The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Whitney Holding Corporation (the Company or Whitney) and its subsidiaries from December 31, 2008 to September 30, 2009 and on their results of operations during the third quarters of 2009 and 2008. Nearly all of the Company's operations are contained in its banking subsidiary, Whitney National Bank (the Bank). This discussion and analysis is intended to highlight and supplement information presented elsewhere in this quarterly report on Form 10-Q, particularly the consolidated financial statements and related notes appearing in Item 1. This discussion and analysis should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 2008.

FORWARD-LOOKING STATEMENTS
This discussion contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and these statmements are intended to be covered by the safe harbor provided by the same. Forward-looking statements provide projections of results of operations or of financial condition or state other forward-looking information, such as expectations about future conditions and descriptions of plans and strategies for the future. Forward-looking statements often contain words such as "anticipate," "believe," "could," "continue," "estimate," "expect," "forecast," "goal," "intend," "plan," "predict," "project" or other words of similar meaning. The forward-looking statements made in this discussion include, but may not be limited to, (a) comments on the expectd use of the proceeds of the Company's common stock offering; (b) the description of Whitney's participation in the U.S. Treasury's Capital Purchase Program; (c) comments on conditions impacting certain sectors of the loan portfolio, including economic conditions; (d) information about changes in the duration of the investment portfolio with changes in market rates; (e) discussion of the results of a voluntary stress test of the loan portfolio; (f) statements of the results of net interest income simulations run by the Company to measure interest rate sensitivity; (g) comments on the anticipated dividend capacity of the Company and the Bank; (h) discussion of the performance of Whitney's net interest income assuming certain conditions; (i) discussion of factors affecting trends in certain categories of noninterest income; and (j) comments on expected changes in certain categories of noninterest expense.
Whitney's ability to accurately project results or to predict the effects of plans or strategies is inherently limited. Although Whitney believes that the expectations reflected in its forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements.
Factors that could cause actual results to differ from those expressed in the Company's forward-looking statements include, but are not limited to:
· the continued deterioration of general economic and business conditions in the United States and in the regions and communities Whitney serves;

· further declines in the values of residential and commercial real estate, which may increase Whitney's credit losses;

· Whitney's ability to manage disruptions in the credit and lending markets, including the impact on its business and on the businesses of its customers as well as other financial institutions with which Whitney has commercial relationships;

· Whitney's ability to effectively manage interest rate risk and other market risk, credit risk and operational risk;

· changes in interest rates that affect the pricing of Whitney's financial products, the demand for its financial services and the valuation of its financial assets and liabilities;

· Whitney's ability to manage fluctuations in the value of its assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support its business;

· the occurrence of natural disasters or acts of war or terrorism that directly or indirectly affect the financial health of Whitney's customer base;

· Whitney's ability to comply with any requirements imposed on the Company and the Bank by their respective regulators, and the potential negative consequences that may result;

· changes in laws and regulations, including increases in regulatory capital requirements, that significantly affect the activities of the banking industry and the Company's competitive position relative to other financial service providers;

· the impact of future losses on Whitney's deferred tax assets and the potential need for a valuation allowance for deferred tax assets in future periods;

· technological changes affecting the nature or delivery of financial products or services and the cost of providing them;

· Whitney's ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by the Bank's customers;

· Whitney's ability to effectively expand into new markets;

· the cost and other effects of material contingencies, including litigation contingencies;

· the failure to attract or retain key personnel;

· the failure to capitalize on growth opportunities and to realize cost savings in connection with business acquisitions;

· the effectiveness of Whitney's responses to unexpected changes; and

· those other factors identified and discussed in Whitney's public filings with the SEC.

You are cautioned not to place undue reliance on these forward-looking statements. Whitney does not intend, and undertakes no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements, except as required by law.

OVERVIEW OF RECENT TRENDS IN FINANCIAL PERFORMANCE
Whitney recorded a net loss of $30.0 million for the quarter ended September 30, 2009 compared to a net loss of $21.3 million for the second quarter of 2009. Including dividends on preferred stock, the loss to common shareholders was $34.1 million, or $.50 per diluted common share, for the third quarter of 2009 compared to a loss of $25.4 million, or $.38 per diluted share, for the second quarter of 2009. The Company earned $7.0 million, or $.11 per diluted common share, for the third quarter of 2008.

Common Stock Offering
Subsequent to September 30, 2009, Whitney announced and completed an underwritten public offering of the Company's common stock. The underwriters purchased 28.75 million shares at a public offering price of $8.00 per share. The net proceeds to the Company after deducting underwriting discounts and commissions and estimated offering expenses are expected to be approximately $218 million. The net proceeds will qualify as Tier 1 capital and will be used for working capital and general corporate purposes, which may include capital to support organic growth, to better position the Company to eventually redeem the Company's preferred stock and warrant issued to the U.S. Department of Treasury pursuant to the Capital Purchase Program, and to facilitate future acquisition opportunities.

Mergers and Acquisitions
On November 7, 2008, Whitney completed its acquisition of Parish National Corporation (Parish), the parent of Parish National Bank. Parish National Bank operated 16 banking centers, primarily on the north shore of Lake Pontchartrain and other parts of the metropolitan New Orleans area, and had $771 million in total assets, including a loan portfolio of $606 million, and $636 million in deposits at the acquisition date. Whitney's financial statements include the results from these acquired operations since the acquisition date.

Loans and Earning Assets
Total loans at the end of the third quarter of 2009 were down $605 million from December 31, 2008, primarily within the commercial and industrial (C&I) portfolio. As was anticipated and previously disclosed, economic conditions restrained loan demand through the first nine months of 2009. Whitney continues to seek and fund new credit relationships and to renew existing ones, but the level of overall demand has been insufficient to cover repayments and maturities along with charge-offs, foreclosures and other problem loan resolutions. The Company does not expect this situation to change over the near term. Both average loans and average earning assets for the third quarter of 2009 were down approximately 3% compared to the second quarter of 2009.

Deposits and Funding
Deposits at September 30, 2009 decreased approximately 4% from December 31, 2008, reflecting mainly declines in competitively bid public fund deposits and deposits held in treasury-management sweep products used by corporate customers. Average deposits in the third quarter of 2009 were down 1.5% compared to the second quarter of 2009. During the first and second quarters of 2009, the Bank executed a campaign around a special money market deposit product to attract new personal and business accounts. Year-end deposit balances included some seasonal inflows.

Noninterest-bearing demand deposits were stable to slightly higher in the third quarter of 2009 compared to the second quarter of 2009 and comprised 34% of total average deposits and funded 29% of average earning assets for the current period. The percentage of funding from all noninterest-bearing sources totaled 34%. The current funding mix was somewhat favorable in comparison to both the second quarter of 2009 and the year-earlier period.
The balance of short-term borrowings at September 30, 2009, was down 22%, or $285 million, from year-end 2008, reflecting mainly restrained loan demand and the overall reduced level of earning assets.

Net Interest Income
Whitney's net interest income (TE) for the third quarter of 2009 decreased less than 1%, or $.8 million, compared to the second quarter of 2009. Although average earning assets were down 3% between these periods, the net interest margin (TE) improved 6 basis points to 4.11%. The margin expansion reflected both a small increase in earning asset yields and a further reduction in the cost of funds. Asset yields benefited from an improved asset mix, while the reduction in the cost of funds was driven mainly by the maturity or renewal of higher-cost certificates of deposit in the current low interest rate environment. The start of scheduled rate reductions on deposits from a special money market campaign offered during the second quarter of 2009 also benefited the cost of funds in the third quarter of 2009. The lost interest on nonaccruing loans reduced the net interest margin by approximately 20 basis points in both the third and second quarters of 2009.

Provision for Credit Losses and Credit Quality Whitney increased its provision for credit losses to $80.5 million in the third quarter of 2009 compared to $74.0 million in 2009's second quarter. Provisions related to impaired loans accounted for more than half of the third quarter's total provision for credit losses. Over $30 million of the impaired loan provisions came from the Tampa, Florida market, reflecting in part the continued decline in the value of underlying real estate collateral. The remainder of the third quarter's provision for credit losses was related to a net increase on total criticized loans for the third quarter of 2009 of $131 million, the impact of smaller consumer charge-offs and qualitative adjustments. Approximately $100 million of the net increase in criticized loans came from oil and gas industry credits and commercial construction, land and land development loans serviced from our Texas market. Nonperforming loans totaled $406 million at September 30, 2009, which reflected a small improvement of $7.3 million from June 30, 2009. Net loan charge-offs in the third quarter of 2009 were $61.9 million or 2.86% of average loans on an annualized basis, compared to $46.7 million or 2.09% in the second quarter of 2009. The majority of total gross charge-offs, approximately 76%, came from credits in the Florida market and was heavily concentrated in residential-related real estate loans.
The provision for loan losses exceeded net charge-offs by $19.1 million during the third quarter of 2009 which increased the allowance for loan losses to 2.81% of total loans at September 30, 2009, up from 2.50% at June 30, 2009 and 1.77% at year end 2008.

Noninterest Income
Noninterest income for the third quarter of 2009 decreased 10%, or $3.2 million, from the second quarter of 2009. Fee income from Whitney's secondary mortgage market operations declined 27%, or $.8 million, on a slowdown in refinancing activity in the third quarter of 2009. The second quarter of 2009 included a $1.8 million distribution from an interest in a local small business investment company and an additional $.5 million of revenue from the Company's grandfathered foreclosed assets.

Noninterest Expense
Total noninterest expense for the third quarter of 2009 decreased $8.2 million from 2009's second quarter. The second quarter included a $5.5 million special deposit insurance assessment that was imposed industry-wide by the FDIC. The provision for valuation allowances on foreclosed property decreased $3.0 million in the third quarter of 2009. Loan collections and foreclosed asset management expenses were stable between these periods, although they remain at elevated levels. Total personnel expense for the third quarter of 2009 decreased $.8 million. There was a $.5 million reduction in share-based compensation that reflected the lower cost of the 2009 award relative to the cost of prior awards that vested in the second quarter of 2009. Sales-based incentive plan compensation was also lower in the third quarter.

U.S. Treasury Department Capital Purchase Program On December 19, 2008, Whitney issued 300,000 shares of senior preferred stock to the Treasury under the CPP that was established as part of the Emergency Economic Stabilization Act of 2008 (EESA). Treasury also received a ten-year warrant to purchase 2,631,579 shares of common stock at an exercise price of $17.10 per share. The aggregate proceeds were $300 million, and the total capital raised qualifies as Tier 1 regulatory capital and can be used in calculating all regulatory capital ratios. The terms of the senior preferred stock and warrant are more fully described in Note 17 to the consolidated financial statements located in Item 8 of the Company's annual report on Form 10-K, including certain restrictions on the Company's ability to pay common dividends or repurchase stock. Further, under the EESA, Congress has the ability to impose "after-the-fact" terms and conditions on participants in the CPP. The Company cannot predict whether, or in what form, additional terms or conditions may be imposed or the extent to which the Company's business may be affected by such changes.

FINANCIAL CONDITION

LOANS, CREDIT RISK MANAGEMENT, AND ALLOWANCE AND RESERVE FOR CREDIT LOSSES

Loan Portfolio Developments
Total loans at the end of the third quarter of 2009 were down $605 million from December 31, 2008. Most of the decrease was within the commercial and industrial (C&I) portfolio, but there were reductions in most portfolio segments and geographic regions. As was anticipated and previously disclosed, economic conditions restrained loan demand through the first nine months of 2009. Whitney continues to seek and fund new credit relationships and to renew existing ones, but the level of overall demand has been insufficient to cover repayments and maturities along with charge-offs, foreclosures and other problem loan resolutions. This situation is not expected to change over the near term.

Table 1 shows loan balances by type of loan at September 30, 2009 and at the end of the four prior quarters. The Parish acquisition in November 2008 included a loan portfolio of approximately $606 million, which was concentrated mainly in the commercial real estate (CRE) loan categories. Table 2 distributes the loan portfolio as of September 30, 2009 by the geographic region from which the loans are serviced. The following discussion provides a brief overview of the composition of the different portfolio sectors and the customers served in each, as well as recent changes.

TABLE 1. LOANS
                                             2009                2008
                               September   June  March December September
( in millions)                     30      30     31      31        30
Commercial & industrial           $3,064 $3,258 $3,328   $3,436    $3,101
Commercial real estate:
 Residential construction            215    239    265      274       265
 Commercial construction,
  land & land development          1,487  1,540  1,615    1,614     1,418
 Other CRE - owner-user            1,057  1,077  1,041    1,015       822
 Other CRE - nonowner-user         1,220  1,235  1,251    1,254     1,107
  Total commercial real estate     3,979  4,091  4,172    4,157     3,612
Residential mortgage               1,011  1,028  1,046    1,079     1,003
Consumer                             423    415    407      410       362
  Total loans                     $8,477 $8,792 $8,953   $9,082    $8,078

The portfolio of C&I loans, including commercial real estate (CRE) loans secured by properties used in the borrower's business, decreased $330 million, or 7%, between year-end 2008 and September 30, 2009, mainly reflecting economic conditions noted above. The C&I portfolio is diversified over a range of industries, including oil and gas (O&G), wholesale and retail trade in various durable and nondurable products and the manufacture of such products, marine transportation and maritime construction, hospitality, financial services, and professional services.
Loans outstanding to O&G industry customers declined approximately $100 million over the first nine months of 2009, but still represented approximately 11%, or $962 million, of total loans at September 30, 2009. The majority of Whitney's customer base in this industry provides transportation and other services and products to support exploration and production activities. Loans outstanding to the exploration and production sector comprised approximately 33% of the O&G portfolio at September 30, 2009. Management continues to monitor the impact of weak global economic activity on commodity prices and has made what it believes to be appropriate adjustments to Whitney's credit underwriting guidelines with respect to O&G loans and the management of existing relationships. Outstanding balances under participations in larger shared-credit loan commitments totaled $681 million at the end of 2009's third quarter, compared to $772 million outstanding at year-end 2008. The total at September 30, 2009 included approximately $282 million related to the O&G industry. Substantially all of the shared credits are with customers operating in Whitney's market area.

TABLE 2. GEOGRAPHIC DISTRIBUTION OF LOAN PORTFOLIO AT SEPTEMBER 30, 2009
                                                                                          Total       Percent        Total       Percent
                                                                           Alabama/      Sep 30            of      Dec. 31           of
(dollars in millions)              Louisiana       Texas      Florida         Miss.        2009         total         2008         total
Commercial & industrial          $     2,124     $   596     $     98     $     246     $ 3,064            36 %   $  3,436            38 %
Commercial real estate:
 Residential construction                 81          71           42            21         215             3          274             3
 Commercial construction,
  land & land development                442         444          365           236       1,487            18        1,614            18
 Other CRE - owner-user                  655         117          209            76       1,057            12        1,015            11
 Other CRE - nonowner-user               617         136          319           148       1,220            14        1,254            14
  Total commercial real estate         1,795         768          935           481       3,979            47        4,157            46

Residential mortgage                     553         137          198           123       1,011            12        1,079            12
Consumer                                 292          23           67            41         423             5          410             4
Total                            $     4,764     $ 1,524     $  1,298     $     891     $ 8,477           100 %   $  9,082           100 %
Percent of total                          56 %        18 %         15 %          11 %       100 %

The CRE portfolio, excluding loans on properties used in C&I operations, decreased $220 million during the first nine months of 2009. Approximately half of the decrease came from charge-offs and foreclosures. Project financing is an important component of this CRE portfolio sector, and management expects that current economic uncertainty will limit the availability of new creditworthy CRE projects throughout Whitney's market area over the near term.
Tables 3 and 4 show the composition of certain components of the CRE portfolio by property type and the region from which the loans are serviced.

TABLE 3. COMMERCIAL CONSTRUCTION, LAND & LAND DEVELOPMENT LOANS
AT SEPTEMBER 30, 2009
                                                 Alabama/         Percent of
(dollars in millions) Louisiana Texas Florida Mississippi  Total       total
Land & lots:
  Residential              $149   $45    $147         $82   $423         28%
  Commercial                115    87      86          55    343         23%
Retail                       41   151      21          25    238         16%
Office buildings             32    36      24           5     97          7%
Multifamily                  20    94       1          21    136          9%
Other (a)                    85    31      86          48    250         17%
Total                      $442  $444    $365        $236 $1,487        100%
Percent of total            30%   30%     24%         16%   100%

TABLE 4. COMMERCIAL REAL ESTATE LOANS - NONOWNER-USER
AT SEPTEMBER 30, 2009
                                                 Alabama/            Percent of
(dollars in millions) Louisiana Texas Florida Mississippi  Total          total
Retail                     $158   $73     $76         $40   $347            28%
Office buildings            111    28      62          28    229            19%
Hotel/motel                 156     4      45          24    229            19%
Multifamily                  74    11      49          32    166            14%
Industrial/warehouse         54    16      46          16    132            11%
Other                        64     4      41           8    117             9%
Total                      $617  $136    $319        $148 $1,220           100%
Percent of total            51%   11%     26%         12%   100%

The residential mortgage loan portfolio declined $68 million from the end of 2008 to September 30, 2009, reflecting in part the impact of attractive refinancing opportunities in the low interest rate environment, as well as some charge-offs and foreclosures. The Bank continues to sell most conventional residential mortgage loan production in the secondary market.

Credit Risk Management and Allowance and Reserve for Credit Losses

General Discussion of Credit Risk Management and Determination of Credit Loss Allowance and Reserve
Whitney manages credit risk mainly through adherence to underwriting and loan administration standards established by the Bank's Credit Policy Committee and through the efforts of the credit administration function to ensure consistent application and monitoring of standards throughout the Company. Lending officers are primarily responsible for ongoing monitoring and the assignment of risk ratings to individual loans based on established guidelines. An independent credit review function, which reports to the Audit Committee of the Board of Directors, assesses the accuracy of officer ratings and the timeliness of rating changes and performs concurrent reviews of the underwriting processes. Management's evaluation of credit risk in the loan portfolio is reflected in its estimate of probable losses inherent in the portfolio that is reported in the Company's financial statements as the allowance for loan losses. Changes in this evaluation over time are reflected in the provision for credit losses charged to expense. The methodology for determining the allowance involves significant judgment, and important factors that influence this judgment are re-evaluated quarterly to respond to changing conditions.
The recorded allowance encompasses three key elements: (1) allowances established for losses on criticized loans; (2) allowances based on historical loss experience for loans with acceptable credit quality and groups of homogeneous loans not individually rated; and (3) allowances based on general economic conditions and other qualitative and environmental risk factors both internal and external to the Company. During the third quarter of 2009, management enhanced the allowance methodology by expanding the qualitative and environmental factors that are considered and by evaluating and applying loss factors to the loan portfolio at a more granular level to better capture regional distinctions and distinctions among the types of property securing real estate loans.

The monitoring of credit risk also extends to unfunded credit commitments, such as unused commercial credit lines and letters of credit, and management establishes reserves as needed for its estimate of probable losses on such commitments.

Credit Quality Statistics and Components of Credit Loss Allowance and Reserve The total of loans criticized through the Company's credit risk-rating process was $1.18 billion at September 30, 2009, which represented 14% of total loans and a net increase of $131 million from June 30, 2009. The range of criticized ratings covers loans with well-defined weaknesses that would likely lead to a default if not corrected as well as loans with a high probability of loss but not yet charged off due to specific pending events. Criticized ratings also identify loans that deserve close attention because of potential weaknesses as evidenced by, for example, the borrower's recent operating trends or adverse market conditions. Table 5 shows the composition of criticized loans at . . .