Home » NEWS » Banking & Finance » Fitch places Whitney on 'Rate Watch Evolving' after merger

Fitch places Whitney on 'Rate Watch Evolving' after merger

NEW ORLEANS — Fitch Ratings has placed Whitney Holding Corp.’s (WTNY) ratings including its respective ‘BBB’ and ‘F2’ long- and short-term Issuer Default Ratings (IDRs) on Rating Watch Evolving. The action follows the announcement that WTNY and Gulfport-based Hancock Holding Company (HBHC) have entered into a definitive merger agreement.

While Fitch does not currently rate HBHC, Fitch believes the combined company would likely be rated investment grade.

Fitch said, “The all-stock deal creates a company with approximately $20 billion in assets, $16 billion in deposits and over 300 branches in five contiguous states bordering the Gulf of Mexico. The merger is expected to close in the second quarter of 2011 with a $200 million capital raise anticipated to maintain sound capital ratios and facilitate the payoff of WTNY’s $300 million in TARP. The company has projected an 8.6% tangible common equity ratio at close.

“HBHC has positively differentiated itself during this downturn by remaining profitable with NCOs and NPAs below many peer comparisons, especially for a banking company based in the Southeast. WTNY has remained under pressure from asset quality challenges which have hampered the company’s return to profitability with Fitch’s expectation that elevated pressure from loan losses would have likely continued into 2011. WTNY’s current ratings reflect the company’s elevated level of problem loans and operating performance relative to other similarly rated peers. HBHC is expected to take an approximate $447 million credit mark representing 6% of WTNY’s $7.5 billion loan portfolio (less loans already identified for bulk sale) with higher marks in commercial real estate and construction and development loans.

“While there are apparent synergies and potential cost saves, this is a major acquisition for HBHC and integration remains a substantive risk. While both company’s have acquisition experience, neither have completed a merger of this scope. The loan portfolio of the combined entity will be more balanced with HBHC’s more consumer focused book combining with WTNY’s more commercially-oriented loan portfolio. The combined company will still have a large percentage of loans in CRE and construction at 44% of combined loans. Fitch notes that HBHC’s performance in this area has been relatively better than peers and WTNY has continued to work through its problems in this area, however, Fitch expects CRE loans to remain challenging for the industry.”

BEFORE YOU GO…

… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Wally Northway

Leave a Reply

Your email address will not be published. Required fields are marked *

*