NEW ORLEANS, Oct. 26, 2010 (GLOBE NEWSWIRE) -- Whitney Holding Corporation (Nasdaq:WTNY) (the "Company") reported a net loss of $29.0 million for the third quarter of 2010 compared to net losses of $18.0 million and $30.0 million, respectively, in the second quarter of 2010 and in the third quarter of 2009. Including the $4.1 million dividend paid each quarter to the U.S. Treasury on the preferred stock issued under TARP, the loss per diluted common share was $.34 for the third quarter of 2010, $.23 for the second quarter of 2010 and $.50 for the third quarter of 2009.
In addition, the Company announced today, in a separate release, it has agreed to sell approximately $180 million of nonperforming loans and will reclassify up to an additional $100 million of nonperforming loans as held for sale. The sale, reclassification and the impact of these actions on the provision are expected to occur in the fourth quarter of 2010. The Company expects to be in an excellent position to begin a return to consistent, quarterly profitability in the first quarter of 2011.
"Although the challenges of the most recent credit cycle continued this quarter, we have gained greater clarity and an increased confidence about where we are today," said John C. Hope, III, Chairman and CEO. "The issues and concerns that tempered our optimism last quarter --- the Gulf oil spill, the independent third-party risk rating review project, and the weak economic recovery and threat of another downturn in the economy --- have all eased or been addressed. The oil leak has been capped and those impacted along the Gulf Coast are recovering, the risk-rating project has been completed and is reflected in our results, and today the economy is showing more signs of stabilization. With a clearer picture of the current conditions we are taking aggressive actions to manage our credit issues through the intended sale of greater than half of our nonperforming loans."
HIGHLIGHTS OF THIRD QUARTER FINANCIAL RESULTS
Total loans at the end of the third quarter of 2010 were $7.7 billion, down $245 million, or 3%, from June 30, 2010. The linked-quarter decline includes $80 million in gross charge-offs, approximately $37 million in proceeds from problem loan sales, $23 million in foreclosures and approximately $20 million in payoffs and paydowns of problem loans. The majority of the remaining decline came from the Louisiana market as repayments exceeded new originations during the quarter, mainly in the commercial and industrial (C&I) portfolio. Average loans for the third quarter of 2010 totaled $7.9 billion, down $171 million, or 2%, compared to the second quarter of 2010. Average earning assets of $10.3 billion were up slightly from the second quarter.
Deposits and Funding
Average deposits in the third quarter of 2010 were $8.9 billion, virtually unchanged from the second quarter of 2010. Total period-end deposits at September 30, 2010 of $8.9 billion were up approximately $47 million, or less than 1%, compared to June 30, 2010.
"Our deposit mix continues to be a core operating strength and distinguishes Whitney from many of its peers," said Hope. Average and period-end noninterest-bearing deposits each totaled $3.2 billion in the third quarter of 2010, and were stable compared to the second quarter of 2010. Noninterest-bearing demand deposits comprised 36% of total average deposits and funded approximately 31% of average earning assets for the third quarter. The percentage of earning assets funded by all noninterest-bearing sources totaled 36% for the current quarter.
Net interest income (TE) for the third quarter of 2010 decreased $1.6 million, or less than 2%, compared to the second quarter of 2010. The net interest margin (TE) declined 10 basis points to 4.05%, while average earnings assets were up slightly. The margin compression during the third quarter of 2010 reflected mainly reduced yields on earning assets as well as some shift in the mix of earning assets and some additional impact from nonaccrual loans.
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Whitney provided $70.0 million for credit losses in the third quarter of 2010, an increase of $11.0 million from the second quarter of 2010, and a decrease of $10.5 million from the third quarter of 2009. More than half of this quarter's provision was related to an increase in classified loans, another $11.0 million was associated with the resolution of problem credits through note sales and foreclosures and approximately $15.0 million resulted mainly from reduced values for collateral securing previously impaired loans. The remainder of the third quarter's provision was related mainly to charge-offs of smaller commercial and consumer credits.The provision for the second quarter of 2010 included $5 million based on an assessment of the impact of the oil spill on tourism in Gulf Coast beach communities.
Classified loans increased $236 million, net, during the third quarter, and totaled $1.1 billion at September 30, 2010. As noted in our second quarter filings, the Company engaged an independent third-party consultant to review various credit administration and credit review processes. As part of the project, the consultants, with expertise in risk rating policies and practices, assisted Whitney in evaluating its risk ratings for its loan portfolio. Over the course of this engagement, the consultants provided comprehensive training to relationship officers in the application of risk rating definitions in a dynamic economic environment.
"We believe that the risk rating project was a necessary step to gain further clarity and confidence regarding the losses inherent in our portfolio in the current economic environment. As we have noted previously, we believe that many of the newly classified loans have lower loss potential compared to the losses incurred on loans impacted by the significant real estate market issues in Florida," said Hope.
Classified C&I loans increased a net $94 million in the third quarter of 2010 with additions in all regional markets. This increase reflected in part prolonged stress on businesses associated with home and commercial construction. There was little change in classified oil and gas (O&G) industry relationships, and, overall there were no significant industry concentrations within the totals for classified C&I loans at September 30, 2010. Classified commercial real estate (CRE) loans increased a net $137 million in the third quarter of 2010, with $119 million for loans serviced from the Texas market related mainly to newly completed retail, apartment and condominium projects.
During the third quarter Whitney management and bankers continued to review credits and talk to both customers and industry experts to determine the potential impact of the BP oil spill and the regulatory and legislative responses to the spill on the Company's loan portfolio. No significant additional credits were identified as having potential direct or indirect exposure to the oil spill or downgraded as a result of the oil spill.
Nonperforming loans, a subset of classified loans, totaled $428 million at September 30, 2010, a net decrease of $23 million from June 30, 2010. Approximately 47% of nonperforming loans came from Whitney's Florida markets, 26% from Louisiana, 15% from Alabama/Mississippi and 12% from Texas. Nonperforming loans individually evaluated for impairment, a subset of total nonperforming loans, totaled $334 million at September 30, 2010, a decrease of $42 million from June 30, 2010. Cumulative charge-offs and the current impaired loss allowance on these loans represented approximately 34% of the remaining contractual principal balances on these credits. Foreclosed assets totaled $92 million at September 30, 2010, virtually unchanged from June 30, 2010.
Net loan charge-offs in the third quarter of 2010 were $76.6 million, or 3.89% of average loans on an annualized basis, compared to $53.3 million, or 2.65% of average loans in the second quarter. Approximately $40 million of the charge-offs in the third quarter were related to losses identified and reserved for in previous quarters on impaired loans. Charge-offs of credits serviced in the Florida market were 52% of total gross charge-offs in the third quarter, mainly from loans on residential land, lots and investment properties and on recently developed CRE. Charge-offs of credits serviced in Louisiana markets, mainly from the C&I portfolio, were approximately 20% of the total, while the Alabama/Mississippi and Texas markets accounted for 18% and 10% of total gross charge-offs, respectively.
The allowance for loan losses represented 2.89% of total loans at September 30, 2010, compared to 2.88% at June 30, 2010 and 2.81% at September 30, 2009.
Noninterest Income
Noninterest income for the third quarter of 2010 totaled $28.7 million, a decline of $3.1 million, or 10%, from the second quarter of 2010. The earlier period included a $1.3 million insurance settlement gain related to the hurricanes in 2008 and a gain of $.8 million from the sale of surplus banking property.
Deposit service charge income decreased $.5 million compared to the second quarter of 2010 mainly as a result of the new consumer protection regulations implemented during the third quarter. Secondary mortgage market income was up approximately $.6 million during the third quarter of 2010 on strong loan production that was helped by low rates and increased refinancing activity.
Other noninterest income decreased $3.0 million during the third quarter of 2010 reflecting mainly the second quarter gains noted earlier. A loss of $.5 million was recorded in the third quarter on the early disposition of equipment and software being replaced by new technology as part of our previously announced technology upgrade project.
Total noninterest expense for the third quarter of 2010 increased $3.0 million from the second quarter of 2010.
Total personnel expense declined slightly from the second quarter of 2010. A decrease of $.4 million in employee compensation was related mainly to an adjustment of performance estimates for certain share-based compensation awards. No management cash bonus was accrued during the first nine months of 2010 or during 2009.
Loan collection costs, together with foreclosed asset management expenses and provisions for valuation losses, totaled $8.5 million in the third quarter of 2010, up $2.5 million from the second quarter of 2010.
Equipment and data processing costs increased $.5 million compared to the second quarter of 2010, related mainly to our ongoing technology project. Legal and other professional services increased $.3 million during the third quarter and included services associated with collection of problem credits, technology initiatives, and compliance and other regulatory projects. Deposit insurance and regulatory fees declined in the third quarter, related mainly to our decision not to participate in the most recent extension of the FDIC's Transaction Account Guarantee Program.
The Company's tangible common equity ratio was 8.10% at September 30, 2010, compared to 8.49% at June 30, 2010. The Company's leverage ratio at September 30, 2010 declined to 10.09% from 10.48% at June 30, 2010. Substantially all of the Company's deferred tax assets have been disallowed for regulatory capital calculations. Regulatory capital ratios continue to remain above those required for the Company and Whitney National Bank to be considered well-capitalized institutions.
Conference Call and Additional Financial Information
Management will host a conference call today at 9:00 a.m. Central Time to review third quarter 2010 results. Analysts and investors may dial in and participate in the question/answer session. A live listen-only webcast of the call will be available under the Investor Relations section of our website at http://www.whitneybank.com. To participate in the Q&A portion of the call, dial (877) 354-4079 or (408) 427-3700.
An audio archive of the conference call will be available under the Investor Relations section of our website. A replay of the call will also be available through November 3, 2010 by dialing (800) 642-1687 or (706) 645-9291, passcode 15357845.
This earnings release, including additional financial tables and a slide presentation related to third quarter results, is posted in the Investor Relations section of the Company's website at .
Whitney Holding Corporation, through its banking subsidiary Whitney National Bank, serves the five-state Gulf Coast region stretching from Houston, Texas; across southern Louisiana and the coastal region of Mississippi; to central and south Alabama; the panhandle of Florida; and the Tampa Bay metropolitan area of Florida.
The Whitney Holding Corporation logo is available at
Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and we intend such forward-looking statements to be covered by the safe harbor provisions therein and are including this statement for purposes of invoking these safe-harbor provisions. Forward-looking statements provide projections of results of operations or of financial condition or state other forward-looking information, such as expectations about future conditions and descriptions of plans and strategies for the future. The forward-looking statements made in this release include, but may not be limited to, expectations regarding credit quality metrics in the loan portfolio and specific industry and geographic segments within the loan portfolio, future profitability, the impact of the oil spill in the Gulf on Whitney's loan portfolio, the results and benefits of the risk-rating project, the timing and strength of the economic recovery, the loss potential for newly classified credits compared to previously classified credits, the impact of new regulations, the overall capital strength of Whitney and its ability to dispose of problem assets and the timing or actual results of such disposal on Whitney's operations.
Whitney's ability to accurately project results or predict the effects of future plans or strategies is inherently limited. Although Whitney believes that the expectations reflected in its forward-looking statements are based on reasonable assumptions, 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 Whitney's forward-looking statements include, but are not limited to, those risk factors outlined in Whitney's public filings with the Securities and Exchange Commission, which are available at the SEC's internet site ( http://www.sec.gov ).
You are cautioned not to place undue reliance on these forward-looking statements. 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, except as required by law.
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CONTACT: Whitney Holding Corporation Thomas L. Callicutt, Jr., CFO Investor Relations Trisha Voltz Carlson 504/299-5208 tcarlson@whitneybank.com