EX-99.1 2 whcannmtgpres09.htm WHC ANNUAL MEETING PRESENTATION whcannmtgpres09.htm
Annual Shareholders Meeting
Report To The Shareholders
May 20, 2009
 
 

 
2
Forward-Looking Statements
 This presentation may include forward-looking statements containing expectations about
 future conditions and descriptions of future plans and strategies.
 Whitney's ability to accurately predict the effects of future plans or strategies is
 inherently limited such that actual results and performance could differ materially from
 those set forth in the forward-looking statements.
 Factors that could cause actual results to differ from those expressed in the forward-
 looking statements are available in Whitney’s filings with the Securities and Exchange
 Commission.
 Whitney does not intend, and undertakes no obligation, to update or revise any forward-
 looking statements, whether as a result of differences in actual results, changes in
 assumptions or changes in other factors affecting such statements.
 
 

 
3
3
Weathering The Storm
3
 
 

 
4
4
2008 Review
 
 

 
5
Challenging Economic Times
 Challenges and historic events in both national
 and local economies tested two of Whitney’s
 core competencies in 2008
 Net Interest Margin impacted from a decline in
 interest rates
 Credit primarily impacted from declines in real
 estate values in Florida and coastal Alabama
 
 

 
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6
A Perfect Storm - Net Interest Margin
 Federal Reserve dropped rates 400+
 basis points during 2008
 Significant competitive advantage
 related to deposit mix negated in
 low rate environment
  DDA represents 35% of total deposits
 (at December 31, 2008)
 Stable NIM
  4.55% for YTD 2008
  Remained in top of peer group
 Libor benefit began diminishing
 towards the end of the year
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Federal Funds Rate
December 11, 2007
4.25%
January 22, 2008
3.50%
January 30, 2008
3.00%
March 18, 2008
2.25%
April 30, 2008
2.00%
October 8, 2008
1.50%
October 29, 2008
1.00%
December 16, 2008
0.00% - .25%
 
 

 
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7
A Perfect Storm - Credit
 Q108: Year started on a good note;
 earnings as expected in light of difficult
 operating environment
 Q208: Stable core results overshadowed
 by credit
 Q308: Earnings continue to be impacted
 by the fragile economy and real estate
 valuation issues
 Q408: Results similar to past two
 quarters - continued credit issues
7
Provision
for credit
losses
Earnings
per
common
share
(diluted)
Q108
$14 million
$.45
Q208
$35 million
$.20
Q308
$40 million
$.11
Q408
$45 million
$.12
 
 

 
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8
2008 - We Are Weathering the Storm
 Net income available for common shareholders $58 million
 or $.89 per diluted common share for 2008
 Reported a profit in each quarter and paid for credit costs out of
 earnings
  $134 million provision for credit losses in 2008 compared to $17 million in 2007
 Balance sheet growth and funding
  Loans up 12% or $900 million excluding Parish acquisition
  Deposits relatively flat excluding Parish acquisition
 Successfully implemented cost control initiatives
  Identified $20 million in annual cost savings as of the end of 2008
  Have identified an additional $10 million in cost saves to-date
 Celebrated our125th Anniversary
8
 
 

 
9
9
2009 Outlook
 
 

 
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10
2009 - Continuing To Weather The Storm
 As previously disclosed, several factors negatively impacted
 earnings in the first quarter --- ones we do not expect to overcome in
 the near future
  Extremely low interest rates continue to impact our net interest margin
  Continued uncertainties, challenges in national and local economies lead to:
  Low loan demand
  Continued credit quality challenges
  Despite very successful efforts to reduce ongoing operating expense levels,
 there are added expenses:
  FDIC insurance and assessments
  Pension expense
  Legal and collection expense related to problem credits and ORE
10
 
 

 
11
11
Credit Quality
Joseph S. Exnicios
Chief Risk Officer
 
 

 
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12
What Was The Cause Of Our Credit Problems?
 Not related to subprime lending
 Not related to large, national syndicated credits
 Followed our credit discipline
 The most significant impact on credit quality metrics:
  The decline in real estate values, particularly in the Florida and
 coastal Alabama markets
 Task going forward is to continue transitioning the
 Florida portfolios over the next several years from a real
 estate concentration toward more commercial, C&I
 lending
 
 

 
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What Is Driving The Higher Levels Of Provision?
 Continued deterioration mainly in the Florida and coastal
 Alabama loan portfolios
  Higher volume of criticized loans
  Increased volume of impaired loans
  Larger charge-offs
  Resulting mainly from declining real estate values
  Evidenced by updated appraisals
 Allowance to loans 2.17% at March 31, 2009
  Up from 1.77% at year-end 2008 and 1.19% at March 31, 2008
 
 

 
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 Oil & Gas portfolio
  South Louisiana and Houston markets provide lending opportunities to the energy
 sector
  Loans outstanding to the energy sector totaled 12% of total loans at March 31, 2009
  Loans related to E&P lending represented 29%
  While there are some criticized credits in the portfolio, it continues to perform well in
 light of the decline in oil prices
 Hospitality
  Many communities within our footprint are tourist destinations
  Those markets are experiencing slowdowns
  Approximately $250 million in hotel/motel exposure
  Approximately $100 million in full-service restaurant exposure
  Some credits criticized in light of economic conditions, however given the most recent
 stress test for many credits post hurricane Katrina, we are comfortable with portfolio
 CRE portfolio
  Watching for signs of weakness throughout our footprint related to retailers or others
As of March 31, 2009
What Other Industries Are We Watching?
 
 

 
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 Yet to see significant signs of systemic credit issues
 outside of Florida and coastal Alabama residential real
 estate-related credits
 Expect provision levels to remain elevated until:
  Stabilization in real estate prices
  Positive turn in the general economy
  Overall level of movement of credits into criticized slows
When Will Current Credit Cycle Be Over?
 
 

 
16
16
Capital Purchase Program (CPP)
(more commonly referred to as TARP)
 
 

 
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17
TARP: What Is It, Why Did We Participate?
 What is it?
  Troubled Asset Relief Program
  Original Goal: stabilize banking system through the purchase of bad loans
 Phase II - Capital Purchase Program
  Goal: invest in healthy banks
 Whitney participated by selling $300 million in preferred
 stock and issued a common stock warrant to the U.S.
 Treasury
  Participation was an investment in Whitney
  Whitney elected to participate as a way to ensure our ability to
 continue serving our customers and communities
regardless of
 the length or severity of the recession
17
 
 

 
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TARP: Are We Lending The Money?
 Whitney is in the business of making loans
  These funds strengthened our ability to continue providing
 lending across our footprint
  Reported loan growth of $900 million for 2008, after adjusting
 for the Parish acquisition
  Loans outstanding grew $400 million in 4Q08 excluding Parish
  Loosening our credit standards is not part of our corporate
 philosophy
  Recessionary conditions in the broader economy typically
 restrain loan demand even from creditworthy borrowers
  New loans and funded commitments totaling $800 million during 1Q09
 did not exceed paydowns and maturities of existing loans
  Expect loan demand to remain weak and for loans to be down slightly for
 2009
18
 
 

 
19
TARP: Will We Return The Money?
 Our intent is to get out ---- at the right time
 We are continuing to monitor changes to the CPP
 In light of ongoing economic challenges we
 believe participation continues to be in the best
 interest of the Company and its shareholders
 If developments occur that would alter our
 previous conclusions, we will consider all options
 available to redeem the funds
 
 

 
20
20
Common Dividend
 
 

 
21
21
Dividend: Why Was It Reduced?
 Not an easy decision
 Could not continue to pay for both credit and dividends
 in excess of earnings
 First reduction to $.20 was an effort to balance the needs
 of retail and institutional shareholders while also
 preserving capital
 Second reduction to $.01 was aimed at preserving and
 building capital given the level of distress and uncertainty
 in the overall economy
  Reduction saved over $12 million in tangible capital during the first quarter
 of 2009
21
 
 

 
22
Dividend: When Will It Increase?
 When our earnings again support common
 dividends, and while we are participating in the
 CPP, we can raise the common dividend to $.31
 without government approval
 Current priority is to continue to preserve and
 build capital
 Long-term goal is to return approximately 50% of
 earnings per common share to common
 shareholders
 
 

 
23
23
Stock Price
 
 

 
24
Whitney Compared To KBW Bank Index
24
 
 

 
25
Impact Of Economic Environment On Compensation Practices And Other Expenses
 Significant portion of management’s compensation is
 performance-based, both short and long term
 No bonuses paid to employees, including named
 executives, participating in the executive incentive
 compensation program
  By design
  Plan penalizes poor performance and rewards good performance
  Long-term equity-based incentives will also be negatively impacted by
 2008’s performance
 Management proactively implemented other changes to
 reduce certain expenses
  Lowered merit increase target for all employees
  Reduced participation in sponsorships and contributions
  Reduced participation in conferences, seminars, etc.
 
 

 
26
Committed And Focused On Creating Long-Term Value
 TARP, dividend and stock
 price impacting shareholders
 Difficult year, but we will
 persevere
 Addressed issues presented
 Committed and focused on
 creating long-term value for
 shareholders
 
 

 
27
27
Strategic Plan Update
John M. Turner, Jr.
President
 
 

 
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28
Leveraging Our Position As The Hometown Bank
 Parish National
  40 year-old bank headquartered on
 the Northshore
  17 locations
  Total loans:
 $605 million
(at 9/30/08)
  Total deposits:
 $635 million
(at 9/30/08)
  Transaction closed November 7, 2008
 Parish National merger provided
 opportunity to strengthen our position
 in the GNO market
  Parish’s Northshore market share:
 9.1%
(at June 30, 2008)
  Combined Northshore market share:
 12.9%
(at June 30, 2008)
  Combined New Orleans MSA market
 share: 17.6%
(at June 30, 2008)
Whitney locations
Parish locations
Source: www.FDIC.gov
 
 

 
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29
Branch Rationalization - Closings
 Aligning branch network to optimize
 Company’s use of capital
 Management concluded 9 branches
 should be closed:
  Moss Bluff, (Lake Charles, LA)
  Patterson, (Morgan City, LA)
  Davis Highway, (Pensacola, FL)
  Clearwater, (Clearwater, FL)
  Foley, (Foley, AL)
  Northside, (Houston, TX)
  Waveland, (Waveland, MS)
  Country Club and West McNeese in Lake Charles will be
 consolidated into a new branch
 Closed 6 overlapping branches
  Hammond, (Hammond, LA) (Whitney branch)
  Causeway, (Metairie, LA) (Parish branch)
  Kenner, (Kenner, LA) (Whitney branch)
  French Quarter, (New Orleans, LA) (Parish branch)
  Destin Commons, (Destin, FL) (Whitney branch)
  Fairhope LPO, (Fairhope, AL) (Parish location)
 
 

 
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Branch Rationalization - Openings
 Opened 8 new branches over
 the past 2 years
 Three branches currently
 under construction
  Transcontinental (Metairie, LA)
  Mid-City (New Orleans, LA)
  Lake Charles (Louisiana)
 Re-opened branches in every
 market served prior to
 hurricane Katrina except one
 Developing a plan to
 improve and monitor
 remaining branches
 
 

 
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31
Investing In Our Future
 New technology investments are a must
 Announced a new customer service initiative Monday
 Project is expected to benefit bankers, customers, and
 shareholders in a number of important ways
  Employees should be able to deliver faster service as well as
 anticipate customer needs with better customer information
  Customers should enjoy faster service, better products and most
 importantly, a better overall experience
  Shareholders are expected to benefit from both projected lower
 ongoing operational costs and enhanced revenues
 
 

 
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32
Times Like These Call For
A Bank Like The Whitney
 
 

 
33
Whitney Bankers
 
 

 
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34
 
 

 
35
Positioning Ourselves For The Long-Term
 Some encouraging signs that the economy may be
 beginning to stabilize
 More work to do
 Fundamental changes in the industry are a positive for
 Whitney
  Better loan pricing
  More rational deposit pricing
  Basic business model more closely reflects traditional Whitney
 model
 We are positioning the company to be ready to capitalize
 on the terrific opportunities ahead
 
 

 
36
It Takes Whitney Bank
 Whitney has prospered for 125 years
  Whitney served its customers through the Great
 Depression
  Whitney managed through losses in 1989-1991
 related to the declines in the oil patch
  Whitney has been here for its customers and
 communities after major hurricanes, including
 Katrina and Rita
  Whitney has been and will continue to be here
 for its customers through this economic crisis
 
 

 
Annual Shareholders Meeting
May 20, 2009