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March 29, 1996
Securities and Exchange Commission
450 Fifth St., N.W.
Judiciary Plaza
Washington, D.C. 20549-1004
Via Edgar Electronic Filing System
In Re: File Number 0-1026
Gentlemen:
Pursuant to regulations of the Securities and Exchange
Commission, submitted herewith for filing on behalf of Whitney Holding
Corporation (the "Company") is the Company's Report on Form 10-K for the period
ended December 31, 1995.
This filing is being effected by direct transmission to the
Commission's EDGAR System.
Sincerely,
/s/Edward B. Grimball
----------------------------
Edward B. Grimball
Executive Vice President &
Chief Financial Officer
(504) 586-7570
EBG/drm
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[ X ] Annual report pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1995
OR
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
-------------------------- ----------------------
Commission file number 0-1026
WHITNEY HOLDING CORPORATION
Incorporated in Louisiana I.R.S. Employer Identification
No. 72-6017893
228 St. Charles Avenue, New Orleans, Louisiana 70130
----------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (504) 586-7272
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of February 28, 1996
Approximately $410,551,821*
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
Common Stock, no par value, 14,895,830 shares outstanding as of
February 28, 1996.
Documents Incorporated by Reference
Definitive Proxy Statement dated March 15, 1996, Part III.
An Exhibit Index appears on page 47.
* For the purposes of this computation, shares owned by directors and executive
officers of the Registrant, even though all such persons may not be affiliates
as defined in SEC Rule 405, have been excluded.
Page
----
PART I
Item 1: Business 3
Item 2: Properties 3
Item 3: Legal Proceedings 4
Item 4: Submission of Matters to a Vote of Security Holders 4
Item 4a: Executive Officers of the Registrant 4
- --------------------------------------------------------------------------------
PART II
Item 5: Market for the Registrant's Common Stock and Related
Shareholder Matters 5
Item 6: Selected Financial Data 6
Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 8: Financial Statements and Supplementary Data 22
Item 9: Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 46
- --------------------------------------------------------------------------------
PART III
Item 10: Directors and Executive Officers of the Registrant 46
Item 11: Executive Compensation 46
Item 12: Security Ownership of Certain Beneficial Owners and
Management 46
Item 13: Certain Relationships and Related Transactions 46
- --------------------------------------------------------------------------------
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports
on Form 8-K 47
- --------------------------------------------------------------------------------
Signatures 49
Page 2 of 60
PART I
ITEM 1: BUSINESS
Whitney Holding Corporation (the "Company") is a Louisiana bank holding
company registered pursuant to the Bank Holding Company Act of 1956. The Company
began operations in 1962 as the parent of Whitney National Bank (the "Louisiana
Bank") which has been in continuous operation since 1883. In December, 1994, the
Company established the Whitney Bank of Alabama (the "Alabama Bank") and,
through this new banking subsidiary, acquired the Mobile area operations of The
Peoples Bank, Elba, Alabama on February 17, 1995. During 1995, the Company also
established the Whitney Community Development Corporation ("WCDC") which is
authorized to make equity and debt investments in corporations or projects
designed primarily to promote community welfare, including the economic
rehabilitation and development of low-income areas by providing housing,
services, or jobs for residents, or promoting small businesses that service
low-income areas. The initial capitalization of WCDC was $1,000,000. As of
December 31, 1995, WCDC had not begun any material operations.
The Company, through its banking subsidiaries, engages in commercial
and retail banking and in trust business, including the taking of deposits, the
making of secured and unsecured loans, the financing of commercial transactions,
the issuance of credit cards, the delivery of corporate, pension and personal
trust services, investment services and safe deposit rentals. The Louisiana Bank
is active as a correspondent for other banks. The Banks render specialized
services of different kinds in connection with all of the foregoing, and operate
forty-five offices in south Louisiana, seven offices in south Alabama, and a
foreign branch on Grand Cayman in the British West Indies.
There is significant competition within the financial services industry
in general as well as with respect to the particular financial services provided
by the Banks. Within their market areas, the Banks compete directly with major
banking institutions of comparable or larger size and resources as well as with
various other smaller banking organizations and local and national "non-bank"
competitors, including savings and loans, credit unions, mortgage companies,
personal and commercial finance companies, investment brokerage firms, and
registered investment companies.
In recent years there has been a significant consolidation within the
financial services industry, particularly with respect to the banking and
savings and loan segments of this industry. This consolidation has been driven
both by the large number of S&L and bank failures experienced during the crisis
of the late 1980s and early 1990s as well as by general competitive pressures.
All of the Banks' major direct banking competitors have been relatively active
in expansion through acquisition. In recent years, the Company has entered into
two acquisitions of banking operations involving approximately $200 million of
assets and completed a merger with a third bank having approximately $243
million of assets in early March 1996. The trend toward industry consolidation
is expected to continue in the near term.
All material funds of the Company are invested in the Banks. The Banks
have a large number of customer relationships which have been developed over a
period of many years and are not dependent upon any single customer or upon a
few customers. The loss of any single customer or a few customers would not have
a material adverse effect on the Banks or the Company. The Louisiana Bank has
customers in a number of foreign countries, but the portion of revenue derived
from these foreign customers is not a material portion of its overall revenues.
The Company and the Banks and their related operations are subject to
federal, state and local laws applicable to banks and bank holding companies and
to the regulations of the Board of Governors of the Federal Reserve System, the
Office of the Comptroller of Currency, the Federal Deposit Insurance Corporation
and the Alabama State Banking Department.
ITEM 2: PROPERTIES
The Company owns no real estate in its own name. The Company's and the
Louisiana Bank's executive offices are located in downtown New Orleans in the
Bank's main office facilities, which it owns. A portion of these facilities, as
well as of certain other facilities in Louisiana, are available for lease to
third parties, although such leasing activity is not material to the Company's
overall operations. The Louisiana and Alabama Banks own approximately
three-quarters of the total number of branch banking facilities currently in
operation. The remaining branch facilities in Louisiana and Alabama are subject
to leases, each of which management considers to be reasonable and appropriate
to the use of that location. All facilities, whether owned or leased, are being
maintained in a manner so as to ensure that they continue to be suitable for
their intended banking operations.
In 1996, the Company plans to open or begin construction on thirteen
additional branch locations throughout the Banks' market areas and to complete
the construction of a new operations center for the Louisiana Bank and a main
office facility for the
Page 3 of 60
Alabama Bank. All of these facilities will be owned by the Banks.
The Banks hold a variety of property interests acquired through the
years in settlement of loans. Reference is made to Note 9 to the financial
statements included in Item 8 for further information regarding such property
interests as of December 31, 1995.
ITEM 3: LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than routine
litigation incidental to the business, to which the Company or its subsidiaries
is a party or to which any of their property is subject.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4A: EXECUTIVE OFFICERS OF THE REGISTRANT
WILLIAM L. MARKS, 52, Chairman of the Board and Chief Executive Officer
of the Louisiana Bank and the Company since February 28, 1990. Former Senior
Executive Vice President and Regional Executive of AmSouth Bank NA,
headquartered in Birmingham, Alabama, responsible for a division with $1 billion
in assets and 702 employees.
R. KING MILLING, 55, Director since 1979, and Director and President of
the Louisiana Bank and the Company since December, 1984.
G. BLAIR FERGUSON, 52, Executive Vice President of the Louisiana Bank
and the Company since July, 1993. Former Executive Vice President and Regional
Director of First City, Dallas, Texas.
EDWARD B. GRIMBALL, 51, Vice President and Chief Financial Officer from
September, 1990 to October, 1991, and Executive Vice President and Chief
Financial Officer of the Louisiana Bank and the Company since October, 1991.
Former Senior Vice President, Comptroller and Secretary of Bank South Corp., a
$5 billion multi-bank holding company headquartered in Atlanta, Georgia.
KENNETH A. LAWDER, JR., 55, Executive Vice President of the Louisiana
Bank and the Company since December, 1991. Former Senior Vice President,
Wachovia Bank NA., a $17 billion bank headquartered in Winston-Salem, North
Carolina.
JOSEPH W. MAY, 50, Executive Vice President of the Louisiana Bank and
the Company since December, 1993. Former Executive Vice President and Chief
Credit Policy Officer, Comerica, Inc., a $27 billion bank holding company
headquartered in Detroit, Michigan.
JOHN C. HOPE, III, 47, Chairman of the Board and Chief Executive
Officer of Whitney Bank of Alabama, and Executive Vice President of the Company
since October, 1994. Former Executive Vice President and Manager, Southern Area
of AmSouth Bank of Alabama.
ROBERT C. BAIRD, JR., 45, Executive Vice President of the Louisiana
Bank and the Company since July, 1995. Former Chairman of the Board, Chief
Executive Officer and President of Union Bank and Trust, a $500 million bank
headquartered in Montgomery, Alabama.
Page 4 of 60
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
a) The Company's stock price is reported on the National
Association of Securities Dealers Automated Quotation (NASDAQ)
system under the symbol WTNY. The following table shows the
range of closing prices of the Company's stock for each
calendar quarter of 1995 and 1994 as reported on the NASDAQ
National Market System.
1995 1994
---------------- ---------------
1st Quarter 22 - 25 3/4 21 1/2 - 24
2nd Quarter 24 - 27 3/8 21 3/4 - 27 1/4
3rd Quarter 26 3/4 - 34 25 3/4 - 28 1/2
4th Quarter 29 3/4 - 31 1/2 21 - 27
b) The approximate number of shareholders of record of the
Company, as of February 28, 1996, is as follows:
Title of Class Shareholders of Record
-------------------------- ----------------------
Common Stock, no par value 2,724
c) During 1995 and 1994, the Company declared dividends as
follows:
1995 1994
------------ ------------
1st Quarter $ 0.20 $ 0.15
2nd Quarter 0.20 0.15
3rd Quarter 0.20 0.17
4th Quarter 0.22 0.17
Page 5 of 60
ITEM 6: SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991
-----------------------------------------------------------
BALANCE SHEET DATA (dollars in thousands, except per-share data, unaudited)
AT YEAR-END:
Total assets.................... $3,151,646 $2,912,657 $3,002,540 $2,953,032 $2,858,204
Total investment in securities.. 1,368,041 1,532,978 1,633,746 1,474,746 1,139,275
Total loans..................... 1,439,424 1,060,167 975,728 1,046,723 1,266,992
Total earning assets............ 2,821,115 2,610,745 2,719,474 2,649,914 2,543,392
Total deposits.................. 2,561,358 2,411,063 2,505,303 2,541,136 2,440,913
AVERAGE BALANCE:
Total assets.................... $2,955,604 $2,956,032 $2,888,335 $2,843,833 $2,854,924
Total investment in securities.. 1,430,018 1,622,971 1,547,701 1,281,713 1,040,451
Total loans..................... 1,187,501 979,254 952,238 1,124,993 1,356,995
Total earning assets............ 2,663,534 2,667,051 2,604,901 2,550,935 2,553,172
Total deposits.................. 2,419,211 2,452,208 2,415,590 2,399,412 2,383,941
INCOME DATA
Net interest income.................. $129,490 $123,894 $120,514 $112,430 $99,200
Provision for possible loan losses
Expense of providing loss reserves - - - (3,350) (45,387)
Recovery of charged-off loan...... - 6,139 - - -
Loss reserve reduction............ 10,000 20,000 60,000 - -
Gains on sale of securities.......... - 46 - 5,429 18,376
Non-interest income.................. 31,264 32,307 30,991 27,215 26,923
Non-interest expense................. (111,133) (104,258) (100,093) (112,623) (105,803)
Income (Loss) before income tax and
effect of accounting changes........ $59,621 $78,128 $111,412 $29,101 ($6,691)
Income tax expense (benefit)......... 18,684 25,290 35,645 8,899 (2,007)
Income (Loss) before effect of
accounting changes.................. $40,937 $52,838 $75,767 $20,202 ($4,684)
Cumulative effect of accounting
changes, net........................ - - 634 - -
Net income (loss).................... $40,937 $52,838 $76,401 $20,202 ($4,684)
COMMON STOCK DATA
Earnings (Loss) per share............ $2.77 $3.63 $5.30 $1.41 ($0.33)
Dividends per share.................. $0.82 $0.64 $0.43 $0.07 -
Book value per share, end of period.. $22.74 $20.36 $17.93 $12.88 $11.57
Weighted average number of shares
outstanding........................ 14,787,171 14,557,008 14,425,007 14,368,052 14,347,071
SELECTED RATIOS
Return on average assets ............ 1.39% 1.79% 2.65% 0.71% -0.16%
Return on average shareholders'
equity.............................. 12.97% 19.13% 34.78% 11.52% -2.79%
Net interest margin,
taxable-equivalent.................. 5.00% 4.79% 4.75% 4.52% 3.99%
Tier 1 risk-based capital ratio...... 17.28% 20.70% 18.92% 13.59% 10.48%
Total risk-based capital ratio....... 18.54% 21.97% 20.19% 14.91% 11.82%
Tier 1 leverage capital ratio........ 10.01% 9.84% 8.23% 6.02% 5.29%
Shareholders' equity to total assets. 10.73% 10.22% 8.63% 6.28% 5.81%
Note: All share and per-share figures give effect to the three-for-two stock splits effective
February 22, 1993 and November 29, 1993.
Page 6 of 60
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
Whitney Holding Corporation earned $40.9 million in 1995, or $2.77 per
share. These results include the effects of a $10.0 million reduction in the
level of the reserve for possible loan losses, which contributed $6.5 million or
$0.44 per share to earnings on an after-tax basis. For 1994, the Company earned
$52.8 million or $3.63 per share, including an after-tax contribution to
earnings of $17.0 million or $1.17 per share resulting from a total of $26.1
million in loan loss reserve reductions during that period.
Net interest income increased $5.6 million or 4.5% between 1994 and
1995 and the taxable-equivalent net interest margin rose to 5.00% in 1995 from
4.79% in 1994. Non-interest income decreased $1.1 million or 3.4% from 1994 to
1995 as a direct result of a $2.3 million decrease in gains recognized on sales
of foreclosed real estate collateral. Virtually all other income categories
showed improvement in 1995 over the prior year. Non-interest expense was $6.9
million or 6.6% higher in 1995 compared to 1994 largely as a result of
acquisitions.
Non-performing assets continued their steady decrease of the past
several years in 1995. At December 31, 1995, non-performing assets were $14.0
million, down $8.1 million or 37% from $22.1 million at December 31, 1994. The
reserve for possible loan losses was $37.0 million on December 31, 1995, an
amount which represented 402% of non-performing loans and 2.6% of total loans.
At year end 1994, the reserve coverage was 224% of non-performing loans and 3.2%
of total loans on that date.
For 1995, average earning assets were $2.66 billion, virtually
unchanged from $2.67 billion in 1994. During 1995, however, the mix of earning
assets shifted in favor of loans and away from investments in securities.
Average loans outstanding were $1.19 billion in 1995 or 44.6% of total earning
assets compared to $979 million or 36.7% of the total in 1994. This loan growth
of $208 million or 21.3% is attributable to the Alabama acquisition completed in
the first quarter of 1995, to strengthened demand for both commercial and
consumer credit in the Company's market areas, and to more aggressive marketing
of the Banks' loan products. At December 31, 1995, total loans outstanding were
$1.44 billion, an increase of $379 million or 35.8% over the $1.06 billion total
at the end of 1994.
Average total deposits decreased slightly in 1995 to $2.42 billion from
$2.45 billion in 1994, despite the impact of the Alabama acquisition in early
1995. The decrease in average deposits reflects the lingering impact of the rise
in market interest rates during 1994 which fostered disintermediation of some
deposit funds as depositors sought higher yielding alternative investment
instruments. With the decline in market rates from the end of 1994 through the
end of 1995, total deposits have increased to $2.56 billion at December 31, 1995
compared to $2.41 billion at December 31, 1994.
The growth in average loans outstanding in 1995 not related to
acquisitions and the average net deposit outflows relative to 1994 were funded
primarily from maturities of investment securities. The Company's average
investment in securities totaled $1.43 billion in 1995, a decrease of $193
million or 11.9% from $1.62 billion in 1994. At year end 1995, the total
investment in securities was $1.37 billion, a decrease of $165 million or 10.8%
from year end 1994.
In early March, 1996, the Company completed a merger with First
Citizens Bancstock, Inc. ("FCB"), the parent of The First National Bank in St.
Mary Parish ("FNB"). FNB, which will merge into Whitney National Bank (the
"Louisiana Bank"), operates eleven banking offices in south Louisiana with
branches in St. Mary, East Baton Rouge and Iberia Parishes and a loan production
office in Orleans Parish. FNB has total assets of approximately $243 million,
$147 million in loans, total deposits of $214 million, and shareholders' equity
of $27 million. The merger will be accounted for as a pooling of interests. FCB
shareholders received approximately 2.03 million shares of Whitney Holding
Corporation common stock in connection with this transaction and holders of FCB
stock options received options to buy approximately 192,000 shares of the
Company's common stock.
On February 17, 1995, Whitney Bank of Alabama (the "Alabama Bank"),
then a newly formed state-chartered banking subsidiary of the Company, purchased
the assets and assumed the deposit liabilities of the five Mobile branch offices
of The Peoples Bank, Elba, Alabama. The fair value of the tangible assets
acquired totaled approximately $90 million, including $47 million in loans and
$34 million in investment securities and federal funds sold. The Alabama Bank
assumed non-interest-bearing demand deposits of $14 million and interest-bearing
transaction, savings and time deposits totaling $76 million. The purchase price
was approximately $12 million. Operating results from the date of acquisition
are included in the accompanying consolidated statements of operations for 1995.
On March 31, 1994, the Company and the Louisiana Bank purchased
substantially all of the assets and assumed the deposits and certain other
liabilities of Baton Rouge Bank and Trust Company. Included in the tangible
assets acquired, whose fair value
Page 7 of 60
totaled approximately $118 million, were cash and cash items of $41 million,
investment securities and federal funds sold of $13 million, and $59 million in
loans, as well as six banking offices in the Baton Rouge area. The deposits
assumed included approximately $24 million in non-interest-bearing demand
deposits and $94 million in interest-bearing transaction, savings and time
deposit accounts. As part of the acquisition price, which totaled approximately
$9 million, Whitney Holding Corporation issued 90,909 shares of its common stock
with a value of $2 million. The operating results from this acquisition were
reflected in the Company's consolidated statements of operations beginning with
the second quarter of 1994.
In January, 1996, the Company announced negotiations to enter into a
definitive merger agreement with The New Iberia Bancorp, parent of The New
Iberia Bank which has assets of approximately $260 million and branches in
Iberia, Lafayette and Vermilion Parishes in southern Louisiana. Completion of
the negotiations and initiation of a plan of merger are still pending.
The Company declared quarterly dividends in 1995 totalling $0.82 per
share compared with $0.64 per share in 1994, an increase of $0.18 per share or
28%.
AVERAGE BALANCE SHEETS
(in thousands)
AVERAGE ASSETS 1995 1994 1993
-------------------------------------
Cash and due from depository institutions $ 177,593 $ 86,362 $ 186,358
Interest bearing deposits in other
financial institutions - - 849
U.S. Treasury and agency securities 1,141,305 1,306,461 1,223,466
Mortgage-backed securities 146,793 157,442 188,424
State and municipal securities 122,916 121,481 98,728
Corporate bonds and other securities 19,004 37,587 36,234
Federal funds sold 46,015 64,826 104,962
Loans, net of reserve for possible loan
losses of $37,467 in 1995, $43,046 in
1994 and $72,866 in 1993 1,150,034 936,208 879,372
Bank premises and equipment, net 68,061 62,400 61,868
All other assets 83,883 83,265 108,074
-------------------------------------
Total assets $ 2,955,604 $ 2,956,032 $ 2,888,335
=====================================
AVERAGE LIABILITIES
Deposits:
Non-interest-bearing demand deposits $ 776,923 $ 759,549 $ 732,734
Savings deposits, NOW accounts and
money market accounts deposits 1,008,610 1,122,636 1,157,859
Time deposits 633,678 570,023 524,997
-------------------------------------
Total deposits $ 2,419,211 $ 2,452,208 $ 2,415,590
Federal funds purchased and
repurchase agreements 194,103 200,063 226,878
All other liabilities 26,594 27,542 26,205
-------------------------------------
Total liabilities $ 2,639,908 $ 2,679,813 $ 2,668,673
AVERAGE SHAREHOLDERS' EQUITY
Total capital accounts 315,696 276,219 219,662
-------------------------------------
Total liabilities and
shareholders' equity $ 2,955,604 $ 2,956,032 $ 2,888,335
=====================================
Page 8 of 60
FINANCIAL CONDITION
LOANS
In 1995, the Company's average loans outstanding increased $208 million
or 21.3% as compared to 1994. Average loans outstanding of $1.32 billion in the
fourth quarter of 1995 were $305 million or 29.9% above the level in 1994's
fourth quarter. The Mobile acquisition in the first quarter of 1995, the
improved economic conditions in the Company's market area, which is primarily
southern Louisiana, southern Mississippi and southern Alabama, together with a
focused effort to market the Banks' retail and commercial loan products, all
contributed to the substantial loan growth in 1995.
All categories of loans experienced solid growth from year end 1994 to
year end 1995. Commercial loans, other than those secured by real estate,
increased $165 million or 28.7% in 1995, while loans secured by commercial and
other non-residential real estate collateral, increased $117 million or 40%.
Loans to entities involved in manufacturing and wholesaling exhibited the
strongest growth, although the overall increase was well distributed over
diverse industries. Retail mortgage loans increased $82 million or 83%, in large
part as a result of the successful promotion of new retail loan products. The
$15 million or 15.8% growth in loans to individuals, which include various
consumer installment and credit line loan products, was also largely the result
of enhanced promotional efforts of new and existing products.
LOAN PORTFOLIO BALANCES AT DECEMBER 31
(in thousands)
1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------
Commercial, financial,
and agricultural loans $ 740,763 $ 575,794 $ 569,812 $ 574,721 $ 745,159
Real estate loans -
commercial and other 409,341 292,018 260,307 292,752 282,403
Real estate loans - retail
mortgage 180,199 98,079 71,363 88,590 118,878
Loans to individuals 109,121 94,276 74,246 90,660 120,552
-----------------------------------------------------------------------------------
Total loans $ 1,439,424 $ 1,060,167 $ 975,728 $ 1,046,723 $ 1,266,992
===================================================================================
DEPOSITS AND SHORT-TERM BORROWINGS
The Company's average deposits decreased $33 million or 1.4% to $2.42
billion in 1995 from $2.45 billion in 1994.
As shown in the table of average balance sheets, non-interest-bearing
demand deposits increased $17 million or 2.3% in 1995 as compared to 1994. This
table also shows that average time deposits, which includes both core deposits
and certificates of deposit of $100,000 and over, increased $64 million or 11.2%
between 1994 and 1995. The growth within the time deposit category came both
from core deposits of under $100,000 which increased $37 million and from a $26
million increase in certificates of deposit of $100,000 and over. The growth in
the non-interest demand and time deposits categories in 1995 exceeded the amount
attributable to the Mobile acquisition in each category.
Average savings, NOW and money market account deposits decreased $114
million or 10.2% between 1994 and 1995. This decrease reflects the continuing
impact of the rise in market rates during 1994 which fostered disintermediation
of some deposit funds as depositors sought higher yielding alternative
investment instruments. With the decline in market rates through the end of
1995, there has been some moderation in the level of the year-to-year decrease
in this deposit category.
The Company's short-term borrowings consist of purchases of federal
funds and sales of securities under repurchase agreements. Such borrowings are
both a source of funding for certain short-term lending facilities and part of
the Company's services to correspondent banks and other customers. The Company's
average short-term borrowing position, net of federal funds sold, was
approximately $148 million in 1995 and $135 million in 1994.
Page 9 of 60
INVESTMENT IN SECURITIES
- --------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
Book Value at December 31 1995 1994 1993
------------------------------------------------------------------
U.S. Treasury securities $ 802,108 $ 994,230 $ 934,134
Securities of U.S. government agencies 250,198 246,027 366,938
Mortgage-backed securities:
Held to maturity 56,707 - -
Available for sale 127,498 137,335 182,030
State and municipal securities 127,996 126,537 112,324
Corporate bonds - 25,160 34,534
Equity securities 3,534 3,689 3,786
------------------------------------------------------------------
Total $ 1,368,041 1,532,978 $ 1,633,746
====================================================================
Distribution of Remaining Over One Over Five
Maturity and Yield by One Year Through Through Over
Range and Less Five Years Ten Years Ten Years Total
at December 31, 1995 Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
------------------------------------------------------------------------------------
Securities held to maturity:
U.S. Treasury securities $231,623 5.0 % $570,485 5.7 % $ - - % $ - - % $802,108 5.5%
Mortgage-backed securities(2) 891 8.1 17,122 6.7 $ 38,694 6.3 - - 56,707 6.4
Securities of U.S. government
agencies 91,345 5.2 158,853 6.6 - - - - 250,198 6.1
State and municipal
securities(1) 10,179 7.2 51,815 7.9 55,691 8.5 10,311 8.7 127,996 8.2
Equity securities(3) - - - - - - 3,534 - 3,534 -
Securities available for sale:(4)
Mortgage-backed securities(2) - - 118,799 6.5 8,699 5.7 - - 127,498 6.4
(1) Tax exempt yields are expressed on a fully taxable equivalent basis.
(2) Distributed by contractual maturity without regard to repayment
schedules or projected prepayments.
(3) These securities have no stated maturities or guaranteed dividends.
(4) These securities are classified as available for sale before maturity.
The actual timing of any such sales, however, is not determinable at
year end.
INVESTMENT IN SECURITIES
At December 31, 1995, the Company's total investment in securities was
$1.37 billion, a decrease of $165 million or 10.8% from the December 31, 1994
total of $1.53 billion.
The average total investment portfolio outstanding decreased $193
million or 11.9% between 1994 and 1995. Proceeds from maturing investments,
particularly U.S. Treasury securities, were used to fund loan growth in 1995.
The mix of average investments remained relatively stable, with U.S. Treasury
and government agency issues, excluding mortgage-backed issues, representing
approximately 80% of the totals for both 1995 and 1994.
The weighted average maturity of the overall portfolio of securities
was 27 months at year end 1995 as compared to 28 months at year end 1994. The
weighted average taxable-equivalent portfolio yield was 5.99% at December 31,
1995, an increase of 18 basis points from 5.81% at December 31, 1994.
Securities classified as available for sale constituted approximately
9% of the total investment portfolio at year end 1995 and 1994. These
securities, all of which are mortgage-backed securities, are reported at their
estimated fair values in the consolidated statements of condition. The
unrealized gain on available for sale securities of $1.3 million at year end
1995 and the unrealized loss of $7.9 million at 1994's year end were reported,
net of tax, as a separate component of shareholders' equity for each period. The
remaining portfolio securities are classified as held to maturity and are
reported at amortized cost. The Company maintains no trading portfolio.
The Company does not maintain any investment or participation in
financial instruments or agreements whose value is linked to or derived from
changes in the value of some underlying asset or index. Such instruments or
agreements include futures, forward contracts, option contracts, interest-rate
swap agreements, and other financial arrangements with similar characteristics,
and are commonly referred to as derivatives.
Page 10 of 60
ASSET QUALITY
Asset quality has exhibited a trend of steady improvement over the past
four years. During 1995, the Company continued to be successful in its efforts
to reduce all categories of its non-performing assets through the full
rehabilitation of nonaccruing loans, the workout of troubled credits, or the
sale of repossessed loan collateral. Non-performing assets totalled $14.0
million at December 31, 1995, a decrease of $8.1 million or 37% from $22.1
million at year end 1994.
In 1995, the Company identified $3.1 million of loans to be charged off
as uncollectible against the reserve for possible loan losses, a decrease of 14%
from the $3.6 million of charge-offs in 1994. At the same time, the Company was
successful in recovering $13.9 million of previously charged-off loans in 1995
compared to $19.7 million in 1994.
The reserve for possible loan losses is maintained at a level believed
by management to be adequate to absorb potential losses in the portfolio. With
the significant recoveries in 1995 and 1994 and the improvement in overall asset
quality, the Company was able to return $10 million of the reserve for possible
loan losses to income in 1995 and $26.1 million in 1994. After the reduction in
1995, the reserve for possible loan losses was $37.0 million at December 31,
1995, or a 402% coverage of total non-performing loans and 2.6% of total loans.
During 1995, the Company disposed of OREO properties with a carrying
value at the time of sale totalling approximately $2.3 million. The value of
properties acquired in settlement of loans during the year was $1.0 million.
NON-PERFORMING ASSETS AT DECEMBER 31
- --------------------------------------------------------------------------------------------------------------
(in thousands) 1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------
Loans accounted for on a
nonaccrual basis $ 7,574 $ 15,396 $ 33,631 $ 70,640 $ 103,763
Restructured loans 1,622 - - - 3,017
-----------------------------------------------------------------------------------
Total non-performing
loans $ 9,196 $ 15,396 $ 33,631 $ 70,640 $ 106,780
Other real estate
owned 4,799 6,685 16,126 40,142 68,444
Other foreclosed
assets - 3 174 420 364
-----------------------------------------------------------------------------------
Total non-performing
assets $ 13,995 $ 22,084 $ 49,931 $ 111,202 $ 175,588
===================================================================================
Loans 90 days past due
still accruing $ 280 $ 201 $ 876 $ 1,441 $ 1,004
===================================================================================
Non-performing assets as a
percentage of:
Total assets 0.4% 0.8% 1.7% 3.8% 6.1%
Total loans and foreclosed
assets 1.0% 2.1% 5.0% 10.2% 13.1%
The Company has several property interests which were acquired through
routine banking transactions generally prior to 1933 and which are recorded in
its financial records at a nominal value. Management continually investigates
ways to maximize the return on these assets. There were no significant
dispositions of or income from these property interests in 1995, 1994 or 1993.
Future dispositions may result in the recognition of substantial gains.
The Company has not extended any credit in connection with what would
be defined under regulatory guidelines as highly leveraged transactions, nor has
it acquired any investment securities arising from such transactions. The
Company's foreign lending and investing activities are currently immaterial.
Note 4 to the consolidated financial statements discusses credit concentrations
in the loan portfolio.
Page 11 of 60
SUMMARY OF LOAN LOSS EXPERIENCE
- --------------------------------------------------------------------------------------------------------------
(dollars in thousands)
1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------
Reserve for possible loan
losses at beginning of
period $ 34,425 $ 44,485 $ 98,558 $ 107,246 $ 90,845
Reserves provided upon
acquisitions 1,772 - - - -
Loans charged off during
period:
Commercial, financial,
and agricultural loans $ 2,174 $ 1,833 $ 4,560 $ 12,651 $ 18,263
Real estate loans 89 358 620 4,742 8,819
Loans to individuals 810 1,383 1,252 3,996 7,909
-----------------------------------------------------------------------------------
Total $ 3,073 $ 3,574 $ 6,432 $ 21,389 $ 34,991
-----------------------------------------------------------------------------------
Recoveries of loans
previously charged off:
Commercial, financial,
and agricultural loans $ 4,706 $ 4,706 $ 7,156 $ 4,281 $ 2,265
Real estate loans 6,846 11,918 3,754 2,156 1,026
Loans to individuals 2,345 3,029 1,449 2,914 2,714
-----------------------------------------------------------------------------------
Total $ 13,897 $ 19,653 $ 12,359 $ 9,351 $ 6,005
-----------------------------------------------------------------------------------
Net loans recovered
(charged off)
during period $ 10,824 $ 16,079 $ 5,927 $ (12,038) $ (28,986)
Addition to (reduction of)
reserve for possible loan
losses charged (credited)
to operations (10,000) (26,139) (60,000) 3,350 45,387
-----------------------------------------------------------------------------------
Reserve for possible loan
losses at end of period $ 37,021 $ 34,425 $ 44,485 $ 98,558 $ 107,246
===================================================================================
Reserve as a percentage of:
Total non-performing
loans 402% 224% 132% 140% 100%
Total loans 2.6% 3.3% 4.6% 9.4% 8.5%
Ratio of net charge-off
(recoveries) to average
loans outstanding (0.9%) (1.6%) (0.6)% 1.1% 2.6%
ALLOCATION OF THE RESERVE FOR POSSIBLE LOAN LOSSES
- --------------------------------------------------------------------------------------------------------------
(dollars in thousands)
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------ ------------------------
Balance at year end AMOUNT PERCENTAGE AMOUNT PERCENTAGE
applicable to - ------------------------ ------------------------
Commercial, financial and
agricultural loans $ 16,046 43.3% $ 16,180 47.0%
Real estate loans -
commercial and other 8,809 23.8 9,295 27.0
Real estate loans -
retail mortgage 4,090 11.1 3,201 9.3
Loans to individuals 2,517 6.8 3,064 8.9
Unallocated 5,559 15.0 2,685 7.8
------------------------ ------------------------
$ 37,021 100.0% $ 34,425 100.0%
======================== ========================
Page 12 of 60
CAPITAL ADEQUACY
The Company's risk-based regulatory capital ratios declined moderately
between December 31, 1994 and December 31, 1995. This decline is attributable
mainly to the acquisition of intangible assets as part of the purchase of the
Mobile, Alabama banking operations in February, 1995. Intangible assets
generally must be deducted from both regulatory capital and risk-weighted assets
before calculating regulatory capital ratios. Also contributing to this decrease
was the shift in the asset mix from investments to loans, because loans are
generally assigned a risk- weighting higher than investment securities in the
capital ratio calculations.
The Company's regulatory capital ratios are shown above compared to the
minimums that are currently required to be eligible for regulatory
classification as a "well-capitalized" institution. The regulatory capital
ratios for the Banks were also in excess of minimum requirements at December 31,
1995.
Regulatory agencies will assess an institution's exposure to interest
rate risk as part of their overall procedures performed to evaluate an
institution's capital adequacy. These agencies have also proposed rules to
incorporate a measure of interest rate risk into an institution's required level
of regulatory capital. Management believes that implementation of these
procedures and proposed rules will not have a significant impact on the
Company's or the Banks' regulatory capital requirements.
REGULATORY CAPITAL RATIOS
- --------------------------------------------------------------------------------
Required for
December 31, well-capitalized
1995 1994 institution
-----------------------------------------------------
Tier 1 risk-based
capital ratio 17.28% 20.70% 6.00%
Total risk-based
capital ratio 18.54% 21.97% 10.00%
Tier 1 leverage
capital ratio 10.01% 9.84% 5.00%
Page 13 of 60
RESULTS OF OPERATIONS
NET INTEREST INCOME
Taxable-equivalent net interest income increased $5.7 million or 4.4%
in 1995 as compared to 1994, as the net interest margin rose to 5.00% from
4.79%. A combination of factors contributed to this increase, the components of
which are detailed in the following tables analyzing changes in interest income
and expense.
Taxable-equivalent loan interest income increased $27.8 million or
33.2% in 1995 as compared to 1994. Approximately 70% of this increase was driven
by the growth in average loans outstanding during 1995, with the remaining
portion driven by the rise in the effective yield of the Company's loan
portfolio. Market interest rates generally rose throughout 1994 and then
moderated during 1995, and weighted-average bank prime rates were approximately
1.5 percentage points higher in 1995 compared to 1994. The effective yield on
the Company's loan portfolio, approximately 40% of which reprices with changes
in prime, increased 0.84 of a percentage point over this same period.
In 1995, taxable-equivalent interest income on investment securities
decreased $9.4 million or 10.1% from the previous year. This decrease is
consistent with the reduction in the average investment in securities
outstanding between 1994 and 1995 of $193 million. Because of its maturity
structure, the effective yield on the Company's investment securities portfolio
is not as immediately responsive to rising or falling market rates as are its
loan yields. The effective portfolio yield was 5.85% in 1995 or an increase of
10 basis points over the effective yield of 5.75% in 1994.
The net increase in total taxable-equivalent interest income between
1994 and 1995 was $18.5 million or 10.3%. The overall effective earning-asset
yield in 1995 was 7.43%, an increase of 70 basis points from 6.73% in 1994.
Interest expense increased approximately $12.8 million or 24.7% in 1995
as compared to 1994. The increase in interest expense came despite a $56.3
million decrease in average interest-bearing liabilities outstanding between
these periods. The increase reflects the impact of rising rates during 1994, the
rate structures of the markets in which the Company has made recent
acquisitions, and a shift in the deposit mix toward time deposits, a shift which
is also partly attributable to recent acquisitions. The overall cost of funds
rate on interest-bearing liabilities was 3.52% in 1995 as compared to 2.74% in
1994, an increase of 78 basis points.
OTHER INCOME AND EXPENSE
Non-interest income, adjusted to exclude securities gains and net gains
from OREO sales, increased $1.3 million or 4.4% to $30.3 million in 1995 from
$29.0 million in 1994. This followed an increase of $1.7 million or 6.1% from
1993 to 1994.
Income from service charges on deposits accounts, which accounted for
more than half of adjusted non-interest income in both 1995 and 1994, decreased
sightly, largely as a result of increases in the earnings credit rate applied to
business account balances that accompanied the generally higher average interest
rates experienced in 1995. The decrease in business account charges was partly
offset by an increase in personal account service charge income which was
largely attributable to the addition of the Alabama operations in 1995.
Fee income from credit card related operations increased 10.5% in 1995
compared to 1994, while income from services which support the international
activities of the Company's customers increased 8.9%. These increases reflect
both economic conditions as well as the successful marketing of existing and new
banking products and services. Increased fees from trust investment management
services, reflecting in part the strong performance of the financial markets in
1995, supported an overall increase of 22.3% in trust services income over 1994.
The loss of several correspondent bank relationships to industry consolidation
and the moderation of market interest rates in 1995 both led to a lessened
demand for the services of the Company's investment department and income from
these services decreased 17.3% from 1994's level.
Page 14 of 60
ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
YIELDS ON AVERAGE EARNING ASSETS AND RATES ON AVERAGE INTEREST-BEARING LIABILITIES
- --------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
1995 1994 1993
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------------------------
ASSETS
Loans (tax equivalent)(1)(2).. $1,187,501 $111,462 9.39 % $ 979,254 $ 83,711 8.55 % $ 952,238 $ 74,846 7.86 %
U.S. Treasury securities...... $ 926,686 $ 50,532 5.45 % $1,007,913 $ 54,312 5.39 % $ 884,417 $ 51,463 5.82 %
U.S. government agency
securities.................. 214,619 12,575 5.86 % 298,548 16,500 5.53 % 339,049 19,570 5.77 %
Mortgage-backed securities(3). 146,793 9,600 6.46 % 157,442 10,197 6.43 % 188,424 12,635 6.71 %
State and municipal securities
(tax equivalent)(1)......... 122,916 10,066 8.19 % 121,481 9,934 8.18 % 98,728 8,603 8.71 %
Corporate bonds and other
securities.................. 19,004 1,039 5.47 % 37,587 2,309 6.14 % 36,234 2,501 6.90 %
----------------------------------------------------------------------------------------
Total investment in
securities................ $1,430,018 $ 83,812 5.85 % $1,622,971 $ 93,252 5.75 % $1,546,852 $ 94,772 6.13 %
----------------------------------------------------------------------------------------
Federal funds sold............ 46,015 2,712 5.89 % 64,826 2,550 3.93 % 104,962 3,145 3.00 %
Interest-bearing deposits..... - - - - - - 849 26 3.06 %
----------------------------------------------------------------------------------------
Total interest-earning
assets.................... $2,663,534 $197,986 7.43 % $2,667,051 $179,513 6.73 % $2,604,901 $172,789 6.63 %
----------------------------------------------------------------------------------------
Cash and due from financial
institutions................ 177,593 186,362 186,358
Bank premises and
equipment,net............... 68,061 62,400 61,868
Other real estate owned, net.. 6,103 10,681 27,753
Other assets........... 77,780 72,584 80,321
Reserve for possible losses... (37,467) (43,046) (72,866)
------------ ----------- -----------
Total assets................ $2,955,604 $2,956,032 $2,888,335
============ =========== ===========
LIABILITIES
Savings account deposits...... $ 467,754 $ 12,557 2.68 % $ 541,782 $ 14,611 2.70 % $ 552,420 $ 15,194 2.75 %
NOW account and MMDA deposits. 540,856 10,365 1.92 % 580,854 10,459 1.80 % 605,439 12,010 1.98 %
Time deposits................. 633,678 31,718 5.01 % 570,023 19,965 3.50 % 524,997 15,552 2.96 %
----------------------------------------------------------------------------------------
Total interest-bearing
deposits.................. $1,642,288 $ 54,640 3.33 % $1,692,659 $ 45,035 2.66 % $1,682,856 $ 42,756 2.54 %
----------------------------------------------------------------------------------------
Federal funds purchased and
repurchase agreements....... 194,103 10,022 5.16 % 200,063 6,832 3.41 % 226,878 6,260 2.76 %
Total interest-bearing
liabilities............... $1,836,391 $ 64,662 3.52 % $1,892,722 $ 51,867 2.74 % $1,909,734 $ 49,016 2.57 %
Demand deposits............... 776,923 759,549 732,734
Other liabilities............. 26,594 27,542 26,205
Shareholders' equity.......... 315,696 276,219 219,662
------------ ----------- -----------
Total liabilities and
shareholders' equity...... $2,955,604 $2,956,032 $2,888,335
============ =========== ===========
Net interest income/margin
(tax equivalent)(1)....... $133,324 5.00 % $127,646 4.79 % $123,773 4.75 %
========= ====== ========= ====== ========= =======
(1) Tax equivalent amounts are calculated using a marginal federal income tax rate of 35% for 1995 and 1994 and 1993.
(2) Average balance includes nonaccruing loans of $12,077, $23,313, and $48,403, respectively, in 1995, 1994 and 1993.
(3) Average balance includes unrealized loss on securities available for sale of $1,848 and $1,257, respectively, in 1995 and
1994, which is excluded in calculating the yield.
Page 15 of 60
ANALYSIS OFCHANGES IN INTEREST INCOME AND INTEREST EXPENSE
VOLUME AND YIELD/RATE VARIANCE
- -----------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
1995 Compared to 1994 1994 Compared to 1993
-------------------------------------------------------------------------------
Increase (Decrease) Due to Increase (Decrease) Due to
Yield/ Yield/
Volume Rate Total Volume Rate Total
-------------------------------------------------------------------------------
INTEREST EARNED ON
Loans (tax equivalent)(1)(2)................. $ 19,727 $ 8,024 $ 27,751 $ 4,420 $ 4,445 $ 8,865
U.S. Treasury securities..................... $ (4,346) $ 566 $ (3,780) $ 6,975 $ (4,126) $ 2,849
U.S. government agency securities............ (4,669) 744 (3,925) (2,326) (744) (3,070)
Mortgage-backed securities
(available for sale)..... (643) 46 (597) (2,066) (372) (2,438)
State and municipal securities
(tax equivalent)(1)...... 120 12 132 1,946 (615) 1,331
Corporate bonds and other securities......... (1,129) (141) (1,270) 85 (277) (192)
-------------------------------------------------------------------------------
Total investment
securties................ $ (10,667) $ 1,227 $ (9,440) $ 4,614 $ (6,134) $ 1,520)
-------------------------------------------------------------------------------
Federal funds sold........................... (905) 1,067 162 (1,303) 708 (595)
Interest-bearing deposits.................... - - - (26) - (26)
-------------------------------------------------------------------------------
Total interest-earning
assets................... $ 8,155 $ 10,318 $ 18,473 $ 7,705 $ (981) $ 6,724
-------------------------------------------------------------------------------
Savings account deposits..................... $ (1,961) $ (93) $ (2,054) $ (300) $ (283) $ (583)
NOW account and MMDA deposits................ (754) 660 (94) (461) (1,090) (1,551)
Time deposits................................ 2,938 8,815 11,753 1,494 2,919 4,413
-------------------------------------------------------------------------------
Total interest-bearing
deposits.................. $ 223 $ 9,382 $ 9,605 $ 733 $ 1,546 $ 2,279
-------------------------------------------------------------------------------
Federal funds purchased and
repurchase agreements.... (300) 3,490 3,190 (837) 1,409 572
-------------------------------------------------------------------------------
Total interest-bearing
liabilities.............. $ (77) $ 12,872 $ 12,795 $ (104) $ 2,955 $ 2,851
-------------------------------------------------------------------------------
Net interest income
(tax equivalent)(1)...... $ 8,232 $ (2,554) $ 5,678 $ 7,809 $ (3,936) $ 3,873
===============================================================================
(1) Tax equivalent amounts are calculated using a marginal federal income tax rate of 35% for 1995, 1994 and 1993.
(2) Interest recognized on a cash basis on nonaccruing loans and prior cost recovery interest currently recognized on
nonaccruing and certain accruing loans was $6,425, $6,803 and $3,830 in 1995, 1994 and 1993, respectively.
Page 16 of 60
The Company continued to expand its automated teller facilities in 1995
and fees generated from ATM operations, which are included with other fees and
charges in the accompanying table of non-interest income, increased 70% or
approximately $500 thousand over 1994. Also included with other fees and charges
is income from the Company's secondary mortgage loan operations. This income
category was stable in 1995 after a fairly sharp decline in 1994 when rising
market rates curtailed the volume of activity.
Non-interest operating expenses, adjusted to exclude provisions for or
recoveries of losses on OREO and other problem assets, were $111 million in
1995, an increase of $5.7 million or 5.4% over 1994's total of $105 million.
Between 1993 and 1994, the increase in adjusted non-interest operating expenses
was $7.1 million or 7.2%.
As is shown in the table of non-interest expense, salaries and employee
benefits expense increased $3.9 million or 7.3% in 1995 as compared to 1994.
Approximately $2.1 million of this increase was related to the new banking
operations in Alabama. The remaining increase of $1.8 million is attributable to
regular merit increases and key staff additions.
Excluding personnel-related expenses, the Alabama Bank acquisition in
1995 added approximately $3.0 million to non-interest operating expenses, with
the largest impact on the amortization of intangible assets, marketing expense,
and the expense of bank premises and furnishings and equipment. Continued
enhancements to the Company's data processing systems and automation
capabilities in 1995 as well as further expansion of its ATM network also
contributed to the 28.1% increase over 1994 in the expense for furnishings and
equipment.
Credit card operating expenses for 1995 grew at a rate consistent with
the growth in income from these operations as discussed above. Taxes and
insurance expense increased 32.2% in 1995 almost entirely as a consequence of
the addition of the Company's earnings and increased equity to the assessment
base used to compute certain state ad valorem taxes. The 14.1% increase in legal
and other professional services for 1995 relates mainly to data processing
consulting services on important system upgrades.
A significant decrease in the premium rate schedule for FDIC deposit
insurance, which was effective for the third quarter of 1995, is directly
responsible for the $2.5 million or 42.6% reduction in the Company's annual
deposit insurance expense as compared to 1994. The added expense from amortizing
intangible assets acquired in 1995 and 1994 was more offset in 1995 by a $2.4
million decrease in the amortization of intangibles from earlier acquisitions
resulting in a net decrease of $1.3 million in this expense category. The
expense of maintaining and operating OREO declined in 1995 with the continued
improvement in asset quality.
NON-INTEREST INCOME
- -------------------------------------------------------------------------------------------------------------------
1995 % Change 1994 % Change 1993
--------------------------------------------------------------
Service charges on deposits $ 15,848 (2.9)% $ 16,322 4.5% $ 15,613
Credit card income 5,081 10.5 4,598 14.5 4,014
Trust service fees 3,394 22.3 2,775 1.3 2,740
International services income 1,941 8.9 1,783 23.6 1,443
Investment services income 920 (17.3) 1,113 27.5 873
Other fees and charges 2,543 27.8 1,990 11.7 1,782
Net gains on sales of OREO 935 (71.3) 3,260 (9.9) 3,618
Other operating income 602 29.2 466 (48.7) 908
--------------------------------------------------------------
Total other non-interest income $ 31,264 (3.2) $ 32,307 4.2 $ 30,991
Gain on sale of securities - - 46 - -
--------------------------------------------------------------
Total non-interest income $ 31,264 (3.4)% $ 32,353 4.4% $ 30,991
==============================================================
Page 17 of 60
NON-INTEREST EXPENSE
- -------------------------------------------------------------------------------------------------------------------
1995 % Change 1994 % Change 1993
--------------------------------------------------------------
Salaries and benefits $ 57,672 7.3% $ 53,725 11.3% $ 48,264
Occupancy of bank premises, net 7,666 11.0 6,903 6.2 6,502
Furnishings and equipment,including data processing 9,200 28.1 7,180 18.7 6,050
Security and other outside services 3,977 9.8 3,623 20.6 3,005
Taxes and insurance, other than real estate 3,955 32.2 2,991 59.0 1,881
Credit card processing services 3,723 11.7 3,334 9.6 3,043
Deposit insurance and regulatory fees 3,383 (42.6) 5,898 (14.3) 6,885
Postage and communications 3,105 20.6 2,574 3.5 2,488
Legal and other professional services 2,908 14.1 2,549 (25.0) 3,398
Stationery and supplies 2,483 11.0 2,237 5.8 2,115
Advertising 1,998 28.2 1,559 23.1 1,267
Amortization of intangible assets 2,888 (30.6) 4,161 13.6 3,664
OREO maintenance and operations, net 371 (61.3) 958 (14.5) 1,120
Provision for (recovery of) losses on OREO and
other problem assets, net 87 108.2 (1,056) (155.6) 1,900
Other operating expense 7,717 1.2 7,622 (10.4) 8,511
--------------------------------------------------------------
Total non-interest
expense $ 111,133 6.6% $104,258 4.2% $ 100,093
==============================================================
INCOME TAXES
The Company provided for income taxes at an overall effective rate of
31.3% in 1995, down from the 32.4% rate in 1994. The effective rates in each
period differ from the statutory rate of 35% primarily because of the tax exempt
income earned on investments in state and municipal obligations.
ACCOUNTING CHANGES
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, as amended by SFAS No. 118, which
addresses the accounting by creditors for impairment of certain loans. The
Company's reserve for possible loan losses at December 31, 1995 includes a
measure of impairment related to those loans identified for evaluation under the
new standard. This measurement is based on a comparison of the recorded
investment in each impaired loan with either the expected cash flows discounted
using the loan's original effective interest rate or, in the case of certain
collateral-dependent loans, the fair value of the underlying collateral.
Adoption of this standard did not have a material impact on the Company's
financial position or results of operations.
ASSET/LIABILITY MANAGEMENT
The asset/liability management process has as its focus the development
and implementation of strategies in the funding and deployment of the Company's
financial resources which are expected to maximize soundness and profitability
over time. These strategies reflect the goals set by the Company for capital
adequacy, liquidity, and the acceptable level of risk established in Company
policies.
INTEREST RATE RISK/INTEREST RATE SENSITIVITY
The Company's financial assets and liabilities are subject to scheduled
and unscheduled repricing opportunities over time. Both the Company's potential
for generating net interest income and the current market values of its
financial assets and liabilities depend in part upon the prevailing levels of
market interest rates when these repricing opportunities arise. Interest rate
risk is a measure of this potential change in earnings ability and market
values.
Page 18 of 60
As part of the asset/liability management process the Company uses a
variety of tools, including an earnings simulation model, to measure interest
rate risk and to evaluate the impact of possible changes in rates on its
internal strategies. The interest rate sensitivity gap analysis, shown in the
accompanying table, compares the volume of repricing assets against repricing
liabilities over time. This analysis is a relatively simple tool which is useful
mainly in highlighting significant short-term repricing volume mismatches.
The table presents the rate sensitivity gap analysis at December 31,
1995. The interest rates on a substantial portion of the outstanding commercial
loans vary with changes in the Banks' prime lending rates or the prime rates of
certain money-center banks. These loans are assigned to the earliest repricing
period in the rate sensitivity analysis. A sizable portion of loans shown in the
analysis as repricing after one year is made up of fixed-rate real estate loans.
In preparing this analysis, deposit funding sources with no scheduled
maturity or contractual repricing date are assigned to a particular repricing
period after consideration of past and expected customer behavior in response to
general market rate changes. In the twelve-month period from December 31, 1995,
the analysis indicates that the Company is in a slightly liability-sensitive
position on a cumulative basis.
INTEREST RATE SENSITIVITY
- -------------------------------------------------------------------------------------------------
December 31, 1995
(dollars in millions)
TIME TO MATURITY OR NEXT REPRICING
-------------------------------------------------------------------------
0-30 31-90 91-180 181-365 1 THROUGH OVER 5
DAYS DAYS DAYS DAYS 5 YEARS YEARS TOTAL
-------------------------------------------------------------------------
ASSETS
Securities held
to maturity $ 29 $ 61 $ 85 $ 165 $ 793 $ 108 $1,241
Securities
available
for sale 2 4 6 12 94 9 127
Loans 697 46 41 52 432 171 1,439
Federal funds
sold 14 - - - - - 14
-------------------------------------------------------------------------
Total earning
assets $ 742 $ 111 $ 132 $ 229 $1,319 $ 288 $2,821
SOURCES OF FUNDS
Demand deposits $ - $ - $ - $ - $ - $ 852 $ 852
Savings deposits - - - - 455 - 455
Money market
account deposits - - 184 - - - 184
NOW account deposits - - - 345 - - 345
Eurodollar deposits 17 - - - - - 17
Certificates of
deposit 115 161 147 177 108 - 708
Funds purchased
and repurchase
agreements 227 - - - - - 227
-------------------------------------------------------------------------
Total funding
liabilities $ 359 $ 161 $ 331 $ 522 $ 563 $ 852 $2,788
INTEREST RATE
SENSITIVITY
GAP $ 383 $ (50) $ (199) $ (293) $ 756 $(564) $ 33
CUMULATIVE INTEREST
RATE SENSITIVITY
GAP $ 383 $ 333 $ 134 $ (159) $ 597 $ 33
CUMULATIVE INTEREST
RATE SENSITIVITY
GAP AS A PERCENT
OF TOTAL EARNING
ASSETS 13.6% 11.8% 4.7% (5.6)% 21.2% 1.2%
Page 19 of 60
LIQUIDITY AND OTHER MATTERS
The Company and the Banks manage their liquidity positions to ensure
their ability to satisfy customer demand for credit, to fund deposit
withdrawals, to meet operating and other corporate obligations, and to take
advantage of investment opportunities, all in a timely and cost-effective
manner. Traditionally these liquidity needs have been met by maintaining a
strong base of core deposits and by carefully managing the maturity structure of
the investment portfolios. The funds provided by current operations and
forecasts of loan repayments are also considered in the liquidity management
process.
The Banks enter into short-term borrowing arrangements by purchasing
federal funds and selling securities under repurchase agreements, both as a
source of funding for certain short-term lending facilities and as part of their
services to correspondent banks and certain other customers. Neither the Company
nor the Banks have accessed long-term debt markets as part of liquidity
management.
The following tables present information concerning deposits and
short-term borrowings for the years 1995, 1994 and 1993. Average core deposits,
defined as all deposits other than time deposits of $100,000 or more, decreased
$60 million or 2.7% to $2.15 billion in 1995 from $2.21 billion in 1994. Core
deposits comprised approximately 90% of total average deposits for both of these
periods.
As of December 31, 1995, approximately $340 million or 27% of the
portfolio of investment securities held to maturity was scheduled to mature
within one year. An additional $127 million of investment securities was
classified as available for sale at the end of 1995, although management's
determination of this classification does not derive primarily from liquidity
considerations.
The Banks had approximately $914 million in unfunded loan commitments
outstanding at December 31, 1995, an increase of $331 million from the level at
December 31, 1994. Contingent obligations under letters of credit and financial
guarantees increased moderately between these dates to a total of $81 million at
December 31, 1995. Available credit card lines were $31 million at December 31,
1995, slightly above the level at year end 1994. Draws under these financial
commitments should not place any unusual strain on the Company's liquidity
position.
In 1996, the Company plans to open or begin construction on thirteen
additional branch locations throughout the Banks' market areas and to complete
the construction of a new operations center for the Louisiana Bank and a main
office for the Alabama Bank. Total capital expenditures for these new facilities
are estimated at $30 million.
Page 20 of 60
DEPOSITS
(in thousands)
1995 1994 1993
-----------------------------------------------
Average non-interest-bearing demand deposits in domestic bank offices $ 776,923 $ 759,549 $ 732,734
Average NOW account deposits in domestic offices 331,765 330,090 344,249
Average savings and money market account deposits in domestic bank offices 676,845 792,546 813,610
Average time deposits in domestic bank offices 626,757 565,923 520,721
Average time deposits in foreign banking offices 6,921 4,100 4,276
Remaining maturity of time certificates of deposit of $100,000 or more
issued by domestic offices as of December 31, 1995:
3 months or less $ 168,963
Over 3 through 6 months 66,573
Over 6 through 12 months 52,490
Over 12 months 25,592
---------
Total certificates of deposit of $100,000 or more $ 313,618
---------
Remaining maturity of time certificates of deposit of less than $100,000
issued by domestic offices as of December 31, 1995:
3 months or less $ 106,594
Over 3 through 6 months 80,895
Over 6 through 12 months 124,954
Over 12 months 82,074
---------
Total certificates of deposit of less than $100,000 $ 394,517
---------
Total time certificates of deposit $ 708,135
=========
FEDERAL FUNDS PURCHASED AND BORROWINGS UNDER REPURCHASE AGREEMENTS
(in thousands)
1995 1994 1993
------------------------------------------------------------------
Amount outstanding at year end $ 227,094 $ 179,806 $ 215,168
Weighted average interest rate at year end 5.15% 4.27% 2.91%
Average outstanding during the year $ 194,103 $ 200,063 $ 226,878
Weighted average interest rate for the year 5.16% 3.41% 2.76%
Maximum amount outstanding at any month
end $ 234,558 $ 262,970 $ 247,055
Page 21 of 60
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
W H I T N E Y H O L D I N G C O R P O R A T I O N A N D S U B S I D I A R I E S
C O N S O L I D A T E D B A L A N C E S H E E T S
(dollars in thousands) December 31,
1995 1994
------------ -------------
ASSETS
Cash and due from financial institutions..................... $ 217,658 $ 196,850
Investment in securities:
Securities available for sale........................... 127,498 137,335
Securities held to maturity (fair value of $1,257,993
in 1995 and $1,350,581 in 1994).................... 1,240,543 1,395,643
Federal funds sold........................................... 13,650 17,600
Loans........................................................ 1,439,424 1,060,167
Less reserve for possible loan losses........................ 37,021 34,425
---------------------------
Loans, net................................................. 1,402,403 1,025,742
Bank premises and equipment, net............................. 75,205 63,209
Other real estate owned, net................................. 4,799 6,685
Accrued income receivable.................................... 27,925 31,365
Other assets................................................. 41,965 38,228
---------------------------
TOTAL ASSETS....................................... $ 3,151,646 $ 2,912,657
===========================
LIABILITIES
Deposits:
Non-interest-bearing demand deposits.................... $ 851,751 $ 768,811
Interest-bearing deposits............................... 1,709,607 1,642,252
Total deposits...................................... 2,561,358 2,411,063
Federal funds purchased and securities sold under
repurchase agreements................................... 227,094 179,806
Dividends payable............................................ 3,273 2,488
Other liabilities............................................ 21,669 21,621
---------------------------
TOTAL LIABILITIES.................................. $ 2,813,394 $ 2,614,978
---------------------------
SHAREHOLDERS' EQUITY
Common stock, nor par value: 40,000,000 shares authorized,
15,442,323 shares issued and 14,878,019 shares
outstanding in 1995, 15,242,505 shares issued and
14,634,701 shares outstanding in 1994, after deduction
of treasury stock......................................... $ 2,800 $ 2,800
Capital surplus.............................................. 57,561 51,608
Retained earnings............................................ 284,820 256,041
Net unrealized gain (loss) on securities available for sale,
net of tax effect of $455) in 1995 and $2,755 in 1994..... 846 (5,118)
---------------------------
Total.............................................. 346,027 305,331
---------------------------
Treasury stock at cost, 564,304 shares in 1995 and 607,804
shares in 1994, and unearned restricted stock
compensation............................................ 7,775 7,652
---------------------------
TOTAL SHAREHOLDERS' EQUITY......................... $ 338,252 $ 297,679
---------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY......................... $ 3,151,646 $ 2,912,657
===========================
The accompanying notes are an intergral part of these financial statements
Page 22 of 60
W H I T N E Y H O L D I N G C O R P O R A T I O N A N D S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T S O F O P E R A T I O N S
(in thousands, except per-share amounts)
Year Ended December 31,
1995 1994 1993
------------------------------------
INTEREST INCOME
Interest and fees on loans............................ $ 111,150 $ 83,436 $ 74,598
Interest and dividends on investments-
U.S. Treasury and agency securities............. 63,107 70,812 71,033
Mortgage-backed securities.......................... 9,600 10,197 12,635
Obligations of states and political
subdivisions.................................. 6,544 6,457 5,592
Federal Reserve and corporate securities........ 1,039 2,309 2,501
Interest on federal funds sold........................ 2,712 2,550 3,145
Interest on deposits in other financial institutions.. - - 26
------------------------------------
TOTAL..................................... $ 194,152 $ 175,761 $ 169,530
------------------------------------
INTEREST EXPENSE
Interest on deposits.................................. $ 54,640 $ 45,035 $ 42,756
Interest on federal funds purchased and securities
sold under repurchase agreements................ 10,022 6,832 6,260
------------------------------------
TOTAL..................................... $ 64,662 $ 51,867 $ 49,016
Net interest income................................... $ 129,490 $ 123,894 $ 120,514
Reduction of reserve for possible loan losses......... 10,000 26,139 60,000
------------------------------------
Net interest income after reduction of reserve for
possible loan losses........................... $ 139,490 $ 150,033 $ 180,514
------------------------------------
NON-INTEREST INCOME
Gain on sale of securities............................ $ - $ 46 $ -
Other non-interest income............................. 31,264 32,307 30,991
------------------------------------
TOTAL..................................... $ 31,264 $ 32,353 $ 30,991
------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits........................ $ 57,672 $ 53,725 $ 48,264
Occupancy of bank premises, net....................... 7,666 6,903 6,502
Other non-interest expenses........................... 45,795 43,630 45,327
------------------------------------
TOTAL..................................... $ 111,133 $ 104,258 $ 100,093
------------------------------------
Income before income taxes and effect of accounting
changes......................................... $ 59,621 $ 78,128 $ 111,412
Income tax expense.................................... 18,684 25,290 35,645
------------------------------------
Income before effect of accounting changes............ $ 40,937 $ 52,838 $ 75,767
Cumulative effect of accounting changes, net.......... - - 634
------------------------------------
Net income............................................ $ 40,937 $ 52,838 $ 76,401
====================================
EARNINGS PER SHARE:
Income before cumulative effect of accounting
changes................................... $ 2.77 $ 3.63 $ 5.25
Cumulative effect of accounting changes, net.... - - 0.05
------------------------------------
Net income....................................... $ 2.77 $ 3.63 $ 5.30
====================================
The accompanying notes are an integral part of these financial statements.
Page 23 of 60
W H I T N E Y H O L D I N G C O R P O R A T I O N A N D S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T S O F C H A N G E S I N
S H A R E H O L D E R S ' E Q U I T Y
(in thousands, except share and per-share amounts)
NET
UNREALIZED UNEARNED
GAIN (LOSS) ON RESTRICTED
SECURITIES STOCK
COMMON CAPITAL RETAINED AVAILABLE TREASURY COMPEN-
STOCK SURPLUS EARNINGS FOR SALE STOCK SATION TOTAL
-----------------------------------------------------------------------------------
Balance at December 31, 1992................ $2,800 $47,448 $142,383 $ - ($6,658) ($442) $185,531
Net income for 1993.................... 76,401 76,401
Cash dividends declared, $0.43 per
share................................ (6,251) (6,251)
Restricted stock grants, 36,000 shares. 364 335 (699) -
Common stock issued:
Employee savings plan, 3,266 shares.. 76 76
Stock options exercised, 2,302 shares 9 21 30
Amortization of unearned restricted
stock compensation................... 168 168
Change in net unrealized gain (loss) on
securities available for sale........ 3,083 3,083
-----------------------------------------------------------------------------------
Balance at December 31, 1993................ $2,800 $47,897 $212,533 $3,083 ($6,302) ($973) $259,038
----------------------------------------------------------------------------------
Net income for 1994.................... 52,838 52,838
Cash dividends declared, $0.64 per
share................................ (9,330) (9,330)
Employee restricted stock grants,
50,100 shares........................ 891 466 (1,357) -
Director stock grants, 1,200 shares.... 63 63
Common stock issued:
Acquisition of Baton Rouge Bank
and Trust Company, 90,909 shares... 2,000 2,000
Employee savings plan, 16,768 shares. 406 406
Dividend reinvestment plan,
10,093 shares...................... 269 269
Stock options exercised, 18,674
shares............................. 82 174 256
Amortization of unearned restricted
stock compensation................... 340 340
Change in net unrealized gain (loss) on
securities available for sale........ (8,201) (8,201)
-----------------------------------------------------------------------------------
Balance at December 31, 1994................ $2,800 $51,608 $256,041 ($5,118) ($5,662) ($1,990) $297,679
-----------------------------------------------------------------------------------
Net income for 1995.................... 40,937 40,937
Cash dividends declared, $0.82 per
share................................ (12,158) (12,158)
Employee restricted stock grants,
40,000 shares........................ 783 372 (1,155) -
Employee stock grants forfeited,
1,250 shares......................... (17) (12) 29 -
Director stock grants, 1,350 shares.... 56 56
Common stock issued:
Employee savings plan, 148,177 shares 3,765 3,765
Dividend reinvestment plan,
50,291 shares...................... 1,325 1,325
Stock options exercised, 4,750 shares 41 45 86
Amortization of unearned restricted
stock compensation................... 598 598
Change in net unrealized gain (loss) on
securities available for sale........ 5,964 5,964
-----------------------------------------------------------------------------------
Balance at December 31, 1995................ $2,800 $57,561 $284,820 $846 ($5,257) ($2,518) $338,252
===================================================================================
The accompanying notes are an integral part of these financial statements.
Page 24 of 60
W H I T N E Y H O L D I N G C O R P O R A T I O N A N D S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
(in thousands) Year Ended December 31,
1995 1994 1993
-------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................... $ 40,937 $ 52,838 $ 76,401
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Cumulative effects of accounting changes......................... - - (634)
Depreciation..................................................... 7,465 6,389 5,971
(Reduction of) reserves for possible loan losses................. (10,000) (26,139) (60,000)
Provision for (Reduction of) losses on OREO and other problem
assets........................................................ 87 (1,073) 1,900
Amortization of intangible assets and unearned restricted stock
compensation.................................................. 3,486 4,500 3,833
Amortization of premiums and discounts on investment
securities, net............................................... 13,062 14,464 13,576
(Gains) on sales of OREO and other property...................... (935) (3,262) (3,612)
(Gains) on sales of securities................................... - (46) -
Deferred tax expense............................................. 1,772 6,281 19,803
Increase (Decrease) in accrued income taxes...................... 274 (859) 912
(Increase) Decrease in accrued income receivable and other assets 3,964 (2,660) (1,351)
Increase (Decrease) in accrued expenses and other liabilities.... 28 257 500
--------------------------------------
Net cash provided by operating activities........................ $ 60,140 $ 50,690 $ 57,299
--------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities held to
maturity......................................................... $ 344,586 $ 798,551 $ 1,171,763
Proceeds from maturities of investment securities available for sale 19,023 42,184 -
Proceeds from sales of investment securities held to maturity....... - 25,066 -
Purchases of investment securities held to maturity................. (188,611) (771,013) (1,339,591)
Purchases of investment securities available for sale............... - (10,100) -
Net (increase) decrease in loans.................................... (323,562) (5,771) 75,322
Net (increase) decrease in federal funds sold....................... 23,703 94,700 18,445
Proceeds from sales of OREO and other property...................... 3,220 12,358 27,711
Capital expenditures................................................ (16,652) (6,330) (3,868)
Net cash (paid) received in business acquisition.................... (3,695) 35,659 -
Other............................................................... 759 (1,312) (1,526)
--------------------------------------
Net cash provided by (used in) investing activities................. $ (141,229)$ 213,992 $ (51,744)
--------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in non-interest-bearing demand deposits..... $ 69,082 $ (39,109) (28,061)
Net increase (decrease) in interest-bearing deposits other than
certificates of deposit.......................................... (112,758) (179,740) 6,725
Net increase (decrease) in certificates of deposit.................. 104,462 6,818 (14,497)
Net increase (decrease) in federal funds purchased and securities
sold under repurchase agreements................................. 47,288 (35,412) 4,680
Exercise of stock options........................................... 86 256 30
Sale of common stock under employee savings plan and dividend
reinvestment plan................................................ 5,090 675 76
Dividends paid...................................................... (11,353) (8,767) (5,287)
--------------------------------------
Net cash provided by (used in) financing activities................. $ 101,897 $ (255,279)$ (36,334)
--------------------------------------
Net increase (decrease) in cash and cash equivalents................... $ 20,808 $ 9,403 $ (30,779)
Cash and cash equivalents at the beginning of the period............... 196,850 187,447 218,226
--------------------------------------
Cash and cash equivalents at the end of the period..................... $ 217,658 $ 196,850 $ 187,447
======================================
Interest income received............................................... $ 198,021 $ 173,323 $ 167,355
======================================
Interest expense paid.................................................. $ 61,716 $ 50,119 $ 48,873
======================================
Net federal income taxes paid.......................................... $ 16,620 $ 19,823 $ 14,920
======================================
The accompanying notes are an integral part of these financial statements.
Page 25 of 60
Notes To Financial Statements
(1) NATURE OF BUSINESS
Whitney Holding Corporation (the "Company") is a Louisiana bank holding
company registered pursuant to the Bank Holding Company Act of 1956. The Company
began operations in 1962 as the parent of Whitney National Bank (the "Louisiana
Bank"), which has been in continuous operation since 1883. In December, 1994,
the Company established the Whitney Bank of Alabama (the "Alabama Bank") and,
through this new banking subsidiary, acquired the Mobile area operations of The
Peoples Bank, Elba, Alabama on February 17, 1995. During 1995, the Company also
established the Whitney Community Development Corporation ("WCDC") which is
authorized to make equity and debt investments in corporations or projects
designed primarily to promote community welfare, including the economic
rehabilitation and development of low-income areas by providing housing,
services, or jobs for residents, or promoting small businesses that service
low-income areas. The initial capitalization of WCDC was $1,000,000.
As of December 31, 1995, WCDC had not begun any material operations.
The Company, through its banking subsidiaries, engages in commercial
and retail banking and in trust business, including the taking of deposits, the
making of secured and unsecured loans, the financing of commercial transactions,
the issuance of credit cards, the delivery of corporate, pension and personal
trust services, investment services and safe deposit rentals. The Louisiana Bank
is active as a correspondent for other banks. The Banks render specialized
services of different kinds in connection with all of the foregoing, and operate
forty-five offices in south Louisiana, seven offices in south Alabama, and a
foreign branch on Grand Cayman in the British West Indies.
There is significant competition within the financial services industry
in general as well as with respect to the particular financial services provided
by the Banks. Within their market areas, the Banks compete directly with major
banking institutions of comparable or larger size and resources as well as with
various other smaller banking organizations and local and national "non-bank"
competitors, including savings and loans, credit unions, mortgage companies,
personal and commercial finance companies, investment brokerage firms, and
registered investment companies.
In recent years there has been a significant consolidation within the
financial services industry, particularly with respect to the banking and
savings and loan segments of this industry. This consolidation has been driven
both by the large number of S&L and bank failures experienced during the crisis
of the late 1980s and early 1990s as well as by general competitive pressures.
All of the Banks' major direct banking competitors have been relatively active
in expansion through acquisition. In recent years, the Company has entered into
two acquisitions of banking operations involving approximately $200 million of
assets and completed a merger with a third bank having approximately $243
million of assets in early March 1996. The trend toward industry consolidation
is expected to continue in the near term.
All material funds of the Company are invested in the Banks. The Banks
have a large number of customer relationships which have been developed over a
period of many years and are not dependent upon any single customer or upon a
few customers. The loss of any single customer or a few customers would not have
a material adverse effect on the Banks or the Company. The Louisiana Bank has
customers in a number of foreign countries, but the portion of revenue derived
from these foreign customers is not a material portion of its overall revenues.
The Company and the Banks and their related operations are subject to
federal, state and local laws applicable to banks and bank holding companies and
to the regulations of the Board of Governors of the Federal Reserve System, the
Office of the Comptroller of Currency, the Federal Deposit Insurance Corporation
and the Alabama State Banking Department.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Whitney Holding Corporation
and its subsidiaries follow generally accepted accounting principles and
policies within the banking industry. The following is a summary of the more
significant policies.
Page 26 of 60
CONSOLIDATION
The consolidated financial statements of the Company include the
accounts of Whitney Holding Corporation and its wholly-owned subsidiaries,
Whitney National Bank and Whitney Bank of Alabama. Whitney Bank of Alabama
commenced significant operations on February 17, 1995. Intercompany accounts and
transactions have been eliminated in consolidation.
Certain balances in prior years have been reclassified to conform with
this year's presentation.
USE OF ESTIMATES
To prepare financial statements in conformity with generally accepted
accounting principles, management is required to develop estimates that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
CASH AND DUE FROM FINANCIAL INSTITUTIONS
The Company considers cash and cash due from financial institutions as
cash and cash equivalents for purposes of the consolidated statement of cash
flows.
INVESTMENT IN SECURITIES
Debt securities which the Company both positively intends and has the
ability to hold to maturity are carried at amortized cost. These criteria are
not considered satisfied when a security is available to be sold in response to
changes in interest rates, prepayment rates, liquidity needs or other reasons as
part of an overall asset/liability management strategy.
Debt securities and equity securities with readily determinable fair
values that are acquired with the intention of being resold in the near term are
classified as trading securities and are carried at fair value, with unrealized
holding gains and losses recognized in current earnings. The Company does not
currently hold any securities for trading purposes.
Securities not meeting the criteria of either trading securities or
securities held to maturity are classified as available for sale and carried at
fair value. Unrealized holding gains and losses for these securities are
recognized, net of related tax effects, as a separate component of shareholders'
equity.
Interest and dividend income earned on securities either held to
maturity or available for sale is included in current earnings, including the
amortization of premiums and the accretion of discounts using the interest
method. The gain or loss realized on the sale of a security held to maturity or
available for sale is computed with reference to its amortized cost and is also
included in current earnings.
LOANS
Loans are generally carried at the principal amounts outstanding, less
unearned income and the reserve for possible loan losses.
Interest on loans is accrued and credited to income based on the
outstanding loan principal amounts. The accrual of interest on loans is
discontinued when, in management's judgement, there is an indication that a
borrower will be unable to meet contractual payments as they become due. For
commercial and real estate loans, this generally occurs when a loan falls
90-days past due as to principal or interest, and the loan is not otherwise both
well secured and in the process of collection. Upon discontinuance, accrued but
uncollected interest is reversed against current income. Interest payments
received on nonaccrual loans are used to reduce the reported loan principal
under the cost recovery method when the collectibility of the remaining
principal is not reasonably assured; otherwise, these payments are recognized as
interest income.
A nonaccrual loan may be reinstated to accrual status when full payment
of contractual principal and interest is expected and this expectation is
supported by current performance.
Page 27 of 60
RESERVE FOR POSSIBLE LOAN LOSSES
The reserve for possible loan losses is maintained at a level which, in
management's judgement, is considered adequate to absorb potential losses
inherent in the loan portfolio. The adequacy of the reserve is evaluated by
management on an ongoing basis. As adjustments to the level of reserves become
necessary, they are reported in current earnings. The factors considered in this
evaluation include the estimated potential losses from specific lending
relationships, including unused loan commitments and credit guarantees; general
economic conditions; economic conditions affecting specific classes of borrowers
or types of loan collateral; historical loss experience; and various trends in
loan portfolio characteristics, such as volume, maturity, customer mix,
delinquencies and nonaccruals.
As actual losses are incurred, they are charged against the reserve.
Recoveries on loans previously charged off are added back to the reserve.
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment
of a Loan," as amended by SFAS No. 118. Under this new standard, a loan is
considered impaired when it is probable that all contractual amounts will not be
collected as they become due. The extent of impairment is measured based on a
comparison of the recorded investment in the loan with either the expected cash
flows discounted using the loan's original effective interest rate or, in the
case of certain collateral-dependent loans, the fair value of the underlying
collateral. The measure of impairment is included in the reserve for possible
loan losses.
The provisions of SFAS No. 114 were not applied by the Company to
measure impairment for large groups of similar loans with relatively small
balances, such as consumer credit line loans and consumer installment loans. As
allowed under the standard, these loans may be collectively evaluated for
impairment.
The guidance in SFAS No. 114 does not represent a significant departure
from existing procedures followed by the Company in evaluating the overall
adequacy of the reserve for possible loan losses. Furthermore, loans evaluated
for impairment would also generally meet the criteria currently in use by the
Company to identify loans on which the accrual of interest should be
discontinued. As such, the adoption of this new standard had no significant
impact on the Company's financial position or results of operations.
FORECLOSED ASSETS
Collateral acquired through foreclosure or in settlement of loans is
classified as either other real estate owned ("OREO") or other assets and is
carried at its fair value, net of estimated costs to sell, or the remaining
investment in the loan, whichever is lower. At acquisition, any excess of the
recorded loan value over the estimated fair value of the collateral is charged
against the reserve for possible loan losses. After acquisition, valuation
allowances are established with a charge to current earnings to adjust the
reported value of foreclosed assets to reflect changes in the estimate of a
property's fair value or selling costs. Revenues and expenses associated with
the management of foreclosed assets prior to sale are included in current
earnings.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment are carried at cost, net of accumulated
depreciation and amortization.
Provisions for depreciation and amortization included in non-interest
expenses are computed primarily on the straight-line method over the estimated
useful lives of the assets. Estimated useful lives range from fifteen to
forty-five years for buildings and improvements and from three to ten years for
furnishings and equipment.
In March, 1995, the Financial Accounting Standards Board issued SFAS
No. 121 which prescribes the accounting for impairment of long-lived assets used
in operations, such as bank premises and equipment, certain identifiable
intangibles, and any goodwill related to these assets. In general, the statement
requires recognition of an impairment loss when the undiscounted cash flows
estimated to be derived from the use of these assets exceeds their carrying
value. The statement also prescribes the accounting to be followed when an
entity plans to dispose of such long-lived assets. The effect of the Company's
adoption of SFAS No. 121 in the first quarter of 1996 will not be material.
Page 28 of 60
INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes." In general, under this accounting standard the
tax consequences of all temporary differences that arise between the tax bases
of assets or liabilities and their reported amounts in the financial statements
represent either tax liabilities to be settled in the future or tax assets that
will be realized as a reduction of future taxes. The change in net deferred
assets or liabilities between periods is recognized as a deferred tax expense or
benefit in the consolidated statement of operations.
EARNINGS PER SHARE
Earnings per share is calculated using the weighted average number of
shares outstanding during each period presented. Potentially dilutive common
stock equivalents consist of stock options which have been granted to certain
officers and directors. Incorporating these common stock equivalents into the
calculation of earnings per share using the treasury method does not materially
affect the reported results whether on a primary or fully-diluted basis.
All share and per-share data in this annual report reflect the
three-for-two stock splits that were effective February 22, 1993 and November
29, 1993.
(3) INVESTMENT IN SECURITIES
Summary information regarding securities available for sale and
securities held to maturity follows.
Securities Available for Sale
--------------------------------------------------------------------------------------
WEIGHTED GROSS GROSS ESTIMATED
(dollars in thousands) AVERAGE AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1995 MATURITY COST GAIN LOSS VALUE
--------------------------------------------------------------------------------------
Mortgage-backed
securities 39.7 mos. $ 126,197 $ 1,661 $ 360 $ 127,498
--------------------------------------------------------------------------------------
TOTAL 39.7 mos. $ 126,197 $ 1,661 $ 360 $ 127,498
======================================================================================
December 31, 1994
Mortgage-backed
securities 45.0 mos. $ 145,208 $ - $ 7,873 $ 137,335
--------------------------------------------------------------------------------------
TOTAL 45.0 mos. $ 145,208 $ - $ 7,873 $ 137,335
======================================================================================
Page 29 of 60
Securities Held to Maturity
--------------------------------------------------------------------------------------
WEIGHTED GROSS GROSS ESTIMATED
AVERAGE AMORTIZED UNREALIZED UNREALIZED FAIR
December 31, 1995 MATURITY COST GAIN LOSS VALUE
--------------------------------------------------------------------------------------
U.S. Treasury securities 18.1 mos. $ 802,108 $ 8,539 $ 1,477 $ 809,170
Securities of U.S. government
agencies 31.7 mos. 250,198 3,937 230 253,905
Mortgage-backed securities 69.1 mos. 56,707 461 - 57,168
State and municipal securities 62.8 mos. 127,996 4,879 331 132,544
Equity securities - 3,534 1,672 - 5,206
--------------------------------------------------------------------------------------
TOTAL 27.7 mos. $1,240,543 $ 19,488 $ 2,038 $ 1,257,993
======================================================================================
December 31, 1994
U.S. Treasury securities 25.4 mos. $ 994,230 $ 4 $ 38,323 $ 955,911
Securities of U.S. government
agencies 20.1 mos. 246,027 - 6,429 239,598
State and municipal securities 65.5 mos. 126,537 1,762 3,517 124,782
Corporate bonds 7.3 mos. 25,160 - 301 24,859
Equity securities - 3,689 1,742 - 5,431
--------------------------------------------------------------------------------------
TOTAL 29.4 mos. $1,395,643 $ 3,508 $ 48,570 $ 1,350,581
======================================================================================
At December 31, 1995 and 1994, U.S. Treasury and agency securities with
a carrying value of $ 544,135,000 and $508,725,000, respectively, were pledged
to secure public deposits or sold under repurchase agreements.
The amortized cost and estimated fair value of securities, other than
equity securities, held to maturity and available for sale at December 31, 1995
are shown below by contractual maturity. The actual maturities of certain
securities, in particular mortgage-backed securities and municipal securities,
may differ from contractual maturities because of principal amortization,
prepayments and the exercise of call options.
AVAILABLE FOR SALE
------------------------------------------------
(in thousands) ESTIMATED
MATURITY DISTRIBUTION AMORTIZED FAIR
DECEMBER 31, 1995 COST VALUE
------------------------------------------------
One year or less $ - $ -
One to five years 117,439 118,799
Five to ten years 8,758 8,699
Over ten years - -
------------------------------------------------
$ 126,197 $ 127,498
================================================
HELD TO MATURITY
------------------------------------------------
(in thousands) ESTIMATED
MATURITY DISTRIBUTION AMORTIZED FAIR
DECEMBER 31, 1995 COST VALUE
------------------------------------------------
One year or less $ 334,038 $ 333,897
One to five years 798,275 810,870
Five to ten years 94,385 97,337
Over ten years 10,311 10,683
------------------------------------------------
$ 1,237,009 $ 1,252,787
================================================
Page 30 of 60
(4) LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES
The composition of the Company's loan portfolio at December 31, was as
follows (in thousands):
1995 1994
--------------------------------------
Commercial, financial and
agricultural loans $ 740,763 $ 575,794
Real estate loans - commercial and other 409,341 292,018
Real estate loans - retail mortgage 180,199 98,079
Loans to individuals 109,121 94,276
--------------------------------------
$ 1,439,424 $ 1,060,167
======================================
The Company's lending activity, both commercial and retail, is
conducted primarily among customers in Louisiana, Mississippi and southern
Alabama. In its market areas, the Company serves a broad base of commercial
customers in diverse industries.
Within the portfolio, the Company maintains a relatively significant
concentration of outstanding credits and loan commitments to customers involved
in the oil and gas industry. At December 31, 1995, outstanding loans to this
industry totalled $111,425,000, and unused loan commitments and letters of
credit and guarantees were $157,206,000 and $14,618,000, respectively. The
operations of this industry have stabilized and improved in recent years,
following a period of severe decline and major restructuring which had adversely
impacted the overall economy of a large portion of the Company's market area.
Management continues to closely monitor its lending relationships in this
industry.
The total of commercial and other real estate loans shown above
includes both those for which the primary source of repayment is the operation
or sale of the underlying project, as well as those secured by real estate
employed in other operations of the customer. Unfunded commitments for loans
secured by commercial or other real estate were $112,000,000 at December 31,
1995. The Company's portfolio of commercial and other real estate loans is
diversified as to both the types of collateral property and the industries in
which the properties are employed.
Non-performing loans at December 31, 1995 and 1994 are summarized as
follows (in thousands):
1995 1994
-------------------------------
Loans accounted for on a nonaccrual basis $ 7,574 $ 15,396
Restructured loans 1,622 -
--------------------------------
Total non-performing loans $ 9,196 $ 15,396
===============================
Effective January 1, 1995, the Company adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS No. 118.
The adoption of this standard, the provisions of which are discussed in Note 2,
had no significant impact on the Company's financial position or results of
operations. At December 31, 1995, the recorded investment in loans that were
evaluated for impairment under SFAS No. 114 was $8,009,000. Of this total,
$4,467,000 relates to impaired loans which required an impairment loss allowance
totalling $1,608,000. This allowance is included in the reserve for possible
loan losses at year end 1995. The remaining balance of impaired loans required
no loss allowance. The average recorded investment in impaired loans during 1995
was approximately $7,900,000.
Page 31 of 60
With respect to certain nonaccrual loans, interest income is recognized
as cash interest payments are received. Interest payments on current or previous
nonaccrual loans that had been accounted for under the cost recovery method may
also subsequently be recognized as interest income as loan collections exceed
previous expectations or as workout efforts result in fully rehabilitated
credits. The following compares contractual interest income on nonaccrual loans
and restructured loans with both the interest income reported on a cash basis
with respect to such loans and the prior cost recovery interest currently
recognized on nonaccrual loans and certain accruing loans (in thousands):
YEAR ENDED DECEMBER 31,
1995 1994 1993
------------------------------------------------
Contractual interest $ 1,480 $ 2,611 $ 5,288
Interest recognized 6,425 6,803 3,830
------------------------------------------------
Impact on reported
interest income,
increase (decrease) $ 4,945 $ 4,192 $ (1,458)
================================================
Changes in the reserve for possible loan losses for the three years in
the period ended December 31, 1995 were as follows (in thousands):
1995 1994 1993
------------------------------------------------------
Balance at beginning of year $ 34,425 $ 44,485 $ 98,558
Reserves provided through acquisition 1,772 - -
Reduction of reserve (10,000) (26,139) (60,000)
Recoveries 13,897 19,653 12,359
Loans charged off (3,073) (3,574) (6,432)
------------------------------------------------------
Balance at end of year $ 37,021 $ 34,425 $ 44,485
======================================================
During 1994, the Company recovered approximately $6,139,000 on one loan
that previously had been charged off and, with the improvement in credit quality
in recent years, was able to transfer this recovery to income in that year. The
reductions in the reserve for possible loan losses in 1995, 1994 and 1993
reflect improved asset quality, successful recovery efforts and management's
determination that efforts to deal with asset quality issues have yielded
lasting positive results.
The Banks have made loans in the normal course of business to certain
directors and executive officers of the Company and to their associates (related
parties). The aggregate amount of these loans was $52,516,000 and $31,591,000 at
December 31, 1995 and 1994, respectively. During 1995, $234,862,000 of new loan
advances were made, and repayments totalled $213,937,000. Outstanding
commitments and letters of credit to related parties totaled $68,095,000 and
$37,734,000 at December 31, 1995 and 1994, respectively. Related party loans are
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with unrelated
persons, and do not involve more than the normal risk of collectibility.
Page 32 of 60
(5) INCOME TAXES
Income tax expense (benefit) consisted of the following components for
the three years in the period ended December 31, 1995 (in thousands):
Included in income before cumulative effect of 1995 1994 1993
accounting changes: -------------------------------------------------
Current tax expense $ 16,912 $ 19,009 $ 15,842
Deferred tax expense 1,772 6,281 19,803
------------- ------------- --------------
$ 18,684 $ 25,290 $ 35,645
============= ============= ==============
Included in cumulative effects of accounting changes:
Deferred tax benefit related to adoption of
SFAS No. 106 (Note 6) $ - $ - $ (2,023)
============= ============= ==============
Included in shareholders' equity:
Deferred tax expense (benefit) related to
the change in the net unrealized gain (loss) on
securities available for sale $ 3,210 $ (4,415) $ 1,660
============= ============= ==============
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes." Under this standard the tax consequences of all
temporary differences between the tax bases of assets or liabilities and their
reported amounts in the financial statements represent either tax liabilities to
be settled in the future or tax assets that will be realized as a reduction of
future taxes. Among other provisions, SFAS No. 109 requires the use of currently
enacted tax rates to measure these deferred tax assets and liabilities. The
impact of any change in the enacted tax rates is included in the deferred tax
expense or benefit recognized in the period in which the change occurs. The
change in the net deferred tax asset or liability between periods represents the
deferred tax expense or benefit to be recognized in the financial statements.
With the adoption of SFAS No. 109, the Company recognized an additional net
deferred asset of $4,574,000, which is reported in the consolidated statement of
operations for 1993 as a cumulative effect of an accounting change (Note 7).
Net deferred income tax assets, which are included in other assets on
the consolidated balance sheets, were approximately $12,199,000 and $17,181,000
at December 31, 1995 and 1994, respectively. The components of the net deferred
tax assets were as follows (in thousands):
1995 1994
-------------- --------------
Deferred tax assets:
Reserves for losses on loans, OREO, and
other problem assets $ 13,503 $ 14,129
Unrecognized interest income 614 2,088
Employee benefit plan liabilities 3,148 2,952
Net unrealized loss on securities available for sale - 2,755
Other 482 284
-------------- --------------
Total deferred tax assets $ 17,747 $ 22,208
============== ==============
Deferred tax liabilities:
Accumulated depreciation and amortization $ (4,315) $ (4,645)
Net unrealized gain on securities available for sale (455) -
Other (778) (382)
-------------- --------------
Total deferred tax liabilities $ (5,548) $ (5,027)
============== ==============
Net deferred tax asset $ 12,199 $ 17,181
============== =============
Page 33 of 60
Under SFAS No. 109, the Company is required to establish a valuation
allowance against the deferred tax asset if, based on all available evidence, it
is more likely than not that some or all of the asset will not be realized.
Management has weighed the evidence, including current earnings performance,
taxable income generated during available carryback periods, and the nature of
significant deductible temporary differences, and believes that no valuation
reserve is required as of December 31, 1995. Rules issued by regulatory agencies
impose additional limitations on the amount of deferred tax assets that may be
recognized when calculating regulatory capital ratios. The Company's ratio
calculations were not affected by these rules at December 31, 1995.
The effective tax rate is less than the statutory federal income tax
rate in each of the three years in the period ended December 31, 1995 because of
the following:
PERCENT OF INCOME
BEFORE INCOME TAX
1995 1994 1993
-----------------------------------------------
Tax at statutory rate 35.0% 35.0% 35.0%
Adjustments in rate resulting from -
Tax exempt income (4.2) (3.0) (1.9)
Impact of change in enacted tax rate - - (1.0)
Miscellaneous items 0.5 0.4 (0.1)
-----------------------------------------------
Effective tax rate 31.3% 32.4% 32.0%
===============================================
(6) EMPLOYEE BENEFIT PLANS
Retirement Plans
The Company has a noncontributory qualified defined benefit pension
plan covering substantially all of its employees. The benefits are based on an
employee's total years of service and his or her highest five-year level of
compensation during the final ten years of employment. Contributions are made in
amounts sufficient to meet funding requirements set forth in federal employee
benefit and tax laws plus such additional amounts as the Company may determine
to be appropriate from time to time.
The actuarial present values of vested and of total accumulated benefit
obligations (both of which exclude projected future increases in compensation
levels) were $39,067,000 and $42,461,000, respectively, as of December 31, 1995,
and $32,361,000 and $35,306,000, respectively, as of December 31, 1994.
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated financial statements (in thousands):
DECEMBER 31,
1995 1994
---------------------------------------------
Actuarial present value of projected benefit
obligation for services rendered to date $ (50,538) $ (44,434)
Plan assets at fair value, primarily U.S. Treasury
securities and listed stocks 67,869 56,532
---------------------------------------------
Plan assets in excess of projected benefit
obligations $ 17,331 $ 12,098
Unrecognized net actuarial gains (11,086) (5,061)
Unrecognized net implementation asset (3,119) (3,524)
Unrecognized prior service cost resulting
from plan amendments (2,874) (3,058)
---------------------------------------------
Prepaid pension cost $ 252 $ 455
=============================================
Page 34 of 60
The net pension expense (benefit) recognized for 1995, 1994, and 1993
is comprised of the following components (in thousands):
1995 1994 1993
------------------------------------------------------------------------
Service costs for benefits
during the period $ 1,635 $ 1,900 $ 1,688
Interest cost on projected
benefit obligation 3,564 3,428 3,437
Actual (return) loss on plan assets (14,480) 1,430 (5,739)
Net amortization and deferral 9,483 (6,983) 629
------------------------------------------------------------------------
Net pension expense (benefit) $ 202 $ (225) $ 15
========================================================================
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.25% in 1995, 8.25% in
1994 and 7.5% in 1993. For all periods presented, the Company assumed an 8.0%
expected long-term rate of return on plan assets. The annual rate of increase in
future compensation levels was assumed to be 4% in 1995 and 5% in 1994 and 1993.
In 1995, the Company adopted a nonqualified defined benefit plan,
effective as of January 1, 1995. This unfunded plan provides to designated
executive officers retirement benefits calculated using the qualified plan's
formula, but without the restrictions imposed on qualified plans by certain
specified provisions of the Internal Revenue Code. Benefits that become payable
under the nonqualified plan would be reduced by amounts paid from the qualified
plan. The Company previously maintained a nonqualified excess benefit retirement
plan which was terminated effective January 1, 1993 with accrued benefits
preserved for participants. Designated executives participating in the newly
adopted nonqualified plan were required to relinquish their benefits under the
terminated plan. At December 31, 1995, the actuarial present value of projected
benefit obligations under the nonqualified plans was approximately $2,120,000
and the recorded accrued pension liability was $1,250,000. The net pension
expense was not material.
Effective October 1, 1993, the Company converted its noncontributory
employee thrift plan into an employee savings plan under Section 401(k) of the
Internal Revenue Code. Under the new plan, which covers substantially all
full-time employees, the Company matches the savings of each participant up to
3% of his or her compensation. Annual participant savings are limited by tax
law. Participants are fully vested in their savings and in the matching Company
contributions at all times. The expense of the Company's matching contributions
was approximately $946,000 in 1995, $922,000 in 1994 and $245,000 in 1993.
Health and Welfare Plans
The Company also maintains certain health care and life insurance
benefit plans for retirees and their eligible dependents. Participant
contributions are required under the health plan, and the Company has
established annual and lifetime maximum health care benefit limits. Effective
January 1, 1993, the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." This statement requires that the
expected cost of providing these postretirement benefits be recognized during
the period employees are actively working. Prior to 1993, the Company recognized
the cost only as benefit payments were made to or on behalf of retirees. The
Company continues to fund its obligations under the postretirement benefit plans
as the benefit payments are made.
Upon adoption of SFAS No. 106, the Company elected to immediately
recognize the accumulated postretirement benefit obligation of $5,963,000. The
expense related to the recognition of this transition obligation was reported,
net of income tax effects of $2,023,000, as the cumulative effect of an
accounting change in 1993 in the consolidated statements of operations (Note 7).
At December 31, 1995, the net postretirement benefit liability reported
with other liabilities in the consolidated balance sheets was approximately
$6,314,000. The net periodic postretirement benefit expense recognized under
SFAS No. 106 for 1995, 1994 and 1993 was $168,000, $300,000 and $450,000,
respectively. The benefit expense includes components for the portion of the
expected benefit obligation attributed to current service, for interest on the
accumulated benefit obligation, and for amortization of unrecognized actuarial
gains or losses. The expense recognized is not materially different from that
which would have been reported under the previous accounting method.
For the actuarial calculation of its postretirement benefit obligations
at December 31, 1995, 1994 and 1993, the Company assumed annual health care cost
increases beginning at 10%, 11% and 12%, respectively, with each decreasing to a
5.5% rate over a ten year period. Discount rates of 7.25% in 1995, 8.25% in 1994
and 7.5% in 1993 were used in determining the present value of projected
benefits. A 1.0% rise in the assumed health care cost trend rates would not
materially impact the accumulated benefit obligation or the periodic net benefit
expense.
Page 35 of 60
Incentive and Other Plans
The Company has a long-term incentive program for which all employees
are eligible. As of December 31, 1995, 263,625 shares of treasury stock are
reserved for the purposes of this program, which include the granting of stock
options, restricted stock, and performance and phantom stock. The Company
granted 40,000 shares of restricted stock to certain employees during 1995 for
no cash consideration. During 1994 and 1993, restricted stock grants totalled
50,100 and 36,000 shares, respectively. Employees receiving the grants are
restricted from transferring or otherwise disposing of the stock for five years
from the date of grant. The market values of the restricted shares, determined
as of the grant dates, were $1,155,000, $1,357,000 and $699,000, respectively,
for 1995, 1994 and 1993. These amounts are being amortized as compensation
expense over the five year restriction periods. Compensation expense recognized
during 1995, 1994 and 1993 related to these employee stock grants was $598,000,
$340,000 and $168,000, respectively.
The following table summarizes stock option activity under the
long-term incentive program for employees for the three-year period ended
December 31, 1995. The incentive and non-qualified options are fully exercisable
six months after the date of grant.
INCENTIVE OPTIONS NON-QUALIFIED OPTIONS
----------------------------------------------- ----------------------------------------------
AVERAGE AVERAGE
EXERCISE MARKET EXERCISE MARKET
SHARES PRICE PRICE SHARES PRICE PRICE
---------------------------------------------------------------------------------------------------
Balance,
December 31, 1992 43,650 $ 13.22 $ 16.00 11,925 $ 13.22 $ 16.00
Options granted 50,497 $ 19.42 $ 19.42 25,253 $ 19.42 $ 19.42
Options exercised (2,302) $ 13.22 $ 22.35 - - -
---------- ------------ ------------ -------- ------------ -----------
Balance,
December 31, 1993 91,845 $13.22-19.42 $ 22.75 37,178 $13.22-19.42 $ 22.75
Options granted 48,926 $ 28.00 $ 28.00 23,574 $ 28.00 $ 28.00
Options exercised (17,174) $ 13.22 $ 22.84 - - -
Options exercised (1,500) $ 19.42 $ 22.00 - - -
---------- ------------ ------------ -------- ------------ -----------
Balance,
December 31, 1994 122,097 $13.22-28.00 $ 21.75 60,752 $13.22-28.00 $ 21.75
Options granted 50,454 $ 28.88 $ 28.88 32,296 $ 28.88 $ 28.88
Options exercised (2,250) $ 13.22 $ 26.30 - - -
Options exercised (1,500) $ 19.42 $ 25.75 - - -
Options forfeited (1,000) $ 28.00 N/A - $ - $ -
---------- ------------ ------------ -------- ------------ -----------
Balance
December 31, 1995 167,801 $13.22-28.88 $ 31.00 93,048 $13.22-28.88 $ 31.00
========= ============ ============ ======== ============ ===========
On February 28, 1990, an executive officer was granted options to
purchase 33,750 shares of common stock of the Company at a price of $18.11 per
share through February 28, 2000. At December 31, 1995, none of these options had
been exercised. If this officer terminates his employment with the Company, the
options will be exercisable for six months after his date of termination. The
options will also be exercisable up to one year past the date of his death, but
in no event beyond February 28, 2000.
During 1994, the Company adopted a revised Directors' Compensation Plan
which provides for, among other matters, the annual award of 150 shares of
common stock and the annual grant of nonqualified options to purchase 1,000
shares of common stock to each director who is not an employee of the Company or
its subsidiaries. The nonqualified options are exercisable at the market price
on the grant date. As of December 31, 1995, options to purchase 11,000 shares of
common stock at an exercise price of $26.25 and 14,000 shares at a price of
$26.75 were outstanding. During 1995, options for 1,000 shares were exercised at
a price of $26.25 when the market price was $33.75. No options were exercised
during 1994. The expense of the stock awards under this plan was $56,000 in 1995
and $47,000 in 1994.
In October, 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation," which is effective for years beginning after December
15, 1995. Among other provisions, this statement establishes a fair value based
method of accounting for stock- based compensation, including the award of stock
options. As provided for in SFAS No. 123, the Company has elected not to adopt
the fair value based method for measuring stock-based compensation cost to be
included in its results of operations, but will continue to follow prior
generally accepted accounting principles. Pro forma disclosures will be made in
future periods of net income and earnings per share determined as if the fair
value method had been applied in measuring compensation cost.
Page 36 of 60
(7) NET CUMULATIVE EFFECT OF ACCOUNTING CHANGES
The net cumulative effect of accounting changes reported in the
consolidated statement of operations for 1993 consisted of the following (in
thousands):
Postretirement benefits expense (net of tax effect
of $2,023) (Note 6) $ (3,940)
Income taxes (Note 5) 4,574
-------------------
Net cumulative effect of accounting changes $ 634
===================
(8) BANK PREMISES AND EQUIPMENT
Bank premises and equipment at December 31 are summarized as follows,
net of accumulated depreciation and amortization (in thousands):
1995 1994
------------------------------------
Land $ 22,145 $ 16,974
Buildings and improvements 39,342 33,607
Furnishings and equipment 13,718 12,628
------------------------------------
$ 75,205 $ 63,209
====================================
Accumulated depreciation was $70,910,000 in 1995 and $63,528,000 in 1994.
Provisions for depreciation and amortization included in non-interest expense
for the three years in the period ended December 31, 1995 were as follows (in
thousands):
1995 1994 1993
--------------------------------------------------------------------------------
Buildings and improvements $ 2,448 $ 2,333 $ 2,268
Furnishings and equipment 5,017 4,056 3,703
--------------------------------------------------------------------------------
$ 7,465 $ 6,389 $ 5,971
================================================================================
Page 37 of 60
(9) OTHER REAL ESTATE OWNED
Other real estate owned ("OREO") comprises real property collateral
acquired through foreclosure or in settlement of loans and surplus banking
property. With the exception of the pre-1933 properties discussed below, these
properties are reported at their fair value, less expected disposition costs, or
the recorded investment in the related loan, whichever is lower. Activity in the
OREO valuation reserve for the three years in the period ended December 31, 1995
was as follows (in thousands):
1995 1994 1993
----------------------------------------------------------------------------------------
Balance at January 1 $ 943 $ 3,790 $ 2,272
Provisions for valuation
adjustments 87 (1,073) 2,956
Charge-offs (397) (1,774) (1,438)
----------------------------------------------------------------------------------------
Balance at December 31 $ 633 $ 943 $ 3,790
========================================================================================
OREO includes a variety of property interests which were acquired
though routine banking transactions generally prior to 1933 and for which there
existed no ready market. These were subsequently written down to a nominal
holding value in accordance with general banking practice at that time. These
property interests include a few commercial and residential site locations
principally in the New Orleans area, ownership interests in scattered
undeveloped acreage, and various mineral interests.
The following summarizes the revenues and direct expenses related to
these property interests and stock that are included in the statements of
operations (in thousands):
1995 1994 1993
--------------------------------------------------------------------------------
Revenues $ 200 $ 224 $ 258
================================================================================
Direct expenses $ 25 $ 39 $ 40
================================================================================
(10) NON-INTEREST INCOME
The components of non-interest income were as follows for the three
years in the period ended December 31, 1995 (in thousands):
1995 1994 1993
-----------------------------------------------------------------------
Service charges on deposits $ 15,848 $ 16,322 $ 15,613
Credit card income 5,081 4,598 4,014
Trust service fees 3,394 2,775 2,740
International services income 1,941 1,783 1,443
Investment services income 920 1,113 873
Other fees and charges 2,543 1,990 1,782
Net gains on sales of OREO 935 3,260 3,618
Other operating income 602 466 908
-------------- ----------------- ---------------
Total other non-interest income $ 31,264 $ 32,307 $ 30,991
Gain on sale of securities - 46 -
-------------- ----------------- ---------------
Total non-interest income $ 31,264 $ 32,353 $ 30,991
============== ================= ===============
Page 38 of 60
(11) NON-INTEREST EXPENSE
The components of non-interest expense were as follows for the three
years in the period ended December 31, 1995 (in thousands):
1995 1994 1993
------------------------------------------------------------------------
Salaries and benefits $ 57,672 $ 53,725 $ 48,264
Occupancy of bank premises,net 7,666 6,903 6,502
Furnishings and equipment, including
data processing 9,200 7,180 6,050
Security and other outside services 3,977 3,623 3,005
Taxes and insurance, other than real estate 3,955 2,991 1,881
Credit card processing services 3,723 3,334 3,043
Deposit insurance and regulatory fees 3,383 5,898 6,885
Postage and communications 3,105 2,574 2,488
Legal and other professional services 2,908 2,549 3,398
Stationery and supplies 2,483 2,237 2,115
Advertising 1,998 1,559 1,267
Amortization of intangible assets 2,888 4,161 3,664
OREO maintenance and operations, net 371 958 1,120
Provision for (recovery of) losses on OREO
and other problem assets, net 87 (1,056) 1,900
Other operating expense 7,717 7,622 8,511
------------- ------------------ ---------------
Total non-interest expense $ 111,133 $ 104,258 $ 100,093
============ ================== ===============
(12) OTHER ASSETS AND LIABILITIES
The significant components of other assets and other liabilities at
December 31, 1995 and 1994, were as follows (in thousands):
OTHER ASSETS
------------------------------------
1995 1994
--------------- --------------
Net deferred tax asset $ 12,199 $ 17,181
Costs in excess of net
tangible assets acquired 24,138 14,034
Other 5,628 7,013
--------------- --------------
Total other assets $ 41,965 $ 38,228
=============== ==============
Costs in excess of the net tangible assets acquired in current and
prior years' business combinations are being amortized over remaining lives
ranging from one to fourteen years as of December 31, 1995.
OTHER LIABILITIES
------------------------------------
1995 1994
--------------- --------------
Accrued interest payable $ 7,716 $ 4,467
Obligation for postretirement
benefits other than pensions 6,314 6,702
Accrued taxes and expenses 5,287 8,012
Other 2,352 2,440
---------------- --------------
Total other liabilities $ 21,669 $ 21,621
================ ==============
Page 39 of 60
(13) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure is made in accordance with the requirements of
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments." In cases where quoted market prices are not
available, fair values have been estimated using present value or other
valuation techniques. The results of these techniques are highly sensitive to
the assumptions used, such as those concerning appropriate discount rates and
estimates of future cash flows, which require considerable judgement.
Accordingly, estimates presented herein are not necessarily indicative of the
amounts the Company could realize in a current settlement of the underlying
financial instruments. SFAS No. 107 excludes certain financial instruments and
all nonfinancial instruments from its disclosure requirements. These disclosures
should not be interpreted as representing an aggregate measure of the underlying
value of the Company.
The Company does not maintain any investment or participation in
financial instruments or agreements whose value is linked to, or derived from,
changes in the value of some underlying asset or index. Such instruments or
agreements include futures, forward contracts, option contracts, interest-rate
swap agreements, and other financial arrangements with similar characteristics,
and are commonly referred to as derivatives.
DECEMBER 31, 1995 DECEMBER 31, 1994
(in thousands)
------------------------------------------------------------------------------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------------------------------------------------------------------------------------------------
ASSETS:
Cash and due from financial
institutions $ 217,658 $ 217,658 $ 196,850 $ 196,850
Federal funds sold 13,650 13,650 17,600 17,600
Investment in securities 1,368,041 1,385,491 1,532,978 1,487,916
Loans, net 1,402,403 1,424,123 1,025,742 1,037,462
Interest receivable and
other assets 29,219 29,219 32,054 32,054
LIABILITIES:
Deposits $ 2,561,358 $ 2,562,868 $ 2,411,063 $ 2,409,259
Federal funds purchased and
other short-term borrowings 227,094 227,094 179,806 179,806
Interest payable and
other liabilities 14,571 14,571 10,107 10,107
The following significant methods and assumptions were used by the
Company in estimating the fair value of financial instruments.
Cash and short-term investments - The carrying value of highly liquid
instruments, such as cash on hand, interest and non-interest bearing deposits in
financial institutions, and federal funds sold, provides a reasonable estimate
of their fair value.
Investment securities - Substantially all of the Company's investment securities
are traded in active markets. Fair value estimates for these securities are
based on quoted market prices obtained from independent pricing services. The
carrying amount of accrued interest on securities approximates its fair value.
Loans, net - For loans with rates that are repriced in coordination with
movements in market rates and with no significant change in credit risk, fair
value estimates are based on carrying values. The fair values for other loans
are estimated through discounted cash flow analysis, using current rates at
which loans with similar terms would be made to borrowers of similar credit
quality. Appropriate adjustments are made to reflect probable credit losses. The
carrying amount of accrued interest on loans approximates its fair value.
Deposits - SFAS No. 107 specifies that the fair value of deposit liabilities
with no defined maturity is to be disclosed as the amount payable on demand at
the reporting date, i.e., at their carrying or book value. These deposits, which
include interest and non-interest checking, passbook savings, and money market
accounts, represented approximately 72% and 77% of total deposits at December
31, 1995 and 1994, respectively. The fair value of fixed maturity deposits is
estimated using a discounted cash flow calculation that applies rates currently
offered for time deposits of similar remaining maturities. The carrying amount
of accrued interest payable on deposits approximates its fair value.
Page 40 of 60
The economic value attributable to the relationship with depositors who
provide low-cost funds to the Company is viewed as a separate intangible asset
and is excluded in SFAS No. 107 from the definition of a financial instrument.
Short-term borrowings - The carrying amounts of federal funds purchased,
borrowings under repurchase agreements, and other short-term borrowings
approximate their fair values.
Off-balance-sheet instruments - Off-balance-sheet financial instruments include
commitments to extend credit, letters of credit, and other financial guarantees.
The fair value of such instruments is estimated using fees currently charged for
similar arrangements in the marketplace, adjusted for changes in terms and
credit risk as appropriate. The estimated fair value for these instruments was
insignificant at December 31, 1995 and 1994.
(14) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In order to meet the financing needs of its customers, the Company
deals in financial instruments that expose it to off-balance-sheet risk. These
financial instruments include commitments to extend credit, letters of credit,
and other financial guarantees. Such instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in
the statements of financial position.
The Company's exposure to credit loss in the event of nonperformance by
other parties for commitments to extend credit and letters of credit and other
financial guarantees written is represented by the contractual amount of those
instruments. The Company follows the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet instruments.
CONTRACTUAL AMOUNT
December 31,
1995 1994
-------------------------------------
(in thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit $ 913,514 $ 582,385
Letters of credit and
financial guarantees written 81,443 72,488
Credit card lines 31,473 28,716
Commitments to extend credit and credit card lines are agreements to
make a loan to a customer as long as there is no violation of any condition
established in the commitment or credit card contract. Commitments generally
have fixed expiration dates or other termination clauses and may require
payments of a fee. Since many of the commitments are expected to expire without
being drawn upon, the total commitment amount outstanding does not necessarily
represent total future cash outlay requirements.
The amount of collateral, if any, required by the Company upon issuance
of a commitment is based on management's credit evaluation of the borrower.
Collateral varies, but may include accounts receivable, inventory, property,
plant and equipment, and income-producing commercial properties.
Letters of credit and financial guarantees written are conditional
agreements issued by the Company to guarantee the performance of a customer to a
third party. These agreements are primarily issued to support commercial trade.
Agreements totalling $14,052,000 at December 31, 1995 have original maturities
greater than one year. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
The Company holds marketable securities as collateral to support those letters
of credit and guarantees for which collateral is deemed necessary. Letters of
credit and financial guarantees outstanding at December 31, 1995, range from
unsecured to fully secured.
(15) REGULATORY MATTERS
The Banks are required to maintain non-interest-bearing reserve
balances with the Federal Reserve Bank to fulfill their reserve requirements.
The totals of the average balances maintained were approximately $41,022,000 in
1995 and $42,731,000 in 1994.
Page 41 of 60
Minimum regulatory capital requirements have been established with
respect to banks and bank holding companies, expressed in terms of regulatory
capital ratios. At December 31, 1995, the Company's and the Banks' ratios
satisfied all of the minimum capital requirements.
Dividends received from the subsidiary Banks are the primary source of
funds available to Whitney Holding Corporation for the declaration and payment
of dividends to the Company's shareholders. There are various regulatory and
statutory provisions that limit the amount of dividends that the subsidiary
Banks may distribute to the Company. Without prior regulatory approvals, the
Banks will have available an amount equal to approximately $37 million plus
their current net income to distribute as dividends in 1996.
(16) MERGERS AND ACQUISITIONS
In early March, 1996, the Company completed a merger with First
Citizens Bancstock, Inc. ("FCB"), the parent of The First National Bank in St.
Mary Parish ("FNB"). FNB, which will merge into the Louisiana Bank, operates
eleven banking offices in south Louisiana, with branches in St. Mary, East Baton
Rouge, and Iberia Parishes and a loan production office in Orleans Parish. FNB
has total assets of approximately $243 million, $147 million in loans, total
deposits of $214 million, and shareholders' equity of $27 million. The merger is
intended to qualify as a tax-free reorganization and will be accounted for as a
pooling of interests. FCB shareholders received approximately 2.03 million
shares of Whitney Holding Corporation common stock with a market value of
approximately $63 million. Holders of FCB stock options at the closing date
received options to buy approximately 192,000 shares of Company common stock at
a weighted-average exercise price of $11.64. Selected proforma financial
information for the pooled companies, assuming the merger had been completed at
the beginning of the earliest year presented, is as follows (unaudited, in
thousands except per-share data):
1995 1994 1993
-----------------------------------------------------------------------
Net interest income $ 141,428 $ 135,247 $ 131,424
Net income $ 44,349 $ 56,198 $ 79,228
Earnings per share:
Primary $ 2.61 $ 3.39 $ 4.81
Fully diluted $ 2.60 $ 3.39 $ 4.81
On February 17, 1995, Whitney Bank of Alabama purchased the assets and
assumed the deposit liabilities of the five Mobile branch offices of The Peoples
Bank, Elba, Alabama. The fair value of the tangible assets acquired totaled
approximately $90 million, including $47 million in loans and $34 million in
investment securities and federal funds sold. The Alabama Bank assumed
non-interest-bearing demand deposits of $14 million and interest-bearing
transaction, savings and time deposits totaling $76 million. The purchase price
was approximately $12 million. Operating results from the date of acquisition
are included in the accompanying consolidated statements of operations for 1995.
On March 31, 1994, the Company and the Louisiana Bank purchased
substantially all of the assets and assumed the deposits and certain other
liabilities of Baton Rouge Bank and Trust Company. Included in the tangible
assets acquired, whose fair value totaled approximately $118 million, were cash
and cash items of $41 million, investment securities and federal funds sold of
$13 million, and $59 million in loans, as well as six banking offices in the
Baton Rouge area. The deposits assumed included approximately $24 million in
non-interest-bearing demand deposits and $94 million in interest-bearing
transaction, savings and time deposit accounts. As part of the acquisition
price, which totaled approximately $9 million, Whitney Holding Corporation
issued 90,909 shares of its common stock with a value of $2 million. The
operating results from this acquisition were reflected in the Company's
consolidated statements of operations beginning with the second quarter of 1994.
(17) COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are parties to various legal
proceedings arising in the ordinary course of business. After reviewing with
outside legal counsel pending and threatened actions, management is of the
opinion that the ultimate resolution of these actions will not have a material
effect on the Company's financial condition and results of operations.
Management also does not believe that compliance with existing federal,
state or local environmental laws and regulations will impose any material
financial obligation on the Company or materially affect the realizable value of
its assets.
Neither the Company nor the Banks have entered into material
commitments under non-cancelable leases for facilities or equipment.
Page 42 of 60
(18) PARENT COMPANY FINANCIAL STATEMENTS
Summarized parent-company-only financial statements of Whitney Holding
Corporation follow (in thousands):
December 31,
1995 1994
------------------------------------------------
BALANCE SHEETS
Investment in and advances to the Banks $ 330,926 $ 295,739
Other investments in subsidiaries 1,003 3
Dividends receivable 3,642 2,854
Other assets 6,462 1,774
------------------------------------------------
Total assets $ 342,033 $ 300,370
================================================
Dividends payable and
other liabilities $ 3,781 $ 2,691
Shareholders' equity, net of treasury
shares, and unearned restricted stock
compensation 338,252 297,679
------------------------------------------------
Total liabilities and
shareholders' equity $ 342,033 $ 300,370
================================================
FOR YEAR ENDED DECEMBER 31,
STATEMENT OF OPERATIONS 1995 1994 1993
--------------------------------------------------------------------------
Dividend income from the Banks $ 24,937 $ 31,430 $ 6,252
Equity in net undistributed earnings of the Banks 15,830 21,427 70,155
Other income (expense), net 170 (19) (6)
--------------------------------------------------------------------------
Net income $ 40,937 $ 52,838 $ 76,401
==========================================================================
STATEMENT OF CASH FLOWS Cash flows from operating activities:
Net income $ 40,937 $ 52,838 $ 76,401
Adjustment to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed
earnings of the Banks (15,830) (21,427) (70,155)
(Increase) Decrease in dividend
receivable (788) (563) (925)
(Increase) Decrease in other assets (317) (119) 2
Increase (Decrease) in other liabilities 268 207 -
Other, net 11 - -
--------------------------------------------------------------------------
Net cash provided by
operating activities $ 24,281 $ 30,936 $ 5,323
--------------------------------------------------------------------------
Cash flows from investing activities:
Investment in and advances to Whitney Bank of Alabama $ (12,752) $ (22,162) $ -
Investment in Whitney Community Development Corporation (1,000) - -
(Increase) Decrease in investment securities (4,484) (740) (130)
--------------------------------------------------------------------------
Net cash provided by
(used in) investing activities $ (18,236) $ (22,902) $ (130)
--------------------------------------------------------------------------
Cash flows from financing activities:
Dividends paid $ (11,353) $ (8,767) $ (5,287)
Sale of common stock under employee savings plan and
dividend reinvestment plan 5,090 675 76
Exercise of stock options 86 256 30
--------------------------------------------------------------------------
Net cash provided by
(used in) financing activities $ (6,177) $ (7,836) $ (5,181)
--------------------------------------------------------------------------
Net increase (decrease) in cash $ (132) $ 198 $ 12
Cash at the beginning of the year 234 36 24
--------------------------------------------------------------------------
Cash at the end of the year $ 102 $ 234 $ 36
==========================================================================
Page 43 of 60
MANAGEMENT REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING
The management of Whitney Holding Corporation is responsible for the
preparation of the financial statements, related financial data and other
information in this annual report. The financial statements are prepared in
accordance with generally accepted accounting principles and include amounts
based on management's estimates and judgement where appropriate. Financial
information appearing throughout this annual report is consistent with the
financial statements.
The Company's financial statements have been audited by Arthur Andersen
LLP, independent public accountants. Management has made available to Arthur
Andersen LLP all of the Company's financial records and related data, as well as
the minutes of shareholders' and directors' meetings. Furthermore, management
believes that all representations made to Arthur Andersen LLP during its audit
were valid and appropriate.
Management of the Company has established and maintains a system of
internal control that provides reasonable assurance as to the integrity and
reliability of the financial statements, the protection of assets from
unauthorized use or disposition, and the prevention and detection of fraudulent
financial reporting. The system of internal control provides for appropriate
division of responsibility and is documented by written policies and procedures
that are communicated to employees with significant roles in the financial
reporting process and updated as necessary. Management continually monitors the
system of internal control for compliance. The Company maintains a strong
internal control auditing program that independently assesses the effectiveness
of the internal controls and recommends possible improvements thereto. As part
of their audit of the Company's 1995 financial statements, Arthur Andersen LLP
considered the Company's system of internal control to the extent they deemed
necessary to determine the nature, timing and extent of their audit tests.
Management has considered the recommendations of the internal auditors and
Arthur Andersen LLP concerning the Company's system of internal control and has
taken actions that it believes are cost-effective in the circumstances to
respond appropriately to these recommendations. Management believes that, as of
December 31, 1995, the Company's system of internal control is adequate to
accomplish the objectives discussed herein.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF WHITNEY HOLDING CORPORATION:
We have audited the accompanying consolidated balance sheets of Whitney
Holding Corporation and subsidiaries (a Louisiana corporation) as of December
31, 1995 and 1994, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Whitney
Holding Corporation and subsidiaries as of December 31, 1995 and 1994, and the
results of its operations and cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in notes 5 and 6 to the consolidated financial statements,
effective January 1, 1993, the Company changed its methods of accounting for
income taxes and for post retirement benefits other than pensions.
Arthur Andersen LLP
New Orleans, Louisiana
January 16, 1996 (except
with respect to the first
paragraph of Note 16 as to
which the date is
March 8, 1996)
Page 44 of 60
SUMMARY OF QUARTERLY FINANCIAL INFORMATION
The following quarterly financial information is unaudited. In the
opinion of management all normal recurring adjustments necessary to present
fairly the results of operations for such periods are reflected.
1995 - UNAUDITED
(in thousands, except per-share amounts)
------------------------------------------------------------------
4TH 3RD 2ND 1ST
QUARTER QUARTER QUARTER QUARTER
------------------------------------------------------------------
Interest income $ 52,052 $ 49,611 $ 47,236 $ 45,253
Net interest income 34,758 32,923 31,109 30,700
Reduction in reserve for possible loan losses - 10,000 - -
Income before income tax 13,714 22,679 11,488 11,740
Net income 9,561 15,205 8,130 8,041
Earnings per share for the three-month periods
(based on weighted average of number of shares
outstanding) $ 0.64 $ 1.03 $ 0.55 $ 0.55
Dividend declared, per share $ 0.22 $ 0.20 $ 0.20 $ 0.20
Range of closing stock prices 29 3/4-31 1/2 26 3/4-34 24-273/8 22-25 3/4
1995 - UNAUDITED
(in thousands, except per-share amounts)
------------------------------------------------------------------
4TH 3RD 2ND 1ST
QUARTER QUARTER QUARTER QUARTER
------------------------------------------------------------------
Interest income $ 44,367 $ 46,010 $ 43,842 $ 41,542
Net interest income 30,812 32,872 30,889 29,321
Recovery of loan charge-off - 6,139 - -
Reduction in reserve for possible loan losses 10,000 - - 10,000
Income before income tax 20,846 20,005 13,798 23,479
Net income 14,135 13,512 9,474 15,717
Earnings per share for the three-month periods
(based on weighted average of number of shares
outstanding) $ 0.96 $ 0.93 $ 0.65 $ 1.09
Dividend declared, per share $ 0.17 $ 0.17 $ 0.15 $ 0.15
Range of closing stock prices 21-27 25 3/4-28 1/2 21 3/4-27 1/4 21 1/2-24
Page 45 of 60
PART III
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
In response to this item, registrant incorporates by reference the
sections entitled "Election of Directors", "Certain Transactions" and
"Compliance with Section 16(A) of the Exchange Act" of its Proxy Statement dated
March 15, 1996.
ITEM 11: EXECUTIVE COMPENSATION
In response to this item, registrant incorporates by reference the
section entitled "Executive Compensation" of its Proxy Statement dated March 15,
1996.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In response to this item, registrant incorporates by reference the
sections entitled "Voting Securities and Principal Holders Thereof" and
"Election of Directors" of its Proxy Statement dated March 15, 1996.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In response to this item, registrant incorporates by reference the
section entitled "Certain Transactions" of its Proxy Statement dated March 15,
1996.
Page 46 of 60
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The following consolidated financial statements of the Company and its
subsidiaries are included in Part II Item 8:
Page Number
-----------
Consolidated Balance Sheets --
December 31, 1995 and 1994 22
Consolidated Statements of Operations --
Years Ended December 31, 1995, 1994, and 1993 23
Consolidated Statements of Changes in Shareholders' Equity --
Years Ended December 31, 1995, 1994, and 1993 24
Consolidated Statements of Cash Flows --
Years Ended December 31, 1995, 1994, and 1993 25
Notes to Financial Statements 26
Report of Independent Public Accountants 44
Summary of Quarterly Financial Information 45
(a) (2) All schedules have been omitted because they are either not applicable
or the required information has been included in the financial statements or
notes to the financial statements.
(a) (3) Exhibits:
Exhibit 3.1 - Copy of Composite Charter, incorporated by reference to
the Company's March 31, 1993 Form 10-Q
Exhibit 3.2 - Copy of Bylaws, as amended, incorporated by reference to
the Company's March 31, 1994 Form 10-Q
Exhibit 10.1 - Stock Option Agreement between Whitney Holding
Corporation and William L. Marks, incorporated by reference to the
Company's 1990 Form 10-K
Exhibit 10.2 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and William L. Marks, incorporated by reference
to the Company's June 30, 1993 Form 10-Q
Exhibit 10.3 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and R. King Milling, incorporated by reference to
the Company's June 30, 1993 Form 10-Q
Exhibit 10.4 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Edward B. Grimball, incorporated by reference
to the Company's June 30, 1993 Form 10-Q
Exhibit 10.5 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Kenneth A. Lawder, Jr., incorporated by
reference to the Company's June 30, 1993 Form 10-Q
Exhibit 10.6 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and G. Blair Ferguson, incorporated by reference
to the Company's September 30, 1993 From 10-Q
Page 47 of 60
Exhibit 10.7 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Joseph W. May, effective December 13, 1993,
incorporated by reference to the Company's 1993 Form 10-K
Exhibit 10.8 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and John C. Hope, III, effective October 28, 1994
Exhibit 10.9 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Robert C. Baird, Jr., effective July 26, 1995
Exhibit 10.10 - Long-term incentive program, incorporated by reference
to the Company's 1991 Form 10-K
Exhibit 10.11 - Executive compensation plan, incorporated by reference
to the Company's 1991 Form 10-K
Exhibit 10.12 - Form of restricted stock agreement between Whitney
Holding Corporation and certain of its officers, incorporated by
reference to the Company's June 30, 1992 Form 10-Q
Exhibit 10.13 - Form of stock option agreement between Whitney Holding
Corporation and certain of its officers, incorporated by reference to
the Company's June 30, 1992 Form 10-Q
Exhibit 10.14 - Directors' Compensation Plan, incorporated by reference
to the Company's Proxy Statement dated March 24, 1994
Exhibit 10.15 - Agreement and Plan of Merger between Whitney Holding
Corporation and First Citizens Bancstock, Inc., effective September 28,
1995
Exhibit 10.16 - Retirement Restoration Plan effective January 1, 1995
Exhibit 21 - Subsidiaries
Whitney Holding Corporation owns 100% of the capital stock of Whitney
National Bank and Whitney Bank of Alabama. All other subsidiaries
considered in the aggregate would not constitute a significant
subsidiary.
Exhibit 23 - Consent of Independent Public Accountants
Exhibit 27 - Financial Data Schedule
(b) No report on Form 8-K was required to be filed by the Registrant during
the last quarter of 1995.
Pursuant to the requirements of the Section 13 or 15(d) 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/ William L. Marks
------------------------------------------------
William L. Marks
Chairman of the Board and
Chief Executive Officer March 27, 1996
-------------------------
Date
Page 48 of 60
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
/s/ William L. Marks , Chairman of the Board and
- -----------------------------------
William L. Marks Chief Executive Officer and
Director March 27, 1996
-----------------------------
/s/ R. King Milling , President and Director March 27, 1996
- ----------------------------------- ---------------
R. King Milling
/s/ Edward B. Grimball , Executive Vice President & C.F.O.
- -----------------------------------
Edward B. Grimball (Principal
Accounting
Officer) March 27, 1996
-----------------------
/s/ John G. Phillips , Director March 27, 1996
- ----------------------------------- -----------------------
John G. Phillips
, Director
- ----------------------------------- -----------------------
W.P. Snyder III
/s/ Robert H. Crosby, Jr. , Director March 27, 1996
- ----------------------------------- -----------------------
Robert H. Crosby, Jr.
/s/ Richard B. Crowell , Director March 27, 1996
- ----------------------------------- -----------------------
Richard B. Crowell
, Director
- ----------------------------------- -----------------------
James M. Cain
/s/ Harry J. Blumenthal, Jr. , Director March 27, 1996
- ----------------------------------- -----------------------
Harry J. Blumenthal, Jr.
/s/ Robert E. Howson , Director March 27, 1996
- ----------------------------------- -----------------------
Robert E. Howson
/s/ Warren K. Watters , Director March 27, 1996
- ----------------------------------- -----------------------
Warren K. Watters
/s/ John K. Roberts, Jr. , Director March 27, 1996
- ----------------------------------- -----------------------
John K. Roberts, Jr.
, Director
- ----------------------------------- -----------------------
William A. Hines
/s/ E. James Kock, Jr. , Director March 27, 1996
- ----------------------------------- -----------------------
E. James Kock, Jr.
/s/ John J. Kelly , Director March 27, 1996
- ----------------------------------- -----------------------
John J. Kelly
/s/ Angus R. Cooper, III , Director March 27, 1996
- ----------------------------------- -----------------------
Angus R. Cooper, III
/s/ Joel B. Bullard, Jr. , Director March 27, 1996
- ----------------------------------- -----------------------
Joel B. Bullard, Jr.
Page 49 of 60
Exhibit 10.16
WHITNEY HOLDING CORPORATION
RETIREMENT RESTORATION PLAN
Effective as of January 1, 1995
Page 50 of 60
WHITNEY HOLDING CORPORATION
RETIREMENT RESTORATION PLAN
INDEX
PAGE
ARTICLE I - PURPOSE.......................................................... 1
ARTICLE II - DEFINITIONS..................................................... 1
Beneficiary......................................................... 1
Benefit Commencement Date........................................... 1
Employer ........................................................... 1
Participant......................................................... 1
Plan Committee...................................................... 2
Retirement Plan..................................................... 2
Other Definitions................................................... 2
ARTICLE III - ELIGIBILITY AND PARTICIPATION.................................. 2
Conditions of Eligibility........................................... 2
No Effect on Other Benefits......................................... 2
ARTICLE IV - RESTORATION BENEFITS............................................ 2
Special Definitions................................................. 2
Time of Payment..................................................... 3
Amount of Restoration Benefit....................................... 3
Form of Restoration Benefit......................................... 4
Cash Out of Small Benefits.......................................... 4
Actuarial Assumptions............................................... 5
Participant Elections............................................... 5
ARTICLE V - DEATH BENEFITS................................................... 5
Special Definition.................................................. 5
Participant's Death Before Benefit Commencement Date................ 5
Participant's Death After Benefit Commencement Date................. 6
Single-Sum Payment.................................................. 6
ARTICLE VI - RESTRICTIONS ON PAYMENT......................................... 6
Benefits Payable on Termination for Cause........................... 6
Early Payments...................................................... 6
ARTICLE VII - PLAN ADMINISTRATION............................................ 7
Powers ........................................................... 7
Payments ........................................................... 7
Delegation of Administrative Authority; Experts..................... 7
ARTICLE VIII - PARTICIPANTS' RIGHTS.......................................... 8
Spendthrift Provision............................................... 8
Plan Not an Employment Agreement.................................... 8
Offset ........................................................... 8
Obligation for Benefit Payments..................................... 8
Taxes ........................................................... 8
Employer's Protection............................................... 8
ARTICLE IX - MISCELLANEOUS................................................... 9
Termination of Plan................................................. 9
Funding ........................................................... 9
Inurement........................................................... 9
Amendments and Modifications........................................ 9
Governing Law....................................................... 10
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i
Page 51 of 60
WHITNEY HOLDING CORPORATION
RETIREMENT RESTORATION PLAN
THIS WHITNEY HOLDING CORPORATION RETIREMENT RESTORATION PLAN (the
"Plan") is adopted by Whitney Holding Corporation, a corporation organized and
existing under the laws of the State of Louisiana, and shall be first effective
as of January 1, 1995.
ARTICLE I
PURPOSE
The Plan is intended to be an unfunded deferred compensation
arrangement for the benefit of designated key management employees of Whitney
Holding Corporation and its affiliates and subsidiaries, within the meaning of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). As
such, this Plan is not intended to constitute an employee benefit plan under
ERISA which is subject to the provisions of Parts 2, 3 and 4 of Title I of
ERISA. In accordance with such intent, any obligation to pay benefits hereunder
shall be deemed to be an unsecured promise, and any right of a participant or
beneficiary hereunder to enforce such obligation shall be solely as a general
creditor of Whitney Holding Corporation. Further, the Plan is not intended to
constitute a qualified employee benefit plan within the meaning of Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE II
DEFINITIONS
Except as expressly set forth below, capitalized terms used herein
shall have the meanings ascribed to them in the Retirement Plan (as defined
below).
2.1 Beneficiary. The person, persons, entity or entities (a) designated
by a Participant, in writing, to receive death benefits payable under the
Retirement Plan, or (b) determined in accordance with the terms of the
Retirement Plan, as the case may be.
2.2 Benefit Commencement Date. The date on which the payment of
Restoration Benefits hereunder commences, determined in accordance with
Paragraph 4.2 hereof.
2.3 Employer. Whitney Holding Corporation, a corporation organized and
existing under the laws of the State of Louisiana, and any subsidiary or
affiliate of Whitney Holding Corporation.
2.4 Participant. An executive officer of the Employer who is designated
to participate in this Plan in accordance with Article III hereof and who is
entitled to receive a Restoration Benefit hereunder.
2.5 Plan Committee. The Plan Committee is the administrator of this
Plan, the members of which are the members of the Compensation Committee of the
Board of Directors of Whitney Holding Corporation.
2.6 Retirement Plan. A qualified employee benefit plan maintained by
Whitney National Bank known as the Whitney National Bank Retirement Plan, most
recently amended and restated as of July 1, 1995, as the same may be further
amended from time to time.
2.7 Other Definitions. The terms "Restoration Benefit," "Retirement
Election Period," "Cause," "Adverse Determination," and "Death Benefit" shall
have the respective meanings set forth below.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
104303_4
3/27/96 3:24PM
Page 52 of 60
3.1 Conditions of Eligibility. Eligibility to become a Participant in
this Plan shall be determined by the Plan Committee, in its sole discretion,
from time to time. Participants hereunder shall be executive officers of the
Employer who also participate in the Retirement Plan. Participants may be
designated individually or by groups or categories, in the discretion of the
Plan Committee. Any such determination shall be conclusive and binding upon all
persons.
The Plan Committee, in its sole discretion, may impose additional
conditions on eligibility to participate in this Plan. Any such conditions may
be imposed on a group or category of executive officers otherwise designated for
participation hereunder or may be imposed individually on any such executive
officer. Any additional conditions shall be evidenced by a written agreement
between the Plan Committee and any affected executive officer.
3.2 No Effect on Other Benefits. Except as set forth in Paragraph 3.1
hereof, any compensation paid or benefits provided to a Participant shall be in
addition to and not in lieu of the benefits provided to such Participant under
this Plan. Except as otherwise provided herein, nothing in this Plan shall be
construed as limiting, varying or reducing the provision of any benefit
available to a Participant, such Participant's estate or Beneficiary pursuant to
any employment agreement, retirement plan, including any qualified pension or
profit-sharing plan, health, disability or life insurance plan or any other form
of agreement or arrangement between the Employer and a Participant.
ARTICLE IV
RESTORATION BENEFITS
4.1 Special Definitions. For purposes of this Article IV, Restoration
Benefit means a benefit determined and payable to a Participant in accordance
with this Article IV.
The term "Retirement Election Period" shall mean (a) the 30-day period
commencing as of the first day of the calendar year immediately preceding the
year in which a Participant will attain his or her earliest Early Retirement
Date determined under the Retirement Plan, but determined without regard to
termination of employment, or (b) if an executive officer is designated as a
Participant hereunder after he or she has attained the earliest Early Retirement
Date (within the meaning of subparagraph (a)), the 30-day period commencing as
of the date on which he or she is designated as a Participant hereunder.
4.2 Time of Payment. A Participant's Restoration Benefit hereunder
shall be payable as of such Participant's Benefit Commencement Date. The term
Benefit Commencement Date shall mean (a) the date designated, in writing, by a
Participant during his or her Retirement Election Period, which date shall not
be earlier than the Participant's termination of employment with the Employer,
or (b) if no Benefit Commencement Date is designated in accordance with the
provisions of the preceding subparagraph (a), the last day of the calendar month
in which the Participant terminates his or her employment, completes 60 months
of Vesting Service or attains age 65, whichever occurs last.
4.3 Amount of Restoration Benefit. A Participant's Restoration Benefit
shall be the difference between a Participant's Maximum Benefit and Normal
Retirement Benefit or Early Retirement Benefit, as the case may be.
For this purpose, the terms "Normal Retirement Benefit" and "Early
Retirement Benefit" shall have the meanings ascribed to them in the Retirement
Plan. The term "Maximum Benefit" means a Participant's Normal Retirement Benefit
or Early Retirement Benefit, as the case may be, subject to the following
adjustments:
a. Compensation shall be determined without regard to
the limit imposed under Code Section 401(a)(17) (or
any successor thereto);
b. No reduction shall be taken on account of the
limitations imposed under Code Section 415 (or a
successor thereto), including, without limitation, a
reduction to reflect the annual benefit payable from
the Retirement Plan;
c. No reduction shall be taken on account of the general
test imposed under Code Section 401(a)(4) (or a
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successor thereto); and
d. Compensation shall be determined taking into account
any amount which a Participant defers under any plan
of deferred compensation maintained by the Employer,
including, without limitation, the Savings Plus Plan
(or any successor thereto), any plan maintained under
Code Section 125, and the Whitney Holding Corporation
Deferred Compensation Plan (or a successor thereto).
The Plan Committee shall determine the amount of the Restoration Benefit in
accordance with the guidelines set forth herein; any such determination shall be
conclusive and binding on all Participants hereunder.
4.4 Form of Restoration Benefit. A Participant's Restoration Benefit
hereunder shall be payable in the form designated by a Participant during his or
her Retirement Election Period, from among the following:
a. Single Life Annuity - Equal monthly payments for the
life of the Participant with no period of guaranteed
payment.
b. Term Certain Annuity - Equal monthly payments for the
life of the Participant, with a period of guaranteed
payments designated by the Participant; provided,
however, that the duration of the guaranteed payments
shall not exceed the number of whole years between
such Participant's Benefit Commencement Date and the
date on which he or she attains age 80.
c. Joint and Last Survivor Annuity - Equal monthly
benefits payable for the life of the Participant and
the Participant's Beneficiary, with 66 2/3% of the
monthly payments made during the lives of the
Participant and his or her Beneficiary paid to the
survivor among them.
d. Joint and Survivor Annuity - Equal monthly benefits
payable for the life of the Participant and the
Participant's Beneficiary (if he or she survives the
Participant) with 100% of the amount of the monthly
payments made during the life of the Participant paid
to the Participant's Beneficiary after the
Participant's death.
e. Joint and Last Survivor Annuity with Guaranteed
Payments - Equal monthly benefits payable for the
life of a Participant with 100% of the amount of the
monthly payment made during the life of the
Participant paid to the Participant's Beneficiary
after the Participant's death, with a guarantee that
such payments be made for 120 months, measured from
the Participant's Benefit Commencement Date.
If no designation is made, benefits hereunder shall be paid (a) in the form of a
joint and 100% survivor annuity (if a Participant is married as of his or her
Benefit Commencement Date), or (b) in the form of a single life annuity (if a
Participant is not married as of his or her Benefit Commencement Date).
4.5 Cash Out of Small Benefits. Notwithstanding the provisions of
Paragraph 4.4 to the contrary, if the present value of a Participant's
Restoration Benefit is $50,000 or less as of his or Benefit Commencement Date,
the Plan Committee shall distribute such amount to the Participant in the form
of an immediate single-sum payment. No additional benefit shall be payable with
respect to such Participant under this Plan.
4.6 Actuarial Assumptions. For purposes of determining a Restoration
Benefit hereunder, the Plan Committee shall use, to the extent practicable, the
actuarial assumptions used to determine benefits under the Retirement Plan.
Otherwise, the Plan Committee shall adopt such actuarial assumptions as may be
reasonably necessary to determine benefits payable hereunder.
4.7 Vesting. Any Restoration Benefit payable hereunder shall be subject
to the vesting rules set forth in the Retirement Plan, taking into account all
service with the Employer, including any affiliate of the Employer. To the
extent service with a predecessor employer is taken into account under the
vesting provisions of the Retirement Plan, such service shall be taken into
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account under this Plan for vesting purposes.
If a Participant's employment with the Employer is terminated, for any
reason, before he or she is fully vested within the meaning of the Retirement
Plan, no Restoration Benefit shall be payable from this Plan.
4.8 Participant Elections. Any elections permitted during the
Retirement Election Period shall be made, in writing, on forms acceptable to the
Plan Committee. Such elections shall be effective upon receipt by the Plan
Committee, which shall not be later than the last day of a Participant's
Retirement Election Period. A Participant's elections hereunder shall become
irrevocable as of the last day of his or her Retirement Election Period.
ARTICLE V
DEATH BENEFITS
5.1 Special Definition. The term Death Benefit shall mean a
benefit payable in accordance with this Article V.
5.2 Participant's Death Before Benefit Commencement Date. If a
Participant dies before his or her Benefit Commencement Date,
a Death Benefit shall be distributed in accordance with the
provisions of this Paragraph 5.2:
a. Amount. The amount of the Death Benefit payable under this
Paragraph 5.2 shall equal the Actuarial Equivalent (as defined
in the Retirement Plan) of either (i) the Participant's Early
Retirement Benefit (if he or she dies after his or her
earliest Early Retirement Date, or (ii) the Participant's
Normal Retirement Benefit, computed as if he or she (1)
terminated employment on the date of his or her death, (2) was
eligible for a Normal Retirement Benefit, (3) retired with a
Qualified Joint and Survivor Annuity (as defined in the
Retirement Plan) on his or her Normal Retirement Date, and (4)
died on the date after he or she would have reached his or her
Normal Retirement Date.
b. Form. A Death Benefit payable under this Paragraph 5.2 shall
automatically be distributed in the form of the survivor's
portion of a Qualified Joint and 50% Survivor Annuity.
c. Time. The distribution of a Death Benefit hereunder shall
commence as of the earlier of (i) the Participant's Benefit
Commencement Date, or (ii) the date on which the Participant
would have attained the earliest Early Retirement Date
determined under the Retirement Plan.
d. Beneficiary. The death benefit provided under this Paragraph
5.2 shall be payable to (i) the Participant's surviving spouse
(if he or she is married on the date of his or her death), or
(ii) the Participant's Beneficiary (if he or she is not
married on the date of his or her death.
5.3 Participant's Death After Benefit Commencement Date. If a
Participant dies after his or her Benefit Commencement Date, the Employer shall
pay to the Participant's Beneficiary the remaining Restoration Benefit, if any,
which would otherwise be payable to the deceased Participant, in accordance with
the method of distribution in effect on the date of the Participant's death.
5.4 Single-Sum Payment. Notwithstanding the provisions of this Article
V to the contrary, if the present value of a Death Benefit payable under
Paragraph 5.2 hereof is $50,000 or less determined as of the date of the
Participant's death, the Plan Committee shall distribute such amount to the
Participant's surviving spouse or Beneficiary, as the case may be, in the form
of a single-sum payment, and no additional benefits shall be payable under this
Plan with respect to such Participant.
ARTICLE VI
RESTRICTIONS ON PAYMENT
6.1 Benefits Payable on Termination for Cause. Notwithstanding any
other provision of this Plan to the contrary, if a Participant's employment with
the Employer is terminated for Cause before his or her Benefit Commence Date,
the Participant's
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participation in this Plan shall be terminated and neither the Participant nor
his or her Beneficiary shall be entitled to any form of benefit under this Plan.
For purposes of this Paragraph 6.1, the term "Cause" means that a
Participant is found guilty (by a court of competent jurisdiction), pleads
guilty or pleads nolo contendere to any act of fraud or dishonesty against the
Employer.
6.2 Early Payments. Notwithstanding any provision of this Plan to the
contrary, the Plan Committee may distribute or direct the trustee of any trust
established pursuant to Paragraph 9.2 hereof to distribute to any Participant
(or Beneficiary), in the form of an immediate single-sum payment, all or any
portion of a Participant's Restoration Benefit, if an Adverse Determination is
made with respect to such Participant. For this purpose, the term "Adverse
Determination" shall mean that, based upon Federal tax or revenue law, a
published or private ruling or similar announcement issued by the Internal
Revenue Service, a regulation issued by the Secretary of the Treasury, a
decision by a court of competent jurisdiction, a closing agreement made under
Section 7121 of the Code that is approved by the Internal Revenue Service and
involves such Participant or a determination of counsel, a Participant has or
will recognize income for Federal income tax purposes with respect to any amount
that is or will be payable under this Plan before it is otherwise to be paid
hereunder.
Further, notwithstanding any provision of the Plan to the contrary, the
Plan Committee may direct the trustee of any trust established pursuant to
Paragraph 9.2 hereof to distribute to any Participant in the form of an
immediate single-sum payment all or any portion of a Participant's Restoration
Benefit, based upon a change in ERISA, a published advisory opinion or similar
announcement issued by the Department of Labor, a regulation issued by the
Secretary of Labor, a decision by a court of competent jurisdiction, an
agreement between such Participant and the Department of Labor or similar agency
or an opinion of counsel, such Participant is not a "management" or "highly
compensated" employee or this Plan is not an "unfunded" plan within the meaning
of ERISA.
ARTICLE VII
PLAN ADMINISTRATION
7.1 Powers. This Plan and all matters related thereto shall be
administered by the Plan Committee. The Plan Committee shall have the power and
authority to interpret the provisions of this Plan and shall determine all
questions arising under this Plan including, without limitation, all questions
concerning administration, eligibility, and the amount of any benefit payable
hereunder. In addition, the Plan Committee shall have the authority to
prescribe, amend, and rescind rules and administrative procedures relating to
the operation of this Plan, to instruct any trustee as to the investment of any
asset held for the purposes described in Paragraph 9.2 hereof, and to correct
any defect, supply any omission or reconcile any inconsistency in this Plan.
Any determination by the Plan Committee need not be uniform as to all
or any Participants hereunder. Any such determination shall be conclusive and
binding on all persons.
7.2 Payments. The Plan Committee shall have the power and authority to
determine the time, method, and amount of any distribution hereunder. The Plan
Committee shall direct the trustee of any trust established pursuant to
Paragraph 9.2 hereof, in writing, as to any such distribution or withdrawal. Any
withdrawal on account of an early payment made in accordance with Article VI,
hereof, shall be deemed to constitute an advance against the affected
Participant's Restoration Benefit.
7.3 Delegation of Administrative Authority; Experts. The Plan
Committee, in its sole discretion, may delegate such nondiscretionary,
ministerial duties as it deems appropriate to the Human Resources Department of
Whitney National Bank. When acting in accordance with such delegation (whether
made orally or in writing) the Human Resources Department shall be deemed to
possess the power and authority granted to the Plan Committee hereunder. The
Plan Committee shall engage the services of such independent actuaries,
accountants, attorneys and other administrative personnel as it deems necessary
to administer the Plan.
ARTICLE VIII
PARTICIPANTS' RIGHTS
8.1 Spendthrift Provision. Neither a Participant nor any other
person shall have any right to commute, sell, assign,
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transfer, pledge, anticipate, mortgage or otherwise encumber any benefit or
amount payable hereunder. No amount payable under this Plan shall, prior to
actual payment, be subject to seizure or sequestration for the payment of any
debt, judgment, alimony or separate maintenance owed by a Participant or any
other person. No amount payable under this Plan shall be transferable by
operation of law in the event of a Participant's or other person's bankruptcy or
insolvency.
8.2 Plan Not an Employment Agreement. This Plan shall not be deemed to
constitute an employment agreement between the parties, nor shall any provision
restrict the right of the Employer to discharge any Participant as an employee
of the Employer.
8.3 Offset. If, at the time of any distribution hereunder, a
Participant, his or her Beneficiary, or both are indebted to the Employer, then
any distribution to be made to the Participant, his or her Beneficiary or both,
may, at the discretion of the Employer, be reduced by the amount of such
indebtedness.
8.4 Obligation for Benefit Payments. Notwithstanding any provision of
this Plan to the contrary, the payment of benefits under this Plan shall remain
the obligation of the Employer. In the event the Employer designates a
third-party as the payor of the benefits and the assets of such third-party are
insufficient to meet the payment obligations of the Employer under this Plan,
the Employer shall remain responsible for such deficiency.
8.5 Taxes. The Employer or any third-party payor shall withhold from
the payment benefits hereunder any amount required to be withheld under
applicable federal or state tax laws.
8.6 Employer's Protection. By commencing participation herein, each
Participant shall be deemed to have agreed to cooperate with the Employer by
furnishing any and all information reasonably requested by the Plan Committee in
order to facilitate the funding or payment of benefits hereunder, including,
without limitation, the taking of such physical examinations as the Employer or
the Plan may deem necessary and taking such other action as may reasonably be
requested by the Employer or the Plan Committee. If a Participant refuses to
cooperate, is uninsurable or is insurable at other than standard rates, the Plan
Committee, in its sole discretion, may determine that the Participant is
ineligible to participate hereunder.
If insurance on the life of any Participant is obtained and such
Participant commits suicide during the two-year period beginning on the date of
his or her participation in this Plan or if a Participant hereunder makes any
material misstatement of information or nondisclosure of medical history, the
Plan Committee, in its sole discretion, may terminate the participation of any
such Participant, without liability for benefit payments hereunder.
ARTICLE IX
MISCELLANEOUS
9.1 Termination of Plan. The Board of Directors of Whitney Holding
Corporation shall have the right, at any time, to terminate this Plan, in whole
or in part. The termination of this Plan shall not reduce any Restoration
Benefit accrued as of the effective date of such termination, without the prior
written consent of each affected Participant. Notwithstanding any provision of
this Plan or the Retirement Plan to the contrary, the termination of this Plan
shall cause the benefits payable hereunder to be fully vested and nonforfeitable
as to any affected Participant.
9.2 Funding. The Employer may establish a trust in connection with the
adoption of this Plan. Each year during the continuance of this Plan, the Plan
Committee may designate amounts to be added to the trust.
The property comprising the assets of any such trust, including any
insurance policy on the life of a Participant purchased by any such trust or
contributed to any such trust by the Employer, shall at all times remain the
property of such trust. The trustee of any such trust shall distribute the
assets comprising such trust in accordance with the provisions of this Plan and
the trust agreement, all as instructed by the Plan Committee, but in no event
shall such trustee distribute the assets of any such trust to or for the benefit
of the Employer, except as provided in any applicable trust agreement.
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No Participant or Beneficiary shall have the right to, or claim under
or against, any insurance policy on the life of the Participant obtained by the
Employer or any asset held in trust to help defray the cost incurred in
providing benefits under this Plan. Any such policy or other property shall be,
and remain, a general, unpledged asset of the Employer or the trust, as the case
may be.
9.3 Inurement. This Plan shall be binding upon and shall insure to the
benefit of the Employer and each Participant hereto and their respective heirs,
executors, administrators, successors and assigns.
9.4 Amendments and Modifications. Except as specifically provided
herein, this Plan may be changed or altered by written instrument signed by the
Board of Directors of Whitney Holding Corporation; provided, however, that no
such amendment or modification, shall reduce the amount of any Restoration
Benefit accrued hereunder as of the date of any such amendment or modification
without the prior written consent of each affected Participant.
9.5 Governing Law. This Plan is governed by the laws of the State of
Louisiana, in all respects, including matters of construction, validity and
performance.
EXECUTED December 1995, in multiple counterparts, each of which shall
be deemed an original, to be effective as of the date first written above.
WITNESSES: WHITNEY HOLDING CORPORATION
/s/ Margaret M. Castay By: /s/ Edward B. Grimball
- ----------------------------------- --------------------------------
/s/ Wendy M. Keller Title: Executive Vice President
- ----------------------------------- ----------------------------
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Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our reports included herein, or incorporated by reference to
this Form 10-K, into Whitney Holding Corporation's previously filed Registration
Statements on Form S-3 (File Nos. 33-56024, 33-55307, 33-56277 and 33-52983) and
Form S-8 (File No. 33-33-68506).
New Orleans, Louisiana Arthur Andersen LLP
March 27, 1996
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