As Filed with the Securities and Exchange Commission on November 8,
1994
REGISTRATION NO. 33-56037
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
AMENDMENT NO. 2 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________________
HIBERNIA CORPORATION
(Exact Name of Registrant as Specified in its charter)
Louisiana 6711 72-0724532
(State or (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification
Incorporation or Classification Number)
Organization)
313 Carondelet Street
New Orleans, Louisiana 70130
(504) 533-5332
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
_____________________________
Gary L. Ryan
Associate Counsel
Hibernia Corporation
313 Carondelet Street
New Orleans, Louisiana 70130
(504) 533-5560
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code of Agent for Service)
COPIES TO:
Patricia C. Meringer
Secretary and Associate Counsel
Hibernia Corporation
313 Carondelet Street
New Orleans, Louisiana 70130
(504) 533-2486
Donald P. Weiss
Weiner, Weiss, Madison & Howell
333 Texas Street, Suite 2350
Shreveport, Louisiana 71101
(318) 226-9100
____________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES
TO THE PUBLIC:
As soon as practicable after this registration statement is
declared effective.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the following
box. ______
/_____/
CALCULATION OF REGISTRATION FEE
_________________________________________________________________
Title of each Amount to be Proposed Proposed Amount of
class of Registered Maximum Maximum Registration
securities to Offering Aggregate Fee (2)
be registered Price per Offering
Share (1) Price (1)
_________________________________________________________________
Class A
Common Stock,
no par value 8,370,512 $8.00 $66,964,096 $10,293
shares
_________________________________________________________________
1. Assuming an Average Market Price of the Registrant's Class A
Common Stock, no par value, at closing (as defined elsewhere
in the Prospectus) equal to the average of the high and low
sales prices of one share of such stock on October 10, 1994.
2. Based upon a book value of the securities to be exchanged as
of June 30, 1994 of $29,851,165 pursuant to Rule 457(f)(2) of
the Securities Act of 1933 (the "Securities Act").
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
HIBERNIA CORPORATION
Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K
Item of Form S-4 Location or Caption in
Proxy Statement
(Prospectus)
1. Forepart of Registration Statement Introduction
and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Table of Contents;
Cover Pages of Prospectus Available Information
3. Risk Factors, Ratio of Earnings Introduction; The
To Fixed Charges and Other Parties to the Merger;
Information Summary; Certain
Certain Regulatory
Considerations
4. Terms of the Transaction Introduction; Summary;
Proposed Merger
5. Pro Forma Financial Pro Forma Financial
Information Information
6. Material Contacts with the Proposed Merger
Company Being Acquired
7. Additional Information Required Not Applicable
for Reoffering by Persons and
Parties Deemed to be Underwriters
8. Interests of Named Experts and Validity of Shares;
Counsel Experts; Relationship
with Independent
Auditors
9. Disclosure of Commission Position Not Applicable
on Indemnification for Securities
Act Liabilities
10. Information with Respect to Introduction; Available
S-3 Registrants Information; The
Parties to the Merger
11. Incorporation of Certain Available Information
Information by Reference
12. Information with Respect to Not Applicable
S-2 or S-3 Registrants
13. Incorporation of Certain Not Applicable
Information by Reference
14. Information with Respect to Not Applicable
Registrants other than
S-2 or S-3 Registrants
15. Information with Respect to Not Applicable
S-3 Companies
16. Information with Respect to Not Applicable
S-2 or S-3 Companies
17. Information with Respect to Summary; The Parties to
Companies Other Than S-2 or the Merger; Certain
S-3 Companies Information Concerning
Pioneer
18. Information if Proxies, Introduction; Summary;
Consents or Authorizations Meeting Information;
are to be Solicited Proposed Merger; Certain
Information Concerning
Pioneer; Relationship with
Independent Auditors
19. Information if Proxies, Not Applicable
Consent, Authorizations are not
to be Solicited or in an Exchange
Offer
November 9, 1994
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of Pioneer Bancshares Corporation ("Pioneer") to be
held on Tuesday, November 29, 1994, at 2:00 p.m., Central time, at
Pioneer Bank & Trust Company, 401 Texas Street, Shreveport,
Louisiana.
At the meeting, you will be asked to approve an Agreement and
Plan of Merger, between Pioneer and Hibernia Corporation
("Hibernia") (the "Agreement"), pursuant to which Pioneer will be
merged with and into Hibernia (the "Merger"), all as more fully
described in the attached Proxy Statement/Prospectus.
The Merger has been approved by your Board of Directors, which
believes based on its own analysis and the opinions of financial
advisors (all of which are described in the accompanying Proxy
Statement/Prospectus), that the Merger is in the best interests of
Pioneer's shareholders. As a result of the Merger, you will become
a shareholder of Hibernia and own common stock for which there is
an active public trading market. Hibernia has greater financial
resources than Pioneer and is able to offer a broad range of
financial services and compete more effectively in this current
market environment. The Merger presents a rare opportunity for our
shareholders, and I urge you to vote your shares in favor of this
transaction.
The Board of Directors recommends that you vote all of your
Common Stock "FOR" the proposal to approve the Agreement and
related Merger. Marking "abstain" on the enclosed proxy card with
respect to the proposal to approve the Agreement and related Merger
will have the same effect as a vote against the proposal to approve
the Agreement. Even if you plan to attend the Special Meeting,
please mark, date and sign the enclosed proxy card and return it
promptly in the accompanying envelope.
Very truly yours,
E.R. Campbell, Jr.
Chairman of the Board
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
PIONEER BANCSHARES CORPORATION
November 29, 1994
NOTICE IS HEREBY GIVEN that, pursuant to the call of the
directors of Pioneer Bancshares Corporation ("Pioneer"), a Special
Meeting of the shareholders of Pioneer will be held at the main
office of Pioneer Bank & Trust Company, 401 Texas Street,
Shreveport, Louisiana 71130 on November 29, 1994, at 2:00 p.m.,
Central time, for the purpose of considering and voting upon the
following matters:
1. A proposal to approve a Merger of Pioneer with and into
Hibernia Corporation ("Hibernia") (the "Merger"), and the
related Agreement and Plan of Merger between Pioneer and
Hibernia dated as of June 1, 1994 (the "Agreement"), a
copy of which is attached as Appendix A to the
accompanying Proxy Statement-Prospectus and incorporated
herein by this reference, and which Agreement also
provides for the merger of Pioneer Bank & Trust Company
(the "Bank"), a Louisiana banking association and wholly-
owned subsidiary of Pioneer, with and into Hibernia
National Bank ("HNB") (the "Bank Merger").
2. The transaction of such other business as may properly
come before the meeting and any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on
November 1, 1994 as the record date for determining the
shareholders entitled to receive notice of, and to vote at, the
Special Meeting.
Each share of common stock, par value $10.00 per share, of
Pioneer (the "Pioneer Common Stock") will entitle the holder
thereof to one vote on all matters that come before the Special
Meeting. Approval of the Merger will require the affirmative vote
of two-thirds of the voting power of Pioneer present or represented
by proxy at the Special Meeting.
Dissenting shareholders who comply with the procedural
requirements of the Business Corporation Law of Louisiana will be
entitled to receive payment of the fair cash value of their shares
if the Merger is effected upon approval by less than eighty percent
(80%) of Pioneer's total voting power.
Whether you intend to attend the Special Meeting, and
regardless of the number of shares you own, your vote is important.
Please take a moment to complete, date and sign the enclosed proxy
card. Your proxy may be revoked by notice to the Secretary of
Pioneer or by executing and delivering a later dated proxy to the
Secretary prior to the Special Meeting.
By Order of the Board of Directors,
Darlene Drake
Secretary
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND
THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT-PROSPECTUS.
PIONEER BANCSHARES CORPORATION
PROXY
This Proxy is Solicited on Behalf of
The Board of Directors of Pioneer Bancshares Corporation
The undersigned shareholder of Pioneer Bancshares Corporation,
a Louisiana corporation, hereby appoints E. R. Campbell, Jr. and
B.D. Flurry and each of them, proxies with power of substitution to
vote and act for the undersigned, as designated below, with respect
to the number of shares of the Common Stock of Pioneer Bancshares
Corporation ("Pioneer") the undersigned would be entitled to vote
if personally present at the Special Meeting of Shareholders of
Pioneer, which will be held at the office of Pioneer Bank & Trust
Company, 401 Texas Street, Shreveport, Louisiana 71130 on November
20, 1994, at 2:00 p.m., Central time, (the "Special Meeting"), and
at any adjournments or postponements thereof, and, at their
discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED
HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS SPECIFIED WHEN THE
DULY EXECUTED PROXY IS RETURNED, SUCH SHARES WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS OF
PIONEER.
The Board of Directors of Pioneer recommends that you vote FOR
approval of the Merger of Pioneer with and into Hibernia
Corporation.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
PLEASE MARK YOUR CHOICE LIKE
THIS ___ IN BLUE OR BLACK INK/
/___/
_____________________ ____________________
Account Number Common Stock
Item 1 Approval of Merger of Pioneer with and into Hibernia
Corporation
For Against Abstain
___ ___ ___
/___/ /___/ /___/
The undersigned hereby acknowledges receipt of a copy of the
accompanying Notice of Special Meeting of Shareholders and Proxy
Statement and hereby revokes any proxy or proxies heretofore given.
Date_______________________________
Signature__________________________
Please mark, date and sign as your account name appears and return
in the enclosed envelope. If acting as executor, administrator,
trustee, guardian, or in a similar capacity, you should so indicate
when signing. If the person signing is a corporation, partnership
or other entity, please sign the full name of the corporation or
partnership or other entity by a duly authorized officer, partner
or other person. If the shares are held jointly, each shareholder
named should sign.
PROXY STATEMENT
PIONEER BANCSHARES CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on November 29, 1994
PROSPECTUS
HIBERNIA CORPORATION
8,370,512 SHARES OF
CLASS A COMMON STOCK
(NO PAR VALUE)
This Proxy Statement-Prospectus is being furnished to the
holders of common stock, par value $10.00 per share (the "Pioneer
Common Stock"), of Pioneer Bancshares Corporation ("Pioneer") in
connection with the solicitation of proxies by the Board of
Directors of Pioneer for use at a special meeting of shareholders
(the "Special Meeting") to be held at 2:00 p.m., local time, on
November 29, 1994, at the office of Pioneer Bank & Trust Company,
401 Texas Street, Shreveport, Louisiana 71130, and at any
adjournments or postponements thereof.
At the Special Meeting, the holders of record of Pioneer
Common Stock as of the close of business on November 1, 1994 (the
"Record Date") will consider and vote upon a proposal to approve
the merger of Pioneer with and into Hibernia Corporation
("Hibernia") (the "Merger"), and the related Agreement and Plan of
Merger dated June 1, 1994 (the "Agreement") between Pioneer and
Hibernia pursuant to which, immediately following the merger of
Pioneer into Hibernia, Pioneer Bank & Trust Company (the "Bank")
will also merge with and into Hibernia National Bank ("HNB") (the
"Bank Merger"). Upon consummation of the Merger, each outstanding
share of Pioneer Common Stock, except for shares owned beneficially
by Hibernia and its subsidiaries and shares as to which dissenters'
rights have been perfected and not withdrawn or otherwise
forfeited, will be converted into the number of shares of
Hibernia's Class A Common Stock, no par value (the "Hibernia Common
Stock"), determined in the manner described below under the heading
"PROPOSED MERGER -- Terms of the Merger," with cash being paid in
lieu of any fractional share interests. For a description of the
Agreement, which is included in its entirety as Appendix A to this
Proxy Statement-Prospectus, see "PROPOSED MERGER."
This Proxy Statement-Prospectus also constitutes a
prospectus of Hibernia with respect to the shares of Hibernia
Common Stock to be issued pursuant to the Agreement if the Merger
is consummated. The actual number of shares of Hibernia Common
Stock to be issued will be determined in accordance with the terms
of the Agreement. See "PROPOSED MERGER -- Terms of the Merger."
The outstanding shares of Hibernia Common Stock are
listed on the New York Stock Exchange, Inc. (the "NYSE"). The
reported last sale price of Hibernia Common Stock on the NYSE
Composite Transactions Reporting System on November 7, 1994 was
$8.25 per share.
This Proxy Statement-Prospectus and the accompanying
proxy card are first being mailed to shareholders of Pioneer on or
about November 10, 1994.
No person is authorized to give any information or to make any
representations other than those contained in this Proxy Statement-
Prospectus, and, if given or made, such information or
representation may not be relied upon as having been made by
Hibernia or Pioneer. This Proxy Statement-Prospectus does not
constitute an offer to sell or solicitation of an offer to buy by
Hibernia, nor will there be any sale of Hibernia Common Stock
offered hereby, in any state in which, or to any person to whom, it
would be unlawful to make such an offer or solicitation prior to
registration or qualification under applicable state law.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF HIBERNIA COMMON STOCK OFFERED HEREBY ARE
NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR
SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this Proxy Statement-Prospectus is November 10, 1994.
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . .
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . .
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . .
THE PARTIES TO THE MERGER. . . . . . . . . . . . . . .
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . .
MEETING INFORMATION. . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . .
Votes Required. . . . . . . . . . . . . . . . . .
Recommendation of Pioneer's Board . . . . . . . .
Other Matters . . . . . . . . . . . . . . . . . .
PRO FORMA FINANCIAL INFORMATION. . . . . . . . . . . .
PROPOSED MERGER. . . . . . . . . . . . . . . . . . . .
Background of and Reasons for Merger. . . . . . .
Terms of the Merger . . . . . . . . . . . . . . .
Opinion of Financial Advisor . . . . . . . . . .
Surrender and Exchange of Stock Certificates. . .
Employee Benefits
Representations and Warranties:
Conditions to the Merger; Waiver. . . . . . . .
Regulatory and Other Approvals. . . . . . . . . .
Required Sale of Branches . . . . . . . . . . . .
Business Pending the Merger . . . . . . . . . . .
Effective Date of the Merger; Termination . . . .
Management and Operations After the Merger. . . .
Certain Differences in Rights of Shareholders . .
Interests of Certain Persons in the Merger. . . .
Material Tax Consequences . . . . . . . . . . . .
Resale of Hibernia Common Stock . . . . . . . . .
Rights of Dissenting Shareholders . . . . . . . .
Dividend Reinvestment Plan. . . . . . . . . . . .
Accounting Treatment. . . . . . . . . . . . . . .
CERTAIN INFORMATION ABOUT HIBERNIA. . . . . . .. . . .
CERTAIN INFORMATION CONCERNING PIONEER. . . . . . . .
Description of Business . . . . . . . . . . . . .
Ownership of Pioneer Common Stock
and Dividends . . . . . . . . . . . . . . . . .
RELATIONSHIP WITH INDEPENDENT AUDITORS . . . . . . . .
VALIDITY OF SHARES . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . .
PIONEER CONSOLIDATED FINANCIAL INFORMATION . . . . . .
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES'
MANAGEMENT'S DISCUSSION AND ANALYSIS
APPENDICES
APPENDIX A -- AGREEMENT AND PLAN OF MERGER DATED JUNE 1, 1994
APPENDIX B -- FORM OF OPINION OF US BANKING ALLIANCE
APPENDIX C -- SELECTED PROVISIONS OF LOUISIANA LAW RELATING
TO RIGHTS OF DISSENTING SHAREHOLDERS
APPENDIX D -- FORM OF OPINION OF ERNST & YOUNG REGARDING
CERTAIN TAX MATTERS
INTRODUCTION
This Registration Statement relates to shares of Class A
Common Stock, no par value of Hibernia Corporation, a Louisiana
corporation , which will be issued in connection with the Merger
of Pioneer Bancshares Corporation, a Louisiana corporation, with
and into Hibernia. The shares of Hibernia Common Stock offered
hereby will be exchanged, upon consummation of the Merger, for the
outstanding shares of common stock, $10.00 par value, of Pioneer
(the "Pioneer Common Stock").
Shareholders of Pioneer will be asked to approve the Merger at
a Special Meeting to be held on November 29, 1994. The proxy
statement relating to such Special Meeting is included in this
Proxy Statement-Prospectus.
The terms of the Merger are described in this Proxy Statement-
Prospectus, and a copy of the Agreement and Plan of Merger between
Hibernia and Pioneer is attached hereto as Appendix A for
reference.
AVAILABLE INFORMATION
Hibernia Corporation is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the
public reference facilities of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at 75 Park Place, 14th Floor, New York,
New York 10007 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, reports, proxy statements and other
information concerning Hibernia may be inspected at the offices of
the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street,
New York, New York 10005, on which the shares of Common Stock are
listed.
Hibernia has filed with the Commission a registration
statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act") with respect to the Common
Stock offered hereby. This Proxy Statement-Prospectus does not
contain all of the information set forth in the Registration
Statement. For further information with respect to Hibernia and
the Hibernia Common Stock offered hereby, reference is hereby made
to the Registration Statement. Statements contained in this
Prospectus concerning the provisions of certain documents are not
necessarily complete and, in each instance, reference is made to
the copy of the document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by
such reference. Copies of all or any part of the Registration
Statement, including exhibits thereto, may be obtained, upon
payment of the prescribed fees, at the offices of the Commission
and the NYSE, as set forth above.
All information contained in this Proxy Statement-Prospectus
relating to Hibernia and its subsidiaries has been supplied by
Hibernia, and all information relating to Pioneer and its
subsidiaries has been supplied by Pioneer.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated by reference in this Prospectus are the following
documents filed by Hibernia Corporation with the Commission
pursuant to the Exchange Act: Hibernia's (1) Annual Report on Form
10-K for the year ended December 31, 1993, (2) definitive Proxy
Statement dated April 8, 1994 relating to its 1994 Annual Meeting
of Shareholders held on April 26, 1994 except for the information
contained therein under the headings "Executive Compensation --
Report of the Executive Compensation Committee" and "-- Stock
Performance Graph", which are expressly excluded from incorporation
in this Registration Statement, (3) Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1994 and June 30, 1994, (4)
Current Reports on Form 8-K dated August 18, 1994, September 22,
1994 and October 11, 1994, respectively and (5) Hibernia's
Description of Capital Stock contained in its Current Report on
Form 8-K dated November 2, 1994.
All documents subsequently filed by Hibernia with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the
termination of the offering of Common Stock made hereby shall be
deemed to be incorporated by reference in this Prospectus and to be
a part hereof from the date such documents are filed, except that
any and all information included in any proxy statement filed by
Hibernia under the headings "Executive Compensation -- Report of
the Executive Compensation Committee" and "-- Stock Performance
Graph" are hereby expressly excluded from such incorporation by
reference. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Hibernia will provide, without charge, to each person to whom
this Prospectus is delivered, on the written or oral request of any
such person, a copy of any or all of the information incorporated
herein by reference other than exhibits to such information (unless
such exhibits are specifically incorporated by reference into such
information). Written or oral requests should be directed to
Hibernia Corporation, 313 Carondelet Street, New Orleans, Louisiana
70130, Attention: Assistant Corporate Secretary, Telephone (504)
533-3411.
THE PARTIES TO THE MERGER
Hibernia. Hibernia is a Louisiana corporation registered
under the Bank Holding Company Act of 1956, as amended ("BHCA").
As of June 30, 1994, Hibernia had total consolidated assets of
approximately $4.9 billion and shareholders' equity of
approximately $443 million. As of June 30, 1994, Hibernia was
ranked, on the basis of total assets, as the 90th largest bank
holding company in the United States and the second largest
headquartered in Louisiana. The principal executive offices of
Hibernia are located at 313 Carondelet Street, New Orleans,
Louisiana 70130, and its telephone number is (504) 533-5532. For
additional information concerning the business and financial
condition of Hibernia, reference should be made to the Hibernia
reports incorporated herein by reference. See "AVAILABLE
INFORMATION."
As of June 30, 1994 Hibernia had a single banking subsidiary,
Hibernia National Bank ("HNB"), that provides retail and commercial
banking services through 101 branches throughout Louisiana. As of
June 30, 1994, HNB was the largest bank headquartered in Louisiana.
Hibernia consummated four mergers in the third quarter of
1994, two each as of July 1 and August 1, each of which was
accounted for as a pooling of interests. Restated supplemental
consolidated financial statements of Hibernia reflecting the impact
of these mergers were included in a Current Report on Form 8-K
filed with the Securities and Exchange Commission on October 11,
1994 and are incorporated herein by reference. As restated to
reflect those mergers, Hibernia's total assets and shareholders'
equity as of December 31, 1993 were $5.7 billion and $474 million,
respectively.
On October 12, 1994, Hibernia publicly reported third-quarter
income of $23.2 million ($.24 per share), up 64% from $14.1 million
($.15 per share) for the same period of 1993, and up 33% from $17.4
million ($.18 per share) for the second quarter of 1994.
Hibernia's third quarter results reflect a negative provision for
loan losses of $17.5 million and a $16.1 million write-off of
goodwill associated with acquisitions in the mid- to late-1980's.
From time to time, Hibernia investigates and holds discussions
and negotiations in connection with possible merger or similar
transactions with other financial institutions. At the date
hereof, Hibernia has entered into definitive merger agreements with
three financial institutions in addition to Pioneer which are
described in documents incorporated herein by reference and
described under "PRO FORMA FINANCIAL INFORMATION" below. In
addition, Hibernia is pursuing other possible acquisition
opportunities and intends to continue to pursue such opportunities
in the near future when available and feasible in the light of
Hibernia's business and strategic plans. Although it is
anticipated that such transactions may be entered into both before
and after the Merger, there can be no assurance as to when or if,
or the terms upon which, such transactions may be pursued or
consummated. If required under applicable law, any such
transactions would be subject to regulatory approval and the
approval of shareholders.
Selected Financial Data. The closing market price per share
of Hibernia Common Stock on the NYSE on May 31, 1994, the day prior
to the announcement of the proposed Merger was $8.875. There can
be no assurance of the market price of Hibernia Common Stock on the
Closing Date.
<PAGE>
SELECTED FINANCIAL DATA
(Unaudited)
The following table sets forth certain historical and restated
consolidated information for Hibernia Corporation. The historical
information is based on historical financial statements and related
notes of Hibernia Corporation incorporated by reference into this
Proxy Statement - Prospectus. The restated information reflects
the impact of four mergers consummated in the second quarter of
1994, two each as of July 1 and August 1, each of which was
accounted for as a polling of interests. Pro forma financial
information giving effect to the merger and other probable mergers
is included in the "PRO FORMA FINANCIAL INFORMATION".
<PAGE>
HIBERNIA CORPORATION
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
6 Months Ended
Year Ended December 31 June 30
Unaudited ($ in thousands, except per share amounts) 1993 1992 1991 1990 1989 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $195,705 $197,278 $234,599 $261,318 $214,530 $99,008 $99,569
Income (loss) from continuing operations 47,950 (7,915) (143,997) (10,995) 61,644 35,575 21,801
Per share:
Income (loss) from continuing operations 0.58 (0.27) (5.12) (0.40) 2.30 0.43 0.26
Cash dividends 0.03 - .15 .90 .91 0.08 -
Book value 5.12 4.48 7.05 13.16 14.45 5.29 4.72
SELECTED PERIOD-END BALANCES
Debt - 8,269 94,534 104,367 55,406 - -
Total assets 4,795,583 4,734,038 6,018,429 7,357,850 6,698,851 4,857,164 4,667,976
</TABLE>
RESTATED HIBERNIA CORPORATION (1)
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
6 Months Ended
Year Ended December 31 June 30
Unaudited ($ in thousands, except per share amounts) 1993 1992 1991 1990 1989 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $234,064 $234,398 $263,348 $285,614 $238,989 $117,896 $118,701
Income (loss) from continuing operations 55,391 (1,752) (141,367) (17,014) 58,148 37,055 25,922
Per share:
Income (loss) from continuing operations 0.58 (0.04) (3.44) (0.42) 1.46 0.38 0.27
Cash dividends 0.03 - 0.15 0.90 0.91 0.08 -
Book value 4.91 4.24 5.18 9.52 10.33 5.02 4.51
SELECTED PERIOD-END BALANCES
Debt 23,981 25,710 127,566 123,145 91,077 3,741 20,935
Total assets 5,720,013 5,592,710 6,862,752 8,172,331 7,531,137 5,691,832 5,517,784
(1) Refer to "PRO FORMA FINANCIAL INFORMATION".
</TABLE>
Pioneer. Pioneer is a Louisiana corporation registered under
the BHCA. As of June 30, 1994, Pioneer had total consolidated
assets of $ 362 million and shareholders' equity of $29.8 million.
Pioneer's banking subsidiary is Pioneer Bank & Trust Company, a
Louisiana banking corporation having twelve (12) offices in Caddo
Parish in Louisiana. The Bank engages in retail and commercial
banking services, including taking deposits and extending secured
and unsecured credit.
The principal offices of Pioneer are located at 401 Texas
Street, Shreveport, Louisiana 71130 and its telephone number is
(318) 429-6000. For additional information concerning the business
of Pioneer and its financial condition, see "CERTAIN INFORMATION
CONCERNING PIONEER" and "PIONEER CONSOLIDATED FINANCIAL
INFORMATION."
<PAGE>
SELECTED FINANCIAL DATA
(Unaudited)
The following table sets forth certain historical consolidated
information for Pioneer Bancshares Corporation. This information
is based on historical financial statements and related notes of
Pioneer Bancshares Corporation, contained elsewhere in this Proxy
Statement - Prospectus.
<PAGE>
PIONEER BANCSHARES CORPORATION
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31 6 Months Ended June 30
Unaudited ($ in thousands, except per share amounts) 1993 1992 1991 1990 1989 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $16,682 $16,869 $14,281 $10,887 $8,296 $8,016 $8,091
Income from continuing operations 3,690 2,200 1,671 1,475 642 2,263 1,696
Per share:
Income from continuing operations 13.45 8.02 6.09 5.37 2.34 8.25 6.18
Cash dividends 1.50 1.00 1.00 - - - -
Book value 101.41 90.42 83.40 78.27 72.89 108.77 96.60
SELECTED PERIOD-END BALANCES
Debt 6,213 6,877 7,243 7,908 8,529 2,080 6,560
Total assets 355,332 359,842 356,700 349,518 307,443 361,986 358,797
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION
QUARTERLY INCOME RESULTS
Unaudited ($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
1994
I II
<S> <C> <C> <C> <C>
Interest income $5,611 $5,808
Net interest income 3,954 4,062
Net income 1,156 1,107
Net income per share $4.21 $4.04
1993
I II III IV
Interest income $5,789 $6,023 $6,152 $6,277
Net interest income 3,779 4,312 4,170 4,421
Income before extraordinary item 567 1,129 804 1,190
Income per share beore extraordinary item 2.07 4.11 2.93 4.34
Net income 567 1,129 804 929
Net income per share $2.07 $4.11 $2.93 $3.38
1992
I II III IV
Interest income $6,879 $6,796 $6,754 $6,330
Net interest income 3,849 4,310 4,265 4,445
Net income 433 586 644 537
Net income per share $1.58 $2.14 $2.35 $1.96
</TABLE>
<PAGE>
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
(Unaudited)
The following table sets forth certain unaudited pro forma combined
financial information for Pioneer Bancshares Corporation and
Hibernia Corporation (on a restated basis, after giving effect for
the mergers of Commercial Bancshares, Inc. and Bastrop National
Bank, consummated on July 1, 1994 and the mergers of First
Continental Bancshares, Inc. and First Bancorp of Louisiana, Inc.
consummated on August 1, 1994 [See Note A to the Pro Forma Combined
Financial Statements.]). Year end information in this table is
based on, and should be read in conjunction with, the audited
restated supplemental consolidated financial statements and related
notes of Hibernia Corporation, incorporated into this Proxy
Statement - Prospectus by reference to Hibernia's Current Report on
Form 8-K dated October 11, 1994, and the historical financial
statements of Pioneer Bancshares Corporation, contained elsewhere
in this Proxy Statement - Prospectus. The table also gives effect
to probable mergers with First State Bank and Trust, American Bank
and STABA Bancshares, Inc. to which Hibernia Corporation is a
party, as discussed in Note E to the Pro Forma Combined Financial
Statements. The pro forma information, which reflects each of the
consummated and probable mergers using the pooling of interests
method of accounting, is presented for informational purposes only
and should not be construed as indicative of the actual operations
that would have occurred had the mergers been consummated at the
beginning of the periods indicated below or which may occur after
all the mergers are consummated. The pro forma information gives
effect to the issuance in each of the periods presented, of
13,021,494 shares of Hibernia Corporation common stock for all of
the outstanding shares of Commercial, Bastrop, First Continental,
and First Bancorp and assumes the issuance of 8,370,512 shares of
Hibernia Corporation common stock for all the outstanding shares of
Pioneer Bancshares Corporation, 3,350,000 shares of Hibernia
Corporation common stock for all the outstanding shares of First
State Bank and Trust Company, 2,250,000 shares of Hibernia
Corporation common stock for all the outstanding shares of American
Bank and 2,117,647 shares of Hibernia Corporation common stock for
all the outstanding shares of STABA Bancshares, Inc.
<PAGE>
PRO FORMA HIBERNIA CORPORATION*
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31 6 Months Ended June 30
Unaudited ($ in thousands, except per share amounts) 1993 1992 1991 1994 1993
<S> <C> <C> <C> <C> <C>
Net interest income $250,746 $251,267 $277,629 $125,912 $126,792
Income (loss) from continuing operations 59,081 448 (139,696) 39,318 27,618
Per share:
Income (loss) from continuing operations 0.57 0.01 (2.82) 0.37 0.27
Cash dividends 0.03 - 0.15 0.08 -
Book value 4.78 4.14 4.77 4.91 4.40
SELECTED PERIOD-END BALANCES
Debt 30,194 32,587 134,809 3,741 27,449
Total assets 6,075,188 5,952,552 7,219,452 6,051,673 5,876,581
* Includes Hibernia Corporation, Pioneer Bancshares Corporation, Commercial Bancshares, Inc.,
Bastrop National Bank, First Continental Bancshares, Inc. and First Bancorp of Louisiana, Inc.
</TABLE>
TOTAL PRO FORMA HIBERNIA CORPORATION**
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31 6 Months Ended June 30
Unaudited ($ in thousands, except per share amounts) 1993 1992 1991 1994 1993
<S> <C> <C> <C> <C> <C>
Net interest income $265,772 $264,950 $287,859 $133,496 $134,197
Income (loss) from continuing operations 63,525 4,028 (138,287) 41,261 29,668
Per share:
Income (loss) from continuing operations 0.57 0.07 (2.42) 0.37 0.27
Cash dividends 0.03 - 0.15 0.08 -
Book value 4.75 4.11 4.58 4.88 4.38
SELECTED PERIOD-END BALANCES
Debt 30,194 32,587 134,809 3,741 27,449
Total assets 6,411,382 6,280,720 7,517,772 6,390,153 6,210,083
** Includes Hibernia Corporation, Pioneer Bancshares Corporation, Commercial Bancshares, Inc., Bastrop National Bank, First
Continental Bancshares, Inc., First Bancorp of Louisiana, Inc., First State Bank and Trust Company, American Bank and STABA
Bancshares, Inc.
</TABLE>
<PAGE>
COMPARATIVE PER SHARE INFORMATION
(Unaudited)
The following table sets forth for Hibernia Corporation common
stock and Pioneer Bancshares Corporation common stock certain
historical, restated, unaudited pro forma combined and unaudited
pro forma equivalent per share financial information. This table
is based on and should be read in conjunction with the historical
financial statements and related notes of Hibernia Corporation,
incorporated by reference into this Proxy Statement - Prospectus,
and Pioneer Bancshares Corporation, contained elsewhere in this
Proxy Statement - Prospectus. The restated information reflects
the impact of four mergers consummated in the second quarter of
1994, two each as of July 1 and August 1, each of which was
accounted for as a pooling of interests. The pro forma
information, which reflects the merger using the pooling of
interests method of accounting, is presented for informational
purposes only and should not be construed as indicative of the
actual operations that would have occurred had the merger been
consummated at the beginning of the periods indicated below or
which may occur after the merger is consummated. The pro forma
information gives effect to the issuance of 8,370,512 shares of
Hibernia Corporation common stock for all the outstanding shares of
Pioneer Bancshares Corporation, which assumes that each share of
Pioneer Bancshares Corporation common stock will be exchanged for
30.5 shares of Hibernia Corporation common stock. See "Proposed
Merger-Terms of the Merger."
<PAGE>
HIBERNIA CORPORATION AND PIONEER BANCSHARES CORPORATION
COMPARATIVE PER SHARE INFORMATION
Unaudited
<TABLE>
<CAPTION>
PRO FORMA PIONEER
HISTORICAL HIBERNIA BANCSHARES
HISTORICAL RESTATED PIONEER CORPORATION CORPORATION
HIBERNIA HIBERNIA BANCSHARES (WITH PIONEER PRO FORMA
CORPORATION CORPORATION(1) CORPORATION BANCSHARES) (1) EQUIVALENT (2)
Per Common Share:
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing operations:
For the six months ended June 30,
1994 $0.43 $0.38 $8.25 $0.37 $11.29
1993 0.26 0.27 6.18 0.27 8.24
For the year ended December 31,
1993 $0.58 $0.58 $13.45 $0.57 $17.39
1992 (0.27) (0.04) 8.02 0.01 0.31
1991 (5.12) (3.44) 6.09 (2.82) (86.01)
Cash dividends:
For the six months ended June 30,
1994 $0.08 $0.08 - $0.08 $2.44
1993 - - - - -
For the year ended December 31,
1993 $0.03 $0.03 $1.50 $0.03 $0.92
1992 - - 1.00 - -
1991 0.15 0.15 1.00 0.15 4.58
Book Value:
At June 30, 1994 $5.29 $5.02 $108.77 $4.91 $149.76
At December 31, 1993 $5.12 $4.91 $101.41 $4.78 $145.79
(1) Refer to "PRO FROMA FINANCIAL INFORMATION".
(2) Pro forma equivalent amounts are computed by multiplying the pro forma combined amount by the
Pioneer Bancshares exchange ratio of 30.50.
</TABLE>
SUMMARY
This summary is necessarily general and abbreviated and has
been prepared to assist shareholders of Pioneer in their review of
this Proxy Statement-Prospectus. This summary is not intended to
be a complete explanation of the matters covered in this Proxy
Statement-Prospectus and is qualified in its entirety by reference
to the more detailed information contained elsewhere in this Proxy
Statement-Prospectus, the Appendices hereto and the documents
incorporated herein by reference, all of which shareholders are
urged to read carefully prior to the Special Meeting.
The Proposed Merger
In accordance with the terms of the Agreement, Pioneer will be
merged with and into Hibernia, whereupon the separate existence of
Pioneer will cease. Immediately thereafter, the Bank will be
merged into HNB, with HNB as the surviving bank. On the Effective
Date, each outstanding share of Pioneer Common Stock, other than
shares held by shareholders who exercise and perfect dissenters'
rights in accordance with Louisiana law, will be converted into
30.5 shares of Hibernia Common Stock, unless the average market
price of Hibernia Common Stock for the five business days ("Average
Market Price") preceding the last trading day immediately prior to
the closing of the Merger (the "Closing Date") is $7.50 per share
or less, or $9.50 per share or more. If the Average Market Price
of Hibernia Common Stock is $7.50 or less, then holders of Pioneer
Common Stock will receive an aggregate number of shares of Hibernia
Common Stock determined by dividing $62,779,000 by the Average
Market Price. If the Average Market Price is $9.50 or more, then
the holders of Pioneer Common Stock will receive an aggregate
number of shares of Hibernia Common Stock determined by dividing
$72,500,000 by the Average Market Price. As long as the Average
Market Price is above $7.50 and below $9.50, however, holders of
Pioneer Common Stock, will receive 30.5 shares of Hibernia Common
Stock for each share of Pioneer Common Stock held by them.
Management and Operations After the Merger
After the Effective Date, the offices of the Bank will operate
as branch banking offices of HNB. As of the Effective Date, the
directors of Pioneer and the Bank will no longer hold their
positions as directors. See "PROPOSED MERGER -- Management and
Operations After the Merger." Certain officers of Pioneer and its
subsidiaries have executed or intend to execute employment or
consulting agreements with Hibernia, and Hibernia maintains a
regional advisory board of directors in the Shreveport-Bossier
region of Louisiana on which some or all of the directors of
Pioneer and its subsidiaries may serve. In addition, it is
anticipated that Mr. Campbell will be considered for a position on
the Board of Directors of Hibernia after the Merger. See "PROPOSED
MERGER -- Interests of Certain Persons in the Merger."
Other Pending Merger Transactions for Hibernia
In addition to Pioneer, Hibernia has entered into definitive
merger agreements with three financial institutions. These
transactions are subject to certain conditions, similar to the
conditions to the Merger described herein. These transactions may
be consummated before or after consummation of the Merger.
Shareholders of Pioneer will not have the right to vote on the
other pending transactions, or any other transaction that might be
entered into by Hibernia prior to the Effective Date of the Merger.
In addition, if the Merger is consummated prior to consummation of
another transaction, former shareholders of Pioneer who have not
exercised and perfected dissenters' rights will be shareholders of
Hibernia at the time those transactions are consummated.
Shareholders of Hibernia do not have the right to vote on any of
the merger transactions that are currently pending.
The table below includes certain information concerning the
pending merger transactions, other than Pioneer, to which Hibernia
is a party as of the date of this Proxy Statement-Prospectus.
Further information concerning the effects of these transactions,
including complete pro forma financial information, is included
herein below. See "PRO FORMA FINANCIAL INFORMATION." All
information included in the following table is as of June 30, 1994,
and all percentages are percentages of the total combined entity,
assuming consummation of all pending mergers including Pioneer, and
using the historical financial statements of Hibernia as of June
30, 1994 as a basis.
Name Deposits Deposits Assets Assets Shareholders' Equity
as % of as % of Equity as %
Total Total Total
First State
Bank and
Trust $129 million 2.33% $150 million 2.34% $20.0 million 3.63%
American
Bank $85 million 1.53% $ 94 million 1.47% $ 7.8 million 1.42%
STABA Banc-
shares $87.5 million 1.58% $ 95 million 1.49% 7.4 million 1.34%
On a pro forma basis, and based upon historical results, if
each of the pending mergers had been effective on January 1, 1991,
the pending transactions, including Pioneer and taken as a whole,
would have decreased earnings per share in each of the years 1991,
1992 and 1993, as shown on the Pro Forma Combined Statements of
Income included in the Pro Forma Financial Statements below.
On a pro forma basis, as of June 30, 1994, the book value of
the shares of Hibernia would be slightly decreased by the pending
transactions. The effect of the Merger on the book value of
Hibernia Common Stock, as well as Pioneer Common Stock, is shown in
the Comparative Per Share Information table included herein.
Sale of Certain Branches Required for Regulatory Approval
As a condition to receipt of regulatory approval for the
Merger, Hibernia has agreed to sell three of the Pioneer branches
that it would otherwise have acquired as a result of the Merger.
All of the deposits and loans of each branch will be sold, along
with the physical premises, and a definitive agreement to sell the
branches must be executed prior to the closing of the Merger.
Total deposits to be divested were approximately $43 million, and
total loans were approximately $21 million, as of June 30, 1994.
There can be no assurance of the price at which the branches may be
sold, if at all, or the timing of such a sale. The sale of these
branches will not affect the consideration to be given to Pioneer's
shareholders in the Merger.
Recommendation of the Board of Directors
The Board of Directors of Pioneer has unanimously approved the
Agreement, believes that the Merger is in the best interests of the
shareholders of Pioneer and recommends that the shareholders vote
FOR the Merger. The Board of Directors has received from US
Banking Alliance Inc. an opinion that the terms of the Merger are
fair, from a financial point of view, to the shareholders of
Pioneer. See "PROPOSED MERGER -- Opinion of Financial Advisor."
Pioneer's Board believes that the Merger will provide significant
value to all Pioneer shareholders and will enable them to
participate in opportunities for growth that Pioneer's Board
believes the Merger makes possible. In recommending the Merger to
the shareholders, Pioneer's Board of Directors considered, among
other factors, the financial terms of the Merger, the liquidity it
will afford Pioneer's shareholders and the business earnings and
potential for future growth of Pioneer and Hibernia. See "PROPOSED
MERGER -- Background of and Reasons for the Merger."
Basis for the Terms of the Merger
A number of factors were considered by the Board of Directors
of Pioneer in approving the terms of the Merger, including, without
limitation, information concerning the financial condition, results
of operations and prospects of Hibernia, Pioneer, HNB and the Bank;
the ability of the combined entity to compete in the relevant
banking markets; the market price of Hibernia Common Stock; the
absence of an active trading market for Pioneer's common stock; the
consideration to be received by Pioneer shareholders in relation to
Pioneer's earnings and book value; the anticipated tax-free nature
of the Merger to Pioneer's shareholders for federal income tax
purposes; and the financial terms of other recent business
combinations in the banking industry. See "PROPOSED MERGER --
Background of and Reasons for the Merger."
Advice and Opinion of Financial Advisor
US Banking Alliance Inc., Pioneer's financial advisor, has
rendered both oral and written opinions that the terms of the
Merger are fair, from a financial point of view, to Pioneer's
shareholders. A copy of the opinion of US Banking Alliance Inc. is
attached hereto as Appendix B and should be read in its entirety
with respect to the assumptions made therein and other matters
considered. See "PROPOSED MERGER -- Opinion of Financial Advisor"
for further information regarding, among other things, the
selection of such firm and its compensation in connection with the
Merger.
Votes Required
Approval of the Merger requires the affirmative vote of the
holders of two-thirds of the voting power of Pioneer present at the
Special Meeting. Directors of Pioneer and members of their
families have voting power with respect to 182,928 shares of
Pioneer Common Stock, representing 66.65% of the Pioneer Common
Stock outstanding as of the Record Date. See "PROPOSED MERGER --
Ownership of Pioneer Common Stock." Subject to receipt of certain
fairness opinions from US Banking Alliance Inc., the directors of
Pioneer have agreed to vote their stock in favor of approval of the
Agreement at any meeting of Pioneer's shareholders held before June
30, 1995 at which the Merger is considered, unless they are legally
required to abstain from voting or to vote against the Merger in
the opinion of their counsel. See "MEETING INFORMATION -- Record
Date; Voting Rights" and "CERTAIN INFORMATION RELATING TO PIONEER -
- - Voting Securities and Certain Holders Thereof."
Conditions; Abandonment; Amendment
Consummation of the Merger is subject to the satisfaction of
a number of conditions, including approval of the Agreement by the
shareholders of Pioneer and the Federal Reserve Board and approval
of the Bank Merger by the Office of the Comptroller of the Currency
("OCC"). As described further below, bank regulatory approval of
the Merger is conditioned upon the sale of three of Pioneer's
branches. See "PROPOSED MERGER -- Required Sale of Branches."
Applicable law provides that the Merger may not be consummated
until at least 30, but no more than 90, days after approval of the
Federal Reserve Board is obtained, although this period may be
reduced by the appropriate regulators in certain circumstances.
Hibernia anticipates obtain regulatory approval in sufficient time
to permit closing of the Merger prior to year-end 1994. See
"PROPOSED MERGER -- Representations and Warranties; Conditions to
Closing; Waiver" and "-- Regulatory and Other Approvals."
Substantially all of the conditions to consummation of the
Merger (except for required shareholder and regulatory approvals)
may be waived at any time by the party for whose benefit they were
created, and the Agreement may be amended or supplemented at any
time by written agreement of the parties, except that no such
waiver, amendment or supplement executed after approval of the
Agreement by Pioneer's shareholders may reduce the ratio of
Hibernia Common Stock to Pioneer Common Stock to be issued in the
Merger (the "Exchange Ratio"). Any other material change to the
Agreement after the date of the Special Meeting would require,
however, a resolicitation of Pioneer's shareholders for the purpose
of voting on the transaction as amended. In addition, the
Agreement may be terminated, either before or after shareholder
approval, under certain circumstances. See "PROPOSED MERGER --
Representations and Warranties; Conditions to Closing; Waiver" and
"-- Effective Date of the Merger; Termination."
Interests of Certain Persons in the Merger
The terms of the Merger include certain benefits for employees
and management of Pioneer, including employment agreements between
Hibernia and Messrs. Flurry and Campbell, consulting agreements
between Messrs. Hansen, Jones and Macollister, and indemnification
of officers, directors and employees of Pioneer for certain
liabilities up to certain aggregate limitations. See "PROPOSED
MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER."
Employee Benefits
Hibernia has agreed as part of the Agreement that it will
offer to all employees of Pioneer who are employed as of the
Effective Date and who become employees of Hibernia or HNB after
the Merger, the same employee benefits as those offered by Hibernia
and HNB to their employees, except that employees of Pioneer will
not be required to wait for any period in order to be eligible to
participate in Hibernia's Flex Plan (including its medical and
dental coverage). Hibernia will also give Pioneer employees who
become Hibernia employees full credit for their years of service
(for both eligibility and vesting) with Pioneer for purposes of
Hibernia's 401(k) plan, the Retirement Security Plan. Hibernia has
also agreed to pay or provide certain other benefits. See
"PROPOSED MERGER -- Employee Benefits."
Material Tax Consequences
It is a condition to consummation of the Merger that the
parties receive an opinion of counsel or a public accounting firm
to the effect that the Merger when consummated in accordance with
the terms of the Agreement will constitute a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and that the exchange of Pioneer Common
Stock for Hibernia Common Stock will not give rise to the
recognition of gain or loss for federal income tax purposes to
Pioneer's shareholders with respect to such exchange. The parties
have received an opinion from Ernst & Young LLP, certified public
accountants, who also serve as independent auditors for Hibernia,
to the effect that the Merger, when consummated in accordance with
the terms of the Agreement, will constitute a reorganization within
the meaning of Section 368(a) of the Code. A copy of such opinion
is attached hereto as Appendix D. See "PROPOSED MERGER -- Material
Tax Consequences."
Because of the complexities of the tax laws and because the
tax consequences may vary depending upon a holder's individual
circumstances or tax status, it is recommended that each
shareholder of Pioneer consult his or her tax advisor concerning
the federal (and any applicable state, local or other) tax
consequences of the Merger to him or her.
Dissenters' Rights
Each holder of Pioneer Common Stock who objects to the Merger
is entitled to the rights and remedies of dissenting shareholders
provided in the Louisiana Business Corporation Law, Louisiana
Revised Statutes Section 12: 112(H), a copy of which is attached
hereto as Appendix C. However, if dissenters' rights are exercised
and perfected with respect to 10% or more of the outstanding shares
of Pioneer Common Stock, Hibernia may abandon the Merger. In
addition, dissenting shareholders may receive value for their
shares that is more or less than, or equal to, the value received
by other shareholders in the Merger. See "PROPOSED MERGER --
Rights of Dissenting Shareholders."
Differences in Shareholders' Rights
Upon completion of the Merger, shareholders of Pioneer, to the
extent they receive shares of Hibernia Common Stock in the Merger,
will become shareholders of Hibernia and their rights as such will
be governed by Hibernia's Articles of Incorporation and Bylaws.
The rights of shareholders of Hibernia are different in certain
respects from the rights of shareholders of Pioneer. See "PROPOSED
MERGER -- Certain Differences in Rights of Shareholders."
Accounting Treatment
The parties intend the Merger to be treated as a pooling of
interests for financial accounting purposes. If, among other
things, holders of more than 10% of the outstanding shares of
Pioneer Common Stock exercise and perfect dissenters' rights, the
Merger will not qualify for pooling-of-interests accounting
treatment, and Hibernia will not be obligated to effect the Merger.
See "PROPOSED MERGER -- Accounting Treatment."
MEETING INFORMATION
General
Each copy of this Proxy Statement-Prospectus mailed to holders
of Pioneer Common Stock is accompanied by a proxy card furnished in
connection with the solicitation of proxies by Pioneer's Board of
Directors for use at the Special Meeting and at any adjournments or
postponements thereof. This Proxy Statement and the accompanying
proxy card are first being mailed to shareholders of Pioneer on
approximately November 11, 1994. The Special Meeting is scheduled
to be held on November 29, 1994, at 2:00 p.m. local time, at the
main office of Pioneer Bank & Trust Company, 401 Texas Street,
Shreveport, Louisiana 71130. Only holders of record of Pioneer
Common Stock at the close of business on November 1, 1994 (the
"Record Date") are entitled to notice of and to vote at the Special
Meeting. At the Special Meeting, the shareholders of Pioneer will
consider and vote upon a proposal to approve the Merger and the
related Agreement, and such other matters as may properly be
brought before the Special Meeting.
HOLDERS OF PIONEER COMMON STOCK ARE REQUESTED TO COMPLETE,
DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO
PIONEER IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE.
Any holder of Pioneer Common Stock who has delivered a proxy
may revoke it any time before it is voted by giving notice of
revocation in writing or delivering a signed proxy card bearing a
later date to Pioneer, provided that such notice or proxy card must
actually be received by Pioneer before the vote of shareholders at
the Special Meeting. A shareholder who votes in person at the
Special Meeting in a manner that is inconsistent with a proxy
previously filed on the shareholder's behalf will be deemed to have
revoked his or her proxy as to that matter only. Any notice of
revocation or proxy card should be sent to Pioneer at 401 Texas
Street, Shreveport, Louisiana 71130, Attention: Darlene Drake,
Secretary.
The shares of Pioneer Common Stock represented by properly
executed proxies received at or before the Special Meeting and not
subsequently revoked will be voted as directed in such proxies.
Proxy cards that are received and that do not contain instructions
as to how to vote the shares represented thereby will be voted FOR
approval of the Merger and the related Agreement. If any other
matters are properly presented for consideration at the Special
Meeting, the persons named in the accompanying proxy card will have
discretionary authority to vote on such matters in accordance with
their best judgment; provided, however, that such discretionary
authority will be exercised only to the extent permissible under
applicable law. If necessary, and unless contrary instructions are
given, the proxy holder also may vote in favor of a proposal to
adjourn the Special Meeting one or more times to permit further
solicitation of proxies in order to obtain sufficient votes to
approve the Merger and the related Agreement. As of the date of
this Proxy Statement-Prospectus, Pioneer's Board of Directors is
unaware of any matter to be presented at the Special Meeting other
than the proposal to approve the Merger.
Any costs of soliciting proxies from shareholders of Pioneer
will be borne by Pioneer. Such solicitation will be made by mail
but also may be made by telephone or in person by the directors,
officers and employees of Pioneer (who will receive no additional
compensation for doing so).
PIONEER SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES
WITH THEIR PROXY CARDS. IF THE MERGER IS CONSUMMATED, SHAREHOLDERS
OF PIONEER WILL RECEIVE INSTRUCTIONS REGARDING THE EXCHANGE OF
THEIR PIONEER STOCK CERTIFICATES FOR CERTIFICATES REPRESENTING
HIBERNIA COMMON STOCK.
Votes Required
As of the Record Date, there were 274,443 shares of Pioneer
Common Stock outstanding and entitled to vote at the Special
Meeting, with each share being entitled to one vote. The
affirmative vote of two-thirds of the voting power of Pioneer
present or represented by proxy and entitled to vote at the Special
Meeting will be required to approve the Merger. Members of
Pioneer's Board of Directors and executive officers, along with
members of their families who are expected to vote in favor of
approval of the Merger, own 66.65% of the outstanding Pioneer
Common Stock.
For purposes of the Special Meeting, the presence in person or
by proxy of a majority of the outstanding shares of Pioneer Common
Stock is necessary to constitute a quorum of shareholders in order
to take action. For these purposes, shares of Pioneer Common Stock
which are present, or represented by proxy, at the Special Meeting
will be counted for quorum purposes regardless whether the holder
of the shares or proxy actually votes on the Merger or whether a
broker with discretionary authority fails to exercise its
discretionary voting authority with respect to the Merger.
Accordingly, an "abstention" will be considered present for quorum
purposes, but will have the same effect as a vote "against" the
proposal as to which the abstention is made. The affirmative vote
of two-thirds of the voting power of Pioneer present or represented
by proxy at the Special Meeting will be necessary to approve the
Merger.
Each outstanding share of Pioneer Common Stock is entitled to
one vote on each matter that comes before the Special Meeting. As
of the Record Date for the Special Meeting, there were 274,443
shares of Pioneer Common Stock outstanding and entitled to vote at
the Special Meeting.
The directors of Pioneer and members of their families
beneficially owned a total of 182,928 shares or approximately
66.65% of the outstanding shares of Pioneer Common Stock as of the
Record Date. Each shareholder who is a director has executed an
agreement with Hibernia pursuant to which such shareholder has
committed, subject to certain conditions, to vote the shares of
Pioneer Common Stock owned by him in favor of the proposal to
approve the Merger. Additionally, Pioneer has been advised that
all of its directors and executive officers intend to vote their
shares in favor of approval of the Merger.
As of the Record Date, the directors and executive officers of
Hibernia and their affiliates beneficially owned no shares of
Pioneer Common Stock.
Approval of the Merger by Hibernia shareholders is not
required under applicable law.
Recommendation of Pioneer's Board
Pioneer's Board has unanimously approved the Merger and
unanimously recommends that Pioneer's shareholders vote FOR
approval of the Merger. See "PROPOSED MERGER -- Background of and
Reasons for the Merger" and "-- Opinion of Financial Advisor."
Other Matters
The Board of Directors of Pioneer is not aware of any business
to be acted upon at the Special Meeting other than consideration of
the Merger. If, however, other matters are properly brought before
the Special Meeting, or any adjournments or postponements thereof,
the persons appointed as proxies will have discretion to vote or
abstain from voting thereon according to their best judgment.
PRO FORMA FINANCIAL INFORMATION
The following pro forma financial statements reflect
Hibernia's pending mergers as described in its public reports and
press releases, giving effect to the assumptions and adjustments
described in the accompanying notes.
The information in the column titled "Hibernia Corporation" on
the Pro Forma Combined Balance Sheet, Pro Forma Statements of
Income and audited Statements of Income are summarized from
Hibernia's Report on Form 10-K for the year ended December 31, 1993
and its quarterly report on Form 10-Q for the quarter ended June
30, 1994. The information in the column titled "Restated Hibernia"
on those statements is summarized from the supplemental
consolidated financial statements of Hibernia filed on the Current
Report on Form 8-K dated October 11, 1994, which reflects four
mergers consummated in the third quarter of 1994. The information
contained in the columns titled "Pioneer Bancshares Corporation",
"First State Bank and Trust Company", "American Bank" and "STABA
Bancshares" are based on December 31, 1993, 1992 and 1991 audited
financial statements of those entities and unaudited financial
statements of those entities for the quarters ended June 30, 1994
and 1993. The pro forma financial statements do not purport to be
indicative of the results that actually would have been obtained if
the pending transactions had occurred on the dates indicated or
that may be obtained in the future.
On August 16, 1994, Hibernia announced that it had executed an
agreement and plan of merger with First State Bank and Trust
Company, a Louisiana banking association headquartered in Bogalusa,
Louisiana ("First State"). Shareholders of First State will
receive an aggregate of 3,350,000 shares of Hibernia Common Stock
in the merger, unless the average market price of Hibernia Common
Stock as of the Closing is less than $7.75 (in which case they
would receive in the aggregate Hibernia shares valued at
$25,962,500) or more than $9.75 per share (in which case they would
receive in the aggregate Hibernia shares valued at $32,662,500).
On September 19, 1994, Hibernia announced that it had executed
an agreement and plan of merger with American Bank, a Louisiana
banking association headquartered in Norco, Louisiana ("American
Bank"). Shareholders of American Bank will receive an aggregate of
2,250,000 shares of Hibernia common stock in the merger, unless the
average market price of Hibernia Common Stock as of the Closing is
less than $7.75 (in which case they would receive in the aggregate
Hibernia shares valued at $17,437,500) or higher than $8.875 (in
which case they would receive in the aggregate Hibernia shares
valued at $19,968,750).
On November 4, 1994, Hibernia announced that it had executed
an agreement and plan of merger with STABA Bancshares, Inc., a
Louisiana bank holding company headquartered in Donaldsonville, and
its subsidiary bank, State Bank and Trust. Shareholders of STABA
will receive Hibernia Common Stock in the Merger valued at $18
million.
The mergers with First State, American Bank and STABA
Bancshares are subject to the satisfaction of certain conditions
similar to those described herein with regard to the Merger. There
can be no assurance that either of these proposed mergers will
occur, or that the timing of the consummation of those mergers will
be as assumed in the Pro Forma Financial Statements.
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
The following unaudited pro forma combined balance sheet combines
the restated balance sheet of Hibernia Corporation and the
historical balance sheet of Pioneer Bancshares Corporation as if
the merger had been effective on June 30, 1994. This unaudited pro
forma combined balance sheet should be read in conjunction with the
historical financial statements and related notes of Hibernia
Corporation, incorporated by reference into this Proxy Statement -
Prospectus, and Pioneer Bancshares Corporation, contained elsewhere
in this Proxy Statement - Prospectus. The restated balance sheet
reflects the impact of four mergers consummated in the second
quarter of 1994 as discussed in Note A to the Pro Forma Combined
Financial Statements. The unaudited pro forma combined balance
sheet also gives effect to other probable mergers, to which
Hibernia Corporation is a party, as discussed in Note E to the pro
forma combined financial statements. These mergers include First
State Bank and Trust Company, American Bank and STABA Bancshares,
Inc. Each merger has been included in the pro forma combined
balance sheet as if the merger had been effective on June 30, 1994.
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET
June 30, 1994
<TABLE>
<CAPTION>
(A) (D)
RESTATED PIONEER PRO PRO FORMA
HIBERNIA HIBERNIA BANCSHARES, FORMA HIBERNIA
Unaudited ($ in thousands) CORPORATIONCORPORATIONCORPORATION ADJ. CORPORATION
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $236,320 $263,172 $19,225 $282,397
Interest-bearing time deposits in domestic banks - 197 1,483 1,680
Short-term investments 75,245 57,512 2,049 ($2,145)(C) 57,416
Securities available for sale 435,223 686,499 47,861 734,360
Securities held to maturity 1,501,374 1,639,341 129,926 1,769,267
Loans, net of unearned income 2,498,068 2,909,658 151,009 3,060,667
Reserve for possible loan losses (158,332) (167,199) (2,690) (169,889)
Loans, net 2,339,736 2,742,459 148,319 2,890,778
Bank premises and equipment 84,938 96,696 7,409 104,105
Customers' acceptance liability 9,730 9,730 - 9,730
Other assets 174,598 196,226 5,714 201,940
TOTAL ASSETS $4,857,164 $5,691,832 $361,986 ($2,145) $6,051,673
LIABILITIES
Deposits:
Demand, noninterest-bearing $763,417 $890,106 $70,708 $960,814
Interest-bearing 3,385,726 4,022,125 249,809 4,271,934
Total Deposits 4,149,143 4,912,231 320,517 5,232,748
Federal funds purchased and securities sold under
agreements to repurchase 166,197 179,193 5,476 184,669
Liability on acceptances 9,730 9,730 - 9,730
Other liabilities 89,354 100,976 4,061 ($65)(C) 104,972
Debt - 3,741 2,080 (2,080)(C) 3,741
TOTAL LIABILITIES 4,414,424 5,205,871 332,134 (2,145) 5,535,860
SHAREHOLDERS' EQUITY
Common Stock 160,738 185,740 2,880 13,191 (B) 201,811
Surplus 405,362 391,813 6,742 (14,004)(B) 384,551
Treasury Stock - - (813) 813 (B) -
Retained earnings (deficit) (118,276) (82,328) 21,284 (61,044)
Unrealized gain (loss) on securities available for sale (5,084) (9,264) (241) (9,505)
TOTAL SHAREHOLDERS' EQUITY 442,740 485,961 29,852 - 515,813
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,857,164 $5,691,832 $361,986 ($2,145) $6,051,673
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET
June 30, 1994 (continued)
<TABLE>
<CAPTION>
(D) FIRST STATE TOTAL
PRO FORMA BANK AND STABA PRO FORMA
HIBERNIA TRUST AMERICAN BANCSHARES, PRO FORMA HIBERNIA
Unaudited ($ in thousands) CORPORATION COMPANY BANK INC. ADJUSTMENTS CORPORATION
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $282,397 $6,880 $3,795 $4,190 $297,262
Interest-bearing time deposits in domestic banks 1,680 - 186 1,085 2,951
Short-term investments 57,416 6,500 4,600 510 69,026
Securities available for sale 734,360 - 17,229 23,811 775,400
Securities held to maturity 1,769,267 84,076 9,345 17,159 1,879,847
Loans, net of unearned income 3,060,667 49,427 55,106 46,175 3,211,375
Reserve for possible loan losses (169,889) (1,585) (1,085) (1,015) (173,574)
Loans, net 2,890,778 47,842 54,021 45,160 - 3,037,801
Bank premises and equipment 104,105 1,511 2,587 1,904 110,107
Customers' acceptance liability 9,730 - - - 9,730
Other assets 201,940 2,877 1,778 1,434 208,029
TOTAL ASSETS $6,051,673 $149,686 $93,541 $95,253 - $6,390,153
LIABILITIES
Deposits:
Demand, noninterest-bearing $960,814 $22,648 $13,557 $13,641 $1,010,660
Interest-bearing 4,271,934 106,288 71,375 73,936 4,523,533
Total Deposits 5,232,748 128,936 84,932 87,577 - 5,534,193
Federal funds purchased and securities sold under
agreements to repurchase 184,669 - 252 - 184,921
Liability on acceptances 9,730 - - - 9,730
Other liabilities 104,972 722 540 229 106,463
Debt 3,741 - - - 3,741
TOTAL LIABILITIES 5,535,860 129,658 85,724 87,806 - 5,839,048
SHAREHOLDERS' EQUITY
Common Stock 201,811 1,000 484 152 13,182 (E) 216,629
Surplus 384,551 8,000 3,516 3,176 (13,182)(E) 386,061
Treasury Stock - - - - -
Retained earnings (deficit) (61,044) 11,028 4,063 4,278 (41,675)
Unrealized gain (loss) on securities available for sale (9,505) - (246) (159) (9,910)
TOTAL SHAREHOLDERS' EQUITY 515,813 20,028 7,817 7,447 - 551,105
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,051,673 $149,686 $93,541 $95,253 - $6,390,153
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<PAGE>
PRO FORMA COMBINED STATEMENTS OF INCOME
(Unaudited)
The following unaudited pro forma combined statements of income for
the six months ended June 30, 1994 and 1993, and the years ended
December 31, 1993, 1992, and 1991 combines the restated statements
of income of Hibernia Corporation and the historical statements of
income of Pioneer Bancshares Corporation as if the merger had been
effective on January 1, 1991. These unaudited pro forma combined
statements of income should be read in conjunction with the
historical financial statements and related notes of Hibernia
Corporation and the audited restated supplemental consolidated
financial statements and related notes of Hibernia, filed in
Hibernia's Current Report on Form 8-K dated October 11, 1994,
incorporated by reference into this Proxy Statement - Prospectus,
and the historical financial statements and related notes of
Pioneer Bancshares Corporation, contained elsewhere in this Proxy
Statement - Prospectus. The cost associated with the merger,
estimated to be approximately $513,000 will be accounted for
as a current period expense upon consummation of the merger and has
not been reflected in the pro forma combined statements of income.
The restated statements of income reflect the impact of four
mergers consummated in the second quarter of 1994 as discussed in
Note A. The unaudited pro forma combined statements of income also
give effect to other probable mergers, to which Hibernia
Corporation is a party, as discussed in Note E to the pro forma
combined financial statements. These mergers include First State
Bank and Trust Company, American Bank and STABA Bancshares, Inc.
Each bank has been included in the pro forma combined statements of
income as though the merger had been effective on January 1, 1991.
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 1994
<TABLE>
<CAPTION>
(A) (D)
RESTATED PIONEER PRO FORMA
HIBERNIA HIBERNIA BANCSHARES HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION CORPORATION CORPORATION
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $96,700 $115,418 $6,945 $122,363
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 53,579 64,095 4,296 68,391
Obligations of states and political subdivisions - 676 5 681
Trading account interest 15 15 - 15
Interest on time deposits in domestic banks - 31 56 87
Interest on federal funds sold and securities
purchased under agreements to resell 2,428 3,022 117 3,139
Total Interest Income 152,722 183,257 11,419 194,676
Interest Expense
Interest on deposits 51,423 61,666 3,197 64,863
Interest on federal funds purchased and
securities sold under agreements to repurchase 2,291 2,445 31 2,476
Interest on debt and other - 1,250 175 1,425
Total Interest Expense 53,714 65,361 3,403 68,764
Net Interest Income 99,008 117,896 8,016 125,912
Provision for possible loan losses - 20 125 145
Net Interest Income After Provision for
Possible Loan Losses 99,008 117,876 7,891 125,767
Noninterest Income
Trust fees 6,223 6,504 - 6,504
Service charges on deposits 16,482 18,942 1,415 20,357
Other service, collection and exchange charges 9,266 10,108 1,083 11,191
Other operating income 3,068 3,411 643 4,054
Securities gains (losses), net - 165 (2) 163
Total Noninterest Income 35,039 39,130 3,139 42,269
Noninterest Expense
Salaries and employee benefits 45,167 55,291 4,017 59,308
Occupancy expense, net 10,286 11,362 591 11,953
Equipment expense 5,432 6,218 429 6,647
Data processing expense 9,291 9,421 0 9,421
Foreclosed property expense (4,900) (3,694) 117 (3,577)
Other operating expense 31,445 38,897 2,439 41,336
Total Noninterest Expense 96,721 117,495 7,593 125,088
Income Before Income Taxes 37,326 39,511 3,437 42,948
Income tax expense 1,751 2,456 1,174 3,630
Income from Continuing Operations $35,575 $37,055 $2,263 $39,318
Pro Forma Weighted Average Common Shares 83,662,494 96,683,988 8,370,512 105,054,500
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.43 * $0.38 $0.37
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 1994 (continued)
<TABLE>
<CAPTION>
(D) FIRST STATE TOTAL
PRO FORMA BANK AND STABA PRO FORMA
HIBERNIA TRUST AMERICAN BANCSHARES, HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION COMPANY BANK INC. CORPORATION
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $122,363 $2,214 $2,665 $2,008 $129,250
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 68,391 2,183 713 1,020 72,307
Obligations of states and political subdivisions 681 6 38 152 877
Trading account interest 15 - 0 - 15
Interest on time deposits in domestic banks 87 - 3 19 109
Interest on federal funds sold and securities
purchased under agreements to resell 3,139 117 137 49 3,442
Total Interest Income 194,676 4,520 3,556 3,248 206,000
Interest Expense
Interest on deposits 64,863 1,640 916 1,153 68,572
Interest on federal funds purchased and
securities sold under agreements to repurchase 2,476 - 0 4 2,480
Interest on debt and other 1,425 - 27 - 1,452
Total Interest Expense 68,764 1,640 943 1,157 72,504
Net Interest Income 125,912 2,880 2,613 2,091 133,496
Provision for possible loan losses 145 525 30 120 820
Net Interest Income After Provision for
Possible Loan Losses 125,767 2,355 2,583 1,971 132,676
Noninterest Income
Trust fees 6,504 3 0 - 6,507
Service charges on deposits 20,357 355 308 216 21,236
Other service, collection and exchange charges 11,191 149 75 28 11,443
Other operating income 4,054 43 82 94 4,273
Securities gains (losses), net 163 - 0 23 186
Total Noninterest Income 42,269 550 465 361 43,645
Noninterest Expense
Salaries and employee benefits 59,308 798 895 580 61,581
Occupancy expense, net 11,953 331 268 85 12,637
Equipment expense 6,647 99 50 161 6,957
Data processing expense 9,421 87 311 11 9,830
Foreclosed property expense (3,577) 5 10 - (3,562)
Other operating expense 41,336 358 490 527 42,711
Total Noninterest Expense 125,088 1,678 2,024 1,364 130,154
Income Before Income Taxes 42,948 1,227 1,024 968 46,167
Income tax expense 3,630 632 316 328 4,906
Income from Continuing Operations $39,318 $595 $708 $640 $41,261
Pro Forma Weighted Average Common Shares 105,054,500 3,350,000 2,250,000 2,117,647 112,772,147
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.37 $0.37
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 1993
<TABLE>
<CAPTION>
(A) (D)
RESTATED PIONEER PRO FORMA
HIBERNIA HIBERNIA BANCSHARES HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION CORPORATION CORPORATION
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $92,960 $112,075 $6,873 $118,948
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 53,928 64,505 4,664 69,169
Obligations of states and political subdivisions - 559 5 564
Trading account interest 10 10 - 10
Interest on time deposits in domestic banks 181 233 122 355
Interest on federal funds sold and securities
purchased under agreements to resell 5,140 5,595 148 5,743
Total Interest Income 152,219 182,977 11,812 194,789
Interest Expense
Interest on deposits 50,573 60,905 3,354 64,259
Interest on federal funds purchased and
securities sold under agreements to repurchase 1,798 1,940 - 1,940
Interest on debt and other 279 1,431 367 1,798
Total Interest Expense 52,650 64,276 3,721 67,997
Net Interest Income 99,569 118,701 8,091 126,792
Provision for possible loan losses 8,800 9,628 749 10,377
Net Interest Income After Provision for
Possible Loan Losses 90,769 109,073 7,342 116,415
Noninterest Income
Trust fees 6,374 6,786 - 6,786
Service charges on deposits 14,838 17,225 1,557 18,782
Other service, collection and exchange charges 7,985 8,842 1,174 10,016
Other operating income 4,291 5,383 490 5,873
Securities gains (losses), net - 10 (75) (65)
Total Noninterest Income 33,488 38,246 3,146 41,392
Noninterest Expense
Salaries and employee benefits 41,397 48,365 3,731 52,096
Occupancy expense, net 9,922 10,896 586 11,482
Equipment expense 5,385 6,185 384 6,569
Data processing expense 8,014 8,129 186 8,315
Foreclosed property expense 2,662 5,195 688 5,883
Other operating expense 35,076 40,505 2,325 42,830
Total Noninterest Expense 102,456 119,275 7,900 127,175
Income Before Income Taxes and
Extraordinary Items 21,801 28,044 2,588 30,632
Income tax expense - 2,122 892 3,014
Income from Continuing Operations $21,801 $25,922 $1,696 $27,618
Pro Forma Weighted Average Common Shares 82,825,792 95,847,286 8,370,512 104,217,798
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.26 * $0.27 $0.27
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 1993 (continued)
<TABLE>
<CAPTION>
(D) FIRST STATE TOTAL
PRO FORMA BANK AND STABA PRO FORMA
HIBERNIA TRUST AMERICAN BANCSHARES, HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION COMPANY BANK INC. CORPORATION
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $118,948 $2,255 $2,392 $1,923 $125,518
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 69,169 2,637 976 1,044 73,826
Obligations of states and political subdivisions 564 16 3 152 735
Trading account interest 10 - - - 10
Interest on time deposits in domestic banks 355 - 3 40 398
Interest on federal funds sold and securities
purchased under agreements to resell 5,743 75 84 111 6,013
Total Interest Income 194,789 4,983 3,458 3,270 206,500
Interest Expense
Interest on deposits 64,259 1,968 962 1,294 68,483
Interest on federal funds purchased and
securities sold under agreements to repurchase 1,940 - - - 1,940
Interest on debt and other 1,798 - 82 - 1,880
Total Interest Expense 67,997 1,968 1,044 1,294 72,303
Net Interest Income 126,792 3,015 2,414 1,976 134,197
Provision for possible loan losses 10,377 450 - 120 10,947
Net Interest Income After Provision for
Possible Loan Losses 116,415 2,565 2,414 1,856 123,250
Noninterest Income
Trust fees 6,786 3 - - 6,789
Service charges on deposits 18,782 346 317 186 19,631
Other service, collection and exchange charges 10,016 136 62 25 10,239
Other operating income 5,873 35 62 52 6,022
Securities gains (losses), net (65) - - - (65)
Total Noninterest Income 41,392 520 441 263 42,616
Noninterest Expense
Salaries and employee benefits 52,096 817 850 492 54,255
Occupancy expense, net 11,482 377 231 76 12,166
Equipment expense 6,569 89 36 109 6,803
Data processing expense 8,315 75 264 11 8,665
Foreclosed property expense 5,883 5 203 - 6,091
Other operating expense 42,830 367 358 490 44,045
Total Noninterest Expense 127,175 1,730 1,942 1,178 132,025
Income Before Income Taxes and
Extraordinary Items 30,632 1,355 913 941 33,841
Income tax expense 3,014 591 289 279 4,173
Income from Continuing Operations $27,618 $764 $624 $662 $29,668
Pro Forma Weighted Average Common Shares 104,217,798 3,350,000 2,250,000 2,117,647 111,935,445
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.27 $0.27
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1993
<TABLE>
<CAPTION>
(A) (D)
RESTATED PIONEER PRO FORMA
HIBERNIA HIBERNIA BANCSHARES HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION CORPORATION CORPORATION
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $185,378 $224,146 $14,704 $238,850
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 105,939 126,820 8,980 135,800
Obligations of states and political subdivisions - 1,222 85 1,307
Trading account interest 33 33 - 33
Interest on time deposits in domestic banks 194 295 255 550
Interest on federal funds sold and securities
purchased under agreements to resell 8,186 9,219 217 9,436
Total Interest Income 299,730 361,735 24,241 385,976
Interest Expense
Interest on deposits 100,092 121,000 6,596 127,596
Interest on federal funds purchased and
securities sold under agreements to repurchase 3,654 4,002 15 4,017
Interest on debt and other 279 2,669 948 3,617
Total Interest Expense 104,025 127,671 7,559 135,230
Net Interest Income 195,705 234,064 16,682 250,746
Provision for possible loan losses (6,200) (5,607) 1,509 (4,098)
Net Interest Income After Provision for
Possible Loan Losses 201,905 239,671 15,173 254,844
Noninterest Income
Trust fees 12,692 13,310 - 13,310
Service charges on deposits 30,046 34,937 2,965 37,902
Other service, collection and exchange charges 15,768 17,367 2,290 19,657
Gain on settlement of acquired loans 1,308 1,308 - 1,308
Other operating income 7,403 7,326 564 7,890
Securities gains (losses), net - 165 (73) 92
Total Noninterest Income 67,217 74,413 5,746 80,159
Noninterest Expense
Salaries and employee benefits 83,364 98,517 7,593 106,110
Occupancy expense, net 20,611 22,757 1,264 24,021
Equipment expense 11,043 12,577 755 13,332
Data processing expense 16,504 16,753 186 16,939
Foreclosed property expense 2,188 7,135 723 7,858
Provision for data processing enhancements 11,991 11,991 - 11,991
Other operating expense 73,775 83,604 4,733 88,337
Total Noninterest Expense 219,476 253,334 15,254 268,588
Income Before Income Taxes and
Cumulative Effect of Accounting Change 49,646 60,750 5,665 66,415
Income tax expense 1,696 5,359 1,975 7,334
Income from Continuing Operations $47,950 $55,391 $3,690 $59,081
Pro Forma Weighted Average Common Shares 83,175,129 96,196,623 8,370,512 104,567,135
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.58 * $0.58 $0.57
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1993 (continued)
<TABLE>
<CAPTION>
(D) FIRST STATE TOTAL
PRO FORMA BANK AND STABA PRO FORMA
HIBERNIA TRUST AMERICAN BANCSHARES, HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION COMPANY BANK INC. CORPORATION
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $238,850 $4,696 $4,705 $3,951 $252,202
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 135,800 5,058 1,756 2,073 144,687
Obligations of states and political subdivisions 1,307 30 21 294 1,652
Trading account interest 33 - 0 - 33
Interest on time deposits in domestic banks 550 - 6 77 633
Interest on federal funds sold and securities
purchased under agreements to resell 9,436 156 125 166 9,883
Total Interest Income 385,976 9,940 6,613 6,561 409,090
Interest Expense
Interest on deposits 127,596 3,695 1,851 2,542 135,684
Interest on federal funds purchased and
securities sold under agreements to repurchase 4,017 - 0 - 4,017
Interest on debt and other 3,617 - 0 - 3,617
Total Interest Expense 135,230 3,695 1,851 2,542 143,318
Net Interest Income 250,746 6,245 4,762 4,019 265,772
Provision for possible loan losses (4,098) 364 0 270 (3,464)
Net Interest Income After Provision for
Possible Loan Losses 254,844 5,881 4,762 3,749 269,236
Noninterest Income
Trust fees 13,310 4 0 - 13,314
Service charges on deposits 37,902 700 625 402 39,629
Other service, collection and exchange charges 19,657 276 92 54 20,079
Gain on settlement of acquired loans 1,308 - 0 - 1,308
Other operating income 7,890 283 463 123 8,759
Securities gains (losses), net 92 - 5 91 188
Total Noninterest Income 80,159 1,263 1,185 670 83,277
Noninterest Expense
Salaries and employee benefits 106,110 2,047 1,559 1,120 110,836
Occupancy expense, net 24,021 792 285 163 25,261
Equipment expense 13,332 181 282 318 14,113
Data processing expense 16,939 160 534 27 17,660
Foreclosed property expense 7,858 25 587 - 8,470
Provision for data processing enhancements 11,991 - 0 - 11,991
Other operating expense 88,337 927 981 1,011 91,256
Total Noninterest Expense 268,588 4,132 4,228 2,639 279,587
Income Before Income Taxes and
Cumulative Effect of Accounting Change 66,415 3,012 1,719 1,780 72,926
Income tax expense 7,334 1,031 508 528 9,401
Income from Continuing Operations $59,081 $1,981 $1,211 $1,252 $63,525
Pro Forma Weighted Average Common Shares 104,567,135 3,350,000 2,250,000 2,117,647 112,284,782
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.57 $0.57
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1992
<TABLE>
<CAPTION>
(A) (D)
RESTATED PIONEER PRO FORMA
HIBERNIA HIBERNIA BANCSHARES HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION CORPORATION CORPORATION
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $253,183 $293,980 $14,947 $308,927
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 89,131 111,482 11,030 122,512
Obligations of states and political subdivisions 3 1,202 187 1,389
Trading account interest 99 99 - 99
Interest on time deposits in domestic banks 223 361 252 613
Interest on federal funds sold and securities
purchased under agreements to resell 14,095 15,198 343 15,541
Total Interest Income 356,734 422,322 26,759 449,081
Interest Expense
Interest on deposits 141,502 167,648 9,158 176,806
Interest on federal funds purchased and
securities sold under agreements to repurchase 6,515 6,910 - 6,910
Interest on debt and other 11,439 13,366 732 14,098
Total Interest Expense 159,456 187,924 9,890 197,814
Net Interest Income 197,278 234,398 16,869 251,267
Provision for possible loan losses 66,275 68,327 2,221 70,548
Net Interest Income After Provision for
Possible Loan Losses 131,003 166,071 14,648 180,719
Noninterest Income
Trust fees 12,263 12,849 6 12,855
Service charges on deposits 31,870 36,451 3,129 39,580
Other service, collection and exchange charges 13,928 15,745 2,284 18,029
Gain on settlement of acquired loans 4,151 4,151 - 4,151
Loss on planned sale of Texas bank (2,934) (2,934) - (2,934)
Other operating income 9,972 9,760 1,447 11,207
Securities gains, net 17,190 17,336 14 17,350
Total Noninterest Income 86,440 93,358 6,880 100,238
Noninterest Expense
Salaries and employee benefits 86,141 99,480 6,936 106,416
Occupancy expense, net 23,275 25,393 1,351 26,744
Equipment expense 13,447 15,019 570 15,589
Data processing expense 17,477 17,726 864 18,590
Foreclosed property expense 16,302 22,702 2,637 25,339
Other operating expense 68,716 77,691 5,876 83,567
Total Noninterest Expense 225,358 258,011 18,234 276,245
Income (Loss) Before Income Taxes and
Extraordinary Items (7,915) 1,418 3,294 4,712
Income tax expense - 3,170 1,094 4,264
Income (Loss) from Continuing Operations ($7,915) ($1,752) $2,200 $448
Pro Forma Weighted Average Common Shares 29,608,279 42,629,773 8,370,512 51,000,285
Pro Forma Income (Loss) Per Common Share
from Continuing Operations (F) ($0.27)* ($0.04) $0.01
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1992 (continued)
<TABLE>
<CAPTION>
(D) FIRST STATE TOTAL
PRO FORMA BANK AND STABA PRO FORMA
HIBERNIA TRUST AMERICAN BANCSHARES, HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION COMPANY BANK INC. CORPORATION
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $308,927 $4,650 $4,360 $3,716 $321,653
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 122,512 5,889 2,250 2,023 132,674
Obligations of states and political subdivisions 1,389 36 0 282 1,707
Trading account interest 99 - 0 - 99
Interest on time deposits in domestic banks 613 - 4 81 698
Interest on federal funds sold and securities
purchased under agreements to resell 15,541 254 159 374 16,328
Total Interest Income 449,081 10,829 6,773 6,476 473,159
Interest Expense
Interest on deposits 176,806 5,022 2,453 2,920 187,201
Interest on federal funds purchased and
securities sold under agreements to repurchase 6,910 - 0 - 6,910
Interest on debt and other 14,098 - 0 - 14,098
Total Interest Expense 197,814 5,022 2,453 2,920 208,209
Net Interest Income 251,267 5,807 4,320 3,556 264,950
Provision for possible loan losses 70,548 545 0 363 71,456
Net Interest Income After Provision for
Possible Loan Losses 180,719 5,262 4,320 3,193 193,494
Noninterest Income
Trust fees 12,855 5 0 - 12,860
Service charges on deposits 39,580 699 672 406 41,357
Other service, collection and exchange charges 18,029 264 149 31 18,473
Gain on settlement of acquired loans 4,151 - 0 - 4,151
Loss on planned sale of Texas bank (2,934) - 0 - (2,934)
Other operating income 11,207 149 505 67 11,928
Securities gains, net 17,350 - 84 - 17,434
Total Noninterest Income 100,238 1,117 1,410 504 103,269
Noninterest Expense
Salaries and employee benefits 106,416 1,982 1,379 998 110,775
Occupancy expense, net 26,744 768 258 162 27,932
Equipment expense 15,589 141 252 218 16,200
Data processing expense 18,590 137 462 19 19,208
Foreclosed property expense 25,339 29 967 13 26,348
Other operating expense 83,567 958 989 874 86,388
Total Noninterest Expense 276,245 4,015 4,307 2,284 286,851
Income (Loss) Before Income Taxes and
Extraordinary Items 4,712 2,364 1,423 1,413 9,912
Income tax expense 4,264 849 422 349 5,884
Income (Loss) from Continuing Operations $448 $1,515 $1,001 $1,064 $4,028
Pro Forma Weighted Average Common Shares 51,000,285 3,350,000 2,250,000 2,117,647 58,717,932
Pro Forma Income (Loss) Per Common Share
from Continuing Operations (F) $0.01 $0.07
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1991
<TABLE>
<CAPTION>
(A) (D)
RESTATED PIONEER PRO FORMA
HIBERNIA HIBERNIA BANCSHARES HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION CORPORATION CORPORATION
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $451,675 $495,697 $16,686 $512,383
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 114,629 135,929 12,042 147,971
Obligations of states and political subdivisions 4,970 6,274 394 6,668
Trading account interest 70 70 - 70
Interest on time deposits in domestic banks 100 522 291 813
Interest on federal funds sold and securities
purchased under agreements to resell 9,285 11,417 572 11,989
Total Interest Income 580,729 649,909 29,985 679,894
Interest Expense
Interest on deposits 317,780 355,371 14,866 370,237
Interest on federal funds purchased and
securities sold under agreements to repurchase 16,177 16,794 - 16,794
Interest on debt and other 12,173 14,396 838 15,234
Total Interest Expense 346,130 386,561 15,704 402,265
Net Interest Income 234,599 263,348 14,281 277,629
Provision for possible loan losses 178,330 180,589 2,561 183,150
Net Interest Income After Provision for
Possible Loan Losses 56,269 82,759 11,720 94,479
Noninterest Income
Trust fees 14,346 14,844 11 14,855
Service charges on deposits 34,779 39,209 2,715 41,924
Other service, collection and exchange charges 19,938 21,775 1,636 23,411
Credit card income 5,251 5,413 - 5,413
Gain on settlement of acquired loans 9,043 9,043 - 9,043
Other operating income 8,512 8,145 207 8,352
Securities gains, net 17,801 17,707 186 17,893
Total Noninterest Income 109,670 116,136 4,755 120,891
Noninterest Expense
Salaries and employee benefits 115,173 128,063 5,548 133,611
Occupancy expense, net 28,785 30,823 1,169 31,992
Equipment expense 13,979 15,579 491 16,070
Data processing expense 12,548 12,783 761 13,544
Foreclosed property expense 24,854 28,781 2,421 31,202
Credit card expense 3,136 3,136 - 3,136
Other operating expense 110,679 118,875 3,842 122,717
Total Noninterest Expense 309,154 338,040 14,232 352,272
Income (Loss) Before Minority Interests (143,215) (139,145) 2,243 (136,902)
Less: Minority interest - 311 - 311
Income (Loss) Before Income Taxes,
Extraordinary Item and Cumulative Effect
of Accounting Change (143,215) (139,456) 2,243 (137,213)
Income tax expense 782 1,911 572 2,483
Income (Loss) from Continuing Operations ($143,997) ($141,367) $1,671 ($139,696)
Pro Forma Weighted Average Common Shares 28,116,938 41,138,432 8,370,512 49,508,944
Pro Forma Income (Loss) Per Common Share
from Continuing Operations (F) ($5.12)* ($3.44) ($2.82)
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1991 (continued)
<TABLE>
<CAPTION>
(D) FIRST STATE TOTAL
PRO FORMA BANK AND STABA PRO FORMA
HIBERNIA TRUST AMERICAN BANCSHARES, HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION COMPANY BANK INC. CORPORATION
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $512,383 $4,797 $4,060 $3,606 $524,846
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 147,971 5,674 2,336 1,736 157,717
Obligations of states and political subdivisions 6,668 64 13 253 6,998
Trading account interest 70 - 0 - 70
Interest on time deposits in domestic banks 813 - 6 125 944
Interest on federal funds sold and securities
purchased under agreements to resell 11,989 673 211 349 13,222
Total Interest Income 679,894 11,208 6,626 6,069 703,797
Interest Expense
Interest on deposits 370,237 6,685 3,623 3,365 383,910
Interest on federal funds purchased and
securities sold under agreements to repurchase 16,794 - 0 - 16,794
Interest on debt and other 15,234 - 0 - 15,234
Total Interest Expense 402,265 6,685 3,623 3,365 415,938
Net Interest Income 277,629 4,523 3,003 2,704 287,859
Provision for possible loan losses 183,150 1,200 90 175 184,615
Net Interest Income After Provision for
Possible Loan Losses 94,479 3,323 2,913 2,529 103,244
Noninterest Income
Trust fees 14,855 6 0 - 14,861
Service charges on deposits 41,924 675 677 367 43,643
Other service, collection and exchange charges 23,411 232 144 83 23,870
Credit card income 5,413 - 24 - 5,437
Gain on settlement of acquired loans 9,043 - 0 - 9,043
Other operating income 8,352 131 245 28 8,756
Securities gains, net 17,893 - 0 - 17,893
Total Noninterest Income 120,891 1,044 1,090 478 123,503
Noninterest Expense
Salaries and employee benefits 133,611 1,660 1,355 868 137,494
Occupancy expense, net 31,992 837 252 137 33,218
Equipment expense 16,070 96 209 201 16,576
Data processing expense 13,544 108 392 13 14,057
Foreclosed property expense 31,202 34 297 12 31,545
Credit card expense 3,136 - 0 - 3,136
Other operating expense 122,717 1,095 1,009 744 125,565
Total Noninterest Expense 352,272 3,830 3,514 1,975 361,591
Income (Loss) Before Minority Interests (136,902) 537 489 1,032 (134,844)
Less: Minority interest 311 - 0 - 311
Income (Loss) Before Income Taxes,
Extraordinary Item and Cumulative Effect
of Accounting Change (137,213) 537 489 1,032 (135,155)
Income tax expense 2,483 257 122 270 3,132
Income (Loss) from Continuing Operations ($139,696) $280 $367 $762 ($138,287)
Pro Forma Weighted Average Common Shares 49,508,944 3,350,000 2,250,000 2,117,647 57,226,591
Pro Forma Income (Loss) Per Common Share
from Continuing Operations (F) ($2.82) ($2.42)
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
<PAGE>
HIBERNIA CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
A. The "Restated Hibernia Corporation" information reflects the
results of the mergers with Commercial Bancshares, Inc. and
Bastrop National Bank, consummated on July 1, 1994; and First
Continental Bancshares, Inc. and First Bancorp of Louisiana,
Inc., consummated on August 1, 1994, which were accounted for
as poolings of interests. Hibernia Corporation issued
13,021,494 shares of common stock with a stated value of
$25,002,000 to effect these mergers. Debt totaling
$17,825,000 and related accrued interest and premium of
$4,930,000 was retired in conjunction with these mergers.
B. Hibernia Corporation will issue common stock with an aggregate
market value at the date of merger of $71,149,000 million to
effect the merger with Pioneer Bancshares Corporation
(Pioneer). The Hibernia Corporation common stock is assumed
to have a market value of $8.50 per share resulting in the
issuance of 8,370,512 shares of common stock for all the
outstanding common stock of Pioneer (exchange ratio of 30.50).
If the Average Market Price is less than $7.50 per share, then
the number of shares of Hibernia Common Stock to be exchanged
in the Merger will be increased proportionately with the
decrease in the Average Market Price below that level to
ensure that an aggregate value of $62,779,000 of Hibernia
Common Stock is exchanged in the Merger. Similarly, if the
Average Market Price is more than $9.50 per share, then the
number of shares of Hibernia Common Stock to be exchanged in
the Merger will be decreased proportionately with the increase
in the Average Market Price above that level to ensure that an
aggregate value of $72,500,000 of Hibernia Common Stock is
exchanged in the Merger. However, if the Average Market Price
is between $9.50 and $7.50, the number of shares to be
exchanged will remain constant, even if the Average Market
Price fluctuates within that range.
The stated value of Hibernia Corporation common stock is $1.92
per share. In accordance with the pooling of interests method
of accounting, the historical equities of the merged companies
are combined.
C. Hibernia Corporation will use available federal funds sold to
retire Pioneer debt of $2,080,000 and related accrued interest
of $65,000. The retirement of the Pioneer debt is not a
requirement of the merger.
D. In connection with obtaining regulatory approval of the
Pioneer transaction, Hibernia has agreed to sell three of the
branches currently operated by Pioneer. The sale of these
branches will include the physical premises as well as all
deposits, loans and other assets held by those branches.
Aggregate deposits and aggregate loans held by those branches
as of June 30, 1994 were approximately $43 million and $21
million, respectively. A definitive agreement to sell each of
the branches must be executed prior to the closing of the
Pioneer merger. The sale of these branches will not affect
the consideration to be paid to Pioneer shareholders in that
merger. The effect of the sale of these branches is
considered immaterial and has not been reflected in the pro
forma combined financial statements.
E. In addition to the Pioneer merger, Hibernia Corporation
is a party to pending mergers with First State Bank and Trust
Company (First State), American Bank (American) and STABA
Bancshares, Inc. (STABA). Hibernia Corporation will issue
common stock to effect these mergers in transactions using the
pooling of interests method of accounting.
The Hibernia Corporation common stock is assumed to have a
market value of $8.50 per share and a stated value of $1.92
per share.
If the average market price is less than $7.75 per share, then
the number of shares of Hibernia Common Stock to be exchanged
in the First State merger will be increased proportionately
with the decrease in the average market price below that level
to ensure that an aggregate value of $25,962,500 of Hibernia
Common Stock is exchanged in the merger. Similarly, if the
average market price is more than $9.75 per share, then the
number of shares of Hibernia Common Stock to be exchanged in
the merger will be decreased proportionately with the increase
in the average market price above that level to ensure that an
aggregate value of $32,662,500 of Hibernia Common Stock is
exchanged in the merger. However, if the average market price
is between $9.75 and $7.75, the number of shares to be
exchanged will remain constant, even if the average market
price fluctuates within that range.
If the average market price is less than $7.75 per share, then
the number of shares of Hibernia Common Stock to be exchanged
in the American merger will be increased proportionately with
the decrease in the average market price below that level to
ensure that an aggregate value of $17,437,500 of Hibernia
Common Stock is exchanged in the merger. Similarly, if the
average market price is more than $8.875 per share, then the
number of shares of Hibernia Common Stock to be exchanged in
the merger will be decreased proportionately with the increase
in the average market price above that level to ensure that an
aggregate value of $19,968,750 of Hibernia Common Stock is
exchanged in the merger. However, if the average market price
is between $8.875 and $7.75, the number of shares to be
exchanged will remain constant, even if the average market
price fluctuates within that range.
In accordance with the pooling of interests method of
accounting, the historical equities of the merged companies
are combined.
<TABLE>
<CAPTION>
Hibernia Mkt Value Stated Value Exchange
Shares of Shares of Shares Ratio
--------- --------- ------------ --------
<S> <C> <C> <C> <C>
First State 3,350,000 $ 28,475,000 $ 6,432,000 33.50
American 2,250,000 19,125,000 4,320,000 4.65
STABA 2,117,647 18,000,000 4,066,000 17.80
--------- ------------ -----------
Total 7,717,647 $ 65,600,000 $14,818,000
========= ============ ===========
</TABLE>
F. Hibernia Corporation expects to achieve savings through
reductions in interest expense and operating costs in
connection with the proposed mergers. The savings vary from
merger to merger depending upon Hibernia Corporation's pre-
merger operations in the respective geographic area. The
majority of the savings will be achieved through the
retirement of long-term debt upon merger and consolidation of
certain operations. The extent to which the savings will be
achieved depends, among other things, on the regulatory
environment and economic conditions, and may be affected by
unanticipated changes in business activities, inflation and
certain external factors such as Federal Deposit Insurance
Corporation (FDIC) assessments. Therefore, there can be no
assurance that such savings will be realized. No adjustment
has been included in the unaudited pro forma financial
statements for the anticipated savings.
PROPOSED MERGER
This section of the Proxy Statement-Prospectus describes
certain aspects of the Merger. The following description does not
purport to be complete and is qualified in its entirety by
reference to the Agreement, which is attached as Appendix A to this
Proxy Statement-Prospectus and is incorporated herein by reference.
All shareholders are urged to read the Agreement carefully and in
its entirety.
Background of and Reasons for Merger
As a result of recent improvement in the Louisiana economy,
there has been a sharp increase in the level of interest in and the
number of acquisitions of financial institutions in Louisiana. One
of the responsibilities of the Board of Directors of Pioneer is to
consider various strategic alternatives, including whether to
affiliate with a larger, more diversified financial organization,
as viable opportunities might arise.
In March of 1994, Hibernia contacted representatives of
Pioneer and expressed an interest in a proposed merger. After
several meetings and extensive negotiations, the Agreement was
executed on June 1, 1994. The Agreement calls for an exchange of
Hibernia Common Stock for all of the outstanding shares of Pioneer
in a tax-free merger.
In determining that the Merger was in the best interests of
Pioneer and its stockholders, the Board of Directors of Pioneer
considered a numerous factors, including: (a) the business,
earnings and potential for future growth of Pioneer and Hibernia;
(b) potential operational and managerial benefits that could be
derived from the Merger; (c) the consideration to be received by
Pioneer stockholders in the Merger in relation to the book value
and earnings of Pioneer; (d) prices paid in similar merger
transactions; (e) the tax-free nature of the stock-for-stock
exchange; (f) the liquidity provided by holding shares of Hibernia
which are traded on the NYSE; and (g) the fairness opinion issued
by U.S. Banking Alliance ("USBA").
Based on the foregoing, the Board of Directors of Pioneer has
unanimously approved the Agreement and believes that the Merger is
in the best interests of the shareholders of Pioneer, and
recommends that the shareholders vote FOR the Merger. The Board of
Directors has received from USBA an opinion that the terms of the
Merger are fair, from a financial point of view, to the common
shareholders of Pioneer. See "PROPOSED MERGER -- Opinion of
Financial Advisor." Pioneer's Board believes that the Merger will
provide significant value to all Pioneer shareholders and will
enable them to participate in opportunities for growth that
Pioneer's Board believes the Merger makes possible.
Terms of the Merger
On the Effective Date, each outstanding share of Pioneer
Common Stock (other than shares held by dissenting shareholders)
will be converted into 30.5 shares of Hibernia Common Stock, unless
the Average Market Price of Hibernia Common Stock is $7.50 or less
or $9.50 or more. If the Average Market Price is $7.50 or less,
then the aggregate number of shares of Hibernia Common Stock to be
exchanged in the Merger will be determined in accordance with the
following formula: ($62,779,000 divided by the Average Market
Price of Hibernia Common Stock). If the Average Market Price is
$9.50 or more, then the aggregate number of shares of Hibernia
Common Stock to be exchanged in the Merger will be determined in
accordance with the following formula: ($72,500,000 divided by the
Average Market Price of Hibernia Common Stock). For this purpose,
the Average Market Price of the Hibernia Common Stock will be the
average of the high and low trading prices of the stock for the
five business days prior to the last trading day immediately
preceding the Closing Date.
If the Average Market Price is less than $7.50 per share, then
the number of shares of Hibernia Common Stock to be exchanged in
the Merger will be increased proportionately with the decrease in
the Average Market Price below that level to ensure that an
aggregate value of $62,779,000 of Hibernia Common Stock is
exchanged in the Merger. Similarly, if the Average Market Price is
more than $9.50 per share, then the number of shares of Hibernia
Common Stock to be exchanged in the Merger will be decreased
proportionately with the increase in the Average Market Price above
that level to ensure that an aggregate value of $72,500,000 of
Hibernia Common Stock is exchanged in the Merger. However, if the
Average Market Price is between $9.50 and $7.50, the number of
shares to be exchanged will remain constant, even if the Average
Market Price fluctuates within that range.
Upon the effectiveness of the Merger, the conversion of shares
of Pioneer Common Stock to Hibernia Common Stock will be automatic,
and Pioneer shareholders will automatically be entitled to all of
the rights and privileges afforded to Hibernia shareholders as of
such date. However, the exchange of Pioneer stock certificates for
certificates representing Hibernia Common Stock will occur after
the Effective Date of the Merger.
SHAREHOLDERS OF PIONEER SHOULD NOT FORWARD THEIR STOCK
CERTIFICATES TO PIONEER OR HIBERNIA AT THIS TIME. IF THE MERGER IS
CONSUMMATED, PIONEER SHAREHOLDERS WILL RECEIVE INSTRUCTIONS
REGARDING THE EXCHANGE OF THEIR CERTIFICATES FOR HIBERNIA COMMON
STOCK.
For a discussion of the rights of dissenting shareholders, see
"PROPOSED MERGER -- Rights of Dissenting Shareholders."
Advice and Opinion of Financial Advisor
Pioneer retained the financial institution consulting firm of
US Banking Alliance Inc., Atlanta, Georgia ("USBA") as financial
advisor in connection with the proposed Merger. USBA subsequently
delivered to the Board of Directors of Pioneer its written opinion
dated March 31, 1994 that, based on the matters set forth therein,
the terms of the Merger as provided for in the Agreement are fair
to Pioneer's stockholders from a financial point of view. A copy
of USBA's opinion is set forth as Appendix B to this Proxy
Statement-Prospectus and should be read in its entirety.
USBA, as part of its financial institution consulting
business, is routinely engaged in the valuation of banks and other
financial institutions and their securities in connection with
mergers and acquisitions and other transactions. Pioneer retained
USBA on the basis of its reputation and its experience in
evaluating financial institutions. The terms of the Merger were
negotiated between the respective managements of Pioneer and
Hibernia. USBA did not participate in direct negotiations between
the parties.
In connection with rendering its opinion USBA reviewed and
analyzed, among other things, the following: (1) the Merger
documents; (2) certain publicly available information concerning
Pioneer and Hibernia including the audited financial statements for
each of the years in the three-year period ended December 31, 1993,
and the unaudited financial statements for the three months ended
March 31, 1994; (3) certain other internal information, primarily
financial in nature, concerning the business and operation of
Pioneer and Hibernia furnished to USBA by Pioneer and Hibernia for
purposes of its analysis; (4) certain publicly available
information with respect to other companies that USBA believed to
be comparable to Pioneer and Hibernia and the trading markets for
such other companies' securities, and (5) certain publicly
available information concerning the nature and terms of other
transactions that USBA considered relevant to its inquiry. Pioneer
did not impose any restrictions or limitations on USBA with respect
to the scope of its investigation.
In performing its review and analysis and in arriving at its
opinion, USBA assumed and relied upon the accuracy and completeness
of all of the financial and other information provided to it or
that was publicly available. USBA did not attempt independently to
verify any such information. USBA did not conduct a physical
inspection of the properties or facilities of Pioneer or Hibernia
nor did it make or obtain any independent evaluations or appraisals
of any such properties or facilities.
In conducting its analyses and arriving at its opinion, USBA
considered such financial and other factors as it deemed
appropriate under the circumstances including, among other things,
the following: (1) the historical and current financial condition
and results of operations of Pioneer and Hibernia, including
interest income, interest expense, net interest income, net
interest margin, interest sensitivity, non-interest expenses,
earnings, dividends, book value, return on assets, return on
equity, capitalization, the amount and type of non-performing
assets and the reserve for loan losses; (2) the business prospects
of Pioneer and Hibernia; (3) the economies in Pioneer's and
Hibernia's market areas; (4) the historical and current market for
Pioneer Common Stock and Hibernia Common Stock and for the equity
securities of certain other companies that USBA believed to be
comparable to Pioneer and Hibernia; and (5) the nature and terms of
certain other acquisition transactions that USBA believed to be
relevant. USBA also took into account its assessment of general
economic, market, financial, and regulatory conditions and trends,
as well as its knowledge of the financial institutions industry,
its experience in connection with similar transactions, and its
knowledge of securities valuation generally.
Set forth below is a brief summary of the valuation report
produced by USBA to the Board of Directors.
Summary of Proposal - USBA reviewed the terms of the merger
proposal, including the consideration provided for in the
Agreement, the resulting percentage ownership of the combined
company that would be held by Pioneer shareholders immediately
following the proposed transaction, and the value of the
consideration offered.
Industry Comparative Analysis - USBA reviewed the strengths
and weaknesses of Pioneer and Hibernia by comparing their
respective financial performance to (1) high performance regional
institutions operating within metropolitan statistical areas; (2)
financial institutions within the same strategic class; and (3)
selected peer institutions comparable in size, strategic focus, and
market locations. This analysis compared a number of Pioneer's and
Hibernia's historical financial ratios to those of the comparable
groups, including but not limited to: (1) general profitability
measures such as returns on average assets and equity; (2) net
interest margins; (3) net non-interest margins; (4) operating risk;
(5) strategic risk; (6) capital analysis; (7) credit quality link;
(8) liquidity risk; (9) interest rate risk; and (10) off-balance
sheet risk.
Valuation of Pioneer - USBA estimated the fair market value of
Pioneer. In arriving at the estimated fair market value, USBA
utilized the income approach and the market approach and then
reconciled the values derived from each such approach.
Using a form of discounted future earnings analysis under the
income approach, USBA projected Pioneer's earnings for the five
years to end March 31, 1999, based on certain assumptions,
including, but not limited to, annual asset growth of 3% to 6%,
constant to slightly improving staff utilization as measured by
core deposits per full time equivalent employee, no additional
branch facilities, loan to deposit ratios in a range of 47.50
percent to 55.00 percent, net charge-offs normalizing to 0.57
percent to 0.71 percent, loan loss reserve targets of 1.50 percent
to 1.85 percent of gross loans and a constant dividend payout of at
least 50 percent of net income. Four alternative projection
scenarios were prepared and labeled expected, better, worse and
alternate cases. The above projections were discounted to present
value at 12.02 percent. The discount rate was an estimate of the
required returns of holders or prospective holders of shares of a
financial institution similar to Pioneer, based on a number of
factors including prevailing interest rates, the pricing levels of
publicly traded financial institutions, the financial condition and
operating results of Pioneer, as well as USBA's general knowledge
of valuation, the securities markets, and acquisition values in
other markets of financial institutions. Using the income
approach, USBA established a range of $161 to $228 per share.
In the market approach, USBA analyzed certain median pricing
ratios (e.g., price to book value, price to tangible book value,
price to reported earnings, and the premium paid over book value as
a percentage of core deposits) resulting from selected completed
bank merger transactions, as well as recently announced pending
transactions. USBA then performed a comparison of a number of
financial ratios for Pioneer to those of the target bank
institutions and analyzed the results to determine whether
adjustments to Pioneer's value would be necessary. Based on the
adjustments made, USBA established an average of $223.00 per share.
USBA then reviewed the results from the two approaches, and
after consideration of all relevant facts, reconciled the
acquisition values generated by each approach and determined a
final range for the acquisition value of Pioneer of $185.00 to
$230.00 per share.
The following is a brief summary of the valuation analysis of
Hibernia presented by USBA to the Board of Directors of Pioneer in
the valuation report.
Hibernia's Stock Pricing - USBA examined the pricing of
Hibernia's common stock as of March 31, 1994, in relation to other
regional commercial banks, commercial banks of a similar size, and
all actively traded commercial banks. USBA also combined the
common stock price level to the results of a dividend discount
model incorporating analysts' estimates of earnings growth.
The summary of USBA's reports set forth above does not purport
to be a complete description of USBA's presentations to Pioneer's
Board of Directors of the analyses performed by USBA. The
preparation of a fairness opinion is a complex process, and it is
difficult to fully describe the process in a partial or summary
description. USBA believes that its analyses and the summary set
forth above must be considered as a whole and that selecting
portions of its analyses or the above summary, without considering
all of the analyses or the entire summary, could create an
incomplete and misleading view of the processes underlying the
analyses set forth in USBA's reports and its opinion. In addition,
USBA may have given various assumptions more or less weight than
other assumptions and may have deemed various assumptions more or
less probable than other assumptions, so that the ranges of
valuations resulting from any particular analysis described above
should not be taken to be USBA's view of the actual value of
Pioneer or the combined company. The fact that any specific
analysis has been referred to in the summary above is not meant to
indicate that such analysis was given greater weight than any other
analyses. In performing its analyses, USBA made numerous
assumptions with respect to industry performance, general business
and economic conditions, and other matters, many of which are
beyond the control of Pioneer or Hibernia. The specific analyses
performed by USBA are not necessarily indicative of actual values
or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Such individual
analyses were prepared solely as part of USBA's overall analysis of
the fairness of the consideration to be received by Pioneer's
shareholders and were provided to the Board of Directors of Pioneer
in connection with the delivery of USBA's opinion. The analyses do
not purport to be appraisals or to reflect the prices at which a
company might actually be sold or the prices at which any
securities may trade at the present time or at any time in the
future. In addition, as described above, USBA's opinion and
presentation to Pioneer's Board of Directors was one of many
factors taken into consideration by Pioneer's Board of Directors in
making its determination to approve the Merger.
Hibernia and Pioneer, through arms' length negotiation,
determined the amount of consideration to be given to Pioneer
shareholders in the Merger. USBA did not advise Hibernia in any
manner with regard to establishing the consideration to be paid.
For USBA's services as financial advisor in the proposed
transaction, Pioneer will pay USBA fees of approximately $27,500
for the issuance of the fairness opinion. In addition, Pioneer has
agreed to reimburse USBA for reasonable out-of-pocket expenses and
indemnify USBA against certain liabilities, including certain
liabilities under the securities laws.
Surrender and Exchange of Stock Certificates
As soon as practicable after the Effective Date, the transfer
agent of Hibernia, in its capacity as Exchange Agent, will mail all
non-dissenting shareholders of Pioneer a letter of transmittal,
together with instructions for the exchange of their Pioneer Common
Stock certificates for certificates representing Hibernia Common
Stock. Until so exchanged, each certificate representing Pioneer
Common Stock outstanding immediately prior to the Effective Date
shall be deemed for all purposes to evidence ownership of the
number of shares of Hibernia Common Stock into which such shares
have been converted on the Effective Date. Shareholders should not
send their Pioneer Common Stock certificates for surrender until
they receive further instructions from the Exchange Agent.
Pioneer shareholders who cannot locate their Pioneer stock
certificates are encouraged to contact Darlene Drake, Secretary,
401 Texas Street, Shreveport, Louisiana 71130 telephone: (318)
429-6000 prior to the Special Meeting. New certificates will be
issued to Pioneer shareholders who have misplaced their
certificates only if the shareholder executes an affidavit
certifying that the certificate cannot be located and agreeing to
indemnify Pioneer and Hibernia (as its successor), against any
claim that may be made against either of them by the owner of the
lost certificate(s). Pioneer or Hibernia (as it successor) may
require a shareholder to post a bond in an amount sufficient to
support the shareholder's indemnification obligation. Shareholders
who have misplaced their stock certificates and shareholders who
hold certificates in names other than their own are encouraged to
resolve those matters prior to the Effective Date of the Merger in
order to avoid delays in receiving their Hibernia Common Stock if
the Merger is approved and consummated.
Employee Benefits
Hibernia has agreed as part of the Agreement that it will
offer to all employees of Pioneer who are employed as of the
Effective Date and who become employees of Hibernia or HNB after
the Merger, the same employee benefits as those offered by Hibernia
and HNB to their employees, except that employees of Pioneer will
not be required to wait for any period in order to be eligible to
participate in Hibernia's Flex Plan (including its medical and
dental coverage). Hibernia will also give Pioneer employees who
become Hibernia employees full credit for their years of service
(for both eligibility and vesting) with Pioneer for purposes of
Hibernia's 401(k) plan, the Retirement Security Plan.
Pioneer intends to terminate its existing profit sharing plan
and to distribute the funds in that plan to participants promptly
after receipt of a termination letter from the Internal Revenue
Service. Distributions from this plan may be rolled over into
Hibernia's Retirement Security Plan (its 401(k) plan) by persons
eligible to participate in Hibernia's plan, as long as the legal
requirements of such rollover are met.
<PAGE>
Expenses
The Agreement provides that all expenses incurred in
connection with the negotiation and execution of the Agreement and
the consummation of the Merger will be borne by the party that
incurred them, regardless whether the Merger is consummated.
Representations and Warranties; Conditions to the Merger; Waiver
The Agreement contains representations and warranties by
Pioneer regarding, among other things, its organization, authority
to enter into the Agreement, capitalization, properties, financial
statements, pending and threatened litigation, contractual
obligations and contingent liabilities. The Agreement also
contains representations and warranties by Hibernia regarding,
among other things, its organization and authority to enter into
the Agreement, capitalization, financial statements and public
reports. Except as otherwise provided in the Agreement, these
representations and warranties will not survive the Effective Date.
The obligations of Hibernia and Pioneer to consummate the
Merger and the Bank Merger are conditioned upon, among other
things, approval of the Agreement by Pioneer's shareholders; the
receipt of necessary regulatory approvals, including the approval
of the OCC and the Federal Reserve without any materially
burdensome conditions; the receipt of an opinion to the effect that
the Merger, when consummated in accordance with the terms of the
Agreement, will constitute a reorganization within the meaning of
Section 368 of the Code and that, to the extent Pioneer Common
Stock is exchanged for Hibernia Common Stock, Pioneer's
shareholders will recognize no gain or loss for federal income tax
purposes with respect to such exchange; the effectiveness under the
Securities Act of a registration statement relating to the Hibernia
Common Stock to be issued in connection with the Merger and the
absence of a stop order suspending such effectiveness; the absence
of an order, decree or injunction enjoining or prohibiting the
consummation of the Merger and the Bank Merger; the receipt of all
required state securities law permits or authorizations; the
accuracy of the representations and warranties set forth in the
Agreement as of the Closing Date; the listing of the Hibernia
Common Stock to be issued in the Merger on the NYSE; the receipt of
certain opinions of counsel; in the case of Pioneer, the receipt of
certain opinions of USBA and, in the case of Hibernia, the absence
of an event that would preclude the Merger from being accounted for
as a pooling-of-interests. In this regard, Hibernia may abandon
the Merger if Pioneer shareholders holding more than 10% of the
outstanding Pioneer Common Stock exercise and perfect dissenters'
rights.
Except with respect to any required shareholder or regulatory
approval, substantially all of the conditions to consummation of
the Merger may be waived at any time by the party for whose benefit
they were created, and the Agreement may be amended or supplemented
at any time by written agreement of the parties, except that no
such waiver, amendment or supplement executed after approval of the
Agreement by Pioneer's shareholders may reduce the Exchange Ratio.
In addition, any material change in the terms of the Merger after
the Special Meeting would require a resolicitation of votes from
Pioneer shareholders.
Regulatory and Other Approvals
Hibernia is a registered bank holding company and as such is
regulated by the Federal Reserve Board. The approval of the
Federal Reserve Board of the Merger is required in order to
consummate the Merger, and the Merger must be consummated within 90
calendar days after such approval is obtained.
HNB is regulated by the OCC, and the Bank Merger consequently
must be approved by the OCC before it may be effected. Hibernia
anticipates receiving the required regulatory approvals prior to
year-end 1994.
Pioneer and Hibernia generally must wait at least 30 days
after the date of Federal Reserve Board approval before they may
consummate the Merger, during which period the Department of
Justice may object to the Merger on antitrust grounds. However, as
a result of a Department of Justice inquiry, Hibernia has agreed to
sell three of the branches that it would have otherwise acquired in
the Merger in order to obtain bank regulatory approval of the
Merger and therefore may not be required in this instance to wait
the entire 30-day period prior to consummating the Merger. See
"Required Sale of Branches", below in this section.
The shares of Hibernia Common Stock offered pursuant to the
Proxy Statement-Prospectus will be registered with the Securities
and Exchange Commission and the state securities regulators in
those states that require such registration. The shares will also
be listed on the NYSE.
The regulatory approvals sought in connection with the Merger
and the Bank Merger may be obtained or denied prior to or after the
Special Meeting. The vote on the Merger at the Special Meeting is
not dependent or conditioned upon receipt of any such approvals
prior to the Special Meeting. Even if the Merger is approved at
the Special Meeting, it may not be consummated thereafter. Failure
to receive the requisite regulatory approvals will result in a
termination of the Agreement.
Required Sale of Branches
As a condition to receiving bank regulatory approval of the
Merger, Hibernia has agreed to sell three of the branches of
Pioneer that it would have otherwise acquired as a result of the
Merger. The Closing of the Merger may not occur until a definitive
agreement relating to the sale of the branches is executed. The
branches that will be sold are Pioneer's Line Avenue Branch, Sunset
Acres Branch and North Market Street Branch, each of which is
located in Shreveport. As of June 30, 1994, aggregate deposits of
these three branches were approximately $43 million and aggregate
loans were approximately $21 million. All of the assets and
liabilities of each of the branches will be sold, including the
physical premises. There can be no assurance as to the price at
which the branches may be sold. However, the sale of the branches
will not affect the amount or type of consideration to be paid to
Pioneer shareholders in the Merger.
Business Pending the Merger
Under the terms of the Agreement, neither Pioneer nor the Bank
may, without the prior written consent of Hibernia or as otherwise
provided in the Agreement: (i) create or issue any additional
shares of capital stock or any options or other rights to purchase
or acquire shares of capital stock; (ii) enter into employment
contracts with directors, officers or employees or otherwise agree
to increase the compensation of or pay any bonus to such persons
except in accordance with existing policy; (iii) enter into or
substantially modify any employee benefits plans, except that
Pioneer may amend its Profit Sharing Plan in order to bring such
plan into compliance with applicable laws and regulations, and
Pioneer may take steps to terminate its Profit Sharing Plan,
including, but not limited to, the appointment of a successor
trustee for purposes of distributing the proceeds of the plan to
participants; (iv) establish any automatic teller machines or
branch or other banking offices; (v) make any capital
expenditure(s) in excess of $100,000; (vi) merge with any other
company or bank or liquidate or otherwise dispose of its assets; or
(vii) acquire another company or bank (except in connection with
foreclosures of bona fide loan transactions). In addition, Pioneer
may not solicit bids or other transactions that would result in a
merger of Pioneer or the Bank with an entity other than Hibernia or
HNB. Pioneer may pay normal and customary dividends prior to the
Closing Date.
Effective Date of the Merger; Termination
After all conditions to consummation of the Merger have been
satisfied or waived, the effective date of the Merger shall be the
date and time that the Merger will become effective as of the date
and time of the issuance by the Louisiana Secretary of State of a
certificate of merger relating to the Merger (the "Effective
Date").
Prior to the Effective Date, the Agreement may be terminated
by either party, whether before or after approval of the Agreement
and the Merger by Pioneer's shareholders: (i) in the event of a
material breach by the other party of any representation, warranty
or covenant which has not been cured within the period allowed by
the Agreement; (ii) if any of the conditions precedent to the
obligations of such party to consummate the Merger have not been
satisfied, fulfilled or waived as of the Closing Date; (iii) if any
application for any required federal or state regulatory approval
has been denied, and the time for all appeals of such denial has
run; (iv) if the shareholders of Pioneer fail to approve the Merger
at the Special Meeting; or (v) in the event that the Merger is not
consummated by June 30, 1995. The Agreement also may be terminated
at any time by the mutual consent of the parties. In the event of
termination, the Agreement becomes null and void, except that
certain provisions thereof relating to expenses and confidentiality
and the accuracy of information provided for inclusion in the
Registration Statement of which this Prospectus is a part survive
any such termination and any such termination does not relieve any
breaching party from liability for any uncured breach of any
covenant or agreement giving rise to such termination.
Management and Operations After the Merger
On the Effective Date, Pioneer will be merged with and into
Hibernia. Immediately thereafter, the Bank will merge with and
into HNB and the separate existences of Pioneer and the Bank will
cease. The offices of the Bank will operate as branch banking
offices of HNB. The employees of the Bank on the Effective Date
will become employees of HNB as of the Effective Date and will be
employed on an "at will" basis thereafter, subject to any existing
employment agreements or similar contractual obligations assumed by
Hibernia or HNB.
The Boards of Directors of Hibernia and HNB following the
Merger shall consist of those persons serving as directors
immediately prior thereto. Certain information regarding the
directors of Hibernia elected at its annual meeting of shareholders
on April 27, 1993 is contained in documents incorporated herein by
reference. See "AVAILABLE INFORMATION." The directors of Pioneer
and the Bank will resign their positions as directors as of the
Effective Date. Some of these directors may serve on an advisory
board of Hibernia after the Merger. In addition, it is expected
that Mr. Campbell will be considered for a position on the Board of
Directors of Hibernia. See "PROPOSED MERGER -- Interests of
Certain Persons in the Merger."
Certain Differences in Rights of Shareholders
If the shareholders of Pioneer approve the Merger and the
Merger is subsequently consummated, all shareholders of Pioneer,
other than any shareholders who exercise and perfect dissenters'
rights, will become shareholders of Hibernia. As shareholders of
Hibernia, their rights will be governed by and subject to
Hibernia's Articles of Incorporation and Bylaws, rather than
Pioneer's Articles of Incorporation and Bylaws. The following is
a summary of the principal differences between the rights of
shareholders of Pioneer and Hibernia not described elsewhere in
this Proxy Statement-Prospectus.
Liquidity of Stock. There currently is no ready market for
the shares of Pioneer Common Stock, and such a market is not likely
to develop in the future. The shares of Hibernia Common Stock that
will be issued in the Merger will be registered under applicable
securities laws and may therefore be freely resold by persons who
are not "affiliates" of Pioneer or Hibernia. In addition, the
Hibernia Common Stock is listed on the NYSE and actively traded on
that exchange. Current quotes of the market price of Hibernia
Common Stock are available from brokerage firms and other
securities professionals, as well as other sources, and are
published in major newspapers on a daily basis.
Preemptive Rights. Shareholders of Hibernia do not have
preemptive rights. Shareholders of Pioneer have preemptive rights
to purchase or subscribe to any unissued shares of common stock or
any right of subscription to or to receive, or any warrant or
option for the purchase of, any shares of common stock that may be
sold by Pioneer. Preemptive rights are generally designed to
permit shareholders to maintain their percentage ownership of a
company if the company issues new shares. This right will not be
afforded to Pioneer shareholders who become shareholders of
Hibernia.
Removal of Directors. Shareholders of Hibernia may remove a
director for cause (defined as gross negligence or wilful
misconduct) by the vote of a majority of the total voting power and
may remove a director without cause by a vote of two-thirds of the
total voting power. One or more directors of Pioneer may be
removed by the affirmative vote of a majority of the shares
entitled to vote on the election of directors present at a meeting
called for that purpose.
Amendment of Articles and Bylaws. Hibernia's Articles of
Incorporation may be amended by a vote of a majority of the voting
power present at any meeting called for that purpose. The Articles
of Incorporation of Pioneer may be amended by the affirmative vote
of two-thirds of the voting power present at a meeting called for
that purpose.
The Bylaws of Hibernia may be amended or repealed by a vote of
two-thirds of the total voting power outstanding or by a vote of
two-thirds of the "continuing directors" of the company, as defined
in the Bylaws. A "continuing director" for this purpose is
generally a director who was nominated for election by a majority
of the existing directors. The Bylaws of Pioneer may be amended by
the Board of Directors and the shareholders, by a majority of the
Directors and/or shareholders at a duly called meeting.
Special Meetings of Shareholders. Special meetings of the
shareholders of Hibernia may be called by the Chairman of the
Board, the President, the Chief Executive Officer or the Treasurer
of Hibernia. In addition, shareholders holding one-fifth or more
of the total voting power of Hibernia may request a special meeting
of shareholders and, upon receipt of such request, the Secretary of
Hibernia is required to call a special meeting of the shareholders.
A special meeting of shareholders of Pioneer may be called at any
time by the President, the Board of Directors, or the holders of
not less than ten percent (10%) of all shares entitled to vote at
such meeting.
Shareholder Proposals. Hibernia's Bylaws contain certain
provisions expressly allowing shareholders to submit shareholder
proposals and to nominate individuals for election as directors,
under certain circumstances and provided the shareholder complies
with all of the conditions set forth in those provisions.
Certain Transfer Restrictions Relating to 5-Percent
Shareholders. Article IX of Hibernia's Articles of Incorporation
restricts transfers of equity interests in Hibernia under certain
circumstances. This restriction (the "5-Percent Restriction") is
intended to protect Hibernia from certain transfers of equity
interests which could have a material adverse effect on Hibernia's
ability to use certain tax benefits to reduce its taxable income.
Under the 5-Percent Restriction, if, before December 29, 1995, a
shareholder transfers or agrees to transfer Hibernia stock or stock
equivalents, the transfer will be prohibited and void to the extent
that it would result under applicable Federal income tax rules in
the identification of a new "5-percent shareholder" of Hibernia or
an increase in the percentage stock ownership of any existing "5-
percent shareholder" is increased.
The 5-Percent Restriction does not apply to any transfer
which has been approved in advance by the Board of Directors of
Hibernia, or which is made in compliance with exceptions
established from time to time by resolution of the Board of
Directors. The Board of Directors may withhold its approval of a
transfer only if, in its judgment, the transfer may result in any
limitation on the use by Hibernia of its net operating loss
carryforwards or built-in tax losses or other tax attributes. The
Board of Directors may adopt further resolutions exempting
additional transfers from the 5-Percent Restriction.
The 5-Percent Restriction may adversely affect the
marketability of the Hibernia Common Stock by discouraging
potential investors from acquiring equity securities of Hibernia.
However, since its adoption in September 1992, the 5-Percent
Restriction does not appear to have had any such adverse affect on
the marketability of the Hibernia Common Stock.
While the 5-Percent Restriction may have the effect of
impeding a shareholder's attempt to acquire a significant or
controlling interest in Hibernia, the purpose of the 5-Percent
Restriction is to preserve the tax benefits of Hibernia's previous
losses, not to insulate management from change. Management of
Hibernia believes the tax benefits outweigh any anti-takeover
impact of the 5-Percent Restriction. Any anti-takeover effect of
the 5-Percent Restriction will end with the termination of the 5-
Percent Restriction on December 29, 1995.
Indemnification of Officers and Directors. Hibernia's
Articles of Incorporation provide for indemnification of officers
and directors of the company under the circumstances permitted by
Louisiana law. This indemnification provision requires
indemnification, except as prohibited by law, of officers and
directors of Hibernia or any of its wholly-owned subsidiaries
against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with any action,
suit or proceeding, whether civil or criminal, administrative or
investigative (including any action by or in the right of Hibernia)
by reason of the fact that the person served as an officer or
director of Hibernia or one of its subsidiaries. Officers and
directors may only be indemnified against expenses in cases brought
by the officer or director against Hibernia if the action is a
claim for indemnification, the officer or director prevails in the
action, or indemnification is included in any settlement or is
awarded by the court. The indemnification provision further
requires Hibernia to advance defense costs to officers and
directors in such suits and proceedings upon receipt of an
undertaking to repay such expenses unless it is ultimately
determined that the officer or director is entitled to
indemnification as authorized by the Article.
Pioneer's Articles of Incorporation provide that Pioneer shall
indemnify its directors, officers, employees, and agents of the
Corporation and may purchase and maintain liability insurance for
such persons as, and to the extent, permitted by Louisiana law.
Interests of Certain Persons in the Merger
Indemnification of Pioneer Directors. The terms of the Merger
include certain provisions that protect the officers and directors
of Pioneer and the Bank from and against liability for actions
arising while they served in those capacities for Pioneer and/or
the Bank. The Agreement provides for indemnification of such
persons to the same extent as they would have been indemnified
under the Articles of Incorporation and Bylaws of Hibernia in
effect on June 1, 1994, except that the Agreement limits Hibernia's
aggregate liability for such indemnification to $10 million and
requires each officer and director eligible for such
indemnification to execute a joinder agreement in which such
persons agree to cooperate with Hibernia in any litigation or
proceeding giving rise to a claim of indemnification. The
indemnification provisions of the Agreement do not apply to claims
of which such persons were aware or should have been aware on or
prior to the Closing Date as to which either of Pioneer's or the
Bank's director and officer liability insurance carrier was not
notified prior to the Closing.
The Agreement also provides for indemnification of Pioneer's
officers, directors and certain affiliates from and against
liability arising under the Securities Act or otherwise if such
liability arises out of or is based on an untrue statement or
omission of a material fact required to be stated therein or
necessary to make the statements made therein not misleading. This
indemnification does not apply to statements made in reliance on
information furnished to Hibernia by Pioneer for use in the
Registration Statement, including this Proxy Statement-Prospectus.
Employment Agreements. Hibernia intends to execute,
contemporaneously with consummation of the Merger, employment
agreements with E. R. Campbell, Jr., Chairman of Pioneer, and B. D.
Flurry, President of Pioneer. Each of these contracts provides for
employment for a period of five years after the date thereof and
salaries at the levels currently earned by those individuals, with
annual salary increases and bonuses based upon Hibernia's policies
and the performance of each individual. Each contract may be
terminated for cause by Hibernia without liability for further
payments thereunder. The agreements may also be terminated without
cause by Hibernia or for "good reason", as defined therein, by the
individual, which termination would require Hibernia to pay the
individual the salary provide for therein for the remainder of the
unexpired term of the contract. For purposes of these contracts,
"good reason" is generally defined as a material diminution or
other adverse change in the duties and responsibilities of the
employee or requiring the employee to relocate without his consent.
In addition, Hibernia intends to execute consulting agreements
with H.J. Hansen, Senior Chairman of the Board of Directors and
Edwin E. Jones, President of Pioneer Mortgage Corporation providing
for consulting services to be rendered at rates of compensation at
or below the rates at which those individuals are currently
compensated for a period of no more than two years. Each of these
agreements also includes a covenant by the consultant not to
compete with the business of Hibernia for the period of the
contract.
Advisory Board of Directors; Membership on Hibernia's Board
of Directors. If the Merger occurs, HNB is considering the
creation of an Advisory Board of Directors for the Northwest
Region. The Advisory Board would function in largely the same
manner as Hibernia's City Boards of Directors, meeting on a regular
basis and providing business development support to HNB. An
Advisory Board would give HNB the benefit of the experience of some
of the individuals who have been directors of Pioneer and are
active members of the Shreveport-Bossier City communities. If the
Advisory Board is created, the number and identities of the persons
who would serve on that Board has not been determined, but the
Board, if created, is likely to include members of the Board of
Directors of the Bank. The function and authority some of such a
Board has not yet been determined. If such a Board is created, the
members of the Advisory Board would be compensated for their
attendance at each meeting of the board in an amount that has not
been determined but that is expected to be comparable to the
amounts currently paid to HNB's other advisory boards.
It is also anticipated that Mr. Campbell will be considered
for a position on Hibernia's Board of Directors after the Merger.
Membership on Hibernia's Board would entitle Mr. Campbell to the
same rights, privileges and obligations as other directors of
Hibernia who are also employees of the company. Employees of
Hibernia who serve as directors of Hibernia or HNB receive no fees
(either meeting fees or retainers) for such service and do not
participate in the Directors Stock Option Plan.
Material Tax Consequences
The following is a summary description of the material income
tax consequences of the Merger; it is not intended to be a
complete description of the federal income tax consequences of the
Merger. Tax laws are complex, and each shareholder's individual
circumstances may affect the tax consequences to such shareholder.
In addition, no information is provided with respect to the tax
consequences of the Merger under applicable state, local or other
tax laws. Each shareholder is therefore urged to consult a tax
advisor regarding the tax consequences of the Merger to him or her.
Consummation of the Merger is conditioned upon the receipt of
an opinion to the effect that the Merger, when consummated in
accordance with the terms of the Agreement will constitute a
reorganization within the meaning of Section 368 of the Code, and
that the exchange of Pioneer Common Stock for Hibernia Common Stock
will not give rise to the recognition of gain or loss for federal
income tax purposes to Pioneer's shareholders with respect to such
exchange. See "PROPOSED MERGER -- Representations and Warranties;
Conditions to the Merger; Waiver."
If the Merger constitutes a reorganization within the meaning
of Section 368 of the Code: (i) no gain or loss will be recognized
by Pioneer, the Bank, Hibernia or HNB by reason of the Merger; (ii)
a shareholder of Pioneer will not recognize any gain or loss for
federal income tax purposes to the extent Hibernia Common Stock is
received in the Merger in exchange for Pioneer Common Stock; (iii)
the tax basis in the Hibernia Common Stock received by a
shareholder of Pioneer will be the same as the tax basis in the
Pioneer Common Stock surrendered in exchange therefor; and (iv) the
holding period, for federal income tax purposes, for Hibernia
Common Stock received in exchange for Pioneer Common Stock will
include the period during which the shareholder held the Pioneer
Common Stock surrendered in the exchange, provided that the Pioneer
Common Stock was held as a capital asset at the Effective Date.
The Louisiana income tax treatment to the shareholders of
Pioneer should be substantially the same as the federal income tax
treatment to the shareholders of Pioneer described above.
Shareholders residing in states other than Louisiana are encouraged
to consult their tax advisors regarding the state income tax
implications of the Merger to them.
The parties have received the opinion of Ernst & Young LLP,
certified public accountants, to the effect that the Merger, if
consummated in accordance with the terms of the Agreement, will
constitute a reorganization for purposes of Section 368 of the Code
and will have the tax effects described in this section. A copy of
the form of opinion of Ernst & Young LLP in this regard is attached
hereto as Appendix D. As noted in the opinion, the opinion is
based upon certain representations and assumptions described
therein. Shareholders of Pioneer are urged to review the full text
of the opinion of Ernst & Young LLP attached hereto as Appendix D
with regard to the tax consequences of the Merger to them.
For information regarding the federal income tax consequences
of cash payments received by dissenting shareholders, see "PROPOSED
MERGER -- Rights of Dissenting Shareholders."
Resale of Hibernia Common Stock
The shares of Hibernia Common Stock issuable to shareholders
of Pioneer upon consummation of the Merger have been registered
under the Securities Act. It is a condition to closing of the
Merger that all shares of Hibernia Common Stock issued in
connection with the Merger be approved for listing, upon official
notice of issuance, on the NYSE. Such shares may be traded freely
by those shareholders not deemed to be affiliates of Pioneer as
that term is defined under the Securities Act. The term
"affiliate" generally means each person who controls, or is a
member of a group that controls, or who is under common control
with, Pioneer, and for purposes hereof could be deemed to include
all executive officers, directors and 10% shareholders of Pioneer.
Hibernia Common Stock received and beneficially owned by those
shareholders who are deemed to be affiliates of Pioneer may be
resold without registration as provided by Rule 145, or as
otherwise permitted, under the Securities Act. Such affiliates,
provided they are not affiliates of Hibernia Corporation, may
publicly resell Hibernia Common Stock received by them in the
Merger subject to certain limitations, principally as to the manner
of sale, during the two years following the Effective Date. After
the two-year period, such affiliates may resell their shares
without restriction. In addition, shares of Hibernia Common Stock
issued to affiliates of Pioneer in the Merger will not be
transferable until financial statements pertaining to at least 30
days of post-Merger combined operations of Hibernia and Pioneer
have been published, in order to satisfy certain requirements of
the Securities and Exchange Commission relating to pooling-of-
interests accounting treatment.
The Agreement provides that Pioneer will use its best efforts
to identify those persons who may be deemed to be affiliates of
Pioneer and to cause each person so identified to deliver to
Hibernia a written agreement providing that such person will not
dispose of Pioneer Common Stock or Hibernia Common Stock received
in the Merger except in compliance with the Securities Act, the
rules and regulations promulgated thereunder and the Commission's
rules relating to pooling-of-interests accounting treatment. In
addition, Hibernia intends to place stop transfer instructions with
its transfer agent regarding Hibernia Common Stock issued to
affiliates of Pioneer.
Rights of Dissenting Shareholders
Each Pioneer shareholder who objects to the Merger is entitled
to the rights and remedies of dissenting shareholders provided in
Louisiana Revised Statutes Section 12:131 of the LBCL, a copy of
which is set forth as Appendix C hereto.
Section 131 provides that shareholders of Louisiana
corporations who vote against a merger have the right to dissent if
the merger is authorized by less than 80% of the total voting power
of the corporation. In order to so dissent, the shareholder must
file with the corporation a written objection to the merger, which
objection must be filed with the corporation prior to or at the
meeting at which the vote is taken. In addition, the shareholder
must vote against the merger at the meeting. If the merger is
approved by less than 80% of the total voting power of the
corporation, the corporation must provide by registered mail notice
of such vote to shareholders who filed a written objection and
voted against the merger. A dissenting shareholder must then file
with the company a written demand for the fair cash value of his
shares as of the date before the vote was taken. The demand must
be made within twenty days of the mailing of the notice from the
corporation and must include the fair value being requested by the
dissenting shareholder. The shareholder must also include in the
demand a post office address to which the corporation's reply may
be sent and must deposit his shares in escrow at a bank, duly
endorsed and transferred to the corporation on the sole condition
that the fair value be paid. If the corporation does not agree
with the fair value requested by the dissenting shareholder, it
must notify the shareholder within twenty days after receipt of the
shareholder's demand and state in such notice the value it is
willing to pay for the shares. If a disagreement continues over
the fair value, the LBCL provides a method for determination of
fair value by a district court in the parish in which the
corporation (if it still exists) or the merged corporation has its
registered office.
The amount received by a dissenting shareholder may be more or
less than, or equal to, the value of the Hibernia Common Stock
received by other Pioneer shareholders in the Merger.
Shareholders who file a demand for payment of fair value cease
to have any rights as shareholders of the corporation thereafter.
Also, shareholders may withdraw their demand at any time before the
corporation gives notice of disagreement. Withdrawal of a demand
thereafter requires the written consent of the corporation in order
to be effective.
Each step must be taken in strict compliance with the
applicable provisions of the statute in order for holders of
Pioneer Common Stock to perfect dissenters' rights. Shareholders
of Pioneer will lose their right to dissent from the Merger unless
they both (i) file with Pioneer a written objection to the
Agreement and the Merger prior to or at the Special Meeting and
(ii) vote their shares (in person or by proxy) against the Merger
at the Special Meeting.
Cash received by a dissenting shareholder of Pioneer in
exchange for his or her Pioneer stock will generally be subject to
state and federal income tax and should be treated as having been
received by such shareholder as a distribution in redemption of his
or her stock, subject to the provisions and limitations of Section
302 of the Code. If, as a result of such distribution, a
shareholder owns no stock either directly or through the
application of Section 318(a) of the Code, the redemption should be
a complete termination of interest within the meaning of Section
302(b)(3) of the Code and such cash will be treated as a
distribution in full payment in exchange for his or her stock, as
provided by Section 302(a) of the Code. In that case, the
shareholder would recognize ordinary income, or capital gain, as
the case may be, in an amount equal to the difference between the
amount of cash received in redemption of his shares and his basis
in his Pioneer shares. The Louisiana income tax treatment to
dissenting shareholders of Pioneer will be substantially the same
as the federal income tax treatment to such shareholders.
Shareholders residing outside of Louisiana should consult their tax
advisors as to the state income tax consequences of exercising
dissenters' rights.
Dividend Reinvestment Plan
Hibernia Corporation maintains a Dividend Reinvestment Plan
through which shareholders of Hibernia who participate in the plan
may reinvest dividends in Hibernia Common Stock. Shares are
purchased for participants in the plan at their market value as
determined by the market price of the stock as listed on the NYSE.
The plan also permits participants to purchase additional shares
with cash at the then-current market price. All shares purchased
through the plan are held in a separate account for each
participant maintained by Hibernia's transfer agent. Shareholders
who participate in the Dividend Reinvestment Plan purchase shares
through the plan without paying brokerage commissions or other
costs ordinarily associated with open market purchases of stock.
It is anticipated that the Dividend Reinvestment Plan will continue
after the Effective Date and that shareholders of Pioneer who
become shareholders of Hibernia will have the same opportunity to
participate in the plan as other shareholders of Hibernia.
Accounting Treatment
It is anticipated that the Merger will be accounted for as a
"pooling-of-interests" transaction. In order for the Merger to
qualify for pooling-of-interests accounting treatment, 90% or more
of the outstanding Pioneer Common Stock must be exchanged for
Hibernia Common Stock. If holders of more than 10% of the
outstanding Pioneer Common Stock exercise and perfect dissenters'
rights, the Merger will not qualify for pooling-of-interest
accounting. Also, in order for the pooling-of-interests accounting
method to apply, "affiliates" of Pioneer cannot reduce their
holdings of Hibernia Common Stock received in the Merger for a
period beginning 30 days prior to the Effective Date and ending
upon the publication of at least 30 days of post-Merger combined
operations of Pioneer and Hibernia. Persons believed by Pioneer to
be "affiliates" have agreed to comply with these restrictions.
Pioneer has agreed to use its best efforts to permit the
transaction to be accounted for as a pooling-of-interests.
Hibernia is not obligated to consummate the Merger if the Merger
does not qualify for pooling-of-interests accounting treatment.
CERTAIN INFORMATION CONCERNING HIBERNIA
Hibernia is a Louisiana corporation registered under the Bank
Holding Company Act of 1956, as amended ("BHCA"). As of June 30,
1994, Hibernia had total consolidated assets of approximately $4.9
billion and shareholders' equity of approximately $443 million. As
of June 30, 1994, Hibernia was ranked, on the basis of total
assets, as the 90th largest bank holding company in the United
States and the second largest headquartered in Louisiana. The
principal executive offices of Hibernia are located at 313
Carondelet Street, New Orleans, Louisiana 70130, and its telephone
number is (504) 533-5532. For additional information concerning
the business and financial condition of Hibernia, reference should
be made to the Hibernia reports incorporated herein by reference.
See "AVAILABLE INFORMATION."
As of June 30, 1994 Hibernia had a single banking subsidiary,
Hibernia National Bank ("HNB"), that provides retail and commercial
banking services through 101 branches throughout Louisiana. As of
June 30, 1994, HNB was the largest bank headquartered in Louisiana.
Hibernia consummated four mergers in the third quarter of
1994, two each as of July 1 and August 1, each of which was
accounted for as a pooling of interests. Restated supplemental
consolidated financial statements of Hibernia reflecting the impact
of these mergers were included in a Current Report on Form 8-K
filed with the Securities and Exchange Commission on October 11,
1994 and are incorporated herein by reference. As restated to
reflect those mergers, Hibernia's total assets and shareholders'
equity as of December 31, 1993 were $5.7 billion and $474 million,
respectively.
On October 12, 1994, Hibernia publicly reported third-quarter
income of $23.2 million ($.24 per share), up 64% from $14.1 million
($.15 per share) for the same period of 1993, and up 33% from $17.4
million ($.18 per share) for the second quarter of 1994.
Hibernia's third quarter results reflect a negative provision for
loan losses of $17.5 million and a $16.1 million write-off of
goodwill associated with acquisitions in the mid- to late-1980's.
Supervision and Regulation
General
As a bank holding company, Hibernia is subject to the
regulation and supervision of the Federal Reserve Board. Under the
Bank Holding Company Act of 1956 (the "BHCA"), bank holding
companies may not directly or indirectly acquire the ownership or
control of more than 5% of the voting shares or substantially all
of the assets of any company, including a bank, without the prior
approval of the Federal Reserve Board. In addition, bank holding
companies are generally prohibited from engaging under the BHCA in
nonbanking activities, subject to certain exceptions.
Hibernia's banking subsidiary, Hibernia National Bank, is
subject to supervision and examination by applicable federal and
state banking agencies. HNB is a national banking association
subject to the regulation and supervision of the Comptroller of the
Currency (the "Comptroller"). HNB is also subject to various
requirements and restrictions under federal and state law,
including requirements to maintain reserves against deposits,
restrictions on the types and amounts of loans that may be granted
and the interest that may be charged thereon and limitations on the
types of investments that may be made and the types of services
that may be offered. Various consumer laws and regulations also
affect the operations of HNB. In addition to the impact of
regulation, commercial banks are affected significantly by the
actions of the Federal Reserve Board as it attempts to control the
money supply and credit availability in order to influence the
economy.
Payment of Dividends
Hibernia generally depends upon payment of dividends by HNB in
order to pay dividends to its shareholders and to meet its other
needs for cash to pay expenses. Hibernia derives substantially all
of its income from the payment of dividends by HNB, and its ability
to pay dividends is affected by the ability of HNB to pay
dividends. HNB is subject to various statutory restrictions on its
ability to pay dividends to Hibernia. Under such restrictions, the
amount available for payment of dividends to Hibernia by HNB was
approximately $61 million at December 31, 1993. In addition, the
OCC has the authority to prohibit any national bank from engaging
in an unsafe or unsound practice, and the OCC has indicated its
view that it generally would be an unsafe and unsound practice to
pay dividends except out of current operating earnings. The
ability of HNB to pay dividends in the future is presently, and
could be further, influenced by bank regulatory policies or
agreements and by capital guidelines. Additional information in
this regard is contained in documents incorporated by reference
herein. See "AVAILABLE INFORMATION."
In addition, consistent with its policy regarding bank holding
companies serving as a source of strength for their subsidiary
banks, the Federal Reserve Board has stated that, as a matter of
prudent banking, a bank holding company generally should not
maintain a rate of cash dividends unless its net income available
to common stockholders has been sufficient to fully fund the
dividends, and the prospective rate of earnings retention appears
to be consistent with the holding company's capital needs, asset
quality and overall financial conditions.
Restrictions on Extensions of Credit
HNB is subject to restrictions imposed by federal law on the
ability of any national bank to extend credit to affiliates,
including Hibernia, to purchase the assets thereof, to issue a
guarantee, acceptance or letter of credit on their behalf
(including an endorsement or standby letter of credit) or to
purchase or invest in the stock or securities thereof or to take
such stock or securities as collateral for loans to any borrower.
Such extensions of credit and issuances generally must be secured
by eligible collateral and are generally limited to 15% of HNB's
capital and surplus.
CERTAIN INFORMATION CONCERNING PIONEER
Description of Business
General. Pioneer is a registered bank holding company
headquartered in Shreveport, Louisiana that was incorporated under
the laws of Louisiana on September 30, 1981. Pioneer engages in
the banking business through its subsidiary, Pioneer Bank & Trust
Company. As of June 30, 1994, Pioneer's consolidated assets were
equal to $361,986,000.
Pioneer Bank & Trust Company (the "Bank") is located in Caddo,
Parish, Louisiana (which Parish has approximately 200,000
residents) and operates its main office and eleven (11) additional
branch offices in Shreveport, Louisiana. As of June 30, 1994, the
Bank had total assets of approximately $360,123,000 and deposits of
approximately $320,726,000.
The Bank provides a wide range of retail banking services,
including checking and savings accounts; certificates of deposit;
individual retirement accounts; commercial, real estate, consumer
and agricultural loans; and safe deposit boxes. The Bank owns all
of the stock of Pioneer Mortgage Corporation, which is engaged in
the residential mortgage loan business.
There is no individual customer or group of customers, the
loss of which would have a material adverse effect on the
operations of the Bank. No significant portion of the Bank' loans
is concentrated within a single industry or group of related
industries.
Properties. The Bank operates in twelve (12) locations in
Shreveport, Louisiana (401 Texas Street, 300 Marshall Street, 648
East Kings Highway, 2321 Greenwood Road, 7701 Pines Road, 814
Jordan, 3400 Line Avenue, 1633 N. Market, 6725 Southern Avenue,
9360 Mansfield Road, 6205 Hearne Avenue and 5895 N. Market).
Pioneer Mortgage Corporation operates three (3) locations (1400
Line Avenue and 6425 Youree Drive in Shreveport, and 1903 Benton
Road in Bossier City). Each of the properties on which branches or
offices of the Bank are located are owned by Pioneer or the Bank or
operated under leases with third parties, the terms of which are
fair to the Bank and provide for rent in amounts that do not exceed
the rates charged for similar properties to other entities in the
relevant markets.
Employees. The Bank had 206 employees as of December 31,
1993, and Pioneer Mortgage Corporation had 42 employees as of that
date. Pioneer has no employees that are not otherwise employed by
the Bank or Pioneer Mortgage Corporation.
Competitive Conditions. The principal markets in which
Pioneer competes are Caddo and Bossier Parishes. For deposits and
loans, Pioneer competes with other banks, savings institutions,
credit unions, finance companies, mortgage companies, insurance
companies, governmental agencies and other financial institutions.
Legal Proceedings. Pioneer and its subsidiaries are parties
to certain legal proceedings and litigation that arise in the
ordinary course of their businesses that are not expected to have
a material impact on Pioneer's consolidated operations or financial
condition. In addition, the Bank is one of 98 defendants in State
of Louisiana v. BISYS Loan Services, et al., litigation pending in
the U. S. District Court for the Eastern District of Louisiana
(Civil Action No. 94-1768) commenced by the State of Louisiana that
alleges a conspiracy to overcharge the State on certain escrow
accounts. Although the Bank has been named in this litigation, it
has not yet been served with the complaint and any potential
liability is impossible to assess at this time.
Ownership of Pioneer Common Stock and Dividends
Market Prices. As of the Record Date, there were 274,443
shares of Pioneer Common Stock outstanding and approximately 284
shareholders of record of such shares. There is no established
trading market for Pioneer Common Stock, and it has been subject to
only limited trading. The shares are not listed on any exchange or
quoted on any automated quotation system, and no institution makes
a market in the stock.
Ownership of Principal Shareholders. Except for the Pioneer
Common Stock, Pioneer has no other class of voting securities
issued or outstanding. The following table provides information
concerning persons known to Pioneer to be beneficial owners,
directly or indirectly, of more than 5% of the outstanding shares
of Pioneer Common Stock, as of the Record Date. Except as set
forth below, no person is known by Pioneer as of such date to be
the beneficial owner of more than 5% of the outstanding voting
securities of Pioneer. Unless otherwise noted, the named persons
own the shares directly and have sole voting and investment power
with respect to the shares indicated.
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership % of Class
E. R. Campbell, Jr.
P. O. Box 31750
Shreveport, Louisiana 71130
Home: 8310 E. Wilderness Way
Shreveport, LA 71106 102,782 37.45%
Anna Campbell Seymour
2711 Oak Drive
Monroe, Louisiana 22,9331 8.36%
Christopher G. Campbell
P. O. Box 31750
Shreveport, Louisiana 71130
Home: 640 Unadilla
Shreveport, LA 71106 14,9302 5.44%
E. R. Campbell, III
P. O. Box 31750
Shreveport, Louisiana 71130
Home: 4505 Gilbert Avenue
Shreveport, LA 71106 15,2463 5.55%
Anna Kathryn Campbell
4309 Emerson
Dallas, Texas 75205 14,7484 5.38%
1 Includes 6,000 shares held in trust for the children of Anna
Campbell Seymour, with respect to which trust Edward J. Seymour,
Jr. (Mrs. Seymour's husband) acts as trustee.
2 Includes 200 shares held in trust for his child for which
E.R. Campbell, III acts as trustee and 3,000 shares are held in
trust for his benefit with his brother, E. R. Campbell, III, as
Trustee.
3 Includes 400 shares held in trust for his children with
respect to which trust Christopher G. Campbell acts as Trustee and
3,000 shares held in trust for his benefit with his brother,
Christopher G. Campbell, for which Christopher G. Campbell as
trustee.
4 Includes 9,000 shares in trust for her benefit for which E.
R. Campbell, III (her brother) acts as trustee.
The Pioneer Employee Profit Sharing Trust owns 10,147 shares of
Pioneer Common Stock of which amount E. R. Campbell, Jr. is
entitled to a beneficial interest of approximately 900 shares, and
E. R. Campbell, III and Christopher G. Campbell are entitled to a
beneficial interest of approximately 10 shares each. The shares in
the Pioneer Employee Profit Sharing Trust are voted by the Bank
Trust Committee, of which Mr. E. R. Campbell, Jr. is a member.
Ownership of Directors and Executive Officers of Pioneer. The
following table provides information concerning the shares of
Pioneer Common Stock beneficially owned, directly or indirectly, by
each director and executive officer of Pioneer, and all directors
and executive officers as a group, as of the Record Date. Unless
otherwise noted, the named persons have sole voting and investment
power with respect to the shares indicated.
Name Number of Shares % of Class
Harry Avant 100 .04%
Dr. William S. Bundrick 2,765 1.01%
Christopher G. Campbell 14,9301 5.44%
E. R. Campbell, Jr. 102,782 37.45%
E. R. Campbell, III 15,2462 5.55%
B. D. Flurry 7,9703 2.90%
Paul H. Hagens, Jr. 700 .26%
H. J. Hansen 5,3874 1.96%
Virginia Harris 600 .22%
Harry M. Jarred 1,832 .67%
Edwin E. Jones 3,310 1.21%
E. A. Richardson 300 .11%
R. H. Shirley 200 .07%
J. Lamar Stall 730 .27%
J. B. Thornton, III 300 .11%
Dr. Raymond W. Turner 3,971 1.45%
161,123 58.72%
1 Includes 200 shares held in trust for his child for which
E.R. Campbell, III acts as trustee and 3,000 shares are held in
trust for his benefit with his brother, E. R. Campbell, III, as
Trustee.
2 Includes 400 shares held in trust for his children with
respect to which trust Christopher G. Campbell acts as Trustee and
3,000 shares held in trust for his benefit with his brother,
Christopher G. Campbell, for which Christopher G. Campbell acts as
trustee.
3 Includes 400 shares held as custodian for his children and
1,800 shares in a self-directed IRA.
4 Includes 545 shares held in a self-directed IRA.
Dividends. Pioneer has paid dividends to its shareholders in
each of the last three fiscal years, including a dividend of $1.00
per share in 1991, a dividend of $1.00 per share in 1992 and a
dividend of $1.50 in 1993. Dividends of $2.25 per share have been
paid in 1994, and no further dividends are planned prior to the
Effective Date of the Merger.
Pioneer's ability to pay dividends is dependent upon the
earnings and financial condition of the Bank, since all of the
funds used by Pioneer to pay dividends are derived from dividends
paid by the Bank to Pioneer.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Smith, Pugh and Company (formerly Smith, Cole, Filipowski and
Company) has continuously served as the independent auditors for
Pioneer from 1989 through 1993. A representative of Smith, Pugh is
expected to be present at the Special Meeting of Pioneer's
shareholders, will have an opportunity to make a statement if he
desires and will be available to respond to appropriate questions.
VALIDITY OF SHARES
The validity of the shares of Common Stock offered hereby has
been passed upon for Hibernia by Patricia C. Meringer, Associate
Counsel and Secretary of Hibernia. As of the date of this
prospectus, Ms. Meringer owned 56 shares of Hibernia Common Stock
in a 401(k) plan account and held options to purchase 15,716 shares
of Hibernia Common Stock, which options are not currently
exercisable.
EXPERTS
The consolidated financial statements of Hibernia incorporated
in this Prospectus by reference from Hibernia's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993 have been
audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon incorporated herein by reference, and have
been so incorporated by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and
auditing.
PIONEER BANCSHARES CORPORATION
AND SUBSIDIARIES
SHREVEPORT, LOUISIANA
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Table of Contents
December 31, 1993
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . .1
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . .2
Consolidated Statements of Income. . . . . . . . . . . . . . . .3
Consolidated Statements of Changes in Stockholders' Equity . . .4
Consolidated Statements of Cash Flows. . . . . . . . . . . . .5-6
Notes to Consolidated Financial Statments. . . . . . . . . . 7-18
<PAGE>
Independent Auditor's Report
To the Board of Directors and Stockholders
Pioneer Bancshares Corporation
Shreveport, Louisiana
We have audited the accompanying consolidated balance sheets of Pioneer
Bancshares Corporation and Subsidiaries as of December 31, 1993, 1992, and
1991, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the years then ended. 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 audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Pioneer
Bancshares Corporation and Subsidiaries at December 31, 1993, 1992, and
1991, and the consolidated results of their operations and their cash flows
for the years then ended in conformity with generally accepted accounting
principles.
Certified Public Accountants
/s/ Smith, Pugh & Company
February 7, 1994
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1993, 1992, and 1991
(in thousands)
<TABLE>
<CAPTION>
Assets
1993 1992 1991
<S> <C> <C> <C>
Cash and Due from Banks $ 12,957 $ 16,172 $ 15,450
Interest-bearing Deposits with Banks 7,235 6,774 6,279
Federal Funds Sold - 9,000 17,000
Total Cash and Cash Equivalents 20,192 31,946 38,729
Investment Securities (Note 2) (market value of
$177,758 in 1993, $171,650 in 1992,
and $160,863 in 1991) 176,444 170,221 157,591
Loans (Note 3) 149,392 138,613 136,849
Less: -Unearned Discount (1,104) (1,221) (1,721)
Allowance for Loan Losses (2,450) (3,365) (3,600)
Net Loans 145,838 134,027 131,528
Premises and Equipment - Net (Note 4) 7,386 7,151 6,071
Other Real Estate Owned (Note 5) 227 7,840 14,338
Accrued Interest Receivable 2,476 2,640 3,528
Other Assets (Note 6) 2,769 6,017 5,019
Total Assets $ 355,332 $ 359,842 $ 356,804
Liabilities and Stockholders' Equity
<S> <C> <C> <C>
Liabilities:
Time Certificates Greater than $100,000 $ 14,622 $ 12,635 $ 14,700
Other Deposits 302,293 311,750 308,808
Total Deposits 316,915 324,385 323,508
Accrued Interest, Taxes, and Expenses 1,822 3,766 3,164
Securities Sold Under Repurchase Agreement 2,550 - -
Long-Term Debt (Note 7) 6,213 6,877 7,243
Total Liabilities 327,500 335,028 333,915
Stockholders' Equity:
Common Stock, Par Value $10 Per Share, Authorized
600,000 Shares, Issued and Outstanding 287,959 Shares 2,880 2,880 2,880
Paid-In Capital 6,742 6,742 6,742
Retained Earnings 19,023 16,005 14,080
Less: Treasury Stock, 13,516 Shares at Cost (813) (813) (813)
Total Stockholders' Equity 27,832 24,814 22,889
Total Liabilities and Stockholders' Equity $ 355,332 $ 359,842 $ 356,804
See notes to consolidated financial statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
For Years Ended December 31, 1993, 1992, and 1991
(in thousands)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Interest Income:
Interest and Fees on Loans $ 14,704 $ 14,947 $ 16,686
Interest on Investment Securities:
Taxable 8,980 11,030 12,041
Exempt from Federal Income Tax 86 187 394
Interest on Federal Funds Sold 217 343 573
Interest on Deposits in Banks 255 252 291
Total Interest Income 24,242 26,759 29,985
Interest Expense:
Other Deposits 6,318 8,603 13,704
Time Deposits Over $100,000 279 555 1,162
Securities Sold Under Repurchase Agreement 14 - -
Long-Term Debt 949 732 838
Total Interest Expense 7,560 9,890 15,704
Net Interest Income 16,682 16,869 14,281
Provision for Loan Losses 1,509 2,221 2,561
Net Interest Income after Provision
for Loan Losses 15,173 14,648 11,720
Other Income:
Service Fees 5,063 5,166 4,513
Other 411 370 498
Net Gains (Losses) on Sales of Assets 255 405 (442)
Net Investment Securities Gains (Losses) (73) 22 186
Total Other Income 5,656 5,963 4,755
Other Expenses:
Salaries 5,999 5,380 4,675
Employee Benefits 1,525 1,126 872
Occupancy Expenses, Net 1,240 1,188 1,169
Equipment Expenses 751 529 491
Other Operating Expenses 5,649 9,094 7,025
Total Other Expenses 15,164 17,317 14,232
Income before Income Taxes and
Cumulative Effect Adjustment 5,665 3,294 2,243
Cumulative Effect on Prior Years of
Accounting Change (Note 8) 261 - -
Income Taxes (Note 8) 1,975 1,094 572
Net Income $ 3,429 $ 2,200 $ 1,671
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1993, 1992, and 1991
(in thousands)
<TABLE>
<CAPTION>
Common Paid-In Retained Treasury
Stock Capital Earnings Stock Total
<S> <C> <C> <C> <C> <C>
Balance December 31, 1990 $2,880 $6,742 $12,670 (813) $21,479
Prior-Year Adjustment 13 13
------- ------- ------- ------- --------
Balance, Beginning of Year,
Restated 2,880 6,742 12,683 (813) 21,492
Add: -Net Income for Year 1,671 1,671
Less: -Dividends Paid (274) (274)
------ ------- -------- ------- --------
Balance December 31, 1991 2,880 6,742 14,080 (813) 22,889
Add: -Net Income for Year 2,200 2,200
Less: -Dividends Paid (275) (275)
------- ------- -------- -------- ---------
Balance December 31, 1992 2,880 6,742 16,005 (813) 24,814
Add: -Net Income for Year 3,429 3,429
Less: -Dividends Paid (411) (411)
------- -------- -------- -------- ---------
Balance December 31, 1993 $2,880 $6,742 $19,023 $(813)$ $27,832
======= ====== ======= ======= ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For Years Ended December 31, 1993, 1992, and 1991
(in thousands)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Interest Received $ 24,510 $ 27,852 $ 30,343
Service Fees and Other Income Received 5,575 6,470 4,995
Interest Paid (7,754) (10,264) (15,468)
Income Taxes Paid (650) (1,205) (894)
Cash Paid to Suppliers and Employees (17,788) (14,176) (9,451)
Net Cash Provided by Operating Activities 3,893 8,677 9,525
Cash Flows from Investing Activities:
Proceeds from Sales and Maturities
of Investments 72,146 67,475 80,221
Purchase of Investments (78,547) (80,289) (75,611)
Purchase of Securities Under Repurchase Agreement 2,550 - -
Increase in Loans (7,171) (6,553) (1,691)
Purchase of Premises and Equipment (1,073) (1,392) (195)
Proceeds from Sales of Premises and Equipment 247 20 300
Proceeds from Sales of Other Real Estate Owned 1,045 4,511 1,590
Proceeds from Sales of Other Assets 2,249 530 185
Net Cash Provided by (Used in) Investing Activities (8,554) (15,698) 4,799
Cash Flows from Financing Activities:
Proceeds from Note Payable 4,478 - -
Payments on Notes Payable (299) - (300)
Dividends Paid (411) (273) (274)
Payments on Subordinated Debentures (4,843) (366) (366)
Net Increase (Decrease) in Other Deposits (8,005) 2,942 14,223
Net Increase (Decrease) Time Deposits Over $100,000 1,987 (2,065) (7,081)
Net Cash Provided by (Used In) Financing Activities (7,093) 238 6,202
Net Increase (Decrease) in Cash and Cash Equivalents (11,754) (6,783) 20,526
Cash and Cash Equivalents Beginning of Year 31,946 38,729 18,203
Cash and Cash Equivalents End of Year $ 20,192 $ 31,946 $ 38,729
(continued)
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For Years Ended December 31, 1993, 1992, and 1991
(in thousands)
<TABLE>
<CAPTION>
1993 1992 1991
Reconciliation of Net Income to Net Cash Provided
by Operating Activities:
<S> <C> <C> <C>
Net Income $ 3,429 $ 2,200 $ 1,671
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 859 673 644
Provision for Possible Losses on Loans 1,509 2,221 2,561
Provision for Deferred Tax Benefit 1,462 (114) (154)
1990 Tax Settlement Refund - - 13
Write-offs of Other Real Estate Owned
and Other Repossessed Assets 429 3,926 3,716
(Gains)Losses on Sale of Premises and Equipment 3 (1) (182)
Gains on Sale of Other Real Estate Owned (150) (376) 633
(Gains)Losses on Sale of Investments 73 (22) (186)
Gains on Sale of Other Assets (108) (29) (10)
Decrease in Accrued Interest Receivable 159 828 159
Increase (Decrease) in Accrued Interest
and Other Liabilities (1,944) 927 (711)
Decrease in Other Assets (1,828) (1,556) 1,371
Net Cash Provided by Operating Activities $ 3,893 $ 8,677 $ 9,525
Supplemental Disclosure of Noncash Investing Activities:
Transfer of Loans to Other Real Estate $ 131 $ 3,345 $ 2,238
Financed Sales of Other Real Estate 5,137 3,109 1,565
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1993, 1992 and 1991
Dollars in thousands (except per share amounts)
1. Summary of Significant Accounting Policies:
Principles of consolidation:
The consolidated financial statements include the accounts of Pioneer
Bancshares Corporation and its wholly-owned subsidiaries: Pioneer Bank & Trust
Company and Zachary Taylor Life Insurance Company. Also included are the
accounts of the wholly-owned subsidiaries of Pioneer Bank & Trust Company.
All material intercompany transactions have been eliminated in consolidation.
Investment securities:
Investment debt securities are those securities which the bank has the ability
and intent to hold to maturity. These securities are stated at cost adjusted
for amortization of premium and accretion of discount, computed by the
interest method. Generally, such securities are sold only to meet liquidity
needs. Gains and losses on the sale of investment securities are computed on
the basis of specific identification of the adjusted cost of each security.
The investment marketable equity securities are carried at the lower of cost
or market value.
Loans and allowance for possible loan losses:
Loans are stated at the amount of unpaid principal, reduced by unearned
discount and an allowance for loan losses. Unearned discount on installment
loans is recognized as income over the terms of the loans by a method which
approximates the interest method. Interest on other loans is calculated by
using the simple interest method or Rule of 78s on daily balances of the
principal amount outstanding.
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for
possible loan losses when management believes that the collectibility of the
principal is unlikely. The allowance is an amount that management believes
will be adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of loans and prior
loan loss experience. The evaluations take into consideration such factors as
changes in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific problem loans, and current economic conditions and
trends that may affect the borrowers' ability to pay. Accrual of interest is
discontinued on loans past due 90 days or more and on which the collateral is
inadequate to cover principal and interest.
Loan origination fees and costs:
Loan origination fees are charged by Pioneer Mortgage Corporation on loans
which are sold to investors. Origination fees of Pioneer Bank & Trust and
Pioneer Mortgage Corporation are recorded as income immediately. Loan
origination expenses of Pioneer Bank & Trust Company and Pioneer Mortgage
Corporation are expensed as incurred. Origination fees, net of loan
origination costs, are considered immaterial at year end.
Premises and equipment:
Premises and equipment is carried at cost less accumulated depreciation.
Depreciation is provided over the estimated useful lives of the respective
assets using straight-line and accelerated methods of depreciation.
Other real estate owned:
Other real estate owned includes properties the Company has foreclosed and
taken title to and properties that have in-substance been foreclosed.
In-substance repossessed properties are those which the borrower has little or
no remaining equity in the property considering its fair value, repayment can
only be expected to come from the operation or sale of the property, and the
borrower has effectively abandoned control of the property or it is doubtful
that the borrower will be able to rebuild equity in the property.
Amortization:
Goodwill is charged to operations using the straight-line method over a period
of forty years.
Income taxes:
Pioneer Bancshares Corporation, with the consent of all subsidiaries, files a
consolidated Federal income tax return on behalf of all Companies. The income
tax liability for each Company is computed separately and settled through a
transfer of funds with its Parent Company. Provisions for income taxes are
based on amounts reported in the Statements of Income (after exclusion of non-
taxable income such as interest on state and municipal securities) and include
deferred taxes on temporary differences in the recognition of income and
expense for tax and financial statement purposes. Deferred taxes are computed
on the liability as prescribed in SFAS No. 109, Accounting for Income Taxes.
Off balance sheet financial instruments:
In the ordinary course of business Pioneer Bank & Trust has entered into off-
balance sheet financial instruments consisting of unfunded master note
obligations, commitments to extend credit and standby letters of credit. Such
financial instruments are recorded in the financial statements when they
become payable.
Cash and cash equivalents:
For purposes of presentation in the Statements of Cash Flows, cash and cash
equivalents include cash on hand, amounts due from banks, and federal funds
sold. Generally, federal funds are sold for one-day periods.
Reclassification:
Certain amounts in 1992 and 1991 have been reclassified to conform to 1993
presentation.
2. Investment Securities:
Amortized costs and approximate market values of investment securities held to
maturity are summarized as follows:
<TABLE>
<CAPTION>
Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Values
--------- ---------- ---------- ---------
December 31, 1993
<S> <C> <C> <C> <C>
U.S. treasury securities $ 39,237 $ 167 $ - $ 39,404
Obligations of other U.S.
government agencies 129,388 1,041 199 130,230
Obligations of state and
political subdivisions 131 2 - 133
Other securities 7,688 303 7,991
-------- ------- -------- ----------
$ 176,444 $ 1,513 $ 199 $ 177,758
======== ======= ======== ==========
December 31, 1992
U.S. treasury securities $ 75,720 $ 825 $ 21 $ 76,524
Obligations of other U.S.
government agencies 94,313 762 349 94,726
Obligations of state and
political subdivisions 136 3 - 139
Other securities 52 209 - 261
------- ------- ---------- ----------
$ 170,221 $ 1,799 $ 370 $ 171,650
======= ======= ========== ===========
December 31, 1991
U.S. treasury securities $ 77,914 $ 1,965 $ - $ 79,879
Obligations of other U.S.
government agencies 76,964 1,193 229 77,928
Obligations of state and
political subdivisions 2,063 55 5 2,113
Other securities 650 293 - 943
-------- ------- ------- --------
$ 157,591 $ 3,506 $ 234 $ 160,863
======== ======= ======= ========
</TABLE>
Investment account securities with amortized costs of $27,150 at December 31,
1993, $24,270 at December 31, 1992, and $23,296 at December 31, 1991, were
pledged to secure public deposits and securities sold under agreements to
repurchase and for other purposes as required by law.
Gross realized gains and gross realized losses on sales of securities were:
<TABLE>
<CAPTION>
December 31, 1993 December 31,1992 December 31, 1991
------------------- ------------------ -------------------
Realized Realized Realized Realized Realized Realized
Gains Losses Gains Losses Gains Losses
-------- --------- ------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Obligations of other
U.S. government agencies $ 1 $ 75 $ - $ 10 $ 279 $ 93
Other securities - - 32 - - -
U.S. Treasury
securities 1 - - - - -
-------- -------- ----- ------- -------- -------
$ 2 $ 75 $ 32 $ 10 $ 279 $ 93
======== ======== ===== ======= ======== =======
</TABLE>
The maturities of investment securities at December 31, 1993, were as follows:
<TABLE>
<CAPTION>
Estimated
Amortized Market
Costs Values
--------- ---------
<S> <C> <C>
Due in one year or less $ 67,945 $ 68,087
Due from one to five years 61,182 61,512
Due from five to ten years 102 103
Due after ten years 47,163 47,787
Marketable equity securities 52 269
----------- -----------
$ 176,444 $ 177,758
============ ===========
</TABLE>
3. Loans:
Major classifications of loans are as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992 1991
------------ ------------ ----------
<S> <C> <C> <C>
Real Estate $ 78,189 $ 73,227 $ 68,005
Commercial 31,511 31,134 29,012
Consumer 20,873 20,955 26,738
Residential mortgage - held for sale 17,990 12,125 11,610
Other 829 1,172 1,484
--------- --------- ---------
149,392 138,613 136,849
Unearned discount (1,104) (1,221) (1,721)
--------- --------- ---------
148,288 137,392 135,128
Allowance for loan losses (2,450) (3,365) (3,600)
--------- --------- ---------
Loans - net $ 145,838 $ 134,027 $ 131,528
========= ========= =========
</TABLE>
Mortgage loans which are held for sale are valued at market at balance sheet
date.
Loans on which the accrual of interest has been discontinued total $1,809,
$1,137, and $3,749 at December 31, 1993, 1992, and 1991, respectively. If
interest on these loans was accrued, such interest income would approximate
$184, $59, and $398 for 1993, 1992, and 1991, respectively. Interest on these
loans, which is recorded only when received, totaled $-0-, $41, and $88 for
the years 1993, 1992, and 1991, respectively.
Mortgage loans serviced for others through the mortgage lending subsidiary
were $396,744, $372,566, and $306,572 for 1993, 1992, and 1991, respectively.
Changes in the allowance for loan losses are summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Balance beginning of year $ 3,365 $ 3,600 $ 4,500
Loans charged-off during period (2,694) (3,130) (3,747)
Recoveries 270 674 286
-------- -------- -------
941 1,144 1,039
Provision charged to operating expense 1,509 2,221 2,561
-------- -------- -------
Balance end of year $ 2,450 $ 3,365 $ 3,600
======== ======== =======
</TABLE>
4. Premises and Equipment:
Components of premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- -------- --------
<S> <C> <C> <C>
Cost:
Land $ 1,994 $ 1,551 $ 1,522
Building and improvements 7,420 7,382 7,162
Furniture, fixtures, and equipment 4,231 3,613 2,901
Automobiles 152 108 124
------- -------- -------
Total cost 13,797 12,654 11,709
Less:-accumulated depreciation (6,411) (5,503) (5,638)
------- -------- -------
Net book value $ 7,386 $ 7,151 $ 6,071
======== ======== =======
</TABLE>
Depreciation totaled $702 for 1993, $593 for 1992, and $446 for 1991.
Premises and equipment include buildings rented by Pioneer Mortgage
Corporation to Pioneer Bank & Trust Company on a month-to-month basis. Rents
for 1993, 1992, and 1991, were $27 per month.
5. Other Real Estate Owned:
A summary of other real estate owned at December 31, 1993, 1992, and 1991, is
as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- -------- -------
<S> <C> <C> <C>
Acquired in settlement of loans $ 150 $ 7,011 $ 9,214
In-substance foreclosures 77 1,589 5,124
------- -------- --------
227 8,600 14,338
Less:-allowance for losses on other
real estate owned - (760) -
------- -------- --------
$ 227 $ 7,840 $ 14,338
======== ======== =========
</TABLE>
Activity in the allowance for losses on other real estate owned for the years
ended December 31, 1993, 1992, and 1991, follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year $ 760 $ - $ -
Provisions 332 1,974 -
Charge-offs, net (1,092) (1,214) -
---------- ---------- ----------
Balance at end of year $ -0- $ 760 $ -0-
========== ========== ==========
</TABLE>
During 1993 the Bank changed its method of accounting for other real estate
write-downs from the reserve method to specific charge-off.
6. Other Assets:
Other assets consist of the following:
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- ---------
<S> <C> <C> <C>
Goodwill $ 1,501 $ 1,553 $ 1,604
Deferred income tax benefit 147 1,609 1,797
Other repossessed assets, net 52 93 1,003
Other assets 1,069 2,762 615
-------- -------- -------
$ 2,769 $ 6,017 $ 5,019
======== ======== ========
</TABLE>
7. Long-term Debt:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
-------- --------- ---------
<S> <C> <C> <C>
7% Subordinated debentures due $ 879 $ 5,722 $ 6,088
7% Notes due 200 1,155 1,155 1,155
Floating rate note due through 2001 4,179 - -
------ ------- ------
$ 6,213 $ 6,877 $ 7,243
======= ======== ========
</TABLE>
The subordinated debentures were substantially redeemed in July, 1993. The
remaining had the interest rate reduced from 10% to a fixed rate of 7%. The
debenture matures at July, 2000, but can be prepaid without penalty. The
debenture is subordinated to all other indebtedness of the Corporation.
The 7% notes mature in 2000. Prior to July 1993, these notes were at 10%
interest and would mature in May of 1994. The agreements were renegotiated
and the interest rate was reduced to 7% with payment of principal due July,
2000. These notes are unsecured.
During 1993, proceeds from the floating rate note were used to pay for the
redemption of the subordinated debentures. Annual principal payments of $597
are required from January, 1995, to retire the notes in 2001. Prepayment may
be made at the option of the corporation without penalty. The note agreement
contains various financial covenants pertaining to minimum levels of net
worth, minimum asset ratios, limitations on debt and restrictions on common
stock. The Corporation was in compliance with all such covenants at December
31, 1993. This note is secured by a pledge of all common stock of the bank
subsidiary, Pioneer Bank & Trust Company.
Principal payments on total long-term debt required in each of the five years
subsequent to December 31, 1993, are as follows:
1994 . . . . . . . . . . . . . . . . . . . . . $ -
1995 . . . . . . . . . . . . . . . . . . . . . 597
1996 . . . . . . . . . . . . . . . . . . . . . 597
1997 . . . . . . . . . . . . . . . . . . . . . 597
1998 . . . . . . . . . . . . . . . . . . . . . 597
8. Income Taxes:
Each company records a provision for income taxes (benefits) based on its
estimated income or loss at year end, and a tax settlement is made with the
parent corporation based on separately computed company tax liabilities in the
subsequent year when the final tax liability is known.
The consolidated provision for income taxes for 1993, 1992, and 1991, consists
of the following:
<TABLE>
<CAPTION>
1993 1992 1991
---------- --------- --------
<S> <C> <C> <C>
Taxes currently payable:
Federal $ 472 $ 1,408 $ 702
State 13 54 23
-------- --------- -------
485 1,462 725
Deferred taxes (benefits):
Federal 1,490 (370) (154)
State - 2 1
-------- -------- --------
1,490 (368) (153)
-------- -------- --------
Total income taxes $ 1,975 $ 1,094 $ 572
======== ======== ========
</TABLE>
The provision for federal income taxes differs from that computed by applying
the federal statutory rate of 34% in 1993, 1992, and 1991, as indicated in the
following analysis:
<TABLE>
<CAPTION>
1993 1992 1991
---------- --------- -------
<S> <C> <C> <C>
Tax based on statutory rate $ 1,926 $ 1,120 $ 763
Effect of tax-exempt income (29) (64) (137)
Other - net 78 36 (54)
-------- -------- --------
$ 1,975 $ 1,092 572
========= ========= ========
</TABLE>
Deferred tax liabilities have been provided for taxable temporary differences
related to accumulated depreciation and amortization of servicing costs.
Deferred tax assets have been provided for deductible temporary differences
related to the allowance for loan losses, for losses on foreclosed assets,
accumulated depreciation and accrued litigation expenses. Due to the tax
timing differences, the effective tax rates are 35% for 1993, 33% for 1992,
and 26% in 1991. The net deferred tax assets in the accompanying statements
of financial condition include the following components:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- -------
<S> <C> <C> <C>
Deferred tax liabilities $ (186) $ (198) $ (104)
Deferred tax assets 333 1,807 1,797
-------- -------- --------
Net deferred tax assets $ 147 $ 1,609 $ 1,693
======== ======== ========
</TABLE>
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. The cumulative
effect of the change in accounting principle is included in determining net
income for year 1993. Financial statements for prior years have not been
restated.
9. Related Party Transactions:
The Bank has entered into transactions with its officers, directors,
significant shareholders and their affiliates (related parties). Such
transactions were made in the ordinary course of business on substantially the
same terms and conditions, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other customers,
and did not, in the opinion of management, involve unfavorable features.
A summary of changes in such loans during 1993 is as follows:
Balance at January 1 $ 3,529
Additions 623
Repayments ( 750)
Changes in director status ( 492)
----------
Balance at December 31 $ 2,910
==========
There were additional commitments for the benefit of these individuals and
their interests in the form of standby letters of credit totaling $231, $236,
and $100 at December 31, 1993, 1992, and 1991, respectively.
10. Commitments and Contingent Liabilities:
In the normal course of business, Pioneer Bank & Trust Company has various
outstanding commitments and contingent liabilities that are not reflected in
the consolidated financial statements, and which involve elements of credit
risk, interest risk, and liquidity risk. The commitments and contingent
liabilities include unfunded master note obligations, commitments to extend
credit, and standby letters of credit.
Credit risk exposure is minimized by subjecting these off-balance sheet
instruments to standard credit policies. The Corporation evaluates each
customer's credit worthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary, is based on management's credit
evaluation. The Bank manages this credit risk by maintaining a well
diversified portfolio of highly rated counterparties in addition to imposing
limits as to types, amounts and degree of risk the portfolios can undertake.
The limits are approved by the appropriate loan committee or authority and
positions are monitored to ensure compliance with such limits.
Generally accepted accounting principles recognize these instruments as
contingent obligations or off-balance sheet items and accordingly, the
contract or notional amounts are not reflected in the consolidated financial
statements. Provided below is a summary of the Corporation's off-balance
sheet financial instruments at December 31, 1993.
Unfunded master note obligations $ 9,097
Commitments to extend credit 10,116
Standby letters of credit 1,428
---------
$ 20,641
=========
Unfunded master note obligations represent the credit available on current
contractual loans. Based on management estimates approximately 50% of these
remaining amounts will be funded due to the revolving nature of the loans.
A loan commitment represents a notional contractual agreement to lend up to a
specified amount, over a stated period of time as long as there is no
violation of any condition established in the contract, and generally requires
the payment of a fee. Standby letters of credit are issued to improve a
customer's credit standing with third parties, whereby the Bank agrees to
honor a financial commitment by issuing a guarantee to third parties in the
event the Bank's customer fails to perform. The Bank estimates that 60% of
these commitments will be drawn upon by customers, while standby letters of
credit are rarely funded. Interest rates are predominantly based on market
rates at the time the commitments are made. Substantially all the commitments
expire within 30-90 days.
The Corporation and its subsidiaries are parties to litigation and claims
arising in the normal course of business. Management, after consultation with
legal counsel, believes the current reserve is sufficient for any claims that
might arise.
11. Disclosures about Fair Value of Financial Instruments:
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
Cash and cash equivalents
The carrying amount is a reasonable estimate of fair value.
Investment securities
Fair values for investment securities are based on quoted market prices, where
available. If quoted market prices are not available, fair values are based
on quoted market prices of comparable instruments.
Loans
For certain homogeneous categories of loans, such as some residential
mortgages, and other consumer loans, fair value is estimated using the net
present value, adjusted for differences in loan characteristics. The fair
value of other types of loans is estimated by discounting the future cash
flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining maturities.
Deposit liabilities
The fair value of demand deposits, savings accounts, and certain money market
deposits is the amount payable on demand at the reporting date. The fair
value of fixed-maturity certificates of deposit is estimated using the rates
currently offered for deposits of similar maturities.
Long-term debt
Rates currently available to the Bank for debt with similar terms and
remaining maturities are used to estimate fair value of existing debt.
Commitments to extend credit, standby letters of credit, and unfunded master
notes
The fees on commitments to extend credit are recognized at the time collected
because of the short-term nature of the instrument. Standby letters of credit
fees are collected yearly. The majority of unfunded master notes are based on
a variable interest rate and the fees are collected at the outset of the note.
Therefore, the value of these unrecognized financial instruments was
immaterial.
The estimated fair values of the Bank's financial instruments as of December
31, 1993 and 1992, are as follows:
<TABLE>
<CAPTION>
1993 1992
----------------- ----------------
Carrying Fair Carrying Fair
Values Value Values Value
-------- ------- -------- ------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 20,192 $ 20,192 $ 31,946 $ 31,946
Investment securities 176,444 177,757 170,221 171,650
Loans 148,288 148,215 137,392 142,716
Less:-allowance for loan losses (2,450) (2,449) (3,365) (3,365)
--------- ------- --------- ----------
$ 342,474 $ 343,715 $ 336,194 $ 342,947
========== ========== =========== =============
Financial liabilities:
Deposits $ 316,915 $ 316,941 $ 324,385 $ 322,957
Long-term debt 6,213 6,213 6,877 6,000
---------- ---------- ---------- -----------
$ 323,128 $ 323,154 $ 331,262 $ 328,957
========== ========== ========== ===========
This is not a required disclosure for 1991.
</TABLE>
12. Employer Sponsored Defined Contribution Profit Sharing Plan:
All employees of Pioneer Bancshares Corporation and Subsidiaries participate
in an employer sponsored defined contribution profit sharing plan. Benefits
are determined by account balances at retirement date.
All full-time employees of the controlled group at the end of the calendar
year are participants in the plan. The contribution each year is computed at
10% of the consolidated net income before income taxes, with certain
limitations, and at the discretion of the employer's board of directors.
Contributions of $500, $200, and $-0- were made for the years ended December
31, 1993, 1992, and 1991, respectively.
13. Concentrations of Credit:
All of the Bank's loans, commitments, and commercial and standby letters of
credit have been granted to customers in the Bank's market area. Most
customers are depositors of the Bank. Investments in state and municipal
securities also involve governmental entities within the Bank's market area.
The concentrations of credit by type of loan are set forth in Note 4. The
distribution of commitments to extend credit approximates the distribution of
loans outstanding. Commercial and standby letters of credit were granted
primarily to commercial borrowers. The Bank, as a matter of policy, does not
extend credit to any single borrower or group of related borrowers in excess
of $2.5 million without specific approval of the Board of Directors.
14. Regulatory Matters:
The Bank is subject to the dividend restriction applicable to all state
chartered banks as set forth by State law. The Bank is prohibited from paying
any cash dividends in excess of the sum of the current year's earnings and
previous year's earnings without the consent of the Commissioner of Financial
Institutions for the State of Louisiana. The dividends, as of December 31,
1993, that the Bank could pay to the holding company, without the approval of
the Commissioner, amounted to approximately $7.2 million.
The Memorandum of Understanding between the FDIC and the Board of Directors of
the Bank dated October 12, 1989, was removed April 5, 1993.
15. Book Values and Earnings per Share:
Consolidated book values and consolidated earnings per share of common stock
of Pioneer Bancshares Corporation at December 31, 1993, 1992, and 1991, are
computed on the weighted average number of shares of common stock outstanding
during the period as follows:
<TABLE>
<CAPTION>
1993 1992 1991
----------- --------- --------
<S> <C> <C> <C>
Book value $ 101.41 $ 90.42 $ 83.40
Less:-goodwill 5.47 5.66 5.85
---------- --------- -------
Book value per share of
tangible assets $ 95.94 $ 84.76 $ 77.55
========= ========= =========
Earnings per share $ 12.50 $ 8.02 $ 6.09
========= ========= =========
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
As of June 30, 1994 and 1993
Unaudited (in thousands)
<TABLE>
<CAPTION>
Assets
1994 1993
------ ------
<S> <C> <C>
Cash and Due from Banks $19,225 $4,733
Interest-bearing Deposits with Banks 1,483 16,132
Federal Funds Sold 2,049 -
------- -------
Total Cash and Cash Equivalents 22,757 20,865
Investment Securities (market value of 177,787 175,736
$175,283 in 1994 and $177,283 in 1993)
Loans 151,907 151,08
Less:-Unearned Discount (898) (1,007)
Allowance for Loan Losses (2,690) (2,216)
------- -------
Net Loans 148,319 147,865
------- -------
Premises and Equipment 7,409 7,235
Other Real Estate Owned 157 310
Accrued Interest Receivable 2,447 2,956
Other Assets 3,111 2,806
-------- --------
Total Assets $361,987 $357,773
======== ========
Liabilities and Stockholders' Equity
Liabilities:
Time Certificates Greater than $100,000 $16,879 $12,330
Other Deposits 303,637 308,149
------- -------
Total Deposits 320,516 320,479
------- -------
Accrued Interest, Taxes, and Expenses 4,062 4,226
Securitites Sold Under Repurchase Agreement 2,477 -
Federal Funds Purchased 3,000 -
Long-Term Debt 2,080 6,558
------- -------
Total Liabilities 332,135 331,263
------- -------
Stockholders' Equity:
Common Stock, Par Value $10 Per Share, Authorized
600,000 Shares, Issued and Outstanding 287,959 Shares 2,880 2,880
Paid-In Capital 6,742 6,742
Retained Earnings 21,286 17,701
Less: Treasury Stock, 13,516 Shares at Cost (813) (813)
Less: Unrealized Loss on Available for Sale Securities (243) -
------ ------
Total Stockholders' Equity 29,852 26,510
------ ------
Total Liabilities and Stockholders' Equity $361,987 $357,773
======== ========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
For the 6 Months ended June 30, 1994 and 1993
Unaudited (in thousands)
<TABLE>
<CAPTION>
June 30 June 30
1994 1993
------- -------
<S> <C> <C>
Interest Income:
Interest and Fees on Loans $6,945 $6,873
Interest on Investment Securities:
Taxable 4,296 4,666
Exempt from Federal Income Tax 5 3
Interest on Federal Funds Sold 117 148
Interest on Deposits in Banks 56 122
------ ------
Total Interest Income 11,419 11,812
====== ======
Interest Expense:
Other Deposits 2,952 3,171
Time Deposits Over $100,000 245 183
Securities Sold Under Repurchase Agreement 31 -
Long-Term Debt 175 367
----- -----
Total Interest Expense 3,403 3,721
----- -----
Net Interest Income 8,016 8,091
Provision for Loan Losses 125 749
----- -----
Net Interest Income after Provision for Loan Losses 7,891 7,342
----- -----
Other Income:
Service Fees 2,498 2,731
Other 299 300
Net Gains on Sales of Assets 344 190
Net Investment Securities Gains (Losses) (2) (75)
----- ------
Total Other Income 3,139 3,146
----- ------
Other Expenses:
Salaries 3,138 2,909
Employee Benefits 879 822
Occupancy Expenses, Net 596 586
Equipment Expenses 429 561
Other Operating Expenses 2,551 3,022
----- -----
Total Other Expenses 7,593 7,900
----- -----
Income before Income Taxes 3,437 2,588
Income Taxes 1,174 892
----- -----
Net Income $2,263 $1,696
===== =====
Net income per share:
Average common shares outstanding $8.25 $6.18
===== =====
See notes to consolidated finacial statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Unaudited (in thousands)
<TABLE>
<CAPTION>
Common Paid-In Retained Treasury
6 months ended June 30, 1994 Stock Capital Earnings Stock Total
------ ------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $2,880 $6,742 $19,023 ($813) $27,832
Add: - Net Income for 6 months
ended June 30, 1994 - - 2,263 - 2,263
Less: - Dividends Paid - - (242) - (242)
------ ------ -------- ------ --------
Balance, June 30, 1994 $2,880 $6,742 $21,044 ($813) $29,853
====== ====== ======== ====== ========
</TABLE>
<TABLE>
<CAPTION>
Common Paid-In Retained Treasury
6 months ended June 30, 1993 Stock Capital Earnings Stock Total
------ ------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1992 $2,880 $6,742 $16,005 ($813) $24,814
Add: - Net Income for 6 months
ended June 30, 1993 - - 1,696 - 1,696
------ ------ ------- ------ -------
Balance, June 30, 1993 $2,880 $6,742 $17,701 ($813) $26,510
====== ====== ======= ====== =======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1994 and 1993
Unaudited (in thousands)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Interest Received $11,692 $11,629
Service Fees and Other Income Received 2,662 2,959
Interest Paid (3,033) (3,518)
Income Taxes Paid (985) (116)
Cash Paid to Suppliers and Employees (5,731) (4,811)
--------- ---------
Net Cash Provided by Operating Activities 4,605 6,143
Cash Flows from Investing Activities:
Proceeds from Sales and Maturities of Investments 34,925 59,809
Purchase of Investments (37,045) (65,505)
Purchase of Securities Under Repurchase Agreement (73) -
Increase in Loans (2,691) (10,258)
Purchase of Premises and Equipment (364) (317)
Proceeds from Sales of Other Real Estate Owned 615 1,810
Proceeds from Sales of Other Assets 126 10
-------- --------
Net Cash Used in Investing Activities (4,507) (14,451)
Cash Flows from Financing Activities:
Payments on Notes Payable (4,133) -
Payments on Subordinated Debentures (319)
Net Increase in Short-Term Borrowings 3,000 -
Net Increase (Decrease) in Other Deposits 1,344 (2,149)
Net Increase (Decrease) in Time Deposits Over $100,000 2,256 (305)
-------- ---------
Net Cash Provided by (Used In) Financing Activities 2,467 (2,773)
Net Increase (Decrease) in Cash and Cash Equivalents 2,565 (11,081)
Cash and Cash Equivalents Beginning of Year 20,192 31,946
-------- --------
Cash and Cash Equivalents End of Period $22,757 $20,865
======== ========
See notes to consolidated finanical statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1994 and 1993
Unaudited (in thousands)
<TABLE>
<CAPTION>
1994 1993
------ -------
Reconciliation of Net Income to Net Cash Provided
by Operating Activities:
<S> <C> <C>
Net Income $2,263 $1,696
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 529 507
Provision for Possible Losses on Loan 125 749
Provision for Deferred Tax Benefit 95 1,524
Write-Offs of Other Real Estate Owned
and Other Repossessed Assets 9 89
Losses on Sale of Premises and Equipment 0 3
Gains on Sale of Other Real Estate Owned (356) (151)
Losses on Sale of Investments 2 75
(Gains) Losses on Sale of Other Asset 11 (152)
(Increase) Decrease in Accrued Interest Receivable 29 (316)
Increase in Accrued Interest and Other Liabilities 2,240 360
(Increase) Decrease in Other Assets (342) 1,759
------- -------
Net Cash Provided by Operating Activities $4,605 $6,143
======= =======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
PIONEER BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Unaudited ($ in thousands)
NOTE 1 - Per Share Data and Market Value of Stock
Net income per average share outstanding is calculated based on the weighted
average number of shares outstanding during the year. The average number of
shares outstanding for the six months ended June 30, 1994 and 1993 was
274,443.
There is not an established public trading market for the Company's common
stock. However, an annual valuation of the stock is prepared for the Employee
Profit Sharing Plan. As of December 31, 1993 the value of the Company's
common stock in the Profit Sharing Plan was estimated to be $90.00.
NOTE 2 - Non-Performing Loans
<TABLE>
<CAPTION>
June 30,
1994 1993
------ ------
<S> <C> <C>
Nonaccrual Loans $ 1,985 $ 2,199
Restructured Loans 174 -
-------- --------
Total Non Performing Loans $ 2,159 $ 2,199
======== ========
Accruing loans past due ninety
days or more $ 93 $ 370
======== ========
</TABLE>
Loans are classified as nonaccrual when they are past due 90 days or more
(principal and interest) that are: (1) not in the process of collection and
(2) not well secured. These are loans that in the judgement of management are
inadequately secured and the bank is having difficulty in collecting. For
other loans that have been classified nonaccrual by management, interest on
these loans are taken as income only when collected. Loans are placed in this
category because of (1) inability of borrower to perform, (2) payment in full
of principal and interest is seriously impaired, or (3) loan is in default.
Placing a loan on non-accrual requires reversal of all accrued interest and
late fees. Generally, any payments received on nonaccrual loans are applied
first to outstanding loan amounts and next to the recovery of charged-off loan
amounts. Any excess is treated as recovery of lost interest.
Interest income in the amount of $82 would have been recorded on nonaccrual
loans during the six months ended June 30, 1994 if they had been performing in
accordance with their contractual terms. During the six months ended June 30,
1994, the company recorded no interest income on nonaccrual loans.
In addition to the nonperforming loans disclosed above, management has
identified loans totalling $825 for which payments are current, but which, in
management's opinion, are subject to potential future classification as non-
performing or past due.
NOTE 3 - Investment Securities
During the first quarter of 1994 Pioneer Bancshares adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" (FAS 115). This pronouncement provides
guidance regarding the appropriate classification of debt and equity
securities in a company's balance sheet and also provides for the recognition
of unrealized holding gains and losses as a result of changes in the fair
value of securities available for sale. For the Company, the balance sheet
classification guidelines pursuant to FAS 115 are consistent with the
Company's classification prior to adoption of FAS 115. The carrying value of
securities held to maturity continues to be amortized cost. Securities
available for sale are now carried at their estimated fair value in accordance
with FAS 115. As of June 30, 1994 the carrying value of securities available
for sale totaled $47,861 which includes $365 in net unrealized losses. The
aggregate amortized cost of securities held to maturity totaled $129,926 as of
June 30, 1994. The securities held to maturity exceeded their market value by
approximately $2,504.
<PAGE>
Pioneer Bancshares Corporation and Subsidiaries's Management's Discussion and
Analysis
The following discussion provides certain information concerning the financial
condition and results of operations of Pioneer Bancshares Corporation
("Pioneer") for the three years ended December 31, 1993 and the interim
periods June 30, 1994 and 1993. The financial position and results of
operations of Pioneer were due primarily to its banking subsidiary, Pioneer
Bank & Trust Company. Management's discussion should be read in conjunction
with the financial statements and accompanying notes presented elsewhere in
this Proxy Statement.
Merger
An Agreement and Plan of Merger between Pioneer Bancshares Corporation and
Hibernia Corporation was signed on June 1, 1994. The Agreement provides for a
merger of the companies in a stock for stock exchange accounted for as a
pooling of interests. Total consideration is calculated on an exchange ratio
of 30.5 shares of Hibernia common stock for each share of Pioneer, based on an
average market price of not less than $7.50 per share ($62,779,000) or more
than $9.50 per share ($79,520,000) on closing date. The merger is contingent
upon shareholder and regulatory approval.
Results of Operations of the Interim Period June 30, 1994 compared with June
30, 1993.
Net income for the six months ending June 30, 1994 was $2,263,000 compared to
$1,697,000 for the same period in 1993. Net income is largely dependent upon
net interest income, or the difference between interest received on loans and
investments, the interest-bearing assets, and interest paid on certain deposit
accounts and long-term debt, the interest-bearing liabilities. Net interest
income is affected by the average yield on the loans and investments, the
balances of these interest-bearing assets and liabilities, and the magnitude
of change of each.
Net interest income decreased only $42,000, from $8,144,000 for the period
ending June 30, 1993 to $8,102,000 for the same period in 1994, as repricing
assets and liabilities essentially matched. Interest income decreased
$365,000, from $11,870,000 in the first six months of 1993 to $11,505,000
during the same period in 1994. Interest expense decreased $323,000, from
$3,726,000 in 1993 to $3,403,000 in 1994.
Non-interest income increased $35,000 during the period, from $3,034,000 in
1993 to $3,069,000 in 1994. Non-interest expense, excluding income taxes and
provision for loan losses, decreased $230,000, from $7,839,000 in 1993 to
$7,609,000 in 1994, primarily as a result of reestablishing data processing
services in-house, thereby saving $184,000 during this comparative period.
Pioneer maintains an allowance for potential loan losses that management
believes is adequate to cover future losses on outstanding loans. The
allowance for loan losses was $2,690,000 at June 30, 1994, compared to
$2,216,000 at June 30, 1993. For the period ending June 30, 1994, a provision
of $125,000 was recorded, with $749,000 charged to operations during the same
period in 1993.
Income taxes increased $282,000 from $892,000 in 1993 to $1,174,000 in 1994,
due to an increase of $847,000 in income before taxes.
Results of Operations December 31, 1993 compared with December 31, 1992.
For the year ended December 31, 1993, net income was $3,429,000 compared to
$2,200,000 for the year ended December 31, 1992. Net interest income declined
$187,000, from $16,869,000 in 1992 to $16,682,000 in 1993. Interest income
decreased $2,517,000, from $26,759,000 in 1992 to $24,242,000 in 1993.
Interest expense decreased $2,330,000, from $9,890,000 in 1992 to $7,560,000
in 1993. The reduction in net interest income is the result of the net
interest margin decreasing 19 basis points, from 5.28% in 1992 to 5.09% in
1993, which was offset by an increase of approximately $7,900,000 in average
earning assets during the same period.
Non-interest income decreased $307,000 during the period, from $5,963,000 in
1992 to $5,656,000 in 1993. This was attributable to a reduction of $103,000
in Service Fees generated on customer accounts, and losses on sale of
investment securities of $73,000 in 1993 versus gains of $22,000 in 1992.
Non-interest expense, excluding income taxes and provision for loan losses,
decreased $2,153,000, from $17,317,000 in 1992 to $15,164,000 in 1993. This
was due to a reduction of $3,445,000 in Other Operating Expenses, comprised
primarily of OREO write-downs and other repossession related expenses of
approximately $3,633,000, which offset additional expenses of $260,000 related
to anticipated litigation settlement. Salaries increased $619,000 due to
increased staffing levels for the establishment of operations of an in-house
data center in 1993 and to handle the workload in the mortgage subsidiary.
Employee benefits increased $399,000, resulting from $300,000 in additional
funding for the Employees Profit Sharing Plan.
The allowance for loan losses for 1993 and 1992 was $2,450,000 and $3,365,000,
respectively, with $1,509,000 charged to operations in 1993 and $2,221,000
charged to operations in 1992 to provide for the allowance.
Effective January 1, 1993 Pioneer adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. The cumulative effect of the
change in accounting principle resulted in an additional charge to income in
1993 of $261,000.
Income taxes increased from $1,094,000 in 1992 to $1,975,000 in 1993 due to
the $2,371,000 increase in income before taxes.
Results of Operations December 31, 1992 compared with December 31, 1991.
For the year ended December 31, 1992, net income was $2,200,000 compared to
$1,671,000 for the year ended December 31, 1991. Net interest income
increased $2,588,000, from $14,281,000 in 1991 to $16,869,000 in 1992.
Interest income decreased $3,226,000, from $29,985,000 in 1991 to $26,759,000
in 1992. Interest expense decreased $5,814,000, from $15,704,000 in 1991 to
$9,890,000 in 1992. The net interest margin increased 73 basis points, from
4.55% in 1991 to 5.28% in 1992, as a result of the average paying liabilities
repricing faster in a declining rate scenario than the average earning assets.
The interest rate on earning assets decreased 118 basis points, from 9.55% for
1991 to 8.37% in 1992, while the average interest rate on paying liabilities
(as a percentage of average earning assets) decreased 191 basis points, from
5.00% in 1991 to 3.09% in 1992. Also, the average earning assets increased
$5,912,000 from 1991 to 1992, due to Other Real Estate Owned and Non Accrual
loans being liquidated and the funds being redeployed in earning assets.
Non-interest income increased $1,208,000 during the period, from $4,755,000 in
1991 to $5,963,000 in 1992. This was attributable to an increase in service
fees of $653,000, and gains on sale of assets of $405,000 in 1992 versus
losses of $442,000 in 1991.
Non-interest expense, excluding income taxes and provision for loan losses,
increased $3,085,000, from $14,232,000 in 1991 to $17,317,000 in 1992.
Salary expense increased $705,000 due primarily to the mortgage banking
subsidiary gearing up for the large influx of refinancings/purchases. Also,
Employee Benefits increased $254,000 primarily due to the resumption of
funding the Employee's Profit Sharing Plan. In addition, an increase of
$2,069,000 in Other Operating Expenses was due to $1,084,000 in increased OREO
related expenditures, $225,000 in losses realized on GNMA foreclosures in the
mortgage banking subsidiary, $107,000 in increased data processing charges
from the outside service provider, $166,000 in additional regulatory agency
assessments, and $117,000 in legal and recording fees.
The allowance for loan losses for 1992 and 1991 was $3,365,000 and $3,600,000,
respectively, with $2,221,000 charged to operations in 1992 and $2,561,000
charged to operations in 1991 to provide for the allowance.
Income taxes increased $522,000 from $572,000 in 1991 to $1,094,000 in 1992
due to the $1,051,000 increase in income before taxes.
APPENDIX A
AGREEMENT AND PLAN OF MERGER
OF
PIONEER BANCSHARES CORPORATION
WITH AND INTO
HIBERNIA CORPORATION
AGREEMENT AND PLAN OF MERGER dated as of June 1, 1994 (this
"Agreement"), adopted and made by and between Pioneer Bancshares
Corporation ("Pioneer") and Hibernia Corporation ("Hibernia").
Pioneer is a corporation duly organized and existing under the
laws of the State of Louisiana; has its registered office at 401
Texas Street, Shreveport, Louisiana 71130 and is a bank holding
company within the meaning of the Bank Holding Company Act of 1956,
as amended (the "Bank Holding Company Act"). The presently
authorized capital stock of Pioneer consists solely of 600,000
shares of common stock of the par value of $10.00 each ("Pioneer
Common Stock"). As of March 31, 1994, 274,443 shares of Pioneer
Common Stock had been issued and were outstanding, and 13,516
shares of Pioneer Common Stock were held in Pioneer's treasury.
All outstanding shares of Pioneer Common Stock have been duly
issued and are validly outstanding, fully paid and nonassessable.
The foregoing are the only voting securities of Pioneer authorized,
issued, or outstanding, and there are no existing options,
warrants, calls, or commitments of any kind obligating Pioneer to
issue any share of its capital stock or any other security of which
it is or will be the issuer. None of the shares of Pioneer's
capital stock has been issued in violation of preemptive rights of
shareholders. Pioneer owns 100 percent of the outstanding voting
shares of Pioneer Bank & Trust Company (the "Bank"), a Louisiana
banking corporation duly organized and existing under the laws of
the State of Louisiana.
Hibernia is a corporation duly organized and existing under
the laws of the State of Louisiana; has its registered office at
313 Carondelet Street, New Orleans, Louisiana 70130; and is a bank
holding company within the meaning of the Bank Holding Company Act.
Hibernia owns all of the issued and outstanding shares of capital
stock of Hibernia National Bank ("HNB"). The presently authorized
capital stock of Hibernia is 300,000,000 shares, consisting of
100,000,000 shares of preferred stock, no par value, and
200,000,000 shares of Class A voting common stock, no par value
(the Class A voting common stock being referred to hereinafter as
"Hibernia Common Stock"). As of March 31, 1994, no shares of
Hibernia's preferred stock or were outstanding, 83,666,469 shares
of Hibernia Common Stock were outstanding, and no shares of
Hibernia Common Stock were held in Hibernia's treasury. All
outstanding shares of Hibernia Common Stock have been duly issued
and are validly outstanding, fully paid and nonassessable. The
foregoing are the only voting securities of Hibernia authorized,
issued or outstanding and there are no existing options, warrants,
calls or commitments of any kind obligating Hibernia to issue any
share of its capital stock or any other security of which it is or
will be the issuer, except that Hibernia has authorized or reserved
1,722,934 shares of Hibernia Common Stock for issuance under its
1987 Stock Option Plan, pursuant to which options covering
1,555,989 shares of Hibernia Common Stock were outstanding as of
March 31, 1994, 3,660,087 (as adjusted) shares of Hibernia Common
Stock for issuance under its 1992 Long-Term Incentive Plan,
pursuant to which options covering 2,540,135 shares of Hibernia
Common Stock were outstanding as of March 31, 1994, 1,000,000
shares of Hibernia Common Stock for issuance under its 1993
Director Stock Option Plan, pursuant to which options covering
75,000 shares of Hibernia Common Stock are outstanding on the date
hereof, 621,211 shares of Hibernia Common Stock are available for
issuance pursuant to Hibernia's Dividend Reinvestment and Stock
Purchase Plan and merger agreements with Commercial Bancshares,
Inc., Bastrop National Bank, First Bancorp of Louisiana, Inc. and
First Continental Bancshares, Inc., which will result in the
issuance of an aggregate of approximately 14,583,746 shares
(assuming a market price of Hibernia Common Stock equal to $7.50
per share). None of the shares of Hibernia's capital stock has
been issued in violation of preemptive rights of shareholders.
The Boards of Directors of Pioneer and Hibernia have duly
approved this Agreement and have authorized the execution hereof by
Pioneer's Chairman of the Board and Hibernia's President and Chief
Executive Officer, respectively. Pioneer has directed that this
Agreement be submitted to a vote of its shareholders in accordance
with Part XI of the Louisiana Business Corporation Law ("LBCL") and
the terms of this Agreement.
In consideration of their mutual promises and obligations, the
parties hereto adopt and make this Agreement for the merger of
Pioneer with and into Hibernia and prescribe the terms and
conditions of such merger and the mode of carrying it into effect,
which shall be as follows:
1. The Merger. On the Effective Date (as defined in Section
14 hereof), Pioneer shall be merged with and into Hibernia under
the Articles of Incorporation of Hibernia, pursuant to the
provisions of, and with the effect provided in, Part XI of the LBCL
(the "Merger") and the Merger Agreement in substantially the form
of Exhibit 1 hereto (the "Merger Agreement").
2. Hibernia Capital Stock. The shares of the capital stock
of Hibernia issued and outstanding immediately prior to the
Effective Date shall, on the Effective Date, continue to be issued
and outstanding.
3. Pioneer Common Stock.
3.1. Conversion. On the Effective Date and subject to
the provisions of Section 3.7 hereof,
(a) each share of Pioneer Common Stock issued and
outstanding immediately prior to the Effective Date, other than (i)
shares as to which dissenters' rights have been perfected and not
withdrawn or otherwise forfeited under Section 12: 131 of the LBCL
and (ii) shares owned beneficially by Hibernia or its subsidiaries,
shall, by virtue of the Merger automatically and without any action
on the part of the holder thereof, become and be converted into the
number of shares of Hibernia Common Stock that equals the Exchange
Rate set forth in Section 3.8 hereof;
(b) holders of certificates which represent shares of
Pioneer Common Stock outstanding immediately prior to the Effective
Date (hereinafter called "Old Certificates") shall cease to be, and
shall have no rights as, shareholders of Pioneer;
(c) each share of Pioneer Common Stock held in the
treasury of Pioneer or owned beneficially by Hibernia or any of its
subsidiaries shall be cancelled; and
(d) Old Certificates shall be exchangeable by the
holders thereof in the manner provided in the transmittal materials
described below for new certificates for the number of whole shares
of Hibernia Common Stock to which such holders shall be entitled in
accordance with the Exchange Rate set forth in Section 3.8 and a
check representing cash paid in lieu of fractional shares as
provided in Section 3.2 hereof.
3.2. Fractional Shares. Each holder of Old Certificates
who would otherwise have been entitled to receive a fraction of a
share of Hibernia Common Stock (after taking into account all
shares of Pioneer Common Stock represented by the Old Certificates
then delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a
share multiplied by the average of the mean of high and low prices
of one share of Hibernia Common Stock for the five business days
preceding the Effective Date as reported in The Wall Street
Journal, or, if the Hibernia Common Stock is not then so reported,
the average of the fair market values of one share of Hibernia
Common Stock on the five business days preceding the Effective Date
determined pursuant to such reasonable method as the Board of
Directors of Hibernia may adopt in good faith for such purpose, and
no such holder shall be entitled to dividends, voting rights or any
other right of shareholders in respect of any fractional share.
3.3. Transmittal Materials. As promptly as practicable
after the Effective Date, Hibernia shall send or cause to be sent
to each former shareholder of record of Pioneer transmittal
materials for use in exchanging Old Certificates for certificates
representing Hibernia Common Stock and a check representing cash
paid in lieu of fractional shares, if any. The letter of
transmittal will contain instructions with respect to the surrender
of Old Certificates and the distribution of certificates
representing Hibernia Common Stock. If any certificate for shares
of Hibernia Common Stock is to be issued in a name other than that
in which an Old Certificate surrendered for exchange is issued, the
Old Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and the person requesting
such exchange shall affix any requisite stock transfer tax stamps
to the Old Certificate surrendered or provide funds for their
purchase or establish to the satisfaction of the exchange agent to
be appointed by Hibernia in connection with such exchange (the
"Exchange Agent") that such taxes are not payable.
3.4. Rights as Shareholders. Former shareholders of
Pioneer will be able to vote after the Effective Date at any
meeting of Hibernia shareholders or pursuant to any written consent
procedure the number of whole shares of Hibernia Common Stock into
which their shares of Pioneer Common Stock are converted,
regardless of whether they have exchanged their Old Certificates.
Whenever a dividend is declared by Hibernia on the Hibernia Common
Stock after the Effective Date, the declaration shall include
dividends on all shares issuable hereunder, but no shareholder will
be entitled to receive his distribution of such dividends until
physical exchange of his Old Certificates shall have been effected.
Upon physical exchange of his Old Certificates, any such person
shall be entitled to receive from Hibernia an amount equal to all
dividends (without interest thereon and less the amount of taxes,
if any, that may have been withheld, imposed or paid thereon)
declared, and for which the payment has occurred, on the shares
represented thereby.
3.5. Cancellation of Old Certificates. On and after the
Effective Date there shall be no transfers on the stock transfer
books of Pioneer or Hibernia of the shares of Pioneer Common Stock
which were issued and outstanding immediately prior to the
Effective Date. If, after the Effective Date, Old Certificates are
properly presented to Hibernia, they shall be cancelled and
exchanged for certificates representing shares of Hibernia Common
Stock and a check representing cash paid in lieu of fractional
shares as herein provided. Any other provision of this Agreement
notwithstanding, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Pioneer Common Stock for any amount
paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat, or similar
law.
3.6. Property Transfers. From time to time, as and when
requested by Hibernia and to the extent permitted by Louisiana law,
the officers and directors of Pioneer last in office shall execute
and deliver such deeds and other instruments and shall take or
cause to be taken such further or other actions as shall be
necessary in order to vest or perfect in or to confirm of record or
otherwise to Hibernia title to, and possession of, all the
property, interests, assets, rights, privileges, immunities,
powers, franchises, and authorities of Pioneer, and otherwise to
carry out the purposes of this Agreement.
3.7. Dissenters' Shares. Shares of Pioneer Common Stock
held by any holder having rights of a dissenting shareholder as
provided in Part XIII of the LBCL, who shall have properly objected
to the Merger and who shall have properly demanded payment on his
stock in accordance with and subject to the provisions of Section
12:131 of the LBCL, shall not be converted as provided in Section
3.1 hereof until such time as such holder shall have failed to
perfect, or shall have effectively lost, his right to appraisal of
and payment for his shares of Pioneer Common Stock, at which time
such shares shall be converted as provided in Section 3.1 hereof.
3.8. Exchange Rate.
(a) Except as provided in paragraphs (b) and (c) of this
Section 3.8, the Exchange Rate shall be 30.5 shares of Hibernia
Common Stock for each outstanding share of Pioneer Common Stock.
(b) In the event the Average Market Price of Hibernia
Common Stock (as defined in paragraph (d) below) is $7.50 or less,
the Exchange Rate shall be increased so that the aggregate value of
Hibernia Common Stock to be exchanged for Pioneer Common Stock
shall not be less than $62,779,000. In this event, the number of
shares of Hibernia Common Stock to be exchanged for each share of
Pioneer Common Stock shall be computed as follows: ($62,779,000
divided by the Average Market Price of Hibernia Common Stock)
divided by 274,443.
(c) In the event the Average Market Price of Hibernia
Common Stock (as defined in paragraph (d) below) is $9.50 per share
or more, the Exchange Rate shall be reduced so that the aggregate
value of the Hibernia Common Stock to be exchanged for Pioneer
Common Stock shall not exceed $79,520,000. In this event, the
number of shares of Hibernia Common Stock to be exchanged for each
share of Pioneer Common Stock shall be computed as follows:
($79,520,000 divided by the Average Market Price of the Hibernia
Common Stock) divided by 274,443.
(d) For purposes of this Agreement, the Average Market
Price of Hibernia Common Stock on the Closing Date shall be the
average of the high and low sale prices of one share of Hibernia
Common Stock for the five business days preceding the last trading
day immediately prior to the Closing Date as reported in The Wall
Street Journal.
4. Articles of Incorporation; Bylaws. The Articles of
Incorporation and Bylaws of Hibernia in force immediately prior to
the Effective Date shall on and after the Effective Date continue
to be the Articles of Incorporation and Bylaws of Hibernia,
respectively, unless altered, amended or repealed in accordance
with applicable law.
5. Employees. Hibernia shall cause to be provided as soon
as practicable after the Effective Date for the employees of
Pioneer and the Bank immediately prior to the Effective Date the
employee benefits then made available to employees of Hibernia and
its subsidiaries, subject to the terms and conditions under which
those employee benefits are made available to such employees;
provided, however, that for purposes of determining the eligibility
of an employee of Pioneer or the Bank (or both) to receive, and the
benefits to which such employee shall be entitled, under Hibernia's
benefits plans after the Effective Date, any period of employment
of such employee with Pioneer or the Bank shall be deemed
equivalent to having been employed for that same period by Hibernia
and/or its subsidiaries.
6. Negative Covenants. From the date hereof until the
Effective Date, or until the termination of this Agreement, Pioneer
covenants and agrees that it will not do, or agree to commit to do,
and Pioneer will cause the Bank not to do and not to agree or
commit to do, without the prior written consent of Hibernia, any of
the following:
(a) in the case of Pioneer (and not the Bank), make,
declare, set aside or pay any dividend or declare or make any
distribution on, or directly or indirectly combine, redeem,
purchase or otherwise acquire, any shares of Pioneer Common Stock
(other than in a fiduciary capacity); provided, however, that
Pioneer may declare and pay, at any time and from time to time
after the date hereof and prior to the Closing Date, one or more
cash dividends on the Pioneer Common Stock in an aggregate amount
not to exceed $2.25 per share of Pioneer Common Stock;
(b) authorize the creation or issuance of or issue any
additional shares of its capital stock, or any options, calls,
warrants, stock appreciation rights or commitments relating to its
capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for
or acquire from it, shares of its capital stock;
(c) enter into any employment contracts with, increase
the rate of compensation of, or pay or agree to pay any bonus to,
any of its directors, officers or employees, except in accordance
with the existing policy;
(d) enter into or substantially modify (except as may be
required by applicable law) any pension, retirement, stock option,
stock purchase, stock appreciation right, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of
any of its directors, officers or other employees, except that
Pioneer may amend its Profit Sharing Plan in order to bring such
plan into compliance with applicable laws and regulations and
Pioneer may take steps to terminate its Profit Sharing Plan,
including, but not limited to, the appointment of a successor
trustee for purposes of distributing the proceeds of the plan to
participants;
(e) other than as contemplated hereby, (i) carry on its
business other than in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted which
"regular and ordinary course" shall include, but not be limited to,
the payment of all or any portion of any note or debenture existing
on the date of this Agreement which Pioneer deems appropriate to
pay prior to closing, (ii) amend its or the Bank's Articles of
Incorporation or Bylaws, (iii) impose, or suffer the imposition, on
any share of stock held by Pioneer in the Bank, of any material
lien, charge, or encumbrance, or permit any such lien to exist,
(iv) establish or add any automatic teller machines or branch or
other banking offices, (v) make any capital expenditures in excess
of $100,000 or (vi) take any action that would materially and
adversely affect the ability of any party hereto to obtain the
approvals necessary for consummation of the transactions
contemplated hereby or that would materially and adversely affect
Pioneer's ability to perform its covenants and agreements
hereunder;
(f) except with respect to transactions contemplated
hereby, merge with any other corporation or bank or permit any
other corporation or bank to merge into it or consolidate with any
other corporation or bank; acquire control over any other firm,
bank, corporation or organization or create any subsidiary (except
in a fiduciary capacity or in connection with foreclosures in bona
fide loan transactions); liquidate; or sell or dispose of any
assets or acquire any assets, otherwise than in the ordinary course
of its business consistent with its past practice (which "ordinary
course of business" shall include for this purpose, but not
necessarily by limited to, the sale of assets included as Other
Real Estate Owned on Pioneer's financial statements); or
(g) knowingly fail to comply with any laws, regulations,
ordinances, or governmental actions applicable to it and to the
conduct of its business in a manner significant, material and
adverse to its business.
Notwithstanding any provision of this Section 6 to the
contrary, Pioneer may, and Hibernia hereby expressly consents to
such sale, sell all of the stock of Zachary Taylor Life Insurance,
so long as the price paid for the stock of such company is no less
than the greater of (i) the aggregate book value of such stock, or
(ii) the fair market value of such stock.
7. Representations and Warranties of Pioneer. Pioneer (and
not its directors or officers in their personal capacities) hereby
represents and warrants as follows:
7.1. Recitals. The facts set forth in the preamble to
this Agreement with respect to it are true and correct.
7.2. Organization and Qualification. Each of Pioneer
and the Bank is a corporation or bank duly organized, validly
existing, and in good standing under the laws of the State of
Louisiana; each of Pioneer and the Bank has the corporate power and
authority to carry on its business as it is now being conducted and
to own, lease and operate its assets, properties and business; and
Pioneer has all requisite power and authority to execute and
deliver this Agreement and perform its obligations hereunder.
7.3. Ownership of Other Banks. Pioneer does not own,
directly or indirectly, 5 percent or more of the outstanding
capital stock or other voting securities of any corporation, bank,
or other organization except the Bank, Pioneer Mortgage Company,
Zachary Taylor Life Insurance Company ("Zachary Taylor") and First
Federal Savings Bank ("First Federal"). The presently authorized
capital stock of the Bank consists solely of 300,000 shares of
common stock of the par value of $ 10.00 each, of which 300,000
shares of common stock are outstanding. The outstanding shares of
capital stock of the Bank are validly issued and outstanding, fully
paid and, except as may be affected by Louisiana Revised Statute
Section 6:262, nonassessable and, except as provided on Schedule
7.3 hereto, all of such shares are owned by Pioneer, free and clear
of all liens, claims and encumbrances.
7.4. Corporate Authorization. The execution, delivery
and performance of this Agreement have been authorized by Pioneer's
Board of Directors, and, subject to the approval of this Agreement
by its shareholders in accordance with the LBCL, all corporate acts
and other proceedings required for the due and valid authorization,
execution, delivery and performance by Pioneer of this Agreement
and the consummation of the Merger have been validly and
appropriately taken. Subject to such shareholder approval and to
such regulatory approvals as are required by law, this Agreement is
a legal, valid and binding obligation of Pioneer, enforceable
against Pioneer in accordance with its terms, except that
enforcement may be limited by bankruptcy, reorganization,
insolvency and other similar laws and court decisions relating to
or affecting the enforcement of creditors' rights generally and by
general equitable principles or principles of Louisiana law that
are similar to equitable principles in jurisdictions that recognize
a distinction between law and equity.
7.5. No Conflicts. Except as disclosed on Schedule 7.5
hereto, the execution and delivery of this Agreement by Pioneer
does not, and the consummation of the transactions contemplated
hereby by it will not, constitute (i) a breach or violation of, or
a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement,
indenture or instrument of Pioneer or the Bank or to which Pioneer
or the Bank is subject, which breach, violation or default would
have a material and adverse effect on the financial condition,
properties, businesses or results of operations of Pioneer and the
Bank taken as a whole or on the transactions contemplated hereby,
(ii) to the best of the knowledge of Pioneer's management, a breach
or violation of, or a default under, any law, rule or regulation or
any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of Pioneer or the Bank or to
which Pioneer or the Bank is subject, or (iii) a breach or
violation of, or a default under, the Articles of Incorporation or
Bylaws of Pioneer or the Bank; and the consummation of the
transactions contemplated hereby will not require any consent or
approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license or the consent or approval of
any other party to any such agreement, indenture or instrument,
other than any required approvals of shareholders and applicable
regulatory authorities.
7.6. Financial Statements; Dividend Restrictions.
Pioneer has delivered to Hibernia prior to the execution of this
Agreement true and correct copies of the following consolidated
financial statements (collectively referred to herein as the
"Pioneer Financial Statements"): Pioneer's Consolidated Balance
Sheets as of March 31, 1994 and 1993 (unaudited) and December 31,
1993, 1992 and 1991 (audited); Consolidated Statements of Income
and Changes in Stockholders' Equity and Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991
(audited), and Consolidated Statements of Income for the three-
month periods ended March 31, 1994 and 1993 (unaudited). Each of
the Pioneer Financial Statements (including the related notes)
fairly presents the consolidated results of operations of Pioneer
and the Bank for the respective periods covered thereby and the
consolidated financial condition of Pioneer and the Bank as of the
respective dates thereof (subject, in the case of unaudited
statements, to year-end audit adjustments that will not be material
in amount or effect), in each case in accordance with GAAP
consistently applied during the periods involved, except as may be
noted therein. Except as disclosed in the Pioneer Financial
Statements, including the notes thereto, or Schedule 7.6 hereto,
and except as otherwise required by this Agreement, there are no
restrictions in any note, indenture, agreement, statute or
otherwise (except for statutes or regulations applicable to
Louisiana corporations or state banks generally) precluding Pioneer
or the Bank from paying dividends, in each case when, as and if
declared by its Board of Directors.
7.7. No Material Adverse Change. Since March 31, 1994,
there has been no event or condition of any character (whether
actual, or to the knowledge of Pioneer or the Bank, threatened or
contemplated) that has had or can reasonably be anticipated to
have, or that, if concluded or sustained adversely to Pioneer,
would reasonably be anticipated to have, a material adverse effect
on the financial condition, results of operations, business or
prospects of Pioneer or the Bank, excluding changes in laws or
regulations that affect banking institutions generally.
7.8. Litigation and Proceedings. Except as set forth on
Schedule 7.8 hereto, no litigation, proceeding or controversy
before any court or governmental agency is pending against Pioneer
that in the opinion of its management is likely to have a material
and adverse effect on the business, results of operations or
financial condition of Pioneer and the Bank taken as a whole, and,
to the best of its knowledge, no such litigation, proceeding or
controversy has been threatened or is contemplated. Except as
disclosed on Schedule 7.8 hereto, no member of Pioneer's
consolidated group is subject to any written agreement, memorandum,
or order with or by any bank or bank holding company regulatory
authority restricting its operations or requiring any material
actions.
7.9. Material Contracts. Except for this Agreement and
arrangements made in the ordinary course of business or disclosed
on Schedule 7.9 hereto, neither Pioneer nor the Bank is bound by
any material contract to be performed after the date hereof that is
not terminable by Pioneer or the Bank without penalty or liability
on thirty days prior notice.
7.10. Brokers' or Finders' Fees. No agent, broker,
investment banker, investment or financial advisor or other person
acting on behalf of Pioneer or the Bank or under their authority is
entitled to any commission, broker's or finder's fee from any of
the parties hereto in connection with any of the transactions
contemplated by this Agreement, except that Pioneer intends to
engage a financial advisor to render a fairness opinion to Pioneer
and its shareholders in connection with the Merger, for which
services such advisor shall be entitled to be paid a fee. The
prohibitions of this Section 7.10 shall not apply to attorney's
fees incurred by Pioneer in connection with the Merger and other
transactions contemplated by this Agreement or any advice or
consultation with counsel, or action taken upon such advice or
counsel in connection therewith, which are contemplated by this
Agreement and the parties hereto as appropriate expenditures of
Pioneer.
7.11. Contingent Liabilities. Except as disclosed on
Schedule 7.11 hereto or as reflected in the Pioneer Financial
Statements and except in the case of the Bank for unfunded loan
commitments made in the ordinary course of business consistent with
past practices, as of March 31, 1994, neither Pioneer nor the Bank
has any obligation or liability (contingent or otherwise) that was
material, or that when combined with all similar obligations or
liabilities would have been material, to Pioneer and the Bank taken
as a whole and there does not exist a set of circumstances
resulting from transactions effected or events occurring prior to,
on, or after March 31, 1994, or from any action omitted to be taken
during such period that, to the knowledge of Pioneer, could
reasonably be expected to result in any such material obligation or
liability.
7.12. Tax Liability. The amounts set up as liabilities
for taxes in the Pioneer Financial Statements are sufficient for
the payment of all respective taxes (including, without limitation,
federal, state, local, and foreign excise, franchise, property,
payroll, income, capital stock, and sales and use taxes) accrued in
accordance with GAAP and unpaid at the respective dates thereof.
7.13. Material Obligations Paid. Since March 31, 1994,
and except as disclosed on Schedule 7.13 hereto, neither Pioneer
nor the Bank has incurred or paid any obligation or liability that
would be material to Pioneer on a consolidated basis, except for
obligations incurred or paid in connection with the transaction
contemplated by this Agreement and transactions by it in the
ordinary course of its business consistent with its past practices.
7.14. Tax Returns; Payment of Taxes. Except as
disclosed on Schedule 7.14, all federal, state, local, and foreign
tax returns (including, without limitation, estimated tax returns,
withholding tax returns with respect to employees, and FICA and
FUTA returns) required to be filed by or on behalf of Pioneer or
the Bank have been timely filed or requests for extensions have
been timely filed and granted and have not expired for periods
ending on or before December 31, 1992; all returns filed are
complete and accurate to the best information and belief of their
respective managements; and all taxes shown on filed returns have
been paid. Except as disclosed on Schedule 7.14, as of the date
hereof, there is no audit, examination, deficiency or refund
litigation or matter in controversy with respect to any taxes that
might result in a determination materially adverse to Pioneer or
the Bank except as reserved against in the Pioneer Financial
Statements. Except as disclosed on Schedule 7.14, all taxes,
interest, additions and penalties due with respect to completed and
settled examinations or concluded litigation have been paid, and
Pioneer's reserves for bad debts at December 31, 1992, as filed
with the Internal Revenue Service were not greater than the maximum
amounts permitted under the provisions of Section 585 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code").
7.15. Loans. To the best knowledge and belief of its
management, each loan reflected as an asset of Pioneer in the
Pioneer Financial Statements, as of March 31, 1994, or acquired
since that date, is the legal, valid, and binding obligation of the
obligor named therein, enforceable in accordance with its terms,
and, to the best knowledge and belief of Pioneer's management, no
loan is subject to any asserted defense, offset or counterclaim,
except as disclosed in writing to Hibernia within 30 days after the
date hereof.
7.16. Allowance for Loan Losses. To the best knowledge
and belief of Pioneer's management, the allowances for possible
loan losses shown on the balance sheets of Pioneer as of March 31,
1994 are adequate in all material respects under the requirements
of GAAP to provide for possible losses, net of recoveries, relating
to loans previously charged off, on loans outstanding (including
accrued interest receivable) as of March 31, 1994 and each such
allowance has been established in accordance with GAAP.
7.17. Title to Assets; Adequate Insurance Coverage.
(a) As of March 31, 1994, Pioneer and the Bank had, and
except with respect to assets disposed of for adequate
consideration in the ordinary course of business since such date,
now have, good and merchantable title to all real property and good
and merchantable title to all other material properties and assets
reflected in the Pioneer Financial Statements, free and clear of
all mortgages, liens, pledges, restrictions, security interests,
charges and encumbrances of any nature (subject as to
enforceability to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights generally
and to general equitable principles or principles of Louisiana law
that are similar to equitable principles in jurisdictions that
recognize a distinction between law and equity) except for (i)
mortgages and encumbrances which secure indebtedness which is
properly reflected in the Pioneer Financial Statements or which
secure deposits of public funds as required by law; (ii) liens for
taxes accrued by not yet payable; (iii) liens arising as a matter
of law in the ordinary course of business with respect to
obligations incurred after March 31, 1994 provided that the
obligations secured by such liens are not delinquent or are being
contested in good faith; (iv) such imperfections of title and
encumbrances, if any, as do not materially detract from the value
or materially interfere with the present use of any of such
properties or assets or the potential sale of any such owned
properties or assets; and (v) capital leases and leases, if any, to
third parties for fair and adequate consideration. Pioneer and the
Bank own, or have valid leasehold interests in, all material
properties and assets, tangible or intangible, used in the conduct
of its business. Any real property and other material assets held
under lease by Pioneer or the Bank are held under valid, subsisting
and enforceable leases with such exceptions as are not material and
do not interfere with the use made or proposed to be made by
Hibernia in such lease of such property.
(b) With respect to each lease of any real property or
a material amount of personal property to which Pioneer or the Bank
is a party, except for financing leases in which Pioneer or the
Bank is lessor. (i) such lease is in full force and effect in
accordance with its terms; (ii) all rents and other monetary
amounts that have become due and payable thereunder have been paid;
(ii) there exists no default or event, occurrence, condition or act
which with the giving of notice, the lapse of time or the happening
of any further event, occurrence, condition or act would become a
default under such lease; and (iv) neither the Merger nor the
merger of the Bank and HNB will constitute a default or a cause for
termination or modification of such lease.
(c) Except as disclosed on Schedule 7.13(c) hereto,
neither Pioneer nor the Bank has any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any
substantial part of its assets or to sell or dispose of any of its
assets except in the ordinary course of business consistent with
past practices.
(d) To the knowledge and belief of its management, the
policies of fire, theft, liability and other insurance maintained
with respect to the assets or businesses of Pioneer and the Bank
provide adequate coverage against loss and the fidelity bonds in
effect as to which Pioneer or the Bank is named insured meet the
applicable standards of the American Bankers Association.
7.18. Employee Plans. To the best of Pioneer's
knowledge and belief, except as disclosed on Schedule 7.18 hereto,
it, the Bank, and all "employee benefit plans," as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), that cover one or more employees
employed by Pioneer or the Bank:
(i) is in compliance with all laws, regulations,
reporting and licensing requirements and orders applicable to its
business or to such plan or any of its employees (because of such
employee's activities on behalf of it), the breach or violation of
which could have a material and adverse effect on such business;
and
(ii) has received no notification from any agency
or department of federal, state or local government or the staff
thereof asserting that any such entity is not in compliance with
any of the statutes, regulations or ordinances that such
governmental authority enforces, or threatening to revoke any
license, franchise, permit or governmental authorization, and is
subject to no agreement with any such governmental authority with
respect to its assets or business.
7.19. Copies of Employee Plans. Within ten days after
the date hereof, Pioneer has provided Hibernia with true, complete
and accurate copies of all pension, retirement, stock purchase,
stock bonus, stock ownership, stock option, savings, stock
appreciation right or profit-sharing plans, any employment,
deferred compensation, consultant, severance, bonus, or collective
bargaining agreement or group insurance contract, or any other
incentive, welfare, or employee benefit plan or agreement
maintained by it or the Bank for its or the Bank's employees or
former employees.
7.20. Plan Liability. Except for liabilities to the
Pension Benefit Guaranty Corporation pursuant to Section 4007 of
ERISA, all of which have been fully paid, and except for
liabilities to the Internal Revenue Service under section 4971 of
the Internal Revenue Code, all of which have been fully paid,
neither Pioneer nor the Bank has any liability to the Pension
Benefit Guaranty Corporation or to the Internal Revenue Service
with respect to any pension plan qualified under Section 401 of the
Internal Revenue Code.
7.21. No Default. Neither Pioneer nor the Bank is in
default in any material respect under any contract, agreement,
commitment, arrangement, lease, insurance policy or other
instrument to which it is a party or by which its respective
assets, business or operations may be bound or affected or under
which it or its respective assets, business or operations receive
benefits, and there has not occurred any event that with the lapse
of time or the giving of notice or both would constitute such a
default.
7.22. Minutes. Within sixty days after the date hereof,
Pioneer has made available to Hibernia, for inspection pursuant to
the terms of Section 9.5 hereof, the minutes of meetings of
Pioneer's and the Bank's Board of Directors and all committees
thereof held prior to the date hereof, which minutes are complete
and correct in all respects and fully and fairly present the
deliberations and actions of such Boards and committees and
accurately reflect the business condition and operations of Pioneer
and the Bank as of the dates and for the periods indicated therein.
7.23. Insurance Policies. Attached hereto as Schedule
7.23 is a schedule detailing all policies of fire, theft, public
liability, and other insurance (including without limitation
fidelity bonds and directors and officers liability insurance)
maintained by Pioneer or the Bank at the date hereof. Except as
disclosed on Schedule 7.23 hereto, neither Pioneer nor the Bank has
received any notice of a premium increase or cancellation with
respect to any of its insurance policies or bonds, and within the
last two years, neither Pioneer nor the Bank has been refused any
insurance coverage sought or applied for, and it has no reason to
believe that existing insurance coverage cannot be renewed as and
when the same shall expire, upon terms and conditions as favorable
as those presently in effect, other than possible increases in
premiums or unavailability of coverage that do not result from any
extraordinary loss experience of Pioneer or the Bank. The parties
hereto expressly agree that Pioneer may purchase, after the date
hereof and prior to the Closing, directors' and officers' "tail"
liability insurance coverage, as long as (i) the amount paid or to
be paid by Pioneer for such coverage does not exceed the aggregate
amount of insurance premiums to be refunded to Pioneer as a result
of termination of insurance policies prior to the Closing, or (ii)
such purchase is approved by Hibernia in advance.
7.24. Investments. Except for pledges to secure public
or trust deposits, none of the investments reflected in the Pioneer
Financial Statements under the heading "Investment Securities," and
none of the investments made by Pioneer or the Bank since March 31,
1994 and none of the assets reflected in the Pioneer Financial
Statements under the heading "Cash and Due From Banks," is subject
to any restriction, whether contractual or statutory, that
materially impairs the ability of Pioneer or the Bank freely to
dispose of such investment at any time. With respect to all
repurchase agreements to which Pioneer or the Bank is a party,
Pioneer or the Bank, as the case may be, has a valid, perfected
first lien or security interest in the government securities or
other collateral securing each such repurchase agreement which
equals or exceeds the amount of the debt secured by such collateral
under such agreement.
7.25. Environmental Matters. Except as disclosed on
Schedule 7.25 hereto, neither Pioneer nor the Bank nor, to the
knowledge of Pioneer and the Bank, any previous owner or operator
of any properties at any time owned (including any properties owned
as a result of foreclosure of a loan, whether still owned or
subsequently resold) leased, or occupied by Pioneer or the Bank or
used by Pioneer or the Bank in their respective business ("Pioneer
Properties") used, generated, treated, stored, or disposed of any
hazardous waste, toxic substance, or similar materials on, under,
or about Pioneer Properties except in compliance with all
applicable federal, state, and local laws, rules, and regulations
pertaining to air and water quality, hazardous waste, waste
disposal, air emissions, and other environmental matters
("Environmental Laws"). Except as disclosed, on Schedule 7.25
hereto, neither Pioneer nor the Bank has received any notice of
noncompliance with Environmental Laws, applicable laws, orders, or
regulations of any governmental authorities relating to waste
generated by any such party or otherwise or notice that any such
party is liable or responsible for the remediation, removal, or
clean-up of any site relating to Pioneer Properties. Hibernia
expressly agrees that the existence of underground storage tanks on
any Pioneer Properties shall not constitute a breach of this
representation unless (i) to Pioneer's knowledge, such tanks are
required to be registered with local, state or federal authorities
and are not so registered, or (ii) Pioneer is aware of any
violation of an Environmental Law associated with or resulting from
any such storage tank.
8. Representations and Warranties of Hibernia. Hibernia
(and not its directors or officers in their personal capacities)
hereby represents and warrants as follows:
8.1. Recitals. The facts set forth in the preamble to
this Agreement with respect to it are true and correct.
8.2. Organization and Qualification. Hibernia is a
corporation, and HNB is a national banking association, duly
organized, validly existing and in good standing under the laws of
the State of Louisiana and the United States of America,
respectively. Each of Hibernia and its material subsidiaries has
the corporate power and authority to carry on its business as it is
now being conducted and to own, lease and operate its assets,
properties and business, and Hibernia has all requisite power and
authority to execute and deliver this Agreement and perform its
obligations hereunder.
8.3. Shares Fully Paid and Non Assessable. The
outstanding shares of capital stock of Hibernia Corporation and HNB
are validly issued and outstanding, fully paid and nonassessable
(subject, in the case of HNB, to 12 U.S.C. Section 55) and all of
such shares of HNB are owned directly or indirectly by Hibernia
free and clear of all liens, claims, and encumbrances. The shares
of Hibernia Common Stock to be issued in connection with the Merger
pursuant to this Agreement will have been duly authorized and, when
issued in accordance with the terms of this Agreement, will be
validly issued, fully paid, and nonassessable.
8.4. Due Authorization. The execution, delivery and
performance of this Agreement have been authorized by Hibernia's
Board of Directors, and, subject to the regulatory and other
approvals required by Section 12 hereof, all corporate acts and
other proceedings required for the due and valid authorization,
execution, delivery and performance by Hibernia of this Agreement
and the consummation of the Merger have been validly and
appropriately taken. Subject to receipt of the regulatory and
other approvals required by Section 12 hereof, this Agreement is a
legal, valid, and binding obligation of Hibernia enforceable
against Hibernia in accordance with its terms, except that
enforcement may be limited by bankruptcy, insolvency, and other
laws of general applicability relating to or affecting creditors'
rights generally and by general equitable principles or principles
of Louisiana law that are similar to equitable principles in
jurisdictions that recognize a distinction between law and equity.
8.5. No Conflicts. Except as disclosed on Schedule 8.5
hereto, the execution and delivery of this Agreement by Hibernia
does not, and the consummation of the transactions contemplated
hereby by it will not, constitute (i) a breach or violation of, or
a default under, any law, rule, or regulation or any judgment,
decree, order, governmental permit or license, or agreement,
indenture, or instrument of Hibernia or its subsidiaries or by
which Hibernia or any of its subsidiaries is subject, which breach,
violation or default would have a material and adverse effect on
the financial condition, properties, businesses, or results of
operations of Hibernia and its subsidiaries taken as a whole or on
the transactions contemplated hereby, (ii) to the best of the
knowledge of Hibernia's management, a breach or violation of, or a
default under, any law, rule, or regulation or any judgment,
decree, order, governmental permit or license, or agreement,
indenture, or instrument of Hibernia or its subsidiaries or to
which Hibernia or any of its subsidiaries is subject, or (iii) a
breach or violation of, or a default under the Articles of
Incorporation or Association or Bylaws of Hibernia, or of its
subsidiaries, and the consummation of the transactions contemplated
hereby will not require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or
license or the consent or approval of any other party to any such
agreement, indenture, or instrument, other than any required
approvals of shareholders and applicable regulatory authorities.
8.6. Reports of Hibernia. As of their respective dates,
none of its Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, its Quarterly Report on Form 10-Q for the
periods ended March 31, 1994, and its proxy statement for its 1994
annual meeting of shareholders, each in the form (including
exhibits) filed with the Securities and Exchange Commission (the
"SEC") and its quarterly report to shareholders for the period
ended March 31, 1994 (collectively, the "Hibernia Reports"),
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances
under which they were made, not misleading. There is no fact or
circumstance that, individually or in the aggregate, materially and
adversely has affected or is so affecting, or, in the opinion of
the executive officers of Hibernia, may reasonably be expected in
the future to so affect, the business, financial condition, net
worth, properties, prospects or results of operations of Hibernia
and its subsidiaries, taken as a whole, that has not been disclosed
in the Hibernia Reports. Each of the balance sheets in or
incorporated by reference into the Hibernia Reports (including the
related notes) fairly presents the financial position of the entity
or entities to which it relates as of its date and each of the
statements of income and stockholders' equity and statement of cash
flows or equivalent statements in the Hibernia Reports (including
any related notes and schedules) fairly presents the results of
operations and changes in stockholders' equity, as the case may be,
of the entity or entities to which it relates for the periods set
forth therein (subject, in the case of unaudited statements, to
year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein.
Copies of the Hibernia Reports have been furnished to Pioneer on or
before the date hereof.
8.7. No Material Adverse Change. Since March 31, 1994
there has been no event or condition of any character (whether
actual, or to the knowledge of Hibernia or HNB, threatened or
contemplated) that has had or can reasonably be anticipated to
have, or that, if concluded or sustained adversely to Hibernia,
would reasonably be anticipated to have, a material adverse effect
on the financial condition, results of operations, business or
prospects of Hibernia or HNB, excluding changes in laws or
regulations that affecting banking institutions generally.
8.9. Brokers' or Finders' Fees. No agent, broker,
investment banker, investment or financial advisor or other person
acting on behalf of Hibernia or HNB or under their authority is
entitled to any commission, broker's or finder's fee from any of
the parties hereto in connection with any of the transactions
contemplated by this Agreement.
9. Agreements and Covenants. Hibernia and Pioneer each
hereby agrees and covenants to the other that:
9.1. Shareholder Approvals. If required by applicable
law, this Agreement shall be submitted to its respective
shareholders at a special meeting called and held in accordance
with applicable provisions of law (to be scheduled to the extent
possible for the date of the shareholders' meeting for the other
party hereto, if any) at which its shareholders shall be asked to
consider and vote upon this Agreement and the transactions
contemplated hereby.
9.2. Actions Necessary to Complete Merger. It shall use
its best efforts in good faith to take or cause to be taken all
action necessary or desirable under this Agreement on its part as
promptly as practicable so as to permit the consummation of this
Agreement at the earliest possible date (including obtaining the
consent or approval of each governmental authority and individual,
partnership, corporation, association, or any other form of
business or professional entity whose consent or approval is
required for the consummation of the transactions contemplated
hereby, requesting the delivery of appropriate opinions and letters
from its counsel and recommending that this Agreement be approved
by its shareholders) and cooperate fully with the other party
hereto to that end; provided, however, that neither party shall be
obligated to take or cause to be taken any action which is or
creates a material burden on such party, except to the extent such
actions are reasonably anticipated to be required in order to
effect the Merger.
9.3. Preparation of Registration Statement and Proxy
Statement. It shall prepare as promptly as practicable jointly
with the other party hereto a proxy statement to be mailed to the
shareholders of each party the shareholders of which are to vote
upon this Agreement in connection with the transactions
contemplated hereby and to be part of a registration statement (the
"Registration Statement") to be filed by Hibernia with the SEC
pursuant to the Securities Act of 1933, as amended (the "1933 Act")
with respect to the shares to be issued in the Merger. When the
Registration Statement or any post-effective amendment thereto
shall become effective, and at all times subsequent to such
effectiveness, up to and including the time of the last shareholder
meeting with respect to the transactions contemplated hereby, such
Registration Statement and all amendments or supplements thereto,
with respect to all information set forth therein furnished or to
be furnished by Hibernia relating to Hibernia and by Pioneer
relating to Pioneer, (i) will comply in all material respects with
the provisions of the 1933 Act and the rules and regulations of the
SEC thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained
therein not misleading. Hibernia will advise Pioneer promptly
after it receives notice thereof of the time when the Registration
Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, of the suspension of
the qualification of the Hibernia Common Stock issuable in
connection with the Merger for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional
information.
9.4. Press Releases and Public Statements. Unless
approved by Hibernia in advance, Pioneer will not issue any press
release or written statement for general circulation relating to
the transactions contemplated hereby, except as otherwise required
by law. The parties will cooperate in any public announcements
directly related to the Merger; provided, however, that, in the
event Hibernia determines to file a current report on Form 8-K that
discloses only the substantive facts of a previously released press
release, such filing may be made without prior consultation with
Pioneer so long as Pioneer is furnished with a copy of such report
within a reasonable time after its filing.
9.5. Material Developments; Access to Information.
(i) In order to afford Pioneer access to such
information as it may reasonably deem necessary to perform its due
diligence review with respect to Hibernia and its assets in
connection with the Merger, Hibernia shall (and shall cause HNB
to), (A) upon reasonable notice, afford Pioneer and its officers,
employees, counsel, accountants and other authorized
representatives, during normal business hours throughout the period
prior to the Effective Date and to the extent consistent with
applicable law, access to its premises, properties, books and
records, and to furnish Pioneer and such representatives with such
financial and operating data and other information of any kind
respecting its business and properties as Pioneer shall from time
to time reasonably request to perform such review, (B) furnish
Pioneer with copies of all reports filed by Hibernia with the
Securities and Exchange Commission ("SEC") throughout the period
after the date hereof prior to the Effective Date promptly after
such reports are so filed, and (C) promptly advise Pioneer of the
occurrence before the Effective Date of any event or condition of
any character (whether actual or to the knowledge of Hibernia,
threatened or contemplated) that has had or can reasonably be
anticipated to have, or that, if concluded or sustained adversely
to Hibernia, would reasonably be anticipated to have, a material
adverse effect on the financial condition, results of operations,
business or prospects of its consolidated group as a whole.
(ii) In order to afford Hibernia access to such
information as it may reasonably deem necessary to perform any due
diligence review with respect to the assets of Pioneer to be
acquired as a result of the Merger, Pioneer shall (and shall cause
the Bank to), upon reasonable notice, afford Hibernia and its
officers, employees, counsel, accountants, and other authorized
representatives access, during normal business hours throughout the
period prior to the Effective Date, to all of its and the Bank's
properties, books, contracts, commitments, loan files, litigation
files, and records (including, but not limited to, the minutes of
the Boards of Directors of Pioneer and the Bank and all committees
thereof), and it shall (and shall cause the Bank to), upon
reasonable notice and to the extent consistent with applicable law,
furnish promptly to Hibernia such information as Hibernia may
reasonably request to perform such review.
(iii) No investigation pursuant to this Section 9.5
shall affect or be deemed to modify any representation or warranty
made by, or the conditions to the obligations to consummate the
Merger of, either party to this Agreement.
9.6. Prohibited Negotiations. Prior to the Effective
Date, neither Pioneer nor the Bank shall solicit or encourage
inquiries or proposals with respect to, furnish any information
relating to, or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or of a substantial equity interest in,
Pioneer or the Bank or any business combination with Pioneer or the
Bank other than as contemplated by this Agreement. Pioneer shall
instruct each officer, director, agent, or affiliate of it or the
Bank to refrain from doing any of the above, and Pioneer will
notify Hibernia promptly if any such inquiries or proposals are
received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated with,
Pioneer; provided, however, that nothing contained in this section
shall be deemed to prohibit any officer or director of Pioneer or
the Bank from taking any action that, in the opinion of counsel to
Pioneer or the Bank, a copy of which opinion shall be furnished to
Hibernia upon its request, is required by applicable law.
9.7. Affiliates. Prior to the Closing Date (as defined
in Section 14 hereof), Pioneer shall deliver to Hibernia a letter
identifying all persons whom it believes to be "affiliates" of
Pioneer for purposes of Rule 145(c) or Rule 144 (as applicable)
under the 1933 Act ("Affiliates"). Pioneer shall use its best
efforts to cause each person so identified to deliver to Hibernia
prior to the Effective Date a written agreement in substantially
the form of Exhibit 9.7 hereto providing, among other things,that
such person will not dispose of Hibernia Common Stock received in
the Merger except in compliance with the 1933 Act and the rules and
regulations thereunder and except in accordance with Section 201.01
of the SEC's Codification of Financial Reporting Policies;
provided, however, that Pioneer shall have no such obligation to
use its best efforts to cause any such identified person to deliver
to Hibernia such agreement if such person may not lawfully execute
such agreement.
9.8. Adjustment for Changes in Outstanding Shares. In
the event that prior to the Effective Date the outstanding shares
of Hibernia Common Stock shall have been increased, decreased, or
changed into or exchanged for a different number or kind of shares
or securities by reorganization, recapitalization,
reclassification, stock dividend, stock split, or other like
changes in the Hibernia's capitalization, then an appropriate and
proportionate adjustment shall be made in the number and kind of
shares of Hibernia Common Stock to be thereafter delivered pursuant
to Section 3.1 hereof.
9.9. Accounting Treatment. It shall use its best
efforts to cause the Merger to qualify for pooling-of-interests
accounting treatment to the extent factors affecting such treatment
are within its control.
9.10. Cooperation in Bank Merger. Promptly upon request
by Hibernia, Pioneer and the Bank shall use their best efforts take
any and all necessary or appropriate actions to cause the Bank to
become merged with and into HNB effective as of, or as soon as
practicable after, the Effective Date if so requested by Hibernia;
provided, however, that Pioneer acknowledges and agrees that the
determination as to when and if the Bank and HNB shall be merged
shall be solely within Hibernia's discretion.
9.11. Adoption of Accounting Policies. As soon as
practicable after the satisfaction or waiver of all conditions to
the Closing set forth in Section 12 of this Agreement and in any
event prior to the Effective Date (unless this Agreement is
terminated pursuant to Section 13 hereof), Pioneer shall, and it
shall cause the Bank to, take any and all necessary or appropriate
actions to adopt all Hibernia accounting procedures and policies
(including without limitation those policies pertaining to charged-
off and non-accrual assets); provided, however, that no such
action taken by Pioneer or the Bank at the request of Hibernia or
HNB pursuant to this Section shall be deemed to be, or be deemed to
cause, a breach of any representation or warranty made by Pioneer
herein.
9.12. Indemnification of Directors and Officers of
Seller and the Bank.
(a) From and after the Effective Date of the Merger,
Hibernia agrees to indemnify and hold harmless each person who, as
of the date immediately prior to the Closing Date, served as an
officer or director of Seller or the Bank (an "Indemnified Person")
from and against all damages, liabilities, judgments and claims
(and related expenses including, but not limited to, attorney's
fees and amounts paid in settlement) based upon or arising from his
capacity as an officer or director of Seller or the Bank, to the
same extent as he would have been indemnified under the Articles of
Incorporation and/or Bylaws of Hibernia, as such documents were in
effect on the date of this Agreement as if he were an officer or
director of Hibernia at all relevant times; provided, however, that
the indemnification provided by this Section shall not apply to any
claim against an Indemnified Person if such Indemnified Person knew
or should have known of the existence of the claim and failed to
make a good faith effort to require Seller or the Bank, as the case
may be, to notify its director and officer liability insurance
carrier of the existence of such claim prior to the Closing Date.
(b) The rights granted to the Indemnified Persons hereby
shall be contractual rights inuring to the benefit of all
Indemnified Persons and shall survive this Agreement and any
merger, consolidation or reorganization of Hibernia or HNB.
(c) The rights to indemnification granted by this
subsection 9.12 are subject to the following limitations: (i) the
total aggregate indemnification to be provided by Hibernia pursuant
to subsection 9.12(a) shall not exceed, as to all of the
Indemnified Persons as a group, the sum of $10,000,000, and
Hibernia shall have no responsibility to any Indemnified person for
the manner in which such sum is allocated among that group (but
nothing in this subsection is intended to prohibit the Indemnified
Persons from seeking reallocation among themselves); (ii) a
director or officer who would otherwise be an Indemnified Person
under this subsection 9.12 shall not be entitled to the benefits
hereof unless such director or officer has executed a Joinder
Agreement (the "Joinder Agreement") in the form of Exhibit 9.12
hereto; and (iii) amounts otherwise required to be paid by Hibernia
to an Indemnified Person pursuant to this subsection 9.12 shall be
reduced by any amounts that such Indemnified Person recovers by
virtue of the claim for which other employees and officers
indemnification is sought.
(d) Hibernia agrees that the $10,000,000 indemnification
limit set forth in paragraph (c) of this Section 9.12 shall not
apply to any damages, liabilities, judgments and claims (and
related expenses, including but not limited to attorney's fees and
amounts paid in settlement) insofar as they arise out of or are
based upon the matters for which indemnification is provided in
Section 11.2 hereof.
9.13. Covenant to Close. At such time as is deemed
appropriate by the parties hereto or as otherwise set forth in this
Agreement, and upon satisfaction or waiver of each of the
conditions to Closing of the Merger, the parties agree to take such
actions as are reasonably necessary or appropriate to effect the
Closing and the Merger.
10. Permits, Consents and Approvals. As promptly as
practicable after the date hereof:
(a) Hibernia shall submit an application to the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board") for approval of the transactions contemplated hereby in
accordance with the provisions of the Bank Holding Company Act;
(b) Hibernia shall submit an application to the
Comptroller of the Currency (the "Comptroller") for approval of the
transactions contemplated hereby in accordance with the provisions
of the Bank Merger Act;
(c) Pioneer shall use its best efforts to have its
Affiliates execute a written agreement in substantially the form of
9.7 hereto; provided, however, that Pioneer shall have no such
obligation prior to the receipt by the Board of Directors of
Pioneer of the Fairness Opinion; and
(d) Pioneer shall use its best efforts to have each of
the directors of Pioneer and the Bank execute a Non-Competition
Agreement in substantially the form of Exhibit 10(d) hereto;
provided, however, that Pioneer shall have no such obligation prior
to the receipt by the Board of Directors of Pioneer of the Fairness
Opinion and that Pioneer shall have no such obligation with respect
to Messrs. E. R. Campbell, Jr., B. D. Flurry, Hugh Hanson and Edwin
Jones so long as such persons shall have executed an employment or
consulting agreement with Hibernia.
The parties hereto acknowledge and agree that Hibernia shall
have primary responsibility under this Agreement to apply for all
permits, consents and approvals required by any agency of state or
federal government in connection with the transactions contemplated
by this Agreement, and Pioneer and the Bank shall provide
reasonable assistance to Hibernia with respect to all such
applications; provided, however, that, in the event Pioneer
determines to sell Zachary Taylor, any and all permits, consents or
approvals required for that transaction shall be the sole
responsibility of Pioneer.
11. Confidentiality; Hold Harmless; Restriction on
Acquisitions.
11.1. Confidentiality. For a period of five years after
the date hereof, the parties hereto acknowledge that each of them
or their representatives or agents has engaged in, and may continue
to engage in, certain due diligence reviews and examinations with
respect to the other and that, in the course of such reviews and
examination, has received or may receive in the future confidential
or proprietary information. Hibernia and Pioneer agree, on behalf
of themselves, their respective officers, directors, employees,
representatives and agents, that they will not use any information
obtained pursuant to due diligence investigations for any purpose
unrelated to the consummation of the transactions contemplated by
this Agreement, and, if the Merger is not consummated, will hold
all such information and documents in confidence unless and until
such time as such information or documents otherwise become
publicly available or as it is advised by counsel that any such
information or document is required by law to be disclosed, in
which event the party required to make such disclosure shall advise
and consult with the other party reasonably in advance of such
disclosure regarding the information proposed to be disclosed. In
the event of the termination of this Agreement, Hibernia and
Pioneer shall, promptly upon request by the other party, either
destroy or return any documents so obtained.
11.2. Hold Harmless. Hibernia will indemnify and hold
harmless Pioneer, each of its directors and officers and each
person, if any who controls Pioneer or the Bank within the meaning
of the 1933 Act against any losses, claims, damages or liabilities,
joint, several or solidary, to which they or any of them may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement, or in any amendment or supplement thereto, or arising
out of or based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse
each such person for any legal or other expenses reasonably
incurred by such person in connection with investigating or
defending any such action or claim; provided, however, that
Hibernia shall not be liable in any such case to the extent that
any such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in
the Registration Statement or any such amendment or supplement in
reliance upon and in conformity with information furnished to
Hibernia by Pioneer or the Bank for use therein. Promptly after
receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against Hibernia under this
Section, notify Hibernia in writing of the commencement thereof.
In case any such action shall be brought against any indemnified
party and it shall notify Hibernia of the commencement thereof,
Hibernia shall be entitled to participate therein, and to the
extent that it shall wish, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and, after notice
from Hibernia to such indemnified party of its election to so
assume the defense thereof, Hibernia shall not be liable to such
indemnified party under this Section 11.2 for any legal expenses of
other counsel or any other expenses of defense subsequently
incurred by such indemnified party.
12. Conditions. The consummation of the Merger is
conditioned upon:
12.1. Shareholder Approval; Dissenters. Approval of
this Agreement by the required vote of shareholders of Pioneer and
exercise and perfection of dissenters' rights pursuant to Section
12: 131 of the LBCL by holders of Pioneer Common Stock holding in
the aggregate no more than 10% of the Pioneer Common Stock
outstanding on the Closing Date.
12.2. Federal Reserve Board and OCC Approvals.
Procurement by Hibernia of the approval of the Federal Reserve
Board of the Merger and the Comptroller of the Bank Merger and any
and all other transactions contemplated hereby.
12.3. Other Approvals. Procurement of all other
consents and approvals and satisfaction of all other requirements
prescribed by law that are necessary to the consummation of the
transactions contemplated by this Agreement.
12.4. No Restraining Action. No litigation or
proceeding initiated by any governmental authority shall be pending
before any court or agency that shall present a claim to restrain,
prohibit or invalidate the transactions contemplated hereby and
neither Hibernia nor Pioneer shall be prohibited by any order of
any court or other governmental authority from consummating the
transactions provided for in this Agreement.
12.5. Opinion of Hibernia Counsel. Pioneer and its
directors shall have received an opinion, dated the Closing Date,
of counsel for Hibernia, in form and substance satisfactory to
Pioneer, as to such matters as Pioneer may reasonably request with
respect to the transactions contemplated hereby.
12.6. Opinion of Pioneer Counsel. Hibernia, its
directors and its officers who sign the Registration Statement
shall have received an opinion, dated the Closing Date, of Wiener,
Weiss, Madison & Howell, counsel for Pioneer, in form and substance
satisfactory to Hibernia, which shall cover such matters as
Hibernia may reasonably request with respect to the transactions
contemplated hereby.
12.7. Representations, Warranties and Agreements of
Pioneer. Each of the representations, warranties, and agreements
of Pioneer contained herein in all material respects shall be true
on, or complied with by, the Closing Date as if made on such date
(or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date) and
Hibernia shall have received a certificate signed by the Chairman
of the Board and the President of Pioneer, dated the Closing Date,
to such effect; Pioneer shall have furnished to Hibernia such other
certificates as Hibernia shall reasonably request in connection
with the Closing (as defined in Section 14 hereof), evidencing
compliance with the terms hereof and its status, business and
financial condition. Pioneer shall have furnished Hibernia with
such further documents or other materials as Hibernia shall have
reasonably requested in connection with the transactions
contemplated hereby.
12.8. Representations, Warranties and Agreements of
Hibernia. Each of the representations, warranties and agreements
of Hibernia contained herein in all material respects shall be true
on, or complied with by, the Closing Date as if made on such date
(or the date when made in the case of any representations or
warranty which specifically relates to an earlier date) and Pioneer
shall have received a certificate signed by the Chief Executive
Officer and the Treasurer of Hibernia, dated the Closing Date, to
such effect; Hibernia shall have furnished to Pioneer such other
certificates as Pioneer shall reasonably request in connection with
the Closing, evidencing compliance with the terms hereof and its
status, business and financial condition. Hibernia shall have
furnished Pioneer with such further documents or other materials as
Pioneer shall have reasonably requested in connection with the
transactions contemplated hereby.
12.9. Effective Registration Statement. The
Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC and Pioneer shall have
received a certificate to such effect from the officer of Hibernia
designated as its agent for service on the cover page of the
Registration Statement (which certificate may be to the knowledge
of such officer).
12.10. Blue Sky. Hibernia shall have received all state
securities laws and "blue sky" permits and other authorizations
necessary to consummate the transactions contemplated hereby.
12.11. Tax Opinion. Hibernia and Pioneer shall have
received an opinion of Ernst & Young, which opinion shall be
satisfactory in form and substance to Hibernia and Pioneer, to the
effect that the Merger when consummated in accordance with the
terms hereof will constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Internal Revenue Code, and that the
exchange of Pioneer Common Stock to the extent exchanged for
Hibernia Common Stock will not give rise to gain or loss to the
shareholders of Pioneer with respect to such exchange and that the
Louisiana income tax treatment to the shareholders of Pioneer will
be substantially the same as the federal income tax treatment to
the shareholders of Pioneer.
12.12. Listing on New York Stock Exchange. The shares
of Hibernia Common Stock issuable to the holders of Pioneer Common
Stock in the Merger shall have been approved for listing on the New
York Stock Exchange, Inc. on or before the Closing Date, subject to
official notice of issuance.
12.13. Fairness Opinion. Pioneer shall have received a
letter from a financial advisor of its choice, acceptable to
Hibernia, dated within five days of the scheduled date of mailing
of the Proxy Statement to its shareholders, and updated to within
five days of the Closing Date to the effect that the terms of the
Merger are fair to its shareholders from a financial point of view.
For purposes of this Agreement, Hibernia acknowledges that, if
Pioneer chooses to engage U. S. Banking Alliance to provide such
fairness opinion, such choice is acceptable to Hibernia.
12.14 Exchange of Schedules. Pioneer shall have
prepared the schedules required by Section 7 hereof and furnished
such schedules to Hibernia within 30 days after the date of this
Agreement, and Hibernia shall have prepared the schedules required
by Section 8 hereof and furnished such schedules to Pioneer within
30 days after the date of this Agreement.
12.14. Assertion of Conditions. A failure to satisfy
any of the requirements set forth in Section 12.5, 12.8 or 12.12
shall only constitute conditions to consummation of the Merger if
asserted by Pioneer and a failure to satisfy any of the
requirements set forth in Section 12.6 or 12.7 shall only
constitute conditions to consummation of the Merger if asserted by
Hibernia.
13. Termination. This Agreement may be terminated prior to
the Closing Date, either before or after its approval by the
shareholders of the parties hereto, in any of the following events:
13.1. Mutual Consent. By the mutual consent of the
parties hereto, if the Board of Directors of each party so
determines by vote of a majority of the members of its entire
Board.
13.2. Breach of Representation, Warranty or Covenant.
By either party hereto, in the event of a breach by the other party
(a) of any covenant or agreement contained herein or (b) of any
representation or warranty herein, if (i) the facts constituting
such breach reflect a material and adverse change in the financial
condition, results of operations, business, or prospects taken as
a whole, of the breaching party, which in either case cannot be or
is not cured within 60 days after written notice of such breach is
given to the party committing such breach, or (ii) in the event of
a breach of a warranty or covenant, such breach results in a
material increase in the cost of the non-breaching party's
performance of this Agreement.
13.3. Passage of Time; Inability to Satisfy Conditions.
By either party hereto, in the event that (i) the Merger is not
consummated by June 30, 1995 or (ii) any condition to Closing
cannot be satisfied by June 30, 1995 and will not be waived by the
party or parties entitled to waive it.
13.4. Failure to Obtain Regulatory Approval. By either
party hereto, at any time after the Federal Reserve Board, the
Federal Reserve Bank or the Comptroller has denied any application
for any approval or clearance required to be obtained as a
condition to the consummation of the Merger and the time period for
all appeals or requests for reconsideration thereof has run.
13.5. Failure to Obtain Shareholder Approval. By either
party hereto, if the Merger is not approved by the required vote of
shareholders of Pioneer.
13.6. Dissenters. By Hibernia, if holders of more than
10 percent of the outstanding Pioneer Common Stock exercise
statutory rights of dissent and appraisal pursuant to Part XIII of
the LBCL.
13.7. Material Adverse Change. By Pioneer, if a
material adverse change as described in Section 8.7 of this
Agreement occurs, and by Hibernia, if a material adverse change as
described in Section 7.7 hereof occurs, after the date hereof and
prior to the Closing.
13.8. Use of Pooling-of-Interests Accounting Treatment.
By Hibernia, in the event it shall have received the opinion of
Ernst & Young, certified public accountants to the effect that the
facts and circumstances surrounding the Merger prohibit or
materially jeopardize the treatment of the Merger as a pooling-of-
interests for accounting purposes.
13.9. Fairness Opinion. By Pioneer, if it shall not
have received a letter from its financial advisor dated within five
days of the scheduled date of mailing of its proxy statement to its
shareholders, and updated to within five days of the Closing Date,
to the effect that the terms of the Merger are fair to its
shareholders from a financial point of view.
13.10. Completion of Due Diligence. By Hibernia, within
60 days after the date hereof (during which time it shall have
completed its due diligence review), if, based upon matters
disclosed or discovered during its due diligence review that have,
in the good faith opinion of Hibernia, a material adverse effect on
the Merger, it shall determine that the Merger is not feasible
under the terms set forth herein.
13.11. Non Solicitation Agreement. By Hibernia, if the
Non Solicitation Agreement attached hereto is not executed on
behalf of First Federal Savings Bank on or before the Closing Date.
14. Closing and Effective Date. The closing of the Merger
(the "Closing") shall take place at the office of Hibernia at 313
Carondelet Street, New Orleans, Louisiana, at 11:00 a.m. local
time, or at such other place or time as shall be mutually agreeable
to the parties hereto, on the first business day occurring after
the last to occur of: (i) December 1, 1994; (ii) the date that
falls 30 days after the date of the order of the Federal Reserve
Board approving the Merger pursuant to the Bank Holding Company
Act; (iii) the date that falls 30 days after the date of the order
of the Comptroller approving the merger of the Bank with and into
HNB pursuant to the Bank Merger Act; and (iv) the date that falls
5 days after the date on which the last meeting of shareholders
called to approve this Agreement is held; or such later date within
60 days of such date as may be agreed upon between the parties
hereto (the date and time of the Closing being referred to herein
as the "Closing Date"). Immediately upon consummation of the
Closing, or on such other later date as the parties hereto may
agree, the Merger Agreement shall be certified, executed,
acknowledged and delivered to the Secretary of State of the State
of Louisiana (the "Secretary") for filing pursuant to and in
accordance with the provisions of Section 12:112 of the LBCL. The
Merger shall become effective as of the date and time of issuance
by the Secretary of a certificate of merger relating to the Merger
(such date and time being referred to herein as the "Effective
Date").
15. Survival and Termination of Representations, Warranties
and Covenants.
15.1. Except as otherwise provided in this Section 15,
the representations, warranties and covenants contained in this
Agreement shall terminate as of the earlier of the Effective Date
or the termination of this Agreement. Upon termination of such
representations, warranties and covenants, such provisions shall be
of no further force or effect, and no party hereto shall have any
legal right to redress, whether for breach of contract or
otherwise, as a result of a breach of any such provision.
15.2. The provisions and agreements set forth in
Sections 3, 5, 9.12 and 11 and the last sentence of Section 8.3
hereof shall survive the Closing, if the Closing occurs, for the
benefit of the shareholders, directors and officers of Pioneer and
the Bank who are the intended beneficiaries of such provisions.
15.3. The provisions of Section 11 and liabilities for
a breach of the provisions of Sections 9.2 or 9.13 shall survive
the termination of this Agreement if this Agreement terminates
without the Closing or the Merger having occurred, in which event
liability for a breach of Section 9.2 or Section 9.13 shall survive
the termination of the Agreement for a period of 180 days following
the date on which the Agreement terminates. Nevertheless, no party
to this Agreement shall have a legal right to redress or cause of
action for a breach of Section 9.2 except in those circumstances in
which such breach directly resulted in the termination of the
Agreement.
15.4. In consideration of the mutual benefits and
agreements contained in this Agreement, each of the parties hereto,
on behalf of itself and its successors and assigns, hereby
irrevocably waives any right or cause of action which otherwise
would survive in the absence of this Section 15.
16. Amendment; Waivers. To the extent permitted under
applicable law, prior to the Closing Date any provision of this
Agreement may be amended or modified at any time, either before or
after its approval by the shareholders of the parties hereto, (i)
by an agreement in writing among the parties hereto approved by
their respective Boards of Directors and executed in the same
manner as this Agreement, and (ii) as provided in Section 12:112 of
the LBCL. Except with respect to any required shareholder or
regulatory approval, each party hereto, by written instrument
signed by a duly authorized officer of such party, may at any time
(whether before or after approval of this Agreement by the
shareholders of Hibernia or Pioneer) extend the time for the
performance of any of the obligations or other acts of the other
party hereto and may waive (i) any inaccuracies of the other party
in the representations or warranties contained in this agreement or
any document delivered pursuant hereto, (ii) compliance with any of
the covenants, undertakings, or agreements of the other party, or
satisfaction of any of the conditions precedent to its obligations,
contained herein or (iii) the performance by the other party of any
of its obligations set out herein or therein; provided that no such
waiver executed after approval of this Agreement by the
shareholders of Hibernia or Pioneer shall change the number of
shares of Hibernia Common Stock into which shares of Pioneer Common
Stock will be converted by the Merger.
17. Execution in Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed to
constitute an original. Each such counterpart shall become
effective when one counterpart has been signed by each party
hereto.
18. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Louisiana
applicable to agreements made and entirely to be performed within
such State, except as federal law may be applicable.
19. Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Agreement and the
transactions contemplated hereby, including the fees, expenses and
disbursements of its counsel and auditors, provided that printing
expenses shall be borne by Hibernia.
20. No Assignment. Prior to the Effective Date, neither
party hereto may assign any of its rights or obligations under this
Agreement to any other person without the prior written consent of
the other bank holding company that is a party hereto, including
any transfer or assignment by operation of law.
21. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient
if delivered personally or sent by registered or certified mail,
postage prepaid, to the Chief Executive Officer of each party
hereto at the address of such party set forth in the preamble to
this Agreement and shall be deemed to have been given as of the
date so personally delivered or mailed. A copy of all notices or
other communications directed to Hibernia shall be sent to:
HNB
313 Carondelet Street
New Orleans, Louisiana 70130
Attention: Corporate Law Division
and a copy of all notices or other communications directed to
Pioneer shall be sent to:
Donald P. Weiss, Esq.
Wiener, Weiss, Madison & Howell
333 Texas Street
23rd Floor
Shreveport, Louisiana 71101
22. Headings. The headings in this Agreement are inserted
for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
23. Entire Agreement. This Agreement and the Schedules and
Exhibits hereto supersede any and all oral or written agreements
and understandings heretofore made relating to the subject matter
hereof and contain the entire agreement of the parties relating to
the subject matter hereof. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
parties hereto, and their respective successors. Nothing in this
Agreement or in the Merger Agreement is intended to or shall be
construed to confer upon or to give any person other than the
parties hereto any rights, remedies, obligation or liabilities
under or by reason of this Agreement except as expressly provided
herein.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in counterparts by their duly authorized
officers and their corporate seals to be hereunto affixed, all as
of the day and year first above written.
Hibernia Corporation
Stephen A. Hansel
President and Chief Executive
Officer
Attest:
Patricia C. Meringer
Secretary
PIONEER BANCSHARES CORPORATION
By:
E. R. Campbell, Jr.
Chairman of the Board
Attest:
Secretary
Exhibit 1
MERGER AGREEMENT
This Merger Agreement is made and entered into this __ day of
_______, 199_ by and between Hibernia Corporation, a Louisiana
corporation ("Hibernia") and Pioneer Bancshares Corporation, a
Louisiana corporation ("Pioneer").
W I T N E S S E T H:
WHEREAS, Hibernia and Pioneer (collectively, the
"Corporations") and their respective Boards of Directors deem it
advisable and in the best interests of the Corporations that
Pioneer be merged into Hibernia (the "Merger") pursuant to the
provisions of the Louisiana Business Corporation Law ("LBCL") and
upon the terms and subject to the conditions hereinafter set forth
and in the Plan (as defined herein); and
WHEREAS, the Corporations have entered into an Agreement and
Plan of Merger dated as of June 1, 1994 (the "Plan") which sets
forth certain terms and conditions relating to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in the Plan, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows.
ARTICLE I
The Merger
Upon the terms and subject to the conditions set forth herein,
on the Effective Date (as defined below), Pioneer shall be merged
into Hibernia and the separate existence of Pioneer shall cease.
ARTICLE II
Effective Date and Time
The Merger shall be effective at 12:01 a.m. on the date
immediately following the day when this Merger Agreement, having
been certified, signed and acknowledged in accordance with the
LBCL, is filed in the office of the Secretary of State of the State
of Louisiana (the "Secretary of State")(such time and date being
herein referred to as the "Effective Time" and the "Effective Date"
respectively).
ARTICLE III
Conversion and Cancellation of Shares
Except for shares as to which dissenters' rights have been
perfected and not withdrawn or otherwise forfeited under Section
131 of the LBCL, on the Effective Date each issued and outstanding
share of Pioneer Common Stock, par value $10.00 ("Pioneer Stock")
shall be exchange for and converted into _______ shares of
Hibernia Class A Common Stock, no par value ("Hibernia Stock").
The exchange of certificates representing Hibernia Common Stock for
certificates formerly representing Pioneer Stock shall be effected
as provided in the Plan. No fractional shares of Hibernia Stock or
script certificates representing such fractional shares will be
issued to any holder of Pioneer Stock. Shareholders of Pioneer
otherwise entitled to receive fractional shares shall be entitled
to cash as provided in the Plan, without interest.
ARTICLE IV
Effect of the Merger
The Merger shall have the effects set forth in Section 115 of
the LBCL.
ARTICLE V
Filing of Merger Agreement
If this Merger Agreement is approved by the shareholders of
Pioneer as provided in the Plan, then the fact of such approval
shall be certified hereon by the secretary or assistant secretary
of Pioneer, and this Merger Agreement, as approved and certified,
shall be signed and acknowledged by the president of each of the
Corporations. Thereafter, a multiple original of this Merger
Agreement, so certified signed and acknowledged, shall be delivered
to the Secretary of State for filing and recordation in the manner
required by law; and thereafter, as soon as practicable )(but not
later than the time required by law), a copy of the Certificate of
Merger issued by the Secretary of State shall be filed for record
in the office of the recorder of mortgages for the parishes of
Orleans and St. Mary and shall also be recorded in the conveyance
records for the parishes of Orleans and Caddo and any other parish
in which any of the Corporations owns real property on the
Effective Date.
ARTICLE VI
Miscellaneous
The obligations of the Corporations to effect the Merger shall
be subject to all of the terms and conditions of the Plan. At any
time prior to the Effective Date, this Merger Agreement may be
terminated pursuant to the terms and provisions of the Plan.
IN WITNESS WHEREOF, this Merger Agreement has been approved by
the Boards of Directors of each of the Corporations, effective as
of the date first above written.
CERTIFICATE OF THE SECRETARY
OF HIBERNIA CORPORATION
I hereby certify that I am the duly elected Secretary of
Hibernia Corporation, a Louisiana corporation, presently serving in
such capacity and that, pursuant to Section 112E of the LBCL,
approval of the Merger Agreement by the shareholders of Hibernia
Corporation is not required.
Certificate dated ___________ __, 199_.
____________________________
Patricia C. Meringer
Secretary
CERTIFICATE OF THE SECRETARY
OF PIONEER BANCSHARES CORPORATION
I hereby certify that I am the duly elected Secretary of
Pioneer Bancshares Corporation, a Louisiana corporation, presently
serving in such capacity and that the foregoing Merger Agreement
was, in the manner required by the LBCL, duly approved, without
alteration or amendment, by the shareholders of Pioneer Bancshares
Corporation, at a meeting duly held pursuant to notice on ______ __
, 199_, at which meeting a quorum was present and acting throughout
by a vote of _____ shares "for" to ______ shares "against or not
voting.
Certificate dated ___________ __, 199_.
____________________________
Secretary
EXECUTION BY CORPORATIONS
In consideration of the approval of this Merger Agreement by
the shareholders of Pioneer Bancshares Corporation and the fact
that no such approval is required by the shareholders of Hibernia
Corporation, both as certified above, this Merger Agreement is
executed by such corporations, acting through their respective
Presidents, this ___ day of _________, 199_.
HIBERNIA CORPORATION
By: __________________________
Stephen A. Hansel
President and Chief Executive
Officer
ATTEST:
_______________________
Patricia C. Meringer
Secretary
PIONEER BANCSHARES CORPORATION
By: ___________________________
B.D. Flurry
President
ATTEST:
__________________________
Secretary
ACKNOWLEDGEMENT
HIBERNIA CORPORATION
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, on this ___ day
of __________, 199_, in the presence of the undersigned competent
witnesses, personally came and appeared Stephen A. Hansel, who,
being duly sworn, declared and acknowledged before me that he is
the President of Hibernia Corporation and that in such capacity he
was duly authorized to and did execute the foregoing Merger
Agreement on behalf of such Corporation, for the purposes therein
expressed,l and as his and such Corporation's free act and deed.
WITNESSES:
_____________________________
______________________________
_____________________________________
NOTARY PUBLIC
ACKNOWLEDGEMENT
PIONEER BANCSHARES CORPORATION
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, on this ___ day
of __________, 199_, in the presence of the undersigned competent
witnesses, personally came and appeared B.D. Flurry , who, being
duly sworn, declared and acknowledged before me that he is the
President of Pioneer Bancshares Corporation and that in such
capacity he was duly authorized to and did execute the foregoing
Merger Agreement on behalf of such Corporation, for the purposes
therein expressed, and as his and such Corporation's free act and
deed.
WITNESSES:
_____________________________
______________________________
_____________________________________
NOTARY PUBLIC
APPENDIX B
FORM OF OPINION OF US BANKING ALLIANCE
July 8, 1994
Pioneer Bancshares Corporation
401 Texas Street
Shreveport, LA 71130
You have requested our opinion, as independent financial
analyst to the common shareholders of Pioneer Bancshares
Corporation, Shreveport, Louisiana ("Pioneer"), as to the fairness,
from a financial point of view to the common shareholders of the
terms of the proposed merger of Pioneer with and into Hibernia
Corporation, New Orleans, Louisiana ("Hibernia"). Pursuant to the
terms of the agreement, Pioneer shareholders will receive 30.5
shares of Hibernia common stock for each outstanding share of
Pioneer common stock.
In the event the Average Market Price of Hibernia Common Stock
is $7.50 or less, the Exchange Rate will be increased so that the
aggregate value of Hibernia Common Stock to be exchanged for
Pioneer Common Stock shall not be less than $62,779,000. In this
event the number of shares of Hibernia Common Stock to be exchanged
for each share of Pioneer Common Stock shall be computed as
follows: ($62,779,000 divided by the Average Market Price of the
Hibernia Common Stock) divided by 274,443.
In the event the Average Market Price of Hibernia Common Stock
is $9.50 per share or more, the Exchange Rate shall be reduced so
that the aggregate value of the Hibernia Common Stock to be
exchange for Pioneer Common Stock shall not exceed $79,520,000. In
this event, the number of shares of Hibernia Common Stock shall be
computed as follows: ($79,520,000 divided by the Average Market
Price of the Hibernia Common Stock) divided by 274,443.
As part of its banking analysis business, The US Banking
Alliance is continually engaged in the valuation of bank and bank
holding company securities in connection with mergers and
acquisitions nationwide.
In connection with this assignment we have analyzed the
historical performance of Pioneer and Hibernia and information and
data provided by the respective managements of the companies
concerning their loan portfolios, securities portfolios, fixed
assets and operations. We also analyzed the projections of future
performance provided by the respective managements of Pioneer and
Hibernia and the most current financial data available on Pioneer
and Hibernia. We have also considered other relevant information,
financial studies, analyses and economic and market criteria.
We have considered certain financial data of Pioneer and
Hibernia and have compared that data with similar data for other
banks and bank holding companies which have recently been acquired;
furthermore, we have considered the financial terms of those
business combinations involving said banks and bank holding
companies.
We have not independently verified any of the information
reviewed by us and have relied on its being complete and accurate
in all material respects. In addition, we have not made an
independent evaluation of the assets of the companies.
Based on all factors that we deem relevant and assuming the
accuracy and completeness of the information and data provided to
us by Pioneer and Hibernia, it is our opinion that the proposed
transaction is fair and equitable to Pioneer and its shareholders
from a financial point of view.
We hereby consent to the reference to our firm in the proxy
statement or prospectus related to the acquisition and to the
inclusion of our opinion as an exhibit to the proxy statement or
prospectus related to the transaction.
Respectfully submitted,
US BANKING ALLIANCE
FINANCIAL STRATEGIES
ATLANTA, GEORGIA
By:____________________
Steven C. Cotton
Senior Vice President
APPENDIX C
CERTAIN PROVISIONS OF LOUISIANA LAW RELATING TO
THE RIGHTS OF DISSENTING SHAREHOLDERS
A. Except as provided in subsection B of this section, if a
corporation has, by vote of its shareholders, authorized a sale,
lease or exchange of all of its assets, or has, by vote of its
shareholders, become a party to a merger or consolidation, then,
unless such authorization or action shall have been given or
approved by at least eighty percent of the total voting power, a
shareholder who voted against such corporate action shall have the
right to dissent. If a corporation has become a party to a merger
pursuant to R.S. 12:112(H), the shareholders of any subsidiaries
party to the merger shall have the right to dissent without regard
to the proportion of the voting power which approved the merger and
despite the fact that the merger was not approved by vote of the
shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall
not exist in the case of:
(1) A sale pursuant to an order of a court having
jurisdiction in the premises.
(2) A sale for cash on terms requiring distribution of
all or substantially all of net proceeds to the shareholders in
accordance with their respective interests within one year after
the date of the sale.
(3) Shareholders holding shares of any class of stock
which, at the record date fixed to determine shareholders entitled
to receive notice of and to vote at the meeting of shareholders at
which a merger or consolidation was acted on, were listed on a
national securities exchange, unless the articles of the
corporation issuing such stock provide otherwise or the shares of
such shareholders were not converted by the merger or consolidation
solely into shares of the surviving or new corporation.
C. Except as provided in the last sentence of this
subsection, any shareholder electing to exercise such right of
dissent shall file with the corporation, prior to or at the meeting
of shareholders at which such proposed corporate action is
submitted to a vote, a written objection to such proposed corporate
action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by
less than eighty percent of the total voting power, and the merger,
consolidation or sale, lease or exchange of assets authorized
thereby be effected, the corporation shall promptly thereafter give
written notice thereof, by registered mail, to each shareholder who
filed such written objection to, and voted his shares against, such
action, at such shareholder's last address on the corporation's
records. Each such shareholder may, within twenty days after the
mailing of such notice to him, but not thereafter, file with the
corporation a demand in writing for the fair cash value of his
shares as of the day before such vote was taken; provided that he
state in such demand the value demanded, and a post office address
to which the reply of the corporation may be sent, and at the same
time deposit in escrow in a chartered bank or trust company located
in the parish of the registered office of the corporation, the
certificates representing his shares, duly endorsed and transferred
to the corporation upon the sole condition that said certificates
shall be delivered to the corporation upon payment of the value of
the shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the
corporation, the written acknowledgment of such bank or trust
company that it so holds his certificates of stock. Unless the
objection, demand and acknowledgment aforesaid be made and
delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the corporate
action proposed or taken. In the case of a merger pursuant to R.S.
12:112(H), the dissenting shareholder need not file an objection
with the corporation nor vote against the merger, but need only
file with the corporation, within twenty days after a copy of the
merger certificate was mailed to him, a demand in writing for the
cash value of his shares as of the day before the certificate was
filed with the secretary of state, state in such demand the value
demanded and a post office address to which the corporation's reply
may be sent, deposit the certificates representing his shares in
escrow as hereinabove provided, and deliver to the corporation with
his demand the acknowledgment of the escrow bank or trust company
as herein-above prescribed.
D. If the corporation does not agree to the value so
stated and demanded, or does not agree that a payment is due, it
shall, within twenty days after receipt of such demand and
acknowledgment, notify in writing the shareholder, at the
designated post office address, of its disagreement, and shall
state in such notice the value it will agree to pay if any payment
should be held to be due; otherwise it shall be liable for, and
shall pay to the dissatisfied shareholder, the value demanded by
him for his shares.
E. In case of disagreement as to such fair cash value,
or as to whether any payment is due, after compliance by the
parties with the provisions of subsections C and D of this section,
the dissatisfied shareholder, within sixty days after receipt of
notice in writing of the corporation's disagreement, but not
thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the may be, in the district court of
the parish in which the corporation or the merged or consolidated
corporation, as the case may be, has its registered office, praying
the court to fix and decree the fair cash value of the dissatisfied
shareholder's shares as of the day before such corporate action
complained of was taken, and the court shall, on such evidence as
may be adduced in relation thereto, determine summarily whether any
payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may,
within such sixty-day period but not thereafter, intervene as a
plaintiff in such suit filed by another shareholder, and recover
therein judgment against the corporation for the fair cash value of
his shares. No order or decree shall be made by the court staying
the proposed corporate action, and any such corporate action may be
carried to completion notwithstanding any such suit. Failure of
the shareholder to bring suit, or to intervene in such a suit,
within sixty days after receipt of notice of disagreement by the
corporation shall conclusively bind the shareholder (1) by the
corporation's statement that no payment is due, or (2) if the
corporation does not contend that no payment is due to accept the
value of his shares as fixed by the corporation in its notice of
disagreement.
F. When the fair value of the shares has been agreed
upon between the shareholder and the corporation, or when the
corporation has become liable for the value demanded by the
shareholder because of failure to give notice of disagreement and
of the value it will pay, or when the shareholder has become bound
to accept the value the corporation agrees is due because of his
failure to bring suit within sixty days after receipt of notice of
the corporation's disagreement, the action of the shareholder to
recover such value must be brought within five years from the date
the value was agreed upon, or the liability of the corporation
became fixed.
G. If the corporation or the merged or consolidated
corporation, as the case may be, shall, in its notice of
disagreement, have offered to pay to the dissatisfied shareholder
on demand an amount in cash deemed by it to be the fair cash value
of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount
so offered, the corporation, or the merged or consolidated
corporation, as the case may be, shall deposit in the registry of
the court, there to remain until the final determination of the
cause, the amount so offered, then, if the amount finally awarded
such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the
proceeding shall be taxed against the corporation, or the merged or
consolidated corporation, as the case may be; otherwise the costs
of the proceeding shall be taxed against such shareholder.
H. Upon filing a demand for the value of his shares, the
shareholder shall cease to have any of the rights of a shareholder
except the rights accorded by this section. Such a demand may be
withdrawn by the shareholder at any time before the corporation
gives notice of disagreement, as provided in subsection D of this
section. After such notice of disagreement is given, withdrawal of
a notice of election shall require the written consent of the
corporation. If a notice of election is withdrawn, or the proposed
corporate action is abandoned or rescinded, or a court shall
determine that the shareholder is not entitled to receive payment
for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment
for his shares, his share certificates shall be returned to him
(and, on his request, new certificates shall be issued to him in
exchange for the old ones endorsed to the corporation), and he
shall be reinstated to all his rights as a shareholder as of the
filing of his demand for value, including any intervening
preemptive rights, and the right to payment of any intervening
dividend or other distribution, or, if any such rights have expired
or any such dividend or distribution other than in cash has been
completed, in lieu thereof, at the election of the corporation, the
fair value thereof in cash as determined by the board as of the
time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in
the interim.
APPENDIX D
FORM OF
OPINION OF ERNST & YOUNG REGARDING
CERTAIN TAX MATTERS
November __, 1994
Hibernia Corporation
313 Carondelet
P.O. Box 61540
New Orleans, Louisiana 70161
Pioneer Bancshares Corporation
401 Texas Street
Shreveport, Louisiana 71130
Dear Sir or Madam:
This letter is in response to your request that we provide you with
our opinion concerning certain federal income tax consequences
which would arise from consummation of the proposed merger of
Pioneer Bancshares Corporation ("Pioneer") with and into Hibernia
Corporation ("Hibernia") (the "Pioneer Merger"), and the proposed
merger of Pioneer Bank and Trust Company ("Bank") with and into
Hibernia National Bank ("HNB") (the "Bank Merger"). (Hereinafter,
the Pioneer Merger and the Bank Merger are referred to collectively
as the "Mergers.")
In rendering this opinion, we have relied upon the facts,
summarized below, as they have been presented to us orally by the
management of Hibernia and verified, in the Statements of Facts and
Representations dated September X, 1994 provided by the respective
managements of Pioneer, Bank, Hibernia, and HNB; in the Agreement
and Plan of Merger made and entered into by and between Pioneer and
Hibernia as of June 1, 1994 (the "Agreement"); in the form of the
Agreement to Merge between Bank and HNB (the "Bank Plan of
Merger"); and in the Registration Statement (Form S-4), dated
September X, 1994, filed with the Securities and Exchange
Commission as declared effective on ______ and containing the Proxy
Statement - Prospectus of Pioneer and Hibernia dated ______
("Prospectus"). (These are sometimes hereinafter referred to
collectively as "Documents.")
You have represented to us that the facts contained in the
documents provide an accurate and complete description of the facts
and circumstances concerning the proposed Mergers. We have made no
independent investigation of the factual matters and circumstances
and, therefore, have relied upon the facts and representations in
the Documents for purposes of this letter. Any changes to the
facts or Documents may affect the conclusions stated herein.
We understand that reference to Ernst & Young LLP and our opinion
is included in the Prospectus relating to the issuance of Hibernia
Common Stock in connection with the proposed Mergers and the
special meetings of the Pioneer and Bank shareholders with respect
thereto. We consent to such reference in the Prospectus under the
caption, "Conditions to Consummation of the Mergers." We also
understand that the form of this letter is included as an appendix
to the Form S-4 Registration Statement. We consent to such
inclusion.
STATEMENT OF FACTS
Pioneer is a corporation organized and existing under the laws of
the State of Louisiana, and is a bank holding company within the
meaning of the Bank Holding Company Act of 1956, as amended. The
presently authorized capital stock of Pioneer is 600,000 shares of
common stock (referred to hereinafter as "Pioneer Common Stock") of
which 274,443 shares were outstanding as of the date hereof.
Shares totaling 287,959 were issued and 13,516 were held in
Pioneer's treasury as of the date hereof. Such outstanding shares
are closely held by approximately ____ shareholders. There are no
options, warrants, subordinated rights or other rights to purchase
Pioneer Common Stock outstanding on the date hereof. Pioneer's
assets include 100 percent of the outstanding voting shares of
Bank, a Louisiana banking corporation duly organized and existing
under the laws of the State of Louisiana, and 100 percent of the
outstanding voting shares of Zachary Taylor Life Insurance Company
("Zachary Taylor"). Zachary Taylor is an inactive, dormant
subsidiary of Pioneer with assets comprised of cash and investments
totaling approximately $500,000.
Bank is a state banking corporation organized under the laws of the
State of Louisiana, engaged principally in the banking business.
Bank has 300,000 authorized shares of common stock of which 300,000
were issued and outstanding and held by Pioneer as of the date
hereof (referred to as "Bank Common Stock"). Bank's assets include
100 percent of the outstanding voting shares of Pioneer Mortgage
Company ("Mortgage").
Hibernia is a bank holding company organized and existing under the
laws of the State of Louisiana with shares registered under the
Securities Act of 1933. The presently authorized capital stock of
Hibernia is 300,000,000 shares, consisting of 100,000,000 shares of
preferred stock, no par value, and 200,000,000 shares of Class A
voting common stock, no par value (the Class A voting common stock
being referred to hereinafter as "Hibernia Common Stock"). As of
June 30, 1994, no shares of Hibernia's preferred stock were
outstanding, 83,717,760 shares of Hibernia Common Stock were
outstanding, and no shares of Hibernia Common Stock were held in
Hibernia's treasury. There are no existing options, warrants,
calls or commitments of any kind obligating Hibernia to issue any
share of its capital stock or any other security of which it is or
will be the issuer, except that Hibernia has issued warrants to
purchase shares of Hibernia Common Stock pursuant to the terms of
the Senior Secured Restructuring Agreement dated as of May 27,
1992, of which warrants to purchase 660,845 shares of Hibernia
Common Stock were outstanding as of June 30, 1994. Additionally,
Hibernia has authorized or reserved 1,718,707 shares of Hibernia
Common Stock for issuance under its 1987 Stock Option Plan,
pursuant to which options covering 1,557,491 shares of Hibernia
Common Stock were outstanding as of June 30, 1994; 3,660,087 (as
adjusted) shares of Hibernia Common Stock for issuance under its
1992 Long-Term Incentive Plan, pursuant to which options covering
2,505,055 shares of Hibernia Common Stock were outstanding as of
June 30, 1994; 1,000,000 shares of Hibernia Common Stock for
issuance under its 1993 Director Stock Option Plan, pursuant to
which options covering 155,000 shares of Hibernia Common Stock are
outstanding as of June 30, 1994; and 574,147 shares of Hibernia
Common Stock are available for issuance pursuant to Hibernia's
Dividend Reinvestment and Stock Purchase Plan. Mergers that have
been consummated with Commercial Bancshares, Inc., Bastrop National
Bank, First Bancorp of Louisiana, Inc. and First Continental
Bancshares, Inc. will result in the issuance of an aggregate of
approximately 13,021,494 shares. Pending mergers with First State
Bank and Trust Company of Bogalusa and American Bank will result in
the issuance of approximately 5,600,000 shares of Hibernia Common
Stock. Hibernia Common Stock is traded on the New York Stock
Exchange.
HNB is a nationally chartered commercial bank engaged principally
in the banking business. HNB is a wholly owned subsidiary of
Hibernia.
BUSINESS PURPOSE
The management of Hibernia has represented to us that Hibernia
desires to consummate the Mergers in order to improve its presence
in the Louisiana market. As discussed in the Prospectus under the
caption, "Background of and Reasons for the Merger," the Pioneer
and Bank Boards of Directors believe the customers, depositors, and
communities served by Bank will benefit from being part of a larger
banking entity as a result of the future growth, synergies and cost
savings expected to be realized from the Mergers.
PROPOSED TRANSACTIONS
In accordance with the above-stated business purpose, the following
transactions have been proposed:
1. After all necessary regulatory and shareholder approvals
have been granted, there will be simultaneous mergers (i.e., the
Mergers) of Pioneer with and into Hibernia in accordance with the
Louisiana Business Corporation Act ("LBCL"), and Bank with and into
HNB in accordance with the provisions of Bank Merger Act, 12 U.S.C.
Sections 1828 et. seq. and 12 U.S.C. Section 215a ("Bank Merger
Act"). Upon the completion of the Pioneer Merger, Hibernia will
cause the Bank Merger to occur.
2. In the Pioneer Merger, Hibernia will acquire all of the
assets and assume all of the liabilities of Pioneer in exchange for
Hibernia Common Stock. As a result of the Pioneer Merger, each
share of the issued and outstanding Pioneer Common Stock shall be
converted into and become the number of shares of Hibernia Common
Stock determined in accordance with the exchange rate. The
exchange rate shall be 30.5 shares of Hibernia Common Stock for
each outstanding share of Pioneer Common Stock. In the event the
Average Market Price (defined below) is $7.50 per share or less,
the exchange rate shall be increased so that the aggregate value of
Hibernia Common Stock to be exchanged for Pioneer Common Stock
shall not be less than $62,779,000. In the event that the Average
Market Price of Hibernia Common Stock is $9.50 per share or more,
the exchange rate shall be reduced so that the aggregate value of
the Hibernia Common Stock to be exchanged for Pioneer Common Stock
shall not exceed $79,520,000. The Average Market Price is defined
as the average of the high and low sales prices of one share of
Hibernia Common Stock for the five business days preceding the last
trading day immediately prior to the closing date. Holders of
shares of Pioneer Common Stock outstanding immediately prior to the
effective date of the Pioneer Merger shall cease to be, and shall
have no rights as, shareholders of Pioneer after the Pioneer
Merger.
3. In the Bank Merger, HNB will acquire all the assets and
assume all of the liabilities of Bank. As a result of the Bank
Merger, each share of the issued and outstanding Bank Common Stock
shall cease to be outstanding and will be canceled. No additional
shares of Hibernia Common Stock nor shares of HNB Common Stock will
be issued in the Bank Merger.
4. No fractional shares will be issued. Each holder of
Pioneer Common Stock who would otherwise have been entitled to
receive a fraction of a share of Hibernia Common Stock shall
receive in lieu thereof, cash (without interest) in an amount equal
to such fractional part of a share multiplied by the Average Market
Price of Hibernia Common Stock.
5. By following certain statutory procedures, shareholders
of Pioneer may exercise dissenter's rights entitling them to
receive in cash the value of their respective Pioneer Common Stock
in lieu of receiving Hibernia Common Stock in the Pioneer Merger.
REPRESENTATIONS
For purposes of our evaluation, we have received from the
management of Pioneer, Bank, Hibernia, and HNB, Statements of Facts
and Representations, dated September X, 1994, as set forth below.
References to the "Code" are to the Internal Revenue Code of 1986,
as amended.
The following representations have been made in connection with the
Pioneer Merger:
(a) The fair market value of the Hibernia Common Stock
to be received by each Pioneer Common Stock shareholder will
be approximately equal to the fair market value of the Pioneer
Common stock surrendered in the exchange.
(b) There is no plan or intention by the shareholders of
Pioneer who own five percent or more of the Pioneer Common
Stock and to the best knowledge of management of Pioneer,
there is no intention on the part of the remaining
shareholders of Pioneer, to sell, exchange, or otherwise
dispose of a number of shares of Hibernia Common Stock
received in the transaction that would reduce the Pioneer
shareholders' ownership of Hibernia Common Stock to a number
of shares having a value, as of the date of the transaction,
of less than 50 percent of the value of all the formerly
outstanding Common Stock of Pioneer as of the same date. For
purposes of this representation, any shares of Pioneer Common
Stock surrendered by dissenters, or exchanged for cash in lieu
of fractional shares of Hibernia Common Stock, will be treated
as outstanding Pioneer Common Stock on the date of the
transaction. Moreover, shares of Pioneer Common Stock and
shares of Hibernia Common Stock held by former Pioneer
shareholders and otherwise sold, redeemed, or disposed of
prior June 1, 1994 or subsequent to the transaction will be
considered in making this representation.
(c) Hibernia has no plan or intention to reacquire any
of its Common Stock issued in the Pioneer Merger other than to
acquire a nominal amount of shares of Common Stock that may be
acquired in ordinary business transactions (including, but
not limited to, open market purchases in brokers'
transactions).
(d) Hibernia has no plan or intention to sell or
otherwise dispose of any of the assets of Pioneer acquired in
the transaction except for dispositions made in the ordinary
course of business.
(e) Any liabilities of Pioneer assumed by Hibernia and
any liabilities to which the transferred assets of Pioneer are
subject were incurred by Pioneer in the ordinary course of its
business.
(f) Following the transaction, Hibernia will continue,
substantially unchanged, the business of Pioneer operated
through Pioneer's subsidiaries, Zachary Taylor, and Bank,
which will be merged with and into HNB. Following the
transaction, Hibernia will continue, substantially unchanged,
the mortgage business of Pioneer operated through Bank's
wholly owned subsidiary, Mortgage, which will either be merged
into HNB or held as a wholly owned subsidiary of HNB after the
merger of Bank with and into HNB.
(g) Except for expenses relating to the registration of
the Hibernia Common Stock and certain proxy printing and
mailing expenses to be paid solely by Hibernia, which are
directly related to the Mergers in accordance with the
guidelines established in Revenue Ruling 73-54, 1973-1 C.B.
187, Hibernia, Pioneer, and the shareholders of Pioneer will
pay their respective expenses, if any, incurred in connection
with the transactions.
(h) There is no intercorporate indebtedness existing
between Pioneer and its affiliates on the one hand and
Hibernia and its affiliates on the other hand which was
issued, acquired, or will be settled at a discount.
(i) No two parties to the transaction are investment
companies as defined in Section 368(a)(2)(F)(iii) and (iv) of
the Code.
(j) Pioneer is not under the jurisdiction of a court in
a Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
(k) The fair market value of the assets of Pioneer to be
transferred to Hibernia will equal or exceed the sum of the
liabilities assumed by Hibernia plus the amount of
liabilities, if any, to which the transferred assets are
subject.
(l) The payment of cash in lieu of fractional shares of
Hibernia Common Stock is solely for the purpose of avoiding
the expense and inconvenience to Hibernia of issuing
fractional shares and does not represent separately bargained
for consideration. The total cash consideration that will be
paid in the transaction to the Pioneer shareholders instead of
issuing fractional shares of Hibernia will not exceed one
percent of the total consideration that will be issued in the
transaction to the Pioneer shareholders in exchange for their
shares of Pioneer Common Stock. The fractional share
interests of each Pioneer shareholder will be aggregated, and
no Pioneer shareholder will receive cash in an amount equal to
or greater than the value of one full share of Hibernia Common
Stock.
(m) None of the compensation received by any
shareholder-employees of Pioneer will be separate
consideration for, or allocable to, any of their shares of
Pioneer Common Stock; none of the shares of Hibernia Common
Stock received by any shareholder-employees will be separate
consideration for, or allocable to, any employment agreement;
and the compensation paid to any shareholder-employees will be
for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's-length for
similar services.
(n) The Pioneer Merger will qualify as a statutory
merger under the Louisiana Business Corporation Law ("LBCL").
(o) The shareholders of Pioneer (immediately before the
proposed transaction) receiving shares of Hibernia Common
Stock will not own (immediately after the proposed
transaction) more than fifty percent of the fair market value
of Hibernia Common Stock.
The following representations have been made in connection with the
Bank Merger:
(aa) No additional Hibernia Common Stock will be issued
or exchanged in the Bank Merger. No additional HNB Common
Stock will be issued or exchanged in the Bank Merger.
(bb) There is no plan or intention by the shareholder of
Bank to sell, exchange or otherwise dispose of a number of
shares of Hibernia Common Stock constructively received in
the transaction that would reduce the Bank shareholder's
ownership of Hibernia Common Stock to a number of shares
having a value, as of the date of the transaction, of less
than 50 percent of the value of all of the formerly
outstanding Common Stock of Bank as of the same date. For
purposes of this representation, any shares of Bank Common
Stock constructively exchanged for cash or other property,
surrendered by dissenters, or exchanged for cash in lieu of
fractional shares of HNB Common Stock will be treated as
outstanding Bank Common Stock on the date of the transaction.
Moreover, shares of Bank Common Stock and shares of Hibernia
Common Stock held by Bank shareholders and otherwise sold,
redeemed, or disposed of prior to June 1, 1994 or subsequent
to the transaction will be considered in making this
representation.
(cc) HNB will acquire at least 90 percent of the fair
market value of the net assets and at least 70 percent of the
fair market value of the gross assets held by Bank immediately
prior to the Bank Merger. For purposes of this
representation, amounts paid by Bank to dissenters, Bank
assets used to pay its reorganization expenses, and all
redemptions and distributions (except for regular, normal
dividends) made by Bank immediately preceding the transfer,
will be included as assets of Bank held immediately prior to
the transaction.
(dd) Prior to the transaction, Hibernia will be in
control of HNB within the meaning of Section 368(c) of the
Code wherein "control" is defined to mean the ownership of
stock possessing at least 80 percent of the total combined
voting power of all classes of stock entitled to vote and at
least 80 percent of the total number of shares of all other
classes of the corporation.
(ee) Following the transaction, HNB will not issue
additional shares of its Common Stock that would result in
Hibernia losing control of HNB within the meaning of Section
368(c) of the Code.
(ff) Hibernia has no plan or intention to reacquire any
of its Common Stock constructively issued in the Bank Merger.
(gg) Hibernia has no plan or intention to liquidate HNB;
to merge HNB into another corporation; to sell or otherwise
dispose of the Common Stock of HNB; or to cause HNB to sell or
otherwise dispose of any of the assets of Bank acquired in
the transaction, except for dispositions made in the ordinary
course of business. As Hibernia makes other acquisitions, it
is likely that some or all of the acquired banks will be
merged with and into HNB. At this time, the discussion
provided under the caption "Parties to the Merger" in the
Prospectus provides a complete list of all pending
acquisitions that are covered by definitive agreements.
However, no Common Stock of HNB will be issued as
consideration in any of the pending acquisitions.
(hh) The liabilities of Bank assumed by HNB and the
liabilities to which the transferred assets of Bank are
subject were incurred by Bank in the ordinary course of its
business.
(ii) Following the transaction, HNB will continue the
historic business of Bank or will use a significant portion of
Bank's historic business assets in its business. Further, HNB
will continue the historic business of Mortgage or will use a
significant portion of Mortgage's historic business assets in
its business.
(jj) Except for expenses relating to the registration of
Hibernia Common Stock and certain proxy printing and mailing
expenses to be paid solely by Hibernia, which are directly
related to the Mergers in accordance with the guidelines
established in Revenue Ruling 73-54, 1973-1 C.B. 187,
Hibernia, HNB, Bank and the shareholders of Bank will pay
their respective expenses, if any, incurred in connection with
the transaction.
(kk) There is no intercorporate indebtedness existing
between Hibernia and Bank and their affiliates or between HNB
and Bank that was issued, acquired, or will be settled at a
discount.
(ll) No two parties to the transaction are investment
companies as defined in Section 368(a)(2)(F)(iii) and (iv) of
the Code.
(mm) Bank is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
(nn) The basis and fair market value of the assets of
Bank transferred to HNB will each equal or exceed the sum of
the liabilities assumed by HNB, plus amount of liabilities, if
any, to which the transferred assets are subject.
(oo) None of the compensation received by any
shareholder-employees of Bank will be separate consideration
for, or allocable to, any of their shares of Bank Common
Stock; none of the shares of Hibernia Common Stock received by
any shareholder-employees will be separate consideration for,
or allocable to, any employment agreement; and the
compensation paid to any shareholder-employees will be for
services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's-length for
similar services.
(pp) The merger of Bank into HNB will qualify as a
statutory merger under the Bank Merger Act.
TECHNICAL ANALYSIS
Section 368(a)(1)(A) of the Code provides that a reorganization (a
"Type A" reorganization) includes a statutory merger or
consolidation. Such a reorganization can only be achieved by
strict compliance with the applicable corporation laws of the
United States or a state or territory of the United States. A
statutory merger occurs wherein one party (the surviving
corporation) to the transaction absorbs the other party whose
corporate existence ceases. It has been represented by the
management of Hibernia that the merger of Pioneer with and into
Hibernia, wherein Hibernia Common Stock is to be exchanged for
Pioneer Common Stock, is to occur as a statutory merger under
applicable law.
Section 368(a)(2)(D) of the Code provides that the acquisition by
one corporation in exchange for stock of a corporation which is in
control of the acquiring corporation, of substantially all of the
properties of another corporation, shall not disqualify a
transaction under Section 368(a)(1)(A) if (i) no stock of the
acquiring corporation is used in the transaction and (ii) the
transaction would have otherwise qualified as a Type A
reorganization had the merger been into the controlling
corporation. It has been represented by the management of Hibernia
that the merger of Bank with and into HNB, wherein Hibernia Common
Stock is to be constructively exchanged for Bank Common Stock, is
to occur as a statutory merger under applicable law.
Revenue Procedure 77-37, 1977-2 C.B. 568 (Section 3.01) provides that, for
advance ruling purposes, the "substantially all" requirement of
Section 368(a)(2)(D) is satisfied if there is a transfer of assets
representing at least 90 percent of the fair market value of the
net assets and at least 70 percent of the fair market value of the
gross assets held by the transferor corporation immediately prior
to the transfer. Any payments to dissenters and any redemptions
and distributions (except for regular dividend distributions) made
by the corporation immediately preceding the transfer and which are
a part of the Agreement will be considered as assets held by the
corporation immediately prior to the transfer. Additionally, the
payment of expenses if any, by Bank, incurred in connection with
the Bank Merger is taken into consideration in applying the
"substantially all" test.
In the proposed Bank Merger, it has been represented by the
management's of Bank and HNB that HNB will acquire assets
representing at least 90 percent of the fair market value of the
net assets and 70 percent of the fair market value of the gross
assets of Bank and that, for this purpose, the fair market value of
the net and gross assets of Bank will be determined before payment
by Bank of any expenses incurred by it in connection with the Bank
Merger, before payment to any dissenters to the Bank Merger, and
before any redemptions and distributions (except for regular,
normal dividends) made by Bank immediately preceding the transfer.
Based upon the foregoing representations, the "substantially all"
requirement will be met in the Bank Merger.
Additional Requirements
Sections 1.368-1(b) and 1.368-2(g) of the Income Tax Regulations
(the "Regulations") provide that the following additional
requirements must be met for a transaction to qualify as a
reorganization within the meaning of Section 368 of the Code:
(i) "continuity of interest" must be present,
(ii) "continuity of business enterprise" must exist,
and
(iii) the transaction must be undertaken for reasons
pertaining to the continuance of the business of a corporation
which is a party to the transaction.
Continuity of Interest
In general, the continuity of interest test requires the owners of
the reorganized entity to receive and retain a meaningful equity in
the surviving entity. See e.g., Pinellas Ice & Cold Storage Co. v.
Comm'r, 287 U.S. 462 (1933); Cortland Specialty Company v. Comm'r,
60 F.2d 937 (2d Cir. 1932), cert. denied, 288 U.S. 599 (1932);
Helvering v. Minnesota Tea Co., 296 U.S. 378 (1935).
Revenue Procedure 77-37, 1977-2 C.B. 568 (Section 3.02) provides
that, for advance ruling purposes, the continuity of interest
requirement is satisfied if there is a continuing interest through
stock ownership in the acquiring or transferee corporation (or a
corporation in "control" thereof within the meaning of Section
368(c) of the Code) on the part of the former shareholders of the
acquired or transferor corporation which is equal in value as of
the effective date of the reorganization, to at least 50 percent of
the value of all of the formerly outstanding stock of the acquired
or transferor corporation as of that date. Sales, redemptions, and
other dispositions of stock occurring prior or subsequent to the
exchange which are part of the plan of reorganization will be
considered in determining whether there is a 50 percent continuing
interest through stock ownership as of the effective date of the
reorganization.
Based upon our understanding of the facts presented to us orally
and as set forth in the Statements of Facts and Representations
dated September X, 1994, the 50 percent continuity of interest test
of Revenue Procedure 77-37, supra, will be met in the Pioneer
Merger and the Bank Merger. It has been represented by the
management of Pioneer that the shareholders of Pioneer have no plan
or intention to sell, exchange or otherwise dispose of a number of
Hibernia shares to be received in the transaction that will reduce
their Hibernia Common Stock holdings to less than the requisite 50
percent continuity of interest. Accordingly, in the Pioneer Merger
there will be a continuing interest through Common Stock ownership
in Hibernia on the part of the former shareholders of Pioneer.
In Revenue Ruling 68-526, 1968-2 C.B. 156, the Internal Revenue
Service (the "Service) held that the acquisition of the assets (and
assumption of liabilities) of a parent corporation and its 60
percent owned subsidiary constituted separate tax-free
reorganizations when the transactions occurred pursuant to one plan
of reorganization and for valid business reasons. In Revenue
Ruling 76-528, 1976-2 C.B. 103, the Service clarified that the
continuity of interest requirement was met in Revenue Ruling 68-526
with respect to the subsidiary acquisition even when the Parent had
no assets other than stock of a subsidiary because, in light of the
acquisition of the parent's assets, and its dissolution pursuant to
the plan of reorganization, the parent's shareholders, in effect,
"stepped into the parent's shoes" as the only qualified parties to
receive and continue the stock interest formerly held by the parent
corporation. Although no assurance can be given that the Service
will agree, the rationale of the above Revenue Rulings suggests
that the continuity of interest maintained by the Pioneer
shareholders in the Pioneer Merger is relevant in determining
whether the continuity of interest requirement is satisfied in the
Bank Merger. See also PLR 9109044 (December 4, 1990) where the
Service, after applying the step transaction doctrine, ruled that
a sideways merger of a Bank Holding Company and its wholly owned
banking subsidiary into an acquiring bank holding company and its
banking subsidiary respectively constituted reorganizations under
Section 368(a)(1)(C) and Section 368(a)(2)(D).
In the past, the Service has frequently ruled on certain facts that
the simultaneous mergers of a parent and its wholly-owned
subsidiary into an acquiring parent corporation and its wholly-
owned subsidiary, respectively each qualified as a Section
368(a)(1)(A) reorganization (see e.g., PLR 9111025 (December 14,
1990), 9047015 (August 24, 1990) and 9003053 (October 26, 1989)).
In other rulings involving slightly different facts (i.e., minority
shareholders in the subsidiary), the Service held that the
subsidiary mergers were Section 368(a)(1)(A) reorganizations by
reason of Section 368(a)(2)(D) (see e.g., PLR 9109044 (December 4,
1990), 8943067 (August 2, 1989) and 8942090 (July 27, 1989)).
Although private letter rulings are not binding on the Service as
precedent, they are cited to illustrate a consistent rulings
position. In recent years, while the Service has declined to rule
on whether a transaction qualifies as a reorganization pursuant to
Section 368(a)(1)(A) of the Code (see section 3.01(26) of Rev.
Proc. 93-3, 1993-1 C.B. 370), it has consistently ruled that the
receipt by a target parent's shareholders of stock of an acquiring
corporation will not prevent a lower tier target's merger from
satisfying the continuity of interest requirement of Section 1.368-
1(b) of the Regulations. See, for example, PLR 9237031 (June 16,
1992) and PLR 9317027 (January 29, 1993).
Continuity of Business Enterprise
Section 1.368-1(b) of the Regulations also provides that a
continuity of business enterprise (as described in Section 1.368-
1(d) of the Regulations) is a requisite to a reorganization.
Section 1.368-1(d) of the Regulations provides that continuity of
business enterprise requires that the acquiring corporation either
continue the acquired corporation's historic business or use a
significant portion of the acquired corporation's historic assets
in a business. The proposed Bank Merger will meet the continuity
of business enterprise test of Section 1.368-1(d) because, based
upon the representation of the management of HNB, HNB will continue
the historic business of Bank or will use a significant portion of
Bank's historic assets in a business.
Revenue Ruling 85-197, 1985-2 C.B. 120, provides that for purposes
of the continuity of business enterprise requirement, the historic
business of a holding company is the business of its operating
subsidiary. Similarly, Revenue Ruling 85-198, 1985-2 C.B. 120,
held that the continuity of business enterprise requirement was met
upon the merger of two bank holding companies where the business of
a former subsidiary of the acquired holding company was continued
through a subsidiary of the acquiring corporation. Accordingly,
the continuity of business enterprise requirement is met with
regard to the Pioneer Merger because Hibernia through its wholly-
owned subsidiary HNB, will continue the banking business indirectly
conducted by Pioneer.
Business Purpose
Section 1.368-2(g) of the Regulations provides that a
reorganization must be undertaken for reasons germane to the
continuance of the business of a corporation which is a party to
the reorganization. As heretofore indicated in the Business
Purpose Section set forth above, there are substantial business
reasons for the Mergers. Accordingly, the Mergers each satisfy the
business purpose requirement as set forth in the Regulations.
Constructive Exchange of Shares
To avoid the expense and inconvenience of issuing Hibernia shares
to itself in the Bank Merger, and because Pioneer's shareholders
will have already received fair value for their shares, the shares
of Bank Common Stock obtained by Hibernia in the Pioneer Merger
shall be canceled. (See the preceding discussion regarding Rev.
Rul 76-528) In the Bank Merger, which occurs simultaneously, but
is to be described in the closing documents covering the Mergers as
a step following the Pioneer Merger, HNB technically would acquire
the assets of Bank by issuing shares of Hibernia Common Stock to
the Bank shareholder, Hibernia (as the result of the Pioneer
Merger).
The Tax Court has consistently held that the physical transfer of
shares is not necessary if it would be a "meaningless gesture,"
particularly in situations where common ownership is present. See,
Fowler Hosiery Co., 36 T.C. 201 (1961), aff'd 301 F.2d 394 (7th
Cir. 1962) and William Holton George, 26 T.C. 396 (1956). In fact,
the Service has ruled that the absence of an actual physical
exchange of shares does not prevent a transaction from qualifying
as a tax-free reorganization if such an exchange would have been a
"meaningless gesture" or a "useless task." See Rev. Rul. 70-240,
1970-1 C.B. 81 and Rev. Rul. 75-383, 1975-2 C.B. 127. See also
Davant v. Commissioner, 366 F.2d 874 (5th Cir. 1966); James Armour,
Inc., 43 T.C. 295 (1964); American Manufacturing Co., 55 T.C. 204
(1970). In addition, the Service held in Revenue Ruling 78-47,
1978-1 C.B. 113, that a physical issuance of shares was unnecessary
in order to eliminate certain expenses associated with a
reorganization.
The Service has also consistently permitted constructive exchanges
in private letter rulings. See e.g., PLR 8750071 (September 17,
1987), 8722021 (February 25, 1987), 8620043 (February 14, 1986),
8403028 (October 17, 1983), and 8306010 (November 4, 1982).
Based on the above, the constructive exchange described herein does
not prevent the Bank Merger from qualifying as a tax-free
reorganization.
Other Statutory Provisions
Section 368(b) of the Code defines the term "a party to a
reorganization" to include a corporation resulting from a
reorganization, and both corporations, in the case of a
reorganization resulting from the acquisition by one corporation of
stock or properties of another.
Section 361(a) of the Code provides that no gain or loss shall be
recognized to a transferor corporation which is a party to a
reorganization on any exchange pursuant to the plan of
reorganization solely for stock or securities in another
corporation which is a party to the reorganization.
Section 1032 of the Code provides that no gain or loss shall be
recognized to a corporation on the receipt of money or other
property in exchange for stock of such corporation. Revenue Ruling
57-278, 1957-1 C.B. 124, provides that a subsidiary will not
recognize gain upon the exchange of its parent's stock for property
in connection with a tax-free reorganization.
Section 354(a)(1) of the Code provides that no gain or loss shall
be recognized if stock or securities in a corporation which is a
party to a reorganization are, in pursuance of the plan of
reorganization, exchanged solely for stock or securities in such
corporation or in another corporation which is a party to the
reorganization.
Section 362(b) of the Code generally provides that if property is
acquired by a corporation in connection with the reorganization,
then the basis shall be the same as it would be in the hands of the
transferor, increased by the amount of gain recognized to the
transferor on such transfer.
Section 1223(2) of the Code provides that in determining a
taxpayer's holding period for property, there shall be included the
period for which such property was held by another person, if such
property has, for the purpose of determining gain or loss from a
sale or exchange, the same basis in whole or in part in such
taxpayer's hands as it would have had in the hands of such other
person.
Section 381 of the Code applies to certain transactions, including
those transactions to which Section 361 of the Code applies, where
there is a transfer in connection with a reorganization described
in Section 368(a)(1)(A) or in Section 368(a)(1)(A) and Section
368(a)(2)(D) of the Code.
FEDERAL INCOME TAX CONSEQUENCES
Based solely upon the Statements of Facts and Representations, the
Agreement, and the Bank Plan of Merger, it is our opinion that the
following federal income tax consequences will result:
In the merger of Pioneer with and into Hibernia:
(1) Provided the proposed merger of Pioneer with and into
Hibernia qualifies as a statutory merger under Louisiana law, the
Pioneer Merger will be a reorganization within the meaning of
Section 368(a)(1)(A) of the Code. Pioneer and Hibernia will each
be a party to a reorganization within the meaning of Section 368(b)
of the Code.
(2) No gain or loss will be recognized by Pioneer upon the
transfer of its assets to Hibernia in exchange solely for Hibernia
Common Stock, cash for dissenters, if any, and the assumption by
Hibernia of the liabilities of Pioneer, since any cash for
dissenters will be distributed to the shareholders (Sections 361(b)
and 357(a) of the Code).
(3) No gain or loss will be recognized to Hibernia on receipt
of the Pioneer assets in exchange for Hibernia Common Stock
(Section 1032(a) of the Code).
(4) The basis of the assets of Pioneer in the hands of
Hibernia will, in each case, be the same as the basis of those
assets in the hands of Pioneer immediately prior to the transaction
(Section 362(b) of the Code).
(5) The holding period of the assets of Pioneer in the hands
of Hibernia will, in each case, include the period for which such
assets were held by Pioneer (Section 1223(2) of the Code).
(6) No gain or loss will be recognized by the shareholders of
Pioneer upon the receipt of solely Hibernia Common Stock in
exchange for their shares of Pioneer Common Stock (Section
354(a)(1) of the Code).
(7) The basis of Hibernia Common Stock to be received by the
shareholders of Pioneer will be, in each instance, the same as the
basis of the Common Stock of Pioneer surrendered in exchange
therefor (Section 358(a)(1) of the Code).
(8) The holding period of the Hibernia Common Stock to be
received by the shareholders of Pioneer in the transaction will
include in each instance, the period during which the Pioneer
Common Stock surrendered in exchange therefor is held as a capital
asset on the date of the surrender (Section 1223(l) of the Code).
(9) Hibernia will succeed to and take into account those tax
attributes of Pioneer described in Section 381(c) of the Code.
(Section 381(a) of the Code and Section 1.381(a)-1 of the
Regulations) These items will be taken into account by Hibernia
subject to the conditions and limitations specified in Sections
381, 382, 383, and 384 of the Code and the Regulations thereunder.
(10) As provided by Section 381(c)(2) of the Code and Section
1.381(c)(2)-1 of the Regulations, Hibernia will succeed to and take
into account the earnings and profits, or deficit in earnings and
profits, of Pioneer as of the date of transfer. Any deficit in the
earnings and profits of Pioneer will be used only to offset the
earnings and profits accumulated after the date of transfer.
(11) Cash received by a dissenting shareholder of Pioneer in
exchange for his or her Pioneer Common Stock will be treated as
having been received by such shareholder as a distribution in
redemption of his or her stock, subject to the provisions and
limitations of Section 302 of the Code. If, as a result of such
distribution, a shareholder owns no stock either directly or
through the application of Section 318(a) of the Code, the
redemption will be a complete termination of interest within the
meaning of Section 302(b)(3) of the Code and such cash will be
treated as a distribution in full payment in exchange for his or
her stock, as provided by Section 302(a) of the Code.
(12) The payment of cash in lieu of fractional share interests
of Hibernia Common Stock will be treated as if the fractional
shares were distributed as part of the exchange and then were
redeemed by Hibernia. These cash payments will be treated as
distributions in full payment in exchange for the stock redeemed,
as provided in Section 302(a) of the Code. (Rev. Rul. 66-365,
1966-2 C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574)
In the merger of Bank with and into HNB:
(13) Provided the proposed merger of Bank with and into HNB
qualifies as statutory merger under the Bank Merger Act, the
acquisition by HNB of substantially all of the assets of Bank
solely in constructive exchange for Hibernia Common Stock, cash for
dissenters, if any, and the assumption by HNB of the liabilities of
Bank, will qualify as a reorganization under the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. Bank, Hibernia
and HNB will each be a party to a reorganization within the meaning
of Section 368(b) of the Code.
(14) No gain or loss will be recognized to Bank upon the
transfer of substantially all of its assets to HNB in constructive
exchange for Hibernia Common Stock, cash for dissenters, if any,
and the assumption of Bank's liabilities by HNB, since any cash for
dissenters will be distributed to the Bank shareholders (Sections
361 and 357(a) of the Code).
(15) No gain or loss will be recognized by either Hibernia or
HNB upon the acquisition by HNB of substantially all of the assets
of Bank in constructive exchange for Hibernia Common Stock, cash
for dissenters, if any, and the assumption of Bank's liabilities
(Section 1032(a) of the Code). (Rev. Rul. 57-278, 1957-1 C.B.
124.)
(16) The basis of the assets of Bank acquired by HNB will be
the same in the hands of HNB as the basis of such assets in the
hands of Bank immediately prior to the exchange (Section 362(b) of
the Code).
(17) The basis of the HNB Common Stock in the hands of
Hibernia will be increased by an amount equal to the basis of the
Bank assets in the hands of HNB and decreased by the sum of the
amount of the liabilities of Bank assumed by HNB and the amount of
liabilities to which the assets of Bank are subject (Section 1.358-
6 of Proposed Regulations).
(18) The holding period of the assets of Bank received by HNB
will, in each instance, include the period for which such assets
were held by Bank (Section 1223(2) of the Code).
(19) As provided by Section 381(c) of the Code and Section
1.381(c)(2)-1 of the Regulations, HNB will succeed to and take into
account the earnings and profits, or deficit in earnings and
profits, of Bank as of the date of transfer. Any deficit in the
earnings and profits of Bank or HNB will be used only to offset the
earnings and profits accumulated after the date of transfer.
(20) The shareholder of HNB will recognize no gain or loss
upon the constructive exchange of Bank Common Stock solely for
Hibernia Common Stock. (Section 354(a)(1) of the Code.)
(21) Bank will recognize no gain or loss on the transfer of
its assets to HNB in constructive exchange for Hibernia Common
Stock and the assumption by HNB of the liabilities of Bank, as
described above. (Sections 361(a) and 357(a) of the Code.)
(22) Pioneer and Bank will close their taxable years as of the
date of the distribution or transfer. HNB will not close its
taxable year merely because of the Bank Merger. (Section 381(b) of
the Code.)
(23) Pursuant to Section 381(a) of the Code and Section
1.381(a)-1 of the Regulations, HNB will succeed to and take into
account the items of Bank described in Section 381(c) of the Code.
These items will be taken into account by HNB subject to the
provisions and limitations specified in Sections 381, 382, 383 and
384 of the Code and Regulations promulgated thereunder.
STATE INCOME TAX CONSEQUENCES
(1) The Louisiana income tax treatment to the shareholders of
Pioneer will be substantially the same as the federal income tax
treatment to the shareholders of Pioneer.
SCOPE OF OPINION
The scope of this opinion is expressly limited to the federal
income tax issues specifically addressed in (1) through (23) in the
section entitled "Federal Income Tax Consequences" above and (1) in
the section entitled "State Income Tax Consequences" above.
Specifically, our opinion has not been requested and none is
expressed with regard to the federal, foreign, state or local
income tax consequences for the shareholders of Hibernia and HNB.
We have made no determination nor expressed any opinion as to any
limitations, including those which may be imposed under Section
382, on the availability of net operating loss carryovers (or
built-in gains or losses), if any, after the Mergers, the
application (if any) of the alternative minimum tax to this
transaction, nor the application of any consolidated return or
employee benefit issues which may arise as a result of the Mergers.
Further, we have made no determination as whether Pioneer dividend
distributions have been sufficient to eliminate any undistributed
personal holding company tax liability, if applicable. We have
made no determination nor expressed any opinion as to the fair
market value of any of the assets being transferred in the Mergers
nor the common shares being exchanged in the Mergers. Furthermore,
our opinion has not been requested and none is expressed with
respect to any foreign, state or local tax consequences (other
than those enumerated in (1) above of State Income Tax
Consequences) to Pioneer, Bank, Hibernia, and HNB.
Our opinion, as stated above, is based upon the analysis of the
Code, the Regulations thereunder, current case law, and published
rulings. The foregoing are subject to change, and such change may
be retroactively effective. If so, our views, as set forth above,
may be affected and may not be relied upon. Further, any variation
or differences in the facts or representations recited herein, for
any reason, might affect our conclusions, perhaps in an adverse
manner, and make them inapplicable. In addition, we have
undertaken no obligation to update this opinion for changes in
facts or law occurring subsequent to the date hereof.
This letter represents our views as to the interpretation of
existing law and, accordingly, no assurance can be given that the
Service or the courts will agree with the above analysis.
Very truly yours,
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Louisiana Business Corporation Law ("LBCL") contains two
provisions that directly affect the liability of officers and
directors of Louisiana corporations to the corporations and
shareholders whom they serve. Section 83 permits Louisiana
corporations to indemnify officers and directors, as well as
certain other individuals who act on behalf of such corporations.
Sections 91 and 92 set forth the liability of officers and
directors of Louisiana corporations.
Section 91 of the LBCL provides that officers and directors of
Louisiana corporations are fiduciaries with respect to the
corporation and its shareholders and requires that they discharge
the duties of their positions as such in good faith and with the
diligence, care, judgment and skill which ordinarily prudent men
would exercise under similar circumstances in like positions.
Section 91 specifically provides that it is not intended to
derogate from any indemnification permitted under Section 83,
discussed below.
Section 92 of the LBCL limits the liability of officers and
directors with respect to certain matters, as well as imposes
personal liability for certain actions, such as the knowing
issuance of shares in violation of the LBCL. Paragraph E of
Section 92 permits a director, in the performance of his duties, to
be fully protected from liability in relying in good faith on the
records of the corporation and upon such information, opinions,
reports or statements presented to the corporation, the board of
directors, or any committee of the board by any of the
corporation's officers or employees, or by any committee of the
board of directors, or by any counsel, appraiser, engineer or
independent or certified public accountant selected with reasonable
care by the board of directors or any committee thereof or any
officer having the authority to make such a selection or by any
other person as to matters the directors reasonably believe are
within such other person's professional or expert competence and
which person is selected with reasonable care by the board of
directors or any committee thereof or any officer having the
authority to make such selection.
Section 83 of the LBCL permits a Louisiana corporation to
indemnify any person who is or was a party or is threatened to be
made a party to any action, suit or proceeding by reason of the
fact that he or she was a director, officer, employee or agent of
the corporation, or was serving at the request of the corporation
in one of those capacities for another business. Such persons may
be indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such persons in connection with any such
action as long as the indemnified party acted in good faith and in
a manner he or she reasonably believed to be in, or not opposed to,
the best interests of the corporation. With respect to criminal
actions or proceedings, the indemnified person must not only have
acted in good faith and in a manner believed to be in or not
opposed to the best interest of the corporation; he or she must
also not have had any reasonable cause to believe that his or her
conduct was unlawful.
The LBCL treats suits by or in the right of the corporation,
or derivative suits, differently from other legal actions.
Indemnification is not permitted in a derivative action for any
expenses if the individual seeking indemnification is adjudged
liable for negligence or misconduct in the performance of his or
her duty to the corporation unless specifically ordered by the
court. Otherwise, officers and directors may be indemnified in
derivative actions only with respect to expenses (including
attorneys' fees) actually and reasonably incurred in connection
with the defense or settlement of the action.
Indemnification of officers and directors may only be made by
the corporation if the corporation has specifically authorized
indemnification after determining that the applicable standard of
conduct has been met. This determination may be made (i) by the
board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding,
or (ii) if such a quorum is not obtainable or a quorum of
disinterested directors so directs, by independent legal counsel,
or (iii) by the shareholders.
Indemnification of officers and directors against reasonable
expenses is mandatory under Section 83 of the LBCL to the extent
the officer or director is successful on the merits or in the
defense of any action or suit against him giving rise to a claim of
indemnification.
Louisiana corporations are permitted to advance the costs of
defense to officers and directors with respect to claims for which
they may be indemnified under Section 83 of the LBCL. In order to
advance such costs, however, such procedure must be approved by the
board of directors by a majority of a quorum consisting of
disinterested directors. In addition, a corporation may only
advance defense costs if it has received an undertaking from the
officer or director to repay the amounts advanced unless it is
ultimately determined that he or she is entitled to be indemnified
as otherwise authorized by Section 83.
Louisiana corporations are also specifically permitted to
procure insurance on behalf of officers and directors and former
officers and directors for actions taken in their capacities as
such. Insurance coverage may be broader than the limits of
indemnification under Section 83. Also, the indemnification
provided for in Section 83 is not exclusive of any other rights to
indemnification, whether arising from contracts or otherwise.
The Company has adopted an indemnification provision to its
articles of incorporation that provides for indemnification of
officers and directors under the circumstances permitted by
Louisiana law. The Company's indemnification provision requires
indemnification, except as prohibited by law, of officers and
directors of the Company or any of its wholly-owned subsidiaries
against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with any action,
suit or proceeding, whether civil or criminal, administrative or
investigative (including any action by or in the right of the
Company) by reason of the fact that the person served as an officer
or director of the Company or one of its subsidiaries. Officers
and directors may only be indemnified against expenses in cases
brought by the officer or director against the Company if the
action is a claim for indemnification, the officer or director
prevails in the action, or indemnification is included in any
settlement or is awarded by the court. The indemnification
provision further requires the Company to advance defense costs to
officers and directors in such suits and proceedings upon receipt
of an undertaking to repay such expenses unless it is ultimately
determined that the officer or director is entitled to
indemnification as authorized by the Article.
The Company's Articles of Incorporation further provide that
no director or officer of the Company shall be personally liable to
the Company or its shareholder for monetary damages for breach of
fiduciary duty as an officer or director. This provision is
limited to those circumstances in which such a limitation of
liability is permitted under applicable law and would not be
operative in any circumstances in which the law prohibits such an
limitation.
The Articles of Association of the Bank include
indemnification and limitation of liability provisions identical to
those adopted by the Company and described above.
Item 21. Exhibits and Financial Statement Schedules.
EXHIBIT DESCRIPTION
2 Agreement and Plan of Merger (included as
Appendix A to the Proxy Statement-Prospectus)
3.1 Exhibit 4.1 to the Registration Statement on
Form S-3 filed with the Commission by the
Registrant (Registration No. 33-23591) is
hereby incorporated by reference (Articles of
Incorporation of the Registrant, as amended to
date)
3.2 Exhibit 4.2 to the Registration Statement on
Form S-8 filed with the Commission by the
Registrant (Post-Effective Amendment No. 2 to
Registration No. 2-96194) is hereby
incorporated by reference (By-Laws of the
Registrant, as amended to date)
5 Opinion of Patricia C. Meringer, Esq. re:
legality of shares
8 Opinion of Ernst & Young, certified public
accountants, regarding certain tax matters
(included as Appendix D to the Proxy
Statement-Prospectus)
10.13 Exhibit 10.13 to the Annual Report on Form 10-
K for the fiscal year ended December 31, 1988,
filed with the Commission by the Registrant
(Commission File No. 0-7220) is hereby
incorporated by reference (Deferred
Compensation Plan for Outside Directors of
Hibernia Corporation and its Subsidiaries, as
amended to date)
10.14 Exhibit 10.14 to the Annual Report on Form 10-
K for the fiscal year ended December 31, 1990,
filed with the Commission by the Registrant
(Commission File No. 0-7220) is hereby
incorporated by reference (Hibernia
Corporation Executive Life Insurance Plan)
10.16 Exhibit 4.7 to the Registration Statement on
Form S-8 filed with the Commission by the
Registrant (Registration No. 33-26871) is
hereby incorporated by reference (Hibernia
Corporation 1987 Stock Option Plan, as amended
to date)
10.28 Exhibits M and N to the Company's definitive
proxy statement dated August 17, 1992 relating
to its 1992 Annual Meeting of Shareholders
filed with the Commission by the Registrant is
hereby incorporated by reference (Warrant
Agreement dated as of May 27, 1992 among the
Registrant, The Chase Manhattan
Bank (National Association) and certain other
lenders, including the Form of Warrant
attached thereto)
10.29 Exhibit L to the Registrant's definitive proxy
statement dated August 17, 1992 relating to
its 1992 Annual Meeting of Shareholders filed
with the Commission by the Registrant is
hereby incorporated by reference (Registration
Rights Agreement dated as of May 27, 1992
among the Registrant, The Chase Manhattan Bank
(National Association) and certain other
lenders, as amended to date)
10.30 Exhibit 10.30 to a Current Report on Form 8-K
dated July 17, 1992 filed by the Registrant
with the Commission is hereby incorporated by
reference (Stock Purchase Agreement dated as
of July 17, 1992 between the Registrant,
Hibernia National Bank in Texas and Comerica
Incorporated)
10.31 Exhibit 10.31 to a Current Report on Form 8-K
dated September 15, 1992 filed by the
Registrant with the Commission is hereby
incorporated by reference (Amendment to Stock
Purchase Agreement dated September 10, 1992
between Registrant and Comerica Incorporated)
10.34 Exhibit C to the Registrant's definitive proxy
statement dated August 17, 1992 relating to
its 1992 Annual Meeting of Shareholders filed
by the Registrant with the Commission is
hereby incorporated by reference (Long-Term
Incentive Plan of Hibernia Corporation)
10.35 Exhibit A to the Registrant's definitive proxy
statement dated March 23, 1993 relating to its
1993 Annual Meeting of Shareholders filed by
the Registrant with the Commission is hereby
incorporated by reference (1993 Director Stock
Option Plan of Hibernia Corporation)
10.36 Exhibit 10.36 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 filed with the Commission
(Commission file no. 0-7220) is hereby
incorporated by reference (Employment
agreement between Stephen A. Hansel and
Hibernia Corporation)
10.37 Form of Employment Agreement between E.R. Campbell, Jr.
and Hibernia Corporation*
10.38 Form of Employment Agreement between B.D. Flurry and
Hibernia Corporation*
13 Exhibit 13 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1993 filed with the Commission
(Commission file No. 0-7220) is hereby
incorporated by reference (1993 Annual Report
to security holders of the Registrant).
22 Exhibit 22 to the Annual Report on Form 10-K
of the Registrant for the fiscal year ended
December 31, 1989 filed with the Commission
(Commission file no. 0-7220) is hereby
incorporated by reference (Subsidiaries of the
Registrant)
23(a) Consent of Patricia C. Meringer, Esq.
(included with Exhibit 5)*
23(b) Consent of Ernst & Young
Consent of Smith, Pugh & Company
Consent of US Banking Alliance Inc.
(included with Appendix B to Prospectus)
24 Powers of Attorney*
- -------
* Previously filed
Item 22. Undertakings.
The undersigned registrant hereby undertakes:
(i) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof;
(ii) to deliver or cause to be delivered with the prospectus,
to each person to whom the prospectus is sent or given, the latest
annual report to security holders that is incorporated by reference
in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X are not set
forth in the prospectus, to deliver, or cause to be delivered to
each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information;
(iii) that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of
this registration statement, by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters,
in addition to information called for by the other Items of the
applicable form;
(iv) that every prospectus (a) that is filed pursuant to the
preceding paragraph, or (b) that purports to meet the requirements
of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part
of an amendment to the registration statement and will not be used
until such amendment is effective and that, for purposes of
determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(v) The undersigned registrant hereby undertakes to respond
to requests for information that is incorporated by reference into
the prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4
within one business day of receipt of such request and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed
subsequent to the effective date of the registration statement
through the date of responding to the request.
(vi) The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant hereby certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-
4 and has duly caused this Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New Orleans, State of Louisiana, on
November 8, 1994.
HIBERNIA CORPORATION
By: /s/ Ron E. Samford, Jr.
RON E. SAMFORD, JR.
Controller and Executive
Vice President
Pursuant to the requirements of the Securities Act of 1933,
Amendment No. 2 to the Registration Statement has been signed by
the following persons in the capacities indicated on November 8,
1994.
Signatures Title
*
_____________________________ Chairman of the Board
Robert H. Boh
*
_____________________________ Chief Executive Officer
Stephen A. Hansel and Director
*
_____________________________ Chief Financial Officer
Robert W. Close
*
_____________________________ Chief Accounting Officer
Ron E. Samford, Jr.
*
_____________________________ Director
W. James Amoss, Jr.
*
_____________________________ Director
J. Terrell Brown
*
_____________________________ Director
J. Herbert Boydstun
*
_____________________________ Director
Brooke H. Duncan
*
_____________________________ Director
Richard W. Freeman
*
_____________________________ Director
Robert L. Goodwin
*
_____________________________ Director
Dick H. Hearin
*
_____________________________ Director
Robert T. Holleman
*
_____________________________ Director
Hugh J. Kelly
*
_____________________________ Director
John P. Laborde
*
_____________________________ Director
Sidney W. Lassen
*
_____________________________ Director
Donald J. Nalty
*
_____________________________ Director
Robert T. Ratcliff
*
_____________________________ Director
H. Duke Shackelford
*
_____________________________ Director
James H. Stone
*
_____________________________ Director
Virgnia E. Weinmann
*
_____________________________ Director
E. L. Williamson
*
_____________________________ Director
Robert E. Zetzmann
*By: /s/ PATRICIA C. MERINGER
Patricia C. Meringer
Attorney-in-Fact
EXHIBIT INDEX
Exhibit Sequential Page
Number
5 Opinion of Patricia C. Meringer, Esq.*
10.37 Form of Employment Agreement between E.R. Campbell, Jr.
and Hibernia Corporation*
10.38 Form of Employment Agreement between B.D. Flurry
and Hibernia Corporation*
23(a) Consent of Patricia C. Meringer, Esq. (included with
Exhibit 5)*
23(c) Consent of Ernst & Young
Consent of Smith, Pugh & Company
Consent of Arthur Andersen & Co.*
Consent of Castaing, Hussey & Lolan*
Consent of KPMG Peat Marwick LLP*
Consent of Roger C. Parker*
Consent of US Banking Alliance Inc. *
24 Powers of Attorney*
________
* Previously filed
EXHIBIT 23 (c)(i)
CONSENT OF ERNST & YOUNG LLP
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts"
in this Registration Statement (Form S-4) and related Prospectus of
Hibernia Corporation for this registration of its common stock to
be issued pursuant to its proposed merger with Pioneer Bancshares
Corporation and to the incorporation by reference therein of our
reports (i) dated January 11, 1994, with respect to the
consolidated financial statements of Hibernia Corporation
incorporated by reference in its Annual Report (Form 10-K) for the
year ended December 31, 1993 and (ii) dated January 11, 1994,
except for the pooling of interests with the Other Pooled Companies
described in Note 16, as to which the date is August 1, 1994, with
respect to the supplemental consolidated financial statements of
Hibernia Corporation included in its Current Report on Form 8-K
dated October 11, 1994, both filed with the Securities and Exchange
Commission.
s/ERNST & YOUNG LLP
Ernst & Young LLP
New Orleans, Louisiana
November 1, 1994
EXHIBIT 23(c)(ii)
CONSENT OF SMITH, PUGH & COMPANY
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement on Form S-4 and related Prospectus of
Hibernia Corporation for the registration of its common stock to be
issued pursuant to its proposed merger with Pioneer Bancshares
Corporation and to the inclusion herein of our report dated
February 7, 1994, with respect to the consolidated financial
statements of Pioneer Bancshares Corporation and Subsidiaries also
included therein, filed with the Securities and Exchange
Commission.
/s/ Smith, Pugh & Company
SMITH, PUGH & COMPANY
Shreveport, Louisiana
November 7, 1994<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
of Hibernia Corporation, a Louisiana corporation (the
"Corporation"), does hereby name, constitute and appoint Robert W.
Close, Patricia C. Meringer and Ron E. Samford, Jr., and each of
them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and
in his name, place and stead, in any and all capacities, to sign,
execute, acknowledge, deliver, and file (a) with the Securities and
Exchange Commission (or any other governmental or regulatory
authority), a Registration Statement on Form S-4 (or other
appropriate form) and any and all amendments (including post-
effective amendments) thereto, with any and all exhibits and any
and all other documents required to be filed with respect thereto
or in connection therewith, relating to the registration under the
Securities Act of 1933 of Common Stock of the Corporation to be
issued in the merger between the Corporation and Pioneer Bancshares
Corporation ("Pioneer") wherein the Corporation agrees to exchange
shares of its common stock for all of the outstanding shares of
common stock, of Pioneer and merge Pioneer into the Corporation,
authorized by resolutions duly adopted by the Board of Directors,
and (b) with the securities agencies or officials of various
jurisdictions, all applications, qualifications, registrations or
exemptions relating to such offering under the laws of any such
jurisdiction, including any amendments thereto or other documents
required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of
them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
on this 26th day of July, 1994.
/s/ Duke Shackelford
DUKE SHACKELFORD
Director
HIBERNIA CORPORATION
