<PAGE>


                                 March 30, 1999


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, 1998.

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

                                                     Sincerely,




                                                    /s/ Thomas L. Callicutt, Jr.
                                                    ----------------------------
                                                    Thomas L. Callicutt, Jr.
                                                    Senior Vice President &
                                                    Comptroller            
                                                    (504) 552-4591

TLC/drm

<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549



                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998        Commission file number 0-1026

                           WHITNEY HOLDING CORPORATION
             (Exact name of registrant as specified in its charter)

       Louisiana                                        72-6017893            
(State of incorporation)                    (I.R.S. Employer Identification No.)

                             228 St. Charles Avenue
                          New Orleans, Louisiana 70130
                    (Address of principal executive offices)

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                           Name of each exchange
                                                           ---------------------
  Title of each class                                       on which registered
  -------------------                                       -------------------
         None                                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                           Common Stock, no par value
                                (Title of Class)

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 this Form 10-K or any amendment to this
Form 10-K.  X
          -----

As of March 4, 1999,  the  aggregate  market  value of the voting  stock held by
non-affiliates was approximately $779,081,482

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

           Class                                    Outstanding at March 4, 1999
           -----                                    ----------------------------
 Common Stock, no par value                                  23,431,022

Documents Incorporated by Reference           Part of 10-K in which incorporated
-----------------------------------           ----------------------------------
Proxy Statement for 1999 annual meeting                    Part III
except for information referred to in
Item 402(a)(8) of Regulation S-K

<PAGE>


                           WHITNEY HOLDING CORPORATION

TABLE OF CONTENTS
                                                                            Page
--------------------------------------------------------------------------------

PART I
         Item 1: Business                                                      3
         Item 2: Properties                                                    4
         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 7a:Quantitative and Qualitative Disclosure about Market Risk    24
         Item 8: Financial Statements and Supplementary Data                  25
         Item 9: Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure                          57

--------------------------------------------------------------------------------

PART III
        Item 10: Directors and Executive Officers of the Registrant           57
        Item 11: Executive Compensation                                       59
        Item 12: Security Ownership of Certain Beneficial Owners and
                 Management                                                   60
        Item 13: Certain Relationships and Related Transactions               60

--------------------------------------------------------------------------------

PART IV
        Item 14: Exhibits, Financial Statement Schedules and Reports
                 on Form 8-K                                                  60


        Signatures                                                            63


                               Page 2 of 66 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, which has been
in continuous  operation  since 1883.  Beginning in 1995 and continuing  through
1997, the Company operated as a multi-bank  holding company,  having established
the Whitney  Bank of Alabama in 1995,  the Whitney  National  Bank of Florida in
1996 and the Whitney  National Bank of  Mississippi  in 1997 in connection  with
business  acquisitions.  In January 1998,  the Company merged all of its banking
operations into Whitney National Bank. Throughout this annual report, references
to the "Bank" will cover all former subsidiary  banks.  During 1995, the Company
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.

     The Company, through the Bank, 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 Bank  renders  these  services
throughout  its  market  areas in south  Louisiana,  south  Alabama,  along  the
Mississippi  Gulf Coast,  in the Pensacola,  Florida area, and through a foreign
branch on Grand Cayman in the British West Indies.

         COMPETITION

     There is significant  competition within the financial services industry in
general as well as with respect to the particular financial services provided by
the Bank. Within its market areas, the Bank competes 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
more recently by general competitive  pressures.  All of the Bank's major direct
banking   competitors   have  been  relatively   active  in  expansion   through
acquisition. Since January 1994 the Company has acquired eleven separate banking
operations  involving  approximately  $1.6  billion of assets.  The trend toward
industry consolidation is expected to continue in the near term.

         EMPLOYEES

     At the end of 1998,  the  Company  and the Bank  employed  a total of 2,269
employees.  The  Company  and its  subsidiaries  provide  a variety  of  benefit
programs  including group life, health and other insurance and retirement plans.
The Company also maintains training and educational programs designed to prepare
employees for positions of increasing responsibility.

         THE SUBSIDIARY BANK

     All material  funds of the Company are invested in the Bank. The Bank has a
large number of customer  relationships  which have been developed over a period
of many  years  and is 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 Bank or the Company.  The 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.

                               Page 3 of 66 Pages



<PAGE>



         SUPERVISION AND REGULATION

     The  Company  and the Bank 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,  and the  Federal  Deposit  Insurance
Corporation.

Item 2:  PROPERTIES

     The Company owns no real estate in its own name.  The Company's and Whitney
National  Bank's  executive  offices are located in downtown  New Orleans in the
Bank's  main  office  facilities,  which  the  Bank  owns.  A  portion  of these
facilities,  as well as portions of certain  other  facilities  in Louisiana and
Mississippi,  are  available for lease to third  parties,  although such leasing
activity is not  material to the  Company's  overall  operations.  The Bank owns
approximately  seventy percent of the total number of branch banking  facilities
currently in operation.  The remaining branch  facilities are subject to leases,
each of which  management  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 1999, the Company plans to open or begin construction on four additional
branch  locations  throughout  the  market  areas  of the  Bank.  Total  capital
expenditures for these new facilities are estimated at $3 million.

     The Bank holds a variety of property  interests  acquired through the years
in settlement of loans.  Reference is made to Note 7 to the financial statements
included in Item 8 for further information  regarding such property interests as
of December 31, 1998.

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

         Incorporated by reference to the Company's 1998 10-K, Item 10.


                               Page 4 of 66 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  Summary of  Quarterly  Financial  Information  located on page 56 shows the
range of closing prices of the Company's stock for each calendar quarter of 1998
and 1997 as reported on The Nasdaq Stock Market.

     b) The approximate  number of shareholders of record of the Company,  as of
March 4, 1999, is as follows:

        Title of Class                                Shareholders of Record
---------------------------------                     ----------------------
   Common Stock, no par value                                  6,493

     c) Also located on the Summary of Quarterly Financial Information, page 56,
are details regarding the dividends declared by the Company.


                               Page 5 of 66 Pages



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

----------------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)                 1998          1997          1996          1995           1994
----------------------------------------------------------------------------------------------------------------------------
YEAR-END BALANCE SHEET DATA
<S>                                                    <C>           <C>           <C>           <C>            <C>        
  Total assets                                         $ 5,211,919   $ 4,787,447   $ 4,675,250   $ 4,367,552    $ 4,038,262
  Earning assets                                         4,762,169     4,359,432     4,233,584     3,939,430      3,644,901
  Investment in securities                               1,340,078     1,470,967     1,668,000     1,822,582      2,001,994
  Loans                                                  3,270,581     2,864,664     2,484,495     2,027,538      1,582,438
  Deposits                                               4,256,662     3,935,871     3,672,438     3,656,457      3,428,389
  Shareholders' equity                                     560,961       525,136       482,992       449,225        393,457
----------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCE SHEET DATA
  Total assets                                         $ 4,857,088   $ 4,630,995   $ 4,438,672   $ 4,117,755    $ 4,079,839
  Earning assets                                         4,429,631     4,229,210     4,043,543     3,742,192      3,702,458
  Investment in securities                               1,301,163     1,569,143     1,798,811     1,901,027      2,091,980
  Loans                                                  2,972,664     2,609,275     2,174,400     1,745,433      1,484,687
  Deposits                                               3,930,221     3,679,832     3,569,118     3,453,728      3,430,632
  Shareholders' equity                                     548,806       503,325       465,347       417,417        359,075
----------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA
  Interest income                                      $   336,113   $   323,571   $   301,586   $   278,988    $   251,125
  Interest expense                                         122,981       122,245       117,368       102,071         81,233
  Net interest income                                      213,132       201,326       184,218       176,917        169,892
  Net interest income (TE)                                 217,858       206,220       189,075       181,122        174,016
  Provision for possible loan losses                            73        (2,120)       (3,626)       (8,616)       (25,618)
  Non-interest income (exclusive of securities
    transactions)                                           59,932        54,169        44,827        40,953         41,255
  Securities transactions                                      839            12             2            50           (771)
  Non-interest expense                                     195,993       171,587       161,952       148,180        141,219
  Net income                                                52,679        57,178        47,811        53,646         69,138
  Net income, before tax-effected merger-related expenses   57,237        59,705        51,230        53,646         69,138
----------------------------------------------------------------------------------------------------------------------------
KEY RATIOS
  Return on average assets                                   1.08%         1.23%         1.08%         1.30%          1.69%
  Return on average shareholders' equity                     9.60%        11.36%        10.27%        12.85%         19.25%
  Net interest margin                                        4.92%         4.88%         4.68%         4.84%          4.70%
  Tier 1 capital ratio                                      13.81%        15.27%        15.39%        17.68%         20.97%
  Total capital ratio                                       14.87%        16.49%        16.64%        18.93%         22.22%
  Leverage ratio                                            10.39%        10.83%        10.60%         9.75%          9.53%
  Average shareholders' equity to average assets            11.30%        10.87%        10.48%        10.14%          8.80%
  Shareholders' equity to total assets                      10.76%        10.97%        10.33%        10.29%          9.74%
  Average loans to average deposits                         75.64%        70.91%        60.92%        50.54%         43.28%
  Reserve for possible loan losses to loans                  1.23%         1.55%         1.77%         2.23%          2.72%
  Non-performing assets to loans plus foreclosed assets       .49%          .51%          .69%         1.12%          1.93%
  Reserve for possible loan losses to non-performing loans 284.54%       381.46%       354.74%       307.66%        192.47%
----------------------------------------------------------------------------------------------------------------------------
SELECTED COMMON SHARE DATA
  Earnings Per Share
    Basic                                                   $ 2.26        $ 2.48        $ 2.10        $ 2.39         $ 3.12
    Basic, before tax-effected merger-related expenses      $ 2.46        $ 2.59        $ 2.25        $ 2.39         $ 3.12
    Diluted                                                 $ 2.24        $ 2.46        $ 2.09        $ 2.37         $ 3.10
    Diluted, before tax-effected merger-related expenses    $ 2.44        $ 2.57        $ 2.24        $ 2.37         $ 3.10
  Dividends
    Cash dividends per share                                $ 1.20        $ 1.12         $ .97         $ .82          $ .64
    Dividend payout ratio                                   53.04%        45.10%        46.11%        34.27%         20.54%
  Book Value Per Share
    Book value                                             $ 23.98       $ 22.72       $ 21.14       $ 19.91        $ 17.64
    Tangible book value                                    $ 23.01       $ 21.90       $ 20.20       $ 18.85        $ 17.02
  Trading Data
    High stock price                                       $ 63.38       $ 59.75       $ 35.88       $ 34.00        $ 28.50
    Low stock price                                        $ 35.75       $ 34.75       $ 29.50       $ 22.00        $ 21.00
    Closing stock price                                    $ 37.50       $ 57.00       $ 35.38       $ 31.00        $ 21.75
    Trading volume                                       6,574,200     5,582,668     4,514,528     4,577,317      5,791,054
  Average Shares Outstanding
    Basic                                               23,283,458    23,025,173    22,729,851    22,417,663     22,185,791
    Diluted                                             23,499,643    23,236,174    22,897,208    22,615,722     22,283,920
----------------------------------------------------------------------------------------------------------------------------

</TABLE>

                               Page 6 of 66 Pages



<PAGE>




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


     The  purpose  of  this  discussion and analysis  is to focus on significant
changes in the financial  condition of Whitney Holding Corporation (the Company)
and its subsidiaries and on their  results  of operations  during 1998, 1997 and
1996. The Company's  principal subsidiary is Whitney National Bank (the "Bank"),
in  which  virtually  all  of  the Company's  operations   are  contained.  This
discussion  and  analysis  is  intended  to highlight and supplement information
contained  elsewhere  in   this  annual  report,  particularly   the   preceding
Consolidated   Financial   Statements  and   Notes  to  Consolidated   Financial
Statements.  Prior year financial information has been  restated  to include the
accounts  of  acquired   companies  accounted  for   as   poolings-of-interests.
Acquisitions accounted for as purchases are included from their respective dates
of acquisition.

OVERVIEW

     During the three-year period ended December 31, 1998, the Company made nine
acquisitions  as  discussed  in  Note  3.  As  a  result, the  Company  incurred
conversion  and  other  merger  expenses  related to the acquisitions in each of
these  three years. The effects of these tax-effected merger-related expenses on
net  income,  earnings per share, return on average assets and return on average
shareholders' equity for each of the years are shown in Table 1.
<TABLE>
<CAPTION>

TABLE 1.  EFFECTS OF MERGER-RELATED EXPENSES                                               Years Ended December 31
-----------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share data)                                          1998           1997           1996
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>          <C>            <C>      
Earnings, before tax-effected merger-related expenses                              $  57.2      $    59.7      $    51.2
Tax-effected merger-related expenses                                                  (4.5)          (2.5)          (3.4)
-----------------------------------------------------------------------------------------------------------------------------
Net Income                                                                         $  52.7      $    57.2      $    47.8
-----------------------------------------------------------------------------------------------------------------------------
Basic earnings per share, before tax-effected merger-related expenses              $  2.46      $    2.59      $    2.25
Effect of tax-effected merger-related expenses                                        (.20)          (.11)          (.15)
-----------------------------------------------------------------------------------------------------------------------------
Basic earnings per share                                                           $  2.26      $    2.48      $    2.10
-----------------------------------------------------------------------------------------------------------------------------
Return on average assets, before tax-effected merger-related expenses                 1.18 %         1.29 %         1.15%
Effect of tax-effected merger-related expenses                                       ( .10)         ( .06)         ( .07)
-----------------------------------------------------------------------------------------------------------------------------
Return on average assets                                                              1.08 %         1.23 %         1.08 %
-----------------------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity, before tax-effected merger-related expenses  10.43 %        11.86 %        11.01 %
Effect of tax-effected merger-related expenses                                       ( .83)         ( .50)         ( .74)
-----------------------------------------------------------------------------------------------------------------------------
Return on average shareholders' equity                                                9.60 %        11.36 %        10.27%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Earnings  before  tax-effected  merger-related  expenses  decreased by $2.5
million  in 1998 from  1997.  Positive  factors  contributing  to 1998  earnings
include  increases  in  net  interest  income  of  $11.8  million,  or  6%,  and
non-interest  income of $6.6 million,  or 12%. Offsetting these positive factors
were a change in the  provision  for loan losses of $2.2  million and  increased
non-interest  expense  of  $21.7  million,  or  13%,  excluding   merger-related
expenses.

     The growth in net interest income was primarily  due to a 14%  increase  in
average  loans.  The change in the  provision  for loan losses  resulted  from a
minimal  provision  arising from pooled entities in 1998,  compared to a reserve
reduction  in  1997.  The  rise in  non-interest  income  was  primarily  due to
increases in credit card income and trust service fees  resulting from increased
business in those  areas.  Non-interest  expense,  exclusive  of  merger-related
expenses,  increased  from 1997 due to the  hiring of key  personnel,  increased
incentive  compensation  expense,   unexpectedly  high  health  claims  expense,
expenses related to the addition of newly constructed  branches and the acquired
branches in Lake Charles,  Louisiana,  increases related to the refurbishment of
existing facilities, expenses related to enhancements to communications and data
processing  hardware and software,  and increased credit card processing charges
resulting from the growth in the related income noted above.

     Earnings  before  tax-effected  merger-related  expenses  increased by $8.5
million  from 1996 to 1997.  The growth in net  interest  income of 9%  resulted
primarily from a 20% increase in average loans. The net reduction in the reserve
for possible loan losses

                               Page 7 of 66 Pages


<PAGE>

was $1.5 million  less than in 1996. Non-interest income  increased $9.4 million
over all categories,  with the largest single increase of  $3.5  million in  net
gains  on  sales  and other  dispositions of foreclosed assets. Excluding merger
-related  expenses,   non-interest  expense  rose $10.5 million  from  increased
personnel,   incentive   compensation   and  stock-based   compensation expense,
branch  renovation  and  expansion,   expenses  related  to the opening of a new
operations  facility and increased credit card processing  charges, coupled with
decreases in legal and professional fees and deposit insurance expense. 

FORWARD-LOOKING STATEMENTS

     Certain statements in this annual report may be regarded as forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking  statements,  made in good faith by the Company, are
based on a number of assumptions  about future events and are subject to various
risks and  uncertainties,  which may cause actual  results to differ  materially
from those in such statements.  These risks and uncertainties  include,  but are
not limited to (i) the strength of the U.S.  economy in general and the strength
of the local economies in which the Company  conducts  operations,  particularly
considering the effects of oil and gas prices,  (ii) changes in trade,  monetary
and fiscal  policies,  laws and  regulations of government  agencies and similar
organizations, including interest rate policies of the Board of Governors of the
Federal  Reserve System,  (iii)  inflation,  interest rate,  market and monetary
fluctuations,  (iv) the Company's  ability to improve sales and service  quality
and to  develop  profitable  new  products,  (v) the  willingness  of  users  to
substitute  competitors'  products and services for the  Company's  products and
services,  (vi) the success of the Company in gaining regulatory approval of its
products  and  services,  when  required,  (vii)  changes in consumer  spending,
borrowing and saving habits, (viii) the effect of changes in accounting policies
and practices, as may be adopted by regulatory agencies as well as the Financial
Accounting  Standards Board, (ix) the amount and rate of growth of the Company's
expenses and its ability to achieve targeted or projected cost controls, (x) the
costs and effects of litigation  and of  unexpected or adverse  outcomes in such
litigation,  (xi)  technological  changes,  including the  possibility  that the
Company's  Year 2000  remediation  project may not be  completed  as  projected,
resulting in losses  related to data  processing  and other systems that may not
operate  as  expected,  (xii)  acquisitions  and  the  integration  of  acquired
businesses,   (xiii)  the  impact  on  the  Company's  financial  statements  of
non-recurring  accounting charges that may result from its ongoing evaluation of
its business strategies,  asset valuations and organizational structures,  (xiv)
charge-off and delinquency trends, (xv) the effects of easing of restrictions on
the  financial   services   industry,   and  the  effects  of  competition  from
institutions  that can take better advantage of eased  restrictions and from new
entries  into the markets  served by the  Company,  and (xvi) the success of the
Company at managing the risks involved in the foregoing.

LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES

     In 1998,  average loans grew $363 million,  or 14%, compared to an increase
in 1997 of $435  million,  or  20%.  Table  2,  which  is  based  on  regulatory
collateral codes,  shows the Company has experienced  significant loan growth in
all major categories.
<TABLE>
<CAPTION>

TABLE 2.  LOANS OUTSTANDING BY TYPE
--------------------------------------------------------------------------------------------------------------------------------
                                                                                 December 31
--------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                        1998           1997           1996           1995           1994
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>            <C>            <C>            <C>     
Commercial, financial and agricultural loans              $1,239,976     $1,206,960     $1,040,639     $  879,400     $  705,244
Real estate loans - commercial and other                   1,036,547        818,213        698,054        530,769        396,445
Real estate loans - retail mortgage                          669,846        545,673        464,249        370,417        272,076
Loans to individuals                                         321,971        287,852        269,275        233,346        198,944
Lease financing                                                2,241          5,966         12,278         13,606          9,729
--------------------------------------------------------------------------------------------------------------------------------
     Total Loans                                          $3,270,581     $2,864,664     $2,484,495     $2,027,538     $1,582,438
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

    Commercial  loans  other than those  secured by real  estate  increased  $33
million,  or 3%, in 1998. This increase was distributed among customers involved
in manufacturing,  wholesaling,  retailing and natural resource  exploration and
development.  Commercial real estate loans increased $218 million,  or 27%. This
growth came from loans collateralized by income producing properties, as well as
from loans  secured by other real estate used in commercial  operations.  As the

                               Page 8 of 66 Pages


<PAGE>

Company's  markets have expanded along the Gulf Coast and the Louisiana  economy
has  diversified,  particularly  in the  tourism  and hotel  business in the New
Orleans  metropolitan area,  construction and commercial real estate lending has
grown to  approximately  32% of the loan  portfolio as of December 31, 1998. The
economies of many of the markets in which the Company  operates,  especially  in
Southern  Louisiana,  have  traditionally  been  dependent  upon the oil and gas
industry  and  companies  that service that  industry.  The Company  maintains a
moderate  amount  of  outstanding  credits  and loan  commitments  to  customers
involved in the oil and gas industry. At December 31, 1998, outstanding loans to
these customers totalled $181.6 million.

     Retail mortgage loans increased $124 million,  or 23%, in 1998. This growth
is largely the result of the continued  successful  marketing of retail mortgage
loan products that have been introduced in recent years as an alternative to the
conventional  mortgage loan products that the Company originates for sale in the
secondary  market.  Loans to  individuals,  other than  retail  mortgage  loans,
increased $34 million, or 12%. These loans include various consumer, installment
and credit line loan  products.  The growth was, in part, the result of enhanced
sales efforts  resulting from  customer-focused  sales training  provided to the
Company's retail bankers during 1998.

     Table 3 reflects  contractual  loan  maturities,  unadjusted  for scheduled
principal reductions, prepayments or repricing opportunities.  Approximately 89%
of the loans with maturities greater than one year bear fixed rates of interest.
<TABLE>
<CAPTION>

TABLE 3.  LOAN MATURITIES BY TYPE
-------------------------------------------------------------------------------------------------------------------------------
                                                                                     December 31
-------------------------------------------------------------------------------------------------------------------------------
                                                                  One Year         One Through        More Than
(dollars in thousands)                                             Or Less          Five Years       Five Years          Total
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                 <C>                <C>          <C>       
Commercial, financial and agricultural loans                    $  771,183          $  362,475         $106,318     $1,239,976
Real estate loans- commercial and other                            268,180             511,062          257,305      1,036,547
Real estate loans - retail mortgage                                 70,158             184,909          414,779        669,846
Loans to individuals                                               254,990              47,057           19,924        321,971
Lease financing                                                      1,532                 538              171          2,241
-------------------------------------------------------------------------------------------------------------------------------
   Total loans                                                  $1,366,043          $1,106,041         $798,497     $3,270,581
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Each loan carries a degree of credit risk.  Management's evaluation of this
risk is reflected  in its  financial  statements  by the size of the reserve for
possible  loan losses,  the amount of loans  charged off and the  provision  for
possible loan losses charged to operating expense.

     The  Company  maintains  the reserve  for  possible  loan losses at a level
believed  by  management  to be  adequate  to  absorb  potential  losses  in the
portfolio.  The factors that management considers in determining the adequacy of
the reserve  include,  but are not limited to, 1) credit  reviews of  individual
loans; 2) collateral values of properties  securing loans; 3) growth in the loan
portfolio;  4)  composition  of  the  loan  portfolio;   and  5)  past  due  and
non-accruing loans.

     At  December  31,  1998,  the reserve  for  possible  loan losses was $40.3
million,  or  285%,  of  non-performing  loans  and 350% of  nonaccruing  loans,
compared to $44.5 million, or 381%, of non-performing loans in 1997. The reserve
was 1.23% of total loans at year-end  1998,  compared to 1.55% at year-end 1997.
Table 4 shows the activity in the reserve for possible loan losses over the past
five years. The allocation of the reserve is included in Table 5.

                               Page 9 of 66 Pages



<PAGE>
<TABLE>
<CAPTION>



TABLE 4.  SUMMARY OF ACTIVITY IN THE RESERVE FOR POSSIBLE LOAN LOSSES

------------------------------------------------------------------------------------------------------------------------------------
( dollars in thousands)                                              1998          1997           1996           1995         1994
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>            <C>            <C>          <C>    
Balance at the beginning of year                                  $44,543       $44,030        $45,309        $42,983      $53,401
Reserves acquired in bank purchase                                      -             -              -          1,772            -
Provision for possible loan losses
   charged (credited) to operations                                    73        (2,120)        (3,626)        (8,616)     (25,618)
Loans charged to the reserve
   Commercial, financial and agricultural                           6,100         5,174          4,981          3,669        3,132
   Real estate                                                        519           462            185            260          726
   Loans to individuals                                             5,423         2,474          1,662          1,610        1,978
   Lease financing                                                    588         1,085          1,849            200          132
------------------------------------------------------------------------------------------------------------------------------------
      Total                                                        12,630         9,195          8,677          5,739        5,968
------------------------------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged off
   Commercial, financial and agricultural                           3,999         6,290          3,868          5,259        5,497

   Real estate                                                      2,699         3,442          5,481          6,972       12,377
   Loans to individuals                                             1,597         2,096          1,652          2,620        3,224
   Lease financing                                                      1             -             23             58           70
------------------------------------------------------------------------------------------------------------------------------------
      Total                                                         8,296        11,828         11,024         14,909       21,168
------------------------------------------------------------------------------------------------------------------------------------
Net (charge-offs) recoveries                                       (4,334)        2,633          2,347          9,170       15,200
------------------------------------------------------------------------------------------------------------------------------------
Balance at the end of year                                         40,282        44,543         44,030         45,309       42,983
------------------------------------------------------------------------------------------------------------------------------------
Ratios
Gross charge-offs to average loans                                    .42 %         .35 %          .40 %          .33 %        .40 %
Recoveries to gross charge-offs                                     65.68 %      128.64 %       127.05 %       259.78 %     354.69 %
Net charge-offs (recoveries) to average loans                         .15 %        (.10)%         (.11)%         (.53)%      (1.02)%
Reserve for possible loan losses to loans at end of year             1.23 %        1.55 %         1.77 %         2.23 %       2.72 %
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>


TABLE 5.  ALLOCATION OF THE RESERVE FOR POSSIBLE LOAN LOSES

------------------------------------------------------------------------------------------------------------------------
                                                          December 31
------------------------------------------------------------------------------------------------------------------------
                                    1998               1997              1996              1995              1994
------------------------------------------------------------------------------------------------------------------------
                              RESERVE   LOANS    RESERVE   LOANS   RESERVE   LOANS   RESERVE   LOANS    RESERVE  LOANS

------------------------------------------------------------------------------------------------------------------------
Commercial, financial and
<S>                           <C>       <C>       <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      
   agricultural               39.70%    37.92%    41.46%   42.13%   41.94%   41.88%   40.75%   43.37%   43.93%   44.58%   
Real estate - commercial
   and other                  31.62     31.69     28.27    28.56    26.71    28.10    23.21    26.18    27.00    25.05
Real estate - retail          20.45     20.48     16.36    19.05    14.84    18.69    12.69    18.27    11.84    17.19
   mortgage
Loans to individuals           7.88      9.84      9.01    10.05     6.88    10.84     8.05    11.51     9.59    12.57
Lease financing                 .10       .07       .67      .21     2.41      .49     1.91      .67      .48      .61
Unallocated                     .25         -      4.23        -     7.22        -    13.39        -        -     7.16
------------------------------------------------------------------------------------------------------------------------
Total                        100.00%   100.00%   100.00%  100.00%  100.00%  100.00%  100.00%  100.00%  100.00%  100.00%
------------------------------------------------------------------------------------------------------------------------
</TABLE>

     In 1998,  the Company  recovered  $8.3  million of  previously  charged-off
loans,  compared to $11.8 million in 1997. Also in 1998, the Company  identified
$12.6  million of loans to be charged off as  uncollectible  against the reserve
for possible  loan losses,  as compared to $9.2  million of  charge-offs  in the
previous year. These charge-offs and recoveries  created net charge-

                              Page 10 of 66 Pages

<PAGE>

offs of $4.3 million  in 1998, compared to net  recoveries  of $2.6  million  in
1997.  The  increase  in  gross  charge-offs  in 1998 is primarily the result of
fully-reserved charge-offs of student loans stemming from a final  settlement of
a  claim  by the  U.S.  Department of Education ("DOE") related to the Company's
participation  in  guaranteed  student  loan  programs.  Because of  anticipated
declines  in  loan  recoveries and continued loan growth, management expects net
charge-offs to grow in future periods.

     A minimal  provision  for  possible  loan losses of $73,000 was recorded in
1998 by pooled entities prior to acquisition.  A portion of the $2.1 million net
reserve  reduction in 1997  reflected  the reversal of excess  reserves that had
previously  been  established to cover a settlement of claims by the DOE related
to the Company's  participation in guaranteed student loan programs. The reserve
reduction in 1996 resulted  from overall  improvement  in asset quality  coupled
with large net recoveries from previously charged-off loans.

    Non-performing  assets consist of non-performing loans and foreclosed assets
and are  shown  for the  five  years  ending  December  31,  1998  in  Table  6.
Non-performing  assets at year-end  1998 totaled $16.2  million,  an increase of
$1.4 million, or 10%, from year-end 1997, after showing steady declines over the
past five  years.  However,  non-performing  assets as a percent  of loans  plus
foreclosed assets declined to .49% from .51% at the end of 1997.

<TABLE>
<CAPTION>

TABLE 6.  NON-PERFORMING ASSETS
-------------------------------------------------------------------------------------------------------------------------
                                                                                December 31
-------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                1998          1997           1996            1995            1994
-------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>            <C>             <C>             <C>        
Loans accounted for on a non-accrual basis       $  11,497    $    9,335     $     9,383     $    11,839     $    19,015
Restructured Loans                                   2,660         2,342           3,029           2,888           3,317
-------------------------------------------------------------------------------------------------------------------------
   Total non-performing loans                    $  14,157    $   11,677     $    12,412     $    14,727     $    22,332
Foreclosed assets                                    2,004         3,048           4,835           8,056           8,338
-------------------------------------------------------------------------------------------------------------------------
   Total non-performing assets                   $  16,161    $   14,725     $    17,247     $    22,783     $    30,670
-------------------------------------------------------------------------------------------------------------------------
Loans 90 days past due still accruing            $   3,765    $    2,142     $     3,149     $     2,084     $     1,666
-------------------------------------------------------------------------------------------------------------------------
Ratios
Non-performing assets to loans plus
     foreclosed assets                                 .49 %         .51 %           .69 %          1.12 %          1.93 %
Reserve for possible loan losses to
     non-performing loans                           284.54 %      381.46 %        354.74 %        307.66 %        192.47 %
Loans 90 days past due still accruing to loans         .12 %         .07 %           .13 %           .10 %           .11 %
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

     At December 31, 1998,  loans  internally  classified as having above normal
credit risk increased  approximately $71 million, or 83%, to $157 million, or 5%
of total loans,  from a historically  low level of 3% of total loans at December
31, 1997. This increase is in part the result of four large  commercial  credits
totaling  approximately $51 million, which were classified in the latter part of
1998. The classification  totals at December 31, 1998 were as follows:  loans as
to  which  there  are  serious  doubts  as  to  full  repayment,  $8.5  million;
substandard  loans with  well-defined  weaknesses that, if not collected,  would
likely result in some loss, $69.4 million;  and loans with risk  characteristics
that  indicate  potential  weaknesses  that  warrant  special  attention,  $79.2
million.   Management   continually  reviews  the  loan  portfolio  to  identify
potentially weak or deteriorating credits.

INVESTMENT IN SECURITIES

     Total  investment  in  securities  was $1.34  billion at December 31, 1998,
compared to $1.47  billion at year-end  1997,  a decrease of $131  million.  The
average total investment  portfolio was $1.30 billion in 1998, compared to $1.57
billion in 1997, a decrease of $268 million.  Funds from investment  maturities,
in particular U.S. Treasury securities, were used to fund increased loan demand.
The weighted average maturity of the overall securities  portfolio was 47 months
at December 31, 1998. The weighted  average  tax-equivalent  portfolio yield was
6.37% at December 31, 1998, a decrease of 31 basis points from

                              Page 11 of 66 Pages

<PAGE>
6.68% at December 31, 1997, reflecting the maturities  of older  higher-yielding
securities.  Information about investment maturities  at  December  31, 1998  is
shown in Table 7.
<TABLE>
<CAPTION>

TABLE 7.  DISTRIBUTION OF INVESTMENT MATURITIES

------------------------------------------------------------------------------------------------------------------------------------
                                                     December 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                               MATURITY
------------------------------------------------------------------------------------------------------------------------------------


                             One Year and Less     Over One Through      Over Five Through     Over Ten Years            Total
                                                      Five Years             Ten Years           
------------------------------------------------------------------------------------------------------------------------------------
                              Amount   Yield        Amount    Yield       Amount   Yield       Amount   Yield       Amount    Yield
------------------------------------------------------------------------------------------------------------------------------------
                                                       SECURITIES HELD TO MATURITY
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>         <C>      <C>          <C>     <C>          <C>      <C>          <C>     <C>          <C>   
U.S. Treasury securities    $   80,056  6.77 %   $  103,214   6.06 %  $       -       - %   $       -       - %  $  183,270   6.37 %
U.S. Agency securities          60,589  6.46        273,844   5.80       95,689    6.47         1,013    6.96       431,135   6.04
Mortgage-backed securities(1)   14,318  6.45        109,448   6.24      155,456    6.34       174,323    6.42       453,545   6.35
Obligations of state and
    political subdivisions(2)   13,668  7.60         64,561   7.96       51,342    7.70        29,115    7.18       158,686   7.70
Federal Reserve stock and
    other corporate securities(3)    -     -              -      -            -       -         8,081       -         8,081      -
------------------------------------------------------------------------------------------------------------------------------------
    Total                   $  168,631  6.70 %   $  551,067   6.19 %  $ 302,487    6.61 %   $ 212,532    6.28 %  $1,234,717   6.38 %
------------------------------------------------------------------------------------------------------------------------------------
                                                     SECURITIES AVAILABLE FOR SALE (4)
------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury securities    $   17,089  6.21 %   $    3,050   6.41 %  $       -       - %   $       -       - %  $   20,139   6.37 %
U.S. Agency securities           5,033  5.71         26,086   6.43        4,171    7.95         5,981    7.11        41,271   6.04
Mortgage-backed securities (1)  14,327  7.11         13,431   5.96        3,432    6.02        11,211    6.42        42,401   6.35
Obligations of state and
    political subdivisions (2)      71 10.41              -      -          350    9.38           531    9.73           952   7.70
Other corporate securities (3)       -     -              -      -          598    5.72             -       -           598   5.72
------------------------------------------------------------------------------------------------------------------------------------
    Total                   $   36,520  6.50 %   $   42,567   6.28 %  $   8,551    7.08 %   $  17,723    6.75 %  $  105,361   6.24 %
------------------------------------------------------------------------------------------------------------------------------------
(1) Distributed by contractual maturity without regard to repayment schedules or projected prepayments.
(2) Tax exempt yields are expressed on a tax-equivalent basis.
(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>



     Securities  classified as held to maturity continued to constitute the bulk
of  investment  in  securities  and  represented  92%  of the  total  investment
portfolio  at the end of 1998,  compared  to 86% at the end of 1997.  Securities
held to  maturity  represent  those  securities  that the Bank  both  positively
intends  and has the ability to hold to  maturity  and are carried at  amortized
cost in the consolidated balance sheets.

     Securities classified as available for sale constituted approximately 8% of
the total  investment  portfolio  at  year-end  1998 and 14% at the end of 1997.
These securities are reported at their estimated fair values in the consolidated
balance sheets. The net unrealized loss on available for sale securities was $.3
million at  year-end  1998,  compared  to an  unrealized  gain of $.4 million at
1997's  year-end.  These gains and losses are  recognized,  net of tax, in other
comprehensive  income and in accumulated other comprehensive  income, a separate
component of shareholders' equity.

     The  Bank  does not  normally  maintain  a  securities  trading  portfolio.
However,  immaterial amounts of trading account securities are held occasionally
for short  periods  while  buying and selling  securities  for  customers.  Such
securities,  if any, are included in other  assets in the  consolidated  balance
sheets.

     At December 31, 1998, the Bank held no investment in securities of a single
issuer,  other than U.S. Treasury and U.S. agency securities and mortgage-backed
securities  issued or  guaranteed  by U.S.  agencies,  that  exceeded 10% of its
shareholders'  equity.  The Bank has not had  investments or  participations  in
financial  instruments or agreements  whose values are linked to

                              Page 12 of 66 Pages


<PAGE>

or  derived  from  changes  in  the values of some  underlying  assets 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.  Management
continues  to evaluate the use of and need for such  instruments  as part of its
asset/liability and liquidity management processes.

DEPOSITS AND SHORT-TERM BORROWINGS

     Deposits were $4.3 billion at December 31, 1998. Average deposits were $3.9
billion in 1998, a 7% increase over 1997. The most  significant  growth was in a
new premium money market  product.  This growth was  partially  offset by slight
declines in NOW and savings deposits. As shown in Table 8, time deposits,  which
are primarily  certificates of deposits,  rose 2% in 1998 and represented 33% of
total deposits. The Bank continued to show growth in non-interest-bearing demand
deposits, with an increase of 9% over 1997. Average noninterest-bearing deposits
were 28% of total average  deposits  during 1998, up from 27% in 1997.  Shown in
Table 9 are the maturities of time deposits at December 31, 1998.

<TABLE>
<CAPTION>

TABLE 8.  AVERAGE DEPOSITS
-----------------------------------------------------------------------------------------------------------------------------------

(dollars in thousands)                                 1998                             1997                          1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>           <C>               <C>         <C>               <C>   
Non-interest-bearing demand deposits        $ 1,083,530      27.56%        $    996,888      27.09%      $    946,063      26.51%
Savings deposits                                508,180      12.93              542,901      14.76            557,265      15.61
NOW and Money Market deposits                 1,046,039      26.62              867,878      23.58            804,952      22.55
Time deposits                                 1,292,472      32.89            1,272,165      34.57          1,260,838      35.33
-----------------------------------------------------------------------------------------------------------------------------------
        Total average deposits              $ 3,930,221     100.00%        $  3,679,832     100.00%       $ 3,569,118     100.00%
-----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>
TABLE 9.  MATURITIES OF TIME DEPOSITS
-----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
-----------------------------------------------------------------------------------------------------------------------------------

Remaining maturity of certificates of deposit of $100,000 or more
     as of December 31, 1998
<S>                                                                                                                   <C>         
          Three months or less                                                                                        $    331,571
          Over three months through twelve months                                                                          189,883
          Over twelve months                                                                                                36,858
-----------------------------------------------------------------------------------------------------------------------------------
               Total certificates of deposit of $100,000 or more                                                           558,312
-----------------------------------------------------------------------------------------------------------------------------------

Remaining maturity of certificates of deposit of less than $100,000
     as of December 31,1998
          Three months or less                                                                                             206,706
          Over three months through twelve months                                                                          372,117
          Over twelve months                                                                                               182,487
-----------------------------------------------------------------------------------------------------------------------------------
               Total certificates of deposit of less than $100,000                                                         761,310
-----------------------------------------------------------------------------------------------------------------------------------
               Total certificates of deposit                                                                          $  1,319,622
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Short-term  borrowings  consist of purchases of federal  funds and sales of
securities  under  repurchase  agreements  and were $355 million at December 31,
1998.  These  short-term  borrowings are solely the result of transactions  with
customers and do not include brokered funds.  Average  short-term  borrowings in
1998 were $338 million,  compared to $410 million in 1997.  This decrease was in
part the result of a decline in the number of smaller correspondent banks in the
Bank's market area. In the normal course of business,  funds are purchased  from
downstream correspondent banks, which have declined over the year due to various
bank acquisitions, including those made by the Company.

                               Page 13 of 66 Pages



<PAGE>




LIQUIDITY

     The object of liquidity management is to ensure that funds are available to
meet cash flow requirements of depositors and borrowers,  while at the same time
meeting the cash flow needs of the Company and the Bank.  Liquidity  is provided
by a stable base of funding  sources,  including low cost core deposits,  and an
adequate  level of maturing  assets.  The company  models  liquidity  needs on a
periodic basis to determine the best strategy of  investments  and borrowings to
meet those needs.

     The Bank had over $1.1 billion in unfounded loan commitments outstanding at
December 31, 1998, a slight decrease from the level at 1997's year-end.  Note 13
shows the details of these and other  unfunded  commitments at December 31, 1998
and 1997. Because commitments and unused lines of credit may, and many times do,
expire  without  being drawn upon,  unfunded  balances do not  represent  actual
future liquidity requirements.

     In order to  ensure  adequate  liquidity,  the  Company  has  developed  an
investment  strategy,   which  plans  a  level  of  investment  maturities  that
management considers adequate to meet funding needs. In addition the Company and
the Bank also have access to external funding sources in the financial markets.

ASSET/LIABILITY MANAGEMENT

    The  objective of the Company's  asset/liability  management is to implement
strategies  for the funding and  deployment of its financial  resources that are
expected to maximize  soundness and profitability over time at acceptable levels
of risk.

    Interest  rate   sensitivity  is  the  potential  impact  of  changing  rate
environments  on both net  interest  income and cash flows.  The Company and the
Bank  use a number  of  methods  to  measure  rate  sensitivity,  including  gap
analysis,  net interest income  simulations and monitoring the economic value of
equity.

     The simplest  measure of interest rate  sensitivity is gap analysis,  which
details the  contractual  maturities,  prepayments  or repricing  mismatches for
assets and liabilities  within specified time periods.  Gap analysis has several
limitations, including the fact that it is a point in time measurement. Table 10
demonstrates the Company's static gap position as of December 31, 1998.

                               Page 14 of 66 Pages



<PAGE>
<TABLE>
<CAPTION>

TABLE 10.  INTEREST RATE SENSITIVITY

------------------------------------------------------------------------------------------------------------------------------------
                                      By Maturity or Repricing Dates at December 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
                                               0-30           31-90        91-180        181-365     After     Non-Interest
(dollars in millions)                          Days           Days          Days           Days     1 Year       Bearing       Total
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S>                                          <C>             <C>          <C>           <C>         <C>         <C>        <C>      
Securities available for sale                $      8        $    16      $     16      $     13    $    52     $     -    $     105
Securities held to maturity                        29             66            76           108        956           -        1,235
Loans                                             714            338           413           534      1,272           -        3,271
Federal funds sold and short-term investments     152              -             -             -          -           -          152
Other assets                                        -              -             -             -          -         449          449
------------------------------------------------------------------------------------------------------------------------------------
     Total assets                            $    903        $   420      $    505      $    655    $ 2,280     $   449    $   5,212
------------------------------------------------------------------------------------------------------------------------------------
SOURCES OF FUNDS

Savings Deposits                             $     14        $     -      $      -      $      -    $   479     $     -    $     493
NOW and Money Market Deposits                   1,205              -             -             -          -           -        1,205
Time Deposits                                     279            255           293           272        220           -        1,319
Short-Term Borrowings                             355              -             -             -          -           -          355
Non-interest bearing Demand Deposits                -              -             -             -          -       1,240        1,240
Other liabilities                                   -              -             -             -          -          39           39
Shareholders' equity                                -              -             -             -          -         561          561
------------------------------------------------------------------------------------------------------------------------------------
     Total Sources of Funds                  $  1,853        $   255      $    293      $    272    $   699     $ 1,840    $   5,212
------------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SENSITIVITY GAP                $   (950)       $   165      $    212      $    383    $ 1,581  $   (1,391)

CUMULATIVE INTEREST RATE SENSITIVITY GAP     $   (950)       $  (785)     $   (573)     $   (190)   $ 1,391  $        -


CUMULATIVE INTEREST RATE
SENSITIVITY GAP AS A PERCENT
OF TOTAL EARNING ASSETS                        (19.94) %      (16.48) %     (12.03)%       (3.99)%    29.20 %    
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Table 10 indicates that the company is liability sensitive. However, static
gap  analysis  does not take into  consideration  the  actions  that  management
intends to take to  maximize  net  interest  income  over  time.  The assets and
liabilities of the Company are  constantly  managed to limit changes in earnings
due to changes in interest rates.

    A more  sophisticated  tool used by the  Company to test its  interest  rate
sensitivity is a net interest  simulation model, which tests the Bank's reaction
to  various  economic   environments.   The  model's   assumptions   incorporate
management's  expectations  regarding  such factors as loan and deposit  growth,
pricing,  prepayment speeds and spreads between interest rates. In general,  the
simulations  indicate that the Company is actually  moderately  asset sensitive.
Balance  sheet  simulations  were run at  year-end  to  determine  the impact of
various rate scenarios on net interest income for the next twelve-month  period.
A "base case"  scenario  used a rate forecast  which showed a slight  decline in
rates  throughout 1999 totaling 35 basis points.  The results of this simulation
reveal an increase in net interest  income of  approximately  $12.3 million,  or
5.6%,  from 1998 levels after  consideration  of projected  asset and  liability
volumes.  When the balance sheet  simulations  were subjected to parallel up and
down  shifts of 100 to 300 basis  points,  these  rate  shocks  showed an annual
impact on the Company's 1999 net interest income from a positive $5.6 million at
300 basis points up to a negative  $19.0  million at 300 basis points down.  The
results of these  simulations show that the Bank was within  acceptable  limits,
considering established guidelines.

     The  method  used  for  measuring  longer-term  interest  rate  risk is the
economic value of equity analysis.  At year-end 1998, the Company's  sensitivity
was acceptable at all levels of rate shock simulation.

    The actual  impact of  changing  interest  rates on net  interest  income is
dependent upon many factors  including the growth of earning assets,  the mix of
earning  assets and  interest-bearing  liabilities,  the timing of  repricing of
assets and  liabilities,  the magnitude of interest rate changes,  interest rate
spreads  and the  level of  success  of  asset/liability  management  strategies
implemented.

                              Page 15 of 66 Pages

<PAGE>
     Changes in interest rates affect the fair values of financial  instruments.
Note 14  contains  information  regarding  these fair  values.  The  differences
between  fair values and book values were  primarily  the result of  differences
between contractual and market interest rates at each year-end.  Fluctuations in
fair values will occur as interest rates change.

IMPACT OF INFLATION AND CHANGING PRICES

     The  majority  of assets and  liabilities  of a financial  institution  are
monetary  in nature.  Inflation  and  changing  prices may have an impact on the
growth  of total  assets  in the  banking  industry  and the  resulting  need to
increase capital at higher than normal rates in order to maintain an appropriate
equity  to assets  ratio.  Changing  prices  also  affect  other  expenses  that
fluctuate as economic environments change.

     Management  believes the most significant  impact of inflationary  economic
cycles on  financial  results  is the  Company's  ability to react to changes in
interest rates. Interest rates do not necessarily move in the same direction, or
at the same magnitude,  as the prices of other goods and services.  As discussed
above,  management  attempts to maintain a balance in its maturity and repricing
structure  to  minimize  the  effects of economic  cycles on the  Company's  net
interest income.

CAPITAL ADEQUACY

     At December  31,  1998,  shareholders'  equity to total  assets was 10.76%,
compared to 10.97% in 1997. The Company's risk-based regulatory ratios, shown in
Table 11,  declined in 1998.  These  declines  were  consistent  with the growth
between periods in total  risk-weighted  assets.  Loan growth,  which was partly
funded by maturities of generally lower risk-weighted investment securities, was
the main factor contributing to the rise in risk-weighted assets.
<TABLE>
<CAPTION>

TABLE 11.  RISK-BASED CAPITAL AND CAPITAL RATIOS
---------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                         1998            1997           1996           1995           1994
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>             <C>            <C>            <C>         
Tier 1 capital                                        $     524,028   $     505,470   $    461,379   $    424,731   $    366,082
Tier 2 capital                                               40,282          41,380         37,474         30,029         21,822
---------------------------------------------------------------------------------------------------------------------------------
     Total capital                                    $     564,310   $     546,850   $    498,853   $    454,760   $    387,904
---------------------------------------------------------------------------------------------------------------------------------
Risk-weighted assets                                  $   3,794,290   $   3,310,400   $  2,997,914   $  2,402,325   $  1,745,742
---------------------------------------------------------------------------------------------------------------------------------
Ratios
     Leverage ratio                                           10.39%          10.83%         10.60%          9.75%          9.53%
     Tier 1 capital                                           13.81%          15.27%         15.39%         17.68%         20.97%
     Total capital                                            14.87%          16.49%         16.64%         18.93%         22.22%
     Equity ratio                                             10.76%          10.97%         10.33%         10.29%          9.74%
     Tangible equity ratio                                    10.05%          10.57%          9.87%          9.72%          9.07%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

    The regulatory  capital  ratios of the Bank far exceed the minimum  required
ratios,  and the Bank has been  categorized  as  "well-capitalized"  in the most
recent notice received from its primary regulatory agency.

YEAR 2000 REMEDIATION

    The Year 2000 situation arose because many existing  computer  programs used
only two  digits to  identify  a year in the date  field.  These  programs  were
designed and developed without  considering the impact of the upcoming change in
the  century.  Inherent  risks to the  Company  with  respect  to the Year  2000
situation  include potential losses related to data processing and other systems
that may not operate as expected,  disruption  of Company  operations  resulting
from   technological   malfunctions   from   within   the   Company's   internal
communications and other processing  systems,  business problems associated with
key third party vendors and other  external  service  providers  that may not be
Year 2000 system compliant, credit quality issues that may arise with respect to
significant  customers  that may not be Year 2000  system  compliant,  liquidity
issues arising from potential  withdrawals of cash by customers during late 1999
and early 2000,  as well as other  business and  economic  risks that may result
from the  pervasive  impact that the Year 2000  situation  could have on overall
social and economic conditions.

                              Page 16 of 66 Pages

<PAGE>
     In response to Year 2000 issues, a company-wide task force developed a plan
to review  and test the  Company's  systems  and other  business  operations  in
relation  to Year  2000  compliance.  To date,  the task  force  has  identified
appropriate  remediation  action steps, and system revisions and/or upgrades are
being made,  where  appropriate.  These  remediation  action  steps also include
non-information  technology  systems that employ  embedded  technology,  such as
facilities control systems.

     The  Company  had  its  internal   mission-critical  systems  substantially
remediated  and  tested  for  Year  2000  compliance  by the  end of  1998.  All
mission-critical  systems arc planned to be placed back into production by March
1999.  Remediation  and testing of other  systems and  business  operations  are
underway and are  anticipated  to be fully  compliant  and in production by June
1999.  Approximately  65%  of  mission-critical  systems  were  compliant  as of
December  31, 1998.  Processes  and  procedures  are in place to ensure that all
projects  undertaken in the interim deliver Year 2000 compliant  solutions,  all
future third party hardware and software  acquisitions  are Year 2000 compliant,
and all commercial  third-party  service  providers are queried  regarding their
Year 2000 compliance plans.

    Non-interest  expense in 1998 includes  direct costs  incurred in connection
with  the  Company's   efforts  to  ensure  that  its  operations  will  not  be
significantly  affected by the use of the year 2000 in its  computer  systems or
other systems or in the systems of its suppliers and customers.  The majority of
systems  remediation costs have been borne by third party vendors who supply the
software under annual  maintenance fees. The Company's costs for installation of
vendor-remediated   software   fall  within  the  business  as  usual"   budget.
Expenditures for vendor  maintenance and specific  software costs related to the
Year 2000 items have been  approximately  $1 million.  Internal costs associated
with Year 2000 compliance were approximately $1.6 million in 1998. The Company's
remaining  cost of system  remediation  is  estimated to be an  additional  $1.5
million. This estimate includes an additional $.9 million of internal costs.

     The Bank started  working with certain of its borrowing  customers in early
1998 relative to understanding and assessing the customers'  progress concerning
the Year 2000 situation. These customers represent most of the Bank's investment
in commercial  loans and assert that they are compliant  with Year 2000 needs or
will be by the middle of 1999.  The small  number of  customers  who do not have
adequate  plans to assure  compliance  with Year 2000 needs are receiving  extra
attention.  This  attention  includes  internal  training of the Bank's  account
officers on methods to assist  customers as well as protect the Bank's interests
and counseling  directly with customers to assist them in avoiding disruption to
their businesses.

     The Company is also  dependent  upon  customers and others for deposits and
other funding sources to fund its assets.  In a process similar to that used for
borrowing  customers,  the  Company  sent  assessment  questionnaires  to  major
depositors and  investment  counter-parties.  These  responses have been used to
assess the possible  impact from Year 2000 problems on the Company's  ability to
secure  sufficient  funding to support its  operations and have been included in
its asset/liability and liquidity modeling and planning.

     The Company has also initiated formal  communications  with its significant
suppliers  to  determine  the extent to which it is  vulnerable  to those  third
parties' failures to remediate their own Year 2000 issues. However, there can be
no assurance  that the systems of other  organizations  upon which the Company's
operations rely, including essential utilities and telecommunications providers,
will be timely converted,  or that a failure to convert by another company, or a
conversion that is  incompatible  with the Company's  systems,  would not have a
materially adverse effect on the Company.

    Because there is no generally  accepted  definition of "Year 2000 Compliant"
and the ability of any organization's systems to operate reliably after midnight
on December 31, 1999 is  dependent  upon factors that may be outside the control
of, or unknown to, that organization, no certification of compliance is possible
by any business.  For example,  in Securities  and Exchange  Commission  ("SEC")
Staff Legal  Bulletin  No. 5, the SEC opined  that "it is not,  and will not, be
possible for any single entity or collective enterprise to represent that it has
achieved  complete Year 2000  compliance  and thus to guarantee its  remediation
efforts.  The problem is simply too complex for such a claim to have legitimacy.
Efforts to solve Year 2000  problems are best  described as 'risk  mitigation'."
Consequently,  the Company  cannot so  "certify"  either.  Although  the Company
believes the  likelihood  of any or all of the above risks  occurring to be low,
specific  contingency  plans have been  developed  in the event that  efforts to
remediate the Company's systems are not fully successful or are not completed in

                              Page 17 of 66 Pages

<PAGE>

accordance  with current  expectations.  The  contingency  plans are designed to
safeguard the Company  under various Year 2000  scenarios and are an addition to
the  Company's  existing  business  resumption  plans.  While  there  can  be no
assurance  that the Company will not be  materially  adversely  effected by Year
2000 problems,  it is committed to ensuring that it is fully Year 2000 compliant
and believes its plans adequately address the above-mentioned risks.

RESULTS OF OPERATIONS

NET INTEREST INCOME

     Tax-equivalent net interest income increased $11.6 million,  or 6%, in 1998
from 1997, and the net interest  margin,  which is  tax-equivalent  net interest
income as a percent of average earning assets, increased to 4.92% from 4.88%. In
1997,  tax-equivalent  net interest income increased $17.1 million,  or 9%, over
1996,  and  the  net  interest  margin   increased  from  4.68%  to  4.88%.  The
improvements  in both net  interest  income  and the net  interest  margin  were
primarily  the result of loan  growth and  increases  in  interest-free  funding
sources. Tables 12 and 13 show the factors contributing to these changes and the
components of those changes.

     The mix of earning assets  continued to improve from 1996 to 1998. In 1997,
average  earning  assets grew 5%,  while  average  loans rose 20%,  and in 1998,
average loan growth of 14% continued to exceed  average  earning asset growth of
5%. As a percent of earning assets,  average loans increased to 67% in 1998 from
62% in 1997  and 54% in  1996.  Increases  were  experienced  in  virtually  all
categories of loans and  reflected the economic  activity and loan demand in the
market areas that the Company serves.

     The loan  growth was mainly  funded by both  reductions  in the  securities
portfolio and steady deposit growth.  The average  securities  portfolio fell by
17% in 1998 and 13% in 1997.  Average  securities  were 29% of  average  earning
assets in 1998, down from 37% in 1997.

     Both demand and  interest-bearing  deposit growth supported average earning
asset growth in 1998 and 1997. Average demand deposits grew 9% in 1998 and 5% in
1997.  Average  interest-bearing  deposits grew 6% in 1998 and 2% in 1997 in all
categories except savings deposits.

     The net interest spread, which is the yield on earning assets less the cost
of interest-bearing  liabilities,  remained stable from 1997 to 1998, increasing
by only one basis point to 3.83% in 1998.  This  stability  reflected the active
management  of  interest-bearing  deposit  rates to offset the  effects of lower
earning asset yields,  which  decreased from 7.77% in 1997 to 7.69% in 1998. The
net interest spread increased from 3.66% in 1996 to 3.82% in 1997,  reflecting a
19 basis  point  increase  in the  yield on  earning  assets,  while the cost of
interest-bearing liabilities only increased three basis points to 3.95%.

                               Page 18 of 66 Pages



<PAGE>
<TABLE>
<CAPTION>

TABLE 12.  SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME(TE) AND INTEREST RATES (1)
------------------------------------------------------------------------------------------------------------------------------------

(dollars in thousands)                                 1998                            1997                          1996
------------------------------------------------------------------------------------------------------------------------------------
                                          Average                         Average                       Average
                                          Balance    Interest    Rate     Balance    Interest   Rate    Balance    Interest   Rate
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
EARNING ASSETS
<S>                                      <C>         <C>         <C>     <C>         <C>        <C>    <C>         <C>        <C>   
Loans (tax-equivalent)(1) (2)            $2,972,664  $ 247,287   8.32 %  $2,609,275  $ 224,798  8.62 % $2,174,400  $ 191,671  8.81 %
------------------------------------------------------------------------------------------------------------------------------------

U.S. Treasury securities                    263,710     17,010   6.45       520,404     31,063  5.97      768,681    43,780   5.70
U.S. agency securities                      435,925     28,024   6.42       558,306     35,453  6.35      557,433    34,156   6.13
Mortgage-backed securities                  450,436     28,138   6.25       331,175     21,194  6.40      315,870    20,243   6.41
Obligations of states and political
   subdivisions (tax-equivalent) (1)        140,873     11,396   8.08       147,935     12,213  8.25      148,746    12,244   8.23
Federal Reserve stock and other
   corporate securities                      10,219        573   5.61        11,323        641  5.66        8,081       507   6.27 %
---------------------------------------------------------------------- -------------------------------------------------------------
    Total investment in securities(3)     1,301,163     85,141   6.54     1,569,143    100,564  6.41    1,798,811   110,930   6.17
------------------------------------------------------------------------------------------------------------------------------------
Federal funds sold and short-term
   investments                              155,804      8,411   5.39        50,792      3,103  6.11       70,332     3,842   5.46
------------------------------------------------------------------------------------------------------------------------------------
    Total earning assets                  4,429,631  $ 340,839   7.69 %   4,229,210  $ 328,465  7.77 %  4,043,543 $ 306,443   7.58 %
------------------------------------------------------------------------------------------------------------------------------------
NON-EARNING ASSETS
   Other assets                             470,525                         446,339                       442,933
   Reserve for possible loan losses         (43,068)                        (44,554)                      (47,804)
------------------------------------------------------------------------------------------------------------------------------------
    Total assets                         $4,857,088                      $4,630,995                    $4,438,672
------------------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES
   Savings deposits                      $  508,180  $  12,070   2.38 %  $  542,901  $  14,301   2.63 % $ 557,265 $  15,026   2.70 %
   NOW and money market deposits          1,046,039     29,602   2.83       867,878     22,368   2.58     804,952    18,458   2.29
   Time deposits                          1,292,472     65,786   5.09     1,272,165     65,123   5.12   1,260,838    65,747   5.21
-----------------------------------------------------------------------------------------------------------------------------------
    Total interest-bearing deposits       2,846,691    107,458   3.77     2,682,944    101,792   3.79   2,623,055    99,231   3.78
------------------------------------------------------------------------------------------------------------------------------------

    Short-term borrowings                   337,544     15,523   4.59       409,875     20,453   4.99     368,511    18,137   4.92
------------------------------------------------------------------------------------------------------------------------------------
    Total interest-bearing liabilities   $3,184,235  $ 122,981   3.86 %  $3,092,819  $ 122,245   3.95 %$2,991,566 $ 117,368   3.92 %
------------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST-BEARING DEPOSITS AND SHAREHOLDERS' EQUITY
   Demand deposits                              1,083,530                         996,888                       946,063
   Other liabilities                               40,517                          37,963                        35,696
   Shareholders' equity                           548,806                         503,325                       465,347
------------------------------------------------------------------------------------------------------------------------------------
    Total liabilities and shareholders'
      equity                             $4,857,088                      $4,630,995                    $4,438,672
------------------------------------------------------------------------------------------------------------------------------------

    Net interest income and margin
     (tax-equivalent)(1)                               217,858   4.92 %              $ 206,220  4.88 %           $  189,075   4.68 %
------------------------------------------------------------------------------------------------------------------------------------
    Net earning assets and spread        $1,245,396              3.83 %  $1,136,391             3.82 %           $1,051,977   3.66 %
------------------------------------------------------------------------------------------------------------------------------------
<FN>
    (1)Tax-equivalent amounts are calculated using a marginal federal income tax rate of  35%.
    (2)Average balance includes non-accruing loans of $10,679, $9,208 and $11,042 respectively, in 1998, 1997 and 1996.
    (3)Average balance excludes  unrealized  gain or loss on securities available for sale.
</FN>
</TABLE>
                               Page 19 of 66 Pages

<PAGE>
<TABLE>
<CAPTION>
TABLE 13. SUMMARY OF CHANGES IN NET INTEREST INCOME(TE)(1)
------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                     1998 compared to 1997                     1997 compared to 1996
                                                    --------------------------------------------------------------------------------
                                                             Due To                                  Due To
                                                            Change In         Total Increase       Change In          Total Increase
                                                    -------------------------                ----------------------
                                                      Volume          Rate      (Decrease)   Volume         Rate        (Decrease)
------------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME(TE)
<S>                                                 <C>           <C>           <C>        <C>           <C>            <C>       
      Loans (tax-equivalent)(1)(2)                  $  30,443     $  (7,954)    $ 22,489   $  37,554     $ (4,427)      $   33,127
------------------------------------------------------------------------------------------------------------------------------------

      U.S. Treasury securities                        (16,384)        2,331      (14,053)    (14,732)       2,015          (12,717)
      U.S. government agency securities                (7,862)          433       (7,429)         54        1,243            1,297
      Mortgage-backed securities                        7,461          (517)       6,944         980          (29)             951
      Obligations of states and political
         subdivisions (tax-equivalent) (1)               (575)         (242)        (817)        (67)          36              (31)
      Federal reserve stock and other
         corporate securities                             (62)           (6)         (68)        187          (53)             134
------------------------------------------------------------------------------------------------------------------------------------
            Total investment in securities            (17,422)        1,999      (15,423)    (13,578)       3,212          (10,366)
------------------------------------------------------------------------------------------------------------------------------------

      Federal funds sold and short-term investments     5,709          (401)       5,308      (1,156)         417             (739)
------------------------------------------------------------------------------------------------------------------------------------
            Total interest income (tax-equivalent)(1)  18,730        (6,356)      12,374      22,820         (798)          22,022
------------------------------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE
      Savings deposits                                   (879)       (1,352)      (2,231)       (383)        (342)            (725)
      NOW and money market deposits                     4,896         2,338        7,234       1,512        2,398            3,910
      Time deposits                                     1,035          (372)         663         587       (1,211)            (624)
------------------------------------------------------------------------------------------------------------------------------------
            Total interest-bearing deposits             5,052           614        5,666       1,716          845            2,561
------------------------------------------------------------------------------------------------------------------------------------

      Short-term borrowings                            (3,413)       (1,517)      (4,930)      2,061          255            2,316
------------------------------------------------------------------------------------------------------------------------------------
                Total interest expense                  1,639          (903)         736       3,777        1,100            4,877
------------------------------------------------------------------------------------------------------------------------------------

           Changes in net interest income
              (tax-equivalent)(1)                   $  17,091     $  (5,453)    $ 11,638   $  19,043     $ (1,898)      $   17,145
------------------------------------------------------------------------------------------------------------------------------------
<FN>

         (1)Tax-equivalent amounts are calculated using a marginal federal income tax rate of 35%.
         (2)Interest recognized on a cash basis on non-accruing loans and prior cost recovery interest currently recognized on
            non-accruing and certain accruing loans was $1,216, $1,645, and $3,729 in 1998, 1997 and 1996, respectively.
</FN>
</TABLE>


                               Page 20 of 66 Pages



<PAGE>




PROVISION FOR POSSIBLE LOAN LOSSES

    The Company had a minimal provision of $73,000 in 1998 from pooled entities.
In 1997,  there was a reserve  reduction  of $2.1  million,  following a reserve
reduction in 1996 of $3.6 million.  Management continually monitors the adequacy
of the Company's  reserve for possible  loan losses based upon defined  internal
credit policies and, if deemed appropriate based on the Company's loan portfolio
structure  and  potential  changes  in  economic  conditions,   additional  loss
provisions may be recorded in future periods.  Mainly due to expected  continued
growth  in the  loan  portfolio  and an  expected  decline  in loan  recoveries,
management  expects  to  begin  providing  for  possible  loan  losses  in 1999,
depending  upon  the  results  of  reserve  adequacy  analysis  to be  conducted
throughout the year.

    For  discussion  of the reserve for possible loan losses,  net  charge-offs,
non-performing  assets and general asset quality,  see the Loans and Reserve for
Possible Loan Losses section of this discussion.

NON-INTEREST INCOME

     Table 14 shows the components of non-interest  income for each of the three
years ending December 31, 1998, along with the percent changes between years for
each component. Non-interest income in 1998 increased $6.6 million, or 12%, from
1997, and $9.4 million, or 21%, from 1996 to 1997.

<TABLE>
<CAPTION>
TABLE 14.  NON-INTEREST INCOME
---------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                           1998    % Change            1997     % Change         1996
---------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>           <C>           <C>            <C>        <C>    
Service charges on deposit accounts                           $25,162       3.32%         $24,354        6.97 %     $22,768
Credit card income                                             10,075      35.14            7,455       25.91         5,921
Trust service fees                                              6,739      36.92            4,922       17.72         4,181
Net gain on sales and other
  dispositions of foreclosed assets                             5,897     (11.20)           6,641      112.92         3,119
ATM fees                                                        3,446      14.07            3,021       28.00         2,360
Secondary market mortgage fees                                  2,230      99.29            1,119       36.13           822
International services income                                   1,895       4.06            1,821       (.27)         1,826
Investment services income                                      1,466      41.64            1,035      (4.17)         1,080
Other fees and charges                                          1,755     (10.23)           1,955        8.49         1,802
Other operating income                                          1,267     (31.37)           1,846       94.73           948
---------------------------------------------------------------------------------------------------------------------------
Total non-interest income before securities transactions      59,932       10.64           54,169       20.84        44,827
Securities transactions                                          839        (a)                12        (a)              2
---------------------------------------------------------------------------------------------------------------------------
Total non-interest income                                    $60,771       12.16%         $54,181       20.86%      $44,829
---------------------------------------------------------------------------------------------------------------------------
(a)  Not meaningful.
</TABLE>


     Income from service charges on deposit accounts  increased 3% in 1998 after
an  increase  of 7% in 1997.  The  increase  from 1996 to 1997 was mainly due to
changes in the rate schedules for certain deposit  services.  The lower increase
from 1997 to 1998 reflects  increased  deposit  business and the assimilation of
acquisitions  to Whitney's rate  schedules,  somewhat offset by the migration of
customers to Whitney SELECT and other  products  offering  bundled  services and
lower service charges.

     Credit card income,  the second-largest  component of non-interest  income,
grew 35% in 1998 after increasing 26% in 1997. These large increases  reflect an
increasing  customer base from  acquisitions and successful  marketing  efforts,
more merchant processing customers and activity, and healthy retail economies in
the Company's market areas.  Similarly,  trust service fees grew 37% in 1998 and
18% in 1997 due to an  increased  customer  base and strong  performance  in the
financial markets.

                              Page 21 of 66 Pages
<PAGE>

     Net gains on sales and other  dispositions of foreclosed assets include the
effects of sales of pre-1933 assets that vary from year to year as opportunities
for sale arise.  They also  include  gains from  additional  payouts  related to
previously sold foreclosed assets.

     ATM fees have  increased as the Company has deployed  full service ATMs and
cash dispensers in both banking and other locations.  At December 31, 1998, 1997
and 1996 the Company had 191,  137 and 89 ATMs and cash  dispensers  in service,
respectively.

    Secondary market mortgage fees have increased  dramatically with the fall in
interest rates and increased mortgage product emphasis and marketing.

NON-INTEREST EXPENSE

     Table  15  shows   the   components   of   non-interest   expense   without
merger-related  expenses for each of the three years  ending  December 31, 1998,
along with the percent changes  between years for each  component.  Non-interest
expense before merger-related expenses increased 13% in 1998 after a 7% increase
in 1997.
<TABLE>
<CAPTION>

TABLE 15.  NON-INTEREST  EXPENSE
-----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                              1998          % Change              1997           % Change               1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                  <C>            <C>                    <C>            <C>      
Personnel expense                              $  97,377            12.37 %        $  86,661              8.53 %         $  79,853
Equipment expense                                 19,261            16.64             16,513             10.45              14,951
Net occupancy expense                             14,938            13.39             13,174              7.00              12,313
Credit card processing services                    7,405            35.23              5,476             26.26               4,337
Postage and communications                         7,188            20.68              5,956             12.70               5,285
Legal and professional fees                        5,493            42.34              3,859            (28.03)              5,362
Ad valorem taxes                                   5,270            22.42              4,305             13.47               3,794
Stationery and supplies                            4,468             7.22              4,167              3.48               4,027
Other outside services                             3,964             1.51              3,905             15.94               3,368
Advertising                                        3,074           (13.11)             3,538             20.04               2,947
Amortization of intangible assets                  2,777            14.84              2,418            (16.08)              2,881
Miscellaneous operating losses                     2,409           (11.30)             2,716            172.96                 995
Training expense                                   2,148           172.94                787             23.35                 638
Security services                                  1,511           (28.94)             2,126             12.51               1,890
Deposit insurance and regulatory fees              1,182           (14.94)             1,390            (48.01)              2,673
Insurance, other than real estate                    847           (27.69)             1,171            (27.04)              1,605
Other operating expense                           10,532             5.04             10,028             (7.21)             10,807
-----------------------------------------------------------------------------------------------------------------------------------
Non-interest expense, before
  merger-related expenses                        189,844            12.88            168,190              6.63             157,726
Merger-related expenses                            6,149             (a)               3,397              (a)                4,226
-----------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense                     $ 195,993            14.22 %        $ 171,587              5.95 %         $ 161,952
-----------------------------------------------------------------------------------------------------------------------------------
(a)  Not meaningful.
</TABLE>


     Personnel  expense  increased  $10.7  million,  or 12%,  in 1998  after  an
increase  of $6.8  million,  or 9% in 1997.  Approximately  $1.1  million of the
increase in 1998 and $.9 million of the  increase in 1997 is due to the addition
of key  personnel  and the staffing of additional  banking  locations  opened in
those  years.  Incentive  compensation  increased  $3.7 million in 1998 and $2.3
million  in 1997  primarily  as a result  of  increased  incentive  bonuses  and
stock-based incentive compensation as participation and shares granted under the
various  plans  increased.   Also  increasing  benefits  expense  in  1998  were
unexpectedly  high health

                              Page 22 of 66 Pages
<PAGE>

claims   expense   under  a  self-insured   medical  plan.   Beginning  in 1999,
employees are covered under an insured plan or health maintenance  organization.

     Equipment expense increased $2.7 million, or 17%, in 1998 after an increase
of $1.6  million in 1997.  The  construction  and  refurbishment  of banking and
administrative facilities contributed to these increases, as well as the opening
of a  new  operations  center  in  1996.  In  addition,  the  implementation  of
enhancements  to the  Company's  data  processing  and  communications  systems,
including  new branch  delivery  systems and a  standardized  office  automation
network, resulted in growth in this expense category

     Net occupancy expense increased $1.8 million, or 13%, in 1998 after growing
$.9 million,  or 7%, in 1997 from 1996.  Both of these increases were the result
of the Company's expansion of its branch network, its ongoing program to upgrade
the  appearance  and  functionality  of all  of its  facilities  and  the  costs
associated with a new operations  center occupied in 1996. From the beginning of
1996,  the Company has  constructed 26 new branch  locations,  six of which were
replacements  for  existing  branches.  In  addition,  1998 was  impacted by the
addition of eight  branches  purchased  from a bank in Lake Charles,  Louisiana,
which also caused the increase in amortization of intangible assets.

     Credit card  processing  services  expense  grew from 1996  through 1998 at
rates  that are  generally  consistent  with the  growth in  revenue  from those
operations.

     Legal and  professional  fees grew in 1998 after  declining in 1997.  These
fluctuations  reflect the general level of corporate  legal  activity in each of
these periods and also the use of  consultants  in 1998 for customer call center
design work and Year 2000 remediation testing.

     Advertising  expense  decreased 13% in 1998 after increasing 20% in 1997 as
the result of fewer campaigns and media buys in 1998. Training expense increased
markedly to $2.1 million in 1998 due to specific customer-focused sales training
at all levels designed to benefit revenue growth in future periods.

     Security  services  was  impacted  in 1998 by changes in the mix of on-site
armed guards versus other security measures.  Therefore,  even with increases in
the number of branch and ATM locations,  this expense category decreased in 1998
after a 13%  increase  in 1997.  The  growth  in the  Company's  branch  and ATM
delivery systems impacted virtually every other category of non-interest expense
to some degree,  particularly  postage and  communications  expense,  ad valorem
taxes, insurance, and stationery and supplies.

     The Company and its merger candidates incur various  non-recurring costs to
complete  merger  transactions  and to  consolidate  operations  subsequent to a
merger.  Such  merger-related  costs  include  change in  control  payments  and
severance  or  retention  bonuses for  management  and  employees  of the merged
entity,  investment  banker  fees,  fees for various  professional  services and
losses on  cancellations  of  contracts  and the  disposition  of  obsolete  and
redundant facilities and equipment. Total merger-related expenses vary with each
transaction.

INCOME TAXES                                                         

     Income tax expense  was $25.2  million in 1998,  $28.9  million in 1997 and
$22.9 million in 1996. The changes in income tax expense resulted primarily from
changes  in  pretax  income  and  non-deductible  merger-related  expenses.  The
Company's  effective  tax  rate  was 32% in both  1998 and 1996 and 34% in 1997.
These  effective  rates  were  lower than the 35%  federal  statutory  tax rate,
primarily  because of tax-exempt  interest income received from the financing of
state and local governments. Louisiana-sourced income of commercial banks is not
subject to state income taxes.  Rather, banks in Louisiana pay an ad valorem tax
based on the value of their capital stock in lieu of income and franchise taxes,
and these property taxes are included in non-interest expense.

    For  additional  information  on the  Company's  effective tax rates and the
composition of changes in income tax expense for all periods, see Note 18.


                              Page 23 of 66 Pages
<PAGE>

FOURTH QUARTER RESULTS                                                 

    The Company's income before  merger-related  expenses for the fourth quarter
of 1998 was $12.3 million, or $.53 per share, compared to $15.4 million, or $.67
per share,  in the fourth quarter of 1997 and $11.6 million,  or $.50 per share,
in the third  quarter of 1998.  Net  income  for the fourth  quarter of 1998 was
$11.4 million, or $.49 per share,  compared to $14.7 million, or $.64 per share,
in the fourth quarter of 1997 and $10.7 million, or $.46 per share, in the third
quarter of 1998.

     Tax-equivalent  net interest income increased 6% from the fourth quarter of
1997 and 4% from  1998's  third  quarter.  Continued  loan  growth  was the most
significant factor in this improvement.

     Like the third  quarter of 1998,  there was no provision  for possible loan
losses in the fourth  quarter.  There was a nominal  $236,000  provision  in the
fourth quarter of 1997 from pooled acquisitions.

     Non-interest income,  excluding securities  transactions and gains on sales
of  foreclosed  property,  was 7% higher  than in 1997's  fourth  quarter and 8%
higher than in the third quarter of 1998,  with increases in most all categories
of non-interest income. The largest dollar contribution was from service charges
on deposit accounts,  which increased 6% from 1997 and 9% from the third quarter
of 1998.  Credit card income  increased  31% and 13% and trust fees improved 34%
and 15%  from  the  fourth  quarter  of 1997  and the  third  quarter  of  1998,
respectively.

     Non-interest   expense,   excluding  conversion  and  other  merger-related
expenses, was $52.5 million in the fourth quarter,  compared to $43.1 million in
the  fourth  quarter  of 1997 and $50.3  million  in the third  quarter of 1998.
Investments  in  additional  key  personnel,  unexpectedly  high  health  claims
expense,  expenses  related to the  addition of newly  constructed  branches and
acquired branches in Lake Charles,  Louisiana,  and increased  professional fees
all contributed to the increases in expenses in the third and fourth quarters of
1998 from the fourth quarter of 1997.

    Summary of  Quarterly  Financial  Information  on page 56  compares  certain
quarterly financial information for 1998 and 1997.

Item 7a: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK  

    Incorporated by reference to the Company's 1998 10-K, Item 7.




                               Page 24 of 66 Pages



<PAGE>
<TABLE>
<CAPTION>
Item 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS


                                                                                                        December 31
----------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                                              1998               1997
----------------------------------------------------------------------------------------------------------------------------
ASSETS
<S>                                                                                           <C>                <C>      
  Cash and due from financial institutions                                                    $  214,963         $  238,058
  Investment in securities
     Securities available for sale                                                               105,361            208,195
     Securities held to maturity, fair values of $1,253,113 and $1,276,925, respectively       1,234,717          1,262,772
----------------------------------------------------------------------------------------------------------------------------
        Total investment in securities                                                         1,340,078          1,470,967
  Federal funds sold and short-term investments                                                  151,510             23,801
  Loans, net of unearned income of $1,704 and $2,646, respectively                             3,270,581          2,864,664
     Reserve for possible loan losses                                                            (40,282)           (44,543)
----------------------------------------------------------------------------------------------------------------------------
        Net loans                                                                              3,230,299          2,820,121
----------------------------------------------------------------------------------------------------------------------------

  Bank premises and equipment                                                                    169,724            146,066
  Accrued interest receivable                                                                     31,070             35,750
  Other assets                                                                                    74,275             52,684
----------------------------------------------------------------------------------------------------------------------------
        Total assets                                                                          $5,211,919        $ 4,787,447
----------------------------------------------------------------------------------------------------------------------------

LIABILITIES
  Non-interest-bearing demand deposits                                                        $1,240,189        $ 1,104,784
  Interest-bearing deposits                                                                    3,016,473          2,831,087
----------------------------------------------------------------------------------------------------------------------------
        Total deposits                                                                         4,256,662          3,935,871
----------------------------------------------------------------------------------------------------------------------------

  Federal funds purchased and securities sold under repurchase agreements                        355,322            289,686
  Accrued interest payable                                                                        12,229             11,314
  Accounts payable and other accrued liabilities                                                  26,745             25,440
----------------------------------------------------------------------------------------------------------------------------
        Total liabilities                                                                      4,650,958          4,262,311
----------------------------------------------------------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
  Common stock, no par value
    Authorized -100,000,000 shares
    Issued - 23,669,700 and 23,460,619 shares, respectively                                        2,800              2,800
  Capital surplus                                                                                138,848            127,316
  Retained earnings                                                                              428,880            403,892
  Accumulated other comprehensive income                                                            (272)               373
  Treasury stock at cost - 276,703 and 346,344 shares, respectively                               (4,613)            (3,685)
  Unearned restricted stock compensation                                                          (4,682)            (5,560)
----------------------------------------------------------------------------------------------------------------------------

        Total shareholders' equity                                                               560,961            525,136
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
        Total liabilities and shareholders' equity                                            $5,211,919        $ 4,787,447
----------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these balance sheets.
</TABLE>

                               Page 25 of 66 Pages



<PAGE>
<TABLE>
<CAPTION>
                                   WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                    Years Ended December 31
-------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)                                        1998        1997         1996
-------------------------------------------------------------------------------------------------------------------

INTEREST INCOME
<S>                                                                            <C>         <C>          <C>      
  Interest and fees on loans                                                   $  246,534  $  224,158   $  191,163
  Interest and dividends on investments
    U.S. Treasury securities                                                       17,010      31,063       43,780
    U.S. Agency securities                                                         28,024      35,453       34,156
    Mortgage-backed securities                                                     28,138      21,194       20,243
    Obligations of states and political subdivisions                                7,423       7,959        7,895
    Federal Reserve stock and other corporate securities                              573         641          507
  Interest on federal funds sold and short-term investments                         8,411       3,103        3,842
-------------------------------------------------------------------------------------------------------------------
    Total interest income                                                         336,113     323,571      301,586
-------------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE
  Interest on deposits                                                            107,458     101,792       99,231
  Interest on federal funds purchased and securities sold under repurchase
    agreements                                                                     15,523      20,453       18,137
-------------------------------------------------------------------------------------------------------------------
    Total interest expense                                                        122,981     122,245      117,368
-------------------------------------------------------------------------------------------------------------------

NET INTEREST INCOME                                                               213,132     201,326      184,218
PROVISION FOR POSSIBLE LOAN LOSSES                                                     73      (2,120)      (3,626)
-------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES                      213,059     203,446      187,844
-------------------------------------------------------------------------------------------------------------------

NON-INTEREST INCOME
  Service charges on deposit accounts                                              25,162      24,354       22,768
  Credit card income                                                               10,075       7,455        5,921
  Trust service fees                                                                6,739       4,922        4,181
  Other non-interest income                                                        17,956      17,438       11,957
  Securities transactions                                                             839          12            2
-------------------------------------------------------------------------------------------------------------------
    Total non-interest income                                                      60,771      54,181       44,829
-------------------------------------------------------------------------------------------------------------------

NON-INTEREST EXPENSE
  Employee compensation                                                            84,537      73,543       68,450
  Employee benefits                                                                14,283      13,599       12,214
-------------------------------------------------------------------------------------------------------------------
    Total personnel expense                                                        98,820      87,142       80,664
  Equipment and data processing expense                                            19,555      16,578       14,996
  Net occupancy expense                                                            14,943      13,174       12,313
  Legal and professional fees                                                       7,734       5,608        7,153
  Credit card processing services                                                   7,405       5,476        4,337
  Postage and communications                                                        7,188       5,956        5,285
  Ad valorem taxes                                                                  5,270       4,305        3,794
  Stationery and supplies                                                           4,468       4,167        4,027
  Other non-interest expense                                                       30,610      29,181       29,383
-------------------------------------------------------------------------------------------------------------------
    Total non-interest expense                                                    195,993     171,587      161,952
-------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                                         77,837      86,040       70,721
INCOME TAX EXPENSE                                                                 25,158      28,862       22,910
-------------------------------------------------------------------------------------------------------------------
NET INCOME                                                                     $   52,679  $   57,178   $   47,811
-------------------------------------------------------------------------------------------------------------------

EARNINGS PER SHARE
  Basic                                                                        $     2.26  $     2.48   $     2.10
  Diluted                                                                      $     2.24  $     2.46   $     2.09
WEIGHTED-AVERAGE SHARES OUTSTANDING
  Basic                                                                        23,283,458  23,025,173   22,729,851
  Diluted                                                                      23,499,643  23,236,174   22,897,208
-------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>

                               Page 26 of 66 Pages
<PAGE>
<TABLE>
<CAPTION>
                                   WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                                                               Accumulated               Unearned
                                                                               Other                    Restricted
                                                 Common   Capital   Retained   Comprehensive  Treasury     Stock
(dollars in thousands, except per share data)    Stock    Surplus   Earnings   Income         Stock     Compensation    Total
--------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>       <C>       <C>        <C>            <C>        <C>           <C>     
Balance at December 31, 1995                   $  2,800  $111,007  $ 342,660  $   533        $(5,257)   $ (2,518)     $449,225
--------------------------------------------------------------------------------------------------------------------------------
  Comprehensive income
    Net income                                        -         -     47,811        -              -           -        47,811
      Unrealized loss on securities, net of
         reclassification adjustment of $186
         and tax benefit of $540                      -         -          -   (1,002)             -           -        (1,002)
-------------------------------------------------------------------------------------------------------------------------------
  Total comprehensive income                          -         -     47,811   (1,002)             -           -        46,809
-------------------------------------------------------------------------------------------------------------------------------
  Cash dividends, $.97 per share                      -         -    (16,796)       -              -           -       (16,796)
  Cash dividends, pooled entities                     -         -     (2,585)       -              -           -        (2,585)
  Exercise of stock options                           -     2,154          -        -            210           -         2,364
  Sales to benefit and reinvestment plans             -     2,699          -        -              -           -         2,699
  Stock grants                                        -     1,166          -        -            354      (1,461)           59
  Restricted stock activity                           -         -          -        -              -         898           898
  Common stock issued, pooled entities                -       319          -        -              -           -           319
-------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996                      2,800   117,345    371,090     (469)        (4,693)     (3,081)      482,992
-------------------------------------------------------------------------------------------------------------------------------
  Comprehensive income
    Net income                                        -         -     57,178        -              -           -        57,178
      Unrealized gain on securities, net of reclassification
         adjustment of $214 and tax benefit of $453   -         -          -      842              -           -           842
-------------------------------------------------------------------------------------------------------------------------------
  Total comprehensive income                          -         -     57,178      842              -           -        58,020
-------------------------------------------------------------------------------------------------------------------------------
  Cash dividends, $1.12 per share                     -         -    (22,790)       -              -           -       (22,790)
  Cash dividends, pooled entities                     -         -     (1,586)       -              -           -        (1,586)
  Exercise of stock options                           -       861          -        -            295           -         1,156
  Sales to benefit and reinvestment plans             -     4,922          -        -            123           -         5,045
  Stock grants                                        -     3,827          -        -            590      (4,647)         (230)
  Restricted stock activity                           -       361          -        -              -       2,168         2,529
-------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997                      2,800   127,316    403,892      373         (3,685)     (5,560)      525,136
-------------------------------------------------------------------------------------------------------------------------------
  Comprehensive income
    Net income                                        -         -     52,679        -              -           -        52,679
      Unrealized loss on securities, net of reclassification
         adjustment of $1,038 and tax benefit of $347 -         -          -     (645)             -           -          (645)
-------------------------------------------------------------------------------------------------------------------------------
  Total comprehensive income                          -         -     52,679     (645)             -           -        52,034
-------------------------------------------------------------------------------------------------------------------------------
  Cash dividends, $1.20 per share                     -         -    (27,041)       -              -           -       (27,041)
  Cash dividends, pooled entities                     -         -       (650)       -              -           -          (650)
  Exercise of stock options                           -     1,997          -        -             37           -         2,034
  Sales to benefit and reinvestment plans             -     6,005          -        -            150           -         6,155
  Stock grants                                        -     3,530          -        -         (1,115)     (2,412)            3
  Restricted stock activity                           -         -          -        -              -       3,290         3,290
-------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998                   $  2,800  $138,848  $ 428,880  $  (272)       $(4,613)   $ (4,682)     $560,961
-------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>


                               Page 27 of 66 Pages
<PAGE>
<TABLE>
<CAPTION>
                    WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                         Years Ended December 31
------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                                         1998         1997         1996
------------------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                                        <C>          <C>          <C>     
  Net income                                                                               $ 52,679     $ 57,178     $ 47,811
  Adjustments to reconcile net income to net cash provided by operating activities:
      Depreciation and amortization                                                          20,420       18,572       20,493
      Amortization of intangibles                                                             2,777        2,418        2,881
      Deferred tax expense (benefit)                                                           (486)         221           62
      Net gains on sales of investment securities                                              (839)         (12)          (2)
      Provision for possible loan losses                                                         73       (2,120)      (3,626)
      Provision for losses on other real estate owned                                           128          243          385
      Net gains on sales and other dispositions of  foreclosed assets                          (595)        (102)      (1,190)
      Increase (decrease) in accrued income taxes                                               (51)       1,725         (222)
      Decrease in accrued interest receivable and other assets                                  420        1,719          189
      Increase (decrease) in accrued expenses and other liabilities                           1,462        1,477         (423)
     Other, net                                                                                 (41)         379          352
------------------------------------------------------------------------------------------------------------------------------
        NET CASH PROVIDED BY OPERATING ACTIVITIES                                            75,947       81,698       66,710
------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
  Proceeds from maturities of investment securities held to maturity                        551,791      777,045      463,770
  Purchases of investment securities held to maturity                                      (522,828)    (633,357)    (375,826)
  Proceeds from sales of investment securities available for sale                             1,051            -       77,027
  Proceeds from maturities of investment securities available for sale                      105,698      128,222      113,123
  Purchases of investment securities available for sale                                      (4,927)     (75,866)    (133,622)
  Net increase in loans                                                                    (371,130)    (378,408)    (454,508)
  Net increase (decrease) in federal funds sold and short-term investments                 (127,709)      56,063        9,733
  Proceeds from sales and other dispositions of foreclosed assets                             2,787        2,217        5,343
  Purchases of premises and equipment                                                       (36,936)     (36,008)     (36,106)
  Net cash acquired in branch purchase                                                       83,459            -            -
  Other, net                                                                                  1,734        4,222       (3,563)
------------------------------------------------------------------------------------------------------------------------------
    NET CASH USED IN INVESTING ACTIVITIES                                                  (317,010)    (155,870)    (334,629)
------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
  Net increase in demand deposits, NOW, money market and savings deposits                   238,370      147,151       31,380
  Net increase (decrease) in time deposits                                                  (66,496)     115,671      (16,051)
  Net increase (decrease) in federal funds purchased and securities sold under
      repurchase agreements                                                                  65,636     (194,734)     256,399
  Proceeds from issuance of stock                                                             8,201        6,044        4,661
  Purchases of treasury stock                                                                (1,300)        (513)           -
  Cash dividends                                                                            (26,443)     (23,425)     (18,273)
------------------------------------------------------------------------------------------------------------------------------
    NET CASH PROVIDED BY FINANCING ACTIVITIES                                               217,968       50,194      258,116
------------------------------------------------------------------------------------------------------------------------------
    DECREASE IN CASH AND CASH EQUIVALENTS                                                   (23,095)     (23,978)      (9,803)
    CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                          238,058      262,036      271,839
------------------------------------------------------------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS AT END OF YEAR                                              $ 214,963     $238,058    $ 262,036
------------------------------------------------------------------------------------------------------------------------------

Cash received during the period for:
   Interest income                                                                        $ 340,793     $324,564    $ 300,721

Cash paid during the period for:
   Interest expense                                                                       $ 122,066     $121,684    $ 117,997
   Income taxes                                                                           $  23,482     $ 26,489    $  23,054
------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.

</TABLE>
                               Page 28 of 66 Pages
<PAGE>



Notes To Financial Statements


(Note 1) NATURE OF BUSINESS

     Whitney  Holding  Corporation  ("the  Company") is a Louisiana bank holding
company  headquartered  in  New  Orleans,  Louisiana.  The  Company's  principal
subsidiary is Whitney  National Bank ("the Bank"),  which has been in continuous
operation  since 1883 and  represents  virtually all of the  operations  and net
income of the Company. The Bank engages in community banking in its market areas
in Southern Louisiana;  the coastal region of Mississippi;  Mobile,  Montgomery,
Butler County and the Alabama Gulf Coast; and the Pensacola area of Florida. The
Bank offers commercial and retail banking products and services, including trust
products and services, to the customers in the communities it serves.

(Note 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT PRONOUNCEMENTS

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

BASIS OF PRESENTATION

     The consolidated  financial  statements include the accounts of the Company
and its  subsidiaries.  All significant  intercompany  balances and transactions
have been  eliminated.  Prior year  financial  statements  have been restated to
include   the   accounts   of   business    combinations    accounted   for   as
poolings-of-interests.  Business  combinations  accounted  for as purchases  are
included from the respective  dates of acquisition.  Certain  balances for prior
years  have  been  reclassified  to  conform  to the  current  year's  financial
statement presentation.

USE OF ESTIMATES

     In preparing the consolidated financial statements, the Company is required
to make  estimates  and  assumptions  that  affect the  amounts  reported in the
consolidated  financial  statements and accompanying notes. Actual results could
differ from those estimates.

INVESTMENT IN SECURITIES

     Securities  are  classified  as trading,  held to maturity or available for
sale.  Management  determines  the  classification  of securities  when they are
purchased and reevaluates this classification  periodically as conditions change
that could require reclassification.

     Trading  account  securities are bought and held  principally for resale in
the near term. They are carried at fair value with realized and unrealized gains
or losses  reflected in  non-interest  income.  Trading  account  securities are
immaterial  in each period  presented  and have been included in other assets on
the consolidated balance sheets.

     Securities which the Company both positively intends and has the ability to
hold to maturity are  classified as securities  held to maturity and are carried
at amortized cost. Intent and ability to hold 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.

     Securities  not meeting the  criteria to be  classified  as either  trading
securities or securities  held to maturity are  classified as available for sale
and are  carried  at fair  value.  Net  unrealized  holding  gains or losses are
excluded from

                              Page 29 of 66 Pages

<PAGE>

net income and are recognized in other comprehensive income and in   accumulated
other  comprehensive  income, a separate  component of shareholders' equity.

         Interest  and  dividend  income  earned on  securities  either  held to
maturity or available  for sale are  recognized  in interest  income,  including
amortization of premiums and accretion of discounts  computed using the interest
method.  Realized  gains and losses on  securities  either  held to  maturity or
available for sale are computed  based upon  specifically  identified  amortized
cost and are reported as a separate component of non-interest income.

LOANS

     Loans are  carried at the  principal  amounts  outstanding  net of unearned
income. Interest on loans and accretion of unearned income are computed to yield
a level rate of return on recorded  principal.  Material  loan fees are deferred
and amortized as an adjustment to loan yields.

NON-PERFORMING LOANS

     Non-performing  loans consist of loans accounted for on a non-accrual basis
and  restructured  loans.  Loans are placed on  non-accrual  status when, in the
opinion of management,  there is an indication that a borrower will be unable to
meet  contractual  payments as they become due. For  commercial  and real estate
loans,  generally a loan is placed on non-accrual status when it is 90 days past
due as to  principal  and  interest,  and the loan is not  otherwise  both  well
secured and in the process of  collection.  When a loan is placed on non-accrual
status,  any accrued but  uncollected  interest  is  reversed  against  interest
income.  Interest  payments on non-accrual 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,  such payments are
recognized as interest  income in the period in which they are received.  A loan
on  non-accrual  status may be reinstated to accrual status when full payment of
contractual principal and interest is expected and this expectation is supported
by current sustained performance.

IMPAIRED LOANS

     A loan is considered impaired when it is probable that all amounts will not
be collected as they become due according to the  contractual  terms of the loan
agreement.  Generally,  impaired loans are accounted for on a non-accrual basis.
The extent of  impairment  is measured  based upon 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
amount of impairment is included in the reserve for possible loan losses.

RESERVE FOR POSSIBLE LOAN LOSSES

     The reserve for possible loan losses is maintained at a level which, in the
opinion of management,  is adequate to absorb  potential  losses inherent in the
loan portfolio. The adequacy of the reserve is based on an ongoing evaluation of
the  portfolio.  Factors  considered  include  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;  historic loss experience; and
various  trends in loan  portfolio  characteristics,  such as volume,  maturity,
customer mix,  delinquencies and non-accruals.  Adjustments arising from changes
in these  factors are reflected in the provision for possible loan losses in the
period in which they arise.

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

                               Page 30 of 66 Pages
<PAGE>
BANK PREMISES AND EQUIPMENT

     Bank  premises  and  equipment  are  carried  at  cost,  less   accumulated
depreciation  and  amortization.  Depreciation  and  amortization  are  computed
primarily using the straight-line  method over the estimated useful lives of the
assets  and over the  shorter  of the  lease  terms  or the  estimated  lives of
leasehold  improvements.  Additions  to bank  premises and  equipment  and major
replacements or improvements are capitalized.  Gains and losses on dispositions,
maintenance, repairs and minor replacements are reflected in current earnings.

FORECLOSED ASSETS

     Foreclosed  assets  include  real  property   collateral  acquired  through
foreclosure  or in  settlement  of  loans,  unused  banking  property,  pre-1933
property  interests and other foreclosed  assets and are carried in other assets
in the  consolidated  balance  sheets.  With the exception of pre-1933  property
interests,  which are  carried  at nominal  book  value,  foreclosed  assets are
recorded  at the  lower  of the  remaining  investment  in the  related  loan or
estimated  fair value,  less  estimated  selling  costs.  At foreclosure or loan
settlement, the reduction in the carrying amount to fair value of the collateral
received is charged to the reserve for  possible  loan  losses.  Any  subsequent
charge  necessary  to  adjust  the  recorded  value to  reflect  a change in the
estimate of the fair value of a foreclosed asset or its selling costs is charged
to current  earnings.  In addition,  revenues and expenses  associated  with the
management of foreclosed assets prior to sale are included in current earnings.

INTANGIBLE ASSETS

     The  unamortized  cost of  intangible  assets is included in other  assets.
Goodwill,  the  excess of cost  over the fair  value of net  assets of  acquired
businesses,  and identified  intangible  assets is amortized on a  straight-line
basis over periods of up to twenty five years. Other intangible assets,  such as
premiums on purchased  deposits,  are amortized using the  straight-line  method
over the periods benefited.

         The Company  periodically  reviews its  intangible  assets for possible
impairment in value or life.

INCOME TAXES

     The Company and its  subsidiaries  file a  consolidated  federal income tax
return.  Income taxes are accounted  for using the asset and  liability  method.
Under this method the expected tax  consequences of temporary  differences  that
arise between the tax bases of assets or liabilities and their reported  amounts
in the financial  statements  represent  either  deferred tax  liabilities to be
settled in the future or deferred tax assets that will be realized as reductions
of  future  taxes  payable.  Currently  enacted  tax  rates and laws are used to
calculate  expected tax consequences  when such amounts are settled or realized.
Valuation  allowances are established  against net deferred tax assets if, based
on all  available  evidence,  it is more likely than not that some or all of the
assets will not be realized.

EARNINGS PER SHARE

     Basic  earnings  per share is  computed by dividing  income  applicable  to
common  shares (net income in all periods  presented)  by the  weighted  average
number of common shares outstanding for the applicable period.  Diluted earnings
per  share is  computed  using the  weighted  average  number  of common  shares
outstanding  increased by the number of  additional  shares that would have been
outstanding if potentially dilutive unexercised stock options had been issued as
determined using the treasury stock method

STATEMENTS OF CASH FLOWS

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

                              Page 31 of 66 Pages
<PAGE>

OTHER

     Assets held by the Bank in a fiduciary  capacity are not assets of the Bank
and are not included in the  consolidated  balance  sheets.  Generally,  certain
minor  sources of income are  recorded  on a cash  basis,  which does not differ
materially from the accrual basis.

RECENT PRONOUNCEMENTS

     In June 1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive   Income."  The  Company's   current  and  prior  years  financial
statements  have  been  revised  to  conform  to the  reporting  and  disclosure
requirements of this statement.

     Also in June  1997,  the FASB  issued  SFAS  No.  131,  "Disclosures  About
Segments of an Enterprise and Related  Information." This statement  established
standards for reporting information about a company's operating segments using a
"management  approach."  The  statement  requires  that  reportable  segments be
identified  based upon those  revenue-producing  components  for which  separate
financial  information  is produced  internally and are subject to evaluation by
the chief  operating  decision  maker in deciding  how to allocate  resources to
segments. The provisions of SFAS No. 131 were effective for 1998.

     The Company has applied the  provisions of SFAS No. 131 during 1998 and has
evaluated its potential operating segments against the criteria specified in the
statement.  Based upon that  evaluation,  the  Company  has  determined  that no
operating  segment  disclosures  are required in 1998 because of the aggregation
concepts specified in the statement.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities." This statement provides a comprehensive and
consistent  standard for the  recognition  and  measurement of  derivatives  and
hedging  activities,  in which the Company does not presently  participate.  The
provisions  of SFAS No. 133 are effective as of January 1, 2000 for the Company,
with  early  adoption  permitted.  At the date of  initial  application  of this
statement,  the Company may  transfer  any  security  held to maturity  into the
available  for sale  category  or the  trading  category  without  calling  into
question the Company's  intent to hold other debt  securities to maturity in the
future.  The Company has not determined what  transfers,  if any, may be made in
accordance with this provision. Other than for the effects of such transfers, if
any,  adoption of this  accounting  standard is not  expected to have a material
effect on the Company's financial position or results of operations.

(Note 3) MERGERS AND ACQUISITIONS

     On September 11, 1998, the Bank purchased  substantially  all of the assets
and  deposits  of eight  of the  branches  of The  First  National  Bank of Lake
Charles,  Louisiana.  These eight branches,  all of which are located in or near
Lake Charles in southwest Louisiana,  had approximately $39 million of loans and
$149 million of deposits at the time of purchase.  The Bank's  acquisition  cost
included an amount calculated at 15.25% of the estimated  deposits  assumed,  or
approximately $23 million, which has been allocated to assets purchased, deposit
intangibles and goodwill.  The deposit  intangibles are being amortized over the
estimated lives of the deposits,  approximately eight years, and the goodwill is
being  amortized  over 25 years.  The results of  operations of the Lake Charles
branches  have been included in the financial  statements  from the  acquisition
date. The pro forma impact of the Lake Charles acquisition would not be material
to the Company's 1998 results of operations.

     During the  three-year  period ended  December 31,  1998,  eight  financial
institutions  merged with the  Company.  These  mergers  were  accounted  for as
poolings-of-interests, and the Company's financial statements have been restated
to include these pooled companies.  These financial  institutions  include First
Citizens BancStock,  Inc. ("First  Citizens"),  the parent of The First National
Bank in St. Mary Parish, Louisiana; American Bank and Trust ("AB&T"), Pensacola,
Florida;  Liberty  Holding  Corporation  LHC"),  the  parent  of  Liberty  Bank,
Pensacola, Florida; First National

                              Page 32 of 66 Pages
<PAGE>

Bankshares,   Inc.   ("FNB"),   the  parent  of  First  National  Bank of Houma,
Louisiana;  Merchants Bancshares,  Inc.  ("Merchants"),  the parent of Merchants
Bank & Trust Company,  Gulfport,  Mississippi;  Meritrust  Federal  Savings Bank
("Meritrust"),  Thibodaux, Louisiana; Louisiana National Security Bank ("LNSB"),
Donaldsonville,  Louisiana;  and The First National Bancorp of Greenville,  Inc.
("Greenville"), the parent of The First National Bank of Greenville, Greenville,
Alabama.  The  following  table shows the merger date,  assets  acquired and the
number of Company  common  shares  issued  for each of the pooled  institutions:
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------
                                                                       Assets Acquired
                                                Merger Date         (dollars in millions)            Shares Issued
--------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                        <C>                          <C>      
First Citizens                                   March 8, 1996              $243                         2,031,775
LHC                                           October 25, 1996              $ 48                           435,951
AB&T                                          October 25, 1996              $ 57                           318,173
FNB                                          February 28, 1997              $235                         1,132,983
Merchants                                       April 18, 1997              $208                         1,451,507
Meritrust                                       April 24, 1998              $233                         1,046,686
LNSB                                              May 16, 1998              $104                           542,476
Greenville                                     August 21, 1998              $115                           720,938
--------------------------------------------------------------------------------------------------------------------
</TABLE>


     The  following  table  shows  the  effects  on  the  Company's  results  of
operations    in   1997   and   1996   from    restatements    for   the   three
poolings-of-interests occurring in 1998:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                        Originally Reported              Restated
----------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)              1997          1996          1997          1996
----------------------------------------------------------------------------------------------------------
<S>                                                   <C>           <C>           <C>           <C>      
Net interest income                                   $ 184,462     $ 168,568     $ 201,326     $ 184,218
Non-interest income                                   $  51,035     $  41,817     $  54,181     $  44,829
Net income                                            $  52,218     $  44,494     $  57,178     $  47,811
Earnings per share
Basic                                                 $    2.52     $    2.18     $    2.48     $    2.10
Diluted                                               $    2.50     $    2.17     $    2.46     $    2.09
----------------------------------------------------------------------------------------------------------
</TABLE>



                               Page 33 of 66 Pages



<PAGE>
<TABLE>
<CAPTION>



    (Note 4) INVESTMENT IN SECURITIES

         Summary information about securities  available for sale and securities
held to maturity follows:

----------------------------------------------------------------------------------------------------------------------
                                         Securities Available for Sale
----------------------------------------------------------------------------------------------------------------------
                                                           Amortized       Unrealized       Unrealized        Fair
(dollars in thousands)                                        Cost           Gains           (Losses)         Value
----------------------------------------------------------------------------------------------------------------------
    December 31, 1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>               <C>               <C>          <C>        
    U.S. Treasury securities                             $    19,986       $     154         $     (1)    $    20,139
    U.S. Agency securities                                    41,123             238              (90)         41,271
    Mortgage-backed securities                                42,452             293             (344)         42,401
    Obligations of state and political subdivisions              904              48                -             952
    Other corporate securities                                   648               -              (50)            598
----------------------------------------------------------------------------------------------------------------------
        Total                                            $   105,113       $     733         $   (485)    $   105,361
----------------------------------------------------------------------------------------------------------------------
    December 31, 1997
----------------------------------------------------------------------------------------------------------------------
    U.S. Treasury securities                             $    46,323       $     196         $     (3)    $    46,516
    U.S. Agency securities                                    75,697             615              (48)         76,264
    Mortgage-backed securities                                81,548             514             (480)         81,582
    Obligations of state and political subdivisions            1,530              55                -           1,585
    Other corporate securities                                 1,597             736              (85)          2,248
----------------------------------------------------------------------------------------------------------------------
        Total                                            $   206,695       $   2,116         $   (616)    $   208,195
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
                                          Securities Held to Maturity
----------------------------------------------------------------------------------------------------------------------
                                                           Amortized       Unrealized       Unrealized        Fair
    (dollars in thousands)                                    Cost            Gains          (Losses)         Value
----------------------------------------------------------------------------------------------------------------------
    December 31, 1998
----------------------------------------------------------------------------------------------------------------------
    U.S. Treasury securities                             $   183,270       $   3,754         $     (3)    $   187,021
    U.S. Agency securities                                   431,135           2,429           (1,706)        431,858
    Mortgage-backed securities                               453,545           5,596             (422)        458,719
    Obligations of state and political subdivisions          158,686           5,117             (121)        163,682
    Federal Reserve stock and other corporate securities       8,081           3,752                -          11,833
----------------------------------------------------------------------------------------------------------------------
    Total                                                $ 1,234,717       $  20,648        $  (2,252)    $ 1,253,113
----------------------------------------------------------------------------------------------------------------------
December 31, 1997
----------------------------------------------------------------------------------------------------------------------
U.S. Treasury securities                                 $   301,360       $   3,038        $    (16)     $   304,382
U.S. Agency securities                                       485,197           2,850          (1,726)         486,321
Mortgage-backed securities                                   328,172           1,136            (849)         328,459
Obligations of state and political subdivisions              139,331           4,475             (12)         143,794
Federal Reserve stock and other corporate securities           8,712           5,257               -           13,969
----------------------------------------------------------------------------------------------------------------------
    Total                                                $ 1,262,772       $  16,756       $  (2,603)     $ 1,276,925
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                               Page 34 of 66 Pages
<PAGE>




         The amortized cost and estimated fair value of securities available for
sale and held to maturity by contractual maturity follows:

------------------------------------------------------------------------
                  Securities Available for Sale
------------------------------------------------------------------------
                                      Amortized           Fair
(dollars in thousands)                  Cost              Value
------------------------------------------------------------------------
December 31, 1998
------------------------------------------------------------------------
Within one year                           $     36,239      $     36,520
One to five years                               42,328            42,567
Five to ten years                                8,117             8,551
After ten years                                 18,429            17,723
------------------------------------------------------------------------
    Total securities available for sale   $    105,113      $    105,361
------------------------------------------------------------------------

------------------------------------------------------------------------
                   Securities Held to Maturity
------------------------------------------------------------------------
                                             Amortized           Fair
(dollars in thousands)                         Cost              Value
------------------------------------------------------------------------
December 31, 1998
------------------------------------------------------------------------
Within one year                           $    168,631      $    169,245
One to five years                              551,067           557,090
Five to ten years                              302,487           307,261
After ten years                                212,532           219,517
------------------------------------------------------------------------
    Total securities held to maturity     $  1,234,717      $  1,253,113
------------------------------------------------------------------------

         Expected   maturities   may   differ   from   contractual   maturities,
particularly  for  mortgage-backed  securities  and  obligations  of states  and
political  subdivisions,  because of principal  prepayments  and the exercise of
call options.

         Securities  with  carrying  values of $953  million and $827 million at
December 31, 1998 and 1997, respectively, were sold under repurchase agreements,
pledged to secure public and trust deposits or pledged for other purposes.

     During  1997,  approximately  $28  million  of  securities  that  had  been
classified  by pooled  entities as available for sale prior to their merger with
the Company were transferred to the held to maturity category in accordance with
the  investment  policies  and  practices  of the  combined  institution.  These
transfers were recorded at fair value.  The  unrealized  gains and losses at the
transfer  dates,  which are included  net of tax as a component  of  accumulated
other comprehensive income in shareholders' equity, were insignificant.


                               Page 35 of 66 Pages
<PAGE>
(Note 5) LOANS
<TABLE>
<CAPTION>

     The composition of the Company's loan portfolio follows:

                                                                                         December 31
------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                         1998                         1997
------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>              <C>        <C>              <C>   
Commercial, financial and agricultural                               $ 1,239,976      37.92%     $ 1,206,960      42.13%
Real estate - commercial and other                                     1,036,547      31.69%         818,213      28.56%
Real estate - retail mortgage                                            669,846      20.48%         545,673      19.05%
Loans to individuals                                                     321,971       9.84%         287,852      10.05%
Lease financing                                                            2,241        .07%           5,966        .21%
------------------------------------------------------------------------------------------------------------------------
    Total loans                                                      $ 3,270,581     100.00%     $ 2,864,664     100.00%
------------------------------------------------------------------------------------------------------------------------
</TABLE>

     The Bank makes  loans in the normal  course of business  to  directors  and
executive officers of the Company and the Bank and to their associates ("related
parties").  Loans to related parties are made on  substantially  the same terms,
including  interest rates and  collateral,  as those  prevailing at the time for
comparable  transactions  with  unrelated  parties and do not involve  more than
normal risks of collectibility  at the time of the transactions.  An analysis of
the changes in such loans during 1998 follows:

-------------------------------------------------------------
(dollars in thousands)                                  1998
-------------------------------------------------------------
Beginning balance                                $    74,164
Additions                                            119,962
Repayments                                          (127,947)
-------------------------------------------------------------
Ending balance                                   $    66,179
-------------------------------------------------------------

     Outstanding  commitments  and letters of credit to related  parties totaled
$108 million and $86 million at December 31, 1998 and 1997, respectively.

(Note 6) RESERVE FOR POSSIBLE LOAN LOSSES

     A summary  analysis  of changes in the  reserve  for  possible  loan losses
follows:
                                              Years Ended December 31
-----------------------------------------------------------------------------
(dollars in thousands)                        1998         1997         1996
-----------------------------------------------------------------------------
Balance at beginning of year              $ 44,543     $ 44,030     $ 45,309
Provision for possible loan losses              73       (2,120)      (3,626)
Loans charged off                          (12,630)      (9,195)      (8,677)
Recoveries                                   8,296       11,828       11,024
-----------------------------------------------------------------------------
  Net (charge-offs) recoveries              (4,334)       2,633        2,347
-----------------------------------------------------------------------------
Balance at end of year                    $ 40,282     $ 44,543     $ 44,030
-----------------------------------------------------------------------------



                               Page 36 of 66 Pages
<PAGE>



(Note 7) IMPAIRED LOANS, NON-PERFORMING LOANS AND FORECLOSED ASSETS

     Information on loans evaluated for possible impairment losses follows:

                                                                  December 31
--------------------------------------------------------------------------------
(dollars in thousands)                                          1998        1997
--------------------------------------------------------------------------------
Impaired loans at year-end
  Requiring a loss reserve                                  $  5,054    $  4,737
  Not requiring a loss reserve                                 6,007       5,431
--------------------------------------------------------------------------------
Total recorded investment in impaired loans                 $ 11,061    $ 10,168
--------------------------------------------------------------------------------
Total impairment loss allowance required at year-end        $  1,554    $  2,152
--------------------------------------------------------------------------------
Average recorded investment in impaired loans during year   $ 10,819    $ 10,576
--------------------------------------------------------------------------------

     The following is a summary of non-performing loans and  foreclosed assets:

                                                                  December 31
--------------------------------------------------------------------------------
(dollars in thousands)                                          1998        1997
--------------------------------------------------------------------------------
Loans accounted for on a non-accrual basis                  $ 11,497    $ 9,335
Restructured loans                                             2,660      2,342
--------------------------------------------------------------------------------
Total non-performing loans                                  $ 14,157    $11,677
--------------------------------------------------------------------------------
Foreclosed assets
  Other real estate                                         $  2,170    $ 3,456
  Other foreclosed assets                                         54         53
  Reserve for losses on other real estate                       (220)      (461)
--------------------------------------------------------------------------------
Total foreclosed assets                                     $  2,004    $ 3,048
--------------------------------------------------------------------------------

     Interest income on certain non-accrual loans is recognized as cash interest
payments  are  received.  Interest  payments  on  non-accrual  loans  that  were
accounted for under the cost recovery method may also subsequently be recognized
as interest  income when loan  collections  exceed  expectations or when workout
efforts  result  in  fully   rehabilitated   credits.   The  following  compares
contractual  interest income on non-accrual  loans and  restructured  loans with
both the interest  income  reported on a cash basis for these loans and the cost
recovery interest recognized on non-accrual loans and certain accruing loans:

                                                       Years Ended December 31
--------------------------------------------------------------------------------
(dollars in thousands)                                1998       1997       1996
--------------------------------------------------------------------------------
Contractual interest                               $ 1,218    $ 1,111    $ 1,242
Interest recognized                                  1,216      1,645      3,729
--------------------------------------------------------------------------------
Increase (decrease) in reported interest income    $    (2)   $   534    $ 2,487
--------------------------------------------------------------------------------

                               Page 37 of 66 Pages

<PAGE>



     The activity  in the  valuation  reserve  for losses on other  real  estate
follows:

                                            Years Ended December 31
------------------------------------------------------------------------
(dollars in thousands)                      1998       1997        1996
------------------------------------------------------------------------
Balance at beginning of year               $ 461      $ 905       $ 645
Reserve provisions                           128        243         385
Sales and dispositions                      (369)      (687)       (125)
------------------------------------------------------------------------
    Net change                              (241)      (444)        260
------------------------------------------------------------------------
Balance at end of year                     $ 220      $ 461       $ 905
------------------------------------------------------------------------

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

     Revenues and direct expenses  related to these property  interests that are
included in the statements of operations follows:

                                   Years Ended December 31
----------------------------------------------------------------
(dollars in thousands)            1998        1997         1996
----------------------------------------------------------------
Revenues                       $ 2,488     $ 3,026     $    955
----------------------------------------------------------------
Direct expenses                $    36     $    38     $     58
----------------------------------------------------------------


(Note 8) BANK PREMISES AND EQUIPMENT

     An analysis of bank premises and equipment by asset classification follows:

                                                               December 31
--------------------------------------------------------------------------------
(dollars in thousands)                                       1998          1997
--------------------------------------------------------------------------------
Land                                                 $     36,502  $     33,461
Buildings and improvements                                150,248       127,436
Furnishings and equipment                                 100,256        91,188
--------------------------------------------------------------------------------
                                                          287,006       252,085
Accumulated depreciation and amortization                (117,282)     (106,019)
--------------------------------------------------------------------------------
Total bank premises and equipment                    $    169,724  $    146,066
--------------------------------------------------------------------------------

     Provisions  for  depreciation  and  amortization  included in  non-interest
expense were as follows:

                                                    Years Ended December 31
--------------------------------------------------------------------------------
(dollars in thousands)                             1998         1997        1996
--------------------------------------------------------------------------------
Buildings and improvements                     $  5,044     $  4,604    $  4,084
Furnishings and equipment                        10,998        9,478       7,956
--------------------------------------------------------------------------------
  Total depreciation and amortization expense  $ 16,042     $ 14,082    $ 12,040
--------------------------------------------------------------------------------

                              Page 38 of 66 Pages
<PAGE>

     At  December  31,  1998,   the  Bank  was  obligated   under  a  number  of
non-cancelable operating leases. Certain of these leases have escalation clauses
and renewal options.  Total rental expense,  net of immaterial sublease rentals,
was $2.8  million,  $1.8  million  and $1.5  million  in  1998,  1997 and  1996,
respectively.

     As of December 31, 1998,  the future minimum  rentals under  non-cancelable
operating  leases  having an  initial  lease  term in excess of one year were as
follows:

(dollars in thousands)
-------------------------------------------------
1999                                   $   2,339
2000                                       2,178
2001                                       1,362
2002                                       1,259
2003                                       1,140
Later years                                9,803
-------------------------------------------------
                                       $  18,081
-------------------------------------------------

(Note 9) SHORT-TERM BORROWINGS

     Short-term borrowings consisted of the following components:

                                                              December 31
--------------------------------------------------------------------------------
(dollars in thousands)                                       1998          1997
--------------------------------------------------------------------------------
Federal funds purchased                               $    70,780   $    55,065
Securities sold under agreements to repurchase            284,542       234,621
--------------------------------------------------------------------------------
Total short-term borrowings                           $   355,322   $   289,686
--------------------------------------------------------------------------------

     The Bank has the ability to exercise  legal  authority  over the securities
that serve as collateral for the securities  sold under  repurchase  agreements.
The carrying  and  estimated  fair values of  securities  sold under  repurchase
agreements at December 31, 1998, by term of the underlying  borrowing agreement,
were as follows:

                                                   Up to
(dollars in thousands)             Overnight      30 days
-----------------------------------------------------------
December 31, 1998
-----------------------------------------------------------
Book value:
U.S. Treasury securities         $    21,232    $   12,958
U.S. Agency securities               250,352             -
-----------------------------------------------------------
  Total book value               $   271,584    $   12,958
-----------------------------------------------------------
Fair value:
U.S. Treasury securities         $    21,752    $   12,158
U.S. Agency securities               252,098             -
-----------------------------------------------------------
  Total fair value               $   273,850    $   12,158
-----------------------------------------------------------
Outstanding borrowings           $   272,446    $   12,096
-----------------------------------------------------------



                               Page 39 of 66 Pages



<PAGE>




     Additional information about federal funds purchased follows:

---------------------------------------------------------------------------
(dollars in thousands)                                  1998          1997
---------------------------------------------------------------------------
Average interest rate on December 31                   4.25%         5.06%
---------------------------------------------------------------------------
Average for the year
  Interest rate                                        5.08%         5.37%
  Balance                                         $  66,803     $  83,531
---------------------------------------------------------------------------
Maximum month-end outstanding                     $  79,650     $ 105,587
---------------------------------------------------------------------------

     Additional  information  about securities sold under repurchase  agreements
follows:

-----------------------------------------------------------------------------
(dollars in thousands)                                1998              1997
-----------------------------------------------------------------------------
Average interest rate on December 31                 4.07%             5.06%
-----------------------------------------------------------------------------
Average for the year
  Interest rate                                      4.44%             4.90%
  Balance                                       $ 270,741         $ 326,344
-----------------------------------------------------------------------------
Maximum month-end outstanding                   $ 320,190         $ 408,151
-----------------------------------------------------------------------------


(Note 10) EMPLOYEE BENEFIT PLANS

Retirement Plans

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

                               Page 40 of 66 Pages
<PAGE>
     The  following  table is in  accordance  with SFAS No. 132 and  details the
changes both in the actuarial  present value of the pension  benefit  obligation
and in the plan's  assets for the years ended  December  31, 1998 and 1997.  The
table also shows the funded status of the plan at each  year-end and  identifies
amounts  recognized  and  unrecognized  in the  Company's  consolidated  balance
sheets.

--------------------------------------------------------------------------------
(dollars in thousands)                                  1998               1997
--------------------------------------------------------------------------------
Benefit obligation, beginning of year             $   65,533         $   59,820
Service cost for benefits                              2,854              2,019
Interest cost on benefit obligation                    4,222              4,237
Net actuarial loss                                     4,385              2,617
Benefits paid                                         (3,225)            (3,160)
--------------------------------------------------------------------------------
Benefit obligation, end of year                       73,769             65,533
--------------------------------------------------------------------------------
Plan assets at fair value, beginning of year          91,206             73,548
Actual return on plan assets                          10,069             21,065
Benefits paid                                         (3,225)            (3,160)
Plan expenses                                           (284)              (247)
--------------------------------------------------------------------------------
Plan assets at fair value, end of year                97,766             91,206
--------------------------------------------------------------------------------
Plan assets in excess of benefit obligation,
  end of year                                         23,997             25,673
Unrecognized net actuarial gains                     (18,561)           (21,106)
Unrecognized net implementation asset                 (1,904)            (2,309)
Unrecognized prior service cost resulting
     from plan amendments                             (1,329)            (1,453)
--------------------------------------------------------------------------------
Prepaid pension asset                             $    2,203         $      805
--------------------------------------------------------------------------------

     The Company  recognized a net pension benefit in each of the three years in
the period ended December 31, 1998.  The  components of the net pension  benefit
were as follows:

--------------------------------------------------------------------------------
(dollars in thousands)                             1998        1997        1996
--------------------------------------------------------------------------------
Service cost for benefits during the period    $  2,854    $  2,019    $  1,669
Interest cost on benefit obligation               4,222       4,237       3,797
Expected return on plan assets                   (7,162)     (5,750)     (5,305)
Amortization of:
     Unrecognized net actuarial gains              (785)        (55)       (107)
     Unrecognized net implentation asset           (405)       (405)       (405)
     Unrecognized prior service cost               (124)       (124)       (124)
--------------------------------------------------------------------------------
 Net pension benefit                           $ (1,400)   $    (78)  $    (475)
--------------------------------------------------------------------------------

     The  weighted-average  discount  rate  used in  determining  the  actuarial
present value of the pension  benefit  obligation was 6.25% for 1998,  7.00% for
1997 and 7.25% for 1996. For all periods  presented,  the Company  assumed an 8%
expected  long-term rate of return on plan assets and an annual rate of increase
in future compensation levels of 4%.

     The pension  plan held 219,800  shares of Company  common stock at December
31, 1998 and 239,555 shares at both December 31, 1997 and 1996.

     The Company also has a nonqualified  defined  benefit plan,  which provides
retirement  benefits calculated using the qualified plan's formula to designated
executive officers,  but without the restrictions  imposed on qualified plans by
certain  provisions of the Internal  Revenue Code.  Benefits that become payable
under the nonqualified  plan would be reduced by amounts paid from the qualified
plan. At December 31, 1998, the actuarial present value of the excess

                              Page 41 of 66 Pages

<PAGE>
benefit  obligation  was  $2.3  million,  and   the   recorded  accrued  pension
liability was $1.5 million. The net pension expense for the nonqualified defined
benefit plan was not material in 1998, 1997 or 1996.

     The Company  sponsors an employee  savings plan under Section 401(k) of the
Internal Revenue Code. This plan covers  substantially all full-time  employees,
and the Company  matches the savings of each  participant up to 3% of his or her
compensation.  Tax law  imposes  limits  on total  annual  participant  savings.
Participants  are fully  vested in their  savings  and in the  matching  Company
contributions at all times. The expense of the Company's matching contributions,
including those made by pooled entities with comparable plans, was approximately
$1.6 million in 1998, $1.4 million in 1997 and $1.3 million in 1996.

Health and Welfare Plans

     The Company  maintains  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.  The Company recognizes 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, 1998, the net  postretirement  benefit  liability  reported
with other liabilities in the consolidated balance sheets was approximately $6.7
million,  essentially  unchanged  from  December  31,  1997.  The  net  periodic
postretirement  benefit expense was  approximately $.5 million for both 1998 and
1997 and $.4 million for 1996. This expense includes  components for the portion
of the expected benefit  obligation  attributed to current service,  interest on
the accumulated benefit obligation,  and 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, 1998,  1997 and 1996,  the Company  assumed annual health care cost
increases  beginning  at  8.40%,  9.00%  and  9.50%,  respectively,   with  each
decreasing  to a 5.00% rate over a six to seven year period.  Discount  rates of
6.25% in 1998,  7.00% in 1997 and  7.25% in 1996 were  used in  determining  the
present value of benefit  obligations  in each period.  A 1% rise in the assumed
health care cost trend rates would increase the accumulated  benefit  obligation
by  approximately   $1.2  million  and  the  periodic  net  benefit  expense  by
approximately  $150,000.  A 1% fall in these  trend  rates  would  decrease  the
accumulated  benefit  obligation by approximately  $900,000 and the periodic net
benefit expense by approximately $120,000.


                               Page 42 of 66 Pages

<PAGE>

(Note 11) STOCK-BASED INCENTIVE COMPENSATION PLANS AND OTHER STOCK-BASED
          COMPENSATION

     The Company  maintains two stock-based  compensation  plans.  The long-term
incentive plan for key employees is administered by the  Compensation  Committee
of the Board of Directors,  which designates the participants and authorizes the
awarding of grants. Under this plan,  participants may be awarded stock options,
restricted  stock,  performance  shares,  phantom shares and stock  appreciation
rights.  To date,  only stock  options  and  restricted  stock  grants have been
awarded under the plan. The directors' compensation plan provides for the annual
award of common stock and options to purchase common stock to each  non-employee
director.

     The following  schedule  summarizes  the common stock grants  awarded under
these plans during 1998, 1997 and 1996:

----------------------------------------------------------------------
(dollars in thousands)                                    Market Value
                                               Shares      Of Award On
    Year              Plan                     Awarded      Grant Date
----------------------------------------------------------------------
    1998      Employee-performance              61,500     $    3,383
              Director                           5,100     $      259
    1997      Employee-performance              62,375     $    2,505
              Employee                          54,040     $    2,141
              Director                           5,400     $      192
    1996      Employee-performance              53,500     $    1,605
              Director                           5,100     $      156
----------------------------------------------------------------------

     Shares  awarded to  employees  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,  with the  exception of a portion of the 1997 grants,  the
employee  grants  are  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.  The ultimate
performance-based awards can range from 0% to 200% of the initial grants. Shares
granted to employees before 1996 are subject to possible forfeiture and transfer
restrictions  for a five-year period but not to  performance-based  adjustments.
The directors'  shares are awarded without any significant  restrictions and are
not subject to future adjustment.

     The  Company  initially  measures  the  compensation  expense  related to a
restricted  stock grant as the market  value of the shares  awarded on the grant
date. Compensation expense is recognized ratably over the restriction period, if
any.   Adjustments  are  made  for  forfeitures  as  they  occur.   The  Company
periodically  re-measures  compensation expense for performance-based grants for
changes both in the estimate of the unrestricted  shares to which employees will
ultimately become entitled and in the market value of the Company's stock. These
re-measurements  affect both the recognition of cumulative  compensation expense
through  that date and the  future  recognition  of expense  over the  remaining
restriction periods. The total compensation expense recognized during 1998, 1997
and 1996 related to common stock awards was $3.5 million,  $2.4 million and $1.0
million, respectively.



                               Page 43 of 66 Pages
<PAGE>

     The following  table  summarizes  stock option activity under the long-term
incentive plan for employees and its predecessor incentive program and under the
directors'  compensation  plan for each of the three  years in the period  ended
December 31, 1998. 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.

--------------------------------------------------------------------------------
                                         Employees               Directors
--------------------------------------------------------------------------------
                                                Weighted               Weighted
                                                 Average                Average
                                                Exercise               Exercise
                                     Number       Price      Number      Price 
--------------------------------------------------------------------------------
Outstanding at
December 31, 1995                    260,848    $  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          -           -
--------------------------------------------------------------------------------
Outstanding at
December 31, 1996                    339,824    $  26.08     41,000    $  28.17
     Options granted                 150,500    $  42.44     18,000    $  42.44
     Options exercised               (30,021)   $  22.69     (1,000)   $  30.50
--------------------------------------------------------------------------------
Outstanding at
December 31, 1997                    460,303    $  31.65     58,000    $  32.56
     Options granted                 146,750    $  55.00     17,000    $  50.88
     Options exercised               (94,540)   $  24.74     (4,000)   $  34.47
--------------------------------------------------------------------------------
Outstanding at
December 31, 1998                    512,513    $  39.61     71,000    $  36.84
--------------------------------------------------------------------------------
Exercisable at
December 31, 1998                    512,513    $  39.61     71,000    $  36.84
--------------------------------------------------------------------------------
Available for grant at
December 31, 1998                  1,637,510           -      1,000           -
--------------------------------------------------------------------------------

     The following table summarizes certain  information about the stock options
outstanding under these plans at December 31, 1998:


--------------------------------------------------------------
                                     Weighted       Weighted
                     Number of        Average        Average
Range of               Shares        Years to       Exercise
Exercise Prices     Under Option   Expiration         Price
--------------------------------------------------------------
$13.22-$19.42           38,017          4.25         $  18.12
$26.25-$28.88          121,182          6.14         $  28.16
$30.00-$30.50           95,564          7.55         $  30.08
$42.44-$42.44          165,000          8.50         $  42.44
$50.88-$55.00          163,750          9.45         $  54.57
--------------------------------------------------------------
$13.22-$55.00          583,513          7.84         $  39.27
--------------------------------------------------------------


     In  connection  with the merger with  Meritrust in April 1998,  the Company
converted options held by certain


                              Page 44 of 66 Pages
<PAGE>

Meritrust  employees  and  directors  into  options  to acquire 93,283 shares of
Company stock. The weighted-average  exercise price of these options was $11.26.
At December 31, 1998, 56,052 of these options with a  weighted-average  exercise
price of $12.31 and a  weighted-average  remaining  life of 5.75 years  remained
unexercised.

     Upon its merger with First  Citizens in March 1996,  the Company  converted
options held by certain First  Citizens  employees and directors into options to
acquire 192,551 Company shares with a weighted-average exercise price of $11.64.
Holders  exercised  options for 146,964 shares in 1996, 14,085 in 1997 and 1,000
in 1998.  The  unexercised  options at December 31, 1998 for 33,502 shares had a
weighted-average exercise price of $10.13 and a remaining life of 5 years.

     In 1990, an executive officer was granted options to purchase 33,750 shares
of common  stock at $18.11 per share.  During  1998,  all of these  options were
exercised.

     SFAS No. 123, "Accounting for Stock-Based  Compensation," was effective for
the Company's 1996 fiscal year.  This  statement  established 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  stock-based  compensation  cost to be
included  in its  results  of  operations,  but is  continuing  to follow  prior
generally accepted accounting principles

     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 awarded in 1995 and
thereafter:
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)                  1998       1997         1996
-------------------------------------------------------------------------------------------
<S>                                                        <C>        <C>          <C>     
Net income                                                 $ 52,679   $ 57,178     $ 47,811
Pro forma stock-based compensation expense, net of tax        1,961      1,474          770
-------------------------------------------------------------------------------------------
 Pro forma net income                                      $ 50,718   $ 55,704     $ 47,041
-------------------------------------------------------------------------------------------
Pro forma earnings per share
     Basic                                                 $   2.18   $   2.42     $   2.07
     Diluted                                               $   2.16   $   2.40     $   2.05
Weighted-average fair value of options granted during the
   year                                                    $  14.22   $  10.79     $   7.67
-------------------------------------------------------------------------------------------
</TABLE>

     The fair values of the stock options  granted in 1998,  1997 and 1996 under
the  Company's  employee  incentive  and  directors'   compensation  plans  were
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  for the Company's
common  stock of 22.74%  in 1998,  18.78% in 1997,  and  17.70% in 1996;  (b) an
average  option  life of seven years  before  exercise;  (c) an expected  annual
dividend  yield of 2.70% in  1998,  2.80% in 1997 and  2.90% in 1996;  and (d) a
weighted-average  risk-free  interest  rate of 5.60% in 1998,  6.50% in 1997 and
7.01% in 1996.


                               Page 45 of 66 Pages

<PAGE>
(Note 12) 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  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 regulatory  capital to average total  assets,  also known as the
leverage ratio. The regulators  define the components and computation of each of
these ratios.  The minimum  capital ratios for both the Company and the Bank are
generally  4%  Tier 1  capital,  8%  total  capital  and 4%  leverage.  However,
regulators may set higher  capital  requirements  for an individual  institution
when particular circumstances warrant.

     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
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.

     Under the regulatory  framework for prompt corrective  action,  the capital
levels of banks are categorized  into one of five  classifications  ranging from
well-capitalized to critically under-capitalized.  For an institution to qualify
as well-capitalized,  its Tier 1 capital, total capital and leverage ratios must
be at least 6%,  10% and 5%,  respectively.  Maintaining  capital  ratios at the
well-capitalized  levels avoids certain  restrictions  that, for example,  could
impact the FDIC  insurance  premium rate. As of December 31, 1998 and 1997,  the
Bank was  categorized as  well-capitalized,  and there have been no events since
December 31, 1998 that management believes would cause this status to change.


                               Page 46 of 66 Pages



<PAGE>



     The actual capital amounts and ratios and the minimum and  well-capitalized
required  capital  amounts  for the Company  and the Bank are  presented  in the
following tables:

(dollars in thousands)
--------------------------------------------------------------------------------
                                              Actual                    Well-
December 31, 1998                       Amount     Ratio   Minimum   Capitalixed
                                                             (a)         (b)
--------------------------------------------------------------------------------
Total Capital (to Risk Weighted Assets):
      Company                           $ 564,310  14.87%  $ 303,543       (c)
      Bank                                505,988  13.35%    303,292   $ 379,115
--------------------------------------------------------------------------------
Tier 1 Capital (to Risk Weighted Assets):
      Company                           $ 524,028  13.81%  $ 151,772       (c)
      Bank                                465,707  12.28%    151,646   $ 227,469
--------------------------------------------------------------------------------
Leverage (to Average Assets):
      Company                           $ 524,028  10.39%  $ 201,691       (c)
      Bank                                465,707   9.24%    201,583   $ 251,979
--------------------------------------------------------------------------------
December 31, 1997
--------------------------------------------------------------------------------
Total Capital (to Risk Weighted Assets):
      Company                           $ 546,850  16.49%  $ 264,832       (c)
      Bank                                538,267  16.28%    264,444   $ 330,555
--------------------------------------------------------------------------------
Tier 1 Capital (to Risk Weighted Assets):
      Company                           $ 505,470  15.27%  $ 132,416       (c)
      Bank                                498,063  15.07%    132,222   $ 198,333
--------------------------------------------------------------------------------
Leverage (to Average Assets):
      Company                           $ 505,470  10.83%  $ 186,654       (c)
      Bank                                498,063  10.68%    186,567   $ 233,208
--------------------------------------------------------------------------------
(a) Minimum capital required for capital adequacy purposes.
(b) Capital required for well-capitalized status.
(c) Not applicable.


Other Regulatory Matters

     Dividends  received  from the Bank  represent  the primary  source of funds
available  to the Company 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 Bank may distribute to the Company.
Without prior regulatory approvals, the Bank will have available an amount equal
to  approximately  $10 million plus its current net income to pay to the Company
as dividends in 1999.

     Under  current  Federal  Reserve  regulations,  the Bank is  limited in the
amounts  it may lend to the  Company  to a  maximum  of 10% of its  capital  and
surplus,  as defined in the regulations.  Any such loans must be  collateralized
from  100% to  130%  of the  loan  amount,  depending  upon  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  based on a
percentage of deposits. Average balances maintained by the Bank with the Federal
Reserve Bank for such purposes were $11 million and $13 million  during 1998 and
1997, respectively.


                               Page 47 of 66 Pages
<PAGE>
(Note 13) OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

     To meet the financing  needs of its customers,  the Bank 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  amounts  recognized  in the
consolidated balance sheets.

     The Bank's exposure to credit loss in the event of non-performance 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 Bank follows the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.

     Commitments  to extend  credit for loans and credit card and related  lines
are  agreements  to make loans to  customers as long as there is no violation of
any  condition   established  in  the  commitments  or  credit  line  contracts.
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 outlays.  Of the total  commitments
outstanding  at December  31,  1998,  approximately  18% carried a fixed rate of
interest over their terms.

     The amount of collateral,  if any,  required by the Bank 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 Bank 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 Bank  holds
marketable  securities  as  collateral  to support  those  letters of credit and
guarantees for which collateral is deemed necessary.

     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 as futures, forward contracts,
option contracts, interest-rate swap agreements and other financial arrangements
with similar characteristics that are commonly referred to as derivatives.

     A summary of off-balance-sheet financial instruments follows:

                                                              December 31
--------------------------------------------------------------------------------
dollars in thousands)                                      1998            1997
--------------------------------------------------------------------------------
Commitments to extend credit                       $   1,122,761   $   1,168,717
Letters of credit and financial guarantees written $     102,416   $     104,570
Credit card and related lines                      $     147,843   $     102,948
--------------------------------------------------------------------------------



                               Page 48 of 66 Pages
<PAGE>
(Note 14) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

     SFAS No.  107,  "Disclosures  about Fair Value of  Financial  Instruments,"
requires the disclosure of estimated fair value information about certain on and
off-balance  sheet  financial  instruments  where it is  practicable to estimate
those values.  Because many of the Company's financial  instruments lack readily
available  trading  markets,  fair  values  for such  instruments  are  based on
significant  estimations  and present value  calculations.  The use of different
assumptions  and  estimation  methods,  such  as  those  concerning  appropriate
discount rates and estimates of future cash flows,  could  significantly  affect
the fair value amounts disclosed. In addition,  reasonable comparability between
financial  institutions  may not be possible  due to the wide range of permitted
valuation techniques and numerous estimates involved.

     Fair value  estimates  do not consider  the value of future  business,  the
value of certain  financial  instruments or the value of assets and  liabilities
that  are  not  considered   financial   instruments.   In  addition,   the  tax
ramifications  related  to  the  unrealized  gains  and  losses  have  not  been
considered  in the  estimates.  Accordingly,  the  aggregate  fair value amounts
presented  are not  necessarily  indicative  of the amounts  the  Company  could
realize in a current  settlement of the underlying  financial  instruments,  nor
should  they  be  interpreted  as  representing  an  aggregate  measure  of  the
underlying value of the Company.

     The following  methods and assumptions were used to estimate the fair value
of each class of financial instrument:

     Cash and  short-term  investments  - The  carrying  amount is a  reasonable
estimate of the fair value of cash and due from financial institutions,  federal
funds sold and short-term investments.

     Investment in  securities - Fair values of  securities  are based on quoted
market prices obtained from independent pricing services.

     Loans - Loans with rates that are repriced in  coordination  with movements
in market  rates and with no  significant  change in credit  risk are  valued at
carrying  amounts.  The fair values of other loans are estimated by  discounting
scheduled cash flows to maturity 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.

     Deposits - SFAS No. 107 requires that deposits  without stated  maturities,
such  as  non-interest-bearing  demand  deposits,  NOW  deposits,  money  market
deposits and savings  deposits,  have fair values  equal to the amounts  payable
upon demand (carrying  amounts).  Deposits with stated maturities were valued by
discounting  contractual cash flows using a discount rate approximating  current
market rates for deposits of similar remaining maturities.

     Short-term  borrowings - Short-term  borrowings  are valued fairly at their
carrying amounts.

     Off-balance-sheet   financial  instruments  -  Off-balance-sheet  financial
instruments  include  commitments to extend credit,  letters of credit and other
financial  guarantees.  The fair values of such instruments were estimated using
fees  currently  charged for similar  arrangements  in the market,  adjusted for
changes in terms and credit risk as  appropriate.  The estimated  fair values of
these instruments are not material.


                               Page 49 of 66 Pages
<PAGE>

    The estimated fair values of the Company's financial instruments follows:
<TABLE>
<CAPTION>

                                                            December 31, 1998              December 31, 1997
--------------------------------------------------------------------------------------------------------------------
                                                          Carrying          Fair          Carrying          Fair
(dollars in thousands)                                     Amount           Value          Amount           Value
--------------------------------------------------------------------------------------------------------------------
ASSETS:
<S>                                                     <C>             <C>             <C>             <C>        
Cash and short-term investments                         $   366,473     $   366,473     $   261,859     $   261,859
Investment in securities                                $ 1,340,078     $ 1,358,474     $ 1,470,967     $ 1,485,120
Loans, net                                              $ 3,230,299     $ 3,230,099     $ 2,820,121     $ 2,816,407
LIABILITIES:
Deposits                                                $ 4,256,662     $ 4,256,087     $ 3,935,871     $ 3,932,942
Short-term borrowings                                   $   355,322     $   355,322     $   289,686     $   289,686
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(Note 15) CONTINGENCIES

     In  1992,  the  Company  discovered  and  reported  to  the  United  States
Department  of  Education  (the "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 (the "Program"). At that time, a
reserve for  potential  settlement  with the DOE was  established  and  internal
procedures were revised for future compliance with the Program. During 1997, the
Company  reached a  tentative  settlement  agreement  with the DOE and  recorded
certain expenses and income tax effects,  which were substantially offset by the
reversal of excess  reserves  for  possible  loan  losses,  also  related to the
settlement. During the fourth quarter of 1998, amounts accrued for the tentative
settlement in 1997 were paid in final settlement to the DOE.

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

(Note 16) OTHER NON-INTEREST INCOME

     The components of other non-interest income were as follows:
<TABLE>
<CAPTION>

                                                                          Years Ended December 31
---------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                  1998          1997          1996
---------------------------------------------------------------------------------------------------------
<S>                                                                <C>           <C>            <C>      
Net gains on sales and other dispositions of foreclosed assets     $   5,897     $   6,641      $  3,119
ATM fees                                                               3,446         3,021         2,360
Secondary market mortgage fees                                         2,230         1,119           822
International services income                                          1,895         1,821         1,826
Investment services income                                             1,466         1,035         1,080
Other fees and charges                                                 1,755         1,955         1,802
Other operating income                                                 1,267         1,846           948
---------------------------------------------------------------------------------------------------------
Total other non-interest income                                     $ 17,956      $ 17,438      $ 11,957
---------------------------------------------------------------------------------------------------------
</TABLE>




                               Page 50 of 66 Pages



<PAGE>



(Note 17) OTHER NON-INTEREST EXPENSE

     The components of other non-interest expense were as follows:

                                                  Years Ended December 31
--------------------------------------------------------------------------------
(dollars in thousands)                             1998         1997        1996
--------------------------------------------------------------------------------
Other outside services                        $   3,964    $   3,905   $   3,368
Advertising                                       3,074        3,538       2,947
Miscellaneous operating losses                    2,855        3,330       1,090
Amortization of intangible assets                 2,777        2,418       2,881
Training expense                                  2,148          787         638
Security services                                 1,511        2,126       1,890
Deposit insurance and regulatory fees             1,182        1,390       2,673
Other operating expense                          13,099       11,687      13,896
--------------------------------------------------------------------------------
Total other non-interest expense               $ 30,610     $ 29,181    $ 29,383
--------------------------------------------------------------------------------


(Note 18) INCOME TAXES

     The components of income tax expense (benefit) follows:

<TABLE>
<CAPTION>

                                                                                        Years Ended December 31
----------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                                 1998         1997         1996
----------------------------------------------------------------------------------------------------------------------
Included in net income
  Current
<S>                                                                                <C>          <C>          <C>     
    Federal                                                                        $ 25,422     $ 28,405     $ 22,718
    State                                                                               222          236          130
----------------------------------------------------------------------------------------------------------------------
      Total                                                                          25,644       28,641       22,848
  Deferred
    Federal                                                                            (221)         213           69
    State                                                                              (265)           8           (7)
----------------------------------------------------------------------------------------------------------------------
      Total                                                                            (486)         221           62
----------------------------------------------------------------------------------------------------------------------
    Total income tax expense                                                       $ 25,158     $ 28,862     $ 22,910
----------------------------------------------------------------------------------------------------------------------
Included in shareholders' equity
  Deferred tax expense (benefit) related to the change in the net unrealized
    gain (loss) on securities                                                      $   (378)    $   416      $   (546)
  Current tax benefit related to nonqualified stock options and restricted stock     (1,342)       (661)         (708)
----------------------------------------------------------------------------------------------------------------------
    Total                                                                          $ (1,720)    $  (245)     $ (1,254)
----------------------------------------------------------------------------------------------------------------------
</TABLE>



                               Page 51 of 66 Pages
<PAGE>
     Income tax expense was different from the amounts  computed by applying the
statutory federal income tax rates to pretax income as follows:
<TABLE>
<CAPTION>

                                                                   Years Ended December 31
-------------------------------------------------------------------------------------------------------
(in percentages)                                             1998             1997             1996
-------------------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>              <C>    
Federal income tax expense                                  35.00 %          35.00 %          35.00 %
Increase (decrease) resulting from
    Tax exempt income                                       (3.92)           (3.67)           (4.43)
    Non-deductible merger-related expenses                    .72              .37             1.02
    Tentative settlement of contingent liability                -             1.19                -
    Miscellaneous items                                       .52              .66              .80
-------------------------------------------------------------------------------------------------------
Effective tax rate                                          32.32 %          33.55 %          32.39 %
-------------------------------------------------------------------------------------------------------
</TABLE>


     Deferred  income  taxes  reflect the tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. The components of the net
deferred income tax asset, which is included in other assets on the consolidated
balance sheets, follow:

<TABLE>
<CAPTION>
                                                                                                      December 31
----------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                                              1998          1997
----------------------------------------------------------------------------------------------------------------------
Deferred tax assets:
<S>                                                                                              <C>           <C>    
  Reserves for losses on loans, other real estate, and other problem assets                      $12,677       $14,035
  Employee benefit plan liabilities                                                                5,955         4,303
  Net operating loss carryforward                                                                    593         1,364
  Unrecognized interest income                                                                     1,193         1,220
  Other                                                                                            1,728         1,104
----------------------------------------------------------------------------------------------------------------------
Total deferred tax assets                                                                        $22,146       $22,026
----------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
  Accumulated depreciation and amortization                                                      $ 4,579       $ 5,510
  Other                                                                                            2,096         1,909
----------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities                                                                   $ 6,675       $ 7,419
----------------------------------------------------------------------------------------------------------------------
  Net deferred tax asset                                                                         $15,471       $14,607
----------------------------------------------------------------------------------------------------------------------
</TABLE>

     At December 31,  1998,  the Company had  approximately  $1.7 million in net
operating loss carryforwards generated by a pooled entity.  Substantially all of
these carryforwards expire in 2004 and 2007.



                               Page 52 of 66 Pages



<PAGE>



(Note 19) PARENT COMPANY FINANCIAL STATEMENTS

     Summarized parent company only financial statements follow:

<TABLE>
<CAPTION>
BALANCE SHEETS                                                             December 31
-----------------------------------------------------------------------------------------------
(dollars in thousands)                                                     1998            1997
-----------------------------------------------------------------------------------------------
ASSETS
<S>                                                                 <C>            <C>         
  Investment in and advances to banking subsidiaries                $   559,263    $    523,356
  Other investments in subsidiaries                                       1,035           1,032
  Dividends receivable                                                    7,384           6,189
  Other assets                                                            2,591           1,816
-----------------------------------------------------------------------------------------------
    Total assets                                                    $   570,273    $    532,393
-----------------------------------------------------------------------------------------------
LIABILITIES
  Dividends payable                                                 $     7,015    $      5,987
  Other liabilities                                                       2,297           1,270
-----------------------------------------------------------------------------------------------
    Total liabilities                                                     9,312           7,257
SHAREHOLDERS' EQUITY                                                    560,961         525,136
-----------------------------------------------------------------------------------------------
    Total liabilities and shareholders' equity                      $   570,273    $    532,393
-----------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>

STATEMENTS OF OPERATIONS                                         Years Ended December 31
---------------------------------------------------------------------------------------------
(dollars in thousands)                                         1998         1997        1996
---------------------------------------------------------------------------------------------
<S>                                                        <C>          <C>         <C>     
Dividend income from banking subsidiaries                  $ 71,474     $ 28,089    $ 27,260
Equity in undistributed earnings of subsidiaries
  Banks                                                     (18,557)      29,888      22,176
  Nonbanks                                                        4           11          18
Other expense, net                                             (242)        (810)     (1,643)
---------------------------------------------------------------------------------------------
NET INCOME                                                 $ 52,679     $ 57,178    $ 47,811
---------------------------------------------------------------------------------------------
</TABLE>



                               Page 53 of 66 Pages
<PAGE>
<TABLE>
<CAPTION>

STATEMENTS OF  CASH FLOWS                                                                Years Ended December 31
----------------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                                  1998         1997        1996
----------------------------------------------------------------------------------------------------------------------
    OPERATING ACTIVITIES
<S>                                                                                  <C>          <C>        <C>     
    Net Income                                                                       $ 52,679     $ 57,178   $ 47,811
    Adjustments to reconcile net income to net cash provided by operating activities:
        Equity in undistributed earnings of subsidiaries                               18,553      (29,899)   (22,194)
        Increase in dividends receivable                                               (1,195)      (1,331)    (1,216)
        Other, net                                                                        468          117        732
---------------------------------------------------------------------------------------------------------------------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                                        70,505       26,065     25,133

---------------------------------------------------------------------------------------------------------------------
    INVESTING ACTIVITIES
      Investment in and advances to banking
        subsidiaries                                                                  (50,995)      (7,742)   (15,015)
      Other, net                                                                            -         (653)     3,248
---------------------------------------------------------------------------------------------------------------------
      NET CASH USED IN INVESTING ACTIVITIES                                           (50,995)      (8,395)   (11,767)

---------------------------------------------------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Cash dividends                                                                  (26,443)     (23,425)   (18,273)
      Proceeds from issuance of stock                                                   8,201       6,044       4,661
      Purchases of treasury stock                                                      (1,300)       (513)          -
---------------------------------------------------------------------------------------------------------------------
      NET CASH USED IN FINANCING ACTIVITIES                                           (19,542)    (17,894)    (13,612)
---------------------------------------------------------------------------------------------------------------------
      DECREASE IN CASH AND CASH EQUIVALENTS                                               (32)       (224)       (246)
      CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                      237         461         707
---------------------------------------------------------------------------------------------------------------------
      CASH AND CASH EQUIVALENTS AT END OF YEAR                                       $    205    $    237    $    461
---------------------------------------------------------------------------------------------------------------------
</TABLE>


(Note 20) EARNINGS PER SHARE

     The components used to calculate  basic and diluted  earnings per share are
as follows:
<TABLE>
<CAPTION>

                                                                   Years Ended December 31
----------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)                  1998            1997            1996
----------------------------------------------------------------------------------------------------
Numerator:
<S>                                                       <C>            <C>              <C>      
    Net income                                            $  52,679      $   57,178       $  47,811
    Effect of dilutive securities                                 -               -               -
----------------------------------------------------------------------------------------------------
    Numerator for diluted earnings per share              $  52,679      $   57,178       $  47,811
----------------------------------------------------------------------------------------------------
Denominator:
    Weighted average shares outstanding                  23,283,458      23,025,173      22,729,851
    Effect of dilutive stock options                        216,185         211,001         167,357
----------------------------------------------------------------------------------------------------
    Denominator for diluted earnings per share           23,499,643      23,236,174      22,897,208
----------------------------------------------------------------------------------------------------
Earnings per share:
    Basic                                                   $  2.26         $  2.48         $  2.10
    Diluted                                                 $  2.24         $  2.46         $  2.09
----------------------------------------------------------------------------------------------------
Antidilutive stock options                                  123,125          42,125               -
----------------------------------------------------------------------------------------------------
</TABLE>

                               Page 54 of 66 Pages



<PAGE>

          MANAGEMENT'S 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  judgments  where  appropriate.  Financial
information  appearing  throughout this annual report is consistent with that in
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  the
Company's 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,  is  documented  by written  policies  and  procedures  that are
communicated  to employees  with  significant  roles in the financial  reporting
process, and is updated as necessary. Management continually monitors the system
of internal control for compliance.  The Company maintains a professional  staff
of internal  auditors who  independently  assess the  effectiveness  of internal
controls and recommend possible  improvements thereto. As part of their audit of
the Company's  1998  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, 1998, the
Company's  system of internal  control is adequate to accomplish  the objectives
discussed herein.

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

    We  have  audited  the  consolidated   balance  sheets  of  WHITNEY  HOLDING
CORPORATION (a Louisiana  corporation)  and subsidiaries as of December 31, 1998
and 1997 and the  related  consolidated  statements  of  operations,  changes in
shareholders'  equity and cash  flows for each of the three  years in the period
ended December 31, 1998. 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 financial position of Whitney Holding Corporation
and subsidiaries as of December 31, 1998 and 1997, and the consolidated  results
of their  operations  and cash  flows for each of the three  years in the period
ended  December 31, 1998,  in  conformity  with  generally  accepted  accounting
principles.
                                                             ARTHUR ANDERSEN LLP

New Orleans, Louisiana
January 18, 1999



                                                     Page 55 of 66 Pages



<PAGE>

<TABLE>
<CAPTION>


                                                                      

SUMMARY OF QUARTERLY FINANCIAL INFORMATION                                                  1998 Quarters (a)
---------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)                                 4th             3rd             2nd             1st
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>             <C>            <C>            <C>      
Net interest income                                                    $   55,005      $   52,938      $   52,697       $  52,492
Provision for loan losses                                                       -               -               -              73
Non-interest income (exclusive of securities transactions)                 15,212          13,767          17,551          13,402
Securities transactions                                                        (2)            833               -               8
Non-interest expense                                                       53,810          51,667          47,877          42,639
Income tax expense                                                          4,962           5,216           7,464           7,516
---------------------------------------------------------------------------------------------------------------------------------
Net income                                                             $   11,443      $   10,655      $   14,907      $   15,674
---------------------------------------------------------------------------------------------------------------------------------
Per share data
  Basic                                                                $      .49      $      .46      $      .64      $      .67
  Diluted                                                              $      .49      $      .45      $      .63      $      .67
  Dividends                                                            $      .30      $      .30      $      .30      $      .30
Trading data (b)
  High stock price                                                     $    41.88      $    51.25      $    62.38      $    63.38
  Low stock price                                                      $    35.75      $    36.63      $    50.00      $    51.13
  Closing stock price                                                  $    37.50      $    41.75      $    50.75      $    60.00
  Trading volume                                                        1,922,621       2,093,098       1,410,536       1,147,945
---------------------------------------------------------------------------------------------------------------------------------

                                                                                            1997 Quarters (a)
----------------------------------------------------------------------------------------------------------------------------------
                                                                               4th             3rd             2nd             1st
----------------------------------------------------------------------------------------------------------------------------------
Net interest income                                                     $   51,970      $   51,661      $   49,572      $   48,123
Provision for loan losses                                                      236          (2,808)            121             331
Non-interest income (exclusive of securities transactions)                  13,982          13,314          15,285          11,588
Securities transactions                                                         20               3             (11)              -
Non-interest expense                                                        44,032          44,206          41,927          41,422
Income tax expense                                                           6,969           8,695           7,283           5,915
----------------------------------------------------------------------------------------------------------------------------------
Net income                                                              $   14,735      $   14,885      $   15,515      $   12,043
----------------------------------------------------------------------------------------------------------------------------------
Per share data
  Basic                                                                 $      .64      $      .65      $      .67      $      .52
  Diluted                                                               $      .63      $      .64      $      .67      $      .52
  Dividends                                                             $      .28      $      .28      $      .28      $      .28
Trading data (b)
  High stock price                                                      $    59.75      $    47.25      $    43.00      $    40.50
  Low stock price                                                       $    46.13      $    40.00      $    35.25      $    34.75
  Closing stock price                                                   $    57.00      $    47.25      $    42.25      $    38.94
  Trading volume                                                         1,052,417       1,232,680       1,762,829       1,534,742
----------------------------------------------------------------------------------------------------------------------------------
<FN>

(a) Unaudited.
(b) Common  stock is traded in the  over-the-counter  market on The Nasdaq Stock
    Market. All closing prices represent closing sales prices as reported on The
    Nasdaq Stock Market.

</FN>
</TABLE>

                              Page 56 of 66 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

     The names,  ages and  positions of the  Company's  directors  and executive
officers are listed below with their  business  experience  during the past five
years.

<TABLE>
<CAPTION>


                                                                                     Director          Term
Name and Age                        Principal Occupation                              Since           Expires
------------------------            --------------------------------------------     --------         -------
<S>                                 <C>                                                <C>              <C>                       
Robert C. Baird, Jr., 48            Executive     Vice       President       of        N/A              N/A
                                    the Company and the Bank since 1995;  Former
                                    President and CEO of Union Bank and Trust, a
                                    $500  million  bank,  from  1991 to 1994 and
                                    Chairman from 1993 to 1994

Guy C. Billups, Jr., 70             Former Chairman of the Board                      1997             2002
                                    of Merchants Bancshares, Inc. and
                                    Merchants Bank & Trust Company;
                                    Chairman, the Mississippi Bank
                                    Advisory Board; Partner, Billups
                                    Farms and Director, Billups
                                    Plantation, Inc. (farming)

Harry J. Blumenthal, Jr., 53        President, Blumenthal                             1993             1999
                                    Print Works, Inc.
                                    (textiles manufacturing)

Joel B. Bullard, Jr., 48            President, Joe Bullard                            1994             1999
                                    Automotive Companies

James M. Cain, 65                   Former Vice Chairman, Entergy                     1987             2002
                                    Corp. (utility holding company);
                                    former Chairman of the Board,
                                    Chief Executive Officer and former
                                    President, Louisiana Power and
                                    Light Company (electric utility);
                                    Former Director, Chief Executive
                                    Officer and President, New
                                    Orleans Public Service, Inc.
                                    (electric utility)

Rodney D. Chard, 56                 Executive Vice President                           N/A              N/A
                                    of the Company and the Bank;
                                    Former Consultant with EDS
                                    Management Consulting Services from
                                    1992 to 1995

                              Page 57 of 66 Pages

<PAGE>
Angus R. Cooper II, 55              Chairman and Chief Executive                      1994             1999
                                    Officer, Cooper/T. Smith Corp.
                                    (shipping service company)

Robert H. Crosby, Jr., 78           Chairman of the Board and                         1972             2002
                                    Chief Executive Officer,
                                    Crosby Land & Resources
                                    (timberland holdings, oil
                                    and gas production)

Richard B. Crowell, 59              Attorney, Crowell & Owens                         1983             2002

Camille A. Cutrone, 69              Partner, Cutrone,                                 1996             2000
                                    Verlander & Meyer, Attorney
                                    at Law

G. Blair Ferguson, 55               Executive Vice President                           N/A              N/A
                                    of the Company and the Bank

William A. Hines, 62                Chairman of the Board,                            1986             2001
                                    Nassau Holding Corporation
                                    (holding company of entities
                                    in oil field service industry)

John C. Hope, III, 49               Executive Vice President                           N/A              N/A
                                    of the Company and the Bank;
                                    Former Chairman and Chief
                                    Executive Officer of the
                                    Alabama Bank; Former Executive Vice
                                    President of AmSouth Bank of Alabama from
                                    1974 to 1994
                            
Robert E. Howson, 67                Former Chairman of the Board                      1989             2000
                                    and Chief Executive Officer of
                                    McDermott International, Inc.
                                    and of McDermott Incorporated
                                    (marine construction services
                                    and power generation systems)

John J. Kelly, 64                   Former President, Textron                         1986             2000
                                    Marine and Land Systems
                                    (designs and builds advanced
                                    technology vehicles and
                                    ships); Chairman, New Orleans
                                    Technology Council

E. James Kock, Jr., 69              Former President: Bowie                           1965             2003
                                    Lumber Associates, Downmans
                                    Associates, Jeanerette Lumber &
                                    Shingle Co., Ltd. and White
                                    Castle Lumber & Shingle Co., Ltd.
                                    (land and timber holdings, and
                                    investments)

                              Page 58 of 66 Pages
<PAGE>
Kenneth A. Lawder, Jr., 57          Executive Vice President                          N/A              N/A
                                    of the Company and the Bank

Alfred S. Lippman, 60               Partner, Lippman, Mahfouz                        1996             2001
                                    & Martin, Attorneys at Law

William L. Marks, 55                Chairman of the Board and                        1990             2000
                                    Chief Executive Officer of
                                    the Company and the Bank

Joseph W. May, 53                   Executive Vice President                          N/A      `       N/A
                                    of the Company and the Bank

R. King Milling, 58                 President of the Company                         1979             2003
                                    and the Bank

John G. Phillips, 76                Former Chairman of the Board                     1972             2003
                                    and Chief Executive Officer, The
                                    Louisiana Land and Exploration
                                    Company (oil and gas exploration
                                    and production)

John K. Roberts, Jr., 62            Chairman and Chief Executive                     1985             2002
                                    Officer, Pan-American Life
                                    Insurance Company (markets
                                    and services life, health
                                    and retirement insurance);
                                    Director, Pan-American
                                    Financial Services, Inc.

Carroll W. Suggs, 60                Chairman, Chief Executive                        1996             2001
                                    Officer and President,
                                    Petroleum Helicopters, Inc.

Warren K. Watters, 71               President, Reilly-Benton                         1986             2000
                                    Company, Inc. (fabrication
                                    and wholesale distribution of
                                    marine and commercial
                                    construction materials)
</TABLE>


     In further response to this Item 10,  registrant  incorporates by reference
the sections entitled "Compliance with Section 16(a) of the Exchange Act" of its
Proxy statement dated March 18, 1999.


Item 11: EXECUTIVE COMPENSATION

     In response to this item, registrant incorporates by reference the sections
entitled  "Compensation  of Directors,"  "Summary  Compensation  Table," "Option
Grants Table," "Option  Exercises and Year End Value Table," and "Company Plans"
and  the  sub-sections   entitled  "Long-Term  Incentive  Plan"  and  "Executive
Compensation Plan" under the heading of "Executive  Compensation Report," of its
Proxy Statement  dated March 18, 1999.  

                              Page 59 of 66 Pages


<PAGE>

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, 1999.

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, 1999.

                                     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, 1998 and 1997                                            25

     Consolidated Statements of Operations --
        Years Ended December 31, 1998, 1997, and 1996                         26

     Consolidated Statements of Changes in Shareholders' Equity --
        Years Ended December 31, 1998, 1997, and 1996                         27

     Consolidated Statements of Cash Flows --
        Years Ended December 31, 1998, 1997, and 1996                         28

     Notes to Financial Statements                                            29

     Report of Independent Public Accountants                                 55

     Summary of Quarterly Financial Information                               56

(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  (filed as Exhibit 3.1 to the
          Company's   Quarterly  Report  on  Form  10-Q  for the  quarter  ended
          March 31, 1993   (Commission  file  number  0-1026)  and  incorporated
          herein by reference).
      
          Exhibit 3.3 - Copy of Bylaws,  as amended  July 1998 (filed as Exhibit
          3.3  to  the  Company's  Quarterly   Report  on  Form  10-Q  for   the
          quarter  ended  September  30, 1998  (Commission  file  number 0-1026)
          and incorporated by reference herein).

                              Page 60 of 66 Pages
<PAGE>
          Exhibit  10.1  -  Stock  Option  Agreement   between  Whitney  Holding
          Corporation  and   William L. Marks   (filed  as  Exhibit  10.2 to the
          Company's   Annual  Report  on  Form  10-K for the year ended December
          31, 1990   (Commission   file  number  0-1026)  and  incorporated   by
          reference).

          Exhibit  10.2  -   Executive   agreement   between   Whitney   Holding
          Corporation, Whitney National Bank and William L. Marks (filed as
          Exhibit 10.3 to the Company's  Quarterly  Report on Form 10-Q for
          the quarter ended June 30, 1993  (Commission  file number 0-1026)
          and incorporated by reference).

          Exhibit   10.3  -  Executive   agreement   between   Whitney   Holding
          Corporation,  Whitney  National  Bank and R.  King  Milling  (filed as
          Exhibit 10.4 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter  ended June 30,  1993  (Commission  file  number  0-1026)  and
          incorporated by reference).

          Exhibit   10.4  -  Executive   agreement   between   Whitney   Holding
          Corporation,  Whitney  National Bank and Edward B. Grimball  (filed as
          Exhibit 10.5 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter  ended June 30,  1993  (Commission  file  number  0-1026)  and
          incorporated by reference).

          Exhibit   10.5  -  Executive   agreement   between   Whitney   Holding
          Corporation,  Whitney National Bank and Kenneth A. Lawder,  Jr. (filed
          as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the
          quarter  ended June 30,  1993  (Commission  file  number  0-1026)  and
          incorporated by reference).

          Exhibit   10.6  -  Executive   agreement   between   Whitney   Holding
          Corporation,  Whitney  National Bank and G. Blair  Ferguson  (filed as
          Exhibit 10.7 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 1993  (Commission  file number 0-1026) and
          incorporated by reference).

          Exhibit   10.7  -  Executive   agreement   between   Whitney   Holding
          Corporation, Whitney National Bank and Joseph W. May (filed as Exhibit
          10.7 to the  Company's  Annual  Report on Form 10-K for the year ended
          December 31, 1993  (Commission file number 0-1026) and incorporated by
          reference).

          Exhibit   10.8  -  Executive   agreement   between   Whitney   Holding
          Corporation,  Whitney Bank of Alabama and John C. Hope,  III (filed as
          Exhibit 10.8 to the Company's  Annual Report on Form 10-K for the year
          ended   December  31,  1994   (Commission   file  number  0-1026)  and
          incorporated by reference).

          Exhibit   10.9  -  Executive   agreement   between   Whitney   Holding
          Corporation,  Whitney National Bank and Robert C. Baird, Jr. (filed as
          Exhibit 10.9 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter  ended June 30,  1995  (Commission  file  number  0-1026)  and
          incorporated by reference).

          Exhibit 10.10a - Long-term incentive program (filed as Exhibit 10.7 to
          the Company's  Annual Report on Form 10-K for the year ended  December
          31,  1991   (Commission   file  number  0-1026)  and  incorporated  by
          reference).

          Exhibit 10.10b - Long-term  incentive plan (filed as a Proposal in the
          Company's Proxy Statement dated March 18, 1997 (Commission file number
          0-1026) and incorporated by reference).

          Exhibit 10.11 - Executive  compensation plan (filed as Exhibit 10.8 to
          the Company's  Annual Report on Form 10-K for the year ended  December
          31,  1991   (Commission   file  number  0-1026)  and  incorporated  by
          reference).

          Exhibit 10.12 - Form of restricted  stock  agreement  between  Whitney
          Holding Corporation and certain of its officers (filed as Exhibit 19.1
          to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
          June 30, 1992  (Commission  file number  0-1026) and  incorporated  by
          reference).

                              Page 61 of 66 Pages
<PAGE>

          Exhibit 10.13 - Form of stock option agreement between Whitney Holding
          Corporation  and certain of its officers (filed as Exhibit 19.2 to the
          Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
          1992 (Commission file number 0-1026) and incorporated by reference).

          Exhibit  10.14 - Directors'  Compensation  Plan (filed as Exhibit A to
          the Company's Proxy Statement  dated March 24, 1994  (Commission  file
          number 0-1026) and incorporated by reference).

          Exhibit  10.14a - Amendment No. 1 to the Whitney  Holding  Corporation
          Directors'  Compensation  Plan  (filed as  Exhibit A to the  Company's
          Proxy Statement dated March 15, 1996  (Commission  file number 0-1026)
          and incorporated by reference).

          Exhibit 10.15 - Retirement  Restoration Plan effective January 1, 1995
          (filed as Exhibit  10.16 to the  Company's  Annual Report on Form 10-K
          for the year ended December 31, 1995  (Commission  file number 0-1026)
          and incorporated by reference).

          Exhibit  10.16  -  Executive   agreement   between   Whitney   Holding
          Corporation,  Whitney  National  Bank and  Rodney D.  Chard  (filed as
          Exhibit 10.17 to the Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 1996  (Commission  file number 0-1026) and
          incorporated by reference).

          Exhibit  10.17 - Form of Amendment  to Section  2.1e of the  Executive
          agreements  (filed as Exhibits  10.2  through  10.9  herein  (filed as
          Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year
          ended   December  31,  1996   (Commission   file  number  0-1026)  and
          incorporated by reference).

          Exhibit 10.18 - Executive  agreement  between Whitney National Bank of
          Mississippi  and Guy C.  Billups,  Jr.  dated April 18, 1997 (filed as
          Exhibit 10.19 to the Company's  Quarterly  Report on form 10-Q for the
          quarter  ended June 30,  1997  (Commission  file  number  0-1026)  and
          incorporated by reference).

          Exhibit  10.19  - Form  of  Amendment  adding  subsection  2.1g to the
          Executive  Agreements set forth as Exhibits 10.2 through 10.9, Exhibit
          10.16  and  Exhibit  10.18  herein  (filed  as  Exhibit  10.19  to the
          Company's  Quarterly  Report on Form 10-Q for the quarter  ended March
          31,  1998   (Commission   file  number  0-0126)  and  incorporated  by
          reference).

          Exhibit 21 - Subsidiaries

          Whitney Holding  Corporation owns 100% of the capital stock of Whitney
          National  Bank,  successor by merger in early  January 1998 to Whitney
          Bank of Alabama, Whitney National Bank of Florida and Whitney National
          Bank of Mississippi.

          Exhibit 23 - Consent of Arthur Andersen LLP dated March 26, 1999

          All  other   subsidiaries   considered  in  the  aggregate  would  not
          constitute a significant subsidiary. 

          Exhibit 27 - Financial Data Schedule

(b) Reports of Form 8-K

          None


                               Page 62 of 66 Pages



<PAGE>




     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, Chief Executive Officer,
                               and Chief Financial Officer (Principal Accounting
                               Officer)




                               March 24, 1999
                               -------------------------------------------------
                                                      Date



                               Page 63 of 66 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.

           Signature                                                 Date
-----------------------------------                          -------------------

/s/ William L. Marks               , Chairman of the Board,
-----------------------------------  Chief Executive Officer, and
    William L. Marks                 Chief Financial Officer
                                     (Principal Accounting       March 24, 1999
                                     Officer) and Director ---------------------


/s/ R. King Milling                , President and Director      March 24, 1999
-----------------------------------                        ---------------------
    R. King Milling



/s/ John G. Phillips               , Director                     March 24, 1999
-----------------------------------                        ---------------------
    John G. Phillips


/s/ Robert H. Crosby, Jr.          , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Robert H. Crosby, Jr.


/s/ Richard B. Crowell             , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Richard B. Crowell


/s/ James M. Cain                  , Director                     March 24, 1999
-----------------------------------                        ---------------------
    James M. Cain


/s/ Harry J. Blumenthal, Jr.       , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Harry J. Blumenthal, Jr.


/s/ Robert E. Howson               , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Robert E. Howson


/s/ Warren K. Watters              , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Warren K. Watters


/s/ John K. Roberts, Jr.           , Director                     March 24, 1999
-----------------------------------                        ---------------------
    John K. Roberts, Jr.


                                   , Director                     
-----------------------------------                        ---------------------
    William A. Hines


                              Page 64 of 66 Pages

<PAGE>

/s/ E. James Kock, Jr.             , Director                     March 24, 1999
-----------------------------------                        ---------------------
    E. James Kock, Jr.


/s/ John J. Kelly                  , Director                     March 24, 1999
-----------------------------------                        ---------------------
    John J. Kelly


/s/ Angus R. Cooper, III           , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Angus R. Cooper, III


/s/ Joel B. Bullard, Jr.           , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Joel B. Bullard, Jr.


/s/ Camille A. Cutrone             , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Camille A. Cutrone


/s/ Carroll W. Suggs               , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Carroll W. Suggs    


/s/ Alfred S. Lippman              , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Alfred S. Lippman   


/s/ Guy C. Billups, Jr.            , Director                     March 24, 1999
-----------------------------------                        ---------------------
    Guy C. Billups, Jr. 


                              Page 65 of 66 Pages

<PAGE>


                                                                      Exhibit 23


                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    -----------------------------------------

As independent  public  accountants,  we hereby consent to the  incorporation by
reference of our report  included  herein or  incorporated  by reference in this
Form 10-K,  into Whitney Holding  Corporation's  previously  filed  Registration
Statements on Forms S-3 (File Nos. 33-56024,  33-55307, and 33-56277)  and  Form
S-8 (File No. 33-68506).


                                                         /s/ Arthur Andersen LLP


New Orleans, Louisiana
March 26, 1999


                               Page 66 of 66 Pages