Whitney Holding Corporation

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Whitney Holding Corporation

228 St. Charles Avenue
P.O. Box 61260
New Orleans, Louisiana 70130
(504) 586-7272 Fax: (504) 586-3478

Public Company
Employees: 2,100
Total Assets: $4.2 billion
Stock Exchanges: NASDAQ
SICs: 6712 Bank Holding Companies; 6021 National Commercial Banks

Whitney Holding Corporation, with headquarters in New Orleans, is a bank holding company with combined assets totaling over $4.2 billion. It owns subsidiaries in four Gulf Coast states and has one foreign branch in the British West Indies; its more than 100 banking locations operate in the southern regions of Louisiana, Alabama, and Mississippi; in the Pensacola area of northwest Florida; and on the island of Grand Cayman. Its most extensive market is in Louisiana. Together, the Whitney National Bank and the First National Bank of Houma make Whitney the fourth largest bank in Louisiana. All of the subsidiary banks offer the traditional banking services: personal and business savings and checking accounts, safe deposits, commercial and private unsecured and secured loans, real estate mortgages, and investment, personal, and pension trust services. The Whitney Holding Corporation also acts as correspondent for its various subsidiary banks.

Over a Century in New Orleans

The oldest continuously operating banking firm in New Orleans, the Whitney was the sole bank of that city to survive the Great Depression intact. Its history began back in the early 1880s, when George Q. Whitney and 11 other investors chartered the bank as the Whitney National Bank. It began operating under a national charter on November 5, 1883, with James Hayden as president, James M. Pagaud, Jr., as cashier, and future U.S. Chief Justice, Edward Douglas White, Jr., as legal advisor.

The bank had an auspicious beginning. New Orleans was in the process of being rejuvenated as a port, thanks to the building of jetties at the mouth of the Mississippi River, and the city was readying itself to host an international exposition, the Cotton Centennial, which took place in 1884. From the outset, the Whitney Bank played a significant role in supporting local businesses and civic enterprises and quickly earned a reputation for its promptness, civic-mindedness, and fiscal dependability.

The early success allowed the bank to move into its first permanent location, the landmark building on Gravier Street, in 1888, a site that still serves as the companys safe deposit department. As the Whitney National Bank, the firm prospered through the remainder of the century, and in the first decade of the twentieth century it began a period of expansion through some complex and intricate mergers.

Early Growth Through Mergers

On July 5, 1905, the Whitney National Bank established an affiliation with two other banks: the Germania National Bank and the Central Bank, Savings and Trust Company. Under new articles of association and an expanded board of directors, the company became the Whitney Central National Bank.

The merging of affiliates under the Whitney name was carefully orchestrated to allow the company to charter both national and state banks, a measure undertaken because, at the time, the nationally chartered banks were more strictly regulated than state banks. Directors and officers of the Whitney National Bank had served in parallel capacities in the Central Bank, Savings and Trust Company, which existed largely on paper, with Charles Godchaux as president and Frank B. Williams as first vice-president. Most of the stock in the Whitney National Bank and Central Bank was held by the same investors. Moreover, the Central Trust and Savings Bank was closely associated with the Central Investment and Mortgage Company, which it later absorbed. With this complex arrangement, the Whitney affiliates began acquiring business-district property in downtown New Orleans.

At the time of the merger, James Hayden resigned his presidency of the Whitney National Bank. In 1907, the presidency of the new Whitney Central National Bank passed to Charles Godchaux, who also became president of the newly named Whitney Central Trust and Savings Bank. A state-chartered bank, the Whitney Central Trust and Savings Bank was not subject to the same restrictions governing its national affiliate. Whitney thus became a banking system of national and state banks, the basis for the Whitney Banks phrase that was formerly attached to the companys familiar clock symbol.

The Whitney Central Trust and Savings Bank quickly acquired property adjacent to the Gravier Street bank and erected a new building in 1911. By that time, it had already expanded through the acquisition of the Carrollton Savings Trust and Banking Company, in 1908, and the Morgan State Bank, in 1911. In 1913, it added the Third District Savings, Banking and Trust Company. In the following year, Charles Godchaux resigned the presidency, though he remained a director. He was succeeded by Sol Wexler, who, during his brief, two-year tenure, saw the Whitney affiliates enter the newly created Federal Reserve System.

John Edward Bouden, Jr., replaced Wexler, remaining president of both the national and state affiliates until his death on January 9, 1930. Bouden oversaw the purchase of additional properties in the rectangle formed by Gravier, Common and Camp Streets and St. Charles Avenue. In 1919, the Common Street Annex was built, providing additional access to adjacent streets. Over the next ten years, the Whitney Central National Bank was renamed, becoming the Whitney National Bank of New Orleans. Its capital stock was set at $2.8 million, at which it has remained since 1919, and it opened four new branches: the Margaret Place Branch in 1924, the Canal Street Branch in 1926, and the Broad Street and St. Roch Market branches, both in 1927.

In the same period, the Whitney Central Trust and Savings Bank, the state-chartered affiliate, was also renamed, becoming the Whitney Trust and Savings Bank in 1929. Also under the presidency of Bouden, in 1918 it acquired the Bank of Orleans, followed by the City Bank and Trust Company, including its French Market branch, in 1919, and the Pan American Bank and Trust Co. in 1920. It also acquired the Algiers Trust and Saving Bank in 1930.

Surviving the Great Depression and World War II

Boudens successor, John D. OKeefe, confronted the challenging task of guiding the Whitney system through the lean years of the Great Depression. In 1933, he oversaw the reorganization of the affiliates into a single corporate entity, the Whitney National Bank. While other banks failed in the early and mid-1930s, the Whitney, through able management, survived. By 1935 the company was able not only to earn enough to pay regular dividends to its stock holders but also to invest $300,000 in a modern air conditioning system for its main office.

Keehn W. Berry, executive vice president, replaced OKeefe as president in October 1938. Under his guidance, the Whitney undertook some internal reorganization to help the national defense effort through World War II. Between 1940 and the end of 1945, Whitney deposits increased from about $141 million to over $353 million, which, paralleling a trend nationwide, heralded the postwar inflation that struck America as it changed economic gears in the face of a restored peace. Although a fiscal conservative, concerned about government borrowing and the Federal Reserves step increases in the prime interest rate, Berry continued the Whitneys robust growth.

Postwar Growth

Throughout the 1940s and 1950s, the Whitney added real properties both for its current needs and future expansion, including the remodeling of the main office, completed in 1961. Berry and the banks directors also initiated its Thrift Incentive Plan, a profit-sharing arrangement that enabled eligible employees to contribute up to 15 percent of their salary to the plan. At the same time, it created its pension plan, a rioncontributory fund for its regular employees.

In May 1962, before Louisiana passed a law permitting the establishment and operation of bank holding companies, the Whitney shareholders created the Whitney Holding Corporation, the parent company of the current Whitney system of subsidiaries. It created the Whitney National Bank in Jefferson Parish, but that bank was forced to remain closed in the face of a court injunction and ensuing litigation. Not until July 1962 did the state legislature actually sanction the creation of the corporation.

Berry, who became chair of the board of directors in 1969, was replaced as president by William A. Carpenter, who oversaw additional expansion. The board and Whitney officers added new branches and remodeled others, adding drive-up facilities at many of them. Also, largely to meet the needs of oil-related companies, the Whitney established a Nassau branch in the Bahamas, which began operating in 1972 before relocating to Grand Cayman.

The Whitneys Holding Corporations presidency passed to Patrick A. Delaney after Carpenters untimely death in 1976. Delaney was also named chair, after Keehn Berry died in September of 1981. Delaney confronted important legal challenges to the Whitneys ownership and valuation of real estate and mineral rights acquired during the Depression, but matters turned out in Whitneys favor when, in 1982, Congress authorized such ownership when sanctioned by state laws.

1980s and 1990s: Oil Bust to Economic Recovery

Despite the recession that struck Louisiana very hard when the price of crude oil plummeted in the mid- 1980s, the Whitney continued to expand through a series of buyouts and mergers. It purchased the assets of several banks, including NBC Bank-shares, Inc., in 1985 and the American Bank & Trust Co. of Lafayette and the Metropolitan Bank & Trust Co. of Baton Rouge, both in 1986. Additionally, in 1989 it assumed the deposit liabilities of the Enterprise Federal Savings & Loan through the Resolution Trust Corporation. It also merged existing subsidiaries, as in the cases of the Whitney National Bank in Jefferson Parish and the Whitney National Bank, New Orleans, in 1987 and the Whitney National Bank in St. Tammany Parish and the Whitney National Bank in 1991.

In 1990, the company undertook some reorganization and planning that addressed its priorities with respect to management, systems, and technology, products and services, profitability, credit quality, and expansion. William L. Marks, both the CEO and chair of the board, led a team of experienced bankers in effecting new expansion and an updating of the Whitneys banking systems. In the next few years, the company spent $70 million on modernized equipment, installing over 100 ATMs with satellite linkage, and on improving its delivery networks. To meet service challenges from competitors, it also created the Whitney SELECT umbrella, attracting customers with various incentives, such as no-fee checking, free checks, no-fee VISA cards, and preferred loan rates.

By 1993, the Whitney Holding Corporation reflected the new economic recovery in its steadily increasing profits. In that year, its earnings increased by an extraordinary 278 percent over the previous year, leading all public companies in New Orleans in its percentage of gain. That great increase was in part made possible by the favorable interest rate margins that all banks exploited during the recovery. The gain helped offset potential loan losses that had troubled the banks since the oil bust of the 1980s. The Whitneys return to robust health was also reflected in the doubling of its loan growth between 1994 and 1996.

Expansion Outside of Louisiana

Although some speculators were convinced that by 1993 Whitney had reached its maximum growth potential and was a likely candidate for acquisition by a much larger firm, the company used its improving earnings and reduction in nonper-forming assets as springboards for growth and pursued an even more aggressive expansion program. In 1994 it acquired the assets and assumed deposit liabilities of the Baton Rogue Bank & Trust Co. It then began creating new subsidiaries for the acquisition of banks outside of Louisiana. In 1995, through one of these, the Whitney Bank of Alabama, it purchased the assets of the Peoples Bank, in Elba, Alabama, for about $90 million, and, in the next year, it completed a merger with the American Bank & Trust and the Liberty Holding Company, the parent company of Liberty Bank, both of Pensacola, Florida. These banks were merged into another subsidiary, the Whitney National Bank of Florida. It also continued acquiring other Louisiana banks through mergers, including the First Citizens BancStock, Inc., in March 1996, and the First National Bank-shares, Inc., the parent of the First National Bank of Houma, in March 1997. In the next month, the Whitney completed a merger with Merchants Bancshares, Inc., the parent of the Merchants Bank & Trust Co., with offices and branches in the coastal region of Mississippi. Through these acquisitions and mergers, during the three-year period from 1994 to 1997 the Whitneys total assets grew from $2.9 to over $4.2 billion.

Both the new internal organization and the expansion helped offset the cost of federally imposed controls that were driving up bank operating costs by as much as 4 percent per annum, costs that banks were reluctant to pass on to their customers in the face of increasing complaints about excessive banking fees. The Whitney, like a few other successful banks, responded to the profit squeezing by its reorganization and finding economies of scale through growth. At a time when many banks were forced to reduce overhead by downsizing and firings, the Whitney strategy turned out to be a viable alternative.

In 1996 the Whitney completed its relocation to a new, 100,000-square-foot facility in suburban New Orleans, which featured, according to the companys annual report, state of the art processing of the back-room activities of the entire Company. The continuing expansion and modernization led to unusually high expenses in that year but a promise of enhanced profitability and increased share values in the future. The companys leaders felt that the continuing growth of the economy justified the expenditures and minimized the risk.

The Whitney National Bank, the Whitney Holding Corporations chief subsidiary, by virtue of surviving the Great Depression, still possessed in 1997 several properties acquired through normal banking activities prior to 1933. These were maintained at a nominal value in its financial records. The Whitney strove to maximize profits from these properties, largely through oil and gas royalties and rents. These assets offered the promise of considerable future gains and contributed to the corporations financial stability. Linked with the reorganization and growth of the Whitney system, this solid foundation in real estate holdings made the company a solid investment, repeatedly earning it high ratings in various business market guides.

Principal Subsidiaries

Whitney National Bank; First National Bank of Houma; Whitney Bank of Alabama; Whitney National Bank of Florida.

Further Reading

Finn, Kathy, Public Companies Improve in 93, New Orleans City-Business, June 13, 1994, p. 1.

Lind, Angus, and Michael Tisserand, New Orleans: Rollin on the River, Memphis, Tenn.: Towery Publishing, Inc., 1996, pp. 212-213.

McClain, Randy, Louisiana No Bargain Basement for Bank Acquisition, New Orleans CityBusiness, November 7, 1994, p. 17.

Plume, Janet, Banks Try Some New Approaches to the Problem of Rising Overhead, New Orleans CityBusiness, January 17, 1994, p. 20.

Savali, Andy, The Top 25 Public Companies 1993: A Mixed Year, Greater Baton Rouge Business Report, May 24, 1994, p. 7.

John W. Fiero

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Whitney Holding Corporation

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