March 28, 1997


Securities and Exchange Commission
450 Fifth St., N.W.
Judiciary Plaza
Washington, D.C.  20549-1004

Via Edgar Electronic Filing System

                                                       In Re: File Number 0-1026
                                                             -------------------

Gentlemen:

                Pursuant  to   regulations   of  the   Securities  and  Exchange
Commission,   submitted  herewith  for  filing  on  behalf  of  Whitney  Holding
Corporation  (the  "Company")  is  the  Company's  Report  on Form 10-K for  the
period ended December 31, 1996.

                This  filing is being  effected  by direct  transmission  to the
Commission's EDGAR System.

                                                    Sincerely,



                                                    /s/ Edward B. Grimball
                                                    ----------------------------
                                                    Edward B. Grimball
                                                    Executive Vice President &
                                                    Chief Financial Officer
                                                    (504) 586-7570

EBG/drm

<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

[ X ] Annual report pursuant to Section 13 or 15 (d) of  the Securities Exchange
      Act of 1934

For the fiscal year ended December 31, 1996
                                       OR
[   ] Transition  report  pursuant  to  Section  13 or  15 (d) of the Securities
      Exchange Act of 1934

For the transition period from                         to
                               -----------------------    ----------------------
Commission file number 0-1026
                           WHITNEY HOLDING CORPORATION
Incorporated in Louisiana                         I.R.S. Employer Identification
                                                          No. 72-6017893

              228 St. Charles Avenue, New Orleans, Louisiana 70130

Registrant's telephone number, including area code (504) 586-7272

Securities registered pursuant to Section 12(b) of the Act:
                                      None
Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III of the  Form  10-K or any
amendment to this Form 10-K. [ X ]

         State  the  aggregate  market  value  of  the  voting  stock  held   by
nonaffiliates of the Registrant as of February 27, 1997
                           Approximately $692,152,923*

         Indicate the number of shares  outstanding of each of the  Registrant's
classes of common stock, as of the latest practicable date.

         Common  Stock,  no  par  value,  17,977,998  shares  outstanding  as of
February 27, 1997.

                       Documents Incorporated by Reference

         Definitive Proxy Statement dated March 18, 1997, Part III.

         An Exhibit Index appears on page 63.


* For the purposes of this computation,  shares owned by directors and executive
officers of the  Registrant,  even though all such persons may not be affiliates
as defined in SEC Rule 405, have been excluded.


<PAGE>
<TABLE>
<CAPTION>



                                                                                                                      Page
--------------------------------------------------------------------------------------------------------------------------
PART I
<S>      <C>                                                                                                          <C>
         Item 1:  Business                                                                                               3
         Item 2:  Properties                                                                                             3
         Item 3:  Legal Proceedings                                                                                      4
         Item 4:  Submission of Matters to a Vote of Security Holders                                                    4
         Item 4a:          Executive Officers of the Registrant                                                          4

--------------------------------------------------------------------------------------------------------------------------
PART II
         Item 5:  Market for the Registrant's Common Stock and Related Shareholder Matters                               5
         Item 6:  Selected Financial Data                                                                                6
         Item 7:  Management's Discussion and Analysis of Financial Condition and Results of Operations                  7
         Item 8:  Financial Statements and Supplementary Data                                                           27
         Item 9:  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                  62

--------------------------------------------------------------------------------------------------------------------------
PART III
         Item 10: Directors and Executive Officers of the Registrant                                                    62
         Item 11: Executive Compensation                                                                                62
         Item 12: Security Ownership of Certain Beneficial Owners and Management                                        62
         Item 13: Certain Relationships and Related Transactions                                                        62

--------------------------------------------------------------------------------------------------------------------------
PART IV
         Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K                                       63

--------------------------------------------------------------------------------------------------------------------------
         Signatures                                                                                                     65
</TABLE>

                               Page 2 of 69 Pages

<PAGE>



                                     PART I

Item 1:  BUSINESS

         Whitney Holding Corporation (the "Company") is a Louisiana bank holding
company registered pursuant to the Bank Holding Company Act of 1956. The Company
began  operations in 1962 as the parent of Whitney National Bank (the "Louisiana
Bank") which has been in continuous  operation since 1883. In December 1994, the
Company  established  the  Whitney  Bank of Alabama  (the  "Alabama  Bank") and,
through this new banking subsidiary,  acquired the Mobile area operations of The
Peoples Bank, Elba,  Alabama on February 17, 1995. During 1995, the Company also
established the Whitney Community  Development  Corporation  ("WCDC"),  which is
authorized  to make  equity and debt  investments  in  corporations  or projects
designed  primarily  to  promote  community  welfare,   including  the  economic
rehabilitation  and  development  of  low-income  areas  by  providing  housing,
services,  or jobs for residents,  or promoting  small  businesses  that service
low-income  areas. In August 1996, the Company  established the Whitney National
of Florida (the  "Florida  Bank") and  subsequently  acquired  American Bank and
Trust and Liberty Bank, both of Pensacola, Florida on October 25, 1996.

         The Company,  through its banking  subsidiaries,  engages in commercial
and retail banking and in trust business,  including the taking of deposits, the
making of secured and unsecured loans, the financing of commercial transactions,
the issuance of credit cards,  the delivery of  corporate,  pension and personal
trust services,  and certain limited investment services.  The Louisiana Bank is
active as a correspondent for other banks. The Banks render specialized services
of  different  kinds  in  connection  with  all of the  foregoing,  and  operate
sixty-one offices in south Louisiana, ten offices in south Alabama, five offices
in the  Pensacola,  Florida  area,  and a foreign  branch on Grand Cayman in the
British West Indies.

         There is significant competition within the financial services industry
in general as well as with respect to the particular financial services provided
by the Banks.  Within their market areas,  the Banks compete directly with major
banking  institutions of comparable or larger size and resources as well as with
various other smaller banking  organizations  and local and national  "non-bank"
competitors,  including savings and loans,  credit unions,  mortgage  companies,
personal and commercial  finance  companies,  investment  brokerage  firms,  and
registered investment companies.

         In recent years there has been a significant  consolidation  within the
financial  services  industry,  particularly  with  respect to the  banking  and
savings and loan segments of this industry.  This  consolidation has been driven
both by the large number of S&L and bank  failures  experienced  during the late
1980s and early 1990s as well as more recently by general competitive pressures.
All of the Banks' major direct banking  competitors have been relatively  active
in expansion through acquisition.  In recent years, the Company has entered into
four acquisitions of banking operations involving  approximately $540 million of
assets and  completed  a merger  with a fifth  bank  having  approximately  $235
million of assets in February 1997. The trend toward industry  consolidation  is
expected to continue in the near term.

         All material funds of the Company are invested in the Banks.  The Banks
have a large number of customer  relationships  which have been developed over a
period of many years and are not  dependent  upon any single  customer or upon a
few customers. The loss of any single customer or a few customers would not have
a material  adverse  effect on the Banks or the Company.  The Louisiana Bank has
customers in a number of foreign  countries,  but the portion of revenue derived
from these foreign customers is not a material portion of its overall revenues.

         The Company and the Banks and their related  operations  are subject to
federal, state and local laws applicable to banks and bank holding companies and
to the regulations of the Board of Governors of the Federal Reserve System,  the
Office of the Comptroller of Currency, the Federal Deposit Insurance Corporation
and the Alabama State Banking Department.

Item 2:  PROPERTIES

         The Company owns no real estate in its own name.  The Company's and the
Louisiana  Bank's  executive  offices are located in downtown New Orleans in the
Bank's main office facilities,  which it owns. A portion of these facilities, as
well as portions of certain other  facilities  in  Louisiana,  are available for
lease to third  parties,  although such leasing  activity is not material to the
Company's  overall  operations.  The  Louisiana,  Alabama and Florida  Banks own
approximately  three-quarters  of the total number of branch banking  facilities
currently in operation.  The remaining branch  facilities are subject to leases,
each of which management

                               Page 3 of 69 Pages

<PAGE>



considers to be reasonable  and  appropriate  to its location.  All  facilities,
whether owned or leased,  are being  maintained in a manner so as to ensure that
they continue to be suitable for their intended banking operations.

         In 1997, the Company plans to open or begin construction on twenty-four
additional  branch  locations  throughout  the market  areas of the Banks and to
complete the  construction of a main office for the Alabama Bank.  Total capital
expenditures for these new facilities are estimated at $40 million.

         The Banks hold a variety of  property  interests  acquired  through the
years in  settlement  of  loans.  Reference  is made to Note 8 to the  financial
statements  included in Item 8 for further  information  regarding such property
interests as of December 31, 1996.

Item 3:  LEGAL PROCEEDINGS

         There are no material  pending  legal  proceedings,  other than routine
litigation  incidental to the business, to which the Company or its subsidiaries
is a party or to which any of their property is subject.

Item 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

Item 4a: EXECUTIVE OFFICERS OF THE REGISTRANT

         William L. Marks,  53,  Director of Whitney  National  Bank of Florida,
Chairman of the Board and Chief Executive  Officer of the Louisiana Bank and the
Company since February, 1990.

         R. King Milling,  56, Director since 1979,  Director of Whitney Bank of
Alabama and Director and President of the  Louisiana  Bank and the Company since
December, 1984.

         G. Blair Ferguson, 53, Executive  Vice  President of the Louisiana Bank
and the Company since July, 1993.  Former Executive Vice  President and Regional
Director of First City, Dallas, Texas.

         Edward  B.  Grimball,   52,  Director,   Chief  Financial  Officer  and
Investment Officer of Whitney National Bank of Florida,  Chief Financial Officer
and  Investment  Officer of Whitney Bank of Alabama,  Vice  President  and Chief
Financial  Officer from  September,  1990 to October,  1991,  and Executive Vice
President  and Chief  Financial  Officer of the  Louisiana  Bank and the Company
since October, 1991.

         Kenneth A. Lawder,  Jr., 55,  Executive Vice President of the Louisiana
Bank and the Company since December, 1991.

         Joseph W. May, 51,  Executive  Vice President of the Louisiana Bank and
the Company since  December,  1993.  Former  Executive  Vice President and Chief
Credit Policy Officer,  Comerica,  Inc., then a $27 billion bank holding company
headquartered in Detroit, Michigan.

         John C. Hope,  III, 48,  Director of Whitney  National Bank of Florida,
Chairman of the Board and Chief  Executive  Officer of Whitney  Bank of Alabama,
and  Executive  Vice  President  of the  Company  since  October,  1994.  Former
Executive Vice President and Manager, Southern Area of AmSouth Bank of Alabama.

         Robert C. Baird,  Jr., 46,  Executive  Vice  President of the Louisiana
Bank and the  Company  since July,  1995.  Former  Chairman of the Board,  Chief
Executive  Officer and  President  of Union Bank and Trust,  then a $500 million
bank headquartered in Montgomery, Alabama.

         Rodney D. Chard, 54, Executive Vice President of the Louisiana Bank and
Company since July 1996.  Former Consultant, EDS  Management Consulting Services
in Toronto, Ontario,  Canada.  Former  Independent Consultant, Chard  Consulting
Limited in Toronto, Ontario, Canada.


                               Page 4 of 69 Pages

<PAGE>



                                     PART II

Item 5:  MARKET FOR  THE  REGISTRANT'S  COMMON  STOCK  AND  RELATED  SHAREHOLDER
         MATTERS

         a)       The  Company's   stock  price  is  reported  on  the  National
                  Association of Securities Dealers Automated Quotation (NASDAQ)
                  system under the symbol WTNY.  The  following  table shows the
                  range  of  closing  prices  of the  Company's  stock  for each
                  calendar  quarter of 1996 and 1995 as  reported  on the NASDAQ
                  National Market System.

                                          1996              1995
                                    ---------------- -----------------
                  1st Quarter       29 3/4- 31 3/4     22   -  25 3/4
                  2nd Quarter       29 3/4- 31 3/4     24   -  27 3/8
                  3rd Quarter       29 1/2- 32 3/4     26 3/4-  34
                  4th Quarter       31 3/4- 35 7/8     29 3/4-  31 1/2

         b)       The  approximate  number  of  shareholders  of  record  of the
                  Company, as of February 27, 1997, is as follows:
                        Title of Class                    Shareholders of Record
                  --------------------------              ----------------------
                  Common Stock, no par value                      3,415

         c)       During  1996  and  1995,  the  Company  declared  dividends as
                  follows:

                                           1996              1995
                                    -----------      ------------
                  1st Quarter       $      0.22      $       0.20
                  2nd Quarter              0.25              0.20
                  3rd Quarter              0.25              0.20
                  4th Quarter              0.25              0.22



                               Page 5 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>
Item 6: SELECTED FINANCIAL DATA

                  WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
                             SELECTED FINANCIAL DATA

                                                                                YEAR ENDED DECEMBER 31,

                                                              1996         1995         1994         1993         1992
                                                            ---------------------------------------------------------------
BALANCE SHEET DATA                                             (dollars in thousands, except per-share data, unaudited)
<S>                                                         <C>          <C>          <C>          <C>          <C>
AT YEAR-END:
     Total assets........................................   $3,774,501   $3,512,711   $3,224,529   $3,304,906   $3,262,090
     Total investment in securities......................    1,326,294    1,475,896    1,627,497    1,731,811    1,582,439
     Total loans.........................................    2,064,912    1,649,436    1,242,539    1,138,141    1,197,621
     Total earning assets................................    3,404,606    3,154,269    2,895,916    2,997,652    2,925,794
     Total deposits......................................    2,861,881    2,882,170    2,689,738    2,776,509    2,819,435
AVERAGE BALANCE:
     Total assets........................................   $3,576,681   $3,292,574   $3,263,890   $3,194,181   $3,134,850
     Total investment in securities......................    1,446,923    1,535,826    1,716,532    1,648,913    1,372,064
     Total loans.........................................    1,778,074    1,379,587    1,151,750    1,106,631    1,274,674
     Total earning assets................................    3,252,217    2,975,057    2,950,064    2,885,083    2,825,865
     Total deposits......................................    2,795,222    2,720,116    2,725,461    2,689,519    2,660,719
INCOME DATA
Total interest income....................................     $241,706     $221,660     $198,753     $191,550     $200,757
Total interest expense...................................      (89,895)     (75,941)     (59,519)     (56,722)     (75,300)
                                                            ---------------------------------------------------------------
Net interest income......................................      151,811      145,719      139,234      134,828      125,457
Reduction in reserve (provision) for possible loan
    losses...............................................        5,000        9,380       25,869       59,295       (4,640)
Gains on sale of securities..............................           11            3           46          112        5,601
Non-interest income......................................       37,311       33,966       34,964       34,143       30,292
Non-interest expense.....................................     (134,394)    (122,680)    (115,661)    (111,475)    (123,837)
                                                            ---------------------------------------------------------------
Income (Loss) before income tax and effect of accounting
   changes...............................................      $59,739      $66,388      $84,452     $116,903      $32,873
Income tax expense (benefit).............................       19,118       20,855       26,862       37,321        9,969
                                                            ---------------------------------------------------------------
Income (Loss) before effect of accounting changes........      $40,621      $45,533      $57,590      $79,582      $22,904
Cumulative effect of accounting changes, net.............       -            -            -               345       -
                                                            ---------------------------------------------------------------
Net income (loss)........................................      $40,621      $45,533      $57,590      $79,927      $22,904
                                                            ===============================================================

COMMON STOCK DATA
Earnings (Loss) per share................................        $2.26        $2.57        $3.32        $4.67        $1.35
Earnings per share before merger related expenses........        $2.45            -            -            -            -
Dividends per share......................................        $0.97        $0.82        $0.64        $0.43        $0.07
Dividend payout ratio....................................        41.75%       28.63%       17.61%        8.58%        6.40%
Book value per share, end of period......................       $22.53       $21.28       $18.89       $16.83       $12.34
Weighted average number of shares outstanding............   17,954,676   17,683,987   17,364,103   17,096,827   16,997,697

SELECTED RATIOS
Return on average assets ................................         1.14%        1.38%        1.76%        2.50%        0.73%
Return on average shareholders' equity ..................        10.45%       13.05%       18.78%       33.35%       11.85%
Net interest margin, taxable-equivalent..................         4.81%        5.03%        4.86%        4.79%        4.55%
Tier 1 risk-based capital ratio..........................        14.87%       17.19%       20.45%       18.77%       13.44%
Total risk-based capital ratio...........................        16.12%       18.45%       21.72%       20.04%       14.76%
Tier 1 leverage capital ratio............................        10.19%       10.06%        9.85%        8.25%        6.04%
Average shareholders' equity to average assets...........        10.87%       10.60%        9.39%        7.50%        6.35%
Shareholders' equity to total assets.....................        10.72%       10.70%       10.21%        8.72%        6.47%


Note: All share and per-share figures give effect to the three-for-two stock
splits effective February 22, 1993 and November 29, 1993.

</TABLE>




                               Page 6 of 69 Pages

<PAGE>



Item 7:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SUMMARY

         Whitney Holding  Corporation earned $40.6 million in 1996, or $2.26 per
share.  These  results  include the effects of a $5.0  million  reduction in the
level of the reserve for possible loan losses, which contributed $3.3 million or
$0.18 per share to  earnings  on an  after-tax  basis.  The 1996  earnings  also
reflect the impact $4.2 million of merger-related  expenses,  which represent an
after-tax  reduction in earnings of $3.5  million or $0.19 per share.  For 1995,
the Company  earned  $45.5  million or $2.57 per share,  including  an after-tax
contribution  to earnings of $6.1  million or $0.34 per share  resulting  from a
total of $9.4 million in loan loss reserve reductions during that period.

         Taxable-equivalent  net interest income  increased $6.6 million or 4.4%
between 1995 and 1996.  Non-interest  income increased $3.4 million or 9.9% from
1995 to 1996,  with gains shown in most of the income  categories.  Non-interest
expense  was  $11.7  million  or 9.5%  higher  in 1996  compared  to 1995,  with
non-recurring  merger-related expenses accounting for approximately $4.2 million
of the total increase.

         Average earning assets  increased $277 million or 9.3% to $3.25 billion
in 1996  compared  with $2.98  billion in 1995.  Average  loans  increased  $398
million in 1996 or 29% to $1.78  billion from $1.38  billion in 1995.  This loan
growth is attributable  to strengthened  demand for both commercial and consumer
credit in the Company's market areas and to more aggressive  solicitation of the
Banks'  customers.  The increase in loan activity was funded in part by maturing
investment  securities and short term investments which declined $121 million or
8.2% in 1996. At December 31, 1996, total loans  outstanding were $2.06 billion,
an increase of $415  million or 25% over the $1.65  billion  total at the end of
1995.

         Average total deposits increased slightly in 1996 to $2.80 billion from
$2.72  billion  in  1995.  Banks  nationwide  continue  to feel  the  impact  of
depositors seeking higher yielding investment instruments from non-bank sources.
As of December 31, 1996,  total  deposits were $2.86  billion  compared to $2.88
billion at the end of 1995.

         Non-performing  assets  continued  their  steady  decrease  of the past
several  years in 1996. At December 31, 1996,  non-performing  assets were $12.3
million,  down $2.4 million or 16% from $14.7 million at December 31, 1995.  The
reserve for possible  loan losses was $39.3  million on December  31,  1996,  an
amount which  represented 547% of nonaccruing  loans and 1.9% of total loans. At
year end 1995, the reserve coverage was 410% of non-performing loans and 2.4% of
total loans.

         The Company is  scheduled to complete a merger,  pending all  necessary
regulatory and shareholder  approvals,  early in the second quarter of 1997 with
Merchants  Bancshares,  Inc.  ("MB"),  the parent  company of Merchants Bank and
Trust Company  ("MB&T").  MB&T,  which will merge into Whitney  National Bank of
Mississippi,  a newly formed subsidiary of the Company, operates thirteen branch
locations along the Mississippi Gulf Coast. MB has total assets of approximately
$208  million,  $83  million  in loans,  total  deposits  of $188  million,  and
shareholders'  equity of $17 million.  MB  shareholders  are expected to receive
Whitney  Holding  Corporation  common  stock with a value of  approximately  $52
million. The merger is expected to be accounted for as a pooling of interests.

         On  February  28,  1997,  the  Company  completed  a merger  with First
National  Bankshares,  Inc. ("FNB"),  the parent of First National Bank of Houma
("FNBH"). FNBH operates five banking offices in Terrebonne Parish, Louisiana and
has total assets of  approximately  $235 million,  $126 million in loans,  total
deposits of $210 million,  and shareholders' equity of $18 million. The price of
this transaction was $41 million. FNBH shareholders received  approximately 1.13
million shares of Whitney Holding Corporation common stock at the closing.  This
merger will also be accounted for as a pooling of interests.

         On October 25, 1996, the Company  completed a merger with American Bank
& Trust ("AB&T") of Pensacola, Florida and with Liberty Holding Company ("LHC"),
the parent of Liberty Bank, also of Pensacola, Florida. AB&T, with assets of $57
million,  and  Liberty  Bank,  with  assets of $48  million,  were merged into a
newly-chartered wholly-owned banking subsidiary of the Company, Whitney National
Bank of  Florida.  Each of these  mergers  was  accounted  for as a  pooling  of
interests.


                               Page 7 of 69 Pages

<PAGE>



         On March 8, 1996,  the Company  completed a merger with First  Citizens
BancStock,  Inc.  ("FCB"),  the parent of The First  National  Bank in St.  Mary
Parish ("FNB"). FNB, which was merged into Whitney National Bank (the "Louisiana
Bank"), had total assets of approximately  $243 million,  including $147 million
in loans, and total deposits of $214 million at the closing date. The merger was
accounted for as a pooling of interests.

         Whitney  Holding  Corporation  declared  quarterly  dividends  in  1996
totaling  $0.97 per share  compared with $0.82 per share in 1995, an increase of
$0.15 per share or 18%. On February 26, 1997,  the Company  declared a quarterly
dividend of $0.28 per share to shareholders of record on March 14, 1997.

                               Page 8 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>



AVERAGE BALANCE SHEETS
-------------------------------------------------------------------------------------------------------------------
(in thousands)

AVERAGE ASSETS                                            1996                      1995                       1994
                                                    ---------------------------------------------------------------
<S>                                                 <C>                       <C>                        <C>
Cash and due from financial institutions....        $  189,731                $  192,399                 $  198,875
U.S. Treasury and agency securities.........         1,051,699                 1,202,711                  1,354,106
Mortgage-backed securities .................           255,440                   181,664                    194,543
State and municipal securities..............           135,019                   131,394                    129,503
Federal Reserve stock and other corporate
  securities................................             4,765                    20,057                     38,380
Federal funds sold and short-term deposits..            27,220                    59,644                     81,782
Loans, net of reserve for possible loan
 losses of $42,741 in 1996, $40,271 in
 1995 and $45,826 in 1994 ..................         1,735,333                 1,339,316                  1,105,924
Bank premises and equipment, net............            98,714                    77,779                     71,644
All other assets  ..........................            78,760                    87,610                     89,133
                                                    ---------------------------------------------------------------
         Total assets                               $3,576,681                $3,292,574                 $3,263,890
                                                    ===============================================================
AVERAGE LIABILITIES
Deposits:
   Non-interest-bearing demand deposits.....        $  842,168                $  827,348                 $  806,914
   Savings deposits, NOW account
      and money market account deposits.....         1,073,006                 1,125,598                  1,241,023
   Time deposits............................           880,048                   767,170                    677,524
                                                    ---------------------------------------------------------------
         Total deposits.....................        $2,795,222                 2,720,116                  2,725,461

Federal funds purchased and
   repurchase agreements....................           362,534                   194,478                    200,063
All other liabilities.......................            30,070                    29,020                     31,800
                                                    ---------------------------------------------------------------
         Total liabilities..................        $3,187,826                $2,943,614                 $2,957,324
AVERAGE SHAREHOLDERS' EQUITY
Total capital accounts......................           388,855                   348,960                    306,566
                                                    ---------------------------------------------------------------
         Total liabilities and shareholders'
          equity  ..........................        $3,576,681                $3,292,574                 $3,263,890
                                                    ===============================================================
</TABLE>


FINANCIAL CONDITION

Loans

         In 1996, the Company's average loans outstanding increased $398 million
or 29% as compared to 1995.  Since 1994, the Company  achieved growth in average
loans  outstanding  of $626 million or 54%,  from $1.15 billion in 1994 to $1.78
billion in 1996.  The loan growth over this period  reflects  both the Company's
expansion  into the Alabama Gulf Coast  markets in early 1995 and the  continued
favorable  economic  conditions  in the  Company's  overall  market area,  which
includes the southern  portions of Louisiana,  Mississippi and Alabama,  and the
western Florida  panhandle,  as well as the impact of a focused effort to market
the Banks' retail and commercial loan products.

         All categories of loans  experienced solid growth from year end 1995 to
year end  1996.  Commercial  loans  other  than  those  secured  by real  estate
increased  $176 million or 22% in 1996,  while loans secured by  commercial  and
other non-retail residential mortgage loans increased $134 million or 28%. Loans
to entities involved in manufacturing,  wholesaling and retailing  exhibited the
strongest growth, although the overall increase was well distributed.

         In 1996,  the  Company  continued  to  direct  increased  attention  to
developing and promoting attractive and competitive loan products for its retail
markets.  Retail  mortgage loans  increased $92 million or 41% in 1996, in large
part as a result of the continued

                               Page 9 of 69 Pages

<PAGE>



successful  promotion of new retail loan products  that have been  introduced in
recent years as an  alternative to the  conventional  mortgage loan product that
the Company  originates  for sale in the  secondary  market.  During  1996,  the
Company   also   increased   its   portfolio   of  loans   granted   under   its
affordable-housing  program by approximately $10 million.  Loans to individuals,
which  include  various  consumer  installment  and credit  line loan  products,
increased  $13.9  million or 11.4% in 1996,  largely  as the result of  enhanced
promotional efforts.

         The  accompanying  table  of  loan  maturities   reflects   contractual
maturities,  unadjusted  for  scheduled  principal  reductions  or  prepayments.
Approximately 85% of the loans with maturities  greater than one year bear fixed
rates of interest.
<TABLE>
<CAPTION>

LOAN PORTFOLIO BALANCES AT DECEMBER 31,
---------------------------------------------------------------------------------------------------------------------------
(in thousands)
                                                 1996              1995             1994              1993             1992
                                           --------------------------------------------------------------------------------
<S>                                        <C>               <C>              <C>               <C>              <C>
Commercial, financial,
 and agricultural loans.............       $  980,825        $  804,471       $  634,994        $  629,453       $  628,098
Real estate loans -
 commercial and other...............          620,197           486,092          355,374           308,773          335,330
Real estate loans - retail
 mortgage...........................          315,945           223,528          134,507           103,554          118,981
Loans to individuals................          135,667           121,739          107,935            88,065          107,293

Lease financing receivable..........           12,278            13,606            9,729             8,296            7,919
                                           --------------------------------------------------------------------------------
         Total loans................       $2,064,912        $1,649,436       $1,242,539        $1,138,141       $1,197,621
                                           ================================================================================
</TABLE>


<TABLE>
<CAPTION>

LOAN MATURITIES AT DECEMBER 31, 1996
-------------------------------------------------------------------------------------------------
(in thousands)
                                                      ONE
                                    ONE YEAR          THROUGH           MORE THAN
                                    OR LESS           FIVE YEARS        FIVE  YEARS    TOTAL
                                    -------------------------------------------------------------
<S>                                 <C>               <C>               <C>            <C>
Commercial, financial,
 and agricultural loans.............$581,639          $355,588          $ 43,598       $  980,825
Real estate loans -
 commercial and other............... 125,886           331,151           163,160          620,197
Real estate loans - retail
 mortgage...........................  39,001           116,489           160,455          315,945
Loans to individuals................ 101,897            29,827             3,943          135,667
Lease financing receivable..........   2,938             9,340                -            12,278
                                    -------------------------------------------------------------
         Total loans................$851,361          $842,395          $371,156       $2,064,912
                                    =============================================================

</TABLE>

Deposits and Short-Term Borrowings

         The Company's  average deposits  increased $75 million or 2.8% to $2.80
billion in 1996 from $2.72 billion in 1995.

         As shown in the table of average balance  sheets,  non-interest-bearing
demand  deposits have been relatively  stable between 1995 and 1996,  increasing
$14.8 million or 1.8%.  This table also shows that average time deposits,  which
includes both core deposits and  certificates of deposit and other time deposits
of $100,000 and over, increased $113 million or 15% between 1995 and 1996.
 The growth  within the time deposit  category  came both from core  deposits of
under $100,000,  which increased $39 million, and from a $68 million increase in
time deposits of $100,000 and over.

         Average savings,  NOW and money market account  deposits  decreased $53
million or 4.7% between 1995 and 1996.
Despite a moderate  decline in market interest rates during 1995 to a relatively
stable level in 1996, higher-rate investment alternatives

                               Page 10 of 69 Pages

<PAGE>



which have been available to holders of these accounts during the past year have
fostered disintermediation of some deposit funds.

         The  Company's  short-term  borrowings  consist of purchases of federal
funds and sales of securities under repurchase  agreements.  Such borrowings are
both a source of funding for certain  short-term  lending facilities and part of
the Company's services to correspondent banks and other customers. The Company's
average  short-term  borrowing  increased  $168  million or 86% between 1995 and
1996.  The  Company  has used  short-term  borrowings,  particularly  repurchase
agreements,  to provide funds to support the growth in the loan  portfolio.  The
rise in short-term  borrowings is also partly  attributable  to the promotion of
repurchase  agreements  in  connection  with an  expansion  of the  Banks'  cash
management services. The Company's average short-term borrowing position, net of
federal funds sold and short-term  deposits,  was approximately  $335 million in
1996 and $135 million in 1995.
<TABLE>
<CAPTION>

INVESTMENT IN SECURITIES
-----------------------------------------------------------------------------------------------------------
(dollars in thousands)

Book Value at December 31                         1996                       1995                      1994
                                            ---------------------------------------------------------------
<S>                                         <C>                        <C>                       <C>
U S. Treasury securities:
 Held to maturity...........................$  557,606                 $  803,632                $  999,505
 Available for sale.........................       544                      5,598                     8,373
Securities of U.S. government agencies:
 Held to maturity...........................   329,713                    250,905                   248,572
 Available for sale.........................    33,083                     44,567                    27,037
Mortgage-backed securities:
 Held to maturity...........................   145,045                     56,707                     1,834
 Available for sale.........................   112,273                    173,068                   177,480
State and municipal securities:
 Held to maturity...........................   141,972                    135,716                   134,899
 Available for sale.........................     1,072                      1,074                         -
Corporate bonds, held to maturity...........         -                          -                    25,160
Federal Reserve stock and other
  corporate securities......................     4,986                      4,629                     4,637
                                            ---------------------------------------------------------------
         Total..............................$1,326,294                 $1,475,896                $1,627,497
                                            ===============================================================
</TABLE>

<TABLE>
<CAPTION>

Distribution of Remaining                                Over One         Over Five
  Maturity and Yield by                  One Year        Through           Through            Over
  Range                                  and Less       Five Years        Ten Years        Ten Years           Total
  at December 31, 1996              --------------------------------------------------------------------------------------
                                    Amount   Yield   Amount   Yield    Amount   Yield    Amount   Yield    Amount   Yield
                                    --------------------------------------------------------------------------------------
<S>                                 <C>       <C>    <C>       <C>      <C>       <C>    <C>       <C>     <C>       <C>
Securities held to maturity:
U.S. Treasury securities............$322,383  5.24%  $235,223  6.45%    $      -     -%  $      -     -%   $557,606  5.75%
Mortgage-backed securities(2).......   1,600  7.34     18,205  6.59      120,284  6.39      4,956  6.68     145,045  6.44
U.S. government agency
 securities.........................  25,028  6.03    289,605  6.45       15,080  6.47          -     -     329,713  6.47
State and municipal
  securities(1).....................  14,452  7.64     52,120  7.82       58,811  8.28     16,589  7.97     141,972  8.01
Equity securities(3)................       -     -          -     -            -     -      4,986     -       4,986     -

Securities available for sale:(4)
U.S. Treasury securities............       -     -        544  7.02            -     -          -     -         544  7.02
U.S. government agency
 securities.........................  13,906  4.56      3,225  5.36       14,910  6.98      1,042  8.12      33,083  5.84
Mortgage-backed securities(2).......  32,578  6.73     71,288  6.35        2,597  7.26      5,810  8.13     112,273  6.59
State and municipal
  securities(1).....................       -     -        160  6.50          354  7.43        558  8.15       1,072  7.56

(1)      Tax exempt yields are expressed on a fully taxable equivalent basis.
(2)      Distributed by contractual maturity without regard to repayment schedules or projected prepayments.
(3)      These securities have no stated maturities or guaranteed dividends.
(4)      These securities are classified as available for sale before maturity.  The actual  timing  of  any such sales, however, is
         not determinable at year end.
</TABLE>





                               Page 11 of 69 Pages

<PAGE>



Investment in Securities

         At December 31, 1996, the Company's total  investment in securities was
$1.33  billion,  a decrease of $150  million or 10% from the  December  31, 1995
total of $1.48 billion.

         The  average  total  investment  portfolio  outstanding  decreased  $89
million or 5.8%  between 1995 and 1996.  Funds from  investment  maturities,  in
particular  U.S.  Treasury  securities,  have  been  used to  partially  satisfy
increased  loan demand in recent years.  In 1996,  maturities  of U.S.  Treasury
securities have also been reinvested in higher-yielding U.S.
government agency securities and mortgage-backed issues.

         The weighted  average  maturity of the overall  portfolio of securities
was 36 months at year end 1996 as  compared  to 34 months at year end 1995.  The
weighted  average  taxable-equivalent  portfolio yield was 6.32% at December 31,
1996, an increase of 40 basis points from 5.92% at December 31, 1995.

         Securities  classified as available for sale constituted  approximately
11% of the total  investment  portfolio  at year end 1996 and 15% as of year end
1995.  These  securities  are  reported  at their  estimated  fair values in the
consolidated  statements of condition.  The net unrealized gain on available for
sale  securities  was $0.4 million at year end 1996  compared to $2.3 million at
1995's year end. These gains are reported,  net of tax, as a separate  component
of shareholders'  equity for each period. The remaining portfolio securities are
classified as held to maturity and are reported at amortized  cost.  The Company
maintains no securities trading portfolio.

         At December 31, 1996, the Company held no investment in securities of a
single issuer,  other than U.S.  Treasury and government  agency  securities and
mortgage-backed  securities  issued or guaranteed by government  agencies,  that
exceeded  10% of its  shareholders'  equity.  The Company  maintains no material
investment or participation  in financial  instruments or agreements whose value
is linked to or derived  from changes in the value of some  underlying  asset or
index. Such instruments or agreements include futures, forward contracts, option
contracts,  interest-rate swap agreements, and other financial arrangements with
similar characteristics, and are commonly referred to as derivatives.

Bank Premises and Equipment

         The net  investment in bank premises and equipment at December 31, 1996
of $109 million  represents a $24 million or 29% increase from the level at year
end 1995.  Beginning in 1995 and continuing in 1996, the Company has accelerated
the  expansion  of  its  branch  and  automated  teller  machine  networks,  the
renovation or replacement of existing branch facilities,  and the enhancement of
its facilities for its support operations. During 1996, the Company completed or
began  construction on thirteen new branch locations  throughout its market area
and opened a new operations center.

Asset Quality

         Overall asset quality has shown  significant  improvement over the past
five years. Non-performing assets totalled $12.3 million at December 31, 1996, a
decrease of $2.4 million or 16% from $14.7 million at year end 1995. In the four
years since 1992  non-performing  assets have fallen a total of $102  million or
89%. Over this same period,  loans internally  classified as having above-normal
credit risk decreased approximately $148 million or 61% to $94.5 million or 4.6%
of total loans at year end 1996. At December 31, 1996, the classification totals
were  as  follows:  loans  as to  which  there  are  serious  doubts  as to full
repayment, $6.7 million; substandard loans with well-defined weaknesses that, if
not corrected,  would likely result in some loss, $39.3 million;  and loans with
risk characteristics that indicate a potential weakness and that warrant special
attention, $48.5 million.

         The Company was  successful in  recovering  $10.3 million of previously
charged-off  loans in 1996 and  $14.2  million  in 1995.  In 1996,  the  Company
identified $6.1 million of loans to be charged off as uncollectible  against the
reserve for possible  loans losses as compared to $3.5 million of charge-offs in
1995.  The increase in  charge-offs  is mainly  attributable  to certain  credit
quality  issues  that  developed  with  respect  to a segment  of the  portfolio
acquired  in the merger  with one of the pooled  institutions  as well as to the
downgrade  in the  credit  rating of one  commercial  customer.  Management  has
addressed the issues  identified in the acquired  portfolio and has assessed the
potential for additional

                               Page 12 of 69 Pages

<PAGE>



losses in this portfolio and with the troubled commercial customer in evaluating
the adequacy of the loan loss allowance.

         The reserve for possible loan losses is maintained at a level  believed
by management to be adequate to absorb potential losses in the portfolio. In the
early 1990s,  the economic  conditions  in the  Company's  primary  market areas
stabilized and began to improve after a period of severe decline, and management
began  implementing a program to strengthen its policies and procedures  related
to the measurement  and control of credit risk in its loan  portfolio.  In 1993,
the improvement in the economy and the success of management's  program led to a
dramatic  reduction  in the  Company's  measures of overall loan credit risk and
allowed  management to authorize a $59.3 million  reduction in the allowance for
possible loan losses. With continued economic strength,  continued  improvements
in overall  measures of asset  quality,  and  significant  net recoveries in the
following  years,  the Company was able to return $25.9 million of the loan loss
allowance to income in 1994, $9.4 million in 1995, and $5.0 million in 1996. The
reserve for possible loan losses  represented  411% of  non-performing  loans at
December  31, 1996 and 1.9% of total  loans on that date.  At year end 1995 this
reserve coverage was 410% of non-performing loans and 2.4% of total loans.

         During 1996, the Company  disposed of OREO  properties  with a carrying
value at the time of sale  totalling  approximately  $3.1 million.  The value of
properties  acquired  in  settlement  of loan  claims  during  the year was $1.2
million.
<TABLE>
<CAPTION>

NON-PERFORMING ASSETS AT DECEMBER 31
---------------------------------------------------------------------------------------------------------------
(in thousands)
                                     1996             1995              1994             1993              1992
                                -------------------------------------------------------------------------------
<S>                             <C>              <C>               <C>               <C>              <C>
Loans accounted for on
 a nonaccrual basis             $   7,191        $   8,161         $  16,292         $ 34,271         $  72,913
Restructured loans                  2,375            1,622                 -                -                 -
                                -------------------------------------------------------------------------------
    Total non-performing loans      9,566            9,783            16,292           34,271            72,913
Other real estate owned             2,765            4,925             7,034           16,783            41,395
Other foreclosed assets                 -                -                 3              174               420
                                -------------------------------------------------------------------------------
     Total non-performing
       assets                   $  12,331        $  14,708         $  23,329         $ 51,228         $ 114,728
                                ===============================================================================
Loans 90 days past due still
 accruing                       $   2,040        $     688         $     250         $  1,659         $   2,037
                                ===============================================================================
Non-performing assets as a
 percentage of:
     Total assets                    0.3%             0.4%              0.7%             1.6%              3.5%
     Total loans and
      foreclosed assets              0.6%             0.9%              1.9%             4.4%              9.3%
</TABLE>


         Whitney  National  Bank  has  several  property  interests  which  were
acquired through routine banking transactions  generally prior to 1933 and which
are recorded in its financial records at a nominal value. Management continually
investigates ways to maximize the return on these assets.  Operating income from
these property  interests,  primarily from oil and gas royalties and real estate
operations,  was  approximately  $897 thousand in 1996,  including $360 thousand
which related to the sale of  seventy-seven  acres of vacant land. This compares
with $166 thousand of operating income in 1995 and $151 thousand in 1994. Future
dispositions may result in the recognition of substantial gains.

         The Company has not extended any credit in  connection  with what would
be defined under regulatory guidelines as highly leveraged transactions, nor has
it acquired  any  investment  securities  arising  from such  transactions.  The
Company's  foreign  lending and investing  activities are currently  immaterial.
Note 4 to the consolidated  financial statements discusses credit concentrations
in the loan portfolio.


                               Page 13 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>

SUMMARY OF ACTIVITY IN THE RESERVE FOR POSSIBLE LOAN LOSSES
----------------------------------------------------------------------------------------------------------------
(dollars in thousands)
                                      1996             1995              1994             1993              1992
                                   -----------------------------------------------------------------------------
<S>                                <C>              <C>               <C>             <C>               <C>
Reserve for possible loan
   losses at beginning of period   $40,144          $37,069           $47,228         $101,510          $110,205

Reserves provided through
   acquisitions                          -            1,772                 -                -                 -

Loans charged off during period:
   Commercial, financial, and
    agricultural loans             $ 3,404           $2,273            $2,092          $ 5,372           $13,322
   Real estate loans                    24              138               572              872             5,056
   Loans to individuals                829              921             1,480            1,368             4,082
   Lease financing receivables       1,849              200               132              301               594
                                   -----------------------------------------------------------------------------
      Total                        $ 6,106           $3,532            $4,276           $7,913           $23,054
                                   -----------------------------------------------------------------------------

Recoveries of loans previously
   charged off:
   Commercial, financial, and
    agricultural loans             $ 3,495           $4,833            $4,868           $7,474          $  4,434
   Real estate loans                 5,383            6,908            11,964            3,816             2,245
   Loans to individuals              1,404            2,416             3,084            1,492             2,954
   Lease financing receivables          23               58                70              144                86
                                   -----------------------------------------------------------------------------
      Total                        $10,305          $14,215           $19,986          $12,926          $  9,719
                                   -----------------------------------------------------------------------------

Net loans recovered (charged off)
 during period                     $ 4,199          $10,683           $15,710           $5,013          $(13,335)

Addition to (reduction of)
 reserve for possible loan
 losses charged (credited)
 to operations                      (5,000)          (9,380)          (25,869)         (59,295)            4,640
                                   -----------------------------------------------------------------------------

Reserve for possible loan
 losses at end of period           $39,343          $40,144           $37,069          $47,228          $101,510
                                   =============================================================================

Reserve as a percentage of:
  Total non-performing loans          411%             410%              228%             138%              139%

  Total loans                         1.9%             2.4%              3.0%             4.1%              8.5%

Ratio of net charge-off (recoveries)
   to average loans outstanding       0.2%             0.8%              1.4%             0.5%             (1.0%)
</TABLE>


                               Page 14 of 69 Pages

<PAGE>


<TABLE>
<CAPTION>

ALLOCATION OF THE RESERVE FOR POSSIBLE LOAN LOSSES
--------------------------------------------------------------------------------------------------------------------

                            1996                    1995                       1994                       1993
                     -----------------------------------------------------------------------------------------------
                               % of                      % of                       % of                      % of
                        % of   Total            % of     Total              % of    Total            % of     Total
                     Allowance Loans          Allowance  Loans            Allowance Loans          Allowance  Loans
                     -----------------------------------------------------------------------------------------------
<S>                   <C>      <C>             <C>      <C>               <C>      <C>             <C>       <C>
 Commercial,
    financial and
    agricultural
    loans              43.2%    49.4%           42.1%    48.8%             45.5%    51.1%            45.2%    55.3%
 Real estate
    loans -
    commercial
    and other          27.0%    30.0%           23.5%    29.5%             27.7%    28.6%            22.5%    27.1%
 Real estate
    loans - retail
     mortgage          13.5%    13.4%           10.9%    13.6%              9.7%    10.8%             6.0%     9.1%
 Loans to
     individuals        6.3%     6.6%            7.5%     7.3%              9.1%     8.7%             5.9%     7.8%
 Lease financing
    receivables         2.5%     0.6%            2.0%     0.8%              0.5%     0.8%             0.4%     0.7%
 Unallocated            7.5%       -            14.0%       -               7.5%       -             20.0%       -
                     ----------------------------------------------------------------------------------------------
 Total                100.0%   100.0%          100.0%   100.0%            100.0%   100.0%           100.0%   100.0%
                     ==============================================================================================
</TABLE>


Capital Adequacy

         The Company's  risk-based  regulatory  capital ratios decreased between
December 31, 1995 and December 31, 1996,  although all ratios  remained  well in
excess of the minimum requirements. The decreases are consistent with the growth
between these periods in total risk-weighted assets. Loan growth that was partly
funded by maturities of generally lower risk-weighted  investment securities was
the main factor contributing to the rise in total risk-weighted assets.

         The  regulatory  capital  ratios for the  Company  and its  significant
banking  subsidiary  are shown as  follows  compared  to the  minimums  that are
currently  required under capital adequacy standards imposed by their regulators
and those that the Banks must  maintain to be eligible for a "well  capitalized"
classification under the prompt corrective action framework.  With the exception
of the newly-formed Florida Bank, which has not yet been subject to a regulatory
examination, each of the Banks had been capitalized as "well capitalized" in the
most  recent  classification  notice  received  from its  respective  regulatory
agency.

         Regulatory  banking  agencies  assess  an  institution's   exposure  to
interest  rate risk as part of the overall  procedures  performed to evaluate an
institution's  capital adequacy,  but these agencies have not yet incorporated a
specific measure of interest rate risk into an  institution's  required level of
regulatory  capital.  Management  believes  that  implementation  of a  specific
capital charge for interest rate risk will not have a significant  impact on the
Company's or the Banks' regulatory capital requirements.


                               Page 15 of 69 Pages

<PAGE>


<TABLE>
<CAPTION>


REGULATORY CAPITAL RATIOS AND RISK-WEIGHTED ASSETS
---------------------------------------------------------------------------------------------------------------
(dollars in thousands)
                                         December 31,                 Minimum                  Minimum For
                                                                 Capital Adequacy           "Well-Capitalized"
                                    1996              1995           Standard                 Classification
---------------------------------------------------------------------------------------------------------------
<S>                           <C>              <C>                     <C>                       <C>
Tier 1 risk-based capital:
  Company                         14.87%            17.19%             4.00%                         n/a
  Louisiana Bank                  14.38%            16.91%             4.00%                       6.00%
Total risk-based capital:
  Company                         16.12%            18.45%             8.00%                         n/a
  Louisiana Bank                  15.64%            18.17%             8.00%                      10.00%
Tier 1 leverage capital:
  Company                         10.19%            10.06%             4.00%                         n/a
  Louisiana Bank                   9.39%             9.55%             4.00%                       5.00%

Total risk-weighted assets:
  Company                     $2,573,219       $2,041,967
  Louisiana Bank              $2,273,450       $1,824,148

</TABLE>

RESULTS OF OPERATIONS

Net Interest Income

         Taxable-equivalent  net interest income  increased $6.6 million or 4.4%
in 1996 as compared to 1995, and the net interest  margin declined to 4.81% from
5.03%.  In 1995 net interest income had increased $6.5 million or 4.5% over 1994
as the  net  interest  margin  rose to  5.03%  from  4.86%.  The  factors  which
contributed  to these  changes are detailed in the  following  tables  analyzing
changes in interest income and expense.

         Taxable-equivalent  loan interest income increased $24.2 million or 18%
in 1996 as compared to 1995. This increase was driven by the $398 million growth
in average  loans  outstanding  between 1995 and 1996.  The increase in interest
income  from loan  growth was  partially  offset by the impact of a decrease  in
effective  loan yields  between  these  periods,  from 9.51% in 1995 to 8.74% in
1996. The 77 basis point  decrease in effective loan yields  reflects the impact
of variable and short-term  fixed-rate loans repricing in a moderating  interest
rate environment,  some increase in competitive pressure on the pricing of loans
to new and existing  relationships,  and cash basis and cost  recovery  interest
income  recognized in 1995 from nonaccrual loans and loans previously in workout
status.  Market interest rates trended lower throughout 1995 and early 1996, and
over this period  weighted-average  bank prime lending rates  decreased 55 basis
points,  to 8.28% in 1996  from  8.83%  in  1995.  Approximately  a third of the
Company's loan portfolio reprices with changes in prime.

         Comparing  1995  and  1994,  taxable-equivalent  loan  interest  income
increased $30.5 million or 30%, an increase that was also largely driven by loan
growth which on average totalled $228 million between these periods.  A 77 basis
point  increase in the effective  yield on the Company's loan portfolio to 9.51%
in 1995 from 8.74% in 1994 also  contributed to the increase in interest income.
Although  market interest rates had moderated in 1995 after rising in 1994, bank
prime  lending  rates were on average  approximately  150 basis points higher in
1995 than in 1994.

         In 1996,  taxable-equivalent  interest income on investment  securities
decreased $1.5 million or 1.7% when compared with 1995.  This follows a decrease
in investment  income of $8.0 million or 8.1% in 1995 compared with 1994.  These
decreases are consistent with reductions in the average investment in securities
over this period,  which totalled  $88.9 million  between 1995 and 1996 and $181
million between 1994 and 1995. Because of its maturity structure,  the effective
yield on the Company's  investment  securities portfolio is not as responsive to
rising or falling market rates as are its loan yields. As a result of this and a
moderate  shift in the  portfolio  mix  toward  mortgage-backed  issue  and U.S.
government

                               Page 16 of 69 Pages

<PAGE>



agency securities and from U.S.  Treasury  securities,  the effective  portfolio
yield was 6.17% in 1996,  an  increase  of 25 basis  points  from 5.92% in 1995,
despite the overall decline in market rates between these periods.  Between 1994
and 1995, the effective  investment  portfolio  yield increased 16 basis points,
from 5.76% to 5.92%.

         The net increase in total  taxable-equivalent  interest  income between
1996 and 1995 was $20.6  million  or 9.1% on growth in total  earning  assets of
$277 million or 9.3%. The overall effective earning-asset yield in 1996 remained
relatively   unchanged   at   7.57%   compared   to   7.59%   in   1995.   Total
taxable-equivalent  interest income in 1995 was $22.9 million or 11% higher than
in 1994, as total earning assets grew $25 million or 0.8%. The overall effective
earning-asset yield in 1995 was 7.59%, an increase of 72 basis points from 6.87%
in 1994.

         Interest expense  increased $14.0 million or 18% in 1996 as compared to
1995. Approximately $13.0 million of this increase can be attributed to the $228
million  increase  in  interest-bearing  liabilities,   particularly  short-term
borrowings,  between these periods.  The remaining  increase reflects mainly the
impact of the greater  emphasis on short-term  borrowings as a funding source in
1996 and the  continued  shift of the  deposit  mix toward  time  deposits.  The
overall  rate on  interest-bearing  liabilities  was  3.88% in 1996 and 3.64% in
1995, an increase of 24 basis points.

          Interest expense increased  approximately $16.4 million or 28% in 1995
as   compared   to  1994,   despite  a  $31.3   million   decrease   in  average
interest-bearing  liabilities  outstanding  between these periods.  The increase
reflects the lingering  impact of rising rates during 1994, the rate  structures
of the markets in which the Company made purchase acquisitions in 1994 and 1995,
and the shift in the  deposit  mix toward  time  deposits,  a shift also  partly
attributable to acquisitions.  The overall rate on interest-bearing  liabilities
was 3.64% in 1995 as compared to 2.81% in 1994, an increase of 83 basis points.


                               Page 17 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>
ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
YIELDS ON AVERAGE EARNING ASSETS AND RATES ON AVERAGE INTEREST-BEARING LIABILITIES
----------------------------------------------------------------------------------
(dollars in thousands)

                                            1996                          1995                          1994
                              ------------------------------------------------------------------------------------------
                               AVERAGE    REVENUE/  YIELD/    AVERAGE    REVENUE/  YIELD/    AVERAGE    REVENUE/  YIELD/
                               BALANCE    EXPENSE    RATE     BALANCE    EXPENSE    RATE     BALANCE    EXPENSE    RATE
                              ------------------------------------------------------------------------------------------
<S>                           <C>        <C>         <C>    <C>         <C>         <C>    <C>         <C>         <C>
ASSETS
Loans (tax equivalent)u(1)(2)$1,778,074  $155,424    8.74 % $1,379,587  $131,223    9.51 % $1,151,750  $100,699    8.74 %
                              ------------------------------------------------------------------------------------------
U.S. Treasury securities.....$  693,722  $ 39,114    5.64 % $  927,466  $ 51,013    5.50 % $1,015,985  $ 54,748    5.39 %
U.S. government agency
 securities..................   357,977    22,351    6.24 %    275,245    15,956    5.80 %    338,121    18,436    5.45 %
Mortgage-backed securities ..   255,440    16,481    6.45 %    181,664    11,986    6.60 %    194,543    12,623    6.49 %
State and municipal
 securities(1)...............   135,019    11,085    8.21 %    131,394    10,818    8.23 %    129,503    10,697    8.26 %
Federal reserve stock and
   other corporate securities     4,765       293    6.15 %     20,057     1,093    5.45 %     38,380     2,342    6.10 %
                              ------------------------------------------------------------------------------------------
  Total investment
     in securities...........$1,446,923  $ 89,324    6.17 % $1,535,826  $ 90,866    5.92 % $1,716,532  $ 98,846    5.76 %
                              ------------------------------------------------------------------------------------------

Federal funds sold and
 short term deposits.........    27,220     1,501    5.51 %     59,644     3,581    6.00 %     81,782     3,215    3.93 %
                              ------------------------------------------------------------------------------------------
  Total interest-earning
     assets..................$3,252,217  $246,249    7.57 % $2,975,057  $225,670    7.59 % $2,950,064  $202,760    6.87 %
                              ------------------------------------------------------------------------------------------

Cash and due from banks......   189,731                        192,399                        198,875
Bank premises and
 equipment,net...............    98,714                         77,779                         71,644
Other real estate owned, net.     3,965                          6,390                         11,004
Other assets.................    74,795                         81,220                         78,129
   Reserve for possible loan.
      losses.................   (42,741)                       (40,271)                       (45,826)
                              ---------                     ----------                     ----------
  Total assets...............$3,576,681                     $3,292,574                     $3,263,890
                              =========                     ==========                     ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Savings account deposits.....$  449,750  $ 12,100    2.69 % $  489,844  $ 13,224    2.70 % $  568,577  $ 15,378    2.70 %
NOW account and MMDA deposits   623,256    13,800    2.21 %    635,754    13,767    2.17 %    672,446    13,028    1.94 %
Time deposits................   880,048    45,946    5.22 %    767,170    38,916    5.07 %    677,524    24,281    3.58 %
                              ------------------------------------------------------------------------------------------
  Total interest-bearing
      deposits...............$1,953,054  $ 71,846    3.68 % $1,892,768  $ 65,907    3.48 % $1,918,547  $ 52,687    2.75 %
                              ------------------------------------------------------------------------------------------

Federal funds purchased
  repurchase agreements......   362,534    18,049    4.98 %    194,478    10,034    5.16 %    200,063     6,832    3.41 %
                              ------------------------------------------------------------------------------------------
  Total interest-bearing
      liabilities............$2,315,588  $ 89,895    3.88 % $2,087,246  $ 75,941    3.64 % $2,118,610  $ 59,519    2.81 %
                              ------------------------------------------------------------------------------------------

Demand deposits..............   842,168                        827,348                        806,914
Other liabilities............    30,070                         29,020                         31,800
Shareholders' equity.........   388,855                        348,960                        306,566
                              ---------                     ----------                     ----------
  Total liabilities and
      shareholders' equity...$3,576,681                     $3,292,574                     $3,263,890
                              =========                     ==========                     ==========

  Net interest income/margin
      (tax equivalent).......            $156,354    4.81 %             $149,729    5.03 %             $143,241    4.86 %
                                         ========    ======             ========    ======             ========    ======

(1)  Tax equivalent amounts are calculated using a marginal federal income tax rate of 35% for 1996 and 1995 and 1994.
(2)  Average balance includes nonaccruing loans of $8,530, $12,841 and $24,173 respectively, in 1996, 1995 and 1994.
(3)  Average balance excludes  unrealized  gain or loss on securities available for sale.

</TABLE>


                               Page 18 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>
ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
VOLUME AND YIELD/RATE VARIANCE
----------------------------------------------------------------------------------------------------------------------------
( in thousands)

                                                    1996 COMPARED TO 1995                      1995 COMPARED TO 1994
                                              ------------------------------------------------------------------------------
                                                        CHANGE  DUE TO                             CHANGE DUE TO

                                                             YIELD/                                     YIELD/
                                                VOLUME        RATE         NET             VOLUME        RATE         NET
                                              ------------------------------------------------------------------------------
INTEREST EARNED ON
<S>                                           <C>          <C>         <C>               <C>          <C>         <C>
Loans (tax equivalent)u(1)u(2)............... $  33,635    $ (9,434)   $  24,201         $  21,132    $  9,392    $  30,524
                                              ------------------------------------------------------------------------------

U.S. Treasury securities..................... $ (13,215)   $  1,316    $ (11,899)        $  (4,900)   $  1,165    $  (3,735)
U.S. government agency securities............     5,090       1,305        6,395            (3,756)      1,276       (2,480)
Mortgage-backed securities ..................     4,754        (259)       4,495              (855)        218         (637)
State and municipal
      securities (tax equivalent)u(1)........       298         (31)         267               156         (35)         121
Federal Reserve stock and
     other corporate securities..............      (962)        162         (800)           (1,020)       (229)      (1,249)
                                              ------------------------------------------------------------------------------
  Total investment in securities............. $  (4,035)   $  2,493    $  (1,542)        $ (10,375)   $  2,395    $  (7,980)
                                              ------------------------------------------------------------------------------

Federal funds sold and short-term deposits...    (1,809)       (271)      (2,080)             (386)        752          366
                                              ------------------------------------------------------------------------------
  Total interest-earning assets.............. $  27,791    $ (7,212)   $  20,579         $  10,371    $ 12,539    $  22,910
                                              ------------------------------------------------------------------------------


INTEREST ACCRUED ON
Savings account deposits..................... $  (1,079)   $    (45)   $  (1,124)        $    (262)   $ (1,892)   $  (2,154)
NOW account and MMDA deposits................      (228)        261           33                39         700          739
Time deposits................................     5,865       1,165        7,030             3,535      11,100       14,635
                                              ------------------------------------------------------------------------------
  Total interest-bearing deposits............ $   4,558    $  1,381    $   5,939         $   3,312    $  9,908    $  13,220
                                              ------------------------------------------------------------------------------

Federal funds purchased and
    repurchase agreements....................     8,354        (339)       8,015                87       3,115        3,202
                                              ------------------------------------------------------------------------------
  Total interest-bearing liabilities......... $  12,912    $  1,042    $  13,954         $   3,399    $ 13,023    $  16,422
                                              ------------------------------------------------------------------------------


  Net interest income (tax equivalent)u(1)... $  14,879    $ (8,254)   $   6,625         $   6,972    $   (484)   $   6,488
                                              ==============================================================================

<FN>
u(1)  Tax equivalent amounts are calculated using a marginal federal income tax rate of 35% for all years.
u(2) Interest recognized  on a cash basis on nonaccruing loans and prior cost recovery interest currently recognized
on nonaccruing and certain accruing loans was $3,647, $6,425 and $6,803 in 1996, 1995 and 1994, respectively.
</FN>
</TABLE>




                               Page 19 of 69 Pages

<PAGE>



Other Income and Expense

         Non-interest income, adjusted to exclude securities gains and net gains
from sales of foreclosed real estate and other foreclosed assets, increased $2.0
million  or 6.2% to $34.8  million  in 1996 from  $32.8  million  in 1995.  This
followed an increase in 1995 of $1.3 million or 4.2% from $31.4 million in 1994.

         Income from service charges on deposits  accounts,  which accounted for
more than half of adjusted non-interest income in 1996, 1995 and 1994, decreased
sightly over this three year period. The reduction in the Company's FDIC deposit
insurance  premiums in the second half of 1995, as discussed below,  enabled the
Company to reduce the deposit insurance assessment charged on business accounts,
which was partly  responsible for the overall  decrease in service charge income
since 1994.  The decrease in 1995 also  resulted  partly from an increase in the
earnings credit rate applied to business  account  balances that accompanied the
generally higher than average interest rates experienced in that year.

         Fee income from credit card related operations  increased 11.8% in 1996
compared  to  1995,  after  increase  10.5%  in 1995  compared  to  1994.  These
improvement reflect both the economic conditions as well as successful marketing
efforts. Increased fees from trust investment management services, reflecting in
part the strong performance of the financial markets in 1996 and 1995, supported
overall  year-to-year  increases in trust  services  income of 10.1% in 1996 and
22.3% in 1995.

         The Company continued to expand its automated teller facilities in 1995
and 1996 and fees generated from ATM  operations,  which are included with other
fees and charges in the accompanying  table of non-interest  income,  registered
increases of 56% or approximately $700 thousand in 1996 and 72% or $500 thousand
in 1995 . Also included with other fees and charges is income from the Company's
secondary mortgage loan operations. This income category increased approximately
$400  thousand  in  1996  reflecting  in  part a more  favorable  interest  rate
environment. This income category was little changed between 1994 and 1995.

         Non-interest  operating  expenses,  adjusted to exclude provisions for,
and recoveries of, losses on OREO and other problem assets, were $134 million in
1996,  an increase of $11.5  million or 9.4% over 1995's total of $123  million.
Between 1994 and 1995, the increase in adjusted non-interest  operating expenses
was $5.9 million or 5.1% from $116 million in 1994.

         As is shown in the table of non-interest expense, salaries and employee
benefits  expense  increased  $4.0  million or 6.3% in 1996 as compared to 1995.
Approximately  $0.8 million of this increase  related to nonrecurring  personnel
costs  incurred  in  connection  with the merger  completed  in March  1996.  An
additional  $0.4  million  of this  increase  was  related to the  Alabama  bank
acquisition  in February of 1995.  The  remaining  increase of $2.8  million was
attributable to merit salary increases and staff additions and to the net change
in cost of various benefit and incentive programs for employees and management.

         In 1995,  salaries and employee benefits expense increased $4.1 million
or 6.8% as compared to 1994.  Approximately  $2.1  million of this  increase was
related to the new banking operations in Alabama. The remaining increase of $2.0
million is attributable to merit salary increases and staff additions.

         Non-interest expenses other than  personnel-related  expenses increased
$7.5  million or 12.7%  between  1995 and 1996 and $1.9  million or 3.2% between
1994 and 1995.  Contributing to the increase in 1996 were  non-recurring  merger
expenses totalling approximately $3.5 million, which included legal services and
other professional  services,  particularly those related to system conversions,
and  investment  banker  fees.  Also  contributing  to  the  1996  increase  was
approximately   $1.0  million  in  expenses  incurred  in  connection  with  the
relocation of the Company's data processing and operational  support departments
to the  newly-opened  operations  center.  Excluding these merger and relocation
expenses,  the 1996 increase in non-personnel  expenses was  approximately  $3.0
million or 5.0% over 1995.

         Occupancy  expense  increased $1.9 million or 22.3% in 1996 compared to
1995. This increase  reflects both the expansion of the Company's branch and ATM
networks,  as  well  as the  ongoing  program  to  upgrade  the  appearance  and
functionality  of  its  administrative  offices,  operations  facilities  and  a
significant number of the Company's existing

                               Page 20 of 69 Pages

<PAGE>



branches.  Within the past year, the Company opened seven new branch  locations,
completed the renovation of two additional  branch locations as well as the main
office branch facility, and moved into its newly-constructed  operations center.
The  increase  of $0.8  million  or 10.3% in this  expense  category  in 1995 as
compared to 1994 was attributable in part to the Alabama bank acquisition  early
in 1995.

         The expense of  furnishings  and equipment,  including data  processing
systems,  increased  $2.0 million or 19.0% in 1996 following an increase of $2.4
million or 29.7% in 1995.  These increases are directly related to the additions
to the branch network and the opening of the new operations  center,  to various
enhancements  in  the  Company's  data  processing  and  communications  systems
impacting  both  customer   service   capabilities  as  well  as  internal  bank
operations,  and to the continuing  expansion of the Company's ATM network which
has grown from fewer than ten locations in 1990 to over one hundred today.  Also
contributing  to  the  increase  in  1996  was  approximately  $0.2  million  in
non-recurring  data processing  equipment expense associated with the relocation
to  the  new  operations  facility.   The  increase  in  1995  was  also  partly
attributable to the Alabama acquisition.

         Of the $2.2 million or 64.0% increase in the 1996 expense for legal and
other   professional   services,   approximately   $1.8   million   represent  s
merger-related expenses as noted above. An additional $0.7 million of consulting
fees was  incurred  in 1996 for  services  rendered in  connection  with the new
operations  center project.  Excluding these items,  this expense category would
have shown a net decrease in 1996 of  approximately  $0.3 million when  compared
with 1995, as increases in  professional  service fees for data system  upgrades
and process  improvements  were offset by a $0.7 million  recovery of collection
costs from a legal  settlement.  The increase in this expense category from 1994
to 1995 was also related to system upgrade activities.

         Fluctuations in taxes and insurance expense in recent years have mainly
followed the  fluctuations  in the state ad valorem tax assessment that is based
on a calculated  estimate of the Company's value.  Changes in the level of prior
year earnings and equity and in the market conditions for bank stocks in general
all impact the annual assessment calculations.

         Credit card operating expenses for 1996 and 1995 grew at rates that are
generally  consistent  with the  growth in  revenue  from  these  operations  as
discussed above.

         The costs of operating  the Company's  growing  branch and ATM networks
and the new operations  center as well as the cost associated with the expansion
into the Alabama market in early 1995 are also reflected in increases in various
other expense  categories during 1996 and 1995. These include security and other
services, postage and communications, stationery and supplies, and advertising.

         The  added  expense  from  amortizing  intangible  assets  acquired  in
purchase  transactions  in 1995 and 1994 was more than  offset in 1995 by a $2.4
million decrease in the  amortization of intangibles  from earlier  acquisitions
resulting in a net decrease of $1.3 million in this expense category from 1994.

         During the second  half of 1995  there was a dramatic  decrease  in the
premium rate charged by the FDIC for deposit insurance.  This led to a reduction
in this  expense  category  of $2.8  million or 42% in 1995  followed  by a $3.0
million or 80% reduction in 1996.

         The expense of maintaining and operating OREO declined in both 1996 and
1995 with the continued improvement in asset quality.

         Merger-related costs together with costs associated with the relocation
of the operations center comprised  approximately $1.3 million of the total $1.9
million  increase in other  operating  expenses in 1996 as compared to 1995. The
increase in this expense  category for 1995 was partly the result of the Alabama
expansion.




                               Page 21 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>



NON-INTEREST INCOME
-----------------------------------------------------------------------------------------------------------

                                                 1996     % Change          1995    % Change           1994
                                            ---------------------------------------------------------------
<S>                                         <C>             <C>        <C>            <C>         <C>
Service charges on deposit accounts.........$  17,470       (0.2)%     $  17,512      (1.9)%      $  17,851
Trust service fees..........................    3,738       10.1           3,394      22.3            2,775
Credit card income..........................    5,737       11.8           5,131      10.5            4,645
International services income...............    1,822       (6.1)          1,941       8.9            1,783
Investment services income..................    1,080       16.5             927     (16.9)           1,115
Other fees and charges......................    3,815       20.2           3,173      22.7            2,586
Net gains on sales of OREO
 and other foreclosed assets................    2,537      107.4           1,223     (65.5)           3,542
Other operating income......................    1,112       67.2             665      (0.3)             667
                                            ---------------------------------------------------------------
Total other non-interest income.............$  37,311        9.9       $  33,966      (2.9)       $  34,964
Gain on sale of securities..................       11      266.7               3     (93.5)              46
                                            ---------------------------------------------------------------
 Total non-interest income..................$  37,322        9.9%      $  33,969      (3.0)%      $  35,010
                                            ===============================================================
</TABLE>

<TABLE>
<CAPTION>
NON-INTEREST EXPENSE
-----------------------------------------------------------------------------------------------------------

                                                 1996     % Change          1995    % Change          1994
                                            --------------------------------------------------------------
<S>                                         <C>              <C>       <C>             <C>        <C>
Salaries and benefits.......................$  67,493        6.3%      $  63,520       6.8%       $ 59,462
Occupancy of bank premises, net.............   10,142       22.3           8,292      10.3           7,515
Furnishings and equipment, including
 data processing systems....................   12,418       19.0          10,434      29.7           8,047
Legal and other professional services.......    5,762       64.0           3,513      16.0           3,028
Security and other outside services.........    5,006       21.9          4,108      (12.5)          4,694
Taxes and insurance, other than real estate.    4,420       (4.0)          4,603      27.3           3,617
Postage and communications..................    4,367       23.9           3,523      17.9           2,987
Credit card processing services.............    4,337       14.2           3,797      11.7           3,399
Stationery and supplies.....................    3,223       16.2           2,773       9.3           2,537
Amortization of intangible assets...........    2,802       (3.0)          2,888     (30.6)          4,161
Advertising.................................    2,381        5.4           2,260      28.4           1,760
Deposit insurance and regulatory fees.......      767      (79.8)          3,802     (42.4)          6,596
OREO maintenance and operations, net........      345       (9.2)            380     (61.7)            993
Provision for (recovery of) losses on
 OREO and other problem assets, net.........      325      273.6              87     108.2          (1,024)
Other operating expense.....................   10,606       21.9           8,700      10.3           7,889
                                            --------------------------------------------------------------
Total non-interest
    expense.................................$ 134,394        9.5%      $ 122,680       6.1%       $115,661
                                            ==============================================================
</TABLE>


Income Taxes

         The Company  provided for income taxes at an overall  effective rate of
32.0%  in 1996,  up from a 31.4%  rate in 1995  and a 31.8%  rate in  1994.  The
effective  rates in each period differ from the statutory  rate of 35% primarily
because of the tax exempt  income earned on  investments  in state and municipal
bonds.  The increase in the effective rate in 1996 mainly reflects the impact of
non-deductible merger-related expenses.



                               Page 22 of 69 Pages

<PAGE>



Accounting Changes

         In October,  1995,  the  Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting  Standards ("SFAS") No. 123,  "Accounting for
Stock-Based  Compensation,"  which was effective  for the Company's  fiscal year
ended December 31, 1996. Among other  provisions,  this statement  establishes a
fair value based method of accounting for  stock-based  compensation,  including
the award of stock options. As provided for in SFAS No. 123, the Company elected
not to adopt the fair value based method for measuring  compensation costs to be
included  in its  results  of  operations,  but is  continuing  to follow  prior
generally accepted  accounting  principles.  Pro forma disclosures of net income
and earnings per share  determined  as if the fair value method had been applied
and  certain  other  required  disclosures  are  included  in the  notes  to the
consolidated financial statements.

         SFAS No. 125,  "Accounting  for  Transfers  and  Servicing of Financial
Assets and  Extinguishments of Liabilities," was issued in June, 1996, mainly to
provide consistent  standards for  distinguishing  transfers of financial assets
that are sales from  transfers that are secured  borrowings,  and it establishes
measurement,  reporting and disclosure  standards with respect to the assets and
liabilities  that are  obtained or incurred in such  transfers.  SFAS No. 125 is
generally effective for transfers, servicing and extinguishments occurring after
December 31, 1996,  although  application of certain provisions of the statement
has been  delayed to 1998.  Adoption  of SFAS No. 125 with  respect to  transfer
transactions or servicing  activities  currently  engaged in by the Company will
not  result in a  material  impact  on its  financial  position  or  results  of
operations.


ASSET/LIABILITY MANAGEMENT

         The asset/liability management process has as its focus the development
and  implementation of strategies in the funding and deployment of the Company's
financial  resources which are expected to maximize  soundness and profitability
over time.  These  strategies  reflect  the goals set by the Company for capital
adequacy,  liquidity,  and the acceptable  levels of risk established in Company
policies.

Interest Rate Risk/Interest Rate Sensitivity

         The Company's financial assets and liabilities are subject to scheduled
and unscheduled repricing  opportunities over time. Both the Company's potential
for  generating  net  interest  income  and the  current  market  values  of its
financial  assets and liabilities  depend in part upon the prevailing  levels of
market interest rates when these repricing  opportunities  arise.  Interest rate
risk is a measure  of this  potential  change in  earnings  ability  and  market
values.  As part of the  asset/liability  management  process the Company uses a
variety of tools,  including an earnings  simulation  model, to measure interest
rate  risk and to  evaluate  the  impact  of  possible  changes  in rates on its
internal strategies.

         The interest rate  sensitivity  gap analysis shown in the  accompanying
table compares the volume of repricing assets against repricing liabilities over
time. This analysis is a relatively straight forward tool which is useful mainly
in highlighting  significant  short-term repricing volume mismatches.  The table
presents the rate  sensitivity  gap analysis at December 31, 1996.  The interest
rates on a substantial  portion of the  outstanding  commercial  loans vary with
changes  in the  Banks'  prime  lending  rates or the  prime  rates  of  certain
money-center banks. These loans are assigned to the earliest repricing period in
the rate sensitivity  analysis. A sizable portion of loans shown in the analysis
as repricing after one year is made up of fixed-rate real estate loans.

         Certain  interest-bearing deposit funding sources, such as savings, NOW
and money market account deposits,  have characteristics of both demand deposits
and deposits made for investment  return  purposes.  Although these deposits are
technically  subject  to  immediate  repricing,   historical  customer  behavior
indicates that their  rate-sensitivity  is significantly  less. In preparing the
analysis,  these deposits are allocated among the repricing  periods in a manner
that  reflects  expected  customer  behavior so as to present a more  meaningful
point-in-time estimate of short-term  asset/liability  repricing mismatches.  In
the  twelve-month  period from  December 31, 1996,  the analysis  shows that the
Company is in a moderately asset-sensitive position on a cumulative basis, which
indicates that the Company's net interest  margin would benefit  somewhat from a
near-term  increase  in market  interest  rates but would  suffer  somewhat in a
declining interest rate

                               Page 23 of 69 Pages

<PAGE>



market.

         Recognizing  the  limitations  of  the  static  rate   sensitivity  gap
analysis,  the Company uses the  earnings  simulation  model to more  accurately
forecast  how its net  interest  income  would  change in response to changes in
market  interest  rates.   The  simulation   model   incorporates   management's
expectations  regarding loan demand,  deposit product  preferences,  pricing and
funds availability,  prepayment rates, and the spread of rates between different
financial instruments, among other factors. At December 31, 1996, the simulation
model   yielded   changes  in  net  interest   income  in  response  to  various
instantaneous  and gradual  market rate changes that were all well in compliance
with  established  policy  guidelines  and that did not involve any  significant
negative impact on the Company's liquidity position.
<TABLE>
<CAPTION>

INTEREST RATE SENSITIVITY
-------------------------------------------------------------------------------------------------------------------------
December 31, 1996
(dollars in millions)

                                                      TIME TO MATURITY OR NEXT REPRICING
                              -------------------------------------------------------------------------------------------
                                 0-30         31-90       91-180      181-365       1 THROUGH      OVER 5
                                 DAYS         DAYS         DAYS         DAYS         5 YEARS       YEARS          TOTAL
                              -------------------------------------------------------------------------------------------
<S>                            <C>          <C>          <C>          <C>            <C>          <C>            <C>
ASSETS
   Securities held
      to maturity              $    60      $    34      $    89      $   197        $    638     $     161      $  1,179
   Securities  available
      for sale                       2           24           12           24              63            22           147
   Loans                           728           94           81          115             666           381         2,065
   Federal funds
      sold and short-
     term  deposits                 13            -            -            -               -             -            13
                               ------------------------------------------------------------------------------------------
     Total earning  assets     $   803      $   152      $   182      $   336        $  1,367     $     564      $  3,404

SOURCES OF FUNDS
   Demand deposits             $     -      $     -      $     -      $     -        $      -     $     935      $    935
   Savings deposits                  8           24           12           25             369             -           438
   Money market
     account deposits               10           12           21           23             196             -           262
   NOW account deposits             12            6           24           16             320             -           378
   Eurodollar deposits              24            -            -            -               -             -            24
   Certificates of deposit         181          184          194          130             136             -           825
   Funds purchased and
    repurchase agreements          473            6            -            -               -             -           479
                               ------------------------------------------------------------------------------------------
     Total funding liabilites  $   708      $   232      $   251      $   194        $  1,021     $     935      $  3,341
INTEREST RATE
   SENSITIVITY GAP             $    95      $   (80)     $   (69)     $   142        $    346     $    (371)     $     63

CUMULATIVE INTEREST
   RATE SENSITIVITY
   GAP                         $    95      $    15      $   (54)     $    88        $    434     $      63

CUMULATIVE INTEREST RATE
   SENSITIVITY GAP AS A
   PERCENT OF TOTAL EARNING
   ASSETS                         2.8%         0.5%        (1.6%)        2.6%           12.7%          1.9%

</TABLE>

                               Page 24 of 69 Pages

<PAGE>



LIQUIDITY AND OTHER MATTERS

         The Company and the Banks  manage their  liquidity  positions to ensure
their  ability  to  satisfy   customer  demand  for  credit,   to  fund  deposit
withdrawals,  to meet  operating and other  corporate  obligations,  and to take
advantage  of  investment  opportunities,  all in a  timely  and  cost-effective
manner.  Traditionally  these  liquidity  needs have been met by  maintaining  a
strong base of core deposits and by carefully managing the maturity structure of
the  investment  portfolios.  The  funds  provided  by  current  operations  and
forecasts of loan  repayments  are also  considered in the liquidity  management
process.

         The Banks enter into  short-term  borrowing  arrangements by purchasing
federal funds and selling  securities  under  repurchase  agreements,  both as a
source of funding for certain short-term lending facilities and as part of their
services to correspondent banks and certain other customers. Neither the Company
nor the  Banks  have  accessed  long-term  debt  markets  as  part of  liquidity
management.

         The consolidated statements of cash flows provides a summarized view of
the Company's  uses and sources of liquidity  over the  three-year  period ended
December  31,  1996.  The  funding  of loan  growth  was by far the major use of
liquidity in 1996, requiring a total of $411 million. Unreinvested proceeds from
maturities and sales of investment  securities during 1996 provided $139 million
of the  liquidity  needed to fund this  loan  growth.  The net cash flow used in
investing   activities  for  1996  totalled  $287  million,   including  capital
expenditures  for retail  network  expansion  and other  purposes  totalling $34
million.

         The Company  financed this investment in large part through an increase
of $252  million  in  short-term  borrowings  of  federal  funds  and  sales  of
securities under repurchase  agreements.  Total deposits,  which are analyzed in
more detail below, were relatively stable in 1996 and were not a significant new
source or use of funds during 1996. The Company  generated $53 million in liquid
funds during 1996 from operations and paid total  dividends,  including those of
pooled entities, of approximately $16 million.

         The accompanying  tables present  information  concerning  deposits and
short-term  borrowings for the years 1996, 1995 and 1994. Average core deposits,
defined as all  deposits  other than time  deposits of  $100,000  or more,  were
stable between 1995 and 1996 at approximately  $2.41 billion.  Growth in average
non-interest-bearing demand deposits of $15 million and in core time deposits of
$39 million was offset by a $48 million  decrease in  interest-bearing  checking
and savings  deposit  products.  Non-core  time  deposits grew on average by $64
million between these periods.

         Approximately 77% of core and 91% of non-core time deposits at December
31, 1996 mature within one year. Although these time deposits, in particular the
non-core  time  deposits,  are more volatile  than the  transaction  and savings
deposit  products,  management  does not  anticipate any  significant  near-term
negative impact on liquidity from maturities.

         At December  31,  1996,  approximately  $258  million of the total $479
million  in  short-term  borrowings  was  related  to cash  management  services
provided by the Banks to their  downstream  correspondents  and other customers.
The remaining $218 million in short-term  borrowed funds was obtained  primarily
through repurchase  agreements with  broker/dealers.  While brokered  short-term
borrowings are a viable means of leveraging the investment  portfolio to provide
liquidity, the Company is striving to increase its core deposit base through the
expansion of its retail network, the promotion of existing and new products, and
strategically suitable acquisitions.

         As of  December  31,  1996,  approximately  $363  million or 31% of the
portfolio of  investment  securities  held to maturity  was  scheduled to mature
within one year.  An  additional  $147  million  of  investment  securities  was
classified  as  available  for  sale at the end of 1996,  although  management's
assignment  of  this   classification   is  not  based  primarily  on  liquidity
considerations.

         The Banks had  approximately  $990 million in unfunded loan commitments
outstanding  at December 31, 1996,  an increase of $68 million from the level at
December 31, 1995. Contingent  obligations under letters of credit and financial
guarantees decreased by approximately $13 million between these dates to a total
of $69 million at December 31,  1996.  Available  credit card and related  lines
were $77 million at December 31, 1996, and increase of $18 million from

                               Page 25 of 69 Pages

<PAGE>



December 31, 1995.  Because  commitments  and unused  credit lines may, and many
times do, expire  without being drawn upon,  unfunded  balances do not represent
actual  future  liquidity   requirements.   Draws  by  customers  against  these
commitments  should  not place any  unusual  strain on the  Company's  liquidity
position.

         In 1997, the Company plans to open or begin construction on twenty-four
additional  branch  locations  throughout  the market  areas of the Banks and to
complete the  construction of a main office for the Alabama Bank.  Total capital
expenditures for these new facilities are estimated at $40 million.
<TABLE>
<CAPTION>

DEPOSITS
----------------------------------------------------------------------------------------------------------
(in thousands)
                                                                   1996             1995              1994
                                                              --------------------------------------------
<S>                                                           <C>               <C>              <C>
Average non-interest-bearing demand deposits in domestic
   bank offices                                               $ 842,168         $827,348         $ 806,914
Average NOW account deposits in domestic offices                380,513          419,650           411,865
Average savings and money market account deposits in domestic
   bank offices                                                 692,493          705,948           829,158
Average time deposits in domestic bank offices                  868,042          760,249           673,424
Average time deposits in foreign banking offices                 12,006            6,921             4,100

Remaining maturity of time certificates of deposit of
   $100,000 or more issued by domestic  offices as of
   December  31, 1996:
   3 months or less                                           $ 211,952
   Over 3 through 12 months                                     109,554
   Over 12 months                                                33,642
                                                              ---------

     Total certificates of deposit of $100,000 or more        $ 355,148
                                                              ---------

Remaining maturity of time  certificates of deposit of
   less than $100,000 issued by domestic  offices as of
   December 31, 1996:
   3 months or less                                           $ 149,635
   Over 3 through 12 months                                     213,540
   Over 12 months                                               106,569
                                                              ---------

     Total certificates of deposit of less than $100,000      $ 469,744
                                                              ---------

     Total time certificates of deposit                       $ 824,892
                                                              =========

</TABLE>
<TABLE>
<CAPTION>


FEDERAL FUNDS PURCHASED AND BORROWINGS UNDER REPURCHASE AGREEMENTS
(in thousands)
                                                     1996                       1995             1994
                                            ---------------------------------------------------------
<S>                                         <C>                        <C>              <C>
Amount outstanding at year end              $     478,662              $     227,094    $     179,806
Weighted average interest rate at year end           5.03%                      5.15%            2.91%

Average outstanding during the year         $     362,534              $     194,478    $     200,063
Weighted average interest rate for the year          4.98%                      5.16%            3.41%

Maximum amount outstanding at any month end $     478,662              $     234,558    $     262,970

</TABLE>



                               Page 26 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>
Item 8: FINANCIAL STATEMENT AND SUPPLEMENTAL DATA

                         WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
                                 CONSOLIDATED BALANCE SHEETS


     (dollars in thousands)                                              December 31,
                                                                       1996         1995
                                                                   -------------------------
     ASSETS
     <S>                                                           <C>           <C>
     Cash and due from financial institutions....................  $   221,091   $   235,221
     Investment in securities:
          Securities available for sale..........................      146,972       224,307
          Securities held to maturity (fair value of $1,188,186
               in 1996 and $1,269,300 in 1995)...................    1,179,322     1,251,589
     Federal funds sold and short-term deposits..................       13,400        28,937
     Loans.......................................................    2,064,912     1,649,436
     Less reserve for possible loan losses.......................       39,343        40,144
                                                                   -------------------------
        Loans, net...............................................    2,025,569     1,609,292
     Bank premises and equipment, net............................      109,428        85,031
     Other real estate owned, net................................        2,765         4,925
     Accrued income receivable...................................       29,746        30,420
     Other assets................................................       46,208        42,989
                                                                   -------------------------
               TOTAL ASSETS......................................  $ 3,774,501   $ 3,512,711
                                                                   =========================


     LIABILITIES
     Deposits:
          Non-interest-bearing demand deposits...................  $   934,980   $   905,010
          Interest-bearing deposits..............................    1,926,901     1,977,160
                                                                   -------------------------
              Total deposits.....................................    2,861,881     2,882,170
     Federal funds purchased and securities sold under
          repurchase agreements..................................      478,662       227,094
     Dividends payable...........................................        4,489         3,273
     Other liabilities...........................................       24,818        24,311
                                                                   -------------------------
               TOTAL LIABILITIES.................................  $ 3,369,850   $ 3,136,848
                                                                   -------------------------

     SHAREHOLDER'S EQUITY
     Common stock, no par value: 40,000,000 shares authorized,
        18,445,331 shares issued and 17,951,551 shares
        outstanding in 1996, 18,228,222 shares issued and
        17,663,918 shares outstanding in 1995, after deduction
        of treasury stock........................................   $    2,800   $     2,800
     Capital surplus.............................................       78,081        71,765
     Retained earnings...........................................      331,232       307,572
     Net unrealized gain (loss) on securities available for sale
        or transferred to held to maturity, net of tax effect of
        ($169) in 1996 and ($824) in 1995........................          312         1,501
                                                                   -------------------------
               Total.............................................      412,425       383,638

     Treasury stock at cost, 493,780 shares in 1996 and 564,304
          shares in 1995, and unearned restricted stock
          compensation...........................................        7,774         7,775
                                                                   -------------------------

               TOTAL SHAREHOLDERS' EQUITY........................  $   404,651   $   375,863
                                                                   -------------------------
               TOTAL LIABILITIES AND
                     SHAREHOLDERS' EQUITY........................  $ 3,774,501   $ 3,512,711
                                                                   =========================

The accompanying notes are an integral part of these financial statements

</TABLE>
                               Page 27 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>
W H I T N E Y  H O L D I N G  C O R P O R A T I O N  A N D  S U B S I D I A R I E S

C O N S O L I D A T E D  S T A T E M E N T S  O F  O P E R A T I O N S


(in thousands, except per-share amounts)                      Year Ended December 31,

                                                         1996           1995           1994
                                                     ------------------------------------------
INTEREST INCOME
<S>                                                  <C>            <C>            <C>
Interest and fees on loans...........................$    154,761   $    130,998   $    100,425
Interest and dividends on investments-
      U.S. Treasury and agency securities............      61,465         66,969         73,184
  Mortgage-backed securities.........................      16,481         11,986         12,623
      Obligations of states and political
      subdivisions ..................................       7,205          7,033          6,964
      Federal Reserve and corporate securities.......         293          1,093          2,342
Interest on federal funds sold.......................       1,501          3,581          3,215
                                                     ------------------------------------------
           TOTAL.....................................$    241,706   $    221,660   $    198,753
                                                     ------------------------------------------

INTEREST EXPENSE
Interest on deposits.................................$     71,846   $     65,919   $     52,687
Interest on federal funds purchased and securities
      sold under repurchase agreements...............      18,049         10,022          6,832
                                                     ------------------------------------------
            TOTAL....................................$     89,895   $     75,941   $     59,519
                                                     ------------------------------------------
Net interest income..................................$    151,811   $    145,719   $    139,234
Reduction of reserve for possible loan losses........       5,000          9,380         25,869
                                                     ------------------------------------------
Net interest income after reduction of reserve for
      possible loan losses...........................$    156,811   $    155,099   $    165,103
                                                     ------------------------------------------

NON-INTEREST INCOME
Gain on sale of securities...........................$         11   $          3   $         46
Other non-interest income............................      37,311         33,966         34,964
                                                     ------------------------------------------
            TOTAL....................................$     37,322   $     33,969   $     35,010
                                                     ------------------------------------------

NON-INTEREST EXPENSE
Salaries and employee benefits.......................$     67,493   $     63,520   $     59,462
Occupancy of bank premises, net......................      10,142          8,292          7,515
Other non-interest expenses..........................      56,759         50,868         48,684
                                                     ------------------------------------------
            TOTAL....................................$    134,394   $    122,680   $    115,661
                                                     ------------------------------------------
Income before income taxes...........................$     59,739   $     66,388   $     84,452
Income tax expense...................................      19,118         20,855         26,862
                                                     ------------------------------------------
Net Income...........................................$     40,621   $     45,533   $     57,590
                                                     ==========================================

Earnings per share:
      Primary........................................$       2.26   $       2.57   $       3.32
      Fully-diluted..................................$       2.26   $       2.56   $       3.32

Weighted- average shares outstanding for calculation:
      Primary........................................  17,954,676     17,683,987     17,364,103
      Fully-diluted..................................  17,981,555     17,761,494     17,373,868


The accompanying notes are an integral part of these financial statements.
</TABLE>

                               Page 28 of 69 Pages

<PAGE>
<TABLE>
            W H I T N E Y H O L D I N G C O R P O R A T I O N A N D S U B S I D I A R I E S
                  C O N S O L I D A T E D  S T A T E M E N T S  O F  C H A N G E S  I N
                               S H A R E H O L D E R S '  E Q U I T Y
(in thousands, except share and per-share amounts)
                                                                                           Net
                                                                                        Unrealized               Unearned
                                                                                       Gain(Loss) on            Restricted
                                                                                        Securities                Stock
                                                      Common     Capital     Retained   Available    Treasury    Compen-
                                                      Stock      Surplus     Earnings    For Sale     Stock       sation      Total
                                                     -------------------------------------------------------------------------------
<S>                                                  <C>        <C>        <C>          <C>         <C>         <C>        <C>
Balance at December 31, 1993....................     $2,800     $58,882    $229,936      $4,027     ($6,302)      ($973)   $288,370
     Net income for 1994........................                             57,590                                          57,590
     Cash dividends declared, $0.64 per share...                             (9,330)                                         (9,330)
     Cash dividends declared by pooled
       entities, pre-merger.....................                               (815)                                           (815)
     Stock dividend of pooled entity, pre-merger                  2,302      (2,302)
     Common stock issued:
     Acquisition of Baton Rouge Bank
        and Trust Company, 90,909 shares........                  2,000                                                       2,000
      Employee savings plan, 16,768 shares......                    407                                                         407
     Dividend reinvestment plan,
        10,093 shares...........................                    269                                                         269
      Employee stock grants, net of forfeitures.                    891                                 466      (1,357)
     Director stock grants......................                     63                                                          63
     Stock options exercised....................                     82                                 174                     256
     Pooled entries, pre-merger.................                    902                                                         902
     Amortization of unearned restricted
        stock compensation......................                                                                    340         340
     Change in net unrealized gain (loss)
        on securities ..........................                                        (10,787)                            (10,787)
                                                     -------------------------------------------------------------------------------
Balance at December 31, 1994....................     $2,800     $65,798    $275,079     ($6,760)    ($5,662)    ($1,990)   $329,265
                                                     -------------------------------------------------------------------------------
     Net income for 1995........................                             45,533                                          45,533
     Cash dividends declared, $0.82 per share...                            (12,158)                                        (12,158)
     Cash dividends declared by pooled
       entities, pre-merger.....................                               (882)                                           (882)
     Common stock issued:
     Employee savings plan, 148,177 shares......                  3,764                                                       3,764
     Dividend reinvestment plan,
        50,291 shares...........................                  1,325                                                       1,325
      Employee stock grants, net of forfeitures.                    766                                 360      (1,126)
     Director stock grants......................                     56                                                          56
     Stock options exercised....................                     41                                  45                      86
     Pooled entries, pre-merger.................                     15                                                          15
     Amortization of unearned restricted
        stock compensation......................                                                                    598         598
     Change in net unrealized gain (loss)
        on securities ..........................                                          8,261                               8,261
                                                     -------------------------------------------------------------------------------
Balance at December 31, 1995....................     $2,800     $71,765    $307,572      $1,501     ($5,257)    ($2,518)   $375,863
                                                     -------------------------------------------------------------------------------
     Net income for 1996........................                             40,621                                          40,621
     Cash dividends declared, $0.97 per share...                            (16,796)                                        (16,796)
     Cash dividends declared by pooled
       entities, pre-merger.....................                               (165)                                           (165)
     Common stock issued:
     Employee savings plan, 26,604 shares.......                    828                                                         828
     Dividend reinvestment plan,
        59,285 shares...........................                  1,857                                                       1,857
      Employee stock grants, net of forfeitures.                  1,107                                 354      (1,461)
     Director stock grants......................                     59                                                          59
     Stock options exercised, including tax
        benefit from non-qualified options
        exercise................................                  2,155                                 210                   2,365
     Pooled entries, pre-merger.................                    310                                                         310
     Amortization of unearned restricted
        stock compensation......................                                                                    898         898
     Change in net unrealized gain (loss)
        on securities ..........................                                         (1,189)                             (1,189)
                                                     -------------------------------------------------------------------------------
Balance at December 31, 1996....................     $2,800     $78,081    $331,232        $312     ($4,693)    ($3,081)   $404,651
                                                     ===============================================================================

The accompanying notes are an integral part of these financial statements.
</TABLE>

                               Page 29 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>
               WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

                                                                                         Year Ended December 31,
                                                                                 1996         1995         1994
                                                                             --------------------------------------
<S>                                                                          <C>         <C>          <C>
Cash flows from operating activities:
   Net income..............................................................  $    40,621 $     45,532 $     57,589
   Adjustments to reconcile net income to cash provided by (used in)
      operating activities:
      Depreciation.........................................................       10,266        8,234        7,089
      Reduction of reserves for possible loan losses.......................       (5,000)      (9,380)     (25,869)
      Provision for(Reduction of) losses on OREO and other problem assets..          329           87       (1,057)
      Amortization of intangible assets and unearned restricted stock
         compensation......................................................        3,700        3,486        4,500
      Amortization of premiums and discounts on investment securities, net.        7,260       13,092       14,427
      Net gains on sales of OREO and other property........................       (2,537)      (1,223)      (3,512)
      Net gains on sales of investment securities..........................          (11)          (4)         (48)
      Deferred tax expense (benefit).......................................       (1,425)       1,954        6,093
      Increase (Decrease) in accrued income taxes..........................         (128)          51         (837)
      (Increase) Decrease in accrued income receivable and other assets....         (364)       3,848       (1,312)
      Increase (Decrease) in accrued expenses and other liabilities........          229          954         (182)
                                                                             --------------------------------------
      Net cash provided by operating activities............................  $    52,940 $     66,631 $     56,881
                                                                             --------------------------------------
Cash flows from investing activities:
   Proceeds from maturities of investment securities held to maturity......  $   400,565 $    352,837 $    827,572
   Proceeds from maturities of investment securities available for sale....       30,813       32,200       66,952
   Proceeds from sales of investment securities available for sale.........       35,066        3,262          515
   Purchases of investment securities held to maturity.....................     (323,889)    (193,914)    (782,923)
   Purchases of investment securities available for sale...................       (3,321)     (29,201)     (27,795)
   Net (increase) decrease in loans........................................     (410,728)    (352,156)     (26,462)
   Net (increase) decrease in federal funds sold and short-term deposits...       15,537       22,649       93,611
   Proceeds from sales of OREO and other property..........................        5,315        3,717       12,966
   Capital expenditures....................................................      (34,412)     (17,681)      (7,286)
   Net cash (paid) received in business acquisition........................            -       (3,695)      35,659
   Other...................................................................       (2,005)      (4,528)      (3,537)
                                                                             --------------------------------------
   Net cash provided by (used in) investing activities.....................  $  (287,059)$   (186,510)$    189,272
                                                                             --------------------------------------
Cash flows from financing activities:
   Net increase (decrease) in non-interest-bearing demand deposits.........  $    29,970 $     74,994 $    (38,710)
   Net increase (decrease) in interest-bearing deposits other than
      certificates of deposit..............................................      (20,104)    (103,422)    (185,562)
   Net increase (decrease) in certificates of deposit......................      (30,155)     131,352       19,607
   Net increase (decrease) in federal funds purchased and securities sold
      under repurchase agreements..........................................      251,568       47,288      (35,412)
   Sale of common stock under employee savings plan and dividend
      reinvestment plan....................................................        2,685        5,090          676
  Exercise of stock option..............                                           1,657           86          256
  Stock issued by pooled entities, pre-merger......................                  310           15          902
   Dividends paid including  pooled entities...............................      (15,942)     (12,234)      (9,583)
                                                                             --------------------------------------
   Net cash provided by (used in) financing activities.....................  $   219,989 $    143,169 $   (247,826)
                                                                             --------------------------------------

Net increase (decrease) in cash and cash equivalents.......................  $   (14,130)$     23,290 $     (1,673)
Cash and cash equivalents at the beginning of the period...................      235,221      211,931      213,604
                                                                             --------------------------------------
Cash and cash equivalents at the end of the period.........................  $   221,091 $    235,221 $    211,931
                                                                             ======================================

Interest income received...................................................  $   242,380 $    218,425 $    189,645
                                                                             ======================================

Interest expense paid......................................................  $    90,370 $     71,466 $     56,986
                                                                             ======================================

Net federal income taxes paid..............................................  $    20,550 $     18,588 $     21,470
                                                                             ======================================

The accompanying notes are an integral part of these financial statements.
</TABLE>

                               Page 30 of 69 Pages

<PAGE>



                          Notes To Financial Statements


(1) Nature of Business

         Whitney Holding Corporation (the "Company") is a Louisiana bank holding
company registered pursuant to the Bank Holding Company Act of 1956. The Company
began  operations in 1962 as the parent of Whitney National Bank (the "Louisiana
Bank") which has been in continuous operation since 1883. In December, 1994, the
Company  established  the  Whitney  Bank of Alabama  (the  "Alabama  Bank") and,
through this new banking subsidiary,  acquired the Mobile area operations of The
Peoples Bank,  Elba,  Alabama in February  1995.  During 1995,  the Company also
established the Whitney Community  Development  Corporation  ("WCDC"),  which is
authorized  to make  equity and debt  investments  in  corporations  or projects
designed  primarily  to  promote  community  welfare,   including  the  economic
rehabilitation  and  development  of  low-income  areas  by  providing  housing,
services,  or jobs for residents,  or promoting  small  businesses  that service
low-income areas. In August 1996, the Company  established Whitney National Bank
of Florida (the  "Florida  Bank") and  subsequently  acquired  American Bank and
Trust and Liberty Bank, both of Pensacola, Florida, on October 25, 1996.

         The Company,  through its banking  subsidiaries,  engages in commercial
and retail banking and in trust business,  including the taking of deposits, the
making of secured and unsecured loans, the financing of commercial transactions,
the issuance of credit cards,  the delivery of  corporate,  pension and personal
trust services,  and certain limited investment services.  The Louisiana Bank is
active as a correspondent for other banks. The Banks render specialized services
of  different  kinds  in  connection  with  all of the  foregoing,  and  operate
sixty-one  offices in south Louisiana,  ten offices  primarily in south Alabama,
five  offices in the  Pensacola,  Florida  area,  and a foreign  branch on Grand
Cayman in the British West Indies.

         There is significant competition within the financial services industry
in general as well as with respect to the particular financial services provided
by the Banks.  Within their market areas,  the Banks compete directly with major
banking  institutions of comparable or larger size and resources as well as with
various other smaller banking  organizations  and local and national  "non-bank"
competitors,  including savings and loans,  credit unions,  mortgage  companies,
personal and commercial  finance  companies,  investment  brokerage  firms,  and
registered investment companies.

         In recent years there has been a significant  consolidation  within the
financial  services  industry,  particularly  with  respect to the  banking  and
savings and loan segments of this industry.  This  consolidation has been driven
both by the large number of S&L and bank failures  experienced during the crisis
of the  late  1980s  and  early  1990s  as  well  as more  recently  by  general
competitive  pressures.  All of the Banks' major direct banking competitors have
been relatively  active in expansion through  acquisition.  In recent years, the
Company has  entered  into four  acquisitions  of banking  operations  involving
approximately  $540  million of assets and  completed a merger with a fifth bank
having  approximately  $235 million of assets in February 1997. The trend toward
industry consolidation is expected to continue in the near term.

         All material funds of the Company are invested in the Banks.  The Banks
have a large number of customer  relationships  which have been developed over a
period of many years and are not  dependent  upon any single  customer or upon a
few customers. The loss of any single customer or a few customers would not have
a material  adverse  effect on the Banks or the Company.  The Louisiana Bank has
customers in a number of foreign  countries,  but the portion of revenue derived
from these foreign customers is not a material portion of its overall revenues.

         The Company and the Banks and their related  operations  are subject to
federal, state and local laws applicable to banks and bank holding companies and
to the regulations of the Board of Governors of the Federal Reserve System,  the
Office of the Comptroller of Currency, the Federal Deposit Insurance Corporation
and the Alabama State Banking Department.




                               Page 31 of 69 Pages

<PAGE>



(2) Summary of Significant Accounting Policies

         The accounting and reporting  policies of Whitney  Holding  Corporation
and  its  subsidiaries  follow  generally  accepted  accounting  principles  and
policies  within the banking  industry.  The  following is a summary of the more
significant policies.

CONSOLIDATION

         The  consolidated  financial  statements  of the  Company  include  the
accounts  of Whitney  Holding  Corporation  and its  wholly-owned  subsidiaries,
Whitney National Bank, Whitney Bank of Alabama, Whitney National Bank of Florida
and Whitney Community Development Corporation.

         Certain balances in prior years have been  reclassified to conform with
this year's presentation.

USE OF ESTIMATES

         To prepare financial  statements in conformity with generally  accepted
accounting  principles,  management is required to develop estimates that affect
the reported  amounts of assets and  liabilities  and  disclosure  of contingent
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues and expenses  during the reporting  period.  Actual  results
could differ from those estimates.

CASH AND DUE FROM FINANCIAL INSTITUTIONS

         The Company  considers  cash on hand and  balances  due from  financial
institutions  as cash and cash  equivalents  for  purposes  of the  consolidated
statement of cash flows.

INVESTMENT IN SECURITIES

         Debt securities  which the Company both positively  intends and has the
ability to hold to maturity are carried at amortized  cost.  These  criteria are
not considered  satisfied when a security is available to be sold in response to
changes in interest rates, prepayment rates, liquidity needs or other reasons as
part of an overall asset/liability management strategy.

         Debt securities and equity  securities with readily  determinable  fair
values that are acquired with the intention of being resold in the near term are
classified as trading  securities and are carried at fair value, with unrealized
holding gains and losses  recognized in current  earnings.  The Company does not
currently hold any securities for trading purposes.

         Securities  not meeting the criteria of either  trading  securities  or
securities  held to maturity are classified as available for sale and carried at
fair  value.  Unrealized  holding  gains and  losses  for these  securities  are
recognized, net of related tax effects, as a separate component of shareholders'
equity.

         Interest  and  dividend  income  earned on  securities  either  held to
maturity or available  for sale is included in current  earnings,  including the
amortization  of premiums  and the  accretion  of  discounts  using the interest
method.  The gain or loss realized on the sale of a security held to maturity or
available for sale is computed with  reference to its amortized cost and is also
included in current earnings.

LOANS

         Loans are generally carried at the principal amounts outstanding,  less
unearned income and the reserve for possible loan losses.
         Interest  on loans is  accrued  and  credited  to  income  based on the
outstanding  loan  principal  amounts.  The  accrual  of  interest  on  loans is
discontinued  when, in  management's  judgement,  there is an indication  that a
borrower  will be unable to meet  contractual  payments as they become due.  For
commercial  and real  estate  loans,  this  generally  occurs  when a loan falls
90-days past due as to principal or interest, and the loan is not otherwise both
well secured and in the process of

                               Page 32 of 69 Pages

<PAGE>



collection.  Upon  discontinuance,  accrued but uncollected interest is reversed
against current income.  Interest payments received on nonaccrual loans are used
to reduce the reported loan  principal  under the cost recovery  method when the
collectibility of the remaining principal is not reasonably assured;  otherwise,
these payments are recognized as interest income.

         A nonaccrual loan may be reinstated to accrual status when full payment
of  contractual  principal  and  interest is expected  and this  expectation  is
supported by current performance.




                               Page 33 of 69 Pages

<PAGE>



RESERVE FOR POSSIBLE LOAN LOSSES

         The reserve for possible loan losses is maintained at a level which, in
management's  judgement,  is  considered  adequate  to absorb  potential  losses
inherent in the loan  portfolio.  The  adequacy of the reserve is  evaluated  by
management on an ongoing basis.  As adjustments to the level of reserves  become
necessary, they are reported in current earnings. The factors considered in this
evaluation  include  the  estimated   potential  losses  from  specific  lending
relationships,  including unused loan commitments and credit guarantees; general
economic conditions; economic conditions affecting specific classes of borrowers
or types of loan collateral;  historical loss experience;  and various trends in
loan  portfolio  characteristics,   such  as  volume,  maturity,  customer  mix,
delinquencies and nonaccruals.

         As actual  losses are incurred,  they are charged  against the reserve.
Recoveries on loans previously charged off are added back to the reserve.

         Effective  January 1, 1995, the Company adopted  Statement of Financial
Accounting  Standards ("SFAS") No. 114,  "Accounting by Creditors for Impairment
of a  Loan,"  as  amended  by SFAS  No.  118.  Under  this  standard,  a loan is
considered impaired when it is probable that all contractual amounts will not be
collected as they become due. The extent of  impairment  is measured  based on a
comparison of the recorded  investment in the loan with either the expected cash
flows  discounted using the loan's original  effective  interest rate or, in the
case of certain  collateral-dependent  loans,  the fair value of the  underlying
collateral.  The measure of  impairment  is included in the reserve for possible
loan losses.

         The  provisions  of SFAS No.  114 are not  applied  by the  Company  to
measure  impairment  for large  groups of similar  loans with  relatively  small
balances,  such as consumer credit line loans and consumer installment loans. As
allowed  under  the  standard,   these  loans  are  collectively  evaluated  for
impairment.

         The guidance in SFAS No. 114 did not represent a significant  departure
from  existing  procedures  followed  by the Company in  evaluating  the overall
adequacy of the reserve for possible loan losses.  Furthermore,  loans evaluated
for impairment in most all cases met the criteria  already in use by the Company
to identify loans on which the accrual of interest  should be  discontinued.  As
such, the adoption of this standard had no  significant  impact on the Company's
financial position or results of operations.

FORECLOSED ASSETS

         Collateral  acquired  through  foreclosure or in settlement of loans is
classified  as either  other real estate  owned  ("OREO") or other assets and is
carried at its fair value,  net of  estimated  costs to sell,  or the  remaining
investment in the loan,  whichever is lower. At  acquisition,  any excess of the
recorded loan value over the estimated  fair value of the  collateral is charged
against the reserve for  possible  loan  losses.  After  acquisition,  valuation
allowances  are  established  with a charge to  current  earnings  to adjust the
reported  value of  foreclosed  assets to reflect  changes in the  estimate of a
property's  fair value or selling costs.  Revenues and expenses  associated with
the  management  of  foreclosed  assets  prior to sale are  included  in current
earnings.

BANK PREMISES AND EQUIPMENT

         Bank  premises and equipment  are carried at cost,  net of  accumulated
depreciation and amortization.

         Provisions for depreciation  and amortization  included in non-interest
expenses are computed  primarily on the straight-line  method over the estimated
useful  lives of the  assets.  Estimated  useful  lives  range  from  fifteen to
forty-five  years for buildings and improvements and from three to fifteen years
for furnishings and equipment.

         In March,  1995,  the Financial  Accounting  Standards  Board  ("FASB")
issued SFAS No. 121 which prescribes the accounting for impairment of long-lived
assets  used in  operations,  such  as  bank  premises  and  equipment,  certain
identifiable intangibles,  and any goodwill related to these assets. In general,
the statement  requires  recognition of an impairment loss when the undiscounted
cash flows  estimated to be derived from the use of these assets  exceeds  their
carrying value. The statement also prescribes the accounting to be followed when
an entity plans to dispose of such long


                              Page 34 of 69 Pages
<PAGE>

-lived  assets. The Company's adoption of SFAS  No. 121 in 1996  had no material
impact on the Company's  financial position or results of operations.

INCOME TAXES

         Effective   January  1,  1993,  the  Company   adopted  SFAS  No.  109,
"Accounting for Income Taxes." In general,  under this  accounting  standard the
tax  consequences of all temporary  differences that arise between the tax bases
of assets or liabilities and their reported amounts in the financial  statements
represent  either tax liabilities to be settled in the future or tax assets that
will be realized as a reduction of future taxes.  The change in net deferred tax
assets or liabilities between periods is recognized as a deferred tax expense or
benefit in the  consolidated  statement of operations or, for certain  temporary
differences, reflected directly in shareholders' equity.

EARNINGS PER SHARE

         Earnings per share is calculated  using the weighted  average number of
shares  outstanding  during each period  presented  plus  dilutive  common stock
equivalents.  Potentially  dilutive  common stock  equivalents  consist of stock
options which have been granted to certain officers and directors.  The treasury
method is applied to determine the dilutive common stock equivalents to be added
for both the primary and fully-dilutive earnings per share calculations.

RECENT PRONOUNCEMENTS

         SFAS No. 125,  "Accounting  for  Transfers  and  Servicing of Financial
Assets and  Extinguishments of Liabilities," was issued in June, 1996, mainly to
provide consistent  standards for  distinguishing  transfers of financial assets
that are sales from  transfers that are secured  borrowings,  and it establishes
measurement,  reporting and disclosure  standards with respect to the assets and
liabilities  that are  obtained or incurred in such  transfers.  SFAS No. 125 is
generally effective for transfers, servicing and extinguishments occurring after
December 31, 1996,  although  application of certain provisions of the statement
has been  delayed  to 1998.  Adoption  of the  provisions  of SFAS No.  125 with
respect to transfer transactions or servicing activities currently engaged in by
the Company will not result in a material  impact on its  financial  position or
results of operations.


                               Page 35 of 69 Pages

<PAGE>

(3) INVESTMENT IN SECURITIES

         Summary  information   regarding  securities  available  for  sale  and
securities held to maturity follows:
<TABLE>
<CAPTION>


(dollars in thousands)                         SECURITIES AVAILABLE FOR SALE
                           ---------------------------------------------------------------------
                           WEIGHTED                   GROSS             GROSS         ESTIMATED
                           AVERAGE     AMORTIZED      UNREALIZED        UNREALIZED    FAIR
DECEMBER 31, 1996          MATURITY    COST           GAIN              LOSS          VALUE
                           ---------------------------------------------------------------------
<S>                          <C>       <C>            <C>               <C>           <C>
U.S. Treasury securities     41 mos.   $      527     $      17         $       -     $      544
U.S. government agency
 securities                  52 mos.       33,221           135               273         33,083
Mortgage-backed
  securities                 42 mos.      111,770           890               387        112,273
State and municipal
 securities                 110 mos.        1,044            28                 -          1,072
                           ---------------------------------------------------------------------
         TOTAL               45 mos.   $   146,56     $   1,070         $     660     $  146,972
                           =====================================================================
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1995
<S>                          <C>       <C>            <C>               <C>           <C>
U.S. Treasury securities     13 mos.   $    5,568     $      43         $      13     $    5,598
U.S. government agency
 securities                  58 mos.       44,533           517               483         44,567
Mortgage-backed
  securities                 69 mos.      170,838         2,633               403        173,068
State and municipal
 securities                 122 mos.        1,044            30                 -          1,074
                           ---------------------------------------------------------------------
         TOTAL               66 mos.   $  221,983     $  3 ,223        $      899     $  224,307
                           =====================================================================
</TABLE>



                               Page 36 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>



(dollars in thousands)                            SECURITIES HELD TO MATURITY
                           ---------------------------------------------------------------------
                           WEIGHTED                    GROSS           GROSS          ESTIMATED
                           AVERAGE     AMORTIZED       UNREALIZED      UNREALIZED     FAIR
DECEMBER 31, 1996          MATURITY    COST            GAIN            LOSS           VALUE
                           ---------------------------------------------------------------------
<S>                          <C>       <C>            <C>              <C>            <C>
U.S. Treasury securities     12 mos.   $  557,606     $   3,580        $      851     $  560,335
U.S. government agency
 securities                  45 mos.      329,713         2,232             1,453        330,492
Mortgage-backed
  securities                 72 mos.      145,045           414               868        144,591
State and municipal
 securities                  66 mos.      141,972         3,946               277        145,641
Federal Reserve stock
 and other corporate
 securities                       -         4,986         2,141                 -          7,127
                           ---------------------------------------------------------------------
         TOTAL               35 mos.   $1,179,322     $  12,313        $    3,449     $1,188,186
                           =====================================================================
</TABLE>



<TABLE>
<CAPTION>

DECEMBER 31, 1995

<S>                          <C>       <C>            <C>              <C>            <C>
U.S. Treasury securities     18 mos.   $  803,632     $   8,541        $    1,477     $  810,696
U.S. government agency
 securities                  32 mos.      250,905         3,937               230        254,612
Mortgage-backed
  securities                 69 mos.       56,707           461                 -         57,168
State and municipal
  securities                 62 mos.      135,716         5,144               337        140,523
Federal Reserve stock
 and other corporate
 securities                       -         4,629         1,672                 -          6,301
                           ---------------------------------------------------------------------
         TOTAL               28 mos.   $1,251,589     $  19,755        $    2,044     $1,269,300
                           =====================================================================
</TABLE>


         At December 31, 1996 and 1995, U.S. Treasury and agency securities with
a carrying value of approximately  $807,997,000 and $568,626,000,  respectively,
were sold under repurchase agreements,  pledged to secure public funds and trust
deposits or pledged for other purposes.

         During 1996,  approximately  $12,000,000  of  securities  that had been
classified by a pooled entity as available for sale prior to its merger with the
Company were transferred to the held to maturity category in accordance with the
investment policies and practices of the combined institution. This transfer was
recorded at fair value.  The  unrealized  gains and losses at the transfer date,
which are  included  net of tax as a component  of  shareholders'  equity,  were
insignificant.

         The amortized cost and estimated  fair value of securities,  other than
equity securities,  held to maturity and available for sale at December 31, 1996
are shown as follows by contractual  maturity.  The actual maturities of certain
securities, in particular  mortgage-backed  securities and municipal securities,
may  differ  from  contractual  maturities  because of  principal  amortization,
prepayments and the exercise of call options.

                                            AVAILABLE FOR SALE
                                    ---------------------------------------
(in thousands)                                                ESTIMATED
MATURITY DISTRIBUTION               AMORTIZED                 FAIR
DECEMBER 31, 1996                   COST                      VALUE
                                    ---------------------------------------
One year or less                    $     46,403              $      46,484
One to five years                         75,032                     75,217
Five to ten years                         17,838                     17,861
Over ten years                             7,289                      7,410
                                    ---------------------------------------
                                    $    146,562              $     146,972
                                    =======================================


                               Page 37 of 69 Pages

<PAGE>



                                            HELD TO MATURITY
                                    ---------------------------------------
(in thousands)                                                ESTIMATED
MATURITY DISTRIBUTION               AMORTIZED                 FAIR
DECEMBER 31, 1996                   COST                      VALUE
                                    ---------------------------------------
One year or less                    $    363,463              $     363,236
One to five years                        595,153                    600,377
Five to ten years                        194,175                    195,704
Over ten years                            21,545                     21,742
                                    ---------------------------------------
                                    $  1,174,336              $   1,181,059
                                    ========================================



(4) LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES

         The  composition  of the Company's  loan portfolio at December 31, 1996
and 1995 was as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                1996                      1995
                                                              ------------------------------------------------
<S>                                                           <C>                       <C>
Commercial, financial and
 agricultural loans...........................................$              980,825    $              804,471
Real estate loans - commercial and other......................               620,197                   486,092
Real estate loans - retail mortgage...........................               315,945                   223,528
Loans to individuals..........................................               135,667                   121,739
Lease financing receivables...................................                12,278                    13,606
                                                              ------------------------------------------------
                                                              $            2,064,912    $            1,649,436
                                                              ================================================
</TABLE>

         The  Company's  lending  activity,   both  commercial  and  retail,  is
conducted  primarily  among  customers in  Louisiana,  Mississippi  and southern
Alabama and the  western  Florida  panhandle.  In its market  area,  the Company
serves a broad base of commercial customers in diverse industries.

         Within the portfolio, the Company maintains a moderate concentration of
outstanding  credits and loan  commitments to customers  involved in the oil and
gas industry. At December 31, 1996,  outstanding loans to this industry totalled
approximately  $127,000,000,  and unused loan  commitments and letters of credit
and guarantees were  approximately  $130,000,000 and $16,000,000,  respectively.
The  operations of this industry  have  stabilized  and improved in recent years
after a period of severe  decline and major  restructuring  which had  adversely
impacted the overall  economy of a large portion of the  Company's  market area.
Management  continues  to closely  monitor  its  lending  relationships  in this
industry.

         The  total of  commercial  and other  real  estate  loans  shown in the
accompanying table includes both those for which the primary source of repayment
is the operation or sale of the underlying  project, as well as those secured by
real estate employed in other operations of the customer.  Unfunded  commitments
for  loans  secured  by  commercial  or other  real  estate  were  approximately
$178,000,000  at December 31, 1996.  The Company's  portfolio of commercial  and
other  real  estate  loans is  diversified  as to both the  types of  collateral
property and the industries in which the properties are employed.

         Non-performing  loans at December 31, 1996 and 1995 are  summarized  as
follows (in thousands):
<TABLE>
<CAPTION>

                                                              1996                      1995
                                                     ---------------------------------------
<S>                                                  <C>                        <C>
Loans accounted for on a nonaccrual basis            $       7,191              $      8,161
Restructured loans                                           2,375                     1,622
                                                     ---------------------------------------
Total non-performing loans                           $       9,566              $      9,783
                                                     =======================================
</TABLE>



                               Page 38 of 69 Pages

<PAGE>



         Information on loans evaluated for possible  impairment  losses follows
(in thousands):
<TABLE>
<CAPTION>

                                                                               1996                      1995
                                                                       --------------------------------------
<S>                                                                    <C>                      <C>
Impaired loans at year end requiring a loss allowance..................$      3,287             $       6,502
Impaired loans at year end not requiring a loss allowance..............       6,850                     3,542
                                                                       --------------------------------------
Total recorded investment in impaired loans at year end................$     10,137             $      10,044
                                                                       ======================================
Total impairment loss allowance required at year end...................$      1,308             $       2,117
                                                                       ======================================
Average recorded investment in impaired loans during year..............$     10,200             $       7,900
                                                                       ======================================
</TABLE>

  With respect to certain  nonaccrual  loans,  interest  income is recognized as
cash interest  payments are received.  Interest  payments on current or previous
nonaccrual  loans that had been accounted for under the cost recovery method may
also subsequently be recognized as interest income when loan collections  exceed
previous  expectations  or when workout  efforts  result in fully  rehabilitated
credits.  The following compares contractual interest income on nonaccrual loans
and  restructured  loans with both the interest  income reported on a cash basis
with  respect  to such  loans and the prior  cost  recovery  interest  currently
recognized on nonaccrual loans and certain accruing loans (in thousands):
<TABLE>
<CAPTION>

                                                                   YEAR ENDED DECEMBER 31,
                                                     1996                       1995                      1994
                                    --------------------------------------------------------------------------
<S>                                 <C>                       <C>                       <C>
Contractual interest                $               1,005     $                1,554    $                2,662
Interest recognized                                 3,647                      6,425                     6,803
                                    --------------------------------------------------------------------------

Impact on reported
   interest income,
    increase (decrease)             $               2,642     $                4,871    $                4,141
                                    ==========================================================================
</TABLE>


         Changes in the reserve for possible  loan losses for the three years in
the period ended December 31, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>

                                                     1996                       1995                      1994
                                    --------------------------------------------------------------------------
<S>                                 <C>                       <C>                       <C>
Balance at beginning of year        $              40,144     $               37,069    $               47,228
Reserves provided through
   acquisition                                          -                      1,772                         -
Reduction of reserve                               (5,000)                    (9,380)                  (25,869)
Recoveries                                         10,305                     14,215                    19,986
Loans charged off                                  (6,106)                    (3,532)                   (4,276)
                                    --------------------------------------------------------------------------
Balance at end of year              $              39,343     $               40,144    $               37,069
                                    ==========================================================================
</TABLE>

         The  reductions in the reserve for possible  loan losses in 1996,  1995
and 1994  reflect  improved  asset  quality,  successful  recovery  efforts  and
management's  determination  that efforts to deal with asset quality issues have
yielded lasting positive results.

         The Banks have made loans in the normal  course of  business to certain
directors and executive officers of the Company and to their associates (related
parties). The aggregate amount of these loans was $92,133,000 and $53,081,000 at
December 31, 1996 and 1995, respectively.  During 1996, $403,724,000 of new loan
advances  were  made,  and   repayments   totalled   $364,672,000.   Outstanding
commitments  and letters of credit to related  parties  totaled  $63,813,000 and
$68,095,000 at December 31, 1996 and 1995, respectively. Related party loans are
made on substantially the same terms,  including  interest rates and collateral,
as those  prevailing  at the time for  comparable  transactions  with  unrelated
persons, and do not involve more than the normal risk of collectibility.

                               Page 39 of 69 Pages


<PAGE>



(5) INCOME TAXES


         Income tax expense (benefit) consisted of the following  components for
the three years in the period ended December 31, 1996 (in thousands):
<TABLE>
<CAPTION>

Included in net income:                              1996                       1995                      1994
                                    --------------------------------------------------------------------------
<S>                                 <C>                       <C>                       <C>
  Current tax expense               $              20,543     $               18,901    $               20,769
  Deferred tax expense (benefit)                   (1,425)                     1,954                     6,093
                                    --------------------------------------------------------------------------
                                    $              19,118     $               20,855    $               26,862
                                    ==========================================================================

Included in shareholders' equity:
  Deferred tax expense (benefit)
     related to the change in the
     net unrealized gain (loss) on
     securities                     $                (655)    $                4,457    $               (5,780)
   Current tax benefit related to
     nonqualified stock options
     exercised                                       (708)                         -                         -
                                    --------------------------------------------------------------------------
                                    $              (1,363)    $                4,457    $               (5,780)
                                    ==========================================================================
</TABLE>

         The net deferred income tax asset, which is included in other assets on
the consolidated  balance sheets, was approximately  $13,811,000 and $11,731,000
at December 31, 1996 and 1995, respectively.  The components of the net deferred
tax assets were as follows (in thousands):
<TABLE>
<CAPTION>

                                                                       1996                      1995
                                                     ------------------------------------------------
<S>                                                  <C>                        <C>
Deferred tax assets:
         Reserves for losses on loans, OREO, and
           other problem assets                      $               14,249     $              14,101
         Unrecognized interest income                                   742                       674
         Employee benefit plan liabilities                            3,525                     3,148
         Other                                                          717                       552
                                                     ------------------------------------------------
                  Total deferred tax assets          $               19,233     $              18,475
                                                     ================================================
Deferred tax liabilities:
         Accumulated depreciation and
           amortization                              $               (4,484)    $              (5,027)
         Net unrealized gain on securities available
           for sale or transferred to held to maturity                 (169)                     (824)
         Other                                                         (769)                     (893)
                                                     ------------------------------------------------
                  Total deferred tax liabilities     $               (5,422)    $              (6,744)
                                                     ================================================

Net deferred tax asset                               $               13,811     $              11,731
                                                     ================================================
</TABLE>

                               Page 40 of 69 Pages

<PAGE>



         The Company is required to establish a valuation  allowance against the
deferred tax asset if, based on all available  evidence,  it is more likely than
not that some or all of the asset will not be realized.  Management  has weighed
the evidence,  including current earnings performance,  taxable income generated
during available  carryback  periods,  and the nature of significant  deductible
temporary differences,  and believes that no valuation reserve is required as of
December  31,  1996.  Rules  issued by  regulatory  agencies  impose  additional
limitations on the amount of the deferred tax asset that may be recognized  when
calculating regulatory capital ratios. The Company's ratio calculations were not
affected by these rules at December 31, 1996.

         The effective tax rate is less than the  statutory  federal  income tax
rate in each of the three years in the period ended December 31, 1996 because of
the following:
<TABLE>
<CAPTION>
                                                                          PERCENT OF INCOME
                                                                          BEFORE INCOME TAX
                                                                  1996              1995             1994
                                                     ----------------------------------------------------
<S>                                                               <C>              <C>               <C>
Tax at statutory rate                                             35.0%            35.0%             35.0%
Adjustments in rate resulting from:
   Tax exempt income                                              (4.8)            (4.0)             (3.0)
   Non-deductible merger-related expenses                          1.1                -                 -
   Miscellaneous items                                             0.7              0.4              (0.2)
                                                     ----------------------------------------------------
Effective tax rate                                                32.0%            31.4%             31.8%
                                                     ====================================================
</TABLE>


(6) EMPLOYEE BENEFIT PLANS

Retirement Plans

         The Company has a  noncontributory  qualified  defined  benefit pension
plan covering  substantially all of its employees.  The benefits are based on an
employee's  total  years of service and his or her  highest  five-year  level of
compensation during the final ten years of employment. Contributions are made in
amounts  sufficient to meet funding  requirements  set forth in federal employee
benefit and tax laws plus such  additional  amounts as the Company may determine
to be appropriate from time to time.



                               Page 41 of 69 Pages

<PAGE>



         The  following  table sets forth the plan's  funded  status and amounts
recognized in the Company's consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
                                                                                DECEMBER 31,
                                                                            1996                      1995
                                                              ---------------------------------------------
<S>                                                           <C>                       <C>
Actuarial present value of benefit obligation:
  Accumulated benefit obligation :
         Vested                                               $          (45,681)       $          (39,067)
         Non-vested                                                       (3,675)                   (3,394)
                                                              ---------------------------------------------
         Total accumulated benefit obligation                 $          (49,356)       $          (42,461)
     Benefit obligation related to assumed future pay
         increases                                                       (10,464)                   (8,077)
                                                              ---------------------------------------------
     Projected benefit obligation                                        (59,820)                  (50,538)
Plan assets at fair value, primarily U.S. Treasury
    and agency securities and listed stocks                   $           73,548        $           67,869
                                                              ---------------------------------------------
Plan assets in excess of projected benefit
 obligations                                                              13,728                    17,331
Unrecognized net actuarial gains                                          (8,711)                  (11,086)
Unrecognized net implementation asset                                     (2,714)                   (3,119)
Unrecognized prior service cost resulting
 from plan amendments                                                     (1,576)                   (2,874)
                                                              ---------------------------------------------
Prepaid pension cost                                          $              727        $              252
                                                              =============================================
</TABLE>

         The net pension expense  (benefit)  recognized for 1996, 1995, and 1994
is comprised of the following components (in thousands):
<TABLE>
<CAPTION>

                                       1996                       1995                               1994
                           ------------------------------------------------------------------------------
<S>                        <C>                                <C>                       <C>
Service costs for benefits
 during the period         $          1,669                   $  1,635                  $           1,900
Interest cost on projected
 benefit obligation                   3,797                      3,564                              3,428
Actual (return) loss on
  plan assets                        (9,116)                   (14,480)                             1,430
Net amortization and
  deferral                            3,175                      9,483                             (6,983)
                           ------------------------------------------------------------------------------
Net pension expense
 (benefit)                 $           (475)                  $    202                  $            (225)
                           ==============================================================================
</TABLE>


         The  weighted-average  discount rate used in determining  the actuarial
present value of the projected benefit obligation was 7.25% in 1996 and 1995 and
8.25% in 1994. For all periods  presented,  the Company assumed an 8.0% expected
long-term  rate of return on plan assets.  The annual rate of increase in future
compensation levels was assumed to be 4.0% in 1996 and 1995 and 5.0% in 1994.

         In 1995,  the  Company  adopted a  nonqualified  defined  benefit  plan
effective  as of January 1, 1995.  This  unfunded  plan  provides to  designated
executive  officers  retirement  benefits  calculated using the qualified plan's
formula,  but without the  restrictions  imposed on  qualified  plans by certain
specified  provisions of the Internal Revenue Code. Benefits that become payable
under the nonqualified  plan would be reduced by amounts paid from the qualified
plan. The Company previously maintained a nonqualified excess benefit retirement
plan  which was  terminated  effective  January  1, 1993 with  accrued  benefits
preserved for participants.  Designated executives participating in the recently
adopted  nonqualified  plan were required to relinquish their benefits under the
terminated plan. At December 31, 1996, the actuarial  present value of projected
benefit  obligations under the nonqualified  plans was approximately  $2,093,000
and the recorded  accrued  pension  liability  was  $1,532,000.  The net pension
expense was not material in 1996 or 1995.

                               Page 42 of 69 Pages

<PAGE>



         The Company  sponsors an employee  savings plan under Section 401(k) of
the Internal  Revenue  Code.  Under this plan,  which covers  substantially  all
full-time  employees,  the Company matches the savings of each participant up to
3% of his or her  compensation.  Annual  participant  savings are limited by tax
law.  Participants are fully vested in their savings and in the matching Company
contributions at all times. The expense of the Company's matching  contributions
was approximately $1,085,000 in 1996, $946,000 in 1995 and $922,000 in 1994.

Health and Welfare Plans

         The Company  also  maintains  certain  health  care and life  insurance
benefit  plans  for  retirees  and  their   eligible   dependents.   Participant
contributions   are  required  under  the  health  plan,  and  the  Company  has
established  annual and lifetime maximum health care benefit limits.  Under SFAS
No.  106,  "Employers'   Accounting  for  Postretirement   Benefits  Other  than
Pensions,"  the Company is required to recognize  the expected cost of providing
these postretirement  benefits during the period employees are actively working.
The Company continues to fund its obligations under the  postretirement  benefit
plans as the benefit payments are made.

         At December 31, 1996, the net postretirement benefit liability reported
with other  liabilities in the  consolidated  balance  sheets was  approximately
$6,154,000.  The net periodic  postretirement  benefit expense  recognized under
SFAS No.  106 for 1996,  1995 and 1994 was  $416,000,  $168,000,  and  $300,000,
respectively.  The net periodic  benefit  expense  includes  components  for the
portion of the expected benefit  obligation  attributed to current service,  for
interest  on  the  accumulated  benefit  obligation,  and  for  amortization  of
unrecognized   actuarial  gains  or  losses.   No  component  was   individually
significant for any period reported.

         For the actuarial calculation of its postretirement benefit obligations
at December 31, 1996, 1995 and 1994, the Company assumed annual health care cost
increases  beginning  at  9.50%,  10.0%  and  11.0%,  respectively,   with  each
decreasing  to a 5.50% rate over a seven to ten year period.  Discount  rates of
7.25% in 1996 and 1995 and 8.25% in 1994 were used in  determining  the  present
value of projected  benefits.  A 1.0% rise in the assumed health care cost trend
rates would not  materially  impact the  accumulated  benefit  obligation or the
periodic net benefit expense.

Stock-Based Incentive Compensation Plans and Other Stock-Based Compensation

         The Company maintains two stock-based compensation plans. The long-term
incentive  program  for  key  employees  is  administered  by  the  Compensation
Committee of the Board of  Directors,  which  designates  the  participants  and
authorizes the granting of any awards.  Under this program,  participants may be
awarded stock options,  restricted stock, performance shares and phantom shares.
To date, only stock options and restricted  stock grants have been awarded.  The
current  directors'  compensation plan, which was adopted in 1994 and amended in
1996,  provides for, among other  matters,  the annual award of common stock and
the annual  grant of options to  purchase  the  Company's  common  stock to each
director who is not an employee of the Company or its subsidiaries.


                               Page 43 of 69 Pages

<PAGE>



         The following schedule summarizes the common stock awards granted under
these plans during 1996, 1995 and 1994:

                                                            Market Value
                                          Shares            of Award on
                  Year      Plan          Awarded            Grant Date
                  --------------------------------------------------------
                  1996      Employee      53,500         $       1,605,000
                            Director       5,100         $         156,000

                  1995      Employee      40,000         $       1,155,000
                            Director       2,100         $          56,000

                  1994      Employee      50,100         $       1,357,000
                            Director       1,800         $          47,000

         Shares awarded to employees in 1996 are subject to possible  forfeiture
if a recipient's  employment is terminated  within three years of the grant date
and the transfer or other  disposition  of the shares is prohibited  during this
period.  In  addition,  the 1996  grant is subject  to  adjustment  based on the
performance  of the  Company,  as measured by its return on assets and return on
equity,  in relation  to that of a  designated  peer group over the  restriction
period,  with the ultimate  award ranging from 0% to 200% of the initial  grant.
The  shares  granted  to  employees  in 1995 and 1994 are  subject  to  possible
forfeiture  and  transfer   restrictions  for  five-year   periods  but  not  to
performance-based  adjustments.  The directors'  shares are awarded  without any
significant restriction and are not subject to future adjustment.

         The Company  recognizes  the market value of the shares  awarded on the
grant date as compensation expense ratably over the restriction periods, if any.
Adjustments  are made for forfeitures as they occur.  Subsequent  changes in the
estimate of the  unrestricted  shares to which employees will ultimately  become
entitled  under  performance-based  grants  will be  reflected  in  compensation
expense   prospectively  over  the  remaining  restriction  periods.  The  total
compensation  expense  recognized  during 1996,  1995 and 1994 related to common
stock awards was $1,014,000, $651,000 and $363,000, respectively.

         The  following  table   summarizes  stock  option  activity  under  the
long-term  incentive program for employees and the directors'  compensation plan
for the  three-year  period ended  December 31, 1996. The exercise price for all
options is set at the market  price on the grant  date.  All  options  are fully
exercisable six months after the date of grant and expire after ten years.


                               Page 44 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>



                                                     Employees                          Directors
                                    -----------------------------------------------------------------
                                                        Weighted-                          Weighted-
                                                         Average                            Average
                                                        Exercise                           Exercise
                                       Number             Price          Number              Price
                                    -----------------------------------------------------------------
<S>                                   <C>             <C>                <C>             <C>
Balance, December 31, 1993            129,025         $      16.81            -                     -
         Options granted               72,500         $      28.00       12,000          $      26.25
         Options exercised            (18,674)        $      13.72            -                     -
                                    -----------------------------------------------------------------

Balance, December 31, 1994            182,851         $      21.60       12,000          $      26.25
         Options granted               82,750         $      28.88       14,000          $      26.75
         Options exercised             (3,750)        $      15.70       (1,000)         $      26.25
         Options forfeited             (1,000)        $      28.00            -          $          -
                                    -----------------------------------------------------------------

Balance, December 31, 1995            260,851         $      23.97       25,000          $      26.53
         Options granted              103,500         $      30.00       17,000          $      30.50
         Options exercised            (21,524)        $      18.98       (1,000)         $      26.75
         Options forfeited             (3,000)        $      29.00            -          $          -
                                    -----------------------------------------------------------------

Balance, December 31, 1996            339,827         $      26.08        41,000         $      28.17
                                    =================================================================
</TABLE>

         The following  table  summarizes  certain  information  about the stock
options outstanding at December 31, 1996:
<TABLE>
<CAPTION>

Range of                   Number of                Weighted-average          Weighted-average
Exercise                   Shares under             Remaining Years           Exercise
Prices                     Option                   to Expiration             Price
----------------------------------------------------------------------------------------------
<S>                        <C>                      <C>                       <C>
$13.22 - $19.42             88,077                  6.22                      $     17.45
$26.25 - $28.88            173,750                  8.21                      $     28.21
$30.00 - $30.50            119,000                  9.68                      $     30.07
                           -------------------------------------------------------------------
$13.22 - $30.50            380,827                  8.21                      $     26.30
                           ===================================================================
</TABLE>

         In 1990, an executive  officer was granted  options to purchase  33,750
shares of common  stock of the  Company  at a price of $18.11.  If this  officer
terminates his employment with the Company,  the options will be exercisable for
six months after his date of  termination.  The options will also be exercisable
up to one year past the date of his death,  but in no event beyond  February 28,
2000. At December 31, 1996, none of these options had been exercised.

         As discussed in Note 16, First  Citizens  BancStock,  Inc.  ("FCB") was
merged with the Company in March 1996.  FCB  maintained  stock  option plans for
certain  employees and its directors.  Options to purchase  55,000 shares of FCB
common stock had been  previously  granted to FCB employees and 65,000 shares to
the directors. Prior to the merger date, none of the options granted under these
plans had been exercised. Upon the merger, holders of FCB stock options received
options  to buy 88,252  shares of Company  stock at a price of $10.13 per share,
96,276  shares at a price of $12.78  per share,  and 8,023  shares at a price of
$14.57 per share. At December 31, 1996, options for 48,587 shares exercisable at
$10.13 remained unexercised. These options expire in approximately seven years.

         In  October,  1995,  the FASB  issued  SFAS No.  123,  "Accounting  for
Stock-Based Compensation," which is effective for years beginning after December
15, 1995. Among other provisions,  this statement establishes a fair value based
method of accounting for stock-based compensation,  including the award of stock
options.  As provided  for in SFAS No. 123, the Company has elected not to adopt
the fair value based method for measuring  stock-based  compensation  cost to be
included  in its  results  of  operations,  but is  continuing  to follow  prior
generally accepted accounting principles.


                               Page 45 of 69 Pages

<PAGE>



         SFAS No. 123 requires the following  disclosure of pro forma net income
and earnings per share  determined  as if the fair value method had been applied
in measuring  compensation  cost related to stock option  grants (in  thousands,
except per share amounts):

                                        1996                       1995
                                    -----------------------------------
Net income                          $ 40,621                  $  45,533
Pro forma stock-based
     compensation expense,
     net of tax                          770                        577
                                    -----------------------------------
Pro forma net income                $ 39,851                  $  44,956
                                    ===================================

Pro  forma earnings per share:
     Primary                          $ 2.22                     $ 2.54
     Fully-diluted                    $ 2.22                     $ 2.53

Weighted-average fair value
     of options granted
     during the year                  $ 7.67                     $ 7.14

         The  fair  value  of the  stock  options  granted  in 1996 and 1995 was
estimated as of the grant dates using the Black- Scholes  option-pricing  model.
The Company made the following  significant  assumptions  in applying the option
pricing model: (a) an expected annualized volatility of 17.70% for the Company's
common stock; (b) an average option life of seven years before exercise;  (c) an
expected annual dividend yield of 2.90%;  and (d) a  weighted-average  risk-free
interest rate of 7.01% in 1996 and 6.77% in 1995. The Company  options issued in
connection  with the merger with FCB, as discussed  above,  were not included in
the fair value  calculation  because  the FCB  options  exchanged  in the merger
transaction had been issued prior to 1995.


(7) BANK PREMISES AND EQUIPMENT

         Bank  premises  and  equipment  at  December  31,  1996  and  1995  are
summarized as follows,  net of accumulated  depreciation  and  amortization  (in
thousands):

                                                  1996                      1995
                                    --------------------------------------------
Land                                $           27,910         $          24,787
Buildings and improvements                      57,237                    44,924
Furnishings and equipment                       24,281                    15,320
                                    --------------------------------------------
                                    $          109,428         $          85,031
                                    ============================================

Accumulated  depreciation  was  $87,648,000  in 1996  and  $79,267,000  in 1995.
Provisions for depreciation and  amortization  included in non-interest  expense
for the three years in the period  ended  December  31, 1996 were as follows (in
thousands):
<TABLE>
<CAPTION>

                                                 1996                       1995                      1994
                                    ----------------------------------------------------------------------
<S>                                 <C>                       <C>                       <C>
Buildings and improvements          $           3,283         $            2,698        $            2,578
Furnishings and equipment                       6,983                      5,536                     4,511
                                    ----------------------------------------------------------------------
                                    $          10,266         $            8,234        $            7,089
                                    ======================================================================

</TABLE>

                               Page 46 of 69 Pages

<PAGE>



(8) OTHER REAL ESTATE OWNED

         Other real estate owned  ("OREO")  comprises  real property  collateral
acquired  through  foreclosure  or in  settlement  of loans and surplus  banking
property. With the exception of the pre-1933 property interests discussed below,
these  properties are reported at their fair values,  less expected  disposition
costs,  or the  recorded  investment  in the related  loan,  whichever is lower.
Activity in the OREO  valuation  reserve for the three years in the period ended
December 31, 1996 was as follows (in thousands):
<TABLE>
<CAPTION>

                                                   1996              1995             1994
                                            ----------------------------------------------
<S>                                         <C>               <C>               <C>
Balance, beginning of year                  $     633         $     943         $    3,790
  Provisions for valuation
    adjustments                                   323                87             (1,073)
  Charge-offs                                     (66)             (397)            (1,774)
                                            -----------------------------------------------
Balance, at end of year                     $     890         $     633         $      943
                                            ==============================================
</TABLE>

         The  Louisiana  bank owns a variety of  property  interests  which were
acquired  though routine  banking  transactions  generally prior to 1933 and for
which there existed no ready market.  These were subsequently  written down to a
nominal holding value in accordance with general banking  practice at that time.
These property interests include a few commercial and residential site locations
principally  in  the  New  Orleans  area,   ownership   interests  in  scattered
undeveloped acreage and various mineral interests.

         The following  summarizes the revenues and direct  expenses  related to
these  property  interests that are included in the statements of operations (in
thousands):

                                        1996              1995              1994
                                    --------------------------------------------
Revenues                            $    955         $     200         $     224
                                    ============================================
Direct expenses                     $     58         $      34         $      73
                                    ============================================


(9) NON-INTEREST INCOME

         The  components  of  non-interest  income were as follows for the three
years in the period ended December 31, 1996 (in thousands):
<TABLE>
<CAPTION>

                                                 1996                       1995                      1994
                                    ----------------------------------------------------------------------
<S>                                 <C>                       <C>                       <C>
Service charges on deposit
  accounts                          $          17,470         $           17,512        $           17,851
Credit card income                              5,737                      5,131                     4,645
Trust service fees                              3,738                      3,394                     2,775
International services income                   1,822                      1,941                     1,783
Investment services income                      1,080                        927                     1,115
Other fees and charges                          3,815                      3,173                     2,586
Net gains on sales of OREO
  and other foreclosed assets                   2,537                      1,223                     3,542
Other operating income                          1,112                        665                       667
                                    ----------------------------------------------------------------------
Total other non-interest income     $          37,311         $           33,966        $           34,964
Gain on sale of securities                         11                          3                        46
                                    ----------------------------------------------------------------------

Total non-interest income           $          37,322         $           33,969        $           35,010
                                    ======================================================================
</TABLE>

                               Page 47 of 69 Pages

<PAGE>



(10) NON-INTEREST EXPENSE

         The  components of  non-interest  expense were as follows for the three
years in the period ended December 31, 1996 (in thousands):

<TABLE>
<CAPTION>

                                                 1996                       1995                      1994
                                    ----------------------------------------------------------------------
<S>                                 <C>                       <C>                       <C>
Salaries and benefits               $          67,493         $           63,520        $           59,462
Occupancy of bank premises, net                10,142                      8,292                     7,515
Furnishings and equipment, including
 data processing                               12,418                     10,434                     8,047
Legal and other professional services           5,762                      3,513                     3,028
Security and other outside services             5,006                      4,108                     4,694
Taxes and insurance, other than real estate     4,420                      4,603                     3,617
Postage and communications                      4,367                      3,523                     2,987
Credit card processing services                 4,337                      3,797                     3,399
Stationery and supplies                         3,223                      2,773                     2,537
Amortization of intangible assets               2,802                      2,888                     4,161
Advertising                                     2,381                      2,260                     1,760
Deposit insurance and regulatory fees             767                      3,802                     6,596
OREO maintenance and operations, net              345                        380                       993
Provision for (recovery of) losses on OREO
 and other problem assets, net                    325                         87                    (1,024)
Other operating expense                        10,606                      8,700                     7,889
                                    ----------------------------------------------------------------------

Total non-interest expense          $         134,394         $          122,680        $          115,661
                                    ======================================================================
</TABLE>


(11) OTHER ASSETS AND OTHER LIABILITIES

         The  significant  components of other assets and other  liabilities  at
December 31, 1996 and 1995 were as follows (in thousands):
                                                       OTHER ASSETS
                                                 1996                       1995
                                      ------------------------------------------
Net deferred tax asset                $        13,811             $       11,731
Costs in excess of net
  tangible assets acquired                     21,336                     24,138
Other                                          11,061                      7,120
                                      ------------------------------------------
Total other assets                    $        46,208             $       42,989
                                      ==========================================

         Costs in excess of the net  tangible  assets  acquired in prior  years'
business  combinations are being amortized over remaining lives ranging from one
to fourteen  years as of December 31, 1996.  Accumulated  amortization  totalled
approximately $8,560,000 at December 31, 1996.

                                                    OTHER LIABILITIES
                                                 1996                       1995
                                      ------------------------------------------
Accrued interest payable              $         9,000             $        9,518
Obligation for postretirement
  benefits other than pensions                  6,154                      6,314
Accrued taxes and expenses                      5,783                      5,618
Other                                           3,881                      2,861
                                      ------------------------------------------
Total other liabilities               $        24,818             $       24,311
                                      ==========================================

                               Page 48 of 69 Pages

<PAGE>



(12) SHORT-TERM BORROWINGS

         Short-term  borrowings  consisted of the following at December 31, 1996
and 1995 (in thousands):

                                              1996                          1995
                                ------------------------------------------------
Federal funds purchased         $           82,384             $         105,674
Securities sold under
 repurchase agreements                     396,278                       121,420
                                ------------------------------------------------
Total short-term borrowings     $          478,662             $         227,094
                                ================================================

         The carrying value and market value of securities sold under repurchase
agreements  at December  31,  1996 is shown below by the term of the  underlying
borrowing agreement (in thousands):
<TABLE>
<CAPTION>

                                                                           UP TO                     30 TO
                                            OVERNIGHT                    30 DAYS                   90 DAYS
                                    ----------------------------------------------------------------------
Book value:
<S>                                 <C>                       <C>                       <C>
U.S. Treasury securities            $          42,154         $          228,860        $            6,400
U.S. government agency securities             118,219                          -                         -
                                    ----------------------------------------------------------------------
Total book value                    $         160,373         $          228,860        $            6,400
                                    ======================================================================

Fair value:
U.S. Treasury securities            $          42,184         $          230,274        $            6,419
U.S. government agency securities             117,809                          -                         -
                                    ----------------------------------------------------------------------
Total fair value                    $         159,993         $          230,274        $            6,419
                                    ======================================================================

Outstanding borrowings              $         160,394         $          229,480        $            6,404
                                    ======================================================================
</TABLE>


(13) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

         The following disclosure is made in accordance with the requirements of
Statement of Financial  Accounting  Standards No. 107,  "Disclosures  about Fair
Value of Financial  Instruments."  In cases where quoted  market  prices are not
available,  fair  values  have  been  estimated  using  present  value  or other
valuation  techniques.  The results of these  techniques are highly sensitive to
the assumptions  used, such as those concerning  appropriate  discount rates and
estimates  of  future  cash  flows,   which  require   considerable   judgement.
Accordingly,  estimates  presented herein are not necessarily  indicative of the
amounts the Company  could  realize in a current  settlement  of the  underlying
financial  instruments.  SFAS No. 107 excludes certain financial instruments and
all nonfinancial instruments from its disclosure requirements. These disclosures
should not be interpreted as representing an aggregate measure of the underlying
value of the Company.



                               Page 49 of 69 Pages

<PAGE>



         The Company  does not  maintain  any  investment  or  participation  in
financial  instruments or agreements  whose value is linked to, or derived from,
changes in the value of some  underlying  asset or index.  Such  instruments  or
agreements include futures, forward contracts,  option contracts,  interest-rate
swap agreements and other financial  arrangements with similar  characteristics,
and are commonly referred to as derivatives.
<TABLE>
<CAPTION>

                                          DECEMBER 31, 1996                       DECEMBER 31, 1995
                                                                 (in thousands)
                                  ----------------------------------------------------------------------
                                  CARRYING         ESTIMATED                 CARRYING         ESTIMATED
                                  AMOUNT           FAIR VALUE                AMOUNT           FAIR VALUE
                                  ----------------------------------------------------------------------
<S>                               <C>              <C>                       <C>              <C>
ASSETS:
Cash and due from financial
 institutions                     $  221,091       $  221,091                $  235,221       $  235,221
Federal funds sold and
 short-term deposits                  13,400           13,400                    28,937           28,937
Investment in securities           1,326,294        1,335,158                 1,475,896        1,493,607
Loans, net                         2,025,569        2,022,531                 1,609,292        1,637,848
Interest receivable and
 other assets                         31,488           31,488                    31,766           31,766

LIABILITIES:
Deposits                          $2,861,881       $2,861,709                $2,882,170       $2,884,684
Federal funds and
 other short-term borrowings         478,662          478,662                   227,094          227,094
Interest payable and
 other liabilities                    17,918           17,918                    16,704           16,704
</TABLE>


         The  following  significant  methods and  assumptions  were used by the
Company in estimating the fair value of financial instruments.

Cash  and  short-term   investments  -  The  carrying  value  of  highly  liquid
instruments,  such as cash on hand, interest- and non-interest-bearing  deposits
in financial institutions, and federal funds sold provides a reasonable estimate
of their fair value.

Investment securities - Substantially all of the Company's investment securities
are traded in active  markets.  Fair value  estimates for these  securities  are
based on quoted market prices obtained from independent  pricing  services.  The
carrying amount of accrued interest on securities approximates its fair value.

Loans,  net - For loans  with  rates  that are  repriced  in  coordination  with
movements in market rates and with no  significant  change in credit risk,  fair
value  estimates are based on carrying  values.  The fair values for other loans
are estimated  through  discounted  cash flow  analysis,  using current rates at
which loans with  similar  terms would be made to  borrowers  of similar  credit
quality. Appropriate adjustments are made to reflect probable credit losses. The
carrying amount of accrued interest on loans approximates it fair value.

Deposits - SFAS No.  107  specifies  that the fair value of deposit  liabilities
with no defined  maturity is to be disclosed as the amount  payable on demand at
the reporting date, i.e., at their carrying or book value. These deposits, which
include  interest and non-interest  checking,  passbook savings and money market
accounts,  represented  approximately  71% and 70% of total deposits at December
31, 1996 and 1995,  respectively.  The fair value of fixed maturity  deposits is
estimated using a discounted cash flow  calculation that applies rates currently
offered for time deposits of similar remaining  maturities.  The carrying amount
of accrued interest payable on deposits approximates its fair value.

         The economic value attributable to the relationship with depositors who
provide  low-cost funds to the Company is viewed as a separate  intangible asset
and is excluded in SFAS No. 107 from the definition of a financial instrument.

Short-term  borrowings  - The  carrying  amounts  of  federal  funds  purchased,
borrowings  under  repurchase   agreements,   and  other  short-term  borrowings
approximate their fair values.

                               Page 50 of 69 Pages

<PAGE>



Off-balance-sheet  instruments - Off-balance-sheet financial instruments include
commitments to extend credit,  letters of credit and other financial guarantees.
The fair value of such instruments is estimated using fees currently charged for
similar  arrangements  in the  marketplace,  adjusted  for  changes in terms and
credit risk as appropriate.  The estimated fair value for these  instruments was
insignificant at December 31, 1996 and 1995.



                               Page 51 of 69 Pages

<PAGE>



(14) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

         In order to meet the  financing  needs of its  customers,  the  Company
deals in financial  instruments that expose it to off-balance-sheet  risk. These
financial  instruments include commitments to extend credit,  letters of credit,
and other financial  guarantees.  Such instruments  involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount  recognized in
the statements of financial position.

         The Company's exposure to credit loss in the event of nonperformance by
other parties for  commitments  to extend credit and letters of credit and other
financial  guarantees  written is represented by the contractual amount of those
instruments.  The Company follows the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet instruments.
<TABLE>
<CAPTION>

                                                                                    CONTRACTUAL AMOUNT
                                                                                       December 31,
                                                                                   1996                      1995
                                                                     --------------------------------------------
<S>                                                                  <C>                       <C>
(in thousands)
Financial instruments whose contract amounts represent credit risk:
         Commitments to extend credit                                $          990,035        $          922,372
         Letters of credit and
          financial guarantees written                                           68,957                    81,941
         Credit card and related lines                                           76,684                    58,842
</TABLE>

         Commitments  to extend  credit and credit  card and  related  lines are
agreements  to make a loan to a customer as long as there is no violation of any
condition  established in the  commitment or credit line  contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being drawn upon,  the total  commitment  amount  outstanding  does not
necessarily  represent  total  future  cash  outlay  requirements.  Of the total
commitments outstanding at December 31, 1996,  approximately 40% carried a fixed
rate of interest over their terms.

         The amount of collateral, if any, required by the Company upon issuance
of a commitment  is based on  management's  credit  evaluation  of the borrower.
Required  collateral  varies,  but may include accounts  receivable,  inventory,
property, plant and equipment, and income-producing commercial properties.

         Letters of credit and  financial  guarantees  written  are  conditional
agreements issued by the Company to guarantee the performance of a customer to a
third party.  These agreements are primarily issued to support commercial trade.
The credit risk involved in issuing letters of credit is essentially the same as
that  involved in extending  loan  facilities  to  customers.  The Company holds
marketable  securities  as  collateral  to support  those  letters of credit and
guarantees  for which  collateral  is deemed  necessary.  Letters  of credit and
financial  guarantees  outstanding at December 31, 1996, range from unsecured to
fully secured.



                               Page 52 of 69 Pages

<PAGE>



(15) REGULATORY MATTERS

Regulatory Capital Requirements

         Measures of regulatory capital are an important tool used by regulators
to monitor the financial health of insured financial  institutions.  The primary
quantitative  measures used by the regulators to gauge capital  adequacy are the
ratios of Tier 1 and total regulatory  capital to  risk-weighted  assets and the
ratio of Tier 1  capital  to total  assets,  also  known as the Tier 1  leverage
ratio. For the Company and the Banks,  Tier 1 capital is essentially  equivalent
to total shareholders' equity less goodwill and other intangible assets acquired
in business  combinations,  while total regulatory capital represents the sum of
Tier 1 capital and the  reserve for  possible  loan  losses,  subject to certain
limitations.   Risk-weighting   percentages  for  assets  are  assigned  by  the
regulatory  agencies  and are  applied to both  reported  balances as well as to
certain off- balance-sheet items.

         To  evaluate  capital  adequacy,  regulators  compare an  institution's
regulatory  capital  ratios  with their  agency  guidelines  as well as with the
guidelines  established as part of the uniform  regulatory  framework for prompt
corrective  supervisory  action  toward  insured  institutions.  In  reaching an
overall  conclusion  on capital  adequacy or  assigning an  appropriate  capital
adequacy  classification  under  the  uniform  framework,  regulators  must also
consider other subjective and  quantitative  assessments of risk associated with
the  institution,  such as  interest-rate  risk.  Institutions  not judged to be
adequately  capitalized are subject to certain mandatory and possible additional
discretionary   actions  by  regulators   that  could   materially   impact  the
institution's financial position and results of operations.

         Management believes,  as of December 31, 1996, that the Company and the
Banks  meet all  capital  adequacy  requirements  imposed  by  their  respective
regulatory  agencies.  At December 31, 1996, the Louisiana and Alabama Banks had
been classified as "well capitalized" in the most recent  classification  notice
received  from their  regulators.  There are no  conditions  or events since the
notifications  that management  believes would change the  classifications.  The
Florida Bank has not yet been subject to a regulatory  examination and therefore
has not received a classification  notice. The Florida Bank was capitalized at a
level above the minimum required for a "well-capitalized" classification.



                               Page 53 of 69 Pages

<PAGE>



         The accompanying  table shows the actual regulatory  capital ratios and
amounts for the Company and its significant banking subsidiaries at December 31,
1996 and 1995 as well as both the minimum capital  adequacy  standard  currently
imposed by their  regulators  and the minimum  amounts and ratios that the Banks
must maintain to be eligible for a "well capitalized"  classification  under the
prompt corrective action framework.
<TABLE>
<CAPTION>
                                                         Minimum                     Minimum
                                                      Capital Adequacy         for "Well capitalized"
                                  Actual                 Standard                 Classification
                           --------------------------------------------------------------------------
                             Amount   Ratio           Amount   Ratio              Amount   Ratio
                           --------------------------------------------------------------------------
(dollars in thousands)

December 31, 1996:
<S>                        <C>         <C>           <C>         <C>           <C>          <C>
Tier 1 risk-based capital:
         Company           $  382,648  14.87%        $  102,929  4.00%                n/a     n/a
         Louisiana Bank    $  326,972  14.38%        $   90,938  4.00%         $  136,407    6.00%
Total risk-based capital:
         Company           $  414,902  16.12%        $  205,858  8.00%                n/a     n/a
         Louisiana Bank    $  355,486  15.64%        $  181,876  8.00%         $  227,345   10.00%
Tier 1 leverage capital:
         Company           $  382,648  10.19%        $  150,221  4.00%                n/a     n/a
         Louisiana Bank    $  326,972    9.39%       $  139,227  4.00%         $  174,097    5.00%

December 31, 1995:

Tier 1 risk-based capital:
         Company           $  350,942  17.19%        $   81,679  4.00%                n/a     n/a
         Louisiana Bank    $  308,527  16.91%        $   72,966  4.00%         $  109,449    6.00%
Total risk-based capital:
         Company           $  376,647  18.45%        $  163,357  8.00%                n/a     n/a
         Louisiana Bank    $  331,507  18.17%        $  145,932  8.00%         $  182,415   10.00%
Tier 1 leverage capital:
         Company           $  350,942  10.06%        $  139,594  4.00%                n/a     n/a
         Louisiana Bank    $  308,527   9.55%        $  129,218  4.00%         $  161,523    5.00%
</TABLE>


Other Regulatory Matters

         Dividends  received from the subsidiary Banks are the primary source of
funds available to Whitney  Holding  Corporation for the declaration and payment
of dividends to the Company's  shareholders.  There are various  regulatory  and
statutory  provisions  that limit the amount of  dividends  that the  subsidiary
Banks may distribute to the Company.  Without prior  regulatory  approvals,  the
Banks will have  available an amount  equal to  approximately  $35,000,000  plus
their current net income to distribute as dividends in 1997.

         Under current Federal Reserve regulations, the Banks are limited in the
amounts  they may lend to the  Company to a maximum of 10% of their  capital and
surplus, as defined in the regulations. Any such loans must be collateralized at
from 100% to 130% of the loan amount,  depending on the nature of the underlying
collateral.

         Banks   are   required   to   maintain   currency   and   coin   or   a
non-interest-bearing  balance  with the  Federal  Reserve  Bank to meet  reserve
requirements.  The average  balance  required to be maintained by the Banks with
the  Federal   Reserve  Bank  in  excess  of  currency  and  coin  on  hand  was
approximately $39,000,000 in 1996 and $51,000,000 in 1995.



                               Page 54 of 69 Pages

<PAGE>



(16) MERGERS AND ACQUISITIONS

         On  February  28,  1997,  the  Company  completed  a merger  with First
National  Bankshares,  Inc. ("FNB"),  the parent of First National Bank of Houma
("FNBH"). FNBH operates five banking offices in Terrebonne Parish, Louisiana and
has total assets of  approximately  $235 million,  $126 million in loans,  total
deposits of $210 million and shareholders'  equity of $18 million. The merger is
intended to qualify as a tax-free  reorganization and will be accounted for as a
pooling  of  interests.  The price of this  transaction  was $41  million.  FNBH
shareholders  received  approximately  1.13  million  shares of Whitney  Holding
Corporation common stock at the closing. Selected proforma financial information
for the  pooled  companies,  assuming  this  merger  had been  completed  at the
beginning of the earliest year presented, is a follows (unaudited,  in thousands
except per-share data):
<TABLE>
<CAPTION>

                  .                             1996                       1995                      1994
                                    ---------------------------------------------------------------------
<S>                                 <C>                       <C>                       <C>
Interest income                     $        257,049          $         236,987         $         212,010
Interest expense                             (96,487)                   (82,052)                  (64,292)
                                    ---------------------------------------------------------------------
Net interest income                 $        160,562          $         154,935         $         147,718
                                    =====================================================================

Net income                          $         42,721          $          47,925         $          63,470
                                    =====================================================================

Earnings per share:
         Primary                               $2.24                      $2.55                     $3.43
         Fully-diluted                         $2.23                      $2.54                     $3.43
</TABLE>

         Near the end of April 1997,  the  Company  anticipates  completing  its
merger with Merchants  Bancshares,  Inc., the parent of Merchants Bank and Trust
Company  ("MB&T").  MB&T, with operations  along the Mississippi Gulf Coast, has
total  assets of  approximately  $208  million,  deposits  of $188  million  and
shareholders' equity of $17 million. This transaction is priced at approximately
$52  million.  The  Company  expects to account  for this merger as a pooling of
interests.

         In October  1996,  the Company  completed a merger with American Bank &
Trust  ("ABT")  of  Pensacola,  Florida  and with  Liberty  Holding  Corporation
("LHC"), the parent of Liberty Bank, also of Pensacola.  ABT, with assets of $57
million,  and  Liberty  Bank,  with  assets of $48  million,  were merged into a
newly-chartered wholly-owned banking subsidiary of the Company, Whitney National
Bank of Florida.  Shareholders of ABT received 318,000 shares of Whitney Holding
Corporation common stock with a market value at the time of approximately  $10.3
million.  LHC  shareholders  received  436,000  shares of Company  stock with an
approximate value of $14.1 million. Each of these mergers was accounted for as a
pooling of interests.

         In March  1996,  the Company  completed  a merger  with First  Citizens
BancStock,  Inc.  ("FCB"),  the parent of The First  National  Bank in St.  Mary
Parish ("FNB").  FNB, which was merged into the Louisiana Bank, had total assets
of approximately  $243 million,  including $147 million in loans, total deposits
of $214  million  and  shareholders'  equity  of $27  million.  The  merger  was
accounted for as a pooling of interests.  FCB shareholders received 2.03 million
shares of Whitney  Holding  Corporation  common stock with a market value at the
time of approximately  $63 million.  Holders of FCB stock options at the closing
date  received  options to buy  approximately  192,000  shares of the  Company's
common stock at a weighted-average exercise price of $11.64.

         In February  1995,  Whitney  Bank of Alabama  purchased  the assets and
assumed the deposit liabilities of the five Mobile branch offices of The Peoples
Bank,  Elba,  Alabama.  The fair value of the tangible assets acquired  totalled
approximately  $90  million,  including  $47 million in loans.  The Alabama Bank
assumed non-interest-bearing demand deposits of $14 million and interest-bearing
transaction,  savings and time deposits totaling $76 million. The purchase price
was  approximately  $12 million.  Operating  results from this  acquisition  are
included in the accompanying consolidated statements of operations from the date
of acquisition.

         In  March  1994,   the  Company  and  the  Louisiana   Bank   purchased
substantially  all of the assets and assumed  the  deposits  and  certain  other
liabilities of Baton Rouge Bank and Trust Company. The tangible assets acquired,
whose fair

                               Page 55 of 69 Pages

<PAGE>



value totalled  approximately  $118 million,  included $59 million in loans. The
deposits  assumed  included  approximately  $24 million in  non-interest-bearing
demand  deposits and $94 million in  interest-bearing  transaction,  savings and
time  deposit  accounts.  As  part  of the  acquisition  price,  which  totalled
approximately $9 million,  Whitney Holding  Corporation  issued 90,909 shares of
its common  stock with a value of $2 million.  The  operating  results from this
acquisition are reflected in the Company's consolidated statements of operations
from the acquisition date.

(17) COMMITMENTS AND CONTINGENCIES

         In 1992,  the Company  discovered  and  reported  to the United  States
Department  of Education  ("DOE") that in earlier  years it had not in all cases
followed some collection  procedures  related to guaranteed  student loans under
the Federal Family Education Loan Program. At that time, a reserve for potential
settlement  with DOE was  established  and internal  procedures were revised for
future compliance with the Program. The Company believes the ultimate settlement
will not have a  material  effect on its  results  of  operations  or  financial
condition in 1997 or beyond.

         The  Company  and  its   subsidiaries  are  parties  to  various  legal
proceedings  arising in the ordinary  course of business.  After  reviewing with
outside  legal  counsel  pending and  threatened  actions,  management is of the
opinion that the ultimate  resolution  of these actions will not have a material
effect on the Company's financial condition and results of operations.

         Management also does not believe that compliance with existing federal,
state or local  environmental  laws and  regulations  will  impose any  material
financial obligation on the Company or materially affect the realizable value of
its assets.

         Neither  the  Company  nor  the  Banks  have  entered   into   material
commitments under non-cancelable leases for facilities or equipment.

                               Page 56 of 69 Pages

<PAGE>
<TABLE>
<CAPTION>
(18) PARENT COMPANY FINANCIAL STATEMENTS

Summarized parent-company-only financial statements of
Whitney Holding Corporation follow (in thousands):

                                                              December 31,

                                                            1996         1995
                                                         ------------------------
BALANCE SHEETS
<S>                                                      <C>         <C>
Investment in and advances to the Banks...............   $   398,359 $    365,979
Investment in non-bank subsidiaries...................         1,021        1,003
Dividends receivable..................................         4,858        3,642
Other assets..........................................         5,772        9,020
                                                         ------------------------
Total assets..........................................   $   410,010 $    379,644
                                                         ========================

Dividends payable and other liabilities...............   $     5,359 $      3,781
Shareholders' equity, net of treasury shares and
      unearned restricted stock compensation..........       404,651      375,863
                                                         ------------------------
Total liabilities and shareholders' equity............   $   410,010 $    379,644
                                                         ========================
</TABLE>

<TABLE>
<CAPTION>

                                                              FOR YEAR ENDED DECEMBER 31,
STATEMENT OF OPERATIONS                                     1996         1995         1994
                                                        --------------------------------------
<S>                                                      <C>         <C>          <C>
Dividend income from the Banks.........................  $    24,455 $     26,418 $     33,361
Equity in net undistributed earnings of the Banks......       17,409       19,013       24,316
Equity in net undistributed earnings of non-bank
 subsidiaries..........................................           18            2            -
Other income (expense), net............................       (1,261)         100          (87)
                                                         -------------------------------------
Net income.............................................  $    40,621 $     45,533 $     57,590
                                                         =====================================

STATEMENT OF CASH FLOWS
Cash flows from operating activities:
  Net income...........................................  $    40,621 $     45,533 $     57,590
  Adjustment to reconcile net income to net cash
     provided by operating activities:
  Equity in net undistributed earnings of the Banks....      (17,409)     (19,013)     (24,316)
  Equity in undistributed earnings of non-bank
     subsidiaries......................................          (18)          (2)           -
  (Increase) Decrease in dividends receivable..........       (1,216)        (788)        (563)
   Other, net..........................................          818         (285)          35
                                                         --------------------------------------
   Net cash provided by operating activities...........  $    22,796 $     25,445 $     32,746
                                                         --------------------------------------
Cash flows from investing activities:
   Investment in Whitney National Bank of Florida......  $   (15,015)$          - $          -
   Investment in and advances to  Whitney Bank of
      Alabama..........................................            -      (12,752)     (22,162)
   Investment in Whitney Community Development
      Corporation......................................            -       (1,000)           -
   Other, net..........................................        3,224       (4,657)      (2,534)
                                                         --------------------------------------
   Net cash provided by (used in) investing activities.  $   (11,791)$    (18,409)$    (24,696)
                                                         --------------------------------------
Cash flows from financing activities:
   Dividends paid, including pooled entities...........      (15,942)     (12,234)      (9,583)
   Sale of common stock under employee savings plan
     and dividend reinvestment plan....................        2,685        5,090          675
   Exercise of stock options...........................        1,657           86          256
   Stock issued by pooled entities, pre-merger.........          310           15          902
                                                         --------------------------------------
   Net cash provided by (used in) financing activities.  $   (11,290)$     (7,043)$     (7,750)
                                                         --------------------------------------
Net increase (decrease) in cash .......................  $      (285)$         (7)$        300
Cash at the beginning of the year......................          331          338           38
                                                         --------------------------------------
Cash at the end of the year............................  $        46 $        331 $        338
                                                         ======================================
</TABLE>
                               Page 57 of 69 Pages

<PAGE>



           MANAGEMENT REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING

         The management of Whitney  Holding  Corporation is responsible  for the
preparation  of the  financial  statements,  related  financial  data and  other
information  in this annual  report.  The financial  statements  are prepared in
accordance  with generally  accepted  accounting  principles and include amounts
based on  management's  estimates and  judgement  where  appropriate.  Financial
information  appearing  throughout  this annual  report is  consistent  with the
financial statements.

         The Company's financial statements have been audited by Arthur Andersen
LLP,  independent  public  accountants.  Management has made available to Arthur
Andersen LLP all of the Company's financial records and related data, as well as
the minutes of shareholders' and directors'  meetings.  Furthermore,  management
believes that all  representations  made to Arthur Andersen LLP during its audit
were valid and appropriate.

         Management  of the Company has  established  and  maintains a system of
internal  control that  provides  reasonable  assurance as to the  integrity and
reliability  of  the  financial  statements,   the  protection  of  assets  from
unauthorized use or disposition,  and the prevention and detection of fraudulent
financial  reporting.  The system of internal  control  provides for appropriate
division of responsibility  and is documented by written policies and procedures
that are  communicated  to employees  with  significant  roles in the  financial
reporting process and updated as necessary.  Management continually monitors the
system of  internal  control  for  compliance.  The  Company  maintains a strong
internal control auditing program that independently  assesses the effectiveness
of the internal controls and recommends possible  improvements  thereto. As part
of their audit of the Company's 1996 financial  statements,  Arthur Andersen LLP
considered  the Company's  system of internal  control to the extent they deemed
necessary  to  determine  the nature,  timing and extent of their  audit  tests.
Management  has  considered  the  recommendations  of the internal  auditors and
Arthur Andersen LLP concerning the Company's  system of internal control and has
taken  actions  that it believes  are  cost-effective  in the  circumstances  to
respond appropriately to these recommendations.  Management believes that, as of
December  31,  1996,  the  Company's  system of internal  control is adequate to
accomplish the objectives discussed herein.





                               Page 58 of 69 Pages

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF WHITNEY HOLDING CORPORATION:

         We have audited the accompanying consolidated balance sheets of Whitney
Holding  Corporation and  subsidiaries (a Louisiana  corporation) as of December
31,  1996 and 1995,  and the  related  consolidated  statements  of  operations,
shareholders'  equity and cash  flows for each of the three  years in the period
ended December 31, 1996. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects, the consolidated financial position of Whitney
Holding  Corporation and  subsidiaries as of December 31, 1996 and 1995, and the
results  of its  operations  and cash  flows for each of the three  years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.

                                                             Arthur Andersen LLP

New  Orleans,  Louisiana  January 16,  1997  (except  with  respect to the first
paragraph of Note 16 as to which the date is February 28, 1997)



                               Page 59 of 69 Pages

<PAGE>



SUMMARY OF QUARTERLY FINANCIAL INFORMATION

         The following  quarterly  financial  information  is unaudited.  In the
opinion of management,  all normal  recurring  adjustments  necessary to present
fairly the results of operations for such periods are reflected.
<TABLE>
<CAPTION>


                                                                                1996 - UNAUDITED
                                                                      (in thousands, except per-share amounts)
                                                    ----------------------------------------------------------------------------
                                                    4TH                     3RD                2ND                 1ST
                                                    QUARTER                 QUARTER            QUARTER             QUARTER
                                                    ----------------------------------------------------------------------------
<S>                                                 <C>                     <C>                <C>                 <C>
Interest income                                     $      62,377           $      61,126      $      59,076       $      59,127
Net interest income                                        38,997                  38,890             36,938              36,986
Reduction in reserve for possible loan losses               5,000                       -                  -                   -
Income before income tax                                   16,600                  15,766             15,208              12,165
Net income                                                 11,058                  10,780             10,390               8,393
Earnings per share for the three-month periods
 (based on weighted average of number of shares
         outstanding)                               $        0.61           $        0.60      $        0.58       $        0.47
Dividend declared per share, historical             $        0.25           $        0.25      $        0.25       $        0.22
Range of closing stock prices                        31.75-35.875             29.50-32.75        29.75-31.75         29.75-31.75

</TABLE>

<TABLE>
<CAPTION>

                                                                                1995 - UNAUDITED
                                                                      (in thousands, except per-share amounts)
                                                    ----------------------------------------------------------------------------
                                                    4TH                     3RD                2ND                1ST
                                                    QUARTER                 QUARTER            QUARTER            QUARTER
                                                    ----------------------------------------------------------------------------
<S>                                                 <C>                     <C>                <C>                 <C>
Interest income                                     $      59,313           $      56,717      $      54,166       $      51,464
Net interest income                                        38,879                  36,942             35,057              34,841
Reduction in reserve (provision)
  for possible loan losses                                   (350)                  9,900                (50)               (120)
Income before income tax                                   15,275                  24,805             12,690              13,618
Net income                                                 10,633                  16,351              9,322               9,227
Earnings per share for the three-month periods
 (based on weighted average of number of shares
         outstanding)                               $        0.60           $        0.92      $        0.53       $        0.53
Dividend declared per share, historical             $        0.22           $        0.20      $        0.20       $        0.20
Range of closing stock prices                         29.75-31.50             26.75-34.00       24.00-27.375         22.00-25.75
</TABLE>




                               Page 60 of 69 Pages

<PAGE>



Item 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         None.

                                    PART III

Item 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         In response to this item,  registrant  incorporates  by  reference  the
sections   entitled   "Election  of  Directors,"   "Certain   Transactions"  and
"Compliance with Section 16(A) of the Exchange Act" of its Proxy Statement dated
March 18, 1997.


Item 11: EXECUTIVE COMPENSATION

         In response to this item,  registrant  incorporates  by  reference  the
sections  entitled  "Proposal  to Amend  and  Restate  the  Long-Term  Incentive
Program," "Compensation of Directors" and "Executive  Compensation" of its Proxy
Statement dated March 18, 1997.


Item 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         In response to this item,  registrant  incorporates  by  reference  the
sections  entitled  "Voting   Securities  and  Principal  Holders  Thereof"  and
"Election of Directors" of its Proxy Statement dated March 18, 1997.


Item 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In response to this item,  registrant  incorporates  by  reference  the
section entitled  "Certain  Transactions" of its Proxy Statement dated March 18,
1997.




                               Page 61 of 69 Pages

<PAGE>



                                     PART IV

Item 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1) The following  consolidated  financial statements of the Company and its
subsidiaries are included in Part II Item 8:

                                                                     Page Number
                                                                     -----------
         Consolidated Balance Sheets --
            December 31, 1996 and 1995                                        27

         Consolidated Statements of Operations --
            Years Ended December 31, 1996, 1995, and 1994                     28

         Consolidated Statements of Changes in Shareholders' Equity --
            Years Ended December 31, 1996, 1995, and 1994                     29

         Consolidated Statements of Cash Flows --
            Years Ended December 31, 1996, 1995, and 1994                     30

         Notes to Financial Statements                                        31

         Report of Independent Public Accountants                             59

         Summary of Quarterly Financial Information                           60


(a) (2) All schedules  have been omitted  because they are either not applicable
or the required  information  has been included in the  financial  statements or
notes to the financial statements.

(a) (3) Exhibits:

         Exhibit 3.1 - Copy of Composite  Charter,  incorporated by reference to
         the Company's March 31, 1993 Form 10- Q

         Exhibit 3.2 - Copy of Bylaws, as amended

         Exhibit 10.1 - Stock    Option   Agreement  between   Whitney   Holding
         Corporation  and  William L. Marks,  incorporated  by  reference to the
         Company's 1990 Form 10-K

         Exhibit 10.2 - Executive agreement between Whitney Holding Corporation,
         Whitney  National Bank and William L. Marks,  incorporated by reference
         to the Company's June 30, 1993 Form 10-Q

         Exhibit 10.3 - Executive agreement between Whitney Holding Corporation,
         Whitney National Bank and R. King Milling, incorporated by reference to
         the Company's June 30, 1993 Form 10-Q

         Exhibit 10.4 - Executive agreement between Whitney Holding Corporation,
         Whitney National Bank and Edward B. Grimball, incorporated by reference
         to the Company's June 30, 1993 Form 10-Q

         Exhibit 10.5 - Executive agreement between Whitney Holding Corporation,
         Whitney  National  Bank and Kenneth A.  Lawder,  Jr.,  incorporated  by
         reference to the Company's June 30, 1993 Form 10-Q



                               Page 62 of 69 Pages

<PAGE>



         Exhibit 10.6 - Executive agreement between Whitney Holding Corporation,
         Whitney National Bank and G. Blair Ferguson,  incorporated by reference
         to the Company's September 30, 1993 Form 10-Q

         Exhibit 10.7 - Executive agreement between Whitney Holding Corporation,
         Whitney National Bank and Joseph W. May,  effective  December 13, 1993,
         incorporated by reference to the Company's 1993 Form 10-K

         Exhibit 10.8 - Executive agreement between Whitney Holding Corporation,
         Whitney  Bank  of  Alabama  and  John  C. Hope, III,  incorporated   by
         reference to the Company's 1994 10-K

         Exhibit 10.9 - Executive agreement between Whitney Holding Corporation,
         Whitney  National  Bank and  Robert  C.  Baird,  Jr.,  incorporated  by
         reference to the Company's  June 30, 1995 Form 10-Q  effective July 26,
         1995

         Exhibit 10.10a - Long-term incentive program, incorporated by reference
         to the Company's 1991 Form 10-K

         Exhibit 10.10b - Long-term incentive plan, incorporated by reference to
         the Company's Proxy Statement dated March 18, 1997

         Exhibit 10.11 - Executive compensation plan,  incorporated by reference
         to the Company's 1991 Form 10-K

         Exhibit  10.12 - Form of restricted  stock  agreement  between  Whitney
         Holding  Corporation  and  certain  of its  officers,  incorporated  by
         reference to the Company's June 30, 1992 Form 10-Q

         Exhibit 10.13 - Form of stock option agreement  between Whitney Holding
         Corporation  and certain of its officers,  incorporated by reference to
         the Company's June 30, 1992 Form 10-Q

         Exhibit 10.14 - Directors' Compensation Plan, incorporated by reference
         to the Company's Proxy Statement dated March 24, 1994

         Exhibit 10.14a - Amendment  No. 1  to  the  Whitney Holding Corporation
         Directors'  Compensation  Plan,   incorporated  by  reference  to   the
         Company's Proxy Statement dated March 15, 1996

         Exhibit  10.15 -  Amended  and  restated  Agreement  and Plan of Merger
         between Whitney Holding Corporation and First Citizens Bancstock, Inc.,
         dated  December 15, 1995,  incorporated  by reference to the  Company's
         1995 Form 10-K

         Exhibit 10.16 - Retirement  Restoration Plan effective January 1, 1995,
         incorporated by reference to the Company's 1995 Form 10-K

         Exhibit 10.17  -   Executive    agreement   between   Whitney   Holding
         Corporation, Whitney National Bank and Rodney D. Chard, incorporated by
         reference to the Company's September 30, 1996 Form 10-Q

         Exhibit 10.18 - Form of Amendment to the Executive agreements set forth
         in Exhibits 10.2 through 10.9

         Exhibit 21 - Subsidiaries

         Whitney Holding  Corporation  owns 100% of the capital stock of Whitney
         National  Bank and First  National  Bank of Houma,  both in  Louisiana,
         Whitney Bank of Alabama and Whitney  National Bank of Florida All other
         subsidiaries  considered  in  the  aggregate  would  not  constitute  a
         significant subsidiary.

         Exhibit 23 - Consent of Independent Public Accountants

         Exhibit 27 - Financial Data Schedule


                               Page 63 of 69 Pages

<PAGE>



(b)      No report on Form 8-K was required to be filed by the Registrant during
         the last quarter of 1996.



         Pursuant  to  the  requirements  of  the  Section  13 or  15(d)  of the
Securities  Exchange Act of 1934,  the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                        WHITNEY HOLDING CORPORATION
                                                (Registrant)




                                     By:/s/ William L. Marks
                                        ----------------------------------------
                                        William L. Marks
                                        Chairman of the Board and
                                        Chief Executive Officer   March 28, 1997
                                                               -----------------
                                                                      Date

                               Page 64 of 69 Pages



<PAGE>



                  Pursuant to the requirements of the Securities Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the Registrant and in the capacities and on the dates indicated.


     /s/ William L. Marks      ,   Chairman of the Board and Chief Executive
-------------------------------    Officer and Director           March 28, 1997
     William L. Marks                                    -----------------------

     /s/ R. King Milling       ,   President and Director         March 28, 1997
-------------------------------                           ----------------------
     R. King Milling

     /s/ Edward B. Grimball    ,   Executive Vice President & C.F.O.
-------------------------------    (Principal Accounting Officer) March 28, 1997
     Edward B. Grimball                                          ---------------

    /s/ John G. Phillips       ,   Director                       March 28, 1997
-------------------------------            -------------------------------------
    John G. Phillips
                               ,   Director
-------------------------------            -------------------------------------
    W.P. Snyder III

    /s/ Robert H. Crosby, Jr.   ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Robert H. Crosby, Jr.

    /s/ Richard B. Crowell      ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Richard B. Crowell

    /s/ James M. Cain           ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    James M. Cain

    /s/ Harry J. Blumenthal, Jr.,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Harry J. Blumenthal, Jr.

    /s/ Robert E. Howson        ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Robert E. Howson

    /s/ Warren K. Watters       ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Warren K. Watters
                                ,  Director
-------------------------------            -------------------------------------
    John K. Roberts, Jr.

    /s/ Willam A. Hines         ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    William A. Hines

    /s/ E. James Kock, Jr.      ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    E. James Kock, Jr.

------------------------------- ,  Director
    John J. Kelly                          -------------------------------------

    /s/ Angus R. Cooper, II     ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Angus R. Cooper, II

    /s/ Joel B. Bullard, Jr.    ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Joel B. Bullard, Jr.

                               Page 65 of 69 Pages

<PAGE>


                  Pursuant to the requirements of the Securities Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the Registrant and in the capacities and on the dates indicated.



------------------------------- ,  Director
    Camille A. Cutrone                     -------------------------------------

    /s/ Carroll W. Suggs        ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Carroll W. Suggs

    /s/ Alfred S. Lippman       ,  Director                       March 28, 1997
-------------------------------            -------------------------------------
    Alfred S. Lippman

                               Page 66 of 69 Pages

<PAGE>





                                                                     EXHIBIT 3.2


                                     BY-LAWS
                                       OF
                           WHITNEY HOLDING CORPORATION


Section 1. Meetings of the Board of Directors of this corporation may be held by
means of conference telephone or similar communications equipment.


Section 2. A. Without limiting in any way the indemnification by the corporation
of persons as  provided  in its charter and the  existing  applicable  law,  the
corporation  shall  have  authority  to  indemnify  persons in  accordance  with
Louisiana  Revised  Statutes  12:83 as it may from time to time become  amended,
supplemented or replaced.

                  B. The corporation shall have authority to procure or maintain
insurance or other similar  arrangement  in accordance  with  Louisiana  Revised
Statutes  12:83(F)  and (G) as they  may  from  time  to  time  become  amended,
supplemented or replaced.


Section  3. The  Company  may  issue  stock  certificates  signed  by the  Chief
Executive  Officer  and  Secretary  of the  Company.  In  addition  to the Chief
Executive  Officer  and  Secretary  of the  Company,  the  President,  any  Vice
President and any Assistant Secretary, respectively, of the Company may sign the
Company's stock certificates.  All stock certificates representing shares of the
Company's  stock,  whether  currently  outstanding  or that may be issued in the
future,  may bear facsimile  signatures of the Company's Chief Executive Officer
and Secretary,  or other authorized officers,  provided such certificates are or
have been  countersigned by a transfer agent or registrar other than the Company
itself or an employee of the Company.


Section 4. There shall be a standing committee of this Corporation, appointed by
the Board, to be known as the Executive Committee, consisting of the Chairman of
the Board, the President, and such other Directors as may be appointed from time
to time,  each to serve a 12  months'  term,  four (4)  members  of which  shall
constitute a quorum for the  transaction of business.  This committee shall have
power to direct and  transact all business of the  Corporation,  which  properly
might come before the Board of Directors, except such as the Board only, by law,
is authorized to perform.  The Executive  Committee  shall report its actions in
writing at each regular  meeting of the Board of Directors,  which shall approve
or disapprove the report and record such action in the minutes of the meeting.

                               Page 67 of 69 Pages

<PAGE>



                                                                   EXHIBIT 10.18

                                    AMENDMENT
                           WHITNEY HOLDING CORPORATION
                                       and
                              WHITNEY NATIONAL BANK

                               EXECUTIVE AGREEMENT
                               -------------------

                  THIS  AMENDMENT   relates  to  an  Executive   Agreement  (The
"Agreement")  entered into between  WHITNEY HOLDING  CORPORATION,  a corporation
organized  and existing  under the laws of the State of Louisiana  (the "Holding
Corporation"),  WHITNEY  NATIONAL  BANK, a financial  institution  organized and
existing  under the laws of the United States (the "Bank") and John C. Hope, III
(the "Executive") which was first effective as of March 16, 1995.

                  WHEREAS,  the  Executive is presently  employed by each of the
Holding  Corporation and the Bank as a Executive Vice President and Whitney Bank
of Alabama as Chairman and Chief Executive Officer;

                  WHEREAS,  the Holding  Corporation adopted the Whitney Holding
Corporation  Retirement  Restoration Plan,  effective as of January 1, 1995, and
the Executive is designated as a participant in such plan;

                  WHEREAS,  the parties to the Agreement now desire to amend the
Agreement  to take into  account  the  Whitney  Holding  Corporation  Retirement
Restoration Plan;

                  NOW, THEREFORE, effective as of July 23, 1996, Section 2.1e of
the Agreement shall be amended and restated to read in its entirety as follows:

                  e.       Pay to the  Executive  an amount equal to the present
                           value of the  additional  benefits  which  would have
                           accrued under the Whitney  National  Bank  Retirement
                           Plan and the Whitney Holding  Corporation  Retirement
                           Restoration  Plan, or any  successors  thereto,  that
                           would  have  been  made for the  lesser  of (i) three
                           years following the Date of Termination,  or (ii) the
                           number  of  years   until  the   Executive's   normal
                           retirement age under such plans; and

                  THIS AMENDMENT was executed in multiple counterparts as of the
date set forth below,  each of which shall be deemed an  original,  and shall be
effective as of the date first set forth above.

EXECUTIVE:                                        WHITNEY NATIONAL BANK and
                                                  WHITNEY HOLDING CORPORATION

/s/ John C. Hope, III                             /s/ Robert E. Howson
-----------------------------------               ------------------------------
Date: July 23, 1996                               By:  Robert E. Howson
     ------------------------------               Title:  Director & Chairman
                                                          Compensation Committee
                                                          of Board of Directors
                                                  Date: July 23, 1996
                                                       -------------------------



                               Page 68 of 69 Pages