-bearing funding sources continue to be the most important factors behind increased net interest income. In addition, active management of the cost of funds helped maintain the net interest margin at 4.85% for the first quarter of 2000, compared with 4.79% for the year earlier quarter. o Non-interest income, excluding securities transactions and sales of banking properties and pre-1933 assets, was 11% higher than the same quarter in 1999. Credit card income grew 32% from the same period in 1999, and trust service fees were up 10% over the first quarter of 1999. Income from service charges on deposit accounts was up 4% year over year. Increasing brokerage activity during early 2000 helped generate an improvement in investment service income of 44% over 1999's first quarter. Gains on sales of banking properties and pre-1933 assets were $.4 million in the first quarter of 2000; no gains were reported in the first quarter of 1999. - 8 - o In 2000, as in 1999, the Company continued to emphasize controlling the growth of and, in certain cases, reducing non-interest expense. Non-interest expense was $50.3 million in the first quarter of 2000, including approximately $.9 million at Bank of Houston. Compared to the first quarter of 1999, non-interest expense, excluding Bank of Houston, was up $1.5 million, or only 3%, of which $.9 million was related to increases in incentive compensation expense. Excluding Bank of Houston, the first quarter expense total was approximately $1 million lower than the fourth quarter of 1999, largely because of a periodic revision of performance-based compensation estimates in the earlier period. o Sustained loan growth continues to be an important factor behind quarterly provisions for possible loan losses, which totaled $2.5 million in the first quarter, $1.0 million in the first quarter of 1999 and $1.8 million in 1999's fourth quarter. Whitney had a small net recovery in the first quarter of 2000 following net charge-offs of $.3 million in the first quarter of 1999 and $1.0 million in 1999's fourth quarter. Whitney's non-performing assets increased in the first quarter to $27.3 million at March 31, 2000, or .72% of loans plus foreclosed assets and surplus bank property, compared to $17.1 million, or .46%, at December 31, 1999, and $15.4 million, or .48%, at the end of 1999's first quarter. The recent increase resulted from the placement of a substantial portion of a commercial credit relationship on non-accrual status because of negative earnings trends, even though the credit was performing. FORWARD-LOOKING STATEMENTS Certain statements in this quarterly report may be regarded as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, made in good faith by the Company, are based on a number of assumptions about the future. Some of the more important assumptions are outlined in the Company's 1999 Annual Report on Form 10-K. Because it is uncertain whether future conditions and events will confirm the Company's assumptions, there is a risk that the Company's future results will differ materially from what is stated in or implied by such forward-looking statements. The Company cautions the reader to consider this risk. - 9 - FINANCIAL CONDITION LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES Average loans for the first quarter of 2000 were $3.72 billion, a $476 million, or 15%, increase compared to $3.24 billion in the first quarter of 1999 and a $155 million, or 4%, increase from 1999's fourth quarter. Bank of Houston contributed approximately $21 million to these increases. Average loan growth continues to be broad-based, with the most significant increases in commercial lending of all types. Commercial real estate lending, which includes loans secured by properties used in commercial or industrial operations, supplied approximately $66 million of the increase over the fourth quarter of 1999, as this portfolio category grew 6% on average. This growth continued to come from a variety of sources, including hotel construction in the New Orleans area, apartment and condominium projects largely in the eastern Gulf Coast region, and retail, small office and commercial facilities throughout the Company's market area. There was no significant shift in the concentration mix of this portfolio from year-end 1999, although the regional distribution continued to show increasing balance. Commercial loans other than those secured by real property increased approximately $40 million, or 3%, on average over 1999's fourth quarter. As with commercial real estate loans, the concentration mix of this portfolio was relatively stable from year-end 1999. Average retail loans, including both retail mortgage loans and other loans to individuals, increased approximately $27 million, or 3%, from fourth quarter 1999. Retail mortgage lending contributed $22 million of this increase. Growth came primarily from the Company's home equity loan product and from adjustable-rate mortgage loans that the Company holds in its loan portfolio. Adjustable mortgage loan originations have increased with rising market rates. Table 1 shows loan balances at March 31, 2000 and at the end of the four prior quarters. With the exception of the non-real-estate commercial category, the period-end changes are consistent with the growth in average loans. The decline in the commercial category from year-end 1999 to March 31, 2000 is related to seasonal factors.
TABLE 1. LOANS - ----------------------------------------------------- ---------------------------------------------------------- 2000 1999 - ----------------------------------------------------- ---------------------------------------------------------- (dollars in thousands) March 31 December 31 September 30 June 30 March 31 - ------------------------------------------------------------------------------------------------------------------ Commercial, financial and agricultural loans $ 1,448,637 $ 1,466,018 $ 1,354,178 $ 1,279,149 $ 1,197,818 Real estate loans - commercial and other 1,276,930 1,213,465 1,167,954 1,136,864 1,067,039 Real estate loans - retail mortgage 733,342 700,311 674,546 654,327 636,970 Loans to individuals 306,443 292,680 290,507 294,416 289,760 Lease financing 373 573 815 1,201 1,670 - ------------------------------------------------------------------------------------------------------------------ Total loans $ 3,765,725 $ 3,673,047 $ 3,488,000 $ 3,365,957 $ 3,193,257 ==================================================================================================================
- 10 - Each loan carries a degree of credit risk. Management's evaluation of this risk is ultimately reflected in the Company's financial statements by the size of the reserve for possible loan losses, and changes in this ongoing evaluation over time are reflected in the provision for possible loan losses charged to operating expense. Table 2 compares first quarter 2000 activity in the reserve for possible loan losses with 1999's fourth quarter and the first quarter of that year. Table 3 shows total non-performing loans at March 31, 2000 and at the end of the preceding four quarters. The recent increase, the possibility for which was discussed in the Company's 1999 annual report on Form 10-K, resulted from the placement of a substantial portion of a commercial credit relationship on non-accrual status because of negative earnings trends, even though the credit was performing. At both March 31, 2000 and December 31, 1999, the total of loans internally classified as having above normal credit risk represented approximately 5% of total loans. The March 31, 2000 total of $197 million is $1.2 million, or less than 1%, above the year-end balance. Since the end of 1999, loans for which full repayment is doubtful increased $12 million, consistent with the increase in non-accrual loans mentioned above. Substandard loans with well-defined weaknesses that, if not corrected, would likely result in some loss increased $16 million over this same period. Loans warranting special attention because of risk characteristics that indicate potential weaknesses, however, decreased by approximately $26 million. Although there was little growth in the total of internally classified loans, the changes within the classification categories indicate an overall increase in management's assessment of the risk profile of this pool of loans and were an important factor in the increase in the reserve for possible loan losses from year-end 1999. Management continually reviews the loan portfolio to identify potentially weak or deteriorating credits. - 11 -
TABLE 2. SUMMARY OF ACTIVITY IN THE RESERVE FOR POSSIBLE LOAN LOSSES - --------------------------------------------------------------------------------------------------- First Fourth First Quarter Quarter Quarter - --------------------------------------------------------------------------------------------------- (dollars in thousands) 2000 1999 1999 - --------------------------------------------------------------------------------------------------- Balance at the beginning of period $44,466 $43,738 $40,282 Reserves acquired in bank purchase 1,461 - - Provision for possible loan losses 2,500 1,750 1,000 Loans charged to the reserve: Commercial, financial and agricultural 594 1,431 1,452 Real estate (mainly commercial) 194 189 199 Loans to individuals 661 474 571 Lease financing 18 4 38 - --------------------------------------------------------------------------------------------------- Total charge-offs 1,467 2,098 2,260 - --------------------------------------------------------------------------------------------------- Recoveries of loans previously charged off: Commercial, financial and agricultural 743 452 1,198 Real estate (mainly commercial) 387 137 372 Loans to individuals 462 487 389 Lease financing - - - - --------------------------------------------------------------------------------------------------- Total recoveries 1,592 1,076 1,959 - --------------------------------------------------------------------------------------------------- Net charge-offs (recoveries) (125) 1,022 301 - --------------------------------------------------------------------------------------------------- Balance at the end of period $48,552 $44,466 $40,981 - --------------------------------------------------------------------------------------------------- Ratios: Net annualized charge-offs (recoveries) to average loans (.01)% .11 % .04 % Gross annualized charge-offs to average loans .16 % .24 % .28 % Recoveries to gross charge-offs 108.52 % 51.29 % 86.68 % Reserve for possible loan losses to loans at quarter end 1.29 % 1.21 % 1.28 % - ---------------------------------------------------------------------------------------------------
TABLE 3. NON-PERFORMING ASSETS - ----------------------------------------------------------------------------------------------------------------------- 2000 1999 - ------------------------------------------------------------- -------------------------------------------------------- (dollars in thousands) March December September June March 31 31 30 30 31 - ----------------------------------------------------------------------------------------------------------------------- Loans accounted for on a non-accrual basis $ 25,348 $ 13,601 $ 10,095 $ 9,608 $ 11,591 Restructured loans 507 1,634 1,722 1,748 2.017 - ----------------------------------------------------------------------------------------------------------------------- Total non-performing loans 25,855 15,235 11,817 11,356 13,608 Foreclosed assets 1,401 1,831 1.178 1,299 1,805 - ----------------------------------------------------------------------------------------------------------------------- Total non-performing assets $ 27,256 $ 17,066 $ 12,995 $ 12,655 $ 15,413 - ----------------------------------------------------------------------------------------------------------------------- Loans 90 days past due still accruing $ 2,922 $ 2,617 $ 2,249 $ 2,481 $ 3,543 - ----------------------------------------------------------------------------------------------------------------------- Ratios: Non-performing assets to loans plus foreclosed assets .72 % .46 % .37 % .38 % .48 % Reserve for possible loan losses to non-performing loans 187.79 % 291.87 % 370.13 % 365.92 % 301.15 % Loans 90 days past due still accruing to loans .08 % .07 % .06 % .07 % .11 % - -----------------------------------------------------------------------------------------------------------------------
- 12 - INVESTMENT IN SECURITIES At March 31, 2000, total securities were $1.40 billion, compared to $1.29 billion at December 31, 1999 and $1.41 billion at March 31, 1999. Average investment in securities decreased $40 million, or 3%, in the first quarter of 2000 compared to the same period in 1999. Excluding the impact of Bank of Houston, the decrease would have been $97 million, or 7%. Between these same periods, average federal funds sold and other short-term liquidity management investments decreased $75 million. The $172 million decrease in average securities and liquidity-management investments, excluding Bank of Houston, was used to fund loan growth. Bank of Houston accounted for all of the increase in average securities from 1999's fourth quarter. Average loan growth during the first quarter of 2000 was primarily funded by deposits and short-term borrowings. During 1999, the Company began building its investment in securities classified as available for sale, primarily to increase liquidity management flexibility. At March 31, 2000, such securities constituted 24% of the investment portfolio, compared to 16% at year-end 1999 and 6% at March 31, 1999. The net unrealized loss on available for sale securities was $6.9 million at March 31, 2000 and $4.8 million at December 31, 1999. DEPOSITS AND SHORT-TERM BORROWINGS Average deposits and short-term borrowings increased $360 million, or 8%, over the first quarter of 1999 and $238 million, or 5%, from 1999's final quarter. Bank of Houston contributed $81 million to these increases. These funds supported the growth in average loans between these periods. Lower-cost deposits and core time deposits of under $100 thousand decreased as a percent of total interest-bearing funds in the first quarter of 2000, falling to 68% from 70% in the fourth quarter of 1999 and 72% in 1999's first quarter. At March 31, 2000, total deposits were $4.59 billion, compared to $4.31 billion at December 31, 1999 and $4.20 billion on March 31, 1999. Average deposits for the first quarter were $4.42 billion, which represents an increase of 6% over 1999's first quarter and 5% over the fourth quarter of 1999. The Bank of Houston acquisition contributed approximately 2% to each of these increases. The Company continued to show growth in average non-interest-bearing demand deposits, with an increase of $69 million on average, or 6%, over the first quarter of 1999, excluding Bank of Houston. On the same basis, average demand deposits in the first quarter were $40 million, or 3%, higher than 1999's fourth quarter. Both commercial and consumer accounts contributed to this growth. Average money market deposits in the first quarter of 2000 increased $59 million, or 8%, from the first quarter of 1999, virtually all of which was in premium money market deposits. Premium money market deposits were relatively stable between the fourth quarter of 1999 and the first quarter of 2000. Over this same period, however, average core time deposits of less than $100 thousand, excluding Bank of Houston, rose $31 million, or 4%. Increased money market rates and competition for deposit customers have led to rising time deposit rates and more attractive terms. Average time deposits over $100 thousand grew even more strongly in the first quarter of 2000, rising $76 million on average, or 13%, over the fourth quarter of 1999, excluding Bank of - 13 - Houston. This growth was concentrated in several commercial customers and financial institutions and is volatile. Total average short-term borrowings increased $126 million in the first quarter of 2000 compared to last year's first quarter. Underlying this growth was an $85 million, or 31%, increase in average funds flowing to the Company's sweep repurchase product, which in turn reflects the continued growth in the commercial deposit base. Short-term borrowings were $481 million at March 31, 2000, an 11% decrease from year-end 1999. The decrease partly reflects liquidity funding at year-end in connection with Year 2000 contingency planning. LIQUIDITY The object of liquidity management is to ensure that funds are available to meet cash flow requirements of depositors and borrowers, while at the same time meeting the cash flow needs of the Company and the Banks. Liquidity is provided by a stable base of funding sources, including low cost core deposits, and an adequate level of maturing assets. The Company models liquidity needs on a periodic basis to determine the best strategy of investments and borrowings to meet those needs. The Banks had over $1.3 billion in unfunded loan commitments outstanding at March 31, 2000, a 6% increase from 1999's year-end. Because commitments and unused lines of credit may, and many times do, expire without being drawn upon, unfunded balances do not represent actual future liquidity requirements. In order to ensure adequate liquidity, the Company has developed an investment strategy, which plans a level of investment maturities that management considers adequate to meet funding needs. In addition, the Company and the Banks have access to external funding sources in the financial markets and Whitney National Bank has developed the ability to gather deposits at a nationwide level. During 1999, and continuing into 2000, the Company also began building investment in securities classified as available for sale, further increasing liquidity management flexibility. ASSET/LIABILITY MANAGEMENT As stated in the Company's 1999 Annual Report on Form 10-K, the objective of the Company's asset/liability management is to implement strategies for the funding and deployment of its financial resources that are expected to maximize soundness and profitability over time at acceptable levels of risk. Interest rate sensitivity is the potential impact of changing rate environments on both net interest income and cash flows. The Company and the Banks obtain measures of their interest rate sensitivity by running net interest income simulations, monitoring the economic value of equity, and preparing gap analyses. Using the Company's most recent internal forecast as a base case, the Company ran simulations to estimate the impact on forecasted net interest income (TE) of parallel up and down instantaneous interest rate shocks of 100 to 300 basis points. The asset and liability volumes in the base case were held constant for this test. The simulated impact ranged from a 3% annual increase in net interest income (TE) at 300 basis points up to an annual decrease of 4% at 300 basis points down. These results were within acceptable limits, considering established internal guidelines. - 14 - CAPITAL ADEQUACY The Company's capital amounts and ratios are presented in Table 4:
TABLE 4. RISK-BASED CAPITAL AND CAPITAL RATIOS - -------------------------------------------------------------------------------------------- March 31 December 31 (dollars in thousands) 2000 1999 - -------------------------------------------------------------------------------------------- Tier 1 regulatory capital $ 492,632 $ 527,206 Tier 2 regulatory capital 48,552 44,466 - -------------------------------------------------------------------------------------------- Total regulatory capital $ 541,184 $ 571,672 - -------------------------------------------------------------------------------------------- Risk-weighted assets $4,227,184 $4,134,623 - -------------------------------------------------------------------------------------------- Ratios Leverage (Tier 1 capital to average assets) 8.99 % 9.99 % Tier 1 capital to risk-weighted assets 11.65 % 12.75 % Total capital to risk-weighted assets 12.80 % 13.83 % Shareholders' equity to total assets 9.92 % 10.21 % Tangible equity to total assets 8.58 % 9.60 % - --------------------------------------------------------------------------------------------
The Company remained strongly capitalized at March 31, 2000. The regulatory capital ratios of the Banks far exceed the minimum required ratios, and Whitney National Bank has been categorized as "well-capitalized" in the most recent notice received from its regulatory agency. The Company also fully anticipates that Bank of Houston will be categorized as "well-capitalized." The reduction in regulatory capital levels and ratios since year-end 1999 reflects the impact of the acquisition of Bank of Houston. In this transaction, the Company acquired $44 million of intangible assets that are deducted in determining regulatory capital. Bank of Houston also contributed approximately $60 million to the overall increase in risk-weighted assets. During the first quarter, the Company declared a $.36 per share dividend on its common stock. This represents a $.03 per share, or 9%, increase over the quarterly dividend declared throughout 1999. Year 2000 Remediation For over two years the Company and others within and outside the banking industry worked diligently to address the risks posed by the Year 2000 date change to both information processing systems and non-information systems that employ embedded information technology. The success of these efforts has been widely publicized. When the Company began processing in the new century it experienced only a few date-related problems and suffered no disruptions to its operations. Critical outside services all were available. This was also true with major customers and suppliers. Costs associated with the Company's Year 2000 remediation efforts included both internal costs, primarily personnel-related, and costs from using outside consultants. Non-interest expense for the first quarter of 1999 included internal costs estimated at $.7 million and external costs of approximately $.4 million. There were no significant costs during 2000's first quarter, and none are anticipated for the remainder of the year. - 15 - RESULTS OF OPERATIONS NET INTEREST INCOME Net interest income (TE) for the first quarter of 2000 was $61.6 million, a $5.4 million, or 10%, improvement over the first quarter of 1999, and a $1.5 million, or 3%, increase compared to 1999's fourth quarter. The Bank of Houston contributed approximately $.5 million to these increases. Loan growth was the major factor behind these improvements coupled with the Company's ability to maintain its mix of interest-bearing and interest-free funding sources over these periods and effectively manage its cost of funds. The net interest margin, which is net interest income (TE) as a percent of average earning assets, was 4.85% this quarter, compared to 4.79% in the first quarter of 1999 and 4.91% in 1999's final quarter. Tables 5 and 6 show the factors contributing to these changes and the components of these changes. Compared to the prior year's quarter, average loans grew 15% in 2000's first quarter, while average earning assets rose 8%, resulting in a more favorable mix of earning assets. As a percent of earning assets, average loans increased to 73% in the current quarter, compared to 69% in 1999's first quarter. The effective loan yield (TE) increased 34 basis points from the first quarter of 1999 to the current quarter and is up 15 basis points over the 1999's fourth quarter, while the effective yield (TE) on total earning assets rose 32 basis points and 12 basis points, respectively. Market rates have continued to rise since mid 1999 as is reflected in the 94 basis point increase in the average prime rate for the first quarter of 2000 from 1999's first quarter and the 31 basis point increase over the final quarter in 1999. The percent of earning assets funded by non-interest-bearing sources has remained stable at approximately 27% over each of these periods. Average non-interest-bearing demand deposits grew 7% over the first quarter of 1999 and are up 5% from 1999's fourth quarter, including Bank of Houston. Average interest-bearing deposits grew approximately 5% in the first quarter of 2000 compared to each of the prior quarterly periods. Although rising market rates have put upward pressure on the Company's cost of interest-bearing funds and the proportion of higher-cost funds has increased, the stability in interest-free funding sources has helped limit the increase in the total cost of funding earning assets to 25 basis points over 1999's first quarter and 17 basis points from the prior year's fourth quarter. - 16 -
TABLE 5. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME(TE)(a) AND INTEREST RATES - ------------------------------------------------------------------------------------------------------------------------------------ (dollars in thousands) First Quarter 2000 Fourth Quarter 1999 First Quarter 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Average Average Average Balance Interest Rate Balance Interest Rate Balance Interest Rate - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS EARNING ASSETS Loans (TE)(a),(b) $3,715,427 $75,793 8.20% $3,560,119 $72,218 8.05% $3,239,464 $62,869 7.86% - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Treasury securities 126,266 1,901 6.06 116,288 1,759 6.00 196,949 3,098 6.38 U.S. agency securities 513,896 7,517 5.85 459,882 6,697 5.82 492,524 7,530 6.12 Mortgage-backed securities 507,690 7,673 6.05 524,133 8,023 6.12 512,607 7,772 6.06 Obligations of states and political subdivisions (TE)(a) 191,396 3,757 7.85 190,122 3,573 7.52 177,256 3,426 7.73 Federal Reserve stock and other corporate securities 8,587 125 5.82 8,026 118 5.88 8,368 188 8.99 - ------------------------------------------------------------------------------------------------------------------------------------ Total investment in securities(c) 1,347,835 20,973 6.23 1,298,451 20,170 6.21 1,387,704 22,014 6.36 - ------------------------------------------------------------------------------------------------------------------------------------ Federal funds sold and short-term investments 26,003 369 5.71 10,527 142 5.35 101,270 1,182 4.73 - ------------------------------------------------------------------------------------------------------------------------------------ Total earning assets 5,089,265 $97,135 7.67% 4,869,097 $92,530 7.56% 4,728,438 $86,065 7.36% - ------------------------------------------------------------------------------------------------------------------------------------ NON-EARNING ASSETS Other assets 516,570 485,673 505,134 Reserve for possible loan losses (46,776) (44,370) (40,741) - ------------------------------------------------------------------------------------------------------------------------------------ Total assets $5,559,059 $5,310,400 $5,192,831 ==================================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST-BEARING LIABILITIES NOW account deposits $ 493,695 $ 1,670 1.36% $ 478,417 $ 1,600 1.33% $ 525,027 $ 1,834 1.42% Money market deposits 756,769 7,174 3.81 753,747 6,961 3.66 698,175 6,127 3.56 Savings deposits 453,965 2,269 2.01 456,216 2,322 2.02 489,304 2,408 2.00 Other time deposits 820,270 9,811 4.81 775,637 9,146 4.68 756,533 9,012 4.83 Time deposits $100,000 and over 651,038 8,612 5.32 564,072 7,081 4.98 558,632 6,598 4.79 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing deposits 3,175,737 29,536 3.74 3,028,089 27,110 3.55 3,027,671 25,979 3.48 - ------------------------------------------------------------------------------------------------------------------------------------ Short-term borrowings 527,924 6,046 4.61 494,052 5,372 4.31 401,630 3,966 4.00 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 3,703,661 $35,582 3.86% 3,522,141 $32,482 3.66% 3,429,301 $29,945 3.54% - ------------------------------------------------------------------------------------------------------------------------------------ NON-INTEREST-BEARING DEPOSITS AND SHAREHOLDERS' EQUITY Demand deposits 1,242,213 1,185,281 1,155,762 Other liabilities 49,175 48,449 40,117 Shareholders' equity 564,010 554,529 567,651 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $5,559,059 $5,310,400 $5,192,831 ==================================================================================================================================== Net interest income and margin (TE) (a) $61,553 4.85% $60,048 4.91% $56,120 4.79% - ------------------------------------------------------------------------------------------------------------------------------------ Net earning assets and spread $1,385,604 3.81% $1,346,956 3.90% $1,299,137 3.82% ==================================================================================================================================== (a) Tax-equivalent (TE) amounts are calculated using a marginal federal income tax rate of 35%. (b) Average balance includes non-accruing loans of $17,963, $11,225 and $10,688 respectively, in the first quarter of 2000 and the fourth and first quarters of 1999. (c) Average balance excludes unrealized gain or loss on securities available for sale.
- 17 -
TABLE 6. SUMMARY OF CHANGES IN NET INTEREST INCOME(TE)(a) - ---------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) First Quarter 2000 Compared to: Fourth Quarter 1999 First Quarter 1999 ---------------------------------------------------------------------------- Due To Due To Change In Total Change In Total ---------------------- Increase -------------------- Increase Volume Rate (Decrease) Volume Rate (Decrease) - ---------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME(TE) Loans (TE)(a) $ 2,510 $ 1,065 $ 3,575 $ 9,993 $ 2,931 $ 12,924 - ---------------------------------------------------------------------------------------------------------------------------- U.S. Treasury securities 128 14 142 (1,049) (148) (1,197) U.S. agency securities 790 30 820 322 (335) (13) Mortgage-backed securities (249) (101) (350) (74) (25) (99) Obligations of states and political subdivisions (TE) (a) 24 160 184 277 54 331 Federal Reserve stock and other corporate securities 8 (1) 7 5 (68) (63) - ---------------------------------------------------------------------------------------------------------------------------- Total investment in securities 701 102 803 (519) (522) (1,041) - ---------------------------------------------------------------------------------------------------------------------------- Federal funds sold and short-term investments 217 10 227 (1,026) 213 (813) - ---------------------------------------------------------------------------------------------------------------------------- Total interest income (TE) (a) 3,428 1,177 4,605 8,448 2,622 11,070 - ---------------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE NOW account deposits 39 31 70 (99) (65) (164) Money market deposits 19 194 213 569 478 1,047 Savings deposits (28) (25) (53) (159) 20 (139) Other time deposits 446 219 665 835 (36) 799 Time deposits $100,000 and over 1,061 470 1,531 1,207 807 2,014 - ---------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 1,537 889 2,426 2,353 1,204 3,557 - ---------------------------------------------------------------------------------------------------------------------------- Short-term borrowings 339 335 674 1,408 672 2,080 - ---------------------------------------------------------------------------------------------------------------------------- Total interest expense 1,876 1,224 3,100 3,761 1,876 5,637 - ---------------------------------------------------------------------------------------------------------------------------- Change in net interest income (TE)(a) $ 1,552 $ (47) $ 1,505 $ 4,687 $ 746 $ 5,433 - ---------------------------------------------------------------------------------------------------------------------------- (a) Tax-equivalent (TE) amounts are calculated using a marginal federal income tax rate of 35%.
- 18 - PROVISION FOR POSSIBLE LOAN LOSSES The provision for possible loan losses was $2.5 million for the first quarter of 2000, $1.8 million in 1999's fourth quarter and $1.0 million in the prior year's first quarter. There was a small net recovery in the first quarter, following net charge-offs of $1.0 million in 1999's final quarter and $.3 million in the year earlier quarter. The higher provision in 2000 reflects management's consideration, among other factors, of the increased risk profile of loans internally classified and continued strong loan growth. For a discussion of changes in the reserve for possible loan losses, non-performing assets and general asset quality, see the earlier section on Loans and Reserve for Possible Loan Losses. NON-INTEREST INCOME Non-interest income, excluding securities transactions, was $17.3 million in the first quarter, compared to $15.2 million in the first quarter of 1999. First quarter 2000 income includes approximately $.4 million in gains from sales of surplus banking property and pre-1933 assets carried at a nominal value. Excluding these gains, first quarter non-interest income increased $1.7 million, or 11%. Credit card fee income rose $.9 million, or 32%, to $3.7 million. This reflects increased transaction volumes, both from an expanded merchant customer base and, more recently, from the growing use of the Company's debit card product. Trust service fee income rose to $2.2 million, an increase of 10% over the same quarter last year, continuing to show the benefits of marketing and incentive-based sales efforts in an expanded market area. Recent volatility in the equities markets, however, has tended to moderate the year-to-year growth rate for this income category. Late in the second quarter of 1999, the Company opened a new parking facility next to its main office. The operating revenue from this new facility represents over one third of the 31% improvement in other non-interest income, excluding one-time gains, in the first quarter of 2000 compared to the same quarter in 1999. Also included in other non-interest income are fees from investment services, which increased 44% in 2000's first quarter, to $.6 million. Whitney Securities, the Company's broker-dealer operation, has been growing rapidly since its inception in the third quarter of 1999, and was the primary factor behind this increase. Quarterly income from service charges on deposit accounts was up 4%, to $6.9 million, in 2000, with the Bank of Houston accounting for most of this increase over the first quarter of 1999. As expected, first quarter 2000 income from secondary mortgage market operations trailed 1999's first quarter performance on reduced origination volume of fixed-rate product with the higher market interest rates since the latter part of 1999. As mentioned earlier, during this same period the Company has increased its origination of adjustable-rate mortgage loans that it holds in its loan portfolio. NON-INTEREST EXPENSE Non-interest expense was $50.3 million in the first quarter of 2000, including $.9 million at Bank of Houston. Excluding the impact of this newly acquired institution, first quarter 2000 expense increased $1.5 million, or 3%, over the first quarter of 1999. There were no significant merger-related expenses in either quarterly period. - 19 - Personnel expense increased by $.9 million, or 4%, to $25.3 million for the quarter, with a third of this increase relating to Bank of Houston. During 1999, the Company had reduced its full-time equivalent employee base by approximately 7%, and the total, excluding Bank of Houston, has remained stable throughout the first quarter of 2000. The benefit from these reductions to first quarter 2000 personnel expense was offset in part by regular merit increases and by a $.9 million net increase in executive incentive plan compensation expense compared to 1999's first quarter. Equipment and data processing expense increased $.3 million, or 6%, almost entirely as a result of higher provisions for depreciation and amortization. The completion of the final phases of the rollout of a new branch delivery system and standardized office automation network during 1999 contributed to this increase, as did the automation of certain back-office functions and other enhancements to data processing and communications systems. Compared to the fourth quarter of 1999, equipment and data processing expense is down 3% in the first quarter of 2000. In early 2000, the Company relocated certain office facilities for its Louisiana bank operations, other than in the New Orleans area, to more suitable leased premises. The net increase in recurring expense from this move, higher provisions for depreciation related in part to the new parking facility mentioned earlier, and Bank of Houston were the main factors behind the $.2 million, or 6%, increase in net occupancy expense in the first quarter of 2000. Excluding Bank of Houston, the year-over-year increase would have been 4%. Credit card transaction processing services expense increased $.5 million, or 25%, consistent with the related growth in merchant transaction volumes and revenue discussed earlier. As noted earlier, the intangible assets acquired with Bank of Houston will initially generate $2.7 million in amortization expense on an annual basis. The impact on the first quarter was $.3 million, which led to a 19% increase in amortization expense over 1999's first quarter. Legal and other professional services decreased $.2 million, or 20%, in the first quarter of 2000, largely reflecting the use of consultants in early 1999 to complete Year 2000 remediation testing as discussed earlier. Other non-interest expenses increased $.2 million, or 3%, to $6.7 million in the first quarter of 2000. Higher expenses associated with an increase in marketing campaigns and an industry-wide increase in deposit insurance rates were partly offset by the benefits of expense control and reduction efforts, particularly with respect to operating supplies. - 20 - PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities and Use of Proceeds None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a)(3) Exhibits: Exhibit 3.1 - Copy of Composite Charter (filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1993 (Commission file number 0-1026) and incorporated herein by reference). Exhibit 3.2 - Copy of Bylaws, as amended July 1998 (filed as Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (Commission file number 0-1026) and incorporated by reference herein). Exhibit 10.1 - Stock Option Agreement between Whitney Holding Corporation and William L. Marks (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1990 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.2 - Executive agreement between Whitney Holding Corporation, Whitney National Bank and William L. Marks (filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 (Commission file number 0-1026) and incorporated by reference). - 21 - Exhibit 10.3 - Executive agreement between Whitney Holding Corporation, Whitney National Bank and R. King Milling (filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.4 - Executive agreement between Whitney Holding Corporation, Whitney National Bank and Kenneth A. Lawder, Jr. (filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.5 - Executive agreement between Whitney Holding Corporation, Whitney National Bank and G. Blair Ferguson (filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.6 - Executive agreement between Whitney Holding Corporation, Whitney National Bank and Joseph W. May (filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.7 - Executive agreement between Whitney Holding Corporation, Whitney Bank of Alabama and John C. Hope, III (filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.8 - Executive agreement between Whitney Holding Corporation, Whitney National Bank and Robert C. Baird, Jr. (filed as Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.9 - Long-term incentive program (filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.9a - Long-term incentive plan (filed as a Proposal in the Company's Proxy Statement dated March 18, 1997 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.10 - Executive compensation plan (filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991 (Commission file number 0-1026) and incorporated by reference). - 22 - Exhibit 10.11 - Form of restricted stock agreement between Whitney Holding Corporation and certain of its officers (filed as Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.12 - Form of stock option agreement between Whitney Holding Corporation and certain of its officers (filed as Exhibit 19.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.13 - Directors' Compensation Plan (filed as Exhibit A to the Company's Proxy Statement dated March 24, 1994 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.13a - Amendment No. 1 to the Whitney Holding Corporation Directors' Compensation Plan (filed as Exhibit A to the Company's Proxy Statement dated March 15, 1996 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.14 - Retirement Restoration Plan effective January 1, 1995 (filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.15 - Executive agreement between Whitney Holding Corporation, Whitney National Bank and Rodney D. Chard (filed as Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.16 - Form of Amendment to Section 2.1e of the Executive agreements filed as Exhibits 10.2 through 10.8 herein (filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.17 - Executive agreement between Whitney National Bank of Mississippi and Guy C. Billups, Jr. (filed as Exhibit 10.19 to the Company's Quarterly Report on form 10-Q for the quarter ended June 30, 1997 (Commission file number 0-1026) and incorporated by reference). Exhibit 10.18 - Form of Amendment adding subsection 2.1g to the Executive Agreements set forth as Exhibits 10.2 through 10.8 and Exhibit 10.15 herein (filed as Exhibit 10.19 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 (Commission file number 0-0126) and incorporated by reference). - 23 - Exhibit 10.19 - Executive agreement between Whitney Holding Corporation, Whitney National Bank and Thomas L. Callicutt, Jr. (filed as Exhibit 10.20 to the Company's Quarterly Report on form 10-Q for the quarter ended September 30, 1999 (Commission file number 0-1026) and incorporated by reference). Exhibit 21 - Subsidiaries Whitney Holding Corporation owns 100% of the capital stock of Whitney National Bank, successor by merger in early January 1998 to Whitney Bank of Alabama, Whitney National Bank of Florida and Whitney National Bank of Mississippi, and 100% of the capital stock of Bank of Houston. All other subsidiaries considered in the aggregate would not constitute a significant subsidiary. Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None 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) By:/s/ Thomas L. Callicutt, Jr. ---------------------------------- Thomas L. Callicutt, Jr. Executive Vice President and Chief Financial Officer (Principal Accounting Officer) May 15, 2000 ---------------------------------- Date - 24 - EX-27 2 ARTICLE 9 FDS FOR 10-Q
9 YEAR DEC-31-2000 MAR-31-2000 204,465 0 30,599 586 336,926 1,058,784 1,028,889 3,765,725 48,552 5,688,179 4,585,808 480,534 57,524 0 2,800 0 0 561,513 5,688,179 75,554 19,658 369 95,581 29,536 35,582 59,999 2,500 0 50,255 24,560 16,563 0 0 16,563 0.73 0.73 4.85 25,348 2,922 507 0 44,466 1,467 1,592 48,552 48,200 0 352
-----END PRIVACY-ENHANCED MESSAGE-----