A $31.2 million pretax gain from an insurance settlement cushioned Whitney Holding Corp.'s earnings against deteriorating credit quality in the third quarter and sent its profits up 39% from a year earlier, to $48.8 million.
Earnings per share increased 34%, to 71 cents. But excluding the settlement, earnings of 42 cents missed the average Wall Street expectation by 9 cents.
The gain was related to hurricane damage the $10.6 billion-asset New Orleans company suffered in the summer of 2005.
Citing an increase in nonperforming and criticized loans, Whitney provided $9 million for credit losses in the third quarter, compared with no provision a year earlier.
Nonperforming loans jumped 56%, to $88.6 million. Two commercial credits in unrelated industries generated $19 million of the newly nonperforming loans, and smaller residential development loans accounted for about $9 million, Whitney said.
Criticized loans increased $39 million in the same period. The increase included about $11 million of loans originated in the Florida Panhandle. Whitney said it has no meaningful exposure to subprime mortgages.
The loan portfolio grew 9%, to $7.5 billion. Whitney attributed about 3 percentage points of the growth to the March 2 acquisition of Signature Financial Holdings Inc. in St. Petersburg, Fla. However, market conditions have restrained overall Florida lending, Whitney said, and apart from the Signature purchase, its loans there decreased about $130 million.
Lending activity in Texas, Alabama, and Louisiana markets outside the New Orleans area fueled the organic loan growth, Whitney said.
In late trading Tuesday, Whitney's shares were down 2.7%, to $24.92.
