Fitch Ratings has placed Whitney Holding Corp.'s ratings on Rating Watch Evolving status following the New Orleans-based bank’s merger agreement with Gulfport, Miss.-based Hancock Holding Company.
Whitney’s current ratings reflect the company's elevated level of problem loans and operating performance, Fitch said. Hancock is expected to take an approximate $447 million credit hit, which represents 6% of Whitney’s $7.5 billion loan portfolio (less loans already identified for bulk sale) with higher marks for commercial real estate and construction and development loans.
On the other hand, Hancock has remained profitable and its level of non-performing assets is better than its peers, Fitch noted.
The ratings agency commented that the combination’s loan portfolio “will be more balanced with Hancock’s more consumer focused book combining with Whitney’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 Hancock's performance in this area has been relatively better than peers and Whitney has continued to work through its problems in this area, however, Fitch expects CRE loans to remain challenging for the industry.
Fitch added it is likely to rate the combination as investment grade; it currently does not rate Hancock.
