DBRS Rates Whitney Holding Corporation at BBB (high)

Dominion Bond Rating Service (“DBRS”) has today assigned ratings to Whitney Holding Corporation and Whitney National Bank, its principal operating bank subsidiary (collectively, “Whitney” or the “Company”), as listed above. All trends are Stable.

The ratings take into account Whitney’s historically strong commercial banking franchise in New Orleans and other metropolitan statistical areas (MSAs) in Louisiana, a solid deposit base that provides ample liquidity and high net interest margins, and sufficient capital when considered in light of the Company’s good asset quality and earnings capacity. The gradual expansion into attractive contiguous markets in Florida and the Houston area provides for improved geographic diversification and mitigates Whitney’s still material dependence on Louisiana’s economy (46% of deposits located in New Orleans, 68% in Louisiana). The holding company’s stand-alone fundamentals are sound, underpinned by ample unencumbered liquidity and the absence of double-leverage.

Whitney’s credit strengths are moderated by a loan portfolio that holds several bulky exposures and is less granular than those of most of its peers similarly rated by DBRS. The simultaneous default by a few of these relationships could result in material losses for the Company. The portfolio also holds a modest risk concentration in the commercial real estate sector – construction loans and loans against income- producing properties (excluding “owner occupied” loans) aggregate to about 250% of the Company’s tangible common equity (at the end of 2005). Hence, in case of a substantial market correction, Whitney could suffer higher loan losses than banks with lesser concentrations in commercial real estate.

Profitability indicators – return on assets (ROA) of 1.15% and return on equity (ROE) of 10.94% (both for 2005) – are close to the medians for those of similarly rated banks in spite of better than peer group average operating efficiency and net interest margin (60.40% and 4.85%, respectively, for 2005). Whitney’s strategic focus on commercial banking, which is typically less profitable (and also less risky) than consumer banking, and the relatively modest contribution of fees and commissions to its net revenues constrain its profitability. Commercial and industrial (C&I) and commercial real estate (CRE) loans aggregate to about 82% of loans relative to the 52% average for the peer group. Whitney’s non-interest income averages between 18% and 21% of net revenues – well below the approximately 25% to 28% average range for its similarly rated peer group. The lower non-interest income contribution is also indicative of Whitney’s preference for commercial rather than consumer banking.

The impact of the devastating hurricanes that hit Whitney’s principal markets – Katrina in late August and Rita at the end of September 2005 – was moderately negative in the short-run and is likely to be positive for the Company’s medium-term prospects. Briefly, commercial customer relationships that account for the great majority of Whitney’s portfolio suffered at most manageable losses and limited business interruptions, and their business volumes have quickly returned to normal levels. Consumer relationships are typically private banking and other high-quality relationships that also suffered at most manageable losses.

Based on a review of the portfolio, including on-site customer visits, Whitney determined that a US$31 million increase in hurricane-related loan loss reserves would be sufficient. Further portfolio analysis by the Company in Q4 2005 supported the adequacy of the loan loss reserves. In spite of the incremental loan loss reserves and expenses, Whitney reported US$9 million in net income for Q3 2005, US$35 million for Q4 2005, and a US$5 million increase to US$102 million in 2005 net income over the previous year (driven by strong growth in net interest income). DBRS believes that further hurricane-related asset quality problems and expenses could arise. Their impact of Whitney’s financial fundamentals, however, should not be material.

Whitney has experienced rapid growth in deposits subsequent to the storms – non-interest bearing deposits grew by 16% in Q3 2005 and 24% in Q4 2005 (aggregate 20% deposit growth during the second half of 2005) due to various factors, including the influx of insurance settlements and disaster relief funds, more cautious spending by consumers, and delays in issuing new construction codes that still hold up the rebuilding effort in parts of the devastated areas. As rebuilding picks up momentum, DBRS expects deposits to return to historical levels. Loan growth has also picked up substantially – 12% increase in loans in Q4 2005 over Q4 2004 (excluding 7% loan growth resulting from an acquisition). DBRS believes that Whitney is well positioned to benefit from the anticipated rebuilding of the region and the attendant increase in economic activity because of its deep roots in the community and long-standing commercial relationships.

The Stable trends reflect DBRS’s expectation of continued good earnings and financial fundamentals along with continued steady geographic diversification through small acquisitions.

Whitney Holding Corporation, a bank holding company headquartered in New Orleans, Louisiana, reported US$10.1 billion in assets at December 31, 2005.