Whitney Holding Corp. expands presence in Florida

New Orleans CityBusiness, Jun 21, 2004 by Holly Miller

While others eyed the growing Texas market, Whitney Holding Corp. set its sights on the Sunshine State.

The bank kicked off 2004 with back-to-back acquisitions in Florida. In March, Whitney bought Palm Harbor, Fla.-based Madison BancShares Inc., which has $200 million in assets and four locations in the Tampa Bay area. In April, Whitney paid $2 million for two Fort Walton Beach, Fla., branches of Panama City-based First National Bank Northwest Florida.

Whitney earned a record $98.5 million in 2003, up 3 percent from $95.3 million in 2002. Revenue was up 1 percent to $384.1 million from $380.4 million in 2002. Revenue was determined by adding net interest income and noninterest income.

Growth came in commercial lending, Whitney's bread and butter, said Thomas Callicutt, executive vice president and chief financial officer. The return on average loans rose 5 percent or $224 million over the previous year despite significant payoffs from customers taking advantage of historically low interest rates to refinance.

Credit quality improved in 2003 so the bank was able to reduce its loan losses. Whitney took $35 million from its reserve in 2003 and $2 million in first quarter 2004 to pay for bad loans.

Low interest rates took a slight toll on the bank's net interest margin, which dropped to 4.47 percent from 4.62 percent in 2002. It continued the decline to 4.4 percent at the end of the first quarter. But noninterest income benefited from increased mortgage originations and sales in 2003's low rate environment. As interest rates climb, Whitney's noninterest income will decrease but the bank will earn more in net interest on other loans, Callicutt said.

Over the long haul, it should balance itself out, he said. We're an asset bank, which means we tend to fare better when interest rates rise.

The bank's fourth-quarter earnings declined 5 percent from 2002 to 2003. Provision for loan losses was $500,000 in fourth quarter 2002 but there was no provision in fourth quarter 2003, Callicutt said.

We had more expenses in fourth quarter 2003 than in 2002, he said. Just because one quarter is lower than another quarter is not necessarily a big deal.

In 2004, first-quarter earnings were up 11 percent over first quarter 2003. First quarter earnings per diluted share were up 10 percent to 64 cents from 58 cents in first quarter 2003.

Assets were up 9 percent to nearly $7.9 billion from $7.2 billion at the end of first quarter 2003. Nonperforming assets dropped to $28 million, from $30.4 million in fourth quarter 2003 and $44.6 million in first quarter 2003. Deposits increased 7 percent to $6.3 billion from $5.9 billion in first quarter 2003.

In the past year, the bank's stock price has crept up steadily since a 52-week low of $31.45 on June 30, 2003. It hit a 52-week high of $44.63 on June 7.

Whitney is interested in further acquisitions in Houston, Tampa, Jacksonville, Fla., and Alabama, Callicutt said.

The primary efforts today are to beef up our presence in Houston and Tampa either through acquisitions or new branches, he said. Banks are sold - they're not necessarily bought. You can have targets but sometimes those don't happen. If we're not able to do it at the right price through acquisitions, we may decide to do it through opening new branches.