Description

Despite the “tens of thousands” of homes and businesses that have been completely destroyed, Whitney Holding (WTNY), the largest independent bank in New Orleans, is a buy. (In the last few days, Whitney is down 15%.) The two most charming areas and most critical for the tourist dominated economy, the St. Charles/Garden district (home to Audubon Park and Tulane University) and the French Quarter, suffered damage, but were not destroyed. (See the two articles below.) While the current human tragedy is horrible, much of the rest of New Orleans was somewhat run-down and under-invested in before Katrina anyway and will benefit from a rebuilding. It now will have billions of dollars to do that as a result of insurance money, FEMA funds, and private donations. And of course the French quarter will receive a lot of the money too. Mardis Gras won’t be canceled. President Bush is already taking a lot of heat for a delayed response. He has promised $10.5B in federal money and I bet more will be coming. There will be tons of money sloshing around the New Orleans’ banks over the next several years. Additionally, because of its location at the mouth of the Mississippi and the implications of all the agriculture that is shipped down from the Midwest, not to mention its role in the oil and gas industry, a large port city to handle all of trade is essential. New Orleans will be back better than ever. Construction will be booming for 10 years.

Some basics of Whitney:
In the last seven years, WTNY has been relatively successful in expanding beyond Louisiana. It now stretches from the gulf coast of Florida to Houston, Texas. It has 125 branches, of which 40 are in the greater New Orleans. While I can’t confirm at this point, I bet that less than half are in the worst flooded areas. About 70% of the deposits and 60% of the loans are in Louisiana. The company also has very strong capital ratios (8.3% tangible-equity-to-assets vs. 6.5% on average for peers), and has historically had some of the best asset quality in the banking industry. Whitney is also almost exclusively a commercial bank. This means that not only will they get a lot of the deposits from FEMA and the insurance companies, but they will be financing a large amount of the construction. Hibernia (HIB), which is to be acquired by Capital One next Wednesday, has been de-emphasizing its commercial lending business, a goal which was further highlighted when it agreed to be acquired. (Capital One bought HIB primarily for its deposits, not its commercial assets.) This was one of the reasons why WTNY’s stock did so well in the first half of 2005. CEO Bill Marks is also 61 years old, which also increases the prospect of a sale over the next few years. Currently, WTNY trades at 2.5 times tangible book value and is projected to earn $2.03 in 2006, putting it at 13.6 times earnings. While it is not bargain-basement, many banks trade at 15+ times earnings and many that are thought to be acquired trade at 17+ times, equating to a $34.50 price tag, 21% above the current price, much of which will be realized in the next month. Over the long holiday weekend, we will see order restored and the chaos diminish in New Orleans. Tuesday morning, momentum investors will bail and the stock will likely rebound.


- September 1, 4 p.m.
Dear Friends of Tulane,
After five days on campus, our emergency team has just arrived in Houston from New Orleans, where we will be joined by the rest of our senior leadership team from locations around the country. We will be working out of Houston effective immediately. Now that we have access to electricity and Internet connectivity, we will be corresponding regularly via this website: http://emergency.tulane.edu
Our immediate priorities are:
1. Attend to the needs of our faculty and staff who remain on campus. They are safe but living conditions are not good. We evacuated the entire uptown campus safely. As of today, only a core team of public safety and facilities personnel remain. We are in the process of evacuating personnel from the Health Sciences Center downtown . Additionally, we are trying to continue to supply provisions to the remaining staff on-site at the Primate Center in Mandeville. All of the students who were evacuated to Jackson State University in Mississippi have returned to their homes or are in the process of returning to their homes.
2. Re-establish our communications with constituencies ASAP. In particular, we will be giving guidance within 48 hours about our plans for this semester. I understand everyone's anxiety but we need additional time to assess the situation in New Orleans.
3. Begin the recovery process. The campus did sustain some damage, though it generally fared very well during the storm. There are many downed trees, some buildings sustained water damage, and some roofing tiles were damaged. The necessary repairs are manageable. The dorms are intact and students' belongings are safe.
I will update you again no later than 11 a.m. CST tomorrow, September 2, 2005. Please disseminate this email as widely as you can through any additional means you may have.
Scott Cowen


French Quarter survives -- with luck and a prayer

The French Quarter was damaged by Katrina, but it was not destroyed, and tourists and residents let the good times roll and wondered why they were so lucky.

By ERIKA BOLSTAD

[email protected]

NEW ORLEANS - At the start of hurricane season, the historic St. Louis Cathedral in the heart of the French Quarter offers a short prayer in the Sunday church bulletin to Our Lady of Prompt Succor.
Each year, the city's Catholics clip out the prayer, place it on their refrigerators and repeat the entreaty whenever a tropical depression appears in the Gulf of Mexico: Spare New Orleans from a direct hit by a hurricane.
''Consequently, these things never hit us dead on,'' said Jim Dartez, 62, who evacuated his lakefront home with his wife and daughter and spent Hurricane Katrina at a high-rise hotel in the city's downtown.
CITY SPARED
It may be prayer or geographic luck, but when Hurricane Katrina made landfall Monday morning, it sideswiped New Orleans.
Katrina, which made its first deadly landfall in South Florida last week before strengthening in the Gulf of Mexico, was thought Sunday to be headed straight for New Orleans as the monster storm-of-a-lifetime that had the potential to destroy the city's levees.
But by Monday afternoon, as Dartez and his wife, Cecilia, and daughter, Estrellita, wandered through the French Quarter, they thought prayer might have something to do with the slight jog the hurricane took to the east.
''Think about it, how it changed just before it got to New Orleans,'' Cecilia Dartez said.
Monday afternoon, Dartez and his family and the other curious tourists and residents walked through the French Quarter to see what kind of damage Hurricane Katrina's winds did earlier in the day to the historic neighborhood and to the landmark cathedral.
STREETS CLOGGED
Some streets were impassable because of fallen trees. Others were clogged with bricks that fell off facades, roof slates and shards of red clay plant holders that tumbled off the balconies of historic Creole town houses.
Like much of the year, Mardi Gras beads were strewn everywhere, caught up in twisted pieces of balconies that fell, and tangled in the debris from fallen tree limbs.
Winds wrested the cooper roof from the Old U.S. Mint on the eastern edge of the French Quarter and tossed the twisted metal across several nearby streets.
But the cathedral was spared any damage. Not only that, a magnolia tree and an oak felled by Katrina's winds landed in the cathedral's back courtyard but missed the church and a white marble statue of Jesus with outstretched arms.
Maybe it was prayer, or maybe just ordinary geographic luck.
SECTIONS UNSCATHED
Whatever it was, the French Quarter, the city's oldest, highest and most famous -- if not infamous -- neighborhood may have been heavily damaged and tattered by Katrina, but it was not destroyed.
Though some areas were littered by broken glass and rendered impassable by flooded streets and downed trees and power lines, other stretches looked unscathed by Katrina.
But the New Orleans neighborhood that once measured the success of Mardi Gras by the tonnage of its Ash Wednesday garbage is used to sweeping up the leftovers of its nightly bacchanals and has no trouble using a fresh coat of paint to spruce up a rundown and termite-ridden facade.
BAR WAS OPEN
''It's not as bad as Mardi Gras bad,'' offered Ken McCorkle, 43, a French Quarter resident walking up Monday afternoon to Johnny White's, a bar that remained open around the clock before, during and after the storm. Dozens of people spilled out onto Bourbon Street with plastic cups of cold keg beer from the bar, one of just a handful open in the French Quarter on Monday afternoon.
''I guess we did such a good job of getting everyone so drunk last night they didn't realize there was a hurricane going on,'' said Cliff Burnham, who manages Snooks, another Bourbon Street bar that opened Monday soon after Katrina's winds slowed to tropical-storm status.
A LONG RECOVERY
Still, although Katrina may not have hit New Orleans directly, it certainly didn't spare the city or the region any misery. Millions of homes were without power, many people suffered tremendous damage to their homes and property, and hundreds were stranded on the roofs of their homes awaiting rescue from the flood of water that may have even destroyed some communities surrounding the city.
It will take weeks, if not years, to recover from such a catastrophic event.
But this is New Orleans, the French Quarter, Bourbon Street.
So the good times roll on, even after the hurricane rolls through.
And as Kimberly Cann bellowed, whenever anyone new entered Snooks, where she was spending the afternoon drinking: ``This is where the party is!''

Catalyst

Realization that the most important areas of New Orleans are not destroyed.