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Whitney Holding Corporation (NASDAQ:WTNY)

Q3 2008 Earnings Call

October 16, 2008 4:30 pm ET

Executives

Tricia Voltz Carlson – Manager of Investor Relations

John C. Hope – Chairman of the Board & Chief Executive Officer

John M. Turner, Jr. – President & Director

Thomas L. Callicut, Jr. – Chief Financial Officer, Executive Vice President & Treasurer

Joseph S. Exnicios – Executive Vice President

Lewis P. Rodgers – Executive Vice President

Robert C. Baird, Jr. – Executive Vice President

Steve Barker – Comptroller

Analysts

Adam Barkstrom - Sterne, Agee & Leach, Inc.

John Pancari - J.P. Morgan

Kevin Fitzsimmons - Sandler O’Neill & Partners L.P.

Jennifer Demba - SunTrust Robinson Humphrey

[Casey Embrac] – Millennium

[Payton Green] - FTN Midwest Securities

Operator

Welcome to Whitney Holding Corporation’s third quarter 2008 earnings results conference call. (Operator Instructions) Presenting in today’s call are John Hope, Chairman and CEO, John Turner, President, Tom Callicutt, CFO, Joe Exnicios, Chief Risk Officer, Lewis Rodgers - EVP of Credit Administration, Bobby Baird, EVP of Banking Services, and Steve Barker, Comptroller of the bank.

At this time for opening remarks I would like to turn things over to Whitney’s Manager of Investor Relations, Tricia Voltz Carlson.

Tricia Voltz Carlson

During today’s call we may make forward-looking statements. Forward-looking statements provide projections of results of operations or financial conditions or state other forward-looking information such as expectations about future conditions and descriptions of plans and strategies for the future. Factors that could cause actual results to differ from those expressed in the company’s forward-looking statements include but are not limited to those outlined in Whitney’s filings with the SEC. Whitney does not intend and undertakes no obligation to update or revise any forward-looking statements.

I will now turn the call over to John Hope, Chairman and CEO.

John C. Hope, III

Thank you for joining us this afternoon. Hopefully by now you’ve had a chance to review the details of the quarter which we released earlier today and as you can see from this release and also the pre-release that we did last week, the numbers are very similar to those that we reported at the end of the second quarter. Obviously the major disappointment relates to the fragile economy and the real estate valuation issues which affect our Florida banking franchise.

Earnings for the quarter were $7 million or $0.11 per share. Included in this result was the one-time cost of $2 million or about $0.02 a share for casualty losses and expenses related to Hurricanes Gustav and Ike.

Before I talk about the topic on everybody’s mind, credit, I’d like to take a couple minutes to point out some things that in today’s environment we may tend to overlook, and that’s some of the positives.

The net interest margin of 4.53% was essentially flat compared to the last quarter and net interest income was stable, something we’re proud of obviously in this environment. This reflects continued loan growth, a stable level of noninterest-bearing deposits and another quarter of benefit from the LIBOR rates.

Loans grew 6% on a linked quarter annualized basis mainly from activity in our Houston, Texas market. Deposits on average were flat compared to the last quarter while quarter end deposits were actually down 3% from June 30. The growth in loans is being funded through normal cash flows from the investment portfolio and a small increase in short-term borrowings.

A couple of quick balance sheet notes. We do not have any preferred or common Fannie or Freddie stock in our portfolio nor do we have any exposure whatsoever to Lehman or AIG.

Fee income was down slightly in almost all categories, expenses increased linked quarter and include the $2 million that I previously mentioned related to the hurricanes. The other additional increase in expenses was mainly related to personnel and occupancy expense.

Now to credit. The issues that have been impacting our results for the past few quarters are again the main drivers for this quarter’s provision: MPAs and criticized loans. The story remains basically the same, real estate issues in Florida. While we are not experiencing any systemic issues in any industries or regions outside of Florida and Coastal Alabama real estate, we are seeing signs of a general weakening in the overall economy.

Tourism and energy are the sectors we are most closely watching today given the economies of our home markets. Approximately $25 million of this quarter’s provision of $40 million was driven by residential related credits within the CRE portfolio mainly located in the Tampa Bay area. Downgrades on a couple of C&I credits added $5 million to the provision. The unallocated allowance and adjustment to qualitative factors increased approximately $4 million reflecting our assessment of current economic conditions.

Consumer and other small credit charge-offs total $4 million and $1 million was added to the provision for changes to non-criticized credits. This provision of $40 million exceeded net charge-offs of $24.5 million which brought the allowance on loans up to 1.55 from the 1.38 level last quarter and 1.10 a year earlier. Approximately $10 million of the charge-offs were related to two C&I credits identified during the second quarter and $11 million was related to residential development loans.

Something that you need to know and understand, we are sticking with our methodology and our discipline that we have a great deal of comfort in in establishing the appropriate level of our provision. That is a discipline that we intend to maintain.

The overall level of criticized loans increased $121 million to a total of $586 million. Special mention credits, the least criticized category, increased $19 million to a total of $168 million as we continued to see migration in and out of both real estate and C&I loans and markets across the company.

Approximately $58 million of the $102 million increase in more severely criticized loans came from four previously uncriticized credit relationships. The relationships are in different markets and represent credits impacted by real estate issues and also by general economic conditions. These loans are all currently performing credits.

Included in criticized loans are approximately $235 million of nonperforming loans, up almost $88 million net during the quarter. The vast majority of the new nonperforming credits are located in that Tampa Bay area. Approximately $57 million of the increase in new nonperforming loans came from five previously-identified and criticized real estate-related credits in Florida. In addition a $13 million previously-criticized Louisiana credit was added to nonperformance.

The lack of demand for real estate in the Florida markets coupled with the difficulty of finding comps for appraisals continues to impact collateral values in turn causing deterioration in the markets. At the end of the third quarter 66% of our nonperforming loans are in Florida, 14% in Alabama, 18% in Louisiana, and 2% in Texas.

We all know that until there’s a floor on real estate prices in Florida, we cannot hope to predict when we may see a turn or stabilization in levels of problem credits. We are considering a variety of ways to manage these problem assets including bulk sales. However, we are not going to package and sell loans if we believe it is the wrong business decision. Currently we are managing our problems the way we always have, credit by credit. And until this credit cycle is over, we may continue to see these elevated levels of credit measures to continue.

I do want to point out that over the past few quarters we’ve been able to absorb the higher level of provision and still make money. Given our strong level of capital we’ve been able to continue to reward our shareholders and pay our quarterly dividend. We said last quarter that nothing had occurred that had caused us to think differently about our dividend policy or the level of capital needed to operate in this environment.

Today I will admit that we have been surprised by the severity and extent of this cycle and I think if we’re all honest, that most of you would admit the same thing. However we are still well capitalized. We intend to remain well capitalized. If credit problems persist, we are prepared to reconsider our dividend payout policy.

The tangible capital ratio was 7.89% and the leverage ratio was 8.14% at quarter end.

We’re also currently studying the announcements from federal officials and regulators made earlier this week regarding the government relief packages for financial institutions in order to determine if there are any opportunities we could take advantage of that would be in the best interest of our shareholders and the company.

Today we are focusing on addressing credit issues while also being a source of strength and stability for our customers just as Whitney has done for the past 125 years. We’re addressing the challenges present in the current environment and as you can see from our results we’re still making money, we’re still well capitalized, we have sufficient levels of liquidity, and we are continuing to focus on our strategic plan that we’ve mentioned to you before.

I’d now like to open it up for questions and we’ll call on my colleagues to help answer those questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Adam Barkstrom - Sterne, Agee & Leach, Inc.

Adam Barkstrom - Sterne, Agee & Leach, Inc.

I do want to ask a couple of follow ups on credit, but just sort of a macro question for you. I just wonder what your thought is. Oil is now bumping against $70 a barrel. Certainly you guys are in the heart of oil country there and I just wondered big picture, what are your thoughts with that? That’s a pretty dramatic decline in the price of oil in a pretty short period of time.

Joseph S. Exnicios

Let me try to explain how we do that. We are at least twice a year, and when the prices of the commodities drop like they have recently, it would prompt us to review our price debt for the E&P lending. We’re currently in the process of doing that. We are comfortable where we are. We’ve always taken a very conservative approach but we intend to upon completion of the review we currently have underway, we’re going to be lowering our price debt for the balance of this year and for 2009.

Adam Barkstrom - Sterne, Agee & Leach, Inc.

What does that mean, lowering your price debt?

Joseph S. Exnicios

That’s the price per barrel of oil when we run our economics on the oil and gas reserves.

John C. Hope, III

When we analyze the collateral offered on a reserve basis -

Adam Barkstrom - Sterne, Agee & Leach, Inc.

Okay.

Joseph S. Exnicios

When the price of oil got up in the $100’s our price debt was still in the $60 to $70 range when we were making loans.

Adam Barkstrom - Sterne, Agee & Leach, Inc.

Not to pin you down on a number, but is $70 a barrel, are we starting to get nervous here or does it have to go to $50 or $60 kind of the range? Any thoughts there?

Lewis P. Rogers

I think you’re beginning to speak more globally about the energy economy as opposed to how an oil and gas reserve based credit would perform and that would depend on the economics. As Joe indicated, we run those conservatively. Traditionally the energy companies have made good money at these levels.

I think what we’ve tried to do is always be cognizant of loading up the service and supply companies with term debt. How much could they take on? Many of us lived through the difficult times of 1985, ’86 and ’87 and so did our customer base. So they really know how difficult it is to deal with term exposure on equipment when there is no demand or falling demand or day rates for a variety of pieces of equipment falls. I think that the players can make money.

It is true that the costs to build vessels and other equipment is higher, and they are relying on higher day rates than they did back in 1986 and ’87. But all I can tell you is we’re cognizant of that risk and that’s what we pay attention to when we underwrite credit. Yes, I think the well capitalized players can survive at $70 and $60 a barrel.

John C. Hope, III

We don’t see any problems at $60 or $70. If it continues to go down below that and were to stay down for an extended period of time, then you would see some problems.

Adam Barkstrom - Sterne, Agee & Leach, Inc.

John, could you maybe just give a little more color on what you guys are thinking as far as the whole globally the TARP package? Would you guys consider as it stands now the preferred offering? Just generally what are you thinking about that?

John C. Hope, III

I’ll probably tell you more than what you’re interested in. My first reaction was that we weren’t going to have any interest in it whatsoever. It just wasn’t something that Whitney would want to do.

The more though the reality of the offering sinks in, the more you begin to think that you owe it to your shareholders to just look at it. 5% money is pretty inexpensive today. We need to understand the costs associated of the strings that would be attached to participating in that and then just really look and see what it can do for us. It’s a business decision and we’ve got to evaluate it as a business decision.

The other question that you’ve got to ask yourself really from two different perspectives is, what level of capital is going to be the right level of capital for a well capitalized bank going forward? And I would suggest to it it’s going to be more than it has been in the past. We’re going to be probably looking at enhancing our capital in some fashion once we can get to a rational solution to do that.

The [TARP] stuff, we’re going to look at it, we’re going to get some outside help to make sure that we understand it properly and then we’ll make a decision that’s in the best interest of our shareholders. We will give it serious consideration if in fact it can be a good deal.

Adam Barkstrom - Sterne, Agee & Leach, Inc.

You alluded to this in your opening remarks and certainly as I think you’re wise to do so looking at the dividend, looking at your payout ratios, looking at your capital issues and you certainly make a good point where you said sort of adequate capital level today is not what it was a year ago or whenever that time period was. Can you add any more color as to the process that you’re going through internally looking at your dividend? Some might say, “Why don’t you guys just go ahead and cut your dividends and start retaining as much capital as you can with this uncertainty, etc.?” I was wondering if you could add a little bit to that.

John C. Hope, III

Let me just first say that to limit the analysis just to say that you’re going to cut your dividend in order to begin to accumulate capital is really not taking into consideration hose shareholders who depend a great deal on receipt of that dividend. We have an obligation to match their needs also at the same time that we’re balancing the needs of maintaining and appropriate level of capital. So we have to consider all of our shareholders and we’ll consider it appropriately when we make that decision.

We will look at our credit quality metrics as this quarter moves forward to see whether or not we can determine if there’s any trend change taking place. I can assure you that if the credit metrics continue to deteriorate, then the dividend will be on the table fairly quickly. We normally announce a dividend decision at our November board meeting so I think you can look for some sign there one way or the other.

Operator

Our next question comes from John Pancari - J.P. Morgan.

John Pancari - J.P. Morgan

Can you give me some additional detail on your reserve for your Florida portfolio, particularly resi construction? Can you give us an idea how much of that portfolio is reserved for? What level of reserve do you have?

Lewis P. Rodgers

We haven’t broken out the reserve by geographies. We’ve had that question from time to time. I think if you look at the statistics we gave you though even in this, you’ll see the residential construction piece in Florida is frankly very small but you probably would be lumping in commercial construction land and land development.

If you look down at the criticized totals, our methodology is sensitive, very sensitive to risk ratings so you can begin to understand how much of the reserve may be allocated to Florida. It would be consistent with the level of criticized loans that we are indicating here as of September 30. But there’s not a tremendous amount of single family contractor base in our portfolio. I think we’re showing $57 million in residential construction in Florida as of 9/30.

John Pancari - J.P. Morgan

Are you able to give us a little bit more detail on your calculation of the reserve charge you took this quarter and how you came up with that? Are you basing it on some of the refresh rates on your LTVs in the Tampa markets and your panhandle markets, because we’re certainly hearing on some of the nonperforming loan sales some comps coming in around $0.35 to $0.40 on the dollar and so I was just trying to get an idea how you came up with your reserve amount and the potential here for additional sizable charges in coming quarters?

Lewis P. Rodgers

I will tell you that we have adjusted our reserve thoughts as it relates to looking at collateral dependent loans and the frequency of appraisals, and we have taken bigger discounts on those assets as we analyze them based on the age of the appraisal. For example, it could be that an appraisal that was up to a year old, in the Florida markets we would have discounted up to 10% in looking at what we thought the value would be. That value has moved up to 20% as it would relate to appraisals generally over six months old.

As we get information and we are looking at a collateral dependent loan and you’re looking at early ’08 or late ’07 appraisals, we’ve gotten more conservative in our assessment. That’s been developed really over the last nine months because as we get feedback in terms of values, we incorporate that as we analyze not only the loan in question but how to apply it to another loan if I’m in fact answering your question.

So it is taken into account so yes, I think both in terms of loss migration statistics as well as the assessment of collateral values it is imbedded in this allowance. John gave you some color as to how the allowance flushed out in terms of the growth and how much we had in net charge-offs, etc. I don’t know if I’m helping you.

John Pancari - J.P. Morgan

Well, you mentioned collateral values. I guess if you could tell us where have you refreshed your average LTV to on this resi construction book there in Florida?

Lewis P. Rodgers

I’m not sure I understand where you’re headed.

John Pancari - J.P. Morgan

In your recent reappraisals, this whole process that you’ve worked on coming up with this new reserve, where are the current reappraisals come in at on the LTV side on the resi construction book?

Lewis P. Rodgers

We don’t have a lot of residential construction. I can tell you on land and land development the refreshing of appraisals has been pretty consistently down and I think I’d indicated last quarter we’ve at times seen decreases from ’05 as much as 50% in the panhandle. I think we’re seeing that more consistently now. I think a little less so in Tampa but those are getting to be more common discounts that we see from those peak appraisals when we get refreshed.

What I was alluding to though is that we are beginning to see that even appraisals performed in early ’07 beyond the peak where you are already beginning to feel some discount, we’re finding that those appraisals when and if they are refreshed are coming down further in value and that is in part what’s driving up criticized totals. We see more risk in those credits and more credits are subject to being classified as risky because of the refreshing of appraisals that you alluded to.

John Pancari - J.P. Morgan

What industry was the Louisiana NPL that you added this quarter?

Joseph S. Exnicios

That would have been in the hospitality industry.

Operator

Our next question comes from Kevin Fitzsimmons - Sandler O’Neill & Partners L.P.

Kevin Fitzsimmons - Sandler O’Neill & Partners L.P.

John, you talked a little bit about the [TARP] program and the willingness to get more capital if it makes sense. Can you talk a little bit about what you might use that for? In this kind of environment is that to strictly bolster your capital levels further or is it to have dry powder for acquisition opportunities that might come along through weaker players that might not have the capital?

John C. Hope III

The motivation for us to consider it would be two-fold. One would be our anticipation that revised levels of capital to be well capitalized are going to be higher as we previously mentioned and the second reason is to prepare ourselves for hopefully some opportunities going forward. We do think they’ll be there.

Kevin Fitzsimmons - Sandler O’Neill & Partners L.P.

The preference for those opportunities, would those be similar to what you outlined earlier John in terms of some of the metro markets as you move north of your Gulf Coast footprint?

John C. Hope III

Yes, I think we mentioned the metro markets that were more C&I oriented but I also would say that we would be real interested in some end market because of the synergies that would be associated with them. The synergy of an end market would be pretty attractive to us today.

Thomas L. Callicutt, Jr.

I think beyond just acquisition type opportunities, it gives you an opportunity to grow your balance sheet potentially and take advantage of asset growing opportunities that are not necessarily acquisitions.

John C. Hope III

We’re being inundated with credit requests that we would like to be able to take advantage of, but since we’re trying to manage our capital levels there’s a limit to how much of that we can do. So it would be nice to have some additional capital.

Kevin Fitzsimmons - Sandler O’Neill & Partners L.P.

I don’t know if you mentioned it earlier, and if you did I apologize, but any update you can give us on New Orleans on what you’re seeing there? Are you more optimistic or are things getting tougher there?

John C. Hope III

I’ll let John Turner, our President, talk to that.

John M. Turner, Jr.

I’d say on the deposit side it’s very competitive. We are experiencing a lot of competition really from most of our competitors and we’re working hard to hold our position in the market. On the asset side we would I think we’ve indicated we’re concerned about hospitality just because of the state of the economy and people traveling less and businesses actually traveling less. So we are somewhat concerned about that. On the other hand, we continue to feel very positive about the infrastructure work that will occur here and continue to occur here and the impact that that will have on our economy. I’d say New Orleans is mixed at the moment largely because we’re not as optimistic about what may occur in the hospitality industry primarily.

John C. Hope III

We’re budgeting some pretty rough numbers for next year and the year after, not necessarily because of Florida but just because we think that the economy nationwide is going to have a pretty significant slowdown.

Operator

Our next question comes from Jennifer Demba - SunTrust Robinson Humphrey.

Jennifer Demba - SunTrust Robinson Humphrey

Could you talk a little bit about and give some color around your deposit flows during the third quarter as well as talk about what your net interest margin outlook is given the Feds just cut rates by 50 basis points?

John C. Hope III

I’m going to let Tom talk to margin and then I’ll let John Turner talk to the deposit situation.

Thomas L. Callicutt, Jr.

As far as the margin is concerned, as you know our margin has held up very well and we think it will hold up reasonably well. But it seems to me that with the cut that came, with where we are today on the deposit side and the competition that John Turner just mentioned, it’s hard to move our deposit rates down any more. But on the other side of that equation, as long as LIBOR stays up then we’ve got $2 billion repricing with LIBOR, it takes a little pressure off the margin. I think it would be unreasonable to think that the margin wouldn’t tend down a little bit but I don’t think it’d be anything drastic.

John M. Turner, Jr.

I would just add to that, we have seen some pressure on our deposits as there’s been some concern about the industry in general. We’ve seen a little bit of runoff in our deposits as some of our customers have sought the safety of treasuries. Those relationships haven’t left the bank and we think we can get that money back as we experience some stability and a little more confidence in the market.

We are again competing here particularly where we have the richest source of deposits and we intend to be competitive with our competition. We’re not going to let them take our customers from us so to the extent we’ve got to price up some to do that, we will in the short term. We’re very active in our markets calling and talking to our customers and I think that will pay dividends for us as we again try to connect with them and ensure them that this is a safe and sound place to keep their money.

John C. Hope III

Let me just focus on one thing in case you haven’t thought about it. As the regulators’ strategies have evolved, I think it’s become very clear to everybody in the country that they determined a group of large banks that they’re going to protect at all risks the ones that are the two big to fail banks.

As you’ve heard those banks announce their quarterly results, every one of those banks has mentioned that they’ve had significant deposit growth in the third quarter particularly in noninterest-bearing deposits. What the regulators have done basically is create an environment where the public in order to get to a flight to safety has gone to a bank that’s too big to fail and they’ve pulled money out of smaller community banks and to some extent the regional banks.

John M. Turner, Jr.

However with that said, our demand deposits are holding up extremely well. So like John says we’ve got the relationship deposits. Where we may have lost some is more in the money markets or CDs.

Operator

Our next question comes from [Casey Embrac] – Millennium.

[Casey Embrac] – Millennium

Just a couple of follow ups on credit, can you give us a little more color on your NPA disposition strategy in terms of what types of pricing you are seeing in some distress CRE situations like in Florida? Do you have anything to kind of help us figure out where the markets pricing or where you are pricing? That’s what I’m trying to get to?

John C. Hope III

As I think we may have indicated we are considering asset sales, we have not attempted any so the pricing of NPAs as it relates to our book we don’t have a litmus test to tell you whether we’re getting $0.80 on the dollar, $0.85, $0.70. I have talked to other bankers and probably hear the same things you hear that heretofore it’s been all over the ballpark depending on location of the property, how far out from a metro area it might be and how long then it will take for it to really be put in to commerce as part of a growth pattern.

Those numbers are anywhere from $0.60 up to $0.85 depending on how attractive the underlying assets are. Our ORE frankly has held up well. We have sales, our velocity of sales –

[Casey Embrac] – Millennium

Let me ask the question a slightly a slightly different way. Have we taken any charges of any material nature as a result of a sale of piece of [OREO]?

John C. Hope III

No.

[Casey Embrac] – Millennium

Hopefully you’re looking at maybe trying to get $0.60 to $0.80 depending on the property if you choose to go down that path. Is that fair?

John Exnicios

I think it’d be fairer to say that we’re going to explore it and take a look at it, and I think as John said, it if makes good business sense, we’ll do it. If it’s too deep a discount, we will evaluate the cost of us continuing to carry that asset and disposing of it at a higher price eventually.

[Casey Embrac] – Millennium

What do you guys mark your CRE assets down to when they go MPA? Is there a certain formula so if something is going MPA you mark it down $0.80?

John M. Turner, Jr.

If it’s a piece of real estate, we get a current appraisal, we evaluate the appraisal and then we put it on our books at 85%. I believe that’s right. Lewis?

Lewis P. Rodgers

It depends on when it goes on MPA and the age of the appraisal, and it would be anywhere from 90% generally on down [KC] and it would depend at the point in time it goes MPA and how fresh that appraisal is.

John M. Turner, Jr.

Just assume the average is around 85% of appraised value.

[Casey Embrac] – Millennium

Forgive my ignorance, but is Tampa Bay considered in the panhandle?

John C. Hope III

No.

[Casey Embrac] – Millennium

The increase in MPAs in Florida that you said it looked like you saw this big surge in Tampa Bay that seems like new. Is that correct?

Lewis P. Rogers

There were the four credits that made up a fairly sizable piece of the increase in Tampa Bay but I can’t really say that there was a lot of new stuff.

[Casey Embrac] – Millennium

You guys haven’t had a lot of previous large MPAs in Tampa Bay, have you?

Lewis P. Rogers

Yes, we have.

[Casey Embrac] – Millennium

Right now you’ve really built your reserves here, which I commend you for, at 1.55 but your reserved MPAs are 49%. Is there a certain point where it just can’t fall anymore?

Lewis P. Rogers

You mean the values?

[Casey Embrac] – Millennium

No, I mean your reserves are half of your MPAs.

Lewis P. Rogers

It’s not really part of our methodology Casey to have that but we theoretically the more severely criticized and if your assessment of exposure in the reserve will build consistent with more problems. But I can’t tell you that it wouldn’t fall more or might back up the other way. It just depends on how the reserve calculates when we throw it all together.

Operator

Our next question comes from Peyton Green - FTN Midwest Securities.

Peyton Green - FTN Midwest Securities

I was wondering if you could answer a couple questions about the growth opportunity. I think you all referred to it earlier as basically you’re seeing an increase in the opportunity to go after new business. I was just wondering how you could characterize the opportunity versus what it would have been earlier this year or even this time last year? And then to what degree are the spreads wider versus your existing book?

John C. Hope III

I think as the year has evolved, we’ve seen our competition generally withdraw from the market so the opportunities that we’re experiencing are in large part because our competition just isn’t as active, and in many cases has actually communicated to their customers that they don’t intend to loan any additional money. So we have an opportunity created by their absence from the market which at the same time then brings some more rationality to structure and pricing. We believe that historical pricing and structure is returning to most of the markets we’re in and we’re pleased to see that.

Peyton Green - FTN Midwest Securities

Is that something that at the margin would be accretive if you could bring in deposits at your all-in cost?

John C. Hope III

I would say yes.

John M. Turner, Jr.

That’s one of those long-term trends that we think is going to be pretty marked, and once we get through the confusion that we’re in right now you will see an improvement to the margins overall.

Peyton Green - FTN Midwest Securities

Is that predominantly from the money center and super regional banks or is it across the spectrum?

John M. Turner, Jr.

It’s across the board.

John C. Hope III

I would say based upon what we know, most of our competitors be they large or small are experiencing the same sorts of issues.

Peyton Green - FTN Midwest Securities

Would your outlook be that loan growth might improve over the next two or three quarters notwithstanding the credit issues?

John C. Hope III

No. I think you’ve got to assume that we’re going to be trying to manage our aggregates also. Our priority is to first take care of our customers in any regard that’s necessary there and then we will pick and choose among the opportunities beyond our customer base.

Operator

Our next question comes from John Pancari - J.P. Morgan.

John Pancari - J.P. Morgan

On your grandfathered assets I know they have been some properties in general that are probably valuable to some in the oil industry I’m assuming or as it seems just given some of your locations down there as you have described, and I’m just wondering if you can comment at all on how the valuation of those may have been impacted by the price in oil or how they could be and if you are likely to see any sales of those assets to help you on the capital side?

Thomas L. Callicut, Jr.

As we’ve said before, we don’t do valuations all the time on those properties. When oil goes up or down we’re not out there trying to figure out the valuation of one or another. Sales of those properties are generally a willing buyer and willing seller kind of thing where the opportunity’s right and the price is fair, we’ll do something with it. But I can’t make a wholesale generalization about those.

John Pancari - J.P. Morgan

Can you comment at all on the general credit direction of the [Parish] portfolio and if you’re still comfortable with the terms and everything of that deal and the credit standing or if you’re going to need to address that one till it’s closed? If you can just comment on that?

John C. Hope

To the terms, we don’t expect any changes in the terms and we’re still very comfortable with the opportunity that the [Parish] transaction presents.

Operator

There are no further questions at this time. I’d like to turn it back to Mr. Hope for any closing remarks.

John C. Hope

Before we close I just want to take a quick opportunity if I might just ask you all to hang around for a second. On September 24th of this year R. King Milling, our recent president and now Vice Chairman of the Board of Directors notified the company that he intends to retire from his position as vice chairman of the board effective at the close of business on December 31st.

This is actually the final step in our previously announced and executed upon succession program. King will continue as a director of the company until the normal retirement age for directors. But, I do want to acknowledge the fact that King first became associated with the bank in 1978 as a director. He became president of the bank in 1984 and we’re very appreciative of his continuation agreement to continue to serve as a director.

King was on board with the bank during the challenges of the 1980s when the oil [inaudible]. He was on board in the 90s when the real estate markets in parts of the country collapsed. He was here in 2000 and he is here now and we have a great deal of appreciation for his service and his experience both in good times and in bad.

King has been a very active leader in this community and its recovery after the hurricanes of 2005 and his service both to the bank and the community has really been something outstanding. So, King, I know you’re not here today but if you happen to be listening we appreciate your service and we congratulate you upon your pending retirement.

If there are any other questions that need to be handled on a follow up basis, you all know that you can contact Tricia Carlson and she’ll take care of you. Thank you all for your participation.

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Source: Whitney Holding Corporation Q3 2008 Earnings Call Transcript
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