As filed with the Securities and Exchange Commission on April 7,
1994
REGISTRATION NO. 33-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________________
HIBERNIA CORPORATION
(Exact Name of Registrant as Specified in its charter)
Louisiana 6711 72-0725432
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Number)
Organization)
313 Carondelet Street
New Orleans, Louisiana 70130
(504) 586-5332
(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) 586-5560
(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) 586-2486
Alan Jacobs, Esq.
McGlinchey Stafford Lang
A Law Corporation
2777 Stemmons Freeway
Suite 925
Dallas, Texas 75207
(214) 634-3939
____________________________
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 (1) Maximum Maximum Registration
securities to Offering Aggregate Fee
be registered Price per Offering
Share (1) Price (1)
_________________________________________________________________
Class A
Common Stock,
no par value 4,423,746 shares $7.50 $33,178,092 $11,440.00
_________________________________________________________________
Estimated solely for purposes of calculating the filing fee
due hereunder, based on an aggregate value of the stock to be
issued in the Merger of $ 33,178,092 and the average of the high
and low sales prices of a share of the Registrant's Class A Common
Stock, no par value, on April 4, 1994 pursuant to Rule 457 of the
Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A)
OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE 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
1. Forepart of Registration Statement Introduction
and Outside Front Cover Page of
Prospectus Introduction
2. Inside Front and Outside Back Available Information;
Cover Pages of Prospectus Table of Contents
3. Risk Factors, Ratio of Earnings Introduction; Summary;
to Fixed Charges and Other Certain Regulatory
Information Considerations
4. Terms of the Transaction Introduction; Summary;
Proposed Merger
5. Pro Forma Financial Information Pro Forma Financial
Information
6. Material Contacts with the Proposed Merger
Company Being Acquired
7. Additional Information Not Applicable
Required for Reoffering
by person and Parties
Deemed to be Underwriters
8. Interests of Named Experts Legal Matters; Experts
and Counsel
9. Disclosure of Commission Interests of Certain
Position on Indemnification Persons in the Merger
for Securities Act Liabilities
10. Information with Respect to Available Information;
S-3 Registrants Introduction; Summary
11. Incorporation of Certain Available Information;
Information By Reference Incorporation of
Certain 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 Summary; Certain
Companies Other than S-2 or Information Concerning
S-3 Companies First Continental
15. Information with Respect to Not Applicable
S-3 Companies
16. Information with Respect to S-2 Not Applicable
or S-3 Companies
17. Information with Respect to Summary; Certain
Companies Other Than S-3 or Information Concerning
S-2 Companies First Continental
18. Information if Proxies, Consents Introduction; Summary;
or Authorizations are to be Meeting Information;
Solicited Proposed Merger;
Certain Information
Concerning First
Continental
19. Information if Proxies, Not Applicable
Consents, Authorizations are not
to be Solicited or in an Exchange
Offer
FIRST CONTINENTAL BANCSHARES, INC.
201 Huey P. Long Avenue
Gretna, Louisiana 70053
May , 1994
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of First Continental Bancshares, Inc. ("First
Continental") to be held on Wednesday, June 15, 1994, at ,
a.m., Central time, at , ,
Gretna, Louisiana.
At the meeting, you will be asked to approve an amendment to
First Continental's Articles of Incorporation and an Agreement and
Plan of Merger, between First Continental and Hibernia Corporation
("Hibernia") (the "Agreement"), pursuant to which First Continental
will be merged with and into Hibernia (the "Merger") all as more
fully described in the attached Proxy Statement/Prospectus.
The proposal to amend First Continental's Articles of
Incorporation is necessary to permit the conversion of Preferred
Stock into Hibernia Common Stock and cash in the amount of all
undeclared and accumulated dividends, plus interest thereon, which
is required by the terms of the Merger. The proposed amendment
must be approved in order for the Merger to occur. Your vote on
this proposal is very important, since it requires the affirmative
votes of both the holders of two-thirds of the outstanding
Preferred Stock (voting separately) and the holders of two-thirds
of the total voting power (including the Common Stock and Preferred
Stock) present at the meeting to be approved. I urge you to read
the Proxy Statement/Prospectus carefully and to vote in favor of
this proposal.
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
First Continental'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 First Continental and is better
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 and Preferred Stock "FOR" the proposal to amend the
Articles of Incorporation of First Continental and "FOR" the
proposal to approve the Agreement and related Merger. A failure to
vote "FOR" the amendment (whether by failure of holders of
Preferred Stock to return the enclosed proxy cards for purposes of
the separate class vote, or in the case of any shareholder, by
marking "abstain" on the proxy card) will have the same effect as
a vote against the amendment. Similarly, 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. Please mark, date
and sign the enclosed proxy card and return it promptly in the
accompanying envelope.
Very truly yours,
Elton A. Arceneaux, Jr.
President
FIRST CONTINENTAL BANCSHARES, INC.
201 Huey P. Long Avenue
Gretna, Louisiana 70053
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 15, 1994
To the Shareholders of First
Continental Bancshares, Inc.:
Notice is hereby given of a Special Meeting of Shareholders of
First Continental Bancshares, Inc., a Louisiana corporation ("First
Continental"), to be held on Wednesday, June 15, 1994, at
p.m., Central time, at , , Gretna,
Louisiana for the following purposes:
1. To consider and vote upon a proposal to approve an
amendment to First Continental's Articles of
Incorporation to eliminate a requirement that as a
condition of any merger or similar transaction, holders
of First Continental's Preferred Stock receive securities
which preserve the rights and preferences of such
Preferred Stock.
2. To consider and vote upon a proposal to approve an
Agreement and Plan of Merger, between First Continental
and Hibernia Corporation("Hibernia"), dated December 4,
1993, and related Merger Agreement (collectively the
("Agreement"), pursuant to which (i) First Continental
will be merged with and into Hibernia (the "Merger"),
(ii) upon consummation of the Merger, each outstanding
share of Common Stock and Preferred Stock of First
Continental will be converted into the respective numbers
of shares of Hibernia Common Stock, and, in the case of
Preferred Stock, cash in the amount of all undeclared and
accumulated dividends, plus interest thereon and (iii)
First National Bank of Jefferson Parish will be merged
with and into Hibernia National Bank.
3. To transact such other business as may properly come
before the Special Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May
6, 1994 as the record date for determining shareholders entitled to
receive notice of, and to vote at, the Special Meeting or any
adjournment thereof.
Dissenting shareholders who comply with the procedural
requirements of the Louisiana Business Corporation Law will be
entitled to receive payment of the fair cash value of their shares
if the merger is effected upon approval by less than 80% of the
total voting power of First Continental. The rights of dissenting
shareholders and the procedures for perfecting dissenters' rights
are described in the accompanying Proxy Statement/Prospectus.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES THAT
YOU OWN. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY CARD(S) AND RETURN
THEM PROMPTLY IN THE ENCLOSED PREPAID ENVELOPE. YOUR PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO THE VOTE AT THE SPECIAL MEETING BY
APPROPRIATE NOTICE TO FIRST CONTINENTAL'S SECRETARY.
BY ORDER OF THE BOARD OF DIRECTORS
Goldie T. Lanaux
Secretary
Gretna, Louisiana
May __, 1994
COMMON PROXY COMMON
STOCK STOCK
FIRST CONTINENTAL BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
JUNE 15, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints R. Preston Wailes,
Elton A. Arceneaux, Jr. and B. Franklin Martin, III, or any of
them, the proxies of the undersigned, with full power of
substitution, to represent the undersigned and to vote all of the
shares of Common Stock of First Continental Bancshares, Inc.
("First Continental"), that the undersigned is entitled to vote at
the Special Meeting of Shareholders of First Continental to be held
on June 15, 1994, and any adjournment thereof.
1. To approve an amendment to First Continental's Articles
of Incorporation to eliminate Section 4.2.1.3(v) of
Article 4 thereof in its entirety and to renumber the
provisions of Section 4.2.1.3 appearing thereafter.
If this proposal is not approved, Proposal 2 will be
withdrawn.
FOR AGAINST ABSTAIN
2. To approve an Agreement and Plan of Merger, between First
Continental and Hibernia Corporation, dated as of
December 4, 1993, and related Merger Agreement
(collectively the "Agreement"), and the merger
contemplated thereby.
FOR AGAINST ABSTAIN
3. In their discretion, to vote upon such other business as
may properly come before the meeting or any adjournment
thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS
ARE GIVEN, THIS PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS SET
FORTH HEREIN.
[Reverse Side]
The adoption of Proposal 2 to approve the Agreement is conditioned
upon shareholder approval of Proposal 1 to amend First
Continental's Articles of Incorporation, and the Merger
contemplated by Proposal 2 will not be consummated unless Proposal
1 is approved by the shareholders of First Continental. The
adoption of Proposal 1, however, is not conditioned on shareholder
approval of Proposal 2.
Please sign exactly as the name appears on the certificate or
certificates representing shares to be voted by this proxy. When
signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If a corporation, please sign in
full corporate name by president or other authorized person. If a
partnership, please sign in partnership name by authorized.
Dated:
Signature of Shareholder
Signature (if jointly owned)
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD TO FIRST CONTINENTAL
PROMPTLY USING THE ENCLOSED PREPAID ENVELOPE.
PREFERRED PROXY PREFERRED
STOCK STOCK
FIRST CONTINENTAL BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
JUNE 15, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints R. Preston Wailes,
Elton A. Arceneaux, Jr. and B. Franklin Martin, III, or any of
them, the proxies of the undersigned, with full power of
substitution, to represent the undersigned and to vote all of the
shares of Preferred Stock of First Continental Bancshares, Inc.
("First Continental"), that the undersigned is entitled to vote at
the Special Meeting of Shareholders of First Continental to be held
on June 15, 1994, and any adjournment thereof.
1. To approve an amendment to First Continental's Articles
of Incorporation to eliminate Section 4.2.1.3(v) of
Article 4 thereof in its entirety and to renumber the
provisions of Section 4.2.1.3 appearing thereafter.
If this Proposal is not approved, Proposal 2 will
be withdrawn.
FOR AGAINST ABSTAIN
2. To approve an Agreement and Plan of Merger, between First
Continental and Hibernia Corporation, dated as of
December 4, 1993, and related Merger Agreement
(collectively the "Agreement"), and the merger
contemplated thereby.
FOR AGAINST ABSTAIN
3. In their discretion, to vote upon such other business as
may properly come before the meeting or any adjournment
thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS
ARE GIVEN, THIS PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS SET
FORTH HEREIN.
[Reverse Side]
The adoption of Proposal 2 to approve the Agreement is conditioned
upon shareholder approval of Proposal 1 to amend First
Continental's Articles of Incorporation, and the Merger
contemplated by Proposal 2 will not be consummated unless Proposal
1 is approved by the shareholders of First Continental. The
adoption of Proposal 1, however, is not conditioned on shareholder
approval of Proposal 2.
Please sign exactly as the name appears on the certificate or
certificates representing shares to be voted by this proxy. When
signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If a corporation, please sign in
full corporate name by president or other authorized person. If a
partnership, please sign in partnership name by authorized person.
Dated:
Signature of Shareholder
INSERT MAILING LABEL
Signature (if jointly owned)
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD TO FIRST CONTINENTAL
PROMPTLY USING THE ENCLOSED PREPAID ENVELOPE.
PROXY STATEMENT
FIRST CONTINENTAL BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on June 15, 1994
PROSPECTUS
HIBERNIA CORPORATION
SHARES
CLASS A COMMON STOCK
(NO PAR VALUE)
This Proxy Statement/Prospectus is being furnished to the
holders of Common Stock, $1.00 par value ("Common Stock") and Class
A Cumulative Convertible Preferred Stock, $1.00 par value
("Preferred Stock"), of First Continental Bancshares, Inc. ("First
Continental") in connection with the solicitation of proxies by the
Board of Directors of First Continental for use at a Special
Meeting of Shareholders (the "Special Meeting") to be held on
Wednesday, June 15 1994, at p.m., Central time, at
, , Gretna, Louisiana 70053,
and any adjournment thereof.
At the Special Meeting, the holders of record of Common Stock
and Preferred Stock as of the close of business on March , 1994
(the "Record Date") will consider and vote upon (i) a proposal to
amend Article 4 of the Articles of Incorporation of First
Continental to eliminate Section 4.2.1.3(v) thereof, a copy of
which is set forth in Appendix B hereto, and to renumber Sections
4.2.1.3(vi), (vii), (viii), (ix) and (x) thereof (collectively, the
"Amendment") and (ii) a proposal to approve an Agreement and Plan
of Merger, between First Continental and Hibernia, dated as of
December 4, 1993, and related Merger Agreement (collectively the
"Agreement"), pursuant to which First Continental will merge with
and into Hibernia (the "Merger") and First National Bank of
Jefferson Parish ("FNJ") will merge with and into Hibernia National
Bank ("HNB") (the "Bank Merger"). Upon consummation of the Merger,
each outstanding share of Common Stock and Preferred Stock, except
for shares owned beneficially by Hibernia and its subsidiaries, and
shares as to which dissenter's 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
("Hibernia Common Stock"), determined in the manner described below
under the caption "PROPOSED MERGER - Conversion of Shares Pursuant
to the Merger," and, in the case of Preferred Stock, the right to
receive cash in the amount of all undeclared and accumulated
dividends, plus interest thereon. Cash will be 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, and the transactions contemplated thereby,
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.
The outstanding shares of Hibernia Common Stock are listed on
the New York Stock Exchange, Inc. (the "NYSE"). The last reported
sale price of Hibernia Common Stock on the NYSE Composite
Transactions Reporting System on , 1994 was $
per share.
This Proxy Statement/Prospectus and the accompanying proxy
cards are first being mailed to shareholders of First Continental
on or about May , 1994.
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
DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY 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 May __, 1994.
AVAILABLE INFORMATION
Hibernia Corporation is subject to the informational
requirements of the Securities Exchange Act of 1934 (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 Hibernia 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 (the "Securities Act") with respect to the Hibernia 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 Proxy
Statement/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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated by reference in this Proxy Statement/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 March 23, 1993, relating to its
1993 Annual Meeting of Shareholders held on April 27, 1993 except
for the information contained therein under the captions "Executive
Compensation -- Report of the Executive Compensation Committee" and
"-- Stock Performance Graph"; and (3) a Current Report on Form 8-K,
dated January 20, 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 Proxy Statement/Prospectus and
prior to the termination of the offering of Hibernia Common Stock
made hereby shall be deemed to be incorporated by reference in this
Proxy Statement/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
captions "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 shall be deemed to be modified or
superseded for the purposes hereof to the extent that a statement
contained herein (or in any subsequently filed document which also
is 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 Proxy Statement/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) 587-3411.
TABLE OF CONTENTS
INTRODUCTION..................................................
SUMMARY.......................................................
MEETING INFORMATION...........................................
Solicitation; Voting and Revocation of Proxies..............
Votes Required; Quorum......................................
Recommendation of First Continental's Board.................
Other Matters...............................................
PRO FORMA COMBINED FINANCIAL STATEMENTS.......................
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
OF FIRST CONTINENTAL........................................
General.....................................................
Description of Section 4.2.1.3(v)...........................
Reasons for Approval........................................
Vote Required to Approve the Amendment......................
PROPOSED MERGER...............................................
Background of and Reasons for the Merger....................
Conversion of Shares Pursuant to the Merger.................
Redemption of Mandatory Convertible.........................
Subordinated Debentures.....................................
Redemption of Class A Notes and Class B Notes...............
Opinions of Financial Advisors..............................
Surrender of Certificates...................................
Representations and Warranties..............................
Conditions to the Merger; Waiver............................
Regulatory and Other Approvals..............................
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 REGULATORY CONSIDERATIONS.............................
CERTAIN INFORMATION CONCERNING FIRST CONTINENTAL..............
Principal Business..........................................
Supervision and Regulation..................................
Competition.................................................
Seasonality of Business and Customers.......................
Employees...................................................
Property....................................................
Legal Proceedings...........................................
Market Prices and Dividends.................................
Security Ownership of Principal Shareholders
and Management............................................
First Continental Management's Discussion and
Analysis of Financial Condition and Results of
Operations..................................................
LEGAL MATTERS.................................................
EXPERTS.......................................................
INDEX TO FIRST CONTINENTAL CONSOLIDATED
FINANCIAL STATEMENTS........................................F-1
APPENDIX A -- AGREEMENT AND PLAN OF MERGER..............A-1
APPENDIX B -- SECTION 4.2.1.3(v) OF FIRST
CONTINENTAL'S ARTICLES OF
INCORPORATION...........................B-1
APPENDIX C -- OPINION OF MONTGOMERY SECURITIES..........C-1
APPENDIX D -- OPINION OF KEEFE, BRUYETTE &
WOODS, INC..............................D-1
APPENDIX E -- SELECTED PROVISIONS OF LOUISIANA
LAW RELATING TO RIGHTS OF
DISSENTING SHAREHOLDERS.................E-1
APPENDIX F -- OPINION OF ERNST & YOUNG
REGARDING CERTAIN TAX MATTERS...........F-1
INTRODUCTION
The Registration Statement of which this Proxy Statement/
Prospectus is a part relates to shares of Hibernia Common Stock
which will be issued in connection with the Merger of First
Continental with and into Hibernia, pursuant to the Agreement. The
shares of Hibernia Common Stock offered hereby will be exchanged,
upon consummation of the Merger, for the outstanding shares of
Common Stock and Preferred Stock of First Continental.
Shareholders of First Continental will be asked to approve the
Agreement as well as the amendment to First Continental's Articles
of Incorporation at a Special Meeting to be held on June 15, 1994.
The proxy statement relating to such Special Meeting is included in
this Proxy Statement/Prospectus.
The terms of the Agreement and of the Amendment are described
in this Proxy Statement/Prospectus, and a copy of the Agreement and
Plan of Merger between Hibernia and First Continental is attached
hereto as Appendix A for reference.
From time to time, Hibernia investigates and holds discussions
and negotiations in connection with possible acquisition
transactions with other financial institutions. At the date
hereof, Hibernia has entered into definitive merger agreements with
four financial institutions, including First Continental, which are
described under the caption "PRO FORMA COMBINED FINANCIAL
STATEMENTS" below. Certain information concerning these
transactions is also contained in documents incorporated herein by
reference. See "AVAILABLE INFORMATION." Although it is
anticipated that merger 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.
SUMMARY
This summary is necessarily general and abbreviated and has
been prepared to assist shareholders of First Continental 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 included 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 Companies
Hibernia. Hibernia is a Louisiana corporation registered
under the Bank Holding Company Act of 1956, as amended ("BHCA").
As of December 31, 1993, Hibernia had total consolidated assets of
approximately $4.8 billion and shareholders' equity of
approximately $428 million. As of December 31, 1993, 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.
As of December 31, 1993, Hibernia had a single banking
subsidiary, Hibernia National Bank ("HNB"), that provides retail
and commercial banking services through 102 branches throughout
Louisiana. As of December 31, 1993, HNB was the largest bank
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) 587-5532. 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."
First Continental. First Continental is a Louisiana
corporation registered as a bank holding company under the BHCA.
As of December 31, 1993, First Continental had total consolidated
assets of approximately $400 million and shareholders' equity of
approximately $17.4 million. First Continental's principal
subsidiary is First National Bank of Jefferson Parish ("FNJ"), a
national banking association, having its main office and eight
other banking offices throughout Jefferson Parish, Louisiana. FNJ
engages in a full range of retail and commercial banking services,
including taking deposits and extending secured and unsecured
credit. As of December 31, 1993, FNJ had total deposits of
approximately $345 million.
On a pro forma basis, as of December 31, 1993, the total
assets of First Continental would represent 8% of the total assets
of the combined entity that would result from the Merger. In
addition, First Continental's shareholders' equity and total
deposits would represent 3.9% (before any pro forma adjustments)
and 7.8%, respectively, of the shareholders' equity and total
deposits of the combined entity as of that date.
The executive offices of First Continental are located at 201
Huey P. Long Avenue, Gretna, Louisiana 70053. First Continental's
telephone number at that address is (504) 366-0389. For additional
information concerning the business of First Continental and its
financial condition and operating results, see "Selected Financial
Data of First Continental" below, "CERTAIN INFORMATION CONCERNING
FIRST CONTINENTAL" and "FIRST CONTINENTAL CONSOLIDATED FINANCIAL
STATEMENTS."
The Special Meeting
The Special Meeting of Shareholders of First Continental will
be held on June 15, 1994, at the time and place set forth in the
accompanying Notice of Special Meeting of Shareholders. Only
holders of record of Common Stock and Preferred Stock of First
Continental at the close of business on the Record Date, are
entitled to notice of, and to vote at, the Special Meeting. On
that date, there were 2,128,096 shares of Common Stock and 135,974
shares of Preferred Stock issued and outstanding. Each share
outstanding is entitled to one vote on each matter properly to come
before the Special Meeting. See "MEETING INFORMATION."
At the Special Meeting, shareholders of First Continental will
consider and vote upon the proposed Amendment, the Agreement and
related Merger, and such other matters as may properly come before
the Special Meeting.
Votes Required
Approval of the Agreement and related Merger will require the
affirmative vote by the holders of at least two-thirds of the total
voting power (including Common Stock and Preferred Stock) of First
Continental present or represented at the Special Meeting.
However, the Amendment must be approved by the holders of at least
two-thirds of the outstanding shares of Preferred Stock voting
separately as a class and the affirmative vote of the holders of at
least two-thirds of the total voting power of First Continental
present or represented at the Special Meeting. If the Amendment is
not so approved, the proposal to approve the Agreement and related
Merger will be withdrawn. Adoption of the Amendment, however, is
not conditioned on shareholder approval of the proposal to approve
the Agreement and related Merger. The directors and holders of 5%
or more of the outstanding Common Stock, who have voting power with
respect to 1,050,680 shares of Common Stock representing 49.4% of
the Common Stock outstanding as of the Record Date, have agreed to
vote their Common Stock in favor of the Agreement and related
Merger and have indicated to First Continental that they intend to
vote their shares of Common Stock in favor of the Amendment. See
"MEETING INFORMATION -- Votes Required; Quorum" and "CERTAIN
INFORMATION RELATING TO FIRST CONTINENTAL -- Voting Securities and
Certain Holders Thereof."
The Proposed Merger; Amendment to Articles
In accordance with the terms of the Agreement, First
Continental will be merged with and into Hibernia, whereupon the
separate existence of First Continental will cease. Immediately
thereafter, FNJ will be merged into HNB, with HNB as the surviving
bank. On the Effective Date (as hereinafter defined), each
outstanding share of Common Stock and Preferred Stock of First
Continental, other than shares held by shareholders who exercise
and perfect dissenters' rights in accordance with Louisiana law,
will be converted into a number of shares determined by the
application of a formula based upon the average market price (the
"Average Market Price") of Hibernia Common Stock for the ten
business days immediately prior to the trading day before the
closing of the Merger (the "Closing Date"). In addition, holders
of Preferred Stock will have the right to receive cash in an amount
equal to all undeclared and accumulated dividends on their shares
of Preferred Stock, plus interest thereon. Regardless of the
market value of Hibernia Common Stock, however, (i) each holder of
Common Stock will receive between 1.41 and 2 shares of Hibernia
Common Stock (depending on its Average Market Price) valued at $12
per share of Common Stock exchanged and (ii) each holder of
Preferred Stock will be treated as though he exercised his right to
convert his Preferred Stock into Common Stock and will receive
between 2.3 and 3.26 shares of Hibernia Common Stock (depending on
its Average Market Price) and cash in the amount of all undeclared
and accumulated dividends, plus interest thereon, which valued
together equals approximately $122 per share of Preferred Stock
exchanged (assuming a June 30, 1994 Closing Date). Approval of the
Agreement and related Merger will require the affirmative vote of
the holders of at least two-thirds of the total voting power of
First Continental present or represented at the Special Meeting.
See "PROPOSED MERGER -- Conversion of Shares Pursuant to the
Merger."
First Continental also proposes to amend Article 4 of its
Articles of Incorporation to eliminate Section 4.2.1.3.(v) thereof
in its entirety and to renumber Sections 4.2.1.3(vi), (vii),
(viii), (ix) and (x) thereof. Section 4.2.1.3(v) requires that, as
a condition to any merger or similar transaction, the rights and
preferences of the Preferred Stock be preserved in the securities
to be received by the holders of such stock. This provision
currently creates a significant impediment to the Merger because
shares of Hibernia Common Stock, as opposed to a comparable class
of preferred stock of Hibernia, are to be received by the holders
of Preferred Stock pursuant to the Merger. This Amendment requires
the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Preferred Stock voting separately as a class
and the affirmative vote of the holders of at least two-thirds of
the total voting power of First Continental present or represented
at the Special Meeting. See "PROPOSED AMENDMENT TO THE ARTICLES OF
INCORPORATION OF FIRST CONTINENTAL."
Management and Operations After the Merger
After the Effective Date, the offices of FNJ will operate as
branch banking offices of HNB and the former directors of First
Continental and FNJ will cease to serve in any capacity in the
surviving corporation or bank. See "PROPOSED MERGER -- Management
and Operations After the Merger".
Recommendation of the Board of Directors
The Board of Directors of First Continental believes that the
Merger is in the best interests of the shareholders and recommends
that the shareholders vote "FOR" the Agreement and related Merger.
The Board of Directors has received from Montgomery Securities an
opinion that the consideration to be received by the shareholders
of First Continental pursuant to the Merger, when taken as a whole,
is fair to such shareholders from a financial point of view and an
opinion from Keefe, Bruyette & Woods, Inc. that the consideration
to be received by the holders of Preferred Stock pursuant to the
Merger is fair from a financial point of view. See "PROPOSED
MERGER -- Opinions of Financial Advisors." First Continental's
Board of Directors believes that the terms of the Merger, as set
forth in the Agreement, will provide significant value to all First
Continental shareholders and will enable them to participate in
opportunities for growth that First Continental's Board of
Directors believes the Merger makes possible. In recommending the
Agreement and related Merger to the shareholders, First
Continental's Board of Directors considered, among other factors,
the financial terms of the Merger, the liquidity it will afford
First Continental's shareholders, the current regulatory
restrictions on First Continental and the likelihood and potential
adverse impact of increased competition for First Continental in
its market area if First Continental remains independent. First
Continental's Board of Directors also recommends that shareholders
vote "FOR" the Amendment because the section of the Articles of
Incorporation proposed to be eliminated thereby will prevent
consummation of the Merger and, in any event, poses a significant
obstacle to acquisition transactions in general involving First
Continental. See "PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
OF FIRST CONTINENTAL -- Reasons for Approval" and "PROPOSED MERGER
- -- Background of and Reasons for the Merger."
Basis for the Terms of the Agreement
A number of factors in addition to those stated above were
considered by the Board of Directors of First Continental in
approving the terms of the Agreement, including, without
limitation, information concerning the financial condition, results
of operation and prospects of Hibernia, First Continental, HNB and
FNJ; the ability of the combined entity to compete in the relevant
banking markets; the proposed treatment of the Common Stock and
Preferred Stock in the Agreement; the market price of Hibernia
Common Stock; the dividend policy of Hibernia and the absence of
dividends on the part of First Continental; the absence of an
active trading market for the Common Stock and Preferred Stock of
First Continental; the inability of First Continental to pay
dividends on its Preferred Stock for the last seven years and the
limited likelihood of dividend payments in the foreseeable future;
the tax-free nature of the Merger to First Continental's
shareholders, to the extent Hibernia Common Stock is received, for
federal income tax purposes; the financial terms of other business
combinations in the banking industry; and certain non-monetary
factors. See "PROPOSED MERGER -- Background of and Reasons for the
Merger."
Advice and Opinions of Financial Advisors
Montgomery Securities ("Montgomery"), First Continental's
financial advisor, has rendered its opinion that the consideration
to be received by the shareholders of First Continental pursuant to
the Merger, when taken as a whole, is fair to such shareholders
from a financial point of view. Moreover, Keefe, Bruyette & Woods,
Inc. ("KBW"), special financial advisor to First Continental, has
issued its opinion that the consideration to be received by the
holders of Preferred Stock pursuant to the Merger is fair from a
financial point of view. The opinions of Montgomery and KBW are
attached hereto as Appendix C and D, respectively, and should be
read in their entirety with respect to the assumptions made therein
and other matters considered. See "PROPOSED MERGER -- Opinions of
Financial Advisors" for further information regarding, among other
things, the selection of such firms and their respective
compensation arrangements in connection with the Merger.
Conditions; Abandonment; Amendment
Consummation of the Merger pursuant to the Agreement is
subject to the satisfaction of a number of conditions, including
approval of the Amendment and of the Agreement and related Merger
by the shareholders of First Continental, approval of the Merger by
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") and approval of the Bank Merger by the Office of
the Comptroller of the Currency ("OCC"). 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. Hibernia has filed applications for the Federal Reserve
Board and OCC approvals. 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 First Continental's shareholders may materially alter
the terms of the Agreement or reduce the exchange rate of Hibernia
Common Stock to be received by First Continental shareholders in
the Merger (the "Exchange Rate"). 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."
Material Tax Consequences
It is a condition to consummation of the Merger that First
Continental receive a tax ruling or 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 Common Stock and Preferred Stock to the extent
exchanged for Hibernia Common Stock will not give rise to the
recognition of gain or loss for federal income tax purposes to
First Continental's shareholders with respect to such exchange.
The parties have received such an opinion from Ernst & Young,
independent public accountants, who also serve as independent
auditors for Hibernia. A copy of such opinion is attached hereto
as Appendix F. See "PROPOSED MERGER -- Certain Federal Income Tax
Consequences."
Because of the complexities of the federal income tax laws and
because the tax consequences may vary depending upon a
shareholder's individual circumstances or tax status, it is
recommended that each shareholder of First Continental 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 Common Stock or Preferred Stock who objects to
the Merger is entitled to the rights and remedies of a dissenting
shareholder provided in Section 12:131 of the Louisiana Business
Corporation Law (the "LBCL"), a copy of which section is attached
hereto as Appendix E. However, if dissenters' rights are exercised
and perfected with respect to more than 10% of the outstanding
shares of Common Stock and Preferred 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 consummation of the Merger, shareholders of First
Continental, 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 holders of
either the Common Stock or Preferred Stock of First Continental.
See "PROPOSED MERGER -- Certain Differences in Shareholders'
Rights."
Accounting Treatment
Consummation of the Merger is conditioned on pooling-of-
interests accounting treatment for financial reporting purposes.
If, among other things, holders of more than 10% of the outstanding
shares of Common Stock of First Continental exercise and perfect
dissenters' rights, the Merger will not qualify for the pooling-of-
interests method of accounting. First Continental has agreed to
use its best efforts to permit the transaction to be accounted for
as a pooling-of-interests. See "PROPOSED MERGER -- Accounting
Treatment."
Selected Financial Data of Hibernia
The closing market price per share of Hibernia Common Stock on
December 3, 1993, the last trading day prior to the announcement of
the proposed Merger, was $7.25.
The following table sets forth certain consolidated financial
information of Hibernia. The information contained therein is
based on the consolidated financial statements and notes thereto of
Hibernia incorporated herein by reference. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE" and "AVAILABLE INFORMATION."
HIBERNIA CORPORATION
Selected Financial Data
Unaudited ($ in thousands, except per share amounts)
Year Ended December 31,
1993 1992 1991 1990 1989
Income Statement
Data:
Interest income $299,730 $356,734 $580,729 $699,505 $615,802
Net interest
income 195,705 197,278 234,599 261,318 214,530
Provision for
loan losses (6,200) 66,275 178,330 166,825 36,400
Income (loss)
before
extraordinary
item and
cumulative effect
of accounting
change 47,950 (7,915) (143,997) (10,995) 61,644
Extraordinary
loss on debt
restructuring - (56,122) - - -
Cumulative effect
of accounting
change - - (21,643) - -
Net income (loss) 47,950 (64,037) (165,640) (10,995) 61,644
Average Balance
Sheet Data:
Total assets 4,635.6 5,082.3 6,801.6 7,348.2 6,257.6
Earning assets 4,344.9 4,639.3 6,192.7 6,609.5 5,701.1
Loans (net of
unearned
discount) 2,250.3 2,944.3 4,654.8 5,106.3 4,493.4
Deposits 3,992.6 4,419.5 6,067.1 6,390.2 5,153.7
Debt 3.0 83.1 96.5 87.1 38.5
Shareholders'
equity 393.6 211.6 277.6 380.6 363.7
Per Share Data:
Income (loss)
before extraordinary
item and cumulative
effect of accounting
change .58 (.27) (5.12) (.40) 2.30
Extraordinary loss
on debt
restructuring - (1.89) - - -
Cumulative effect
of accounting
change - - (.77) - -
Net income (loss)
per share .58 (2.16) (5.89) (.40) 2.30
Cash dividends
declared .03 - .15 .90 .91
Book value 5.12 4.48 7.05 13.16 14.45
Selected Ratios:
Return on Average
Assets 1.03% (1.26)% (2.44)% (.15)% .99%
Return on
Average Equity 12.18% (30.26)% (59.67)% (2.89)% 16.95%
Equity to
Average Assets 8.49% 4.16% 4.08% 5.18% 5.81%
Selected Financial Data of First Continental
The following table sets forth certain consolidated financial
information for First Continental. The information contained
therein is based upon and should be read in conjunction with the
consolidated financial statements and notes thereto of First
Continental appearing elsewhere herein. See "FIRST CONTINENTAL
CONSOLIDATED FINANCIAL STATEMENTS."
Year Ended December 31,
1993 1992 1991 1990 1989
Income Statement
Data:
Interest income $ 29,985 $ 32,180 $ 33,523 $ 36,926 $ 39,397
Net interest
income 18,713 18,336 14,085 11,248 10,880
Provision for
loan losses 725 1,152 1,800 3,101 3,106
Other income 4,783 4,895 4,710 3,732 4,405
Other expenses 20,701 21,397 17,523 18,760 15,088
Income (loss)
before income
taxes,
extraordinary
items and
cumulative effect
of accounting
change 2,070 682 (839) (9,747) (2,909)
Extraordinary
Items:
Gain on
extinguishment
of debt, net of
tax --- 11,345 --- --- ---
Utilization of
net operating
loss
carryforward --- 5,996 --- --- ---
Cumulative effect
of accounting
change 2,622 --- --- --- ---
Net income
(loss) 3,640 17,791 (839) (9,747) (2,909)
Preferred stock
dividends and
accrued
interest (2,053) (1,994) (2,033) (1,992) (1,868)
Net income
(loss)
applicable to
common stock 1,587 15,797 (2,872) (11,739) (4,777)
Balance Sheet Data:
Total assets 399,912 394,018 397,756 397,187 433,767
Average earning
assets 359,148 349,207 332,972 368,561 381,519
Loans (net of
unearned
discount) 223,093 232,958 242,302 265,456 285,242
Reserve for
loan losses 6,590 6,261 7,147 9,023 9,974
Deposits 345,350 347,195 360,713 354,483 371,850
Notes payable 5,884 5,444 16,017 15,750 16,100
Shareholders'
equity
(deficit) 17,397 12,950 (4,841) (4,002) 5,745
Per Share Data:
Earnings (loss) per share of common stock:
Primary:
Income (loss)
before
extraordinary
items and
cumulative
effect of
accounting
change .48 .21 (.39) (4.58) (1.36)
Extraordinary
items --- 8.15 --- --- ---
Cumulative effect
of accounting
change 1.23 --- --- --- ---
Preferred stock
dividends and
accrued
interest (.96) (.94) (.96) (.94) (.88)
Net income
(loss)
applicable to
common stock .75 7.42 (1.35) (5.52) (2.24)
Fully diluted:
Income before
extraordinary
items and
cumulative
effect of
accounting
change --- .33 --- --- ---
Extraordinary
items --- 4.71 --- --- ---
Cumulative effect
of accounting
change --- - --- --- ---
Net income
applicable to
adjusted common
stock
outstanding --- 5.04 --- --- ---
Cash dividends
declared --- --- --- --- ---
Book value per
common share
(1) (3.26) (4.38) (11.81) (10.46) (4.94)
Selected Ratios:
Return on
average assets .92 4.42 (.21) (2.28) (.66)
Return on
average equity 22.03 2,003.49 (18.97) (1,115.22) (40.39)
Equity to
average assets 4.16 (.22) (1.13) .20 1.63
___________
(1) Computed by subtracting from shareholders' equity the
following amounts: 1993 - $24,332; 1992 - $22,279; 1991 - $20,271;
1990 - $18,214 and 1989 - $16,200, representing the book value of
the Preferred Stock and all undeclared and accumulated dividends,
plus interest thereon, relating to the Preferred Stock.
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
(Unaudited)
The following table sets forth certain unaudited pro forma combined
financial information for Hibernia and First Continental. This
table is based on and should be read in conjunction with the
historical financial statements and related notes of Hibernia,
incorporated by reference to this Proxy Statement - Prospectus, and
First Continental, contained elsewhere in this Proxy Statement -
Prospectus. The table also gives effect to other probable mergers
to which Hibernia is a party, as discussed in Note D to the pro
forma combined financial statements. These mergers include
Commercial Bancshares, Inc., Bastrop National Bank and First
Bancorp of Louisiana, Inc. The pro forma information, which
reflects the mergers using the pooling-of-interests method of
accounting, is presented for informational purposes only and should
not be construed as indicative of the actual operations that would
have occurred had the mergers been consummated at the beginning of
the periods indicated below or which may occur after the mergers
are consummated. The pro forma information gives effect to the
issuance of 4,423,746 shares of Hibernia Common Stock for all the
outstanding shares of First Continental and 10,160,000 shares of
Hibernia Common Stock for all the outstanding shares of Commercial
Bancshares, Inc., Bastrop National Bank, and First Bancorp of
Louisiana, Inc. in each of the periods presented.
PRO FORMA HIBERNIA CORPORATION*
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31
Unaudited ($ in thousands, except per share amounts) 1993 1992 1991
<S> <C> <C> <C>
Net interest income $214,418 $215,614 $248,684
Net income (loss) from continuing operations 48,968 (7,465) (144,836)
Per share:
Net income (loss) from continuing operations 0.56 (0.22) (4.45)
Cash dividends 0.03 - 0.15
Book value 4.92 4.40 5.94
SELECTED PERIOD-END BALANCES
Debt - 19,713 117,190
Total assets 5,166,597 5,128,056 6,416,185
*Includes Hibernia Corporation and First Continental Bancshares, Inc.
</TABLE>
TOTAL HIBERNIA CORPORATION**
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31
Unaudited ($ in thousands, except per share amounts) 1993 1992 1991
<S> <C> <C> <C>
Net interest income $234,064 $234,398 $263,348
Net income (loss) from continuing operations 55,391 (1,752) (141,367)
Per share:
Net income (loss) from continuing operations 0.57 (0.04) (3.31)
Cash dividends 0.03 - 0.15
Book value 4.88 4.32 5.32
SELECTED PERIOD-END BALANCES
Debt 4,262 25,710 127,566
Total assets 5,686,883 5,592,710 6,862,752
**Includes Hibernia Corporation, First Continental Bancshares, Inc., Commercial Bancshares, Inc.,
Bastrop National Bank, and First Bancorp of Louisiana, Inc.
</TABLE>
COMPARATIVE PER SHARE INFORMATION
(Unaudited)
The following table sets forth for Hibernia Common Stock and First
Continental Common Stock certain historical, 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, incorporated by reference to this Proxy
Statement - Prospectus, and First Continental, contained elsewhere
in this Proxy Statement - Prospectus. 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 4,423,746 shares of Hibernia Common Stock for all the
outstanding shares of First Continental.
HIBERNIA CORPORATION AND FIRST CONTINENTAL BANCSHARES, INC.
COMPARATIVE PER SHARE INFORMATION
Unaudited
<TABLE>
<CAPTION>
HISTORICAL FIRST
PRO FORMA CONTINENTAL
FIRST HIBERNIA BANCSHARES, INC.
HIBERNIA CONTINENTAL CORPORATION PRO FORMA
CORPORATION BANCSHARES, INC. (WITH F.C.B.I.)(1) EQUIVALENT (2)
Per Common Share:
<S> <C> <C> <C> <C>
Net income (loss) from continuing operations
For the year ended December 31,
1993 $0.58 $0.48 $0.56 $0.90
1992 (0.27) 0.21 (0.22) (0.35)
1991 (5.12) (0.39) (4.45) (7.12)
Cash dividends
For the year ended December 31,
1993 $0.03 - $0.03 $0.05
1992 - - - -
1991 0.15 - 0.15 0.24
Book Value
For the year ended December 31,
1993 $5.12 ($3.26)(3) $4.92 $7.87
(1) Refer to "PRO FROMA FINANCIAL INFORMATION".
(2) Pro forma equivalent amounts are computed by multiplying the pro forma combined amount by the
First Continental exchange ratio of 1.60.
(3) Total Shareholders' Equity ($17,397,000); less Preferred Stock ($11,422,000) and undeclared and
accumulated dividends, plus interest thereon, relating to the Preferred Stock ($12,910,000); divided by
Common Shares Outstanding (2,128,096).
</TABLE>
MEETING INFORMATION
General
Each copy of this Proxy Statement/Prospectus mailed to holders of
Common Stock and Preferred Stock is accompanied by proxy cards
furnished in connection with the solicitation of proxies by First
Continental's Board of Directors for use at the Special Meeting and
any adjournment thereof. This Proxy Statement/Prospectus and the
accompanying proxy cards are first being mailed to shareholders of
First Continental on or about May __, 1994. The Special Meeting is
scheduled to be held Wednesday, June 15, 1994, at p.m. Central
time, at , , Gretna, Louisiana 70053.
Only holders of record of Common Stock and Preferred Stock of First
Continental at the close of business on , 1994 are
entitled to notice of, and to vote at, the Special Meeting. At the
Special Meeting, the shareholders of First Continental will
consider and vote upon the following: (i) a proposal to amend the
Articles of Incorporation of First Continental; (ii) a proposal to
approve the Agreement and related Merger; and (iii) such other
matters as may properly come before the Special Meeting.
HOLDERS OF COMMON STOCK AND HOLDERS OF PREFERRED STOCK ARE
REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARDS
AND RETURN THEM PROMPTLY TO FIRST CONTINENTAL IN THE ENCLOSED PRE-
PAID ENVELOPE. FAILURE TO RETURN YOUR PROPERLY EXECUTED PROXY
CARDS MAY RESULT IN THE LACK OF A QUORUM AT THE SPECIAL MEETING.
FAILURE OF THE SHAREHOLDERS TO APPROVE THE AMENDMENT WILL RESULT IN
THE WITHDRAWAL OF THE PROPOSAL TO APPROVE THE AGREEMENT AND RELATED
MERGER FROM CONSIDERATION AT THE SPECIAL MEETING.
Solicitation; Voting and Revocation of Proxies
The shares of Common Stock and Preferred 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 properly signed but do
not contain voting instructions will be voted "FOR" approval of the
Amendment and "FOR" approval of the Agreement and related Merger.
If any other matters are properly presented for consideration at
the Special Meeting, the persons named in the enclosed 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. As of the date of this Proxy
Statement/Prospectus, First Continental's Board of Directors was
not aware of any other such matters to be presented at the Special
Meeting.
The cost of soliciting proxies from shareholders of First
Continental will be borne by First Continental. Such solicitation
will be made by mail, but also may be made by telephone or in
person by the directors, officers and employees of First
Continental (who will receive no additional compensation for doing
so).
Any holder of Common Stock or Preferred 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 the Secretary of First Continental, provided that
such notice or subsequently executed proxy card must actually be
received by the Secretary before the vote of shareholders at the
Special Meeting. Any notice of revocation or subsequently executed
proxy card should be sent to First Continental at 201 Huey P. Long
Avenue, Gretna, Louisiana 70053, Attention: Ms. Goldie T. Lanaux,
Secretary.
FIRST CONTINENTAL SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK
CERTIFICATES WITH THEIR PROXY CARDS. IF THE AGREEMENT IS APPROVED
AND THE MERGER IS CONSUMMATED, SHAREHOLDERS OF FIRST CONTINENTAL
WILL RECEIVE INSTRUCTIONS REGARDING THE SURRENDER AND EXCHANGE OF
THEIR STOCK CERTIFICATES.
Votes Required; Quorum
As of the Record Date, there were 2,128,096 shares of Common Stock
and 135,974 shares of Preferred Stock outstanding and entitled to
vote at the Special Meeting, with each share being entitled to one
vote. The affirmative vote of holders of at least two-thirds of
the outstanding shares of Preferred Stock voting as a class and
two-thirds of the total voting power of First Continental present
or represented by proxy and entitled to vote at the Special Meeting
is required to approve the proposed Amendment. If the Amendment is
approved, the affirmative vote of at least two-thirds of the total
voting power of First Continental present or represented at the
Special Meeting will be required to approve the Agreement and
related Merger. Members of First Continental's Board of Directors
and holders of 5% or more of the outstanding Common Stock, who have
agreed to vote their shares of Common Stock in favor of the
Agreement and related Merger, own approximately 49.4% of the
outstanding Common Stock of First Continental.
The Merger cannot be consummated unless the Amendment is approved
by the shareholders of First Continental because the Articles of
Incorporation of First Continental as currently in effect prohibit
the receipt of Hibernia Common Stock by holders of Preferred Stock
pursuant to the Agreement. Adoption of the Amendment is not
conditioned on shareholder approval of the Agreement and related
Merger. See "PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION OF
FIRST CONTINENTAL."
For purposes of the Special Meeting, the presence in person or by
proxy of a majority of the outstanding shares of First Continental
will constitute a quorum. Shares of Common Stock and Preferred
Stock which are present, or represented by proxy, at the Special
Meeting will be counted toward the quorum regardless of whether the
holder of the shares or proxy actually votes on the Amendment or on
the Agreement and related Merger. Accordingly, an "abstention"
will be considered present for quorum purposes and will have the
same effect as a vote "against" the proposal as to which the
abstention is made. Broker non-votes, however, will not be counted
for quorum purposes because brokers will not have discretionary
authority to vote with respect to the Amendment or the Agreement.
For purposes of both the class vote of Preferred Stock and the
combined vote of Common Stock and Preferred Stock on the Amendment,
abstentions will be counted as votes "against" the Amendment, while
shares not present or represented by proxy at the Special Meeting
and broker non-votes will be counted as votes "against" only for
purposes of the class vote of Preferred Stock on the Amendment.
For purposes of voting on the Agreement and related Merger,
"abstentions" will have the same effect as votes against the
Agreement and related Merger while broker non-votes will not be
counted.
The directors and executive officers of First Continental and their
affiliates beneficially owned an aggregate of shares, or
approximately %, of the outstanding Common Stock as of the
Record Date for the Special Meeting. Each shareholder who is a
director and each holder of 5% or more of the outstanding shares of
Common Stock has executed an agreement with Hibernia, pursuant to
which such shareholder has committed to vote the shares of Common
Stock owned by him in favor of the Agreement and related Merger.
Additionally, First Continental has been advised by such directors
and affiliates that they intend to vote their shares of Common
Stock in favor of approval of the Amendment.
As of the Record Date, the directors and executive officers of
Hibernia and their affiliates did not beneficially own any shares
of Common Stock or Preferred Stock of First Continental.
Recommendation of First Continental's Board
First Continental's Board of Directors has approved the Amendment
to the Articles of Incorporation and the Agreement, and recommends
that First Continental's shareholders vote "FOR" approval of the
Amendment and "FOR" approval of the Agreement and related Merger.
See "PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION OF FIRST
CONTINENTAL -- Reasons for Approval" and "PROPOSED MERGER --
Background of and Reasons for the Merger" and "-- Opinions of
Financial Advisors."
Other Matters
The Board of Directors of First Continental is not aware of any
business to be acted upon at the Special Meeting other than
consideration of the Amendment and the Agreement and related
Merger. If, however, other matters properly come before the
Special Meeting, or any adjournment 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" on the Pro
Forma Combined Balance Sheet, pro forma statements of income and
audited statements of income are summarized from Hibernia's Annual
Report on Form 10-K for the year ended December 31, 1993. The
information contained in the columns titled "Bastrop", "First
Commercial", "First Bancorp" and "First Continental" are based on
December 31, 1993, 1992 and 1991 financial statements of those
entities. The pro forma financial statements do not purport to be
indicative of the results that actually would have occurred if the
pending transactions had occurred on the dates indicated or that
may be obtained in the future.
On September 28, 1993, Hibernia signed an agreement and plan
of merger with Commercial Bancshares, Inc. ("Commercial"), a bank
holding company headquartered in Franklin, Louisiana, which owns
First Commercial Bank, headquartered in Abbeville, Louisiana. At
December 31, 1993, Commercial reported consolidated assets of $164
million and operated eight banking branches in the Acadiana region
of Louisiana. Shareholders of Commercial will receive Hibernia
Common Stock valued at $18.7 million in exchange for their shares
of Commercial, and the transaction will be accounted for as a
pooling of interests.
On November 4, 1993, Hibernia announced that it had reached an
agreement to merge with First Bancorp of Louisiana, Inc. ("First
Bancorp"). First Bancorp is a bank holding company headquartered
in Monroe, Louisiana that owns First National Bank of West Monroe
and Southern National Bank of Tallulah. As of December 31, 1993,
First Bancorp had consolidated assets of approximately $225 million
and operated seven banking branches in Monroe and Tallulah.
Shareholders of First Bancorp will receive Hibernia Common Stock
valued at $36 million in exchange for their common stock of First
Bancorp, and the transaction will be accounted for as a pooling of
interests.
On December 6, 1993, Hibernia announced that it had reached an
agreement to merge with First Continental Bancshares, Inc. ("First
Continental"), a Louisiana bank holding company that owns First
National Bank of Jefferson Parish ("FNJ"). At December 31, 1993,
First Continental reported consolidated assets of $400 million and
operated eight banking branches in Jefferson Parish, Louisiana.
Common and preferred stockholders of First Continental will receive
Hibernia Common Stock valued at approximately $31.7 million, and
certain other security and debt holders will receive cash and
Hibernia Common Stock, in the merger. This merger will also be
accounted for as a pooling of interests.
The mergers with Commercial, Bastrop and First Bancorp are
subject to the satisfaction of certain conditions similar to those
described herein with regard to the Merger. There can be no
assurance that any of such proposed mergers will occur, or that the
timing of the consummation of such mergers will be as assumed in
the Pro Forma Financial Statements.
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
The following unaudited pro forma combined balance sheet combines
the historical balance sheets of Hibernia and First Continental as
if the merger had been effective on December 31, 1993. This
unaudited pro forma combined balance sheet should be read in
conjunction with the historical financial statements and related
notes of Hibernia, incorporated by reference to this Proxy
Statement - Prospectus, and First Continental, contained elsewhere
in this Proxy Statement - Prospectus. The unaudited proforma
combined balance sheet also gives effect to other probable mergers
to which Hibernia is a party, as discussed in Note D to the pro
forma combined financial statements. These mergers include
Commercial Bancshares, Inc., Bastrop National Bank, and First
Bancorp of Louisiana, Inc. and have been included in the pro forma
combined balance sheet as if the mergers had been effective on
December 31, 1993.
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET
December 31, 1993
<TABLE>
<CAPTION>
FIRST PRO FORMA
CONTINENTAL PRO HIBERNIA
HIBERNIA BANCSHARES, FORMA CORPORATION
Unaudited ($ in thousands) CORPORATION INC. ADJ. (WITH F.C.B.I.)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $216,675 $13,141 $229,816
Interest-bearing time deposits in domestic banks - - -
Federal funds sold and securities purchased
under agreements to resell 220,000 22,000 ($15,374)C 213,716
(12,910)B
Securities available for sale 394,640 95,056 489,696
Securities held to maturity 1,526,231 32,651 (614)C 1,558,268
Loans, net of unearned income 2,328,119 223,093 2,551,212
Reserve for possible loan losses (159,143) (6,590) (165,733)
Loans, net 2,168,976 216,503 2,385,479
Bank premises and equipment 81,291 6,051 87,342
Customers' acceptance liability 11,800 - 11,800
Other assets 175,970 14,510 190,480
TOTAL ASSETS $4,795,583 $399,912 ($28,898) $5,166,597
LIABILITIES
Deposits:
Demand, noninterest-bearing $812,693 $60,999 $873,692
Interest-bearing 3,273,342 284,351 3,557,693
Total Deposits 4,086,035 345,350 4,431,385
Federal funds purchased and securities sold under
agreements to repurchase 137,986 13,234 151,220
Liability on acceptances 11,800 - 11,800
Payables arising from securities transactions
not yet settled 50,875 - 50,875
Other liabilities 80,515 12,047 ($4,288)C 88,274
Debt - 11,884 (11,400)C -
(484)A
TOTAL LIABILITIES 4,367,211 382,515 (16,172) 4,733,554
SHAREHOLDERS' EQUITY
Preferred Stock - 11,422 (11,422)B -
Common Stock 160,535 2,145 5,668 A 169,029
681 B
Surplus 404,745 2,741 (5,302)A 400,015
(2,169)B
Treasury Stock - (118) 118 A -
ESOP commitment - - -
Retained earnings (deficit) (147,160) 400 (300)C (147,060)
Unrealized gain on securities available for sale 10,252 807 11,059
TOTAL SHAREHOLDERS' EQUITY 428,372 17,397 (12,726) 433,043
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,795,583 $399,912 ($28,898) $5,166,597
See notes to Pro Forma Combined Financial Statements.
</TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET
December 31, 1993
(con't.)
<TABLE>
<CAPTION>
PRO FORMA FIRST TOTAL
HIBERNIA COMMERCIAL BASTROP BANCORP PRO PRO FORMA
CORPORATION BANCSHARES, NATIONAL OF LOUISIANA FORMA HIBERNIA
Unaudited ($ in thousands) (WITH F.C.B.I.) INC. BANK INC. ADJ. CORPORATION
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $229,816 $8,583 $5,494 $10,963 $254,856
Interest-bearing time deposits in domestic banks - 7 - 1,077 1,084
Federal funds sold and securities purchased
under agreements to resell 213,716 2,850 10,525 15,775 ($7,148)E 235,718
Securities available for sale 489,696 33,270 76,710 94,396 3,073 F 697,145
Securities held to maturity 1,558,268 58,502 - - 1,616,770
Loans, net of unearned income 2,551,212 58,916 35,482 99,775 2,745,385
Reserve for possible loan losses (165,733) (1,326) (384) (1,413) (168,856)
Loans, net 2,385,479 57,590 35,098 98,362 2,576,529
Bank premises and equipment 87,342 2,936 1,284 2,002 93,564
Customers' acceptance liability 11,800 - - - 11,800
Other assets 190,480 5,019 1,411 2,507 199,417
TOTAL ASSETS $5,166,597 $168,757 $130,522 $225,082 ($4,075) $5,686,883
LIABILITIES
Deposits:
Demand, noninterest-bearing $873,692 $23,084 $16,483 $33,067 $946,326
Interest-bearing 3,557,693 125,809 98,558 166,468 3,948,528
Total Deposits 4,431,385 148,893 115,041 199,535 4,894,854
Federal funds purchased and securities sold under
agreements to repurchase 151,220 - - 2,021 153,241
Liability on acceptances 11,800 - - - 11,800
Payables arising from securities transactions
not yet settled 50,875 - - - 50,875
Other liabilities 88,274 2,426 720 1,186 ($113)E 92,493
Debt - 3,345 - 8,752 (7,035)E 4,262
(800)D
TOTAL LIABILITIES 4,733,554 154,664 115,761 211,494 (7,948) 5,207,525
SHAREHOLDERS' EQUITY
Preferred Stock - - - - -
Common Stock 169,029 629 300 1,364 17,214 D 188,536
Surplus 400,015 591 1,000 6,744 (19,207)D 389,143
Treasury Stock - (1,154) - (1,639) 2,793 D -
ESOP commitment - - - (400) (400)
Retained earnings (deficit) (147,060) 13,968 13,461 7,519 (112,112)
Unrealized gain on securities available for sale 11,059 59 - - 3,073 F 14,191
TOTAL SHAREHOLDERS' EQUITY 433,043 14,093 14,761 13,588 3,873 479,358
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,166,597 $168,757 $130,522 $225,082 ($4,075) $5,686,883
See notes to Pro Forma Combined Financial Statements.
</TABLE>
PRO FORMA COMBINED STATEMENTS OF INCOME
(Unaudited)
The following unaudited pro forma combined statements of income for
the years ended December 31, 1993, 1992, and 1991 combine the
historical statements of income of Hibernia and First Continental
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, incorporated by reference to this Proxy
Statement - Prospectus, and First Continental, contained elsewhere
in this Proxy Statement - Prospectus. The cost associated with the
merger, estimated to be approximately $____________ will be
accounted for as a current period expense upon consummation of the
merger and has not been reflected in the pro forma combined
statements of income. The unaudited pro forma combined statements
of income also give effect to other probable mergers to which
Hibernia is a party, as discussed in Note D to the pro forma
combined financial statements. These mergers include Commercial
Bancshares, Inc., Bastrop National Bank, and First Bancorp of
Louisiana, Inc. and have been included in the pro forma combined
statements of income as if the mergers had been effective on
January 1, 1991.
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1993
<TABLE>
<CAPTION>
FIRST PRO FORMA
CONTINENTAL PRO HIBERNIA
HIBERNIA BANCSHARES, FORMA CORPORATION
Unaudited ($ in thousands, except per share data) CORPORATION INC. ADJ. (WITH F.C.B.I.)
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $185,378 $22,636 $208,014
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 105,939 6,890 112,829
Obligations of states and political subdivisions - 13 13
Trading account interest 33 - 33
Interest on time deposits in domestic banks 194 - 194
Interest on federal funds sold and securities
purchased under agreements to resell 8,186 446 8,632
Total Interest Income 299,730 29,985 329,715
Interest Expense
Interest on deposits 100,092 9,230 109,322
Interest on federal funds purchased and
securities sold under agreements to repurchase 3,654 289 3,943
Interest on debt and other 279 1,753 2,032
Total Interest Expense 104,025 11,272 115,297
Net Interest Income 195,705 18,713 214,418
Provision for possible loan losses (6,200) 725 (5,475)
Net Interest Income After Provision for
Possible Loan Losses 201,905 17,988 219,893
Noninterest Income
Trust fees 12,692 611 13,303
Service charges on deposits 30,046 2,755 32,801
Other service, collection and exchange charges 15,768 815 16,583
Gain on settlement of acquired loans 1,308 - 1,308
Other operating income 7,403 578 (905)G 7,076
Securities gains, net - 24 24
Total Noninterest Income 67,217 4,783 (905) 71,095
Noninterest Expense
Salaries and employee benefits 83,364 8,087 91,451
Occupancy expense, net 20,611 727 21,338
Equipment expense 11,043 745 11,788
Data processing expense 16,504 755 (741)G 16,518
Foreclosed property expense 2,188 5,213 7,401
Provision for data processing enhancements 11991 - 11,991
Other operating expense 73,775 5,174 (164)G 78,785
Total Noninterest Expense 219,476 20,701 (905) 239,272
Income Before Income Taxes and
Cumulative Effect of Accounting Change 49,646 2,070 0 51,716
Income tax expense 1,696 1,052 2,748
Income from Continuing Operations $47,950 $1,018 $0 $48,968
Pro Forma Weighted Average Common Shares 83,175,129 4,423,746 87,598,875
Pro Forma Income Per Common Share
from Continuing Operations (H) $0.58 * $0.56
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1993
(con't.)
<TABLE>
<CAPTION>
PRO FORMA FIRST TOTAL
HIBERNIA COMMERCIAL BASTROP BANCORP PRO FORMA
CORPORATION BANCSHARES, NATIONAL OF LOUISIANA, HIBERNIA
Unaudited ($ in thousands, except per share data) (WITH F.C.B.I.) INC. BANK INC. CORPORATION
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $208,014 $5,479 $3,183 $7,470 $224,146
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 112,829 5,001 4,312 4,678 126,820
Obligations of states and political subdivisions 13 42 630 537 1,222
Trading account interest 33 - - - 33
Interest on time deposits in domestic banks 194 1 - 100 295
Interest on federal funds sold and securities
purchased under agreements to resell 8,632 180 200 207 9,219
Total Interest Income 329,715 10,703 8,325 12,992 361,735
Interest Expense
Interest on deposits 109,322 3,992 3,378 4,308 121,000
Interest on federal funds purchased and
securities sold under agreements to repurchase 3,943 - - 59 4,002
Interest on debt and other 2,032 252 8 377 2,669
Total Interest Expense 115,297 4,244 3,386 4,744 127,671
Net Interest Income 214,418 6,459 4,939 8,248 234,064
Provision for possible loan losses (5,475) 75 28 (235) (5,607)
Net Interest Income After Provision for
Possible Loan Losses 219,893 6,384 4,911 8,483 239,671
Noninterest Income
Trust fees 13,303 - - 7 13,310
Service charges on deposits 32,801 820 513 803 34,937
Other service, collection and exchange charges 16,583 176 138 470 17,367
Gain on settlement of acquired loans 1,308 - - - 1,308
Other operating income 7,076 67 47 136 7,326
Securities gains, net 24 - 51 90 165
Total Noninterest Income 71,095 1,063 749 1,506 74,413
Noninterest Expense
Salaries and employee benefits 91,451 2,404 1,451 3,211 98,517
Occupancy expense, net 21,338 401 358 660 22,757
Equipment expense 11,788 392 93 304 12,577
Data processing expense 16,518 21 14 200 16,753
Foreclosed property expense 7,401 (178) - (88) 7,135
Provision for data processing enhancements 11,991 - - - 11,991
Other operating expense 78,785 1,938 915 1,966 83,604
Total Noninterest Expense 239,272 4,978 2,831 6,253 253,334
Income Before Income Taxes and
Cumulative Effect of Accounting Change 51,716 2,469 2,829 3,736 60,750
Income tax expense 2,748 802 779 1,030 5,359
Income from Continuing Operations $48,968 $1,667 $2,050 $2,706 $55,391
Pro Forma Weighted Average Common Shares 87,598,875 2,493,333 2,866,667 4,800,000 97,758,875
Pro Forma Income Per Common Share
from Continuing Operations (H) $0.56 $0.57
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1992
<TABLE>
<CAPTION>
FIRST PRO FORMA
CONTINENTAL PRO HIBERNIA
HIBERNIA BANCSHARES, FORMA CORPORATION
Unaudited ($ in thousands, except per share data) CORPORATION INC. ADJ. (WITH F.C.B.I.)
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $253,183 $24,612 $277,795
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 89,131 7,017 96,148
Obligations of states and political subdivisions 3 2 5
Trading account interest 99 - 99
Interest on time deposits in domestic banks 223 - 223
Interest on federal funds sold and securities
purchased under agreements to resell 14,095 549 14,644
Total Interest Income 356,734 32,180 388,914
Interest Expense
Interest on deposits 141,502 12,169 153,671
Interest on federal funds purchased and
securities sold under agreements to repurchase 6,515 322 6,837
Interest on debt and other 11,439 1,353 12,792
Total Interest Expense 159,456 13,844 173,300
Net Interest Income 197,278 18,336 215,614
Provision for possible loan losses 66,275 1,152 67,427
Net Interest Income After Provision for
Possible Loan Losses 131,003 17,184 148,187
Noninterest Income
Trust fees 12,263 577 12,840
Service charges on deposits 31,870 2,726 34,596
Other service, collection and exchange charges 13,928 932 14,860
Gain on settlement of acquired loans 4,151 - 4,151
Loss on planned sale of Texas bank (2,934) - (2,934)
Other operating income 9,972 640 (911)G 9,701
Securities gains, net 17,190 20 17,210
Total Noninterest Income 86,440 4,895 (911) 90,424
Noninterest Expense
Salaries and employee benefits 86,141 7,034 93,175
Occupancy expense, net 23,275 726 24,001
Equipment expense 13,447 744 14,191
Data processing expense 17,477 747 (739)G 17,485
Foreclosed property expense 16,302 6,554 22,856
Other operating expense 68,716 5,592 (172)G 74,136
Total Noninterest Expense 225,358 21,397 (911) 245,844
Income (Loss) Before Income Taxes and
Extraordinary Items (7,915) 682 0 (7,233)
Income tax expense - 232 232
Income (Loss) from Continuing Operations ($7,915) $450 $0 ($7,465)
Pro Forma Weighted Average Common Shares 29,608,279 4,423,746 34,032,025
Pro Forma Income (Loss) Per Common Share
from Continuing Operations (H) ($0.27)* ($0.22)
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1992
(con't.)
<TABLE>
<CAPTION>
PRO FORMA FIRST TOTAL
HIBERNIA COMMERCIAL BASTROP BANCORP PRO FORMA
CORPORATION BANCSHARES, NATIONAL OF LOUISIANA, HIBERNIA
Unaudited ($ in thousands, except per share data) (WITH F.C.B.I.) INC. BANK INC. CORPORATION
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $277,795 $6,489 $3,410 $6,286 $293,980
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 96,148 5,619 4,775 4,940 111,482
Obligations of states and political subdivisions 5 70 572 555 1,202
Trading account interest 99 - - - 99
Interest on time deposits in domestic banks 223 4 2 132 361
Interest on federal funds sold and securities
purchased under agreements to resell 14,644 230 178 146 15,198
Total Interest Income 388,914 12,412 8,937 12,059 422,322
Interest Expense
Interest on deposits 153,671 5,497 3,743 4,737 167,648
Interest on federal funds purchased and
securities sold under agreements to repurchase 6,837 - 4 69 6,910
Interest on debt and other 12,792 377 11 186 13,366
Total Interest Expense 173,300 5,874 3,758 4,992 187,924
Net Interest Income 215,614 6,538 5,179 7,067 234,398
Provision for possible loan losses 67,427 150 40 710 68,327
Net Interest Income After Provision for
Possible Loan Losses 148,187 6,388 5,139 6,357 166,071
Noninterest Income
Trust fees 12,840 2 - 7 12,849
Service charges on deposits 34,596 713 481 661 36,451
Other service, collection and exchange charges 14,860 183 179 523 15,745
Gain on settlement of acquired loans 4,151 - - - 4,151
Loss on planned sale of Texas bank (2,934) - - - (2,934)
Other operating income 9,701 22 31 6 9,760
Securities gains, net 17,210 44 22 60 17,336
Total Noninterest Income 90,424 964 713 1,257 93,358
Noninterest Expense
Salaries and employee benefits 93,175 2,565 1,336 2,404 99,480
Occupancy expense, net 24,001 407 351 634 25,393
Equipment expense 14,191 387 133 308 15,019
Data processing expense 17,485 22 14 205 17,726
Foreclosed property expense 22,856 (124) - (30) 22,702
Other operating expense 74,136 1,868 985 1,550 78,539
Total Noninterest Expense 245,844 5,125 2,819 5,071 258,859
Income (Loss) Before Income Taxes and
Extraordinary Items (7,233) 2,227 3,033 2,543 570
Income tax expense 232 638 854 598 2,322
Income (Loss) from Continuing Operations ($7,465) $1,589 $2,179 $1,945 ($1,752)
Pro Forma Weighted Average Common Shares 34,032,025 2,493,333 2,866,667 4,800,000 44,192,025
Pro Forma Income (Loss) Per Common Share
from Continuing Operations (H) ($0.22) ($0.04)
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1991
<TABLE>
<CAPTION>
FIRST PRO FORMA
CONTINENTAL PRO HIBERNIA
HIBERNIA BANCSHARES, FORMA CORPORATION
Unaudited ($ in thousands, except per share data) CORPORATION INC. ADJ. (WITH F.C.B.I.)
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $451,675 $26,672 $478,347
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 114,629 5,861 120,490
Obligations of states and political subdivisions 4,970 6 4,976
Trading account interest 70 - 70
Interest on time deposits in domestic banks 100 - 100
Interest on federal funds sold and securities
purchased under agreements to resell 9,285 984 10,269
Total Interest Income 580,729 33,523 614,252
Interest Expense
Interest on deposits 317,780 17,645 335,425
Interest on federal funds purchased and
securities sold under agreements to repurchase 16,177 543 16,720
Interest on debt and other 12,173 1,250 13,423
Total Interest Expense 346,130 19,438 365,568
Net Interest Income 234,599 14,085 248,684
Provision for possible loan losses 178,330 1,800 180,130
Net Interest Income After Provision for
Possible Loan Losses 56,269 12,285 68,554
Noninterest Income
Trust fees 14,346 490 14,836
Service charges on deposits 34,779 2,629 37,408
Other service, collection and exchange charges 19,938 884 20,822
Credit card income 5,251 160 5,411
Gain on settlement of acquired loans 9,043 - 9,043
Other operating income 8,512 368 (799)G 8,081
Securities gains, net 17,801 179 17,980
Total Noninterest Income 109,670 4,710 (799) 113,581
Noninterest Expense
Salaries and employee benefits 115,173 6,954 122,127
Occupancy expense, net 28,785 899 29,684
Equipment expense 13,979 851 14,830
Data processing expense 12,548 665 (658)G 12,555
Foreclosed property expense 24,854 3,685 28,539
Credit card expense 3,136 - 3,136
Other operating expense 110,679 4,469 (141)G 115,007
Total Noninterest Expense 309,154 17,523 (799) 325,878
Income (Loss) Before Minority Interests (143,215) (528) 0 (143,743)
Less: Minority interest - 311 311
Income (Loss) Before Income Taxes,
Extraordinary Item and Cumulative Effect
of Accounting Change (143,215) (839) 0 (144,054)
Income tax expense 782 - 782
Income (Loss) from Continuing Operations ($143,997) ($839) $0 ($144,836)
Pro Forma Weighted Average Common Shares 28,116,938 4,423,746 32,540,684
Pro Forma Income (Loss) Per Common Share
from Continuing Operations (H) ($5.12)* ($4.45)
See notes to Pro Forma Combined Financial Statements.
*Historical
</TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1991
(con't.)
<TABLE>
<CAPTION>
PRO FORMA FIRST TOTAL
HIBERNIA COMMERCIAL BASTROP BANCORP PRO FORMA
CORPORATION BANCSHARES, NATIONAL OF LOUISIANA, HIBERNIA
Unaudited ($ in thousands, except per share data) (WITH F.C.B.I.) INC. BANK INC. CORPORATION
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $478,347 $7,857 $3,648 $5,845 $495,697
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 120,490 6,002 4,694 4,743 135,929
Obligations of states and political subdivisions 4,976 229 495 574 6,274
Trading account interest 70 - - - 70
Interest on time deposits in domestic banks 100 61 37 324 522
Interest on federal funds sold and securities
purchased under agreements to resell 10,269 292 470 386 11,417
Total Interest Income 614,252 14,441 9,344 11,872 649,909
Interest Expense
Interest on deposits 335,425 8,216 5,150 6,580 355,371
Interest on federal funds purchased and
securities sold under agreements to repurchase 16,720 - - 74 16,794
Interest on debt and other 13,423 635 19 319 14,396
Total Interest Expense 365,568 8,851 5,169 6,973 386,561
Net Interest Income 248,684 5,590 4,175 4,899 263,348
Provision for possible loan losses 180,130 10 17 432 180,589
Net Interest Income After Provision for
Possible Loan Losses 68,554 5,580 4,158 4,467 82,759
Noninterest Income
Trust fees 14,836 2 - 6 14,844
Service charges on deposits 37,408 754 442 605 39,209
Other service, collection and exchange charges 20,822 218 162 573 21,775
Credit card income 5,411 - - 2 5,413
Gain on settlement of acquired loans 9,043 - - - 9,043
Other operating income 8,081 27 37 - 8,145
Securities gains, net 17,980 22 (278) (17) 17,707
Total Noninterest Income 113,581 1,023 363 1,169 116,136
Noninterest Expense
Salaries and employee benefits 122,127 2,510 1,231 2,195 128,063
Occupancy expense, net 29,684 411 350 378 30,823
Equipment expense 14,830 453 85 211 15,579
Data processing expense 12,555 17 17 194 12,783
Foreclosed property expense 28,539 244 - (2) 28,781
Credit card expense 3,136 - - - 3,136
Other operating expense 115,007 1,935 799 1,317 119,058
Total Noninterest Expense 325,878 5,570 2,482 4,293 338,223
Income (Loss) Before Minority Interests (143,743) 1,033 2,039 1,343 (139,328)
Less: Minority interest 311 - - - 311
Income (Loss) Before Income Taxes,
Extraordinary Item and Cumulative Effect
of Accounting Change (144,054) 1,033 2,039 1,343 (139,639)
Income tax expense 782 163 478 305 1,728
Income (Loss) from Continuing Operations ($144,836) $870 $1,561 $1,038 ($141,367)
Pro Forma Weighted Average Common Shares 32,540,684 2,493,333 2,866,667 4,800,000 42,700,684
Pro Forma Income (Loss) Per Common Share
from Continuing Operations (H) ($4.45) ($3.31)
See notes to Pro Forma combined Financial Statements.
*Historical
</TABLE>
HIBERNIA CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
A. Hibernia will issue Common Stock with an aggregate market
value at the date of merger of approximately $30,500,000 to
acquire the outstanding First Continental Common Stock. It is
assumed that prior to the merger the Cash Premium related to
the Senior Notes of approximately $484,000 will be converted
to 415,107 shares of First Continental Common Stock. The
Hibernia Common Stock is assumed to have a market value of
$7.50 per share resulting in the issuance of 4,069,125 shares
of Common Stock for all the outstanding First Continental
Common Stock (exchange ratio of 1.60). The stated value of
Hibernia 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.
B. Hibernia will acquire the outstanding First Continental
Preferred Stock through the issuance of approximately
$2,660,000 of Common Stock and payment of $12,910,000 of cash.
The Hibernia Common Stock is assumed to have a market value of
$7.50 per share resulting in the issuance of 354,621 shares.
The stated value of Hibernia Common Stock is $1.92 per share.
Available federal funds will be used to fund the cash payment.
C. Hibernia will use available federal funds sold and investment
securities to retire $11,400,000 of First Continental debt and
pay $4,288,000 of related accrued interest and a $300,000
redemption premium pursuant to a debt agreement. Investment
securities of $614,000, which represent an escrow account
previously established by First Continental, will be used to
fund a portion of the debt retirement. The retirement of this
debt is a requirement of the merger.
D. In addition to the First Continental merger, Hibernia is a
party to pending mergers with Commercial Bancshares, Inc.
(Commercial Bancshares), Bastrop National Bank (Bastrop
National) and First Bancorp of Louisiana, Inc. (First
Bancorp). Hibernia will issue Common Stock to effect these
mergers in transactions using the pooling-of-interests method
of accounting. It is assumed that prior to these mergers
$800,000 of First Bancorp convertible subordinated debentures
will be converted to 30,064 shares of First Bancorp common
stock.
The Hibernia Common Stock is assumed to have a market value of
$7.50 per share and a stated value of $1.92 per share. In
accordance with the pooling-of-interests method of accounting,
the historical equities of the merged companies are combined.
Hibernia Mkt Value Stated Value Exchange
Shares of Shares of Shares Ratio
----------------------------------------------
Commercial Bancshares 2,493,333 $18,700,000 $ 4,787,000 8.85
Bastrop National 2,866,667 21,500,000 5,504,000 9.55
First Bancorp 4,800,000 36,000,000 9,216,000 20.20
Total 10,160,000 $76,200,000 $19,507,000
E. Hibernia will use available federal funds sold and investment
securities to retire debt and related accrued interest.
Debt Interest
----------------------
Commercial Bancshares $3,345,000 $ 63,000
First Bancorp 3,690,000 50,000
$7,035,000 $ 113,000
The retirement of the Commercial Bancshares debt is not a
requirement of the merger. The retirement of the First
Bancorp debt is required by the debt agreement.
F. To record the effect of the adoption of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS No. 115), for
Bastrop National (increase in value of securities available
for sale of $1,089,000) and for First Bancorp (increase in
value of securities available for sale of $1,984,000).
Hibernia, Commercial Bancshares and First Continental adopted
SFAS No. 115 effective December 31, 1993. This entry conforms
the accounting policies of all of the companies.
G. To eliminate intercompany transactions between Hibernia and
First Continental primarily related to data processing charges
paid by First Continental to Hibernia.
H. Hibernia 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'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
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 AMENDMENT TO
ARTICLES OF INCORPORATION OF FIRST CONTINENTAL
General
At the Special Meeting, First Continental will seek shareholder
approval of the Amendment to eliminate Section 4.2.1.3(v) of
Article 4 of First Continental's Articles of Incorporation and to
renumber Sections 4.2.1.3(vi), (vii), (viii), (ix) and (x) thereof.
A copy of Article 4.2.1.3(v) of First Continental's Articles of
Incorporation is attached to this Proxy Statement/Prospectus as
Appendix B. Section 4.2.1.3(v) of Article 4 is an impediment to
any merger, consolidation, recapitalization, sale of assets or
similar transaction by First Continental and would operate to
prevent consummation of the Merger because it requires, as a
condition to any such transaction, that holders of Preferred Stock
receive securities in such transaction that preserve the rights and
preferences of such stock. Accordingly, only a comparable class of
preferred stock, and not common stock or other consideration, could
be received by the holders of Preferred Stock pursuant to any such
merger or similar transaction in order to comply with the
requirements of Section 4.2.1.3(v). Consequently, the repeal or
modification of Section 4.2.1.3(v) of Article 4 is necessary to the
consummation of the Merger, wherein holders of Preferred Stock will
receive shares of Hibernia Common Stock (and cash in the amount of
all undeclared and accumulated dividends plus interest thereon)
pursuant to the Agreement.
Description of Section 4.2.1.3(v)
Section 4.2.1.3(v) contains provisions that impede the
accomplishment of certain types of extraordinary transactions,
including transactions such as the Merger. The Amendment, if
approved, will result in the repeal of these provisions. The
following description of Section 4.2.1.3(v) is qualified in its
entirety by the exact terms and provisions of Section 4.2.1.3(v),
the text of which is attached hereto as Appendix B.
Preservation of Rights and Preferences. Clause (i) of Section
4.2.1.3(v) provides that, upon any capital reorganization or
reclassification of the capital stock of First Continental,
consolidation or merger of First Continental with another
corporation, or sale of all or substantially all of its assets to
another corporation (any of such transactions being defined as a
"Reorganization"), the rights and preferences of the Preferred
Stock (including certain conversion rights) shall be preserved in
the securities to be received by the holders of the Preferred Stock
upon consummation of the Reorganization, regardless of whether
First Continental is the surviving entity in such transaction. In
effect, this provision requires that any acquiring corporation
which is to be the surviving entity in a merger or similar
transaction with First Continental issue to holders of Preferred
Stock a substantially similar class of preferred stock of the
acquiring corporation in exchange for such stock. As a result of
any merger, the former holders of Preferred Stock would become
holders of a class of preferred stock of the acquiring corporation
that provides for rights and preferences in the payment of
dividends and upon the liquidation or dissolution of the
corporation, conversion rights (including the rights set forth in
Section 4.2.1.3(v) to receive a substantially similar class of
preferred stock in any Reorganization), and class voting rights in
certain circumstances. While this provision is intended to assure
that holders of Preferred Stock do not receive a more junior class
of securities in a merger or similar transaction, it also makes
more difficult the negotiation and consummation of such a
transaction because of possible objections by common shareholders
and other security holders of the acquiring corporation, and
generally inhibits flexibility in the structuring of the
transaction. Hibernia did not offer to exchange a similar class of
preferred stock for the Preferred Stock, primarily because of the
economic and other terms of the Preferred Stock and their effect on
its common shareholders. Accordingly, the Merger cannot be
consummated unless the Amendment is approved by First Continental's
shareholders.
Certain Conversion Rights and Assumption of Obligations. Clause
(ii) of Section 4.2.1.3(v) provides that upon any Reorganization
provision be made so that the holders of Preferred Stock thereafter
have the right to convert their shares into that number of the
securities or that amount of consideration other than securities
into which each share of Common Stock is converted pursuant to such
Reorganization (as opposed to the shares of Common Stock of First
Continental that would have been receivable upon such conversion
had such Reorganization not taken place) multiplied by the
Conversion Ratio as then in effect under the Articles of
Incorporation. In effect, holders of Preferred Stock exercising
their conversion privilege would be treated under this provision as
though they had converted their shares into shares of Common Stock
and then received the securities or other consideration into which
the Common Stock is converted pursuant to the Reorganization. It
is not being proposed that the general conversion right of the
Preferred Stock set forth in Section 4.2.1.3(i) (which contains
similar conversion rights) otherwise be modified or eliminated.
Clause (iii) of Section 4.2.1.3(v) implements clauses (i) and (ii)
by requiring that a successor corporation resulting from a
Reorganization assume by written instrument mailed or delivered to
holders of Preferred Stock all obligations to the holders of the
Preferred Stock to which they are entitled. The provisions
contained in clauses (ii) and (iii) do not add to the substantive
rights and preferences of the holders of Preferred Stock but do
contribute to the administrative complexity of a merger or similar
transaction. For a discussion of the comparative rights of holders
of Common Stock and Preferred Stock of First Continental, on the
one hand, and Hibernia Common Stock on the other, see "PROPOSED
MERGER -- Certain Differences in Rights of Shareholders."
Reasons for Approval
Section 4.2.1.3(v) of the Articles of Incorporation is intended to
assure that any security of an acquiring company issued to holders
of Preferred Stock in exchange for their shares in connection with
a merger or similar transaction have rights and preferences no less
favorable to the holders of Preferred Stock than the rights and
preferences provided for in such stock. A major effect of that
provision, however, is to make more difficult the negotiation and
consummation of certain transactions in which First Continental
would combine with and become a part of another financial
institution. By requiring that a substantially similar class of
preferred stock be issued in the transaction to holders of
Preferred Stock of First Continental, Section 4.2.1.3(v) limits the
character of consideration that can be used in a merger or similar
transaction, thereby inhibiting flexibility in the structuring of
a possible transaction, and imposes what may be impractical and/or
unacceptable economic terms on the capital structure of an
acquiring corporation. None of the offers, including that of
Hibernia, considered by the Board of Directors of First Continental
for the acquisition of First Continental provided for the issuance
of a class of preferred stock to holders of Preferred Stock of
First Continental, and the Agreement under consideration at the
Special Meeting does not so provide. Consequently, the Merger
cannot be consummated unless Section 4.2.1.3(v) is repealed by
shareholder approval of the Amendment.
The proposed merger of First Continental with and into Hibernia has
been determined by First Continental's Board of Directors, after
consultations with its financial advisors, to be in the best
interests of First Continental and its shareholders (including the
holders of Preferred Stock). See "PROPOSED MERGER -- Background of
and Reasons for the Merger" and "-- Opinions of Financial
Advisors." In order to facilitate consummation of the Merger and
other possible acquisition transactions involving First Continental
if the Merger is not consummated for any reason, First
Continental's Board of Directors recommends approval of the
Amendment.
Vote Required to Approve the Amendment
The proposal to amend First Continental's Articles of Incorporation
to delete Section 4.2.1.3(v) thereof requires the affirmative vote
of the holders of at least two-thirds of the outstanding shares of
Preferred Stock voting separately as a class and the affirmative
vote of the holders of at least two-thirds of the total voting
power of First Continental present or represented at the Special
Meeting. Directors and affiliates of First Continental having
voting power as of the Record Date of approximately 49.4% of the
outstanding Common Stock have indicated that they intend to vote
their Common Stock in favor of the Amendment.
THE BOARD OF DIRECTORS OF FIRST CONTINENTAL RECOMMENDS THAT YOU
VOTE ALL OF YOUR SHARES OF COMMON STOCK AND PREFERRED STOCK "FOR"
THE AMENDMENT TO THE ARTICLES OF INCORPORATION.
PROPOSED MERGER
This section of the Proxy Statement/Prospectus describes certain
aspects of the Agreement and 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 to this Proxy
Statement/Prospectus as Appendix A and is incorporated herein by
reference. All shareholders are urged to read the Agreement
carefully and in its entirety.
Background of and Reasons for the Merger
Background. The Board of Directors of First Continental in July
1993 engaged Montgomery to evaluate strategic alternatives for
First Continental. Based upon Montgomery's presentation of
strategic alternatives available to First Continental, the Board on
August 3, 1993, determined to solicit preliminary indications of
interest for the purchase of First Continental from interested and
capable buyers. Montgomery contacted four local and regional
financial institutions and one individual investor, including all
who had expressed any interest in acquiring First Continental
previously. Each potential buyer which expressed an acceptable
preliminary indication of interest was allowed two weeks of
document and record review before the submission of final
acquisition proposals. Three financial institutions, including
Hibernia, submitted final acquisition proposals and preliminary
versions of merger agreements which were considered by the Board of
Directors of First Continental and FNJ at a Joint Special Meeting
held for that purpose on December 2, 1993. At the meeting,
representatives of Montgomery advised the Board of Directors
regarding the competing proposals and expressed their willingness
to opine affirmatively on the fairness of any of the transactions,
from a financial point of view, to First Continental and its
shareholders. Representatives of KBW, which had been retained by
the Board in November 1993 to evaluate the proposals as they
related to the holders of Preferred Stock, also made a presentation
to the Board and concluded that each proposal was fair from a
financial point of view to the holders of Preferred Stock. Based
upon the foregoing and its analysis of the competing proposals, the
Board of Directors determined that the sale of First Continental to
Hibernia pursuant to its acquisition proposal was in the best
interests of First Continental and its shareholders and approved
the Agreement and the Merger.
Reasons for the Merger. In reaching its decision that the Merger
is in the best interests of First Continental and its share-
holders, First Continental's Board of Directors consulted with its
financial and other advisors, as well as with First Continental's
management, and considered a number of factors, including, but not
limited to, the following:
(a) The financial condition and results of operations of, and
prospects for, each of Hibernia and First Continental, and
particularly, in the case of First Continental, that it has only
recently begun its recovery from substantial losses incurred over
the past several years;
(b) The nature and extent of certain regulatory restrictions
imposed on First Continental and the impact of such restrictions on
the ability of First Continental to raise needed capital and fund
its operations;
(c) First Continental has never declared a dividend on its
Common Stock and it is unlikely that any dividends will be paid on
its Common Stock in the future because of the accumulated dividends
on the Preferred Stock;
(d) Dividends have accumulated but not been paid on its
Preferred Stock for over seven years, and that there is only a
limited likelihood that accumulated dividends will be paid on the
Preferred Stock in the foreseeable future;
(e) The amount and type of consideration to be received by
First Continental's shareholders in the Merger;
(f) The Hibernia Common Stock to be received in the Merger
will be listed for trading on the NYSE and should provide First
Continental's shareholders with liquidity that is unavailable to
holders of Common Stock and Preferred Stock of First Continental,
for which active trading markets do not exist;
(g) The Merger will allow First Continental's shareholders to
become shareholders of Hibernia, an institution which is one of the
largest bank holding companies headquartered in Louisiana;
(h) Recent changes in the regulatory environment will result
in First Continental facing additional competitive pressures in its
market area from other financial institutions with greater
financial resources capable of offering a broad array of financial
services;
(i) The Merger is expected to qualify as a tax-free
reorganization so that neither First Continental nor its
shareholders (except to the extent that cash is received in respect
of their shares) will recognize any gain in the transaction (see
"Material Tax Consequences"); and
(j) The opinion received from Montgomery that the
consideration to be received by the shareholders of First
Continental pursuant to the Merger, when taken as a whole, is fair
to such shareholders from a financial point of view, and the
opinion received from KBW that the consideration to be received by
the holders of Preferred Stock pursuant to the Merger is fair to
such shareholders from a financial point of view (see "Opinions of
Financial Advisors").
First Continental's Board of Directors did not assign any
specific or relative weight to the foregoing factors in its
considerations. First Continental's Board of Directors believes
that the Merger will provide significant value to all First
Continental shareholders and will enable them to participate in
opportunities for growth that First Continental's Board of
Directors believes the Merger makes possible.
Based on the foregoing, the Board of Directors of First
Continental has approved the Agreement and related Merger, believes
that the Agreement and related Merger is in the best interests of
First Continental shareholders, and recommends that all
shareholders vote "FOR" the Agreement and related Merger.
Conversion of Shares Pursuant to the Merger
On the Effective Date, (i) each outstanding share of Common
Stock (other than shares held by dissenting shareholders) will be
converted into the number of shares of Hibernia Common Stock that
equals the Exchange Rate (as hereinafter defined) and (ii) each
outstanding share of Preferred Stock (other than shares held by
dissenting shareholders) will be converted into the number of
shares of Hibernia Common Stock that equals the Exchange Rate
multiplied by 1.63 and the right to receive cash in the amount of
all undeclared and accumulated dividends, plus interest thereon.
The "Exchange Rate" is the number that is obtained by dividing
$12.00 by the Average Market Price of Hibernia Common Stock. The
Average Market Price of the Hibernia Common Stock will be the
average of the mean of the high and low trading prices of the stock
for the ten business days prior to the last trading day immediately
preceding the Closing Date, provided that the Average Market Price
shall not be less than $6.00 nor more than $8.50 for purposes of
calculating the Exchange Rate. Holders of Preferred Stock will
receive between 2.3 and 3.26 shares of Hibernia Common Stock
(depending on the Average Market Price of Hibernia Common Stock),
and the right to receive cash in the amount of all undeclared and
accumulated dividends and interest thereon, which valued together
equals approximately $122 per share of Preferred Stock exchanged
(assuming a June 30, 1994 Closing Date). Holders of Common Stock
will receive between 1.41 and 2 shares of Hibernia Common Stock
(depending on its Average Market Price) valued at $12 per share of
Common Stock exchanged (assuming a June 30, 1994 Closing Date).
The following table sets forth the range of the number of shares of
Hibernia Common Stock into which each share of Common Stock and
Preferred Stock would be converted on the Effective Date assuming
that on such date the Average Market Price of Hibernia Common Stock
is as specified below.
Assumed Average Market Number of Hibernia Common Shares
Price of Hibernia Per First Continental Share
Common Stock Common Stock Preferred Stock
$6.00 2.00 shares 3.26 shares
6.50 1.85 shares 3.01 shares
7.00 1.71 shares 2.79 shares
7.50 1.60 shares 2.61 shares
8.00 1.50 shares 2.45 shares
8.50 1.41 shares 2.30 shares
On December 3, 1993, the actual closing price for a share of
Hibernia Common Stock was $7.25 and the Average Market Price would
have been $7.25 if calculated as of December 6, 1993.
In lieu of the issuance of any fractional share of Hibernia
Common Stock to which a shareholder of First Continental may be
entitled (after aggregation of all fractional shares to which such
holder may be entitled), shareholders will receive cash (without
interest) in an amount equal to such fractional part of a share
multiplied by the Average Market Price of Hibernia Common Stock.
Upon the effectiveness of the Merger, shares of Common Stock
and Preferred Stock will automatically and without any action on
the part of the holders thereof become and be converted into
Hibernia Common Stock, and First Continental shareholders will
thereby be entitled to all of the rights and privileges afforded to
Hibernia shareholders as of such date.
For a discussion of the rights of dissenting shareholders, see
"PROPOSED MERGER -- Rights of Dissenting Shareholders."
Redemption of Mandatory Convertible Subordinated Debentures
At January 31, 1994, First Continental had outstanding a class
of 12% Mandatory Convertible Subordinated Debentures in the
principal amount of $6,000,000, due November 15, 1996 (the
"Debentures"). The Debenture Agreement, dated as of November 15,
1986, pertaining to the Debentures (the "Debenture Agreement")
provides in Section 11.01 thereof that upon a merger of First
Continental into another entity the Debentures may be redeemed in
cash in an amount equal to 105% of the unpaid principal amount of
the Debentures, together with accrued and unpaid interest to the
date fixed for redemption. Pursuant to the Agreement, if the
Merger is consummated the Debentures will be redeemed for cash on
the Effective Date in accordance with Section 11.01 of the
Debenture Agreement as herein described. Assuming an Effective
Date for the Merger of June 30, 1994, accrued and unpaid interest
of approximately $4,411,000 would be payable on the Debentures.
Notice of such redemption will be given to each holder of a
Debenture not less than 30 nor more than 60 days prior to the
Effective Date, whereupon holders of Debentures will be entitled on
or after the Effective Date at the place of payment specified in
such Notice to payment of the cash due upon surrender of the
Debentures.
Redemption of Class A Notes and Class B Notes
First Continental has outstanding two classes of senior notes
in the aggregate principal amount of $5,400,000 comprised of the
10.75% Class A Senior Secured Notes due 1997 (the "Class A Notes"),
and the 10.75% Class B Senior Secured Notes due 1997 (the "Class B
Notes", and together with the Class A Notes the "Senior Notes"),
which will be subject to mandatory redemption because the Merger
constitutes an "Extraordinary Transaction" under the Indenture,
dated as of November 9, 1992 (the "Indenture"), pertaining to the
Senior Notes. Pursuant to the Agreement, the Senior Notes will be
redeemed, if the Merger is consummated, for cash on the Effective
Date in accordance with Section 1109 of the Indenture. Section
1109 of the Indenture provides for a redemption price for the Class
A Notes and Class B Notes equal to the principal amount of such
notes, plus all accrued and unpaid interest to, but not including,
the date of redemption, plus (in the case of the Class A Notes),
the Cash Premium with related Share Option as defined in the
Indenture which is described below.
Section 202(a) of the Indenture provides that each holder of
Class A Notes is entitled to a Cash Premium upon the earlier of
redemption or maturity of his Note equal to the product of (i) 10%
of the principal amount of his Class A Note and (ii) the number of
years from the date of issuance (including the year of payment)
that the Note has been outstanding, up to a maximum of five years.
Assuming that the Effective Date of the Merger is on or before June
30, 1994, the Cash Premium will be $200 for each $1,000 face amount
of Class A Note.
The Share Option pursuant to Section 311 of the Indenture
gives each holder of Class A Notes the option to exchange the right
to receive the Cash Premium with respect to any or all of his Class
A Notes for shares of Common Stock, subject to certain conditions
provided in the Indenture (the "Option Conditions"). The Option
Conditions are that (i) the holders of at least 25% of the
aggregate principal amount of the Class A Notes elect to receive
Common Stock in lieu of the Cash Premium, (ii) the issuance of the
shares of Common Stock as a result of the exercise of the Share
Option would not be subject to registration under the Securities
Act, the Louisiana Securities Law, or any successor statute or an
exemption from such registration is reasonably available, and (iii)
the payment of principal and interest on the Class A Notes shall
not have been accelerated (and not rescinded) upon the occurrence
of an Event of Default as defined in the Indenture. If the Share
Option is exercised and the Option Conditions are satisfied, each
holder of Class A Notes will be deemed to have received, in lieu of
the Cash Premium attributable to his Class A Notes, approximately
94 shares of Common Stock for each $1,000 face amount of Class A
Note. Each such share of Common Stock deemed to have been received
and valued at $12.00 per share under the Agreement will
automatically be converted pursuant to the Merger into shares of
Hibernia Common Stock at the Exchange Rate as described above under
"Conversion of Shares Pursuant to the Merger."
Notice of such Extraordinary Mandatory Redemption has been
sent to each holder of Class A Notes and Class B Notes, together
with Letters of Transmittal for purposes of delivery of the Notes
for surrender to the Paying Agent, and (in the case of Class A
Notes) Option Notice and Notice of Election to Exercise Share
Option for purposes of exercising the Share Option on the part of
holders of Class A Notes. On the Effective Date, the redemption
price in respect of the Class A Notes and Class B Notes will become
due and payable by the Paying Agent to holders who have duly
surrendered such Notes, including, in the case of Class A Notes,
the Cash Premium as to holders of Class A Notes who do not exercise
the Share Option as to all or any part of their Class A Notes.
Holders of Class A Notes who deliver to First Continental not less
than five days before the consummation of the Merger a written
Notice of Election as to all or any part of their Notes will be
entitled to receive, in lieu of the Cash Premium in respect of
their Notes as to which the Share Option is so exercised, the
shares of Hibernia Common Stock to which they would be entitled
upon consummation of the Merger in exchange for the shares of
Common Stock which they otherwise would be entitled to receive upon
such exercise.
Opinions of Financial Advisors
Opinion of Montgomery Securities
General. Pursuant to an engagement letter dated July 12, 1993
(the "Engagement Letter"), First Continental engaged Montgomery to
act as its financial advisor in connection with its evaluation of
its strategic alternatives and the possible sale of First
Continental. Montgomery is a nationally recognized investment
banking firm and, as part of its investment banking activities, is
regularly engaged in the valuation of businesses and their
securities in connection with merger transactions and other types
of acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes. First
Continental selected Montgomery as its financial adviser on the
basis of its experience and expertise in transactions similar to
the Merger and its reputation in the banking and investment
communities.
At the December 2, 1993 meeting of First Continental's Board
of Directors, Montgomery delivered its oral opinion, subsequently
confirmed in writing, that the consideration to be received by the
shareholders of First Continental pursuant to the Merger, when
taken as a whole, is fair to such shareholders from a financial
point of view. Montgomery was not asked to, and did not, express
any opinion as to the allocation of the consideration between the
holders of Common Stock and Preferred Stock. No limitations were
imposed by First Continental on Montgomery with respect to the
investigations made or procedures followed in rendering its
opinion. The full text of Montgomery's written opinion to the
First Continental Board of Directors is attached hereto as Appendix
C and is incorporated herein by reference and should be read
carefully and in its entirety in connection with this Proxy
Statement/Prospectus. The following summary of Montgomery's
opinion is qualified in its entirety by reference to the full text
of the opinion. Montgomery's opinion is addressed to the First
Continental Board of Directors only and does not constitute a
recommendation to any shareholder of First Continental as to how
such shareholder should vote at the Special Meeting.
In connection with its opinion, Montgomery, among other
things: (i) reviewed certain publicly available financial and other
data with respect to First Continental and Hibernia, including the
consolidated financial statements for recent years and interim
periods to September 30, 1993, and certain other relevant financial
and operating data relating to First Continental and Hibernia made
available to Montgomery from published sources and from the
internal records of First Continental; (ii) reviewed the Agreement;
(iii) reviewed certain historical market prices and trading volumes
of Hibernia Common Stock as reported by the NYSE; (iv) compared
First Continental and Hibernia from a financial point of view with
certain other companies in the financial services industry that
Montgomery deemed to be relevant; (v) considered the financial
terms, to the extent publicly available, of selected recent
business combinations of companies in the financial services
industry that Montgomery deemed to be comparable, in whole or in
part, to the Merger and First Continental; (vi) reviewed and
discussed with representatives of the management of First
Continental and Hibernia certain information of a business and
financial nature regarding First Continental and Hibernia,
furnished to Montgomery by First Continental and Hibernia,
including financial projections and related assumptions of First
Continental; (vii) made inquiries regarding and discussed the
Merger and the Agreement, and other matters related thereto with
First Continental's counsel; and (viii) performed such other
analyses and examinations as Montgomery deemed appropriate.
In connection with its review, Montgomery did not
independently verify any of the foregoing information, and relied
on such information and assumed such information was complete and
accurate in all material respects. With respect to the financial
projections for First Continental provided to Montgomery by First
Continental's management, Montgomery assumed for purposes of its
opinion that they were reasonably prepared on bases reflecting the
best available estimates and judgments of First Continental's
management at the time of preparation as to the future financial
performance of First Continental and they provided a reasonable
basis upon which Montgomery could form its opinion. Montgomery
also assumed that there were no material changes in First
Continental's or Hibernia's assets, financial condition, results of
operations, business or prospects since the respective dates of the
last financial statements made available to Montgomery. Montgomery
relied on advice of counsel to First Continental as to all legal
matters with respect to First Continental, the Merger and the
Agreement. In addition, Montgomery did not make an independent
evaluation, appraisal or physical inspection of the assets or
individual properties of First Continental or Hibernia, nor was
Montgomery furnished with any such appraisals. Further,
Montgomery's opinion was based on economic, monetary and market
conditions existing as of December 2, 1993.
Set forth below is a brief summary of the report presented by
Montgomery to the First Continental Board of Directors on December
2, 1993 in connection with its opinion.
Comparable Company Analysis. Using public and other available
information, Montgomery compared certain financial ratios of FNJ
(including the ratio of net income to average total assets ("return
on average assets"), the ratio of net income to average total
equity ("return on average equity"), the ratio of average equity to
average assets, the ratio on noninterest expense to revenue ("cost
control") and certain credit ratios) for the year ended December
31, 1992 and for the nine months ended September 30, 1993, to three
Louisiana banks which Montgomery deemed to be comparable to First
Continental (First Commerce Corporation, Hibernia Corporation and
Premier Bancorp, Inc.), to a national proxy group consisting of 50
selected national banks (the "National Bank Proxy Group"), and to
a southeast proxy group consisting of approximately nine banks
located in the Southeast region of the United States (including
Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi,
Oklahoma, Tennessee and Texas) (the "Southeast Bank Proxy Group").
No company used in the analysis is identical to FNJ. The analysis
necessarily involved complex considerations and judgments
concerning differences in financial and operating characteristics
of the companies.
Analysis of Selected Bank Merger Transactions. Montgomery
reviewed the consideration paid in recently announced transactions
whereby certain banks were acquired. Specifically, Montgomery
reviewed 286 transactions involving acquisitions of banks in the
Southeast region of the United States announced since January 1989
(the "Southeast Acquisitions"), acquisitions of 13 selected
Louisiana banks announced since May 1989 (the "Louisiana
Acquisitions"), and Hibernia's announcement of pending merger
transactions with three other Louisiana financial institutions in
1993 (the "Hibernia Mergers"). For each bank acquired or to be
acquired in such transactions, Montgomery compiled figures
illustrating, among other things, the return on average equity,
return on average assets and nonperforming assets to total assets.
For each such transaction Montgomery compiled figures illustrating,
among other things, the ratio of the premium (i.e., purchase price
in excess of book value) to core deposits, purchase price to
deposits, purchase price to book value and purchase price to last
twelve-months ("LTM") earnings.
The figures for banks acquired or to be acquired in the
Southeast Acquisitions, the Louisiana Acquisitions and the Hibernia
Mergers produced: (i) median return on average equity of 11.36%,
11.36% and 18.84%, respectively; (ii) median return on average
assets of 0.94%, 0.82% and 1.87%, respectively; and (iii) median
nonperforming assets to total assets of 1.42%, 1.89% and 1.22%,
respectively. In comparison, Montgomery determined that for the
nine months ended September 30, 1993, FNJ's return on average
equity was 16.25%, its return on average assets was 1.06%, and its
nonperforming assets to total assets were 4.58%.
The figures for the Southeast Acquisitions, the Louisiana
Acquisitions, and the Hibernia Mergers produced: (i) median
percentage of premium to core deposits of 4.48%, 2.99% and 8.35%,
respectively; (ii) median purchase price to deposits of 12.53%,
11.95% and 18.94%, respectively; (iii) a median ratio of purchase
price to book value of 1.43, 1.38 and 1.52, respectively; and (iv)
a median ratio of purchase price to LTM earnings of 12.7, 9.7 and
9.7, respectively. In comparison, assuming the Average Market
Price of Hibernia Common Stock on the Closing Date is between $6.00
and $8.50, the conversion of all Preferred Stock into 221,638
shares of Common Stock and the issuance of 458,339 shares of Common
Stock to holders of the Class A Notes, Montgomery determined that
the consideration to be received by the holders of Common Stock in
the Merger represented a percentage of premium to core deposits of
10.47%, a premium of price to deposits of 18.27%, a ratio of price
to book value of 2.23 and a ratio of price to FNJ's annualized and
normalized estimated 1993 earnings of 15.2.
No other company or transaction used in the above analysis as
a comparison is identical to FNJ or the Merger. Accordingly, an
analysis of the results of the foregoing is not mathematical;
rather, it involves complex considerations and judgments concerning
differences in financial and operating characteristics of the
companies and other factors that could affect the public trading
value of the companies to which First Continental and the Merger
are being compared.
Contribution Analysis. Montgomery analyzed the contribution
of each of First Continental and Hibernia to, among other things,
common equity and net income of the pro forma combined companies
for the years ended December 31, 1991 and 1992, and for the nine-
month period ended September 30, 1993. This analysis showed, among
other things, that based on pro forma combined balance sheets and
income statements for First Continental and Hibernia as of December
31, 1992 and September 30, 1993, First Continental would have
contributed 0.4% and 1.1%, respectively, of the common equity, and
for the nine months ended September 30, 1993, First Continental
would have contributed 3.7% of the net income to common
shareholders of the combined companies. At the year ended December
31, 1991, First Continental had a negative common equity and for
the years ended December 31, 1991 and 1992, either or both First
Continental or Hibernia reported a net loss to holders of its
Common Stock. Assuming the Average Market Price of Hibernia Common
Stock on the Closing Date is between $6.00 and $8.50, the
conversion of all Preferred Stock into 221,638 shares of Common
Stock and the issuance of 458,339 shares of Common Stock to holders
of the Class A Notes, the First Continental shareholders would own
approximately 5.54% of the combined companies based on common
shares outstanding on September 30, 1993.
Dilution Analysis. Using estimates of future earnings
prepared by First Continental management and analysts' estimates
for Hibernia, Montgomery compared the calendar year 1994 estimated
earnings per share of First Continental Common Stock and Hibernia
Common Stock to the calendar year 1994 estimated earnings per share
of the common stock of the pro forma combined companies. Based on
such analysis and assuming the Average Market Price of Hibernia
Common Stock on the Closing Date is between $6.00 and $8.50, the
conversion of all Preferred Stock into 221,638 shares of Common
Stock and the issuance of 458,339 shares of Common Stock to holders
of the Class A Notes, the proposed transaction would be dilutive to
Hibernia's earnings per share in 1994, prior to projected cost
savings, and accretive to First Continental's earnings per share.
The summary set forth above does not purport to be a complete
description of the presentation by Montgomery to the First
Continental Board of Directors or of the analyses performed by
Montgomery. The preparation of a fairness opinion is not
necessarily susceptible to partial analysis or summary description.
Montgomery believes that its analyses and the summary set forth
above must be considered as a whole and that selecting a portion of
its analyses and of the factors considered, without considering all
analyses and factors, would create an incomplete view of the
process underlying the analyses set forth in its presentation to
the First Continental Board of Directors. In addition, Montgomery
may have given certain analyses more or less weight than other
analyses, 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 Montgomery's view of the actual value of First
Continental or the combined companies. 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
analysis.
In performing its analyses, Montgomery made numerous
assumptions with respect to industry performance, general business
and economic conditions and other matters, many of which are beyond
the control of First Continental or Hibernia. The analyses
performed by Montgomery 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 analyses were
prepared solely as part of Montgomery's analysis of the fairness of
the consideration to be received by the First Continental
shareholders in the Merger and were provided to the First
Continental Board of Directors in connection with the delivery of
Montgomery'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. Montgomery used in its analyses
various projections of future performance prepared by the
management of First Continental. The projections are based on
numerous variables and assumptions which are inherently
unpredictable and must be considered not certain of occurrence as
projected. Accordingly, actual results could vary significantly
from those set forth in such projections.
As described above, Montgomery's opinion and presentation to
the First Continental Board of Directors were among the many
factors taken into consideration by the Board in making its
determination to approve the Agreement and the Merger.
Pursuant to the Engagement Letter, First Continental became
obligated to pay Montgomery a retainer fee of $25,000 on December
31, 1993, which will be credited against any other fee to be paid
to Montgomery. If the Merger is consummated, Montgomery will be
paid a fee equal to 1.2% of the total consideration involved in the
Merger. First Continental has also agreed to reimburse Montgomery
for its reasonable out-of-pocket expenses in an amount not to
exceed $15,000, excluding legal fees of up to $10,000 which First
Continental also agreed to reimburse. Pursuant to a separate
letter agreement, First Continental has agreed to indemnify
Montgomery, its affiliates, and their respective partners,
directors, officers, agents, consultants, employees and controlling
persons against certain liabilities, including liabilities under
the federal securities laws. Neither Hibernia nor First
Continental has paid Montgomery any other fees during the last two
years, except for soliciting dealer fees.
In the ordinary course of its business, Montgomery actively
trades equity securities of Hibernia for its own account and for
the accounts of customers and, accordingly, may at any time hold a
long or short position in such securities.
Opinion of Keefe, Bruyette & Woods, Inc.
General. First Continental retained KBW to provide its
opinion on the consideration to be paid to the holders of Preferred
Stock pursuant to the Merger. Representatives of KBW attended the
First Continental Board of Directors meeting held on December 2,
1993, at which time the Board approved the Merger. Prior to the
Board of Directors' meeting, KBW's role was limited to discussions
with First Continental management. KBW was not authorized to
solicit indications of potential interest from other institutions,
and KBW did not participate in the negotiations pertaining to the
Merger.
KBW is a recognized investment banking firm and, as part of
its investment banking business, is continually engaged in the
valuation of bank and thrift securities in connection with mergers,
negotiated underwritings, secondary distribution of listed and
unlisted securities, private placements and valuations for various
other purposes. As specialists in the securities of these
companies, KBW has experience in, and knowledge of, the valuation
of banking and thrift institutions.
At the December 2, 1993 First Continental Board of Directors
meeting, KBW rendered an oral opinion to the Board that, from a
financial point of view, the consideration (the "Preferred
Consideration") to be paid to holders of Preferred Stock by
Hibernia of (i) such numbers of shares of Hibernia Common Stock
equal to the Exchange Rate multiplied by 1.63, and (ii) cash in the
amount of all accumulated and unpaid dividends plus interest
thereon for each share of Preferred Stock was fair. A written
opinion to the First Continental Board of Directors reaffirming
KBW's oral opinion has been delivered to First Continental.
The full text of KBW's opinion is attached as Appendix D to
this Proxy Statement/Prospectus. The description of the opinion
set forth herein is qualified in its entirety by reference to the
opinion.
KBW's opinion is directed only to the Preferred Consideration
and does not constitute a recommendation to any First Continental
shareholder as to how the shareholder should vote at the Special
Meeting.
In connection with its opinion, KBW reviewed, analyzed and
relied upon material relating to the financial and operating
condition of Hibernia and First Continental, including, among other
things, the following: (i) the Agreement; (ii) a copy of the
Registration Statement on Form S-4 of Hibernia as filed with the
Commission on April ___, 1994; (iii) Annual Reports to Stockholders
and Annual Reports on Form 10-K for each of the years ended
December 31, 1992, 1991 and 1990 of Hibernia and First Continental;
(iv) certain interim reports to stockholders and Quarterly Reports
on Form 10-Q of Hibernia and First Continental and certain other
communications from Hibernia and First Continental to their
respective shareholders; (v) other financial information concerning
the business and operations of Hibernia and First Continental
furnished to KBW for purposes of its analysis, including certain
internal financial analyses and projections for First Continental
prepared by senior management; (vi) certain publicly available
information concerning the trading of, and the trading market for,
the Hibernia Common Stock and the Common Stock and Preferred Stock
of First Continental; and (vii) certain publicly available
information with respect to banking companies and the nature and
terms of certain other transactions that KBW considered relevant to
its evaluation.
In conducting its review and arriving at its opinion, KBW
relied upon and assumed the accuracy and completeness of all of the
financial and other information provided to it or publicly
available, and KBW did not attempt to verify such information
independently. KBW relied upon the management of First Continental
as to the reasonableness and achieveability of the financial and
operating projections provided to it and assumed that such
projections will be realized in the amounts and in the time periods
currently estimated by management. KBW also assumed, without
independent verification, that the aggregate allowances for loan
losses for Hibernia and First Continental are adequate to cover
such losses. KBW did not make or obtain any evaluations or
appraisals of the property of Hibernia or First Continental, nor
did KBW examine any individual loan credit files.
Prior to rendering the written opinion attached hereto as
Appendix D to this Proxy Statement/Prospectus, KBW rendered an oral
opinion to First Continental's Board of Directors on December 2,
1993. Set forth below is a brief summary of selected analyses
generated by KBW that supported its oral opinion to the Board of
Directors of First Continental. The Selected Peer Analysis and
Selected Merger Transactions address the relative merits of the
Hibernia Common Stock and the fairness of the aggregate
consideration offered by Hibernia. The Proposal Summary and
Discounted Cash Flow Analysis address the fairness of the specific
consideration offered to the Preferred Shareholders.
Selected Peer Analysis. KBW constructed a peer group analysis
of regional banking companies for financial comparison purposes.
The analysis was based on various financial measures of performance
including earnings, capital adequacy and asset quality.
The peer analysis compared the financial performance of
Hibernia and the other two bidders to a group of southeastern
regional banking peers. The group of other regional banks had
assets ranging from approximately $4.8 billion to $11.5 billion,
including Deposit Guaranty Corp., AmSouth Bancorporation, First
Alabama Bancshares, Inc., First Tennessee National Corp., and Union
Planters Corp. This analysis showed, among other things, that as
of September 30, 1993, Hibernia's tangible equity to asset ratio
was 7.91%, compared to a range of 5.06% to 7.82% and a mean of
6.82% for the group; its ratio of non-performing assets to total
loans and other real estate owned was 4.37%, compared to a range of
.66% to 2.07% and a mean of 1.11% for the group; its return on
equity for the quarter ended September 30, 1993 on an annualized
basis was 12.07%, compared with a range of 14.75% to 18.15% and a
mean of 15.98% for the group; and its return on assets for the
quarter ended September 30, 1993 on an annualized basis was 1.05%,
compared with a range of 1.05% to 1.42% and a mean of 1.25% for the
group. As of November 30, 1993, Hibernia's price to book value
multiple was 1.42, compared with a range of 1.32 to 1.59 and a mean
of 1.44 for the group; and its price to earnings multiple based on
1994 estimated earnings was 8.09, compared with a range of 8.1 to
8.87 and a mean of 8.76 for the group.
Analysis of Selected Merger Transactions. KBW reviewed
certain financial data related to selected bank holding company
acquisitions of smaller regional and community banks. The selected
acquisitions included the following transactions (identified by
acquiror/acquiree); Hibernia Corporation/First Bancorp of
Louisiana, Inc.; Keystone Financial/WM Bancorp; Premier
Bancorp/Alerion Corp.; Hibernia Corporation/Commercial Bancshares,
Inc.; First Commerce Corporation/First Acadania; Banc One
Corp./Central Banking Group; Banc One Corp./First Financial
Association; and Comerica Incorporated/NorthPark National
Corporation.
In each of the selected transactions, KBW calculated the
premiums paid relative to the target's trailing twelve months
earnings and tangible book value. The calculations produced the
following ranges of percentage premiums: (i) price offered as a
multiple of earnings of 7x's to 20.4x's with an average of
13.03x's, compared with a premium of 12.6x's associated with
Hibernia's proposal; and (ii) price offered as a multiple of
tangible book value of 1.38x's to 2.15x's with an average of 1.79
x's, compared with a premium of 2.25x's for Hibernia's proposal.
No company or transaction used as a comparison in the above
analysis is identical to Hibernia, First Continental or the Merger.
Accordingly, an analysis of the results of the foregoing is not
mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operating
characteristics of the companies and other factors that could
affect the public trading value of the companies to which they are
being compared.
Proposal Summary. KBW reviewed the three offers submitted to
First Continental in its sales process. All three proposals
approached the interests of the holders of Preferred Stock in a
similar manner, with a cash component for all accumulated and
unpaid dividends and interest thereon and a common stock component
relating to the principal balance of the Preferred Stock. The cash
component of all three offers represented a major portion of the
consideration for the holders of Preferred Stock and the common
stock components were close in value. As such, KBW viewed the
three offers from the point of view of the holders of Preferred
Stock to be comparable in value.
Discounted Cash Flow Analysis. KBW estimated the value of the
future stream of earnings that may be available for the payment of
dividends on Preferred Stock through the year 2005 and expressed
this value in terms of a net present value calculation. KBW
calculated the available cash flow for holding company obligations
by making certain bank-level assumptions: (i) asset growth rates at
the bank level of 7%; (ii) a return on asset ratio ranging from
1.5% - 1.77%; and (iii) a constant leverage ratio of 7.5%. The
resultant dividends available for the holding company needs were
then applied to claims in order of seniority. Payment on the
claims of the Preferred Stock, namely the current dividends,
dividends in arrears, interest on the dividends in arrears, and the
principal were assumed to be reinstated in 1995 and continued
through 2005. Using discount rates ranging from 20% to 25%, the
present value of the aggregate payments ranged from $9.5 million to
$12.3 million, or approximately $70 to $90 per share of Preferred
Stock.
The summary set forth above provides a description of the main
elements that supported the KBW oral opinion to the First
Continental Board of Directors on December 2, 1993. It does not
purport to be a complete description of the presentations by KBW to
First Continental of the analyses performed by KBW. The
preparation of a fairness opinion is not necessarily susceptible to
partial analysis or summary descriptions. KBW believes that its
analyses and the summary set forth above must be considered as a
whole and that selecting portions of its analyses without
considering all analyses, or selecting part of all of the above
summary without considering all factors and analyses, would create
an incomplete view of the processes underlying the analyses set
forth in KBW's presentations and opinion. The ranges of valuations
resulting from any particular analysis described above should not
be taken to be KBW's view of the actual value of the Preferred
Stock. 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, KBW made numerous assumptions with
respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control
of Hibernia and First Continental. The analyses performed by KBW
are not necessarily indicative of actual values or actual future
results which may be significantly more or less favorable than
suggested by analyses. Such analyses were prepared solely as part
of KBW's analysis of the fairness of the Preferred Consideration to
be paid to the holders of the Preferred Stock pursuant to the
Merger and were provided to First Continental in connection with
the delivery of KBW's opinion. The analyses do not purport to be
appraisals or to reflect the prices at which the Preferred Stock
actually might 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, KBW's opinion, along with its
discussions with First Continental and its Board of Directors is
just one of many factors taken into consideration by First
Continental.
First Continental paid KBW $25,000 concurrently with the
signing of the Agreement and has agreed to pay KBW an additional
cash fee of $25,000 at the time of the mailing of this Proxy
Statement/Prospectus. First Continental also has agreed to
indemnify KBW against ceratin liabilities, including liabilities
under the federal securities laws, and to reimburse KBW for certain
out-of-pocket expenses. Otherwise, KBW has not been paid any other
fees by Hibernia or First Continental in the past two years.
Surrender of 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 First Continental a letter of
transmittal, together with instructions for the exchange of their
Common Stock and Preferred Stock certificates for certificates
representing Hibernia Common Stock. Until so exchanged, each
certificate representing Common Stock or Preferred 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 (and, in the case of Preferred Stock, the
right to receive cash), into which such shares have been converted
on the Effective Date. Shareholders should not send their Common
Stock or Preferred Stock certificates for surrender until they
receive further instructions from the Exchange Agent.
Representations and Warranties; Conditions to the Merger; Waiver
The Agreement contains representations and warranties by First
Continental 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 other
public reports. Except as otherwise provided in the Agreement,
these representations and warranties will not survive the Effective
Date.
The obligations of Hibernia and First Continental to
consummate the Merger and the Bank Merger are conditioned upon,
among other things, approval of the Agreement by First
Continental's shareholders; the receipt of necessary regulatory
approvals, including the approval of the OCC and the Federal
Reserve Board 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(a) of
the Code and that, to the extent Common Stock and Preferred Stock
is exchanged for Hibernia Common Stock, First Continental'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; 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 First Continental shareholders holding
more than 10% of the outstanding First Continental shares 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 First Continental's shareholders may reduce the
Exchange Rate.
Regulatory and Other Approvals
Hibernia and First Continental are registered bank holding
companies and as such are regulated by the Federal Reserve Board.
The approval of the Federal Reserve Board of the Merger is required
in order to consummate the Merger.
HNB and FNJ are regulated by the OCC, and the Bank Merger
consequently must be approved by the OCC before it may be effected.
When the approvals of the Federal Reserve Board and the OCC
have been obtained, First Continental and Hibernia must wait at
least 30 days prior to consummating the Merger. During this 30-day
period, the Department of Justice may object to the Merger on
antitrust grounds.
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 Agreement and related Merger at
the Special Meeting is not dependent or conditioned upon receipt of
any such approvals prior to the Special Meeting. Even if the
Amendment and the Agreement and related Merger are approved at the
Special Meeting, the Merger, nevertheless, may not be consummated
thereafter. Failure to receive the requisite regulatory approvals
will result in a termination of the Agreement.
Business Pending the Merger
Under the terms of the Agreement, neither First Continental
nor FNJ 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; (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, First Continental may not solicit bids
or other transactions that would result in a merger of First
Continental or FNJ with an entity other than Hibernia or HNB.
First Continental is also prohibited from paying 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 shall be the date upon
which the Merger becomes effective under the LBCL (the "Effective
Date").
Prior to the Effective Date, the Agreement may be terminated
by either party, whether before or after approval of the Agreement
by First Continental'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 First Continental fail to approve
the Agreement and related Merger at the Special Meeting; or (v) in
the event that the Merger is not consummated by December 31, 1994.
The Agreement may be terminated by Hibernia if the holders of more
than 10% of the outstanding shares of First Continental exercise
statutory dissenters' rights, by either party if certain material
adverse changes occur in respect of the other party, and by First
Continental if the price of Hibernia Common Stock does not satisfy
certain ratios. 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 Proxy Statement/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, First Continental will be merged with
and into Hibernia. Immediately thereafter, FNJ will merge with and
into HNB and the separate existences of First Continental and FNJ
will cease. The offices of FNJ will operate as branch banking
offices of HNB. The employees of FNJ 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.
The Boards of Directors of Hibernia and HNB following the
Merger shall consist of those persons serving as directors
immediately prior thereto. The former directors of First
Continental and FNJ will not serve on the Board of Directors of
Hibernia and HNB following the Merger. 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."
Certain Differences in Rights of Shareholders
If the shareholders of First Continental approve the Agreement
and the Merger is subsequently consummated, all shareholders of
First Continental, 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 First Continental's Articles of Incorporation and Bylaws. The
following is a summary of the principal differences between the
rights of shareholders of First Continental and Hibernia not
described elsewhere in this Proxy Statement/Prospectus.
Shareholder Actions and Voting Requirements. First
Continental's Articles of Incorporation, except with respect to
certain matters involving the Preferred Stock described hereinafter
under "Preferred Stock" and the limitation of liability of the
directors and officers of First Continental, are silent with
respect to the vote required for shareholder approval of certain
extraordinary matters. Accordingly, two-thirds of the voting power
present or represented by proxy at a meeting called for that
purpose is required under the LBCL to approve an agreement of
merger or consolidation, or a sale, lease, exchange, or other
disposition of all or substantially all of First Continental's
assets, while a majority of the voting power present or represented
is required to approve the dissolution or liquidation of First
Continental. The affirmative vote by the holders of at least 80%
of the total voting power of First Continental is required to amend
or repeal a provision in the Articles of Incorporation limiting the
liability of directors and officers of First Continental.
Hibernia's Articles of Incorporation and Bylaws generally
require the affirmative vote of only a majority of the voting power
present or represented at a meeting called for such purpose to
approve the extraordinary transactions set forth above.
Preemptive Rights. The respective shareholders of Hibernia
and First Continental have no preemptive rights.
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. Any director of First Continental may be
removed, with or without cause, by the vote of a majority of the
shares then entitled to vote at an election of directors.
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 First Continental may be amended by a vote of
two-thirds of the voting power present or represented at any
meeting at which such action is to be considered.
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. First Continental's Bylaws may be
amended or repealed, and new Bylaws may be adopted, by a vote of a
majority of the directors present at a meeting at which a quorum is
present.
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 shareholders.
Special meetings of the shareholders of First Continental may be
called by the Secretary or by its Board of Directors, and must be
called by the President at the request of the holders of not less
than one-tenth of the voting power of First Continental.
Shareholder Proposals. Hibernia's Bylaws contain certain
provisions expressly allowing shareholders to submit 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. Except for the right on
the part of holders of Preferred Stock of First Continental to
elect one or more directors when dividends on the Preferred Stock
have not been paid for two or more consecutive quarters, the
shareholders of First Continental have no special rights to submit
shareholder proposals or to nominate individuals for election as
directors.
Certain Transfer Restrictions Relating to Five-Percent
Shareholders. Article IX of Hibernia's Articles of Incorporation
restricts transfers of equity interests in Hibernia under certain
circumstances. This restriction (the "Five-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 Five-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 "Five-percent shareholder" of
Hibernia or an increase in the percentage stock ownership of any
existing "Five-percent shareholder."
The Five-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 Five-Percent Restriction.
The Five-Percent Restriction may adversely affect the
marketability of Hibernia Common Stock by discouraging potential
investors from acquiring equity securities of Hibernia. However,
since its adoption in September 1992, the Five-Percent Restriction
does not appear to have had any such adverse affect on the
marketability of Hibernia Common Stock.
While the Five-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 Five-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 Five-Percent Restriction. Any anti-takeover effect
of the Five-Percent Restriction will end with the termination of
the Five-Percent Restriction on December 29, 1995.
Neither the Articles of Incorporation nor the Bylaws of First
Continental contain any such restrictions on the transfer of equity
interests in First Continental.
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.
The Articles of Incorporation of First Continental provide
that, subject to certain limitations, no director or officer of
First Continental shall be liable to First Continental or to its
shareholders for monetary damages for breach of his fiduciary duty
as a director or officer and permit the indemnification of such
persons by First Continental. First Continental has adopted
indemnity agreements and Bylaw provisions establishing
indemnification substantially similar to that in effect for
directors and officers of Hibernia.
Preferred Stock. The Board of Directors of Hibernia is
authorized, without action of its shareholders, to issue preferred
stock from time to time and to establish the designations,
preferences and relative, optional or other special rights and
qualifications, limitations and restrictions thereof, as well as to
establish and fix variations in the relative rights as between
holders of any one or more series of such preferred stock.
Hibernia currently does not have any issued and outstanding shares
of preferred stock.
The Articles of Incorporation of First Continental generally
authorize the issuance, in one or more series, of 500,000 shares of
Cumulative Preferred Stock, $1.00 par value, and establish a series
of and designate 140,000 shares of Class A Cumulative Convertible
Preferred Stock (heretofore defined in this Proxy Statement/
Prospectus as "Preferred Stock"). The Preferred Stock, which is
the only series of Preferred Stock of First Continental
outstanding, has certain rights and preferences that Common Stock
of First Continental, as well as Hibernia Common Stock to be
received in the Merger, do not.
The holders of Preferred Stock of First Continental are
entitled to receive, when and as declared by the Board of
Directors, out of funds legally available therefor, cumulative
preferential dividends in cash, payable quarterly at the rate of
$10.92 per annum. In the event that dividends payable with respect
to the Preferred Stock have not been paid for eight or more
cumulative quarters, any accumulated but unpaid dividends will
thereafter bear interest at the prime rate (adjusted quarterly)
established from time to time by Chase Manhattan Bank, New York,
such interest to be payable at the time of payment of such
dividends. So long as any shares of Preferred Stock are
outstanding, First Continental may not pay or declare any cash
dividends whatsoever on its Common Stock or any other class of
stock (including any other series of preferred stock) ranking
junior to the Preferred Stock unless (a) all dividends on the
Preferred Stock of all series for all past dividend periods have
been paid or (b) there is no default in respect of provision for
the redemption or purchase of shares of Preferred Stock by any
sinking fund or purchase fund or any such default has been waived
by the holders of a majority of the outstanding shares of Preferred
Stock.
In the event of any liquidation, dissolution or winding up of
the affairs of First Continental, then before any distribution or
payment may be made to the holders of Common Stock and any other
class of stock of First Continental ranking junior to the Preferred
Stock in respect of dividends or distribution of assets upon
liquidation, the holders of Preferred Stock are entitled to be paid
in full $84 for each share of Preferred Stock plus a sum equal to
(a) accumulated and unpaid dividends thereon to the date of payment
thereof and (b) accrued interest on any such unpaid dividends as
provided for such Preferred Stock. After such payment is made in
full to the holders of Preferred Stock, the remaining assets and
funds of First Continental, if any, will be distributed among the
holders of Common Stock and other class of stock of First
Continental ranking junior to the Preferred Stock in respect of
dividends or distribution of assets upon liquidation according to
their respective rights.
Holders of Preferred Stock have the option at any time to
convert their shares of Preferred Stock into fully paid and
nonassessable shares of Common Stock at the Conversion Ratio of
1.63 shares of Common Stock for each full share of Preferred Stock,
and which Conversion Ratio may be adjusted from time to time upon
Notice of Adjustment to holders of Preferred Stock to account for
or make adjustment to reflect stock splits and stock dividends;
consolidations, mergers, recapitalizations and sales of assets; and
sales of shares of Common Stock for a consideration that would
result in dilution based upon the then Current Market Price (as
defined in the Articles of Incorporation) of such shares. No
fractional shares of Common Stock are to be issued upon conversion
of the Preferred Stock, and First Continental will pay a cash
adjustment in respect of any fractional share based upon the
Current Market Price of a share of Common Stock. All dividends
accumulated and unpaid on such shares of Preferred Stock up to the
dividend date immediately preceding surrender for conversion,
together with any accrued interest thereon, constitute a debt of
First Continental payable to the converting shareholder, and no
dividend or other distribution may be declared, paid upon, set
aside or made in respect of Common Stock until such debt is fully
paid or sufficient funds set apart for the payment thereof.
First Continental, at the option of the Board of Directors,
may redeem the Preferred Stock upon notice to such shareholders at
any time after June 30, 1994 at a price of $84 per share, together
with an amount equal to (a) accumulated and unpaid dividends
thereon and (b) any interest payable in respect of accumulated and
unpaid dividends. In case of the redemption of only part of the
Preferred Stock, such redemption will be made pro rata. If and so
long as there exist any accumulated but unpaid dividends on the
Preferred Stock or any accrued interest on such amounts, First
Continental may not (a) redeem any shares of Preferred Stock unless
all the then outstanding shares of Preferred Stock are redeemed, or
(b) purchase, retire or otherwise acquire for a consideration any
shares of Preferred Stock except pro rata pursuant to offers of
sale made by holders of Preferred Stock in response to an
invitation for tenders given simultaneously by First Continental to
all holders of record of the Preferred Stock.
In general, changes in any of the designations, preferences,
limitations and relative rights of the Preferred Stock may be made
with the affirmative vote, at a meeting called for that purpose, or
the written consent, with or without a meeting, of the holders of
at least two-thirds of the then issued and outstanding shares of
Preferred Stock (which class vote is in addition to other required
approvals), provided that neither the rate of dividend nor the
amount payable upon the redemption of, or in the event of voluntary
or involuntary liquidation on, any shares of Preferred Stock may be
reduced without the consent of all of the holders thereof. Except
as provided above or as required by applicable law, the holders of
Preferred Stock are not entitled to vote as a class on any matter,
but vote together with the holders of Common Stock as a single
class, except (a) regarding the election of two additional members
of the Board of Directors if and so long as dividends payable on
the Preferred Stock have not been paid for two or more consecutive
quarters, whereupon such right may be exercised by the holders of
Preferred Stock, voting as a class, and the holders of the Common
Stock, voting as a class, will be entitled to elect the remaining
directors and (b) if and whenever First Continental proposes to
issue or reserve additional shares of Preferred Stock or any other
class of preferred stock which are senior to or in parity with the
Preferred Stock in any respect, in which event such issue or
reservation must be approved (in addition to other required
approvals) by the holders of two-thirds of the issued and
outstanding Preferred Stock voting as a class.
Interests of Certain Persons in the Merger
Indemnification of First Continental Directors. The terms of
the Agreement include certain provisions that protect the officers
and directors of First Continental and FNJ from and against
liability for actions arising while they served in those capacities
for First Continental and/or FNJ. 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 December 6, 1993, except that the
Agreement limits Hibernia's aggregate liability for such
indemnification to $12 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 First
Continental's or FNJ's director and officer liability insurance
carrier was not notified prior to the Closing Date.
Indemnification for Liabilities under the Securities Act. The
Agreement also provides for indemnification of First Continental'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 First Continental for use in
the Registration Statement, including this Proxy
Statement/Prospectus.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling Hibernia or First Continental pursuant to the
foregoing arrangements, Hibernia and First Continental have been
informed that, in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
Severance and Retention Benefits. Certain severance plans and
retention agreements were adopted by FNJ in 1993 to encourage its
employees and senior management to continue their employment with
FNJ in the context of ongoing merger discussions between First
Continental and certain non-affiliated financial institutions as
described elsewhere herein. Pursuant to such severance plans and
retention agreements, employees and senior management of FNJ
(including executive officers of First Continental) will receive
termination and retention benefits based upon years of service
and/or level of compensation if they are terminated as a result of
the Merger and if they remain in the employ of FNJ until the date
of the Merger. If the Merger is consummated and the other
conditions of the severance plan and retention agreement applicable
to senior management are satisfied, each of the executive officers
of First Continental will receive severance benefits equal to
between 12 and 18 months of such officer's total compensation on a
monthly basis for 1993 based upon his years of service with FNJ and
an additional retention payment equal to such officer's total
compensation for 1993.
Redemption of the Debentures and Class A Notes. Certain
directors, executive officers and/or principal shareholders of
First Continental (i) are directors, executive officers and/or
principal shareholders of certain financial institutions that
collectively own $4,000,000 principal amount of the Debentures; and
(ii) own directly, or through certain partnerships, approximately
$420,000 face amount of the Class A Notes. Upon consummation of
the Merger, the Debentures and Class A Notes will be redeemed
pursuant to the Agreement and the aforesaid holders of such
securities will receive their pro-rata share of the proceeds of
such redemptions, including principal, accrued and unpaid interest,
and premium, if any, and, in the case of the Class A Notes, their
Cash Premium or shares of Common Stock pursuant to the related
Share Option, all on the same basis as non-affiliated holders of
such securities. See "PROPOSED MERGER -- Redemption of Mandatory
Convertible Subordinated Debentures" and "-- Redemption of Class A
Notes and Class B Notes."
Material Tax Consequences
The following is a summary description of the material 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.
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 effects, among others, 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. 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 First Continental, Hibernia, FNJ or HNB by reason of the Merger;
(ii) Hibernia will succeed to and take into account the earnings
and profits, or deficit in earnings and profits, of First
Contiental as of the date of transfer, and any deficit in the
earnings and profits of Hibernia or First Continental will be used
only to offset the earning and profits accumulated after the date
of transfer; (iii) a holder of Common Stock or Preferred Stock of
First Continental, irrespective of their holdings of any Class A or
Class B Notes or Debentures, will recognize no gain or loss for
federal income tax purposes to the extent Hibernia Common Stock is
received in the Merger in exchange for Common Stock or Preferred
Stock; (iv) the tax basis in the Hibernia Common Stock received by
a holder of Common Stock will be the same as the tax basis in the
Common Stock surrendered in exchange therefor; and (v) the holding
period, for federal income tax purposes, for Hibernia Common Stock
received in exchange for Common Stock or Preferred Stock will
include the period during which the shareholder held the Common
Stock or Preferred Stock surrendered in the exchange, provided that
the Common Stock was held as a capital asset on the Effective Date.
In addition, the gain, if any, realized by the holders of
Preferred Stock (including those who may also own Common Stock)
upon the receipt of cash, in addition to Hibernia Common Stock, in
exchange for their shares of Preferred Stock will be recognized,
but in an amount not to exceed the amount of the cash received by
the shareholders. If the exchange has the effect of the
distribution of a dividend (determined by applying Section 302 of
the Code and the attribution rules of Section 318 of the Code),
then the amount of the gain recognized that is not in excess of the
First Continenetal shareholder's ratable share of undistributed
earnings and profits will be treated as a dividend. The
determination of whether the gain has the effect of the
distribution of a dividend will be made in accordance with the
principles of Clark v. CIR, 489 US 726 (1989), and such gain will
generally be treated as gain from the exchange of property, if one
of the tests enumerated in Section 302(b) of the Code is satisfied.
No loss will be recognized on the exchange pursuant to Section
356(c) of the Code.
The redemption premium received by the Debenture holders will
be recognized and taxed to the Debenture holders as oridnary
income.
Cash received by a dissenting shareholder of First Continental
in exchange for his or her Common Stock and Preferred 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.
Any Cash Premium received by the holders of Class A Notes will
be included in taxable income as interest to the extent that it has
not been previously included as original issue discount under the
provisions of Section 1272 of the Code. Stock received in lieu of
the Cash Premium as a result of the exercise of the Share Option
(as described in Section 311 of the Indenture) by the holders of
Class A Notes may be treated as contingent interest on the Class A
Notes. As such, it would be taxable when the amount is fixed to
the extent that it exceeds the Cash Premium already included in
taxable income. Alternatively, stock received in lieu of the Cash
Premium could be considered received in exchange for the right to
receive cash. As such, the receipt of stock would be non-taxable
to the extent that the Cash Premium has been accrued into taxable
income. As a third alternative, if the Class A Notes were treated
as investment units at the time they were issued, there would be no
gain or loss to the Class A Note holder on exercise of the Share
Option to acquire the stock. The amount of the Cash Premium,
whether received or not, would be included in income to the extent
it has not already been accrued as original issue discount. Class
A Note holders should consult their tax advisors as to the proper
treatment of this item.
Cash received in lieu of fractional shares 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 may result in the recognition of gain or loss,
depending upon the shareholder's basis in the shares of Common
Stock or Preferred Stock exchanged. Any gain or loss recognized
will generally be a capital gain or loss if the Common Stock or
Preferred Stock held by the shareolder was a capital asset.
The Louisiana income tax treatment to the shareholders of
First Continental will be substantially the same as the federal
income tax treatment described above. Shareholders of First
Continental residing in states other than Louisiana are urged to
consult their tax advisors regarding the state income tax
consequences of the Merger to them.
The parties will receive the opinion of Ernst & Young,
certified public accountants, to the effect that, if consummated in
accordance with its terms and certain representations of the
parties, the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and will therefore have the
tax consequences to the parties and their affiliates, the holders
of Common Stock, Preferred Stock, the Class A Notes and the
Debentures described herein. The form of opinion of Ernst & Young
is attached hereto as Appendix F and is based upon certain
representations and assumptions described therein. Shareholders of
First Continental are urged to review the full text of the opinion
of Ernst & Young attached hereto as Appendix F and to consult their
own tax advisors with regard to the tax consequences of the Merger
to them.
Resale of Hibernia Common Stock
The shares of Hibernia Common Stock issuable to shareholders
of First Continental 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 First
Continental for purposes of Rule 145(c) or Rule 144 (as applicable)
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, First Continental.
Hibernia Common Stock received and beneficially owned by those
shareholders who are deemed to be affiliates of First Continental
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 First Continental in the Merger will not be
transferable until financial statements pertaining to at least 30
days of post-Merger combined operations of Hibernia and First
Continental have been published, in order to satisfy certain
requirements of the Commission relating to pooling-of-interests
accounting treatment.
The Agreement provides that First Continental will use its
best efforts to identify those persons who may be deemed to be
affiliates of First Continental and to cause each person so
identified to deliver to Hibernia a written agreement providing
that such person will not dispose of Common Stock of First
Continental prior to the vote on the Agreement and related Merger
except in certain limited circumstances 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.
Rights of Dissenting Shareholders
Each First Continental 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 E 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 (
and, in the case of the Preferred Stock, cash) received by other
First Continental 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 First
Continental Common Stock or Preferred Stock to perfect dissenters'
rights. Shareholders of First Continental will lose their right to
dissent from the Merger unless they both (i) file with First
Continental 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 Agreement at the Special Meeting.
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 First Continental
who become shareholders of Hibernia will have the same opportunity
to participate in the plan as other shareholders of Hibernia.
Accounting Treatment
Consummation of the Merger is conditioned on pooling-of-
interests accounting for this transaction. In order for the Merger
to qualify for pooling-of-interests accounting treatment, 90% or
more of the outstanding Common Stock and Preferred Stock must be
exchanged for Hibernia Common Stock. If holders of more than 10%
in the aggregate of the outstanding Common Stock and Preferred
Stock exercise and perfect dissenters' rights, the Merger will not
qualify for pooling-of-interests accounting. Also, in order for the
pooling-of-interests accounting method to apply, "affiliates" of
First Continental cannot reduce their holdings of Hibernia Common
Stock received in the Merger for a period ending upon the
publication of at least 30 days of post-Merger combined operations
of First Continental and Hibernia. Persons believed by First
Continental to be "affiliates" have agreed to comply with these
restrictions. First Continental has agreed to use its best efforts
to permit the transaction to be accounted for as a pooling-of-
interests.
CERTAIN REGULATORY CONSIDERATIONS
General
As a bank holding company, Hibernia is subject to the
regulation and supervision of the Federal Reserve Board. Under 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 OCC. 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 has substantial capital in excess of its needs for
capital. Consequently, although Hibernia would ordinarily depend
upon payment of dividends by HNB in order to pay dividends to its
shareholders, it does not currently depend upon HNB dividends for
the sources of its dividends to shareholders. In the event its
capital position changes or management determines to preserve
holding company capital for other purposes, Hibernia would derive
substantially all of its income from the payment of dividends by
HNB, and its ability to pay dividends would be 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 $__ million at
December, 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 FIRST CONTINENTAL
Principal Business
First Continental was organized on November 4, 1981, as a
business corporation under the laws of the State of Louisiana to
acquire First National Bank of Jefferson Parish ("FNJ"), Gretna,
Louisiana, and Continental Bank ("Continental"), Harvey, Louisiana,
and to engage in activities related to the operation of a bank
holding company. Pursuant to a plan of reorganization that was
consummated on June 30, 1982, First Continental acquired 100% of
the capital stock of each of FNJ and Continental, which were
simultaneously merged with FNJ as the surviving bank, and became a
one-bank holding company subject to regulation under the BHCA. At
December 31, 1993, First Continental had total consolidated assets
of approximately $400 million and FNJ had total consolidated
deposits of approximately $345 million. First Continental's
executive offices are located at 201 Huey P. Long Avenue, Gretna,
Louisiana 70053.
FNJ, which is the principal subsidiary of First Continental,
is a full service commercial bank offering a comprehensive range of
banking services to businesses, industry, public and governmental
organizations and individuals at its main office and eight other
banking offices located in Jefferson Parish, Louisiana. FNJ offers
its customers a variety of banking services, including checking,
savings, NOW and money market accounts, certificates of deposit,
safe deposit facilities, trust services and personal and
installment loans. FNJ also offers short-term loans for working
capital purposes, term loans for fixed assets and expansion needs,
and other commercial loans tailored to the needs of its business
customers. In response to current market conditions, FNJ has
focused its lending activities on small commercial loans, including
start-up capital and working capital loans, and on real estate and
consumer loans to individuals. FNJ believes that the penetration
of these markets is necessary to compete with the larger banking
institutions in FNJ's market area, to diversify its loan portfolio
and to reduce the risk of making large commercial loans in the
current economy. FNJ's deposits are insured by the Federal Deposit
Insurance Corporation ("FDIC").
In accordance with the terms of a Formal Agreement between the
OCC and FNJ, FNJ has submitted a capital plan to the OCC describing
how FNJ intends to augment its capital and capital ratios, which
had fallen below minimum regulatory levels. Moreover, First
Continental has submitted a capital plan to the Federal Reserve
Board that would bring its capital to a satisfactory level. In the
capital plan submitted to the OCC, FNJ has forecast little or no
asset growth over the next three years. For additional information
regarding agreements between FNJ and the OCC and between First
Continental and the Federal Reserve Board prohibiting the payment
of dividends by FNJ to First Continental without OCC approval and
by First Continental to its shareholders without Federal Reserve
Board approval, respectively, as well as First Continental's
suspension of the payment of dividends on Preferred Stock and
interest on the $6,000,000 principal amount of Debentures issued by
First Continental in November 1986, see "Market Prices and
Dividends" and "First Continental Management's Discussion and
Analysis -- Regulatory Issues, Capital and Dividend Restrictions"
and "-- Liquidity and Capital Resources" below.
Supervision and Regulation
First Continental. First Continental is a bank holding
company subject to the BHCA, and to supervision by the Federal
Reserve Board. As a bank holding company, First Continental is
required to file an annual report with the Federal Reserve Board
and such additional information as the Federal Reserve Board may
require pursuant to the BHCA. The Federal Reserve Board may also
make examinations of First Continental and its subsidiary. The
BHCA requires that the Federal Reserve Board approve the
acquisition by a bank holding company of direct of indirect control
of more than 5% of the voting stock or the acquisition of control
of any bank or other bank holding company. It also prohibits the
Federal Reserve Board from approving an application from a bank
holding company to acquire any such interest in any bank or bank
holding company located in a state other than the state in which
the operations of the holding company's banking subsidiary are
principally conducted unless the statutory laws of the state in
which such other bank or bank holding company is located expressly
authorize such acquisition. For additional information on
expansion powers of bank holding companies, see "Competition"
hereafter.
The BHCA also prohibits a bank holding company, with certain
limited exceptions, from engaging in or acquiring direct or
indirect interest in or control of any company that is engaged in
non-banking activities. The principal exception to this rule
allows the acquisition of interests in companies engaging in
activities that are found by the Federal Reserve Board, by order or
regulation, to be so closely related to banking or managing or
controlling banks as to be properly incident thereto. In
determining whether a particular non-banking activity is properly
incident to banking or the management or control of banks, the
Federal Reserve Board must consider whether its performance by an
affiliate of a holding company can reasonably be expected to
produce benefits to the public, such as greater convenience,
increased competition or gains in efficiency that outweigh possible
adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest or unsound
banking practices.
The Federal Reserve Board has adopted regulations implementing
the provisions of the BHCA with respect to the non-banking
activities of bank holding companies. Such regulations reflect a
determination by the Federal Reserve Board that certain specified
activities are permissible for a bank holding company. Although a
particular non-banking activity may be permitted under the BHCA,
the Federal Reserve Board is authorized to require a holding
company to terminate that activity, or divest itself of any non-
banking subsidiary, if in the Federal Reserve Board's judgment the
activity or subsidiaries would be unsound. An activity not listed
in the regulation may be engaged in if, upon application, the
Federal Reserve Board determines that the activity meets the
criteria described in the preceding paragraph. In each case, a
bank holding company must secure the approval of the Federal
Reserve Board prior to engaging in any of these activities.
Under the BHCA and the Federal Reserve Board's regulations, a
bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any
extension of credit or provision of any property or services.
Under the FDIC Improvement Act of 1991, if a bank's capital
declines below a level to be specified by the appropriate bank
regulatory agencies, the bank would be required to produce a plan
detailing how it would rebuild its capital. The law requires the
bank holding company of such a bank to guarantee that bank's
compliance with the plan. Generally, banks would raise needed
capital by measures such as selling assets or stock. If those
steps were to prove inadequate, such law requires the bank's
holding company to contribute capital to its subsidiary or suffer
certain adverse consequences. The bank holding company's
obligation is limited to the lesser of 5% of the holding company's
total assets or the full amount needed to bring the bank into
compliance with the capital plan. Under this Act, First
Continental may be required to guarantee FNJ's compliance with the
terms of any capital plan submitted to the OCC.
FNJ. FNJ is a national banking association subject to the
National Bank Act and to regulation and regular examination by the
OCC and the Federal Reserve Board. Federal and state laws and
regulations of general application to banks have the effect, among
others, of regulating the scope of FNJ's business, investments,
cash reserves, the purpose and nature of and collateral for its
loans, and the interest rates that it pays on certain deposits.
With certain exceptions, FNJ is restricted by Sections 22, 23A
and 23B of the Federal Reserve Act from extending credit or making
loans to or investment in First Continental and certain other
affiliates as defined in the Federal Reserve Act. Such
transactions between FNJ and any such affiliate are limited in
amount to 10% of FNJ's capital and surplus per affiliate and in the
aggregate with respect to all transactions to 20% of FNJ's capital
and surplus. Furthermore, loans and extensions of credit are
subject to various collateral requirements.
The monetary policies of regulatory authorities, including the
Federal Reserve Board, have a significant effect on the operating
results of bank holding companies and their subsidiary banks. The
Federal Reserve Board regulates the national supply of bank credit.
Among the means available to the Federal Reserve Board to regulate
the monetary supply are open market operations in U.S. government
securities, changes in the discount rate on member bank loans and
limitations on the interest rates that member banks may pay on
savings deposits. The Federal Reserve Board uses these means in
varying combinations to influence overall growth and distribution
of bank loans, changes in reserve requirements, investments and
deposits. The nature of future monetary policies and the effect of
such policies on the future business and earnings of First
Continental and FNJ cannot be predicted.
Competition
FNJ's general market area is the Greater New Orleans
Metropolitan Area, which has an approximate population of 1,200,000
and in which there are numerous banks and other financial
institutions. FNJ's primary market area, Jefferson Parish, has a
current population of approximately 500,000.
Competition among banks for loan customers is generally
governed by such factors as loan terms, including interest charges,
restrictions on borrowers and compensating balances, and other
services offered by such banks. FNJ competes with numerous other
commercial banks, savings and loan associations and credit unions
for customer deposits, as well as with a broad range of financial
institutions in consumer and commercial lending activities. In
addition to thrift institutions, other businesses in the financial
services industry compete with FNJ for retail and commercial
deposit funds and for retail and commercial loan business.
Competition for loans and deposits is intense among the financial
institutions in the area.
All national banks domiciled in Louisiana are permitted to
establish branches on a statewide basis because state law permits
state banks to establish statewide branches. Louisiana's banking
law also permits bank holding companies domiciled in any other
state to acquire Louisiana banks and bank holding companies, if the
state in which the bank holding company is domiciled grants
reciprocal rights to Louisiana banks and bank holding companies.
At present, several holding companies with greater resources
than those of First Continental have acquired banks or established
branches in First Continental's market area and are continuing to
do so. The size of these institutions allows certain economies of
scale that permit their operation on a narrower profit margin than
would be appropriate for First Continental or FNJ. FNJ has also
experienced some competitive pressure on those interest rates that
it is able to charge on its new loans. The impact of these
competitive pressures has been intensified recently by the relative
lack of quality loan demand in FNJ's market area.
Seasonality of Business and Customers
FNJ's deposits represent a cross-section of the area's economy
and there is no material concentration of deposits from any single
customer or group of customers. No significant portion of FNJ's
loans is concentrated within a single industry or group of related
industries. Historically, the business of FNJ has not been
seasonal in nature and management of FNJ does not anticipate any
seasonal trends in the future. FNJ does not rely on foreign
sources of funds or income.
Employees
As of the date of this Proxy Statement/Prospectus First
Continental and FNJ have, in the aggregate, approximately 233 full-
time equivalent employees. None of such employees are represented
by labor unions. Management of First Continental considers its
relationship with its employees to be good.
Property
The executive office of First Continental and FNJ, located at
201 Huey P. Long Avenue, Gretna, Louisiana, is owned by FNJ and is
not subject to a mortgage. In addition, FNJ has eight branch
offices in Jefferson Parish, Louisiana, four of which are located
on leased premises under leases that expire on various dates
through 2001. First Continental has the option to renew two of
these leases for two 10-year periods. The remaining four branch
offices, and the premises on which they are located, are owned by
FNJ and are not subject to mortgages.
Legal Proceedings
First Continental and FNJ normally are parties to and have
pending routine litigation arising from their regular business
activities of furnishing financial services, including providing
credit and collecting secured and unsecured indebtedness. In some
instances, such litigation involves claims or counterclaims against
First Continental and FNJ, or either of them. As of December 31,
1993, First Continental and FNJ did not have any litigation pending
other than ordinary routine litigation incidental to their business
that was not material in amount in respect of First Continental's
assets on a consolidated basis.
Market Prices and Dividends
Market Prices. There is no established public trading market
for the Common Stock. The Common Stock is not traded on any
exchange and is not quoted on the automated system of a registered
securities association.
At May __, 1994, there were 1,132 shareholders of record of
Common Stock.
Cash Dividends. First Continental did not pay any cash
dividends on its Common Stock during the last two years.
The Preferred Stock accumulates dividends at an annual rate of
$10.92 per share. First Continental has not declared a dividend on
its Preferred Stock since 1986 and does not anticipate declaring a
dividend on its Preferred Stock in the foreseeable future. At
December 31, 1993, the amount of accumulated dividends on the
Preferred Stock was $10.4 million. Interest on the unpaid
dividends began to accrue as of January 1, 1989 at The Chase
Manhattan Bank, N. A. prime rate adjusted quarterly. That rate was
6% at December 31, 1993, and accrued interest was approximately
$2.5 million as of December 31, 1993. First Continental may not
pay a cash dividend in respect of its Common Stock until all
accumulated dividends and interest thereon in respect of its
Preferred Stock have been paid.
The National Bank Act requires approval of the OCC for the
payment of any dividend by FNJ if the total of all dividends,
including any proposed dividend, declared by the Board of Directors
of FNJ in any calendar year exceeds the sum of the net profits and
retained net profits, as defined by the OCC, for the current year
plus the preceding two years, less any required transfers to
surplus. Federal bank regulatory authorities also have the power
under the Financial Institutions Supervisory Act to prohibit a bank
from engaging in an unsafe or unsound practice. The payment of a
dividend by a bank could, depending on the financial condition of
the bank and other factors, be deemed an unsafe or unsound
practice. For additional information relating to restrictions on
the payment of dividends by FNJ, see Note 2 to First Continental's
Consolidated Financial Statements.
The ability of First Continental to pay dividends to its
shareholders in the future is dependent upon the ability of FNJ to
pay dividends to it. FNJ is prohibited from paying dividends
without OCC approval under the terms of an amended Formal Agreement
between FNJ and the OCC. Moreover, First Continental has agreed
that it will not pay dividends to its shareholders without the
prior written approval of the Federal Reserve Board. For
additional information, see "First Continental Management's
Discussion and Analysis" and Note 2 to First Continental's
Consolidated Financial Statements included elsewhere herein.
Security Ownership of Principal Shareholders and Management
Ownership of Principal Shareholders. The following table sets
forth as of January 31, 1994, the only persons known to First
Continental to own beneficially (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, more than five percent of
any class of the outstanding voting securities of First
Continental. Unless otherwise indicated, all shares indicated as
beneficially owned are held with sole voting and investment power.
Amount and Nature
Name and Address of Class of Beneficial Percent
Beneficial Owner of Stock Ownership of Class(1)
Linda Marie Perry Common 208,607(2)(3) 9.8%
Arceneaux Preferred --- *
#9 Wren Road
Covington, LA 70433
Gerald H. Smith Common 525,754(3)(4)(5) 24.7%
1825 Blaock Preferred 203(4) *
Houston, TX 77055
R. Preston Wailes Common 221,577(3)(6) 10.4%
1528 Nashville Ave. Preferred 223 *
New Orleans, LA 70115
Estate of W. Richard Common 32,646(6)(7) 1.53%
White Preferred 12,413 9.1%
920 Huey P. Long Ave.
Gretna, LA 70054
_________________________
* Indicates ownership of less than 1% of the total shares
outstanding of the class.
(1) The percentages shown in this column are the percentages of
each class of voting securities beneficially owned by the
named individuals. Ms. Arceneaux beneficially owns voting
stock representing 8.9% of the total voting power; Gerald H.
Smith TTEE Elizabeth Smith, 4.0%, Mr. Gerald Smith, 18.3%; Mr.
Wailes, 9.4%; and the Estate of Mr. White, 1.4%.
(2) Includes 161,000 shares of Common Stock in seven equal lots of
23,000 shares held of record by Linda Marie Perry Arceneaux,
Usufructuary for Victoria Renee Trahan-Arceneaux Armijo,
Charisse Marie Arceneaux Webb, Randal Chris Arceneaux, Jami
Trahan Brown, Greg Thomas Arceneaux, Catherine Michelle
Arceneaux Hetzel, and Anna Christine Arceneaux Miller, and
23,000 shares of Common Stock held of record by Jonathan Adam
Arceneaux Trust, Linda Marie Perry Arceneaux, Trustee. Does
not include 9,688 shares of Common Stock beneficially owned by
Ms. Arceneaux's spouse, Elton A. Arceneaux, Jr., as to which
Ms. Arceneaux disclaims beneficial ownership.
(3) Does not include certain shares of Common Stock issuable upon
the conversion of $4,000,000 principal amount of the
Debentures or an aggregate of 10,193 shares of Common Stock
owned of record by certain financial institutions of which
Messrs. Arceneaux, Smith and Wailes are directors, executive
officers and/or principal shareholders, and as to which such
persons disclaim beneficial ownership.
(4) Includes 270 shares of Common Stock that Mr. Gerald Smith has
the right to acquire upon conversion of the Preferred Stock
that he owns.
(5) Includes 94,604 shares of Common Stock and 37 shares of
Preferred Stock, equal to 60 shares of Common Stock upon
conversion, held of record by Gerald H. Smith TTEE Elizabeth
Smith as to which Gerald Smith has sole voting and investment
power.
(6) Includes 363 shares of Common Stock that Mr. Wailes has the
right to acquire upon conversion of the Preferred Stock that
he owns.
(7) Includes 20,233 shares of Common Stock that the Estate of Mr.
White has the right to acquire upon conversion of the
Preferred Stock that it controls.
Stock Ownership of Management. The following table sets forth
as of January 31, 1994 certain information relating to the
beneficial ownership (within the meaning of Rule 13d-3), direct and
indirect, of shares of outstanding voting securities of First
Continental by each director of First Continental and by all
directors and executive officers of First Continental as a group.
Unless otherwise indicated, the shares shown as beneficially owned
are held with sole voting and investment power.
Amount and Nature
Name of Class of Beneficial Percent
Beneficial Owner of Stock Ownership of Class(1)
Elton A. Arceneaux, Common 9,688(2)(3) *
Jr. Preferred 256 *
R. Preston Wailes Common 221,577(3)(4) 10.4%
Preferred 223 *
Edward J. Bourgeois Common 1,315(5) *
Preferred 500 *
John H. Laing Common 3,695(3)(6) *
Preferred --- *
U. J. Prevost Common 38,057(3)(7) 1.8%
Preferred --- *
All directors and Common 270,942(3)(8) 12.7%
executive officers Preferred 979 *
as a group
(8 persons)
_________________________
* Indicates ownership of less than 1% of the total shares
outstanding of the class.
(1) The percentages shown in this column are the percentages of
each class of voting securities beneficially owned by the
named individuals. Mr. Arceneaux beneficially owns shares of
Common Stock and shares of Preferred Stock collectively
representing .41% of the total voting power; Mr. Wailes, 9.4;
Mr. Bourgeois, .06%; Mr. Laing, .09%, Mr. Prevost, 1.5%; and
all directors and executive officers as a group, 11.5%.
(2) Includes 417 shares of Common Stock that Mr. Arceneaux has the
right to acquire upon conversion of the Preferred Stock that
he owns. Does not include 24,607 shares of Common Stock owned
by Mr. Arceneaux's wife, 161,000 shares of Common Stock in
seven equal lots of 23,000 shares held of record by his wife,
Linda Marie Perry Arceneaux, Usufructuary for Victoria Renee
Trahan-Arceneaux Armijo, Charisse Marie Arceneaux Webb, Randal
Chris Arceneaux, Jami Trahan Brown, Greg Thomas Arceneaux,
Catherine Michelle Arceneaux Hetzel, and Anna Christine
Arceneaux Miller, and 23,000 shares of Common Stock held of
record by Jonathan Adam Arceneaux Trust, Linda Marie Perry
Arceneaux, Trustee, as to all of which shares Mr. Arceneaux
disclaims beneficial ownership.
(3) Does not include certain shares of Common Stock issuable upon
the conversion of $4,000,000 principal amount of the
Debentures or an aggregate of 10,173 shares of Common Stock
owned of record by certain financial institutions of which
Messrs. Arceneaux, Wailes, Laing and Prevost are directors,
executive officers and/or principal shareholders, and as to
which such persons disclaim beneficial ownership.
(4) Includes 363 shares of Common Stock that Mr. Wailes has the
right to acquire upon conversion of the Preferred Stock that
he owns.
(5) Includes 815 shares of Common Stock that Mr. Bourgeois has the
right to acquire upon conversion of the Preferred Stock that
he owns.
(6) Includes 1,695 shares of Common Stock owned of record by
Progressive Bank and Trust Company, of which Mr. Laing is
President and Chief Executive Officer.
(7) Includes 1,695 shares of Common Stock owned of record by
Raynes State Bank, of which Mr. Prevost is President and Chief
Executive Officer.
(8) Includes 1,595 shares of Common Stock that such persons have
the right to acquire upon conversion of the Preferred Stock
that they own.
First Continental Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's discussion and analysis of financial condition
and results of operations should be read in conjunction with First
Continental's Consolidated Financial Statements and Notes thereto
included elsewhere herein.
Recent Developments
On December 4, 1993, First Continental and Hibernia entered
into the Agreement pursuant to which First Continental would merge
with and into Hibernia and each outstanding share of Preferred
Stock would be converted into and become exchangeable for a
combination of cash and Hibernia Common Stock with an aggregate
value of approximately $122 per share (as of June 30, 1994) and
each outstanding share of Common Stock would be converted into and
become exchangeable for 1.4 to 2 shares of Hibernia Common Stock,
depending on the price of Hibernia Common Stock prior to closing,
valued at $12 per share. All outstanding Senior Notes and
Debentures of First Continental will be redeemed for the principal
amount thereof, plus accrued and unpaid interest, and premiums, if
any. The Merger is subject, among other things, to receipt of
regulatory and shareholder approvals, and is currently expected to
be completed during the second or third quarter of 1994.
Results of Operations
First Continental reported income (loss) before income taxes,
extraordinary items and cumulative effect of accounting change of
$2,070,000 in 1993, $682,000 in 1992, and ($839,000) in 1991. In
1993, the result of the cumulative effect of accounting change for
the adoption of SFAS 109, "Accounting for Income Taxes," was an
increase in net income of $2,622,000 resulting in net income of
$3,640,000. In 1992, First Continental reported an increase in net
income due to an extraordinary gain on extinguishment of debt, net
of tax, of $11,345,000 and utilization of net operating loss
carryforward of $5,996,000, resulting in net income of $17,791,000.
The improved operating results in 1993 are attributable to
significant improvements in asset quality, continuing efforts to
improve operating efficiency, a slowly improving economy and a
stabilization of the net interest margin.
Net Interest Margin. The net interest margin as a percentage
of average earning assets, is affected by First Continental's net
interest spread (yield on earning assets minus interest on
interest-bearing liabilities), the level of interest rates and
associated money market spreads, the amount of non-performing
assets and the percentage of non-interest-bearing funds supporting
earning assets. The net interest margin of 5.2% in 1993 compares
to 5.3% in 1992 and 4.2% in 1991 (see table below). The 10 basis-
point decrease in 1993 is primarily the result of a decrease in the
interest rate spread as funds from maturities and prepayments of
securities and loans were reinvested in similar instruments at
lower yields. In addition, First Continental issued Senior Notes
in November 1992, the proceeds of which were used to settle prior
debt at an increase in the interest rate. The increase in the
margin in 1992 compared to 1991 was primarily due to the impact of
significantly wider interest rate spreads which resulted from rate-
sensitive liabilities repricing faster than rate-sensitive assets
during the declining market rate period from 1991 to 1992.
The net interest margin is expected to decline somewhat in
1994 as funds received from maturities and prepayments of
securities and loans are reinvested in similar instruments at lower
yields in the current low-rate environment, while no further
significant declines are expected in funding costs.
<TABLE>
AVERAGE BALANCES AND INTEREST RATES
(Dollars in thousands)
<CAPTION>
1993 1992 1991
Balance Interest Rate Balance Interest Rate Balance Interest Rate
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing
deposits in banks $ - $ - 0.0% $ - $ - 0.0% $ 94 $ 8 8.5%
Investment
securities:
Taxable 112,808 6,910 6.1% 100,645 7,017 7.0% 70,839 5,861 8.3%
Non-Taxable (1) 245 13 5.3% 18 2 11.1% 57 6 10.5%
Total Investment
Securities 113,053 6,923 6.1% 100,663 7,019 7.0% 70,896 5,867 8.3%
Federal funds sold
and securities
purchased under
agreements to
resell 14,326 426 3.0% 15,534 549 3.5% 17,644 976 5.5%
Loans, net
of unearned
discounts (2) 231,769 22,636 9.8% 233,010 24,612 10.6% 244,338 26,672 10.9%
Total interest-
earning assets 359,148 29,985 8.3% 349,207 32,180 9.2% 332,972 33,523 10.1%
Reserve for loan
losses (6,574) (7,233) (7,578)
Cash and due
from banks 14,811 15,485 15,007
Other assets 29,646 44,772 49,981
Total assets $397,031 $402,231 $390,382
LIABILITIES & SHAREHOLDERS' EQUITY
Time deposits 148,413 6,632 4.5% 162,729 8,209 5.0% 172,152 11,362 6.6%
Savings & other
interest-bearing
deposits 140,201 2,598 1.9% 140,897 3,960 2.8% 125,882 6,283 5.0%
Federal funds
purchased and
securities sold
under agreements
to repurchase 7,938 228 2.9% 5,752 228 4.0% 6,088 368 6.0%
Short-term
borrowings 2,156 61 2.8% 4,142 94 2.3% 3,113 175 5.6%
Long-term debt 11,400 1,753 15.4% 20,555 1,353 6.6% 22,481 1,250 5.6%
Total interest-
bearing
liabilities 310,108 11,272 3.6% 334,075 13,844 4.1% 329,716 19,438 5.9%
Minority interest - 3,297 3,773
Interest-free
deposits 59,254 57,662 53,867
Other liabilities 11,149 8,085 7,448
Shareholders equity 16,520 (888) (4,422)
Total liabilities
& shareholders'
equity $397,031 $402,231 $390,382
Interest rate
spread 4.7% 5.1% 4.2%
Net interest
income $18,713 $18,336 $14,085
Net interest
margin 5.3% 5.3% 4.2%
</TABLE>
(1) There was no tax benefit attributed to non-taxable income
during 1993, 1992 and 1991 due to First Continental's net
operating loss carryforward position (see Note 14 to First
Continental's net operating loss carryforward position
(see Note 14 to First Continental's Consolidated Financial
Statement.
(2) Average balances include non-accrual loans and interest
income includes fees on loans amounting to $1,000,000,
$952,000 and $921,000 for 1993, 1992 and 1991, respectively.
Interest Differential. Interest-earning assets and interest-
bearing liabilities are analyzed below to allocate changes in
interest income or expense that are attributable to changes in
average volume or rates. Changes which are not solely due to
volume changes or solely due to rate changes have been allocated to
volume and rate changes in proportion to the relationship of the
absolute dollar amount of the changes in each.
INTEREST DIFFERENTIAL
1993 - 1992 1992 - 1991
Average Net Average Net
Volume Rate Change Volume Rate Change
(In thousands)
Increase
(decrease)
in:
Interest Income:
Loans
(including
fees) $ (130) $(1,846) $(1,976) $(1,213) $ (847) $(2,060)
Investment
securities:
Taxable 797 (904) (107) 2,184 (1,028) 1,156
Non-taxable 13 (2) 11 (4) - (4)
Total investments 810 (906) (96) 2,180 (1,028) 1,152
Deposits with
banks - - - (4) (4) (8)
Federal funds sold
and securities
purchased under
agreements to
resell (41) (82) (123) (107) (320) (427)
Total interest
earnings assets 639 (2,834) (2,195) 856 (2,199) (1,343)
Interest expense:
Deposits (706) (2,233) (2,939) 85 (5,561) (5,476)
Federal funds
purchased and
securities sold
under agreements
to repurchase 73 (73) - (19) (121) (140)
Short-term
borrowings (52) 19 (33) 45 (126) (81)
Long-term debt (804) 1,204 400 (113) 216 103
Total interest-
bearing
liabilities (1,489) (1,083) (2,572) (2) (5,592) (5,594)
Increase (decrease)
in net interest
income $ 2,128 $(1,751) $ 377 $ 858 $3,393 $4,251
There was no tax benefit attributed to non-taxable income
during 1993, 1992 and 1991 due to First Continental's net operating
loss carryforward position (see Note 14 "Income Taxes" to First
Continental's Consolidated Financial Statements).
Net Interest Income. Net interest income is the difference
between total interest and fee income generated by earning assets
and total interest expense incurred on interest-bearing liabilities
and is affected by the volume, yield and mix of earning assets; the
level of non-performing assets; the interest rate environment; the
mix of interest-bearing liabilities and the amount of non-interest-
bearing liabilities supporting earning assets.
Net interest income increased by $377,000, or 2.1%, to
$18,713,000 in 1993 from $18,336,000 in 1992. Net interest income
in 1991 was $14,085,000.
Interest income declined by $2,195,000, or 6.8%, in 1993 as
compared to 1992. As seen in the above table (Interest
Differential), in the category total interest-earning assets, the
decrease was primarily attributable to the overall decline in
interest rates in the industry offset somewhat by an increase in
average volume. In addition, there was a substantial decrease in
non-earning assets. Average volume increased in the investment
portfolio, as the composition of earning assets continued to shift
from loans to lower-yielding investments. The decline in interest
income from 1991 to 1992 is attributable to similar conditions.
Interest expense declined by $2,572,000, or 18.6%, from 1992
to 1993, as a result of decreases in both average volumes and rates
on interest-bearing liabilities. The average volume decline was
attributable to a decrease in average interest-bearing deposits and
the restructuring of a portion of First Continental's long-term
debt. The total cost of funds associated with the acquisition and
retainage of deposits continued to decline during 1993 and 1992
from 1991 due to industry-wide rate trends and management's
continued downward pressure on rates to maximize net interest
margin. The decrease in interest expense from 1991 to 1992 of
$5,594,000, or 28.8%, was attributable almost exclusively to the
decrease in the industry-wide interest rates described above, as
total average deposits remained relatively stable.
Non-Interest Income. The following table sets forth the
components of First Continental's non-interest income for the
periods presented and compares each category with the preceding
year.<PAGE>
Increase/(Decrease)
1993 1992 1991 1993-1992 1992-1991
Amount Percent Amount Percent
(Dollars in thousands)
Service charges
on accounts $2,755 $2,726 $2,629 $ 29 1.1% $ 97 3.7%
Trust fees 611 577 490 34 5.9 87 17.8
Other fees
and charges 969 980 949 (11) (1.1) 31 3.3
Other operating
income 424 592 463 (168) (28.4) 129 27.9
Securities
gains 24 20 179 4 20.0 (159) (88.8)
Total non-
interest
income $4,783 $4,895 $4,710 $(112) (2.3)% $ 185 3.9%
Service charges on accounts, trust fees and retail service
fees are the largest contributors to non-interest income. Non-
interest income totalled $4,783,000 in 1993, compared to $4,895,000
in 1992 and $4,710,000 in 1991. The decrease in non-interest
income of $112,000, or 2.3%, in 1993 as compared to 1992, was
primarily due to two events. First, the accrual of $240,000 in
1992 which was recorded in anticipation of adopting SFAS 106,
"Employers' Accounting for Post-Retirement Benefits Other Than
Pensions." The amount recorded in 1992 was accrued prior to
receiving First Continental's actuarial report and prior to formal
adoption of SFAS 106. This amount was reversed in 1993 when the
final actuarial report was received and First Continental formally
adopted SFAS 106. This was offset by the reversal in 1992 of
previously accrued legal fees, totalling $343,000, relating to
certain litigation that settled in 1991.
The increase of $185,000, or 3.9%, in 1992 as compared to
1991, was primarily the result of the above-mentioned reversal in
1992 of $343,000 of previously accrued legal fees. This one-time
item in 1992 was offset by several one-time items in 1991 relating
to accrual adjustments totalling $197,000. The securities gains in
1993 and 1992 were due primarily to security calls or sales of
securities in anticipation of call and a gain on sale of an equity
security taken in satisfaction of debt previously contracted. The
gain of $179,000 in 1991 occurred as a result of management's
attempts to shorten the overall maturity of the investment
portfolio, as recommended by regulatory agencies and management's
internal Asset/Liability Committee.
Non-Interest Expense. Non-interest expense totalled
$20,701,000 in 1993, compared to $21,397,000 in 1992 and
$17,523,000 in 1991. A listing of the major categories is as
follows:<PAGE>
Increase/(Decrease)
1993 1992 1991 1993-1992 1992-1991
Amount Percent Amount Percent
(Dollars in thousands)
Salaries and
benefits $ 8,087 $ 7,034 $ 6,954 $ 1,053 15.0% $ 80 1.2%
Occupancy
and equipment
expense 1,472 1,470 1,752 2 0.0 (282) (16.0)
Litigation
loss
(recovery) 92 255 (176) (163) (63.9) 431 244.9
Other real
estate owned
expenses (net
of income) 5,213 6,554 3,685 (1,341) (20.5) 2,869 77.9
Legal and
professional
fees 1,313 1,485 968 (172) (11.6) 517 53.4
Data processing
fees 755 756 676 (1) 0.0 80 11.8
Advertising 213 229 145 (16) (7.0) 84 57.9
FDIC fees 984 816 726 168 20.6 90 12.4
Other 2,572 2,798 2,793 (226) (8.1) 5 0.2
Total $20,701 $21,397 $17,523 $ (696) (3.3)% $3,874 22.1%
In 1993, salaries and benefits increased $1,053,000, or 15.0%,
from $7,034,000 in 1992, due to increases in incentive programs and
merit increases. In addition, a one-time accrual of $348,000 for
the purchase of annuities to fund retirement benefits for two
former employees was charged to salaries and benefits.
In the litigation category, accruals for expected settlements
relating to several ongoing matters totalled $92,000 in 1993 as
compared to $255,000 in 1992. The recovery in 1991 of $176,000 was
due to the reversal of a previously accrued litigation contingency.
Other real estate owned expenses, net of income, decreased to
$5,213,000 in 1993 from $6,554,000 in 1992, a decline of
$1,341,000, or 20.5%. Contributing to this decline in net expenses
was a significant decrease in Other Real Estate Owned and
Foreclosed Assets of $14,765,000, or 65.9%, to $7,630,000 in 1993
from $22,395,000 in 1992 as properties were liquidated (see
"Finnacial Condition -- Asset Quality" below). Offsetting some of
the decrease in 1993 was an increase in expenses to ready
properties for sale. The increase in other real estate owned
expenses of $2,869,000, or 77.9%, from $3,685,000 in 1991 to
$6,554,000 in 1992 resulted primarily from an increase in the
provision for write-downs of $2,516,000. This increase was due to
management's concerns about deterioration of the underlying value
of certain foreclosed properties and for reserves to be established
for costs to sell such properties.
Deposit insurance calculated under the new risk-based premium
system increased $168,000, or 20.6%, from 1992 to 1993. Semiannual
premiums paid in January 1993 were based on capital levels and
supervisory ratings as of June 30, 1992 (prior to First
Continental's debt restructuring in November 1992), resulting in a
35% increase in the assessment rate from $.23 per $100 of deposits
to $.31 in January 1993. The assessment rate used to calculate the
July 1993 premium decreased to $.29, reflecting the improved
capital position of FNJ. A further 10% reduction in the rate to
$.26 in January 1994 reflects an improved supervisory rating. The
increase of $90,000, or 12%, from 1991 to 1992 represents a general
increase in FDIC fees to all FDIC insured banks.
Income Taxes. First Continental recorded income tax expense
of $1.1 million in 1993, compared to $0.2 million in 1992. There
was no income tax expense in 1991. Effective January 1, 1993,
First Continental adopted SFAS No. 109, "Accounting for Income
Taxes." Under SFAS No. 109, the liability method is used in
accounting for income taxes. This method determines deferred tax
assets and liabilities based on differences between financial
reporting and tax bases of assets and liabilities. The tax effect
of these differences is measured using enacted tax rates and laws
that will be in effect when the differences are expected to
reverse. As permitted by SFAS No. 109, the prior years' financial
statements have not been restated, and the impact of adopting SFAS
No. 109 as of January 1, 1993 in the amount of $2,622,000 is shown
as the cumulative effect of accounting change in 1993. Prior to the
adoption of SFAS No. 109, income tax expense was determined using
the deferred method. Deferred tax expense was based on items of
income and expense that were reported in different years in the
financial statements and tax returns and was measured at the tax
rate in effect in the year the difference originated. Those
differences related principally to depreciation expense, provision
for possible loan losses and write-downs of other real estate. In
addition, First Continental is subject to Louisiana state income
tax.
As of December 31, 1993, First Continental had a net deferred
tax asset of $1.3 million which includes, for tax purposes, net
operating loss carryforwards (NOL's) of approximately $6.2 million
available to offset future taxable income which will expire in
varying amounts through the year 2006. See Notes 3 and 14 to First
Continental's Consolidated Financial Statements for additional
discussion of income taxes.
<PAGE>
Financial Condition
First Continental had total assets of $400 million at December
31, 1993, $394 million at December 31, 1992 and $397.8 million at
December 31, 1991. Assets, in total, have remained stable during
this three-year time frame. While total assets has not fluctuated,
the composition of the assets has changed. The major components
and their percentage of total assets at the respective year-ends
were as follows:
1993 1992 1991
(Dollars in thousands)
Amount Percent Amount Percent Amount Percent
Cash $ 13,141 3% $ 16,964 4% $ 21,325 5%
Investment
securities 127,707 32 98,078 25 90,900 23
Federal
funds sold 22,000 6 17,200 4 10,000 3
Loans (net
of reserves) 216,503 54 226,697 58 235,155 59
Other real
estate owned 7,602 2 22,137 6 25,782 6
Other assets 12,959 3 12,942 3 14,594 4
Total assets $399,912 100% $394,018 100% $397,756 100%
As presented above, the asset base reflects a continuation of the
shift of assets from the loan portfolio to the investment and funds
sold category. This is a result of the continued weakness in loan
demand in 1993 and the continuing efforts to decrease problem and
potential problem loans. Also of significance is the large decline
in Other Real Estate Owned of $14,535,000 between 1993 and 1992,
which resulted from enhanced efforts to dispose of Other Real
Estate Owned, an improving real estate market and lower interest
rates.
Earning Assets and Asset Quality
Loans. The following summary displays the composition of
First Continental's loan portfolio at December 31 for each of the
last five years.
1993 1992 1991 1990 1989
(In thousands)
Commercial, financial
and agricultural $ 19,256 $ 29,352 $ 33,474 $ 47,294 $ 69,902
Real estate -
residential 55,446 53,063 58,753 61,807 58,375
Real estate -
commercial 67,847 67,977 70,790 73,633 84,959
Installment loans 88,966 92,462 89,045 93,499 81,350
231,515 242,854 252,062 276,233 294,586
Unearned discount (8,422) (9,896) (9,760) (10,777) (9,344)
Total loans $223,093 $232,958 $242,302 $265,456 $285,242
The loan portfolio balance declined $9,865,000, or 4.2%, during
1993. This decline was primarily due to the $10,096,000 (34%)
decline in the commercial, financial and agricultural portion of
the portfolio. This follows a corresponding decline of $4,122,000,
or 12.3%, during 1992. These reductions reflect the results of
management's efforts to reduce the level of non-performing loans as
well as the continued decline in quality loan demand for commercial
loans as a result of the weakened economy. Management's recent
strategy has been to emphasize smaller, retail-based lending in
order to diversify and strengthen the overall quality of the loan
portfolio.
The following table sets forth the maturity and rate
sensitivity of the total loan portfolio at December 31, 1993. All
loans are classified based on contractual maturities.
Due After One
Due in One Year Through Due After
Year or Less Five Years Five Years Total
(In thousands)
Commercial,
financial and
agricultural
Fixed $ 4,015 $ 1,938 $ 167 $ 6,120
Floating 9,504 3,105 527 13,136
Real estate -
residential
Fixed 13,350 26,736 5,418 45,504
Floating 4,794 5,104 44 9,942
Real estate -
commercial
Fixed 17,197 35,994 3,935 57,126
Floating 2,749 7,071 901 10,721
Installment loans
Fixed 35,727 52,408 83 88,218
Floating 714 34 - 748
Total fixed
loans 70,289 117,076 9,603 196,968
Total floating
loans 17,761 15,314 1,472 34,547
Total loans(1) $ 88,050 $132,390 $ 11,075 $231,515
______
(1) These amounts represent gross loan balances and, accordingly, are not
net of unearned discounts.
Asset Quality. Non-performing assets consist of non-accrual loans
(loans on which interest income is not currently recognized),
restructured loans (loans with a below-market rate due to the
deteriorated financial condition of the borrower) and foreclosed
assets (assets to which title has been assumed in satisfaction of
debt and insubstance foreclosures). Insubstance foreclosures
include loans for which FNJ has taken possession of the underlying
collateral. Generally, all payments received in satisfaction of
debt on non-performing loans are applied to reduce principal.
Certain non-performing loans are current as to principal and
interest payments but are classified as non-performing because
there is a question concerning collectibility of both principal and
interest. See Notes 3 and 5 to First Continental's Consolidated
Financial Statements included elsewhere herein for additional
information on the circumstances under which loans are placed on
non-accrual status, as well as details on non-performing assets and
loan concentrations.
Non-performing assets totalled $13,006,000 and $32,387,000 at
December 31, 1993 and 1992, respectively. Non-performing assets
declined 59.8% in 1993. This significant decline is the result of
First Continental's efforts to improve asset quality by improved
underwriting standards and collection efforts, as well as the
stabilization in the economy, the lower interest rate environment
which reduced debt service requirements for many borrowers, and
aided the selling of over $14 million in other real estate owned in
1993. The composition of non-performing assets as of the end of
each of the last five quarters is set forth below:
Dec 93 Sep 93 Jun 93 Mar 93 Dec 92
(In Thousands)
Non-accrual loans $ 4,647 $ 4,954 $ 4,062 $ 6,872 $ 7,965
Other real estate
owned (net) 7,602 13,346 18,237 20,873 22,137
Other assets
repossessed 28 44 19 94 258
Restructured
troubled debt - - - - -
Past due 90 days,
still accruing 729 661 239 427 2,027
Total $13,006 $19,005 $22,557 $28,266 $32,387
The following table sets forth the composition of First
Continental's non-performing assets at the end of each of the last
five years:
Decembr 31,
1993 1992 1991 1990 1989
(In thousands)
Non-accrual loans $ 4,647 $ 7,965 $13,080 $18,129 $16,962
Other real estate
owned (net) 7,602 22,137 25,782 27,466 16,709
Other assets
repossessed 28 258 592 272 385
Restructured troubled
debt - - 731 1,666 8,063
Past due 90 days,
still accruing 729 2,027 2,194 4,536 2,385
Total $13,006 $32,387 $42,379 $52,069 $44,504
The average balances of loans on non-accrual status during 1993 and
1992 were approximately $5,551,000 and $9,483,000, respectively.
Interest income on non-accrual loans, which is recorded only when
received, amounted to $422,602 and $687,730 in 1993 and 1992,
respectively. Interest income that would have been earned on non-
accrual loans had those loans been on accrual status totalled
approximately $560,000 in 1993 and $1,005,000 in 1992. The non-
accrual loans, restructured troubled debt and past due 90 days
(still accruing) loans presented above are included with the
presentation of the loan portfolio composition table.
In addition to the non-performing loans shown above, there are
potential problem loans as to which management has concerns about
the ability of the borrowers to comply with the present loan
repayment terms. These loans totalled $2,652,000 and $2,263,000 at
December 31, 1993 and 1992, respectively.
Foreclosed assets, which are recorded at fair value less estimated
cost to sell, totalled $7,630,000 at December 31, 1993 and
$22,395,000 at December 31, 1992. The composition of the
foreclosed assets (before reserves) at December 31, 1993 was as
follows:
Amount Percentage
(In thousands)
Real Estate:
Residential $ 1,587 13.4%
Commercial building 4,679 39.6
Raw land 5,540 46.8
Other foreclosed property 28 .2
Total $11,834 100.0%
At December 31, 1993, First Continental's ratio of non-performing
loans to total loans was 2.4%, a significant improvement from 4.3%
at December 31, 1992 and 6.3% at December 31, 1991. Furthermore,
as illustrated in the Loan Loss Reserve Analysis set forth below,
net charge-offs declined $1,642,000 and $1,638,000 in 1993 and
1992, respectively. Net charge-offs as a percentage of average
loans were .17% in 1993 and .87% in 1992.
Reserve and Provision for Possible Loan Losses. The reserve for
possible loan losses is composed of specific reserves (assessed for
each loan for which a probable loss has been identified), general
reserves and an unallocated reserve. Management continuously
evaluates the reserve in accordance with the guidelines of OCC
Circular #201 to ensure the level is adequate to absorb loan losses
inherent in the loan portfolio. The provision is then recorded to
maintain the reserve at the determined level. Factors contributing
to the determination of specific reserves include the financial
condition of the borrower, changes in the value of pledged
collateral and general economic conditions. General reserves are
established based on historical loan loss experience and trends and
delinquencies of non-accrual loans. The unallocated reserve serves
to compensate for the possibility of changes in risk ratings of
loans and specific reserve allocations. The Board of Directors
reviews the adequacy of the reserve each quarter.
The 1993 reserve of $6,590,000 provided 122.5% coverage of
non-performing loans, as compared to $6,261,000, or 62.7% coverage
at the end of 1992. The following table provides an analysis of
the Reserve for Loan Losses by loan category for each of the last
five years:
<TABLE>
<CAPTION>
December 31,
1993 1992 1991 1990 1989
(Dollars in thousands)
Allocation
of
Reserve
Balance to
End-of-Period
Loans
Outstanding Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial,
financial
and
agricultural
loans $ 501 8% $ 700 11% $ 963 13% $1,240 14% $1,606 16%
Real estate -
residential 620 9 673 11 1,150 16 148 1 534 5
Real estate -
commercial 2,442 37 2,149 34 3,834 54 6,398 71 6,897 69
Installment
and other 3,027 46 2,739 44 1,200 17 1,237 14 937 10
Reserve for
possible
loan losses $ 6,590 100% $6,261 100% $7,147 100% $9,023 100% $9,974 100%
Distribution
of Loan
Portfolio:
Commercial,
financial,
and
agricultural
loans $ 19,256 8% $29,352 12% $33,474 13% $47,294 17% $69,902 23%
Real Estate -
residential 55,446 24 53,063 22 58,753 23 61,807 22 58,375 20
Real Estate -
commercial 67,847 29 67,977 28 70,790 28 73,633 27 84,959 29
Installment
and other 88,966 39 92,462 38 89,045 36 93,499 34 81,350 28
Total loans
(1) $231,515 100% $242,854 100% $252,062 100% $276,233 100% $294,586 100%
(1) The amounts represent gross loan balances and, accordingly, are not net of unearned discounts.
</TABLE>
The provision for possible loan losses (a component of
earnings) is the means by which the reserve for possible loan
losses is adjusted to establish a reserve level considered adequate
by management to absorb future loan losses. Due to the significant
improvement in asset quality discussed earlier and decreased levels
of net loan charge-offs, reduced provisions were recorded in 1993
and 1992. The schedule below presents the provision for loan
losses and an analysis of the loan loss reserve for each of the
last five years:
December 31,
1993 1992 1991 1990 1989
(In thousands)
Beginning balance $ 6,261 $ 7,147 $ 9,023 $ 9,974 $11,143
Charge-offs:
Commercial,
financial and
agricultural (191) (644) (673) (582) (1,018)
Real estate -
commercial (491) (194) (2,272) (1,456) (3,212)
Real estate -
residential (132) (697) (1,008) (1,250) (42)
Installment and
other (1,484) (1,823) (872) (2,078) (448)
Total charge-offs (2,298) (3,358) (4,825) (5,366) (4,720)
Recoveries:
Commercial,
financial and
agricultural 430 449 543 616 376
Real estate -
commercial 480 358 4 300 -0-
Real estate -
residential 178 136 468 239 -0-
Installment and
other 814 377 134 159 69
Total Recoveries 1,902 1,320 1,149 1,314 445
Net charge-offs (396) (2,038) (3,676) (4,052) (4,275)
Provision charged
to expense 725 1,152 1,800 3,101 3,106
Ending balance $ 6,590 $ 6,261 $ 7,147 $ 9,023 $ 9,974
Average total loans $231,769 $233,010 $244,338 $267,243 $270,477
Ratio of net charge-
offs to average
loans outstanding 0.17% 0.87% 1.50% 1.52% 1.58%
Securities. At the end of 1993, total securities were $127.7
million, an increase of $29.6 million, or 30.2%, from the end of
1992. Of total securities, 99.1% are obligations of the U. S.
government or its agencies, or, if private-label collateralized
mortgage obligations, the collateral is an obligation of a U. S.
government agency. The composition of the securities portfolio at
the end of each of the last three years is shown below:
December 31,
1993 1992 1991
(In thousands)
AVAILABLE-FOR-SALE
U. S. treasury and government
obligations $ 25,563 $ - $ -
Mortgage-backed securities 68,650 - -
Other 843 - -
95,056 -(1) -(1)
HELD-TO-MATURITY
U. S. treasury and government
obligations 8,660 26,675 22,448
Mortgage-backed securities 23,233 70,698 68,022
State and political subdivisions 289 - 40
Other 469 705 390
32,651 98,078 90,900
Total securities $127,707 $ 98,078 $ 90,900
Fair value $128,549 $100,418 $ 94,279
___________________
(1) Prior to December 31, 1993, the Company recorded all securities as held-
to-maturity.
On December 31, 1993, First Continental adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which requires the
classification of securities into one of three categories: Trading,
Available-for-Sale, or Held-to-Maturity. Management determines the
appropriate classification of debt securities at the time of
purchase and re-evaluates this classification periodically.
Trading account securities are held for resale in anticipation of
short-term market movements. As of December 31, 1993, there were
no trading account securities. Had there been, those securities
would have been carried at market value and included in short-term
investments. Gains and losses, both realized and unrealized, would
have been reflected in earnings. Debt securities are classified as
held-to-maturity when First Continental has the positive intent and
ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost. Securities not classified
as trading or held-to-maturity are classified as available-for-
sale. Available-for-sale securities are stated at fair value, with
unrealized gains and losses, net of tax, reported in a separate
component of shareholders' equity. First Continental may sell
these securities in response to liquidity demands. They also may
be used as a means of adjusting the interest rate sensitivity of
First Continental's balance sheet through sale and reinvestment.
Management has established a minimum acceptable level of available-
for-sale securities which is 25% of total deposits minus cash
balances, net federal funds sold, and the estimated 12-month cash
flow from the securities portfolio.
First Continental held no trading securities at December 31,
1993, and there was no trading activity during 1993 or 1992. First
Continental reclassified $95 million of its securities from held-
to-maturity to available-for-sale on December 31, 1993 in
conjunction with its adoption of SFAS 115. This reclassification
will allow First Continental to more actively manage its securities
portfolio in response to liquidity demands and interest rate
movements. Of the securities available-for-sale, $22.2 million, or
23.3%, are adjustable-rate mortgage-backed securities, which First
Continental purchased to shorten the average repricing period of
its portfolio. Securities held-to-maturity total $32.7 million, of
which $23.2 million, or 70.9%, are seasoned mortgage-backed
passthrough securities with contractual maturities ranging from
three years to approximately 33 years. Of these, $3.5 million, or
15.0%, are adjustable-rate securities purchased to reduce interest
rate risk.
Because of stability in deposits and weak commercial loan
demand, management elected to increase the size of the securities
portfolio from $98.1 million at the end of 1992 to $127.7 million
at the end of 1993. First Continental purchased a mix of short-to-
intermediate maturity treasuries and agencies, adjustable-rate
mortgage-backed securities, seasoned pass-through mortgage-backed
securities and collateralized mortgage obligations.
Maturities of and yields on First Continental's securities
portfolio at the end of 1993 are set forth in the table below.
Mortgage-backed securities are classified according to contractual
maturity without consideration of contractual repayments or
projected prepayments.
<TABLE>
<CAPTION>
One Year One Through Five Through After
or Less Five Years Ten Years Ten Years Total
(In thousands)
Average Average Average Average Average
Book Weighted Book Weighted Book Weighted Book Weighted Book Weighted
Value Yield Value Yield Value Yield Value Yield Value Yield
AVAILABLE-FOR-SALE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U. S. treasury
and government
obligations $ 4,040 4.42% $19,449 5.48% $ 2,074 6.25% $ - -% $ 25,563 5.37%
Mortgage-backed
securities - - 1,308 7.06 12,188 5.78 55,154 5.73 68,650 5.76
Other - - - - - - 843 .13 843 .13
4,040 4.42 20,757 5.58 14,262 5.85 55,997 5.86 95,056 5.74
HELD-TO-MATURITY
U. S. treasury
and government
obligations 8,660 4.79 - - - - - - 8,660 4.79
Mortgage-backed
securities - - 2,711 7.94 2,645 6.95 17,877 7.78 23,233 7.70
State and political
subdivisions - - - - 120 5.00 169 5.35 289 5.20
Other 146 4.14 - - - - 323 5.93 469 5.38
8,806 4.78 2,711 7.94 2,765 6.87 18,369 7.73 32,651 6.87
Total securities $12,846 4.66% $23,468 5.85% $17,027 6.01% $74,366 6.32% $127,707 6.03%
</TABLE>
There was no tax benefit attributed to tax-exempt obligations
due to First Continental's net operating loss carryforward
position.
Because of the low interest rate environment in 1993,
contractual payments and prepayments, primarily related to
residential mortgage refinancings, reduced First Continental's
mortgage-backed portfolio by more than $43 million. Approximately
$64 million in mortgage-backed securities, both fixed and
adjustable-rate, were added in 1993.
Deposits. Deposits are the primary source of funding for
First Continental's earning assets. Total deposits at the end of
1993 were $345,350,000, a decrease of $1,845,000 from the end of
1992. Average deposits decreased by $13,420,000, or 3.7%, in 1993
from the 1992 average. This decline in average deposits was a
result of the industry-wide decline in interest rates. Short-term
deposits, such as Savings and Demand Deposits, remained stable or
increased as consumers tried to evaluate interest rate trends. As
interest rates declined, certain consumers responded by placing
their maturing time deposits into higher-yielding investments
offered elsewhere, such as mutual funds, annuities, and equity
securities. The table below shows the shift in the composition of
the average deposits and the decline in their associated average
yields for the last three years:
Average Balances Average Yield
1993 1992 1991 1993 1992 1991
(In thousands)
Non-interest
bearing $ 59,254 $ 57,662 $ 53,867 -% -% -%
NOW and super
NOW 40,477 40,532 36,972 1.34 2.34 4.14
Money market 55,202 58,361 54,277 2.13 2.95 4.72
Savings 42,275 42,005 34,632 2.01 3.11 4.96
Time deposits less
than $100,000 110,974 115,631 119,027 4.41 5.07 6.99
Time deposits of
$100,000 or
more 8,424 10,781 15,355 3.97 4.70 6.72
Public funds 4,871 10,009 12,272 2.28 3.57 5.47
IRA's 26,391 26,307 25,499 5.03 5.64 6.49
Total deposits $347,868 $361,288 $351,901 2.65% 3.37% 4.97%
Domestic time deposits of $100,000 or more at December 31,
1993, 1992 and 1991 had maturities as follows:
1993 1992 1991
(In thousands)
Three months or less $ 5,304 $ 4,956 $11,428
Three through six months 2,462 2,507 4,673
Over six months through twelve months 1,892 1,776 3,026
Over twelve months 2,294 2,558 1,424
Total $11,952 $11,797 $20,551
Short-Term Borrowings. First Continental's short-term
borrowings include Federal funds purchased and securities sold
under repurchase agreements and generally represent overnight
borrowing transactions. Other borrowings include quarterly
individual and corporate tax payments deposited in FNJ, which FNJ
may use but must be available to the Treasurer of the United States
by the following day. The following is a summary of certain
information regarding these borrowings for the last three years:
1993 1992 1991
(In thousands)
Balance at end of year $13,234 $14,149 $ 6,860
Average during the year 10,094 10,790 9,473
Maximum month-end balance 16,159 15,032 13,597
Weighted average rate during the year 2.86% 3.2% 5.5%
Weighted average rate at end of year 2.77% 2.9% 4.0%
Interest Rate Sensitivity. Interest rate risk is the
potential impact of changes in interest rates on net interest
income and results from disparities in repricing opportunities of
assets and liabilities over a period of time. Management uses
simulation models to estimate the effects of changing interest
rates and various balance sheet strategies on the level of net
interest income. Management may alter the mix of floating- and
fixed-rate assets and liabilities, change pricing schedules, and
adjust maturities through sales and purchases of securities
available for sale as a means of limiting interest rate risk to an
acceptable level.
Presented below is First Continental's interest rate
sensitivity position at December 31, 1993. This profile is based
on a point in time and may not be meaningful because it does not
consider subsequent changes in interest rate levels or spreads
between asset and liability categories. Although securities
available for sale are mostly fixed-rate and have average
contractual maturities exceeding five years, these securities are
required to be included in the 1 to 30-day category. Securities
available-for-sale are carried at estimated fair value, with
unrealized gains or losses recorded as a component of equity.
Therefore, as interest rates rise, the level of shareholders'
equity could be negatively affected as their carrying value is
adjusted downward. The opposite would be true if interest rates
fall.
The 1 to 30-day deposit category also includes $52.6 million
in money market accounts, which have indeterminate maturities.
Money market rates are administered and do not necessarily reprice
in a direct relationship to changes in interest rates.
1-30 31-90 91-365 More than Non-Int
Days Days Days 1 year Sensitive Total
(Dollars in thousands)
Earnings Assets:
Loans $ 40,659 $16,463 $ 44,383 $116,941 $ 4,647 $223,093
Securities
held-to-
maturity 6,787 4,335 1,407 20,122 - 32,651
Securities
available-for-
sale 94,213 - - - 843 95,056
Money market
assets 22,000 - - - - 22,000
Other assets - - - - 27,112 27,112
$163,659 $20,798 $ 45,790 $137,063 $32,602 $399,912
Funding Sources:
Savings and
NOW Accounts $ 85,431 $ - $ - $ - $ - $ 85,431
Other interest-
bearing
deposits 65,730 30,074 60,374 42,742 - 198,920
Short-term
borrowings 13,234 - - - - 13,234
Long-term
debt - - - 11,884 - 11,884
Non-interest
bearing
deposits - - - - 60,999 60,999
Other
Liabilities - - - - 12,047 12,047
Stockholders'
Equity - - - - 17,397 17,397
$164,395 $30,074 $ 60,374 $ 54,626 $90,443 $399,912
Repricing/Maturity GAP:
Period $ (736) $(9,276) $(14,584) $ 82,437 $(57,841)
Cumulative (736) (10,012) (24,596) 57,841
GAP/Total Earning Assets:
Period (0.2%) (2.3%) (3.6%) 20.6% (14.5%)
Cumulative (0.2%) (2.5%) (6.2%) 14.5%
Regulatory Issues, Capital and Dividend Restrictions
General. First Continental and FNJ are subject to regulatory
risk-based capital guidelines. In the risk-based capital
computation, all assets are weighted based upon assigned risk
factors, and certain off-balance sheet items are included, such as
loan commitments and standby letters of credit. Capital is
separated into two categories, Tier 1 and Tier 2, which combine for
Total Capital. Tier 1 consists of common shareholders' equity and
perpetual preferred stock, subject to certain limitations. Tier 2
capital consists of the reserve for loan losses and subordinated
debt, subject to certain limitations. In order to be considered
adequately capitalized, the guidelines provide for minimum Total
Capital of 8 percent, half of which must be Tier 1 capital.
In conjunction with the risk-based capital guidelines, the
regulators have also issued leverage capital guidelines. The
leverage ratio consists of Tier 1 capital as a percent of average
total assets. In order to be considered adequately capitalized,
the minimum leverage ratio for banks and bank holding companies
must equal at least 4 percent.
First Continental's capital ratios, which were not in
compliance with regulatory requirements in 1993 and 1992, and FNJ's
capital ratios, which were in compliance in 1993 and 1992, were as
follows at December 31, 1993 and 1992, respectively:
FIRST CONTINENTAL
December 1993
(Dollars in thousands)
(Shortfall)
Ratio Regulatory Actual Overage
Amount Percent Amount Percent Amount
Tier 1 $ 9,598 4.000% $ 2,830 1.18% $ ( 6,768)
Total 19,195 8.000 5,661 2.36 (13,534)
Leverage 15,677 4.000 2,830 0.72 (12,847)
FNJ
December 1993
(Dollars in thousands)
(Shortfall)
Ratio Regulatory Actual Overage
Amount Percent Amount Percent Amount
Tier 1 $ 9,643 4.000% $ 29,767 12.35% $ 20,124
Total 19,286 8.000 32,825 13.62 13,539
Leverage 15,678 4.000 29,767 7.59 14,089
FIRST CONTINENTAL
December 1992
(Dollars in thousands)
(Shortfall)
Ratio Regulatory Actual Overage
Amount Percent Amount Percent Amount
Tier 1 $ 10,457 4.000% $ (1,660) (.63)% $ (12,117)
Total 20,914 8.000 (1,660) (.63) (22,574)
Leverage 15,913 4.000 (1,660) (.42) (17,573)
FNJ
December 1992
(Dollars in thousands)
(Shortfall)
Ratio Regulatory Actual Overage
Amount Percent Amount Percent Amount
Tier 1 $ 10,442 4.000% $ 22,813 8.74% $ 12,371
Total 20,884 8.000 26,113 10.00 5,229
Leverage 15,965 4.000 22,813 5.72 6,848
Pursuant to an agreement (the "Formal Agreement") between FNJ and
the OCC described below, FNJ has been directed to achieve Tier 1
capital of at least 5.5% of risk-weighed assets and a leverage
ratio of at least 5.0%. FNJ's Tier 1 and leverage ratios were
above those required by the Formal Agreement at December 31, 1993
and 1992.
Formal Agreement with the OCC. FNJ and the OCC entered into
a Formal Agreement on May 23, 1991, under which FNJ agreed, among
other things, that it would not declare or pay any dividends unless
the dividend payment is in compliance with applicable laws, has
been approved in writing by the OCC and is consistent with the
minimum capital levels contained in FNJ's capital plan established
pursuant to the Formal Agreement. The Formal Agreement was amended
on January 9, 1992 to require FNJ to achieve by March 1, 1992
either Tier 1 capital equal to 5.5% of risk-weighted assets and 5%
of average adjusted total assets or alternate capital ratios
specified in a capital plan approved by the OCC, and, within 60
days, to develop and submit to the OCC a three-year capital plan.
FNJ submitted a three-year capital plan in March 1992 and a
revised capital plan in early 1993, which reflected capital ratios
at December 31, 1992 above those required by the Formal Agreement.
The Plan was approved by the OCC in July 1993.
The capital ratios required by the Formal Agreement and at
December 31, 1993 and 1992, respectively, were as follows:
Required
by Formal December 31,
Agreement 1993 1992
Tier 1 Capital 5.5% 12.35% 8.74%
Total Capital - 13.62 10.00
Leverage Ratio 5.0 7.59 5.72
FNJ is in substantial compliance with the requirements of the
Formal Agreement and the Amended Formal Agreement as signed.
Examination by the Federal Reserve Board; Certain Regulatory
Restrictions. In November 1992, the Federal Reserve Board
conducted an examination of First Continental. In its report, the
Federal Reserve Board noted that the consolidated capital levels
remain below regulatory minimums and directed that management act
immediately to rectify the capital deficiency. The Federal Reserve
Board directed First Continental to submit a capital plan by March
31, 1993 that would bring First Continental's capital to a
satisfactory level. First Continental submitted a capital plan to
the Federal Reserve Board in March 1993. Upon review, the Federal
Reserve Board determined that the Plan was unacceptable because
First Continental's capital ratios remained below regulatory
minimums until 1996. First Continental subsequently retained
Montgomery Securities ("Montgomery") to assist in addressing this
issue and to undertake a review of First Continental's strategic
alternatives. This process ultimately led to the Agreement with
Hibernia (see Note 1 to First Continental's Consolidated Financial
Statements).
Because of First Continental's financial condition, the
Federal Reserve Board requested the Board of Directors to adopt a
Board resolution confirming the continuation of the provisions of
the "no debt/no dividend" letter issued on June 11, 1986 by the
Federal Reserve Board, which contained, among other things, the
following: (i) no additional debt incurrence without Federal
Reserve Board approval, (ii) no payment of dividends to
shareholders without prior written approval from the Federal
Reserve Board, (iii) no treasury stock purchases, (iv) quarterly
Company reporting to the Federal Reserve Board, (v) subsidiary
reporting to the Federal Reserve Board, (vi) quarterly written
progress reports to the Federal Reserve Board, and (vii) the
appointment of a Compliance Committee to ensure all provisions of
the letter and holding company laws and regulations are complied
with in the future. Management believes First Continental is in
compliance with these requirements.
Liquidity and Capital Resources
As previously discussed, the capital levels of First
Continental are below regulatory minimums and First Continental has
not been successful in submitting a satisfactory capital plan to
the Federal Reserve Board. Moreover, current or future debt
service and interest requirements of the Debentures and Senior
Notes, and accumulated dividend requirements on the Preferred
Stock, as well as regulatory constraints on the payment of
dividends and the issuance of debt securities by First Continental,
make equity or debt issuance by First Continental to raise capital
impracticable. FNJ has recently received regulatory approval to
make a $1.1 million dividend payment to First Continental, which,
if made, will enhance First Continental's liquidity; however, it
is not expected that First Continental's capital shortfall can be
eliminated in the foreseeable future by earnings at FNJ or other
internally generated sources of funds. For these and other
reasons, First Continental's Board of Directors retained Montgomery
in July 1993 to evaluate First Continental's strategic
alternatives.
After considering the report prepared and submitted by
Montgomery in September 1993, the Board embarked on a process to
maximize shareholder values by selling First Continental or its
assets; a process which ultimately led to the Agreement with
Hibernia discussed above. If the proposed Merger is consummated,
First Continental's shareholders will receive the stock and other
consideration described above, and First Continental's outstanding
Senior Notes and Debentures will be redeemed for cash at their
principal amount, plus all accrued and unpaid interest thereon, and
premium, if any. See "PROPOSED MERGER -- Background of and Reasons
for the Merger," "-- Conversion of Shares Pursuant to the Merger,"
"-- Redemption of Mandatory Convertible Subordinated Debentures,"
and "-- Redemption of Class A and Class B Notes."
LEGAL MATTERS
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 Proxy
Statement/Prospectus, Ms. Meringer owned no shares of Hibernia
Common Stock and held options to purchase 8,000 shares of Hibernia
Common Stock, which options are not currently exercisable.
EXPERTS
The consolidated financial statements of Hibernia incorporated
in this Proxy Statement/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, independent auditors, as
set forth in their report thereon incorporated herein by reference,
and has been so incorporated by reference in reliance upon such
report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of First Continental for
the fiscal years ended December 31, 1993, 1992 and 1991 contained
in this Proxy Statement/Prospectus have been audited by Arthur
Andersen & Co., independent public accountants, as included in
their report with respect thereto, and have been included herein in
reliance upon the authority of such firm as experts in accounting
and auditing in giving such reports.
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
First Continental Bancshares, Inc.:
We have audited the accompanying consolidated statements of
condition of First Continental Bancshares, Inc. (a Louisiana
corporation) (the Company) and subsidiary as of December 31, 1993
and 1992, and the related consolidated statements of income
(loss), cash flows and shareholders' equity for each of the three
years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
As discussed in Note 2, the Company does not currently meet
minimum regulatory capital standards. During 1993, the Company
was required to submit a capital plan to the Federal Reserve
Board (FRB). The plan was submitted in March, 1993, but it was
not accepted by the FRB due to capital ratios (as reflected in
the plan) remaining below the minimum regulatory guidelines until
1996. As a result, the Company considered other strategic
alternatives which ultimately led to an agreement to merge with
Hibernia Corporation, as further discussed in Note 1. The
merger, which has been approved by the Company's Board of
Directors, is subject to, among other things, regulatory and
shareholder approval, and if approved, is expected to be
completed in 1994. Also, as discussed in Note 2, during 1991 the
Company's subsidiary, First National Bank of Jefferson (the
Bank), entered into a Formal Agreement with the Office of the
Comptroller of the Currency (the OCC) which requires, among other
things, that the Bank not declare or pay dividends without prior
approval in writing by the OCC and that the Bank maintain certain
minimum capital ratios which it met at December 31, 1993 and
1992.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of First Continental Bancshares, Inc. and
subsidiary as of December 31, 1993 and 1992, and the results of
their operations and cash flows for each of the three years in
the period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in Notes 3, 7, and 16 to the financial statements,
effective January 1, 1993, the Company changed its methods of
accounting for investment securities, income taxes, and post-
retirement benefits other than pensions.
s/ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
New Orleans, Louisiana
February 14, 1994
First Continental Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CONDITION
December 31, 1993 and 1992
(In Thousands) 1993 1992
ASSETS
Cash and Due from Banks $ 13,141 $ 16,964
Investment Securities:
U.S. Treasury Securities
and Obligations of U.S.
Government Agencies 34,223 26,675
Mortgage-Backed Securities
(guaranteed by government
agencies and corporations) 91,883 70,698
State and Political Subdivisions 289 -
Federal Reserve Bank Stock and
Other Securities 1,312 705
Total Investments (fair
value of approximately
$128,549 in 1993
and $100,418 in 1992) 127,707 98,078
Federal Funds Sold 22,000 17,200
Loans 223,093 232,958
Reserve for Possible Loan Losses (6,590) (6,261)
Net Loans 216,503 226,697
Bank Premises and Equipment, Net 6,051 6,193
Accrued Interest Receivable 1,933 1,970
Other Real Estate and Foreclosed
Property, Net 7,630 22,395
Other Assets 2,075 824
Goodwill 2,872 3,697
TOTAL ASSETS $399,912 $394,018
LIABILITIES
Deposits:
Interest-Free $ 60,999 $ 59,946
Money Market 52,268 54,053
Savings & NOW 85,431 86,844
Time 146,317 145,183
Interest-Bearing Deposits from
Affiliated Banks 335 1,169
Total Deposits 345,350 347,195
Short-Term Borrowings 13,234 14,149
Notes Payable 5,884 5,444
Mandatory Convertible Debentures 6,000 6,000
Accrued Interest Payable 7,379 5,711
Other Liabilities 4,668 2,569
TOTAL LIABILITIES 382,515 381,068
SHAREHOLDERS' EQUITY
Preferred Stock - 500,000 shares
authorized; 140,000 shares
designated as Class A Cumulative
Convertible Preferred Stock
- par value $1 per share; 135,974
shares issued and outstanding 11,422 11,422
Common Stock - par value $1 per share,
5,000,000 shares authorized;
2,145,151 shares issued, of which
17,055 are held as treasury stock
at December 31, 1993 and 1992 2,145 2,145
Surplus 2,741 2,741
Unrealized Gain on Available-For-Sale
Securities 807 -
Accumulated Earnings (Losses) 400 (3,240)
Treasury Stock (118) (118)
TOTAL SHAREHOLDERS' EQUITY 17,397 12,950
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $399,912 $394,018
The accompanying notes are an integral part of these statements.
First Continental Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For The Years Ended December 31, 1993, 1992 and 1991
(In Thousands Except for Per
Share Data) 1993 1992 1991
INTEREST INCOME:
Interest and Fees on Loans $ 22,636 $ 24,612 $ 26,672
Interest on Investments:
U. S. Government & Agencies 1,846 1,612 967
Mortgage-Backed Securities 5,044 5,405 4,894
State and Political
Subdivisions 13 2 6
Interest on Federal Funds
Sold & Other 446 549 984
Total Interest Income 29,985 32,180 33,523
INTEREST EXPENSE:
Interest on Deposits:
Money Market 1,171 1,794 2,677
Savings and NOW 1,423 2,359 3,606
Time 6,636 8,016 11,362
Interest on Short-Term
Borrowings 289 322 543
Interest on Note Payable
and Debentures 1,753 1,353 1,250
Total Interest Expense 11,272 13,844 19,438
NET INTEREST INCOME 18,713 18,336 14,085
PROVISION FOR POSSIBLE
LOAN LOSSES 725 1,152 1,800
NET INTEREST INCOME AFTER
PROVISION FOR
POSSIBLE LOAN LOSSES 17,988 17,184 12,285
OTHER INCOME:
Service Charges on
Deposit Accounts 2,755 2,726 2,629
Other Charges,
Commissions and Fees 1,580 1,557 1,439
Other Operating Income 424 592 463
Security Gains 24 20 179
Total Other Income 4,783 4,895 4,710
OTHER EXPENSES:
Salaries and Employee Benefits 8,087 7,034 6,954
Net Occupancy Expense 1,472 1,470 1,750
Litigation Loss (Recovery), Net 92 255 (176)
Other Real Estate Expenses 5,213 6,554 3,685
Other Operating Expenses 5,837 6,084 5,310
Total Other Expenses 20,701 21,397 17,523
INCOME (LOSS) BEFORE
MINORITY INTERESTS 2,070 682 (528)
Less: Minority Interest -0- -0- 311
INCOME (LOSS) BEFORE INCOME TAXES,
EXTRAORDINARY ITEMS AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 2,070 682 (839)
Provision for Income Taxes 1,052 232 -0-
Income (Loss) Before
Extraordinary Items and
Cumulative Effect of Change
in Accounting Principle 1,018 450 (839)
Extraordinary Items:
Gain on Extinguishment of
Debt, Net of Tax -0- 11,345 -0-
Utilization of Net Operating
Loss Carryforward -0- 5,996 -0-
Net Income (Loss) Before
Cumulative Effect of Change
in Accounting Principle 1,018 17,791 (839)
Cumulative Effect of Change
in Accounting Principle -
(Adoption of SFAS 109) 2,622 -0- -0-
Net Income (Loss) 3,640 17,791 (839)
PREFERRED STOCK DIVIDENDS
AND ACCRUED INTEREST (2,053) (1,994) (2,033)
NET INCOME (LOSS)
APPLICABLE TO
COMMON STOCK $ 1,587 $ 15,797 $ (2,872)
The accompanying notes are an integral part of these statements.
First Continental Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME (LOSS) - (Continued)
For The Years Ended December 31, 1993, 1992 and 1991
(In Thousands Except for Per Share Data) 1993 1992 1991
PRIMARY EARNINGS (LOSS) PER SHARE:
Earnings (Loss) Per Common Share
Assuming No Dilution:
Income (Loss) Before Extraordinary
Items and Cumulative Effect of
Change in Accounting Principle $ .48 $ .21 $ (.39)
Extraordinary Items -0- 8.15 -0-
Change in Accounting Principle 1.23 -0- -0-
Preferred Stock Dividends and
Accrued Interest (.96) (.94) (.96)
Net Income (Loss) Applicable
to Common Stock $ .75 $7.42 $(1.35)
FULLY-DILUTED EARNINGS PER SHARE:
Earnings Per Common Share Assuming Full Dilution:
Income Before Extraordinary Items and
Cumulative Effect of Change in
Accounting Principle $ N/A $ .33 $ N/A
Extraordinary Items N/A 4.71 N/A
Change in Accounting Principle N/A -0- N/A
Net Income Applicable to
Adjusted Common Stock
Outstanding $ N/A $5.04 $ N/A
The accompanying notes are an integral part of these statements.
First Continental Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1993, 1992 and 1991
(In Thousands) 1993 1992 1991
OPERATING ACTIVITIES:
Net Income (Loss) $ 3,640 $ 17,791 $ (839)
Minority Interest - - 311
Adjustments to Reconcile
Net Income (Loss) to
Net Cash Provided by
Operating Activities:
Gain on Extinguishment of
Debt, Pretax - (17,190) -
Cumulative Effect of Change
in Accounting Principle (2,622) - -
Provision for Possible Loan
Losses 725 1,152 1,800
Provision for Other Real
Estate Losses and Write-Down
to Market Value 4,235 5,253 2,736
Depreciation 371 460 720
Provision for (Recovery
of) Litigation Loss 92 255 (176)
Amortization of Purchase
Adjustments 825 826 843
Amortization (Accretion)
of Security
Premium and Discount 364 452 191
Accretion of Senior
Debentures and Note
Payable 440 392 350
(Gain) Loss on Sale/Valuation
of Investments (24) 57 (179)
(Gain) Loss on Sale of Other
Real Estate (350) (205) 314
Decrease (Increase) in Accrued
Interest Receivable 37 209 580
Increase (Decrease) in Accrued
Interest Payable 1,668 540 (516)
Increase (Decrease) in
Other Liabilities 2,007 (498) (1,140)
Decrease (Increase) in
Other Assets 955 (38) 162
Net Cash Provided by Operating
Activities 12,363 9,456 5,157
INVESTING ACTIVITIES:
Proceeds From Sales of
Investment Securities 15 520 19,669
Proceeds From Maturities and
Calls of Investment Securities 52,436 36,449 7,144
Purchases of Investment
Securities (81,197) (44,677) (49,106)
Net Change in Loan Portfolio 5,458 (5,016) 16,107
Net Change in Federal
Funds Sold (4,800) (7,200) (5,000)
Proceeds From Sale of Other
Real Estate Owned 14,891 11,275 2,354
Net Purchases of Premises
and Equipment (229) (139) (48)
Net Cash Provided by (Used in)
Investing Activities (13,426) (8,788) (8,880)
FINANCING ACTIVITIES:
Net Increase (Decrease)
in Interest-Free,
Money Market, Savings
and NOW Deposits (2,979) 4,653 13,960
Net Increase (Decrease) in
Certificates of Deposit 1,134 (18,171) (7,732)
Net Increase (Decrease) in
Short-Term Borrowings (915) 7,289 (3,828)
Proceeds From Issuance of
Long-Term Debt - 5,400 -
Repayment of Long-Term Debt - (4,200) -
Net Cash Provided by (Used in)
Financing Activities (2,760) (5,029) 2,400
NET INCREASE (DECREASE)
IN CASH AND
CASH EQUIVALENTS (3,823) (4,361) (1,323)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 16,964 21,325 22,648
CASH AND CASH EQUIVALENTS AT
END OF YEAR $13,141 $16,964 $21,325
Cash Paid During the Year
for (in thousands):
Interest $ 9,164 $12,914 $19,954
Income Taxes 119 81 -
The accompanying notes are an integral part of these statements.
First Continental Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY (DEFICIT)
For The Years Ended December 31, 1993, 1992 and 1991
(In Thousands)
<TABLE>
<CAPTION>
Unrealized Gain
on Available-For-
Preferred Stock Common Stock Surplus Sale Securities Treasury Stock Accumulated
Earnings
Shares Amount Shares Amount Amount Amount Shares Amount (Losses)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1990 136 $11,422 2,145 $2,145 $2,741 $ - (17) $(118) $(20,192)
Net Loss - 1991 (839)
BALANCE,
DECEMBER 31, 1991 136 11,422 2,145 2,145 2,741 - (17) (118) (21,031)
Net Income - 1992 17,791
BALANCE,
DECEMBER 31, 1992 136 11,422 2,145 2,145 2,741 - (17) (118) (3,240)
Net Income - 1993 3,640
Unrealized Gains 807
BALANCE,
DECEMBER 31, 1993 136 $11,422 2,145 $2,145 $2,741 $ 807 (17) $(118) $ 400
The accompanying notes are an integral part of these statements.
</TABLE>
First Continental Bancshares, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For The Years Ended December 31, 1993, 1992 and 1991
NOTE 1. MERGER PLAN.
On December 4, 1993, First Continental Bancshares, Inc.
(the "Company") and Hibernia Corporation ("Hibernia") entered
into an Agreement and Plan of Merger (the "Agreement") pursuant
to which the Company would merge within and into Hibernia and
each outstanding share of the Company's Class A Cumulative
Convertible Preferred Stock (see Note 11) would be converted into
and become exchangeable for a combination of cash and Hibernia
Class A Common Stock ("Hibernia Common Stock") with an aggregate
value of approximately $118 per share (as of March 31, 1994) and
each outstanding share of the Company's Common Stock would be
converted into and become exchangeable for 1.4 to 2 shares of
Hibernia Common Stock, depending on the price of Hibernia Common
Stock prior to closing, valued at $12 per share. All outstanding
Class A and Class B Senior Secured Notes due 1997 (see Note 10)
and 12% Mandatory Convertible Subordinated Debentures due
November 15, 1996 (see Note 10) of the Company will be redeemed
at par plus accrued and unpaid interest, and premiums, if any.
The merger is subject, among other things, to receipt of
regulatory and shareholder approvals, and is currently expected
to be completed during the second or third quarter of 1994.
NOTE 2. REGULATORY MATTERS, CAPITAL AND DIVIDEND RESTRICTIONS.
The Company and its wholly-owned subsidiary, the First
National Bank of Jefferson Parish (the "Bank" or "FNJ") are
subject to regulatory risk-based capital guidelines. In the
risk-based capital computation, all assets are weighted based
upon assigned risk factors, and certain off-balance sheet items
are included, such as loan commitments and standby letters of
credit. Capital is separated into two categories, Tier 1 and
Tier 2, which combine for Total Capital. Tier 1 consists of
common stockholders' equity and a portion of the Company's
perpetual Preferred Stock. Tier 2 capital consists of portions
of the allowance for loan losses and subordinated debt, subject
to certain limitations. The regulators have also issued capital
leverage guidelines. The leverage ratio consists of Tier 1
capital as a percent of average total assets. Unrealized gain
attributable to implementation of Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," (see Note 3 and Note
7), although included in shareholders' equity, is not included
for regulatory capital ratio computation purposes. Additionally,
as required, portions of the Company's deferred tax assets have
been excluded from the capital ratios reflected below.
The Company's capital ratios are not in compliance with
regulatory requirements, and were as follows at December 31, 1993
and 1992, respectively:
Regulatory
Requirement
12/31/93 12/31/93 12/31/92
Tier 1 Capital 4.00% 1.18% (0.63%)
Total Capital 8.00% 2.36% (0.63%)
Leverage Ratio 4.00% .72% (0.42%)
Formal Agreement with the OCC
The Bank and the OCC entered into a Formal Agreement on May
23, 1991, under which the Bank agreed, among other things, that
it would not declare or pay any dividends unless the dividend
payment is in compliance with applicable laws, has been approved
in writing by the OCC and is consistent with the minimum capital
levels contained in the Bank's capital plan established pursuant
to the Formal Agreement. The Formal Agreement was amended on
January 9, 1992 to require the Bank to achieve by March 1, 1992
either Tier 1 capital equal to 5.5% of risk-weighted assets
("Tier 1 Capital Ratio") and 5% of average adjusted total assets
("Leverage Ratio") or alternate capital ratios specified in a
capital plan approved by the OCC, and, within 60 days, to develop
and submit to the OCC a three-year capital plan.
The Bank submitted its three-year capital plan in March 1992
and a revised capital plan in early 1993 which reflected capital
ratios at December 31, 1992 exceeding those required in the
Formal Agreement. The Plan was approved by the OCC in July 1993.
The Bank's capital ratios required by the Formal Agreement
and at December 31, 1993 and 1992, respectively, were:
Required
by Formal
Agreement 12/31/93 12/31/92
Tier 1 Capital 5.5% 12.35% 8.74%
Total Capital N/A 13.62% 10.00%
Leverage Ratio 5.0% 7.59% 5.72%
The Bank is in substantial compliance with the requirements of
the Formal Agreement, as amended.
Examination by the Federal Reserve Board (FRB); Certain
Regulatory Impositions on Company
In November 1992, the FRB conducted an examination of the Company
and a copy of the examination report was provided to the
Company's Board of Directors in February 1993. In this report,
the FRB noted that the consolidated capital levels remain below
regulatory minimums and that management should act immediately to
rectify this problem. The FRB requested the Company to submit a
capital plan by March 31, 1993, that would bring the Company's
capital to a satisfactory level. The Company submitted a revised
capital plan to the FRB in March 1993. Upon review, the FRB
determined that the Plan was unacceptable because the capital
ratios remained below the minimum regulatory guidelines until
1996. The Company subsequently retained a consultant to assist
in addressing this issue and to review the Company's strategic
alternatives. This process ultimately led to the definitive
agreement to merge with Hibernia discussed in Note 1.
Because of the Company's financial condition, the FRB requested
the Board of Directors to adopt a Board resolution that
acknowledged the continuation of the no debt/no dividend letter
issued on June 11, 1986 by the FRB and contains, among other
things, the following: (i) no additional debt incurrence without
FRB approval; (ii) no payment of dividends to shareholders
without prior written approval from the FRB, (iii) no Treasury
Stock repurchases, (iv) quarterly Company reporting to the FRB,
(v) subsidiary reporting to the FRB, (vi) quarterly written
progress reports to the FRB, and (vii) the appointment of a
Compliance Committee to ensure all provisions of the request and
holding company laws and regulations are complied with in the
future. Management believes the Company is in compliance with
these requirements.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
The accounting and reporting policies of the Company reflect
industry practices and are in accordance with generally accepted
accounting principles. The principles and policies which
materially affect the determination of results of operations,
financial position, and cash flows are summarized below.
Reclassifications
Certain prior year amounts have been reclassified to conform with
current year presentation.
Consolidation
The consolidated financial statements include the accounts of the
Company and the Bank. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Fair Value of Financial Instruments
FASB Statement No. 107, "Disclosures About Fair Value of
Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not
available, fair values are based on estimates using present value
or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that
regard, the derived fair value estimates may not be substantiated
by comparison to independent markets and, in many cases, could
not be realized in immediate settlement of the instrument.
Statement 107 excludes certain financial instruments and all non-
financial instruments from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
Investment Securities
At December 31, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115
requires the classification of securities into one of three
categories: Trading, Available-for-Sale, or Held-to-Maturity.
Management determines the appropriate classification of debt
securities at the time of purchase and re-evaluates this
classification periodically. Trading account securities are held
for resale in anticipation of short-term market movements. Debt
securities are classified as held-to-maturity when the Company
has the positive intent and ability to hold the securities to
maturity. Securities not classified as held-to-maturity or
trading are classified as available-for-sale.
Effective December 31, 1993, there were no trading account
securities. Had there been, those securities would have been
carried at market value and included in short-term investments.
Gains and losses, both realized and unrealized, would have been
reflected in earnings. Held-to-maturity securities are stated at
amortized cost. Available-for-sale securities are presented at
fair value, with unrealized gains and losses, net of tax,
reported as a separate component of shareholders' equity. Net
unrealized gains of approximately $807,000 were included in
shareholders' equity as of December 31, 1993.
The amortized cost of debt securities classified as held-to-
maturity or available-for-sale is adjusted for amortization of
premiums and accretion of discounts to maturity, or in the case
of mortgage-backed securities, over the estimated life of the
security. Amortization, accretion and accrued interest are
included in interest income on securities. Realized gains and
losses, and declines in value judged to be other than temporary,
are included in net securities gains. The cost of securities
sold is determined based on the specific identification method.
Loans
Loans are stated at the principal amount outstanding less
applicable unearned discount. The fair value of loans as
disclosed in Note 5 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 maturity. Interest on commercial and real estate loans
is accrued based on the principal balance outstanding. Unearned
discount on consumer installment loans is recognized into income
using the sum-of-the-months digits method, which does not differ
materially from the interest method. The accrual of interest is
discontinued when it appears that collection may be doubtful.
Non-Performing Assets
Non-performing assets include loans 90 days or more past due but
still accruing interest, certain renegotiated loans, non-accrual
loans and other real estate and collateral acquired as the result
of foreclosures. Non-accrual loans are loans on which the
accrual of interest income has been discontinued because the
borrower's financial condition has deteriorated to the extent
that the collection of interest is doubtful. Until the loan is
returned to performing status, generally as the result of the
full payment of all past due principal and interest, interest
income is recorded on the cash basis.
Assets acquired through foreclosure, other than marketable equity
securities which are included in investment securities, are
recorded at the lower of cost or estimated fair value less
selling costs. Estimated fair value is the anticipated sales
price of the property, based upon independent appraisals or other
relevant factors. The excess of the loan balance over the fair
value of the asset at the time of foreclosure is charged to the
reserve for possible loan losses. Subsequent declines in market
value of the assets below their carrying values are charged
against the Other Real Estate Reserve. Such reserve is
specifically allocated by property, provisions are added monthly
based on historical indices and management review. Gains and
losses, those greater than the specific reserve for that
particular property, on disposition are reflected in income in
the year in which they occur. The amount of provision included
in other real estate expenses for the years ended December 31,
1993, 1992 and 1991, respectively, was $4,235,000, $5,253,000 and
$2,736,000.
Reserve for Possible Loan Losses
The determination of the balance in the reserve for possible loan
losses is based on an analysis of the relative risks inherent in
the loan portfolio and reflects an amount which, in management's
judgment, is adequate to provide for potential loan losses. A
provision for possible loan losses is charged to operating
expenses for the amount required to adjust the reserve to the
appropriate balance as determined by management. Ultimate losses
may vary from the current estimates. These estimates are
reviewed periodically and, as adjustments become necessary, they
are reported in earnings in the periods in which they become
known.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization for
book purposes is computed on a straight-line basis over the
estimated useful lives of the depreciable property as described
in Note 8. Maintenance and repairs are charged to operating
expense, and gains or losses on dispositions are reflected
currently in the statements of income (loss).
Deposits
The fair value of demand deposits, savings and interest-bearing
demand deposits is the amount payable on demand at December 31,
1993. The fair value of fixed maturity certificates of deposit
and other time deposits are estimated using the rates currently
offered for deposits of similar remaining maturities.
Income Taxes
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, the liability
method is used in accounting for income taxes. This method
determines deferred tax assets and liabilities based on
differences between financial reporting and tax bases of assets
and liabilities. The tax effect of these differences is measured
using enacted tax rates and laws that will be in effect when the
differences are expected to reverse. As permitted by SFAS No.
109, the prior years' financial statements have not been
restated, and the impact of adopting SFAS No. 109 as of January
1, 1993 in the amount of $2,622,000 is shown as the cumulative
effect of a change in accounting principle in the accompanying
consolidated statement of income. Prior to the adoption of SFAS
No. 109, income tax expense was determined using the deferred
method. Deferred tax expense was based on items of income and
expense that were reported in different years in the financial
statements and tax returns and was measured at the tax rate in
effect in the year the difference originated. Those differences
related principally to depreciation expense, provision for
possible loan losses and write-downs of other real estate. The
Company files a consolidated federal income tax return. In
addition, the Company is subject to Louisiana state income tax.
Purchase Accounting Adjustments
The acquisition of the Bank was recorded in 1982 using the
purchase method of accounting. Under purchase accounting, the
assets and liabilities of FNJ at the date of acquisition were
recorded at their fair market values and the excess of the
purchase price over the net fair value of FNJ's assets and
liabilities was recognized as goodwill of $12,046,000, which is
being amortized over 15 years using the straight-line method.
The remaining goodwill at December 31, 1993 is $2,872,000. In
connection with the acquisition of the Bank, warrants were issued
to individuals who had the option to purchase up to 354,574
shares of the Company's Common Stock at an exercise price of
$3.50 per share, which were to expire June 30, 1987. These
warrants were purchased by the Company (see Note 13) during 1986
for $2,393,000. At the Bank's acquisition date, no entries were
recorded to reflect the issuance of the warrants due to
uncertainty in establishing a value for them. During 1986, the
Company's purchase of these warrants established a value and,
accordingly, the purchase price was recorded as additional
goodwill and is being amortized over the remaining original life
of the goodwill. Included in other operating expenses for 1993,
1992 and 1991 is goodwill amortization of approximately $826,000,
$826,000 and $843,000 for each year, respectively.
Statements of Cash Flows
Cash and cash equivalents include cash and due from banks,
deposits in affiliated banks and interest-bearing deposits in
banks.
NOTE 4. CASH AND DUE FROM FINANCIAL INSTITUTIONS.
During 1993 and 1992, FNJ was required by regulation to maintain
balances on deposit with the Federal Reserve Bank which averaged
approximately $1,284,000 and $1,854,000, for those years,
respectively.
NOTE 5. LOANS AND NON-PERFORMING ASSETS.
Loans
The primary assets of the Company which are subject to asset
quality risk are the loan portfolio and other real estate and
foreclosed property. The risk elements of a loan portfolio
include non-accrual, renegotiated and past due loans and loan
concentrations.
The composition of the loan portfolio at the end of 1993 and 1992
was as follows (in thousands):
-------December 31-------
1993 1992
Energy........................... $ - $ 1,676
Marine........................... 1,069 3,682
Other Commercial................. 18,187 23,994
Land and Construction............ 2,631 1,365
Residential Real Estate.......... 52,815 51,698
Commercial Real Estate........... 67,847 67,977
Installment 88,966 92,462
Subtotal $231,515 $242,854
Less: Unearned Discount (8,422) (9,896)
Total $223,093 $232,958
Loans had an estimated fair value of approximately
$225,705,000 and $236,743,000 at December 31, 1993 and 1992,
respectively. (See Note 3 regarding the Company's method for
estimating the fair value of the loan portfolio.)
In May 1993, the Financial Accounting Standards Board issued
Statement No. 114, "Accounting by Creditors for Impairment of a
Loan", which requires that impaired loans that are within the
scope of this statement be measured based on the present value of
expected future cash flows discounted at the loan's effective
interest rate or at the loan's market price or the fair value of
the collateral if the loan is collateral dependent. Adoption of
the new standard is required for fiscal years beginning after
December 15, 1994. The standard is to be adopted prospectively
with the effect of initially applying the standard to be
reflected as an adjustment to the Bank's provision for loan
losses in the year of adoption. The effect, if any, the new
standard may have on the Bank's financial position and results of
operations is not expected to be significant based on the current
loan portfolio.
Non-Performing Assets
Non-accrual loans, loans past due 90 days or more, along
with real estate acquired through foreclosure and repossessed
personal property, represent non-performing assets. Detail of
these elements is as follows:
-------December 31-------
(In Thousands)
1993 1992
Loans:
90 days or more past due,
but still accruing interest $ 729 $ 2,027
Non-accrual 4,647 7,965
Total Non-Performing Loans $ 5,376 $ 9,992
Other Real Estate and Foreclosed Property:
Real Estate:
Residential $ 1,587 $ 7,107
Commercial Buildings 4,679 11,877
Raw Land 5,540 6,271
Other Foreclosed Property 28 708
$11,834 $25,963
Reserve for Possible Other Real Estate Losses:
Balance, beginning of year $ 3,568 $ 1,326
Provision for possible losses 4,235 5,253
Losses charged to the reserve (3,620) (3,018)
Recoveries of other real
estate previously charged
off 21 7
Balance, end of year $ 4,204 $ 3,568
Total Non-Performing Assets $13,006 $32,387
Non-Performing Loans/Total Loans 2.4% 4.3%
Non-Performing Assets/Total Assets 3.3% 8.2%
Activity in the Reserve for Possible Other Real Estate Losses
during 1991 included a beginning balance of $975,000, provision for
possible losses of $2,736,000, losses charged to the reserve of
$2,506,000 and recoveries of $121,000, resulting in an ending
balance of $1,326,000.
At December 31, 1993, eight properties represent 70% of total
other real estate owned; at December 31, 1992, approximately 47% of
the Bank's other real estate owned was concentrated in ten
properties. There were no loans which had been restructured at
December 31, 1993, or December 31, 1992.
As permitted under current accounting practices, during 1993,
the Company revised its policy with respect to accounting for
insubstance foreclosures. Currently, the Company considers
insubstance foreclosure assets to be loans for which the Company
has taken possession of the underlying collateral. There are no
loans which meet this criteria as of December 31, 1993 and the
total of loans which met this criteria as of December 31, 1992 was
$4,187,000. Amounts reported as insubstance foreclosures in 1992
prior to the Company's change in accounting policy were
approximately $6,556,000. Therefore, for comparative purposes,
approximately $2,369,000 of assets previously reported as
insubstance foreclosures have been reclassified from other real
estate to loans in the accompanying 1992 financial statements.
The average balance of loans on a non-accrual basis for 1993
and 1992 was approximately $5,551,000 and $9,483,000, respectively.
Interest income on non-accrual loans, which is recorded only when
received, was $422,602, $687,730 and $479,675 in 1993, 1992 and
1991, respectively. Interest income that would have been earned on
non-accrual loans had those loans been on accrual status totalled
approximately $560,000, $1,005,000 and $924,000 in 1993, 1992 and
1991, respectively.
Monitoring and resolution of problem loans continue to receive
significant Management attention. However, the uncertainty of the
energy industry and its related effect on the overall economy could
have an adverse effect on the financial condition of the Company's
loan customers. In the future it is possible that additional loans
to customers could be classified as non-performing or that
additional charge-offs and write-downs, as well as higher loan loss
provisions, could be incurred.
NOTE 6. RESERVE FOR POSSIBLE LOAN LOSSES.
The provision for possible loan losses charged to expense is
determined in accordance with the policy described in Note 3.
Transactions in the reserve for possible loan losses during 1993,
1992 and 1991 were as follows (in thousands):
1993 1992 1991
Balance, Beginning of Year $ 6,261 $ 7,147 $ 9,023
Provision for Possible Loan Losses 725 1,152 1,800
Losses Charged to the Reserve (2,298) (3,358) (4,825)
Recoveries of Loans Previously
Charged-Off 1,902 1,320 1,149
Balance, End of Year $ 6,590 $ 6,261 $ 7,147
Loans are charged off when the probability of loss is
established. In management's opinion, all known losses have been
charged to the reserve as of December 31, 1993.
NOTE 7. INVESTMENT SECURITIES.
As discussed in Note 3, the Company adopted SFAS No. 115
effective December 31, 1993. Prior to December 31, 1993, the
Company classified all securities as held-to-maturity. A summary
of securities classified as available-for-sale and held-to-maturity
is presented below (in thousands):
--------------December 31, 1993-------------
Gross Gross
Amortized Estimated Unrealized Unrealized
Cost Fair Value Gains Losses
AVAILABLE-FOR-SALE
U. S. Treasury
Securities and
Obligations of
U. S.Government
Agencies $ 25,039 $ 25,563 $ 544 $ (20)
Mortgage-Backed
Securities 68,413 68,650 497 (260)
Other 381 843 462 -
Total Available-
For-Sale $ 93,833 $ 95,056 $ 1,503 $ (280)
HELD-TO-MATURITY
U. S. Treasury
Securities and
Obligations of
U. S. Government
Agencies $ 8,660 $ 8,677 $ 17 $ -
Mortgage-Backed
Securities 23,233 24,046 939 (126)
Other 758 770 12 -
Total Held-To-
Maturity $ 32,651 $ 33,493 $ 968 $ (126)
--------------December 31, 1992-------------
Gross Gross
Amortized Estimated Unrealized Unrealized
Cost Fair Value Gains Losses
HELD-TO-MATURITY
U. S. Treasury
Securities and
Obligations of
U. S. Government
Agencies $ 26,675 $ 27,267 $ 609 $ (17)
Mortgage-Backed
Securities 70,698 72,446 1,890 (142)
Other 705 705 - -
Total Held-To-
Maturity $ 98,078 $100,418 $ 2,499 $ (159)
The amortized cost and estimated fair value of debt
securities at December 31, 1993, by contractual maturity, are shown
below (in thousands). Expected maturities will differ from
contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
AVAILABLE-FOR-SALE
Amortized Estimated
Cost Fair Value
Due in One Year $ 4,017 $ 4,040
Due After One Year Through Five Years 20,314 20,757
Due After Five Years Through Ten Years 14,136 14,262
Due After Ten Years 55,365 55,997
Total Available-For-Sale $ 93,832 $ 95,056
HELD-TO-MATURITY
Amortized Estimated
Cost Fair Value
Due in One Year $ 8,806 $ 8,824
Due After One Year Through Five Years 2,711 2,824
Due After Five Years Through Ten Years 2,765 2,815
Due after ten years 18,369 19,030
Total Held-To-Maturity $ 32,651 $ 33,493
Mortgage-backed securities are classified according to their
contractual maturity without consideration of contractual prepayments or
projected prepayments. Securities available for sale at December 31,
1993, include mortgage-backed securities of $1,308,000 due after one
year through five years, $12,186,000 due after five years through ten
years, and $55,155,000 due after ten years. Held-to-maturity securities
at December 31, 1993, include mortgage-backed securities of $2,711,000
due after one year through five years, $2,645,000 due after five years
through ten years, and $17,878,000 due after ten years. Contractual
maturities on mortgage-backed securities ranged from 2.63 years to
approximately 32 years at December 31, 1993. Estimated average life on
the portfolio of mortgage-backed securities was 3.31 years at December
31, 1993.
Proceeds from the sale and call of investment securities during
1993 and 1992 were $515,600 and $520,772, respectively. Gross gains of
$23,864 and $20,272 were realized on these transactions in 1993 and 1992
respectively. No losses were realized on sales during the periods.
Investment securities with a par value of approximately $28,873,000
and $28,523,000 at December 31, 1993 and 1992, respectively, were
pledged to secure public deposits, repurchase agreements and other
transactions.
NOTE 8. PREMISES AND EQUIPMENT.
Consolidated Company and Bank premises and equipment consists of
the following (in thousands):
----------December 31----------
1993 1992
Land $ 2,499 $ 2,499
Buildings and Leasehold
Improvements 9,034 9,000
Equipment 8,284 8,105
Total 19,817 19,604
Accumulated Depreciation
and Amortization (13,766) (13,411)
Net $ 6,051 $ 6,193
Depreciation and amortization is provided utilizing the
straight-line method and estimated useful lives as follows:
Range of
Useful Lives
Buildings and Leasehold Improvements 5 - 50 years
Equipment 1 - 5 years
NOTE 9. INTEREST-BEARING DEPOSITS.
A summary of interest-bearing deposits is as follows (in
thousands):
-------December 31-------
1993 1992
Demand and Savings Deposits $ 85,431 $ 86,844
Money Market Accounts 52,603 55,222
Certificates of Deposit 146,317 145,183
$284,351 $287,249
Certificates of deposit had an estimated fair value of
approximately $147,894,000 and $146,637,000 at December 31, 1993, and
1992 respectively. (See Note 3 regarding the Company's method for
estimating the fair value of the deposit portfolio.) The carrying value
of demand, savings and money market deposits is deemed a reasonable
estimate of fair value for those financial instruments.
NOTE 10. LONG-TERM DEBT.
Senior Secured Notes
On November 9, 1992, the Company issued an aggregate principal
amount of $5.4 million of its 10.75% Class A and Class B Senior Secured
Notes due 1997 ("Notes"). The Company used the proceeds to repurchase
certain interests in the Company held by Collecting Bank, N.A. in a debt
restructuring transaction and retained sufficient funds to pay the first
two years of interest on the Notes. Interest on the Notes is payable
quarterly on each January 1, April 1, July 1 and October 1. In
addition, under the terms of the Indenture with respect to the Notes,
the Class A noteholders earn the right to receive from the Company an
additional cash payment (the "Cash Premium") payable not later than the
second anniversary of the earlier of maturity or redemption of the Class
A Notes (the "Note Payment Date"). The amount of the Cash Premium
earned by each Class A noteholder is calculated by multiplying (i) 10%
of the principal amount of the Class A Notes held by such Class A
noteholder on the Note Payment Date by (ii) the number of years from the
date of issuance (including the year the Note Payment Date occurs)
during which the Class A Notes have been outstanding (up to a maximum of
five years). Cash Premium on the Class A Notes is being recognized
(amortized) on a straight-line basis over the five-year life of the
Notes.
Pursuant to the Indenture, each holder of Class A Notes has the
option (the "Share Option") to exchange the right to receive the Cash
Premium with respect to any or all of their Class A Notes for shares of
the Company's Common Stock if holders of a minimum of 25% of the
aggregate principal amount of the Notes elect to exercise their Share
Option and if certain other conditions provided for in the Indenture
(the "Option Conditions") are satisfied. If holders of all of the Class
A Notes elect to receive the Share Option and the Option Conditions are
satisfied, such Class A noteholders would receive an aggregate of 16.32%
of the outstanding shares of Common Stock of the Company after such
issuance.
The Notes are redeemable at the option of the Company, in whole or
in part, after November 9, 1994 at the principal amount plus accrued
interest and are mandatorily redeemable by the Company in the event of
a merger or consolidation of either the Company or the Bank with or into
another person or the sale of all or substantially all of the Company's
or the Bank's assets to another person (an "Extraordinary Transaction").
The Agreement with Hibernia discussed in Note 1 constitutes an
Extraordinary Transaction with respect to the Notes, and all the Notes
will be redeemed pursuant to the Indenture if the merger is consummated.
Additionally, each holder of the Class A Notes will be entitled to
receive the Cash Premium upon redemption of his Notes on the effective
date of the merger. If the Share Option is exercised and the Option
Conditions are satisfied, each holder of Class A Notes will be entitled
to receive, in lieu of the Cash Premium attributable to his Class A
Notes, approximately 94 shares of Common Stock for each $1,000 principal
amount of Class A Note. Each such share of Common Stock will then be
converted into shares of Hibernia Common Stock as described in Note 1.
Currently the best indicator of fair value on the Notes is derived
from the terms of the Agreement with Hibernia. Based on those terms, at
December 31, 1993, the consideration received by the noteholders could
vary depending upon whether the Cash Premium on the Class A Notes was
paid in cash or shares were issued pursuant to the Share Option. The
total value would be approximately $6,427,000 if the Class A noteholders
receive the Cash Premium and $10,517,000 if the noteholders exercise
their Share Option and the Option Conditions are satisfied.
Mandatory Convertible Subordinated Debentures
In 1986, the Company issued $6 million of 12% Mandatory Convertible
Subordinated Debentures due November 15, 1996 (the "Debentures"), in
connection with its retirement of $2 million in existing subordinated
Debentures and repurchase of outstanding Common Stock warrants (see Note
13). At maturity, the principal amount of the Debentures will be
converted into shares of Company Common Stock at the conversion rate of
78 shares of Common Stock for each $1,000 principal amount of
outstanding Debentures. Holders of the Debentures are permitted to
convert the Debentures into Common Stock at any time after November 15,
1990 at the same conversion rate. At December 31, 1993, none of the
Debentures had been converted. The Debentures are redeemable at the
option of the Company, in whole or in part, after November 15, 1993, for
the redemption price (expressed as a percentage of principal) of 105%,
103% and 100% for each of the twelve-month periods ending November 15,
1994, 1995 and 1996, respectively, plus accrued interest. However, any
such redemption may only be effected with the proceeds realized from the
Company's sale of Common Stock or perpetual preferred stock.
The Company has not paid interest on the Debentures since May 15,
1988 and, based upon the financial condition of the Company, it is not
anticipated that the payment of interest on the Debentures will resume
in the foreseeable future. Under the terms of the Debenture Agreement,
non-payment of interest is not an event of default. Accrued interest as
of December 31, 1993 was $4,142,000. The Debentures are subordinate to
all Senior Indebtedness of the Company (as defined in the Debenture
Agreement) and holders of the Debentures are permitted to declare an
event of default and accelerate payment of the principal of the
Debentures and accrued interest thereon only in the event of the
bankruptcy, insolvency or reorganization of the Company. If the Company
were liquidated, Debenture holders would have priority over the holders
of the Company's Preferred Stock and Common Stock to the remaining
assets of the Company; however, the debenture holders would be in a
subordinate position to the holders of Notes.
The fair value of the Debentures, based on the terms of the
Agreement with Hibernia discussed in Note 1, is approximately $10.4
million at December 31, 1993.
NOTE 11. CUMULATIVE CONVERTIBLE PREFERRED STOCK.
The Company has 135,974 shares of Class A Cumulative Convertible
Preferred Stock ("Preferred Stock") outstanding with a book value of
$11,422,000, upon which the Company has not paid dividends since the
last quarter of 1986. The Preferred Stock has an annual dividend rate
of $10.92 per share and is redeemable after June 30, 1994 at the option
of the Company at $84.00 per share plus accumulated and unpaid dividends
and interest thereon. At the option of the holder, the Preferred Stock
is convertible into Common Stock at a rate of 1.63 shares of Common
Stock for each share of Preferred Stock with all accumulated and unpaid
dividends and interest thereon becoming a debt of the Company payable to
the Preferred stockholders. Accumulated and unpaid dividends were
$10,395,000 at December 31, 1993. Interest on the accumulated and
unpaid dividends began to accrue as of January 1, 1989 at The Chase
Manhattan Bank, N.A., prime rate, adjusted quarterly. Accrued interest
on the dividends was $2,551,000 at December 31, 1993.
As reflected in the Agreement with Hibernia discussed in Note 1, if
the merger is consummated, each outstanding share of Preferred Stock
would receive total consideration valued at approximately $118 (as of
March 31, 1994) in the form of cash and Hibernia Common Stock.
NOTE 12. DEBT SETTLEMENT.
As reported in the Company's previous Annual Report filings, the
Company was the subject of a claimed default of its loan in the
principal amount of $16,100,000 from First City National Bank of Houston
("First City") that was payable on the earlier of demand or December 31,
1988.
In 1990 the Company and the Bank entered into a Settlement
Agreement and Supplemental Settlement Agreement with First City and
Collecting Bank, N.A. ("Collecting Bank"), a special purpose bank that
had been created by First City and to which the loan had been assigned.
Pursuant to the terms of these agreements (i) the parties exchanged
releases of all claims and litigation related to the Company's debt;
(ii) Collecting Bank delivered to the Company the $16.1 million
promissory note, duly cancelled, and all of the FNJ stock which had been
pledged to secure the note; (iii) the Company delivered to Collecting
Bank 62,685 shares of FNJ Common Stock; (iv) FNJ issued a warrant to
Collecting Bank representing an additional 52% of the outstanding FNJ
Common Stock, with FNJ having the right to defer the exercise of the
warrant by the Collecting Bank by making annual payments ("Exercise
Deferral Payments") in the annual amount of 4.25% of $11.6 million (the
"Repurchase Price") for the period from March 31, 1990 to March 31, 1995
(with the first payment due March 1, 1992 for the period from March 31,
1990 to December 31, 1991) and 10% thereafter, and with FNJ having the
right to repurchase the warrant at any time prior to March 31, 1998 for
the Repurchase Price plus accrued and unpaid Exercise Deferral Payments;
and (v) the Company issued to Collecting Bank a Senior Debenture in the
principal amount of $2 million, bearing interest at the rate of 7% per
annum until March 31, 1995, and at the rate of 10% thereafter. The
Senior Debenture had no maturity date and was redeemable at the option
of the Company within five years for $1 million.
The accounting for the delivery of the warrant in satisfaction of
the indebtedness owed to, Collecting Bank, was treated as a debt-for-
debt exchange. A loss on the transaction of $2.8 million was recorded
as a result of this transaction; this loss resulted from the following
(in thousands):
Investment in Bank at Restructure $ 25,099
Percentage Given to First City 19.9%
4,994
Fair Value of Stock Given Up
(315,000 shares @ $35/share x 19.9%) (2,194)
Resulting Loss on Transfer $ 2,800
As a result, minority interest of $3,560,000 was recorded and a
writedown of goodwill was realized of $1,434,000. The Note Payable and
the Senior Debenture were recorded as follows (in thousands):
Original Note Payable $16,100
Interest Payable 2,212
Subtotal 18,312
Less: Stock Given Up (2,194)
Remaining Debt 16,118
Allocation to Senior Debenture (500)
Recorded Value of Note Payable $15,618
The Note Payable and the Senior Debenture were being accreted,
using the effective interest method, to $17,545,000 (the total of the
Exercise Deferral Payments plus the Repurchase Price) and $2,000,000,
respectively.
At the direction of the Bank's primary regulator in early 1992, the
Company began negotiations with the Collecting Bank to rescind the
warrant in exchange for a lump sum cash payment. As a result of these
negotiations, on November 9, 1992, First Continental Bancshares, Inc.
repurchased from the Federal Deposit Insurance Corporation ("FDIC"), in
its capacity as receiver for Collecting Bank, (i) 62,685 shares of
Common Stock, $10.00 par value per share, of the Bank, (ii) a warrant to
acquire an additional 52% of the outstanding shares of FNJ Common Stock,
(iii) a warrant entitling Collecting Bank to maintain its 19.9%
ownership interest in FNJ in the event of certain circumstances and (iv)
a senior debenture in the principal amount of $2,000,000 (collectively,
the "Collecting Bank Interests"). The repurchase was effected in
connection with the settlement of all pending litigation between the
Company and FNJ, and Collecting Bank and First City, Texas-Houston,
N.A., ("Debt Settlement").
The Company made a cash payment of $4.2 million to the FDIC to
repurchase the Collecting Bank Interests. A gain on extinguishment of
debt of $17,190,000, pre-tax, resulted from this transaction. The
Company funded the repurchase by issuing an aggregate principal amount
of $5.4 million of 10.75% Class A and Class B Senior Secured Notes due
1997 on November 9, 1992. (See Note 10.) The remainder of the proceeds
from the issuance of the Notes are held in escrow to be used by the
Company to provide for the first two years of debt service on the Notes
and to pay certain expenses of the offering.
As a result of the repurchase of the Collecting Bank Interests and
the settlement of the litigation in 1992, all of the Collecting Bank
Interests were cancelled, the Company now owns 100% of the outstanding
shares of FNJ Common Stock (50% plus one share of which has been pledged
by the Company to the trustee for the noteholders to secure the
Company's obligations under the Notes), and the Company has no further
obligation to Collecting Bank.
NOTE 13. RELATED PARTY TRANSACTIONS.
In the ordinary course of business, FNJ makes loans to its
directors, principal officers and shareholders. These loans are made on
substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other
unaffiliated persons. Transactions in loans made to directors,
principal officers and shareholders, including their family members and
companies in which they have a significant ownership interest, were as
follows during 1993 and 1992 (in thousands):
1993 1992
Balance, Beginning of Year $ 379 $ 229
Additions 1 192
Repayments and Other (264) (42)
Balance, End of Year $ 116 $ 379
In addition, FNJ has a number of banking relationships with
other banks which have certain directors, officers and shareholders
in common. The most significant of these relationships relates to
loan participations sold to and purchased from the other banks.
Total loan participations sold to affiliated banks was
approximately $2,149,413 and $551,133 at December 31, 1993 and
1992, respectively. The total of loan participations purchased
from these banks amounted to approximately $3,054,456 and
$2,009,123 at December 31, 1993 and 1992, respectively. These loan
participations sold and purchased are made without recourse, on
comparable terms with the original loan, at market rates of
interest which provide for reimbursement of loan origination and
servicing costs.
In addition, FNJ has other banking relationships with the
aforementioned banks as follows:
These banks maintain time deposits and demand deposits at FNJ,
which totalled approximately $710,815 and $1,355,000 at December
31, 1993 and 1992, respectively, while FNJ maintained no time
deposits nor demand deposits at these related banks at those dates.
In the normal course of business the Company performs services
for and receives services from certain related banks. Fees
received for services performed totalling $83,000, $149,000 and
$222,000 for 1993, 1992 and 1991, respectively, and were included
in either other operating income or as a reduction of salaries and
employee benefits for the respective years. Fees paid for services
received totalling $90,000 for the year ending December 31, 1992,
and $164,000 for 1991 were included in other operating expenses for
the respective years. No fees were paid in 1993.
In 1993, the Company and the Bank sold various affiliate bank
stocks, which were held as other assets and which represented a
book value of $34,200 prior to the bids being requested, to various
individuals including directors and principal officers of the
Company. The sales were made through a public notification and
sealed bid procedure with the highest bidder being awarded the
shares. A gain on the sales of $91,498 (net of tax) is reflected
in Unrealized Gain on Available-For-Sale Securities in the
Company's financial statements as the sales were settled in January
1994.
During 1986 the Company issued $6,000,000 in mandatory
convertible subordinated Debentures to related banks (see Note 10).
Portions of the proceeds were used to retire $2,000,000 in existing
subordinated Debentures and to purchase 354,574 outstanding Common
Stock warrants for $2,393,000 at a price of $6.75 per warrant (net
of the warrants' $3.50 conversion price). The price was based upon
an appraisal of the Company's stock at $10.25 per share performed
by an independent investment banking firm. Of the 354,574 warrants
purchased, 212,742 were purchased from individuals who were either
principal shareholders or officers and directors of the Company.
This transaction was approved by a majority of the shareholders of
the Company.
NOTE 14. INCOME TAXES.
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for
Income Taxes." Under this new accounting standard, the tax
consequences of all temporary differences between the tax bases of
the assets or liabilities and their reported amounts in the
financial statements represent either tax liabilities to be settled
in the future or tax assets that will be realized as a reduction of
future taxes. Among other provisions, SFAS No. 109 requires the
use of currently enacted tax rates to measure these deferred tax
assets and liabilities. The change in the net deferred tax
position between periods represents the deferred tax expense or
benefit to be recognized in the financial statements.
The components of income tax expense for the years ended
December 31, 1993, 1992 and 1991 were as follows (in thousands):
1993 1992 1991
Current $ 125 $ 232 $ -
Deferred 927 - -
$1,052 $ 232 $ -
Total income tax expense differed from the amount computed by
applying the statutory federal income tax rates to pretax income
for the years ended December 31, 1993, 1992 and 1991 as follows (in
thousands):
1993 1992 1991
Federal Income Tax Expense $ 704 $ 232 $ (285)
Increase (Decrease) Resulting From:
Non-Taxable Interest Income (78) (82) (138)
Non-Taxable Income and Expense Related to
Consolidation Adjustments - (220) (313)
Amortization of Goodwill 281 281 287
Unused Portion of Book Operating Loss to
Be Carried Forward - - 432
Other 145 21 17
Actual Income Tax Expense $1,052 $ 232 $ -
The components of the Company's deferred tax assets and
liabilities as of January 1, 1993 and December 31, 1993 and the
changes in the respective balances between those periods were as
follows (in thousands):
January 1, Net December 31,
1993 Change 1993
Deferred Tax Assets:
Other Real Estate $ 3,107 $ 806 $ 2,301
Reserve for Loan Losses 437 (246) 683
Net Operating Loss
Carryforwards 2,639 543 2,096
Other 400 (250) 650
Total Deferred
Tax Assets $ 6,583 $ 853 $ 5,730
Deferred Tax Liabilities:
Basis Difference in
Stock of Subsidiary $(3,044) $ - $(3,044)
Depreciation (917) 73 (990)
Basis Difference in
Investment Securities - 416 (416)
Total Deferred
Liabilities (3,961) 489 (4,450)
Valuation Allowance - - -
Net Deferred
Tax Asset $ 2,622 $ 1,342 $ 1,280
As of December 31, 1993, for tax purposes, the Company had net
operating loss carryforwards (NOL's) of approximately $6,200,000
available to offset future taxable income which will expire in
varying amounts through the year 2006. SFAS No. 109 requires,
among other things, recognition of future tax benefits, subject to
a valuation allowance based on the likelihood of realizing such
benefits. In evaluating the realization of net tax benefits, the
Company must determine whether it is "more likely than not" that
the Company will realize such benefits and that all negative and
positive evidence be considered (with more weight given to evidence
that is "objective and verifiable") in making the determination.
Upon adopting SFAS No. 109, the Company applied the evaluation
criteria set forth in the Statement and determined that based on
the available evidence at the time of adoption, no valuation
reserve for the net deferred tax asset was required. At each
reporting period, the Company re-evaluates all available evidence
in determining whether realization of deferred tax assets is more
likely than not, and, if appropriate, records adjustments to the
valuation allowance. Matters considered by the Company in
determining the appropriate levels of valuation allowance include
(but are not necessarily limited to) historical operating results,
current and expected market conditions, future business plans and
available tax strategies, as well as current banking laws and
regulations.
As of December 31, 1993, the Company determined that based on
available evidence, no valuation reserve for the net deferred tax
asset was required.
NOTE 15. EARNINGS PER SHARE.
Earnings per share was computed by dividing net income (loss)
less Preferred Stock dividends by the weighted average number of
outstanding shares of Common Stock. The Preferred Stock and the
Debentures are not considered Common Stock equivalents. The
weighted average number of outstanding common and common equivalent
shares used in computing primary earnings (loss) per share was
2,128,096 during the past three years. For purposes of computing
fully diluted earnings (loss) per share, the Common Stock
conversion attributes of the Preferred Stock, the Debentures, and
the premium associated with the Class A Senior Notes were computed
and added to Common Stock outstanding as of the beginning of each
year. At December 31, 1993 and 1991, the computed Common Stock
conversion amounts associated with the Preferred Stock, the
Debentures, and the premium associated with the Class A Senior
Notes in 1993 were determined to be anti-dilutive in computing
fully-diluted earnings per share. At December 31, 1992, the
computed Common Stock conversion amounts associated with the
Preferred Stock, the Debentures, and the premium associated with
the Class A Senior Notes were 221,638, 734,136 and 601,540 shares,
respectively. The total weighted average number of shares
outstanding used for computing fully diluted earnings per share at
December 31, 1992 was 3,685,410.
NOTE 16. COMMITMENTS AND CONTINGENCIES.
The Bank is committed under various non-cancellable operating
leases for its facilities and for certain equipment leased on a
short-term basis. Total rent expense included in the accompanying
statements of income (loss) was $266,000, $271,000 and $294,000 in
1993, 1992 and 1991, respectively. The future minimum rental
commitments as of December 31, 1993 are as follows (in thousands):
1994 $ 356,520
1995 145,350
1996 70,704
1997 15,809
1998 & After 43,067
$ 631,450
The Company and its subsidiary are defendants in and are
threatened with various other legal proceedings arising from their
regular business activities, primarily the business of making and
collecting loans. To address such exposure, the Company
periodically records loss accruals when, in the opinion of
management, losses from such litigation become known and probable.
Management believes that the amounts accrued for litigation losses
as of December 31, 1993 is adequate and in the opinion of
management, based upon the advice of legal counsel, the outcome of
such litigation will not have a material adverse effect on the
Company's financial position or results of operations.
Off-Balance Sheet Instruments
In the normal course of business, the Bank is a party to
financial instruments which are not recorded in the financial
statements. These financial instruments include commitments to
extend credit and letters of credit.
Loan commitments and lines of credit represent commitments to
lend funds at specific rates, with fixed expiration or review dates
and for specific purposes. These commitments are agreements to
fund loans if the conditions in the agreements are met. Since many
commitments are never actually drawn on, the unfunded amounts do
not necessarily represent future funding requirements. The Bank
evaluates each customer's credit worthiness on an individual basis.
The amount of collateral obtained, if any, upon extension of credit
is based on the credit worthiness of the customer.
Standby letters of credit obligate the Bank to pay third
parties if customers fail to perform under the agreements with
those third parties. Letters of credit are subject to credit
reviews, collateral requirements and debt covenants similar to
those in loan agreements. The credit risk involved in issuing
letters of credit is essentially the same as that which is involved
in extending loans to customers.
In the opinion of management, there are no financial
instruments which present an unusual risk to the Bank and no
material losses are anticipated as a result of these transactions.
A summary of obligations under financial instruments which are
not reflected in the financial statements follows (in thousands):
December 31, December 31,
1993 1992
Commitments to Extend Credit
for Loans and Leases 13,183 11,215
Standby Letters of Credit 722 1,127
The fair value of off-balance sheet commitments was immaterial
at December 31, 1993 and 1992.
Employee Benefit Plans
The Company sponsors a welfare benefit plan for retired
employees of the Company. To be eligible to participate in this
plan, an employee at retirement must accumulate a minimum of 75
points based on age at retirement and years of service with the
Company after age 39. Benefits available to eligible retirees
include $5,000 of term life insurance and retiree medical coverage.
Effective January 1, 1993, the Company adopted SFAS No. 106,
"Employers' Accounting for Post-Retirement Benefits Other Than
Pensions." It is the intent of the Company to amortize its
accumulated and post-retirement benefit obligation over a 20-year
period as permitted by the Statement.
The SFAS 106 accumulated post-retirement benefit obligation at
January 1, 1993 was $489,072. In fiscal year 1993, the Company
recognized a net periodic post-retirement expense of $87,937,
$40,114 of which related to interest cost, $23,369 related to
service cost attributable to 1993, and $24,454 related to
amortization of the initial transition obligation which is being
recognized over 20 years.
The SFAS 106 accumulated post-retirement benefit obligation at
December 31, 1993 was $574,327. This will result in the Company
recognizing a net periodic post-retirement expense of $74,327 in
1994.
The discount rate used in calculating the accumulated post-
retirement benefit obligation as of December 31, 1993 was 7%. The
annual assumed rate of increase in the cost of covered health care
benefits through 1995 (the health care trend rate) is 12% for
charges covered by Medicare and 14% for charges not covered by
Medicare. The annual assumed rate of increase is predicted to
decrease gradually in 1% increments every other year until it
levels off at 6.5% in 2006.
Increasing the health care trend rate by one percentage point
above the rate disclosed above would result in a change to the
accumulated post-retirement benefit of less than one percent.
In November 1992, the FASB issued SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 112 requires
accrual-based accounting for benefits cost relating to former or
inactive employees after employment but before retirement and
becomes effective January 1, 1994. The effect of adopting SFAS No.
112 is not expected to have a material impact.
Retention agreements were adopted in 1993 to encourage certain
Officers and Executive Officers of the Bank to continue their
employment with the Bank in the context of ongoing merger
discussions between the Company and certain non-affiliated
financial institutions. These agreements were executed primarily
to maintain stability within the organization and reduce the risk
of loss of key members of management before consummation of any
potential merger or acquisition of the Company. These agreements
provide that if the Officers and Executive Officers remain with the
Bank through the consummation of a merger, and certain other
conditions are satisfied, they would receive additional
compensation aggregating approximately $1.3 million.
NOTE 17. PARENT COMPANY FINANCIAL INFORMATION.
The following is a condensed summary of financial statements
as of December 31, 1993 and 1992, and for each of the three years
in the period ended December 31, 1993 (in thousands):
STATEMENTS OF CONDITION
1993 1992
Cash and Due From Banks $ 394 $ 19
Investments in Securities 948 1,131
Investment in Subsidiary Bank 33,627 26,763
Other Assets - 83
$34,969 $27,996
Accrued Liabilities $ 5,688 $ 3,602
Notes Payable 5,884 5,444
Mandatory Convertible Debenture 6,000 6,000
Shareholders' Equity 17,397 12,950
$34,969 $27,996
STATEMENTS OF INCOME (LOSS)
1993 1992 1991
Dividends from Subsidiary Bank $ - $ - $ -
Equity in Undistributed Earnings
of Subsidiary Bank 6,954 3,028 1,255
Amortization of Purchase
Adjustments (831) (832) (848)
Other Income and Expense (Net) (452) (280) 4
Interest Expense on Long-Term Debt (1,753) (1,353) (1,250)
Net Income (Loss) Before Income Taxes,
Extraordinary Items and Cumulative Effect
of Change in Accounting
Principle 3,918 563 (839)
Provision (Benefit) for Income Taxes (626) 192 -
Net Income (Loss) Before Extraordinary Items
and Cumulative Effect of Change in Accounting
Principle 4,544 371 (839)
Extraordinary Items:
Gain on Extinguishment of
Debt, Net of Tax - 11,345 -
Utilization of Net Operating
Loss Carryforward - 6,075 -
Net Income (Loss) Before Cumulative Effect of
Change in Accounting Principle 4,544 17,791 (839)
Cumulative Effect of Change in Accounting
Principle - (Adoption of SFAS 109) (904) - -
Net Income (Loss) $ 3,640 $17,791 $ (839)
Under the terms of resolutions approved by the Board of Directors
of the Bank, prior approval of the OCC is required before any
dividends can be paid to First Continental Bancshares, Inc. for
purposes of debt service, preferred dividends, or other corporate
purposes.
STATEMENTS OF CASH FLOWS
1993 1992 1991
OPERATING ACTIVITIES:
Net Income (Loss) $ 3,640 $17,791 $ (839)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Used in Operating Activities:
Gain on Extinguishment of
Debt, Pre-Tax - (17,190) -
Cumulative Effect of Change
in Accounting Principle 904 - -
Equity in Undistributed (Earnings)
Loss of Subsidiary (6,954) (3,028) (1,255)
Amortization of Organization Costs 83 16 16
Amortization of Purchase Adjustments 831 832 848
Accretion of Senior Debentures
and Note Payable 440 392 350
Adjustment to Market Value of
Equity Securities - 40 -
Increase in Accrued Interest Payable 793 961 900
Increase in Accounts Payable 355 66 23
Net cash Provided By (Used In)
Operating Activities 92 (120) 43
INVESTING ACTIVITIES:
Purchase of Securities (540) (1,104) -
Sales and Maturities of
Investment Securities 823 - -
Net Cash Provided By (Used In)
Investing Activities 283 (1,104) -
FINANCING ACTIVITIES:
Proceeds From Issuance of
Long-Term Debt - 5,400 -
Repayment of Long-Term Debt - (4,200) -
Net Cash Provided by
Financing Activities - 1,200 -
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 375 (24) 43
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 19 43 -
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 394 $ 19 $ 43
NOTE 18. BANK ONLY FINANCIAL INFORMATION.
The statements of condition of First National Bank of
Jefferson Parish as of December 31, 1993 and December 31, 1992, and
the related statements of income and changes in shareholders'
equity for each of the three years in the period ended December 31,
1993, follow (in thousands):
STATEMENTS OF CONDITION
1993 1992
ASSETS
Cash and Due from Banks $ 13,141 $ 16,960
Investment Securities:
United States Government and Agencies 33,557 25,578
Mortgage-Backed Securities 91,883 70,698
State and Political Subdivisions 289 -
Federal Reserve Bank Stock and
Other Securities 1,030 670
Total Investments (fair value
of approximately $127,598 in 1993
and $99,282 in 1992) 126,759 96,946
Federal Funds Sold 22,000 17,200
Loans 223,093 232,958
Reserve for Possible Loan Losses (6,590) (6,261)
Net Loans 216,503 226,697
Bank Premises and Equipment, Net 5,803 5,939
Accrued Interest Receivable 1,933 1,970
Other Real Estate and Foreclosed
Property, Net 7,630 22,395
Other Assets 3,435 742
TOTAL ASSETS $397,204 $388,849
LIABILITIES
Deposits:
Interest-Free $ 61,087 $ 59,951
Money Market 52,574 54,063
Savings & NOW 85,431 86,844
Time 146,317 145,183
Interest-Bearing Deposits
From Affiliated Banks 335 1,169
Total Deposits 345,744 347,210
Short-Term Borrowings 13,234 14,149
Accrued Interest Payable 3,092 2,216
Other Liabilities 4,627 2,461
TOTAL LIABILITIES 366,697 366,036
SHAREHOLDERS' EQUITY
Common Stock 3,150 3,150
Surplus 7,600 7,600
Unrealized Gain on Available-For-
Sale Securities 740 -
Undivided Profits 19,017 12,063
TOTAL SHAREHOLDERS' EQUITY 30,507 22,813
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $397,204 $388,849
STATEMENTS OF INCOME
1993 1992 1991
INTEREST INCOME:
Interest and Fees on Loans $ 22,636 $ 24,612 $ 26,672
Interest and Dividends on
Investment Securities:
United States Government
& Agencies 1,809 1,612 691
Mortgage-Backed Securities 5,044 5,405 5,170
State and Political
Subdivisions 13 2 6
Federal Reserve Bank Stock
and Other Securities 19 19 20
Interest on Federal Funds Sold
and Securities
Purchased Under Agreements
to Resell 426 530 956
Interest on Deposits in Banks - - 8
Total Interest Income 29,947 32,180 33,523
INTEREST EXPENSE:
Interest on Deposits:
Money Market 1,174 1,807 2,677
Savings and NOW 1,423 2,359 3,606
Time 6,636 8,016 11,362
Interest on Short-Term
Borrowings 289 322 543
Total Interest Expense 9,522 12,504 18,188
NET INTEREST INCOME 20,425 19,676 15,335
PROVISION FOR POSSIBLE LOAN
LOSSES 725 1,152 1,800
NET INTEREST INCOME AFTER
PROVISION FOR
POSSIBLE LOAN LOSSES 19,700 18,524 13,535
OTHER INCOME:
Service Charges on
Deposit Accounts 2,755 2,726 2,629
Other Charges, Commissions
and Fees 1,580 1,555 1,439
Other Operating Income 464 592 442
Security Gains 8 20 179
Total Other Income 4,807 4,893 4,689
OTHER EXPENSES:
Salaries and Employee Benefits 8,087 7,034 6,954
Net Occupancy Expense 1,466 1,464 1,746
Litigation Loss (Recovery) 92 255 (176)
Other Real Estate Expenses, Net 5,213 6,554 3,685
Other Operating Expense 4,543 4,962 4,448
Total Other Expenses 19,401 20,269 16,657
INCOME BEFORE INCOME TAXES,
EXTRAORDINARY ITEMS AND
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 5,106 3,148 1,567
Provision for Income Taxes 1,678 1,070 -
Income Before Extraordinary
Items and Cumulative
Effect of Change in
Accounting Principle 3,428 2,078 1,567
Extraordinary Item:
Utilization of Net Operating
Loss Carryforward - 950 -
Net Income Before Cumulative
Effect of Change
in Accounting Principle 3,428 3,028 1,567
Cumulative Effect of Change
in Accounting Principle -
(Adoption of SFAS 109) 3,526 - -
NET INCOME $ 6,954 $ 3,028 $ 1,567
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unrealized
Gain on
Alternative Undivided Available-For-
---Common Stock--- --Warrant-- ---Surplus--- --Profits-- --Sale Securities--
Shares Amount Amount Amount Amount Amount
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1990 3,150 $3,150 $5,458 $7,600 $ 2,010 $ -
Net Income 1,567
Accretion on
Alternative Warrant 1,174 (1,174)
BALANCE,
DECEMBER 31, 1991 3,150 3,150 6,632 7,600 2,403 -
Net Income 3,028
Reversal of Accretion
on Alternative
Warrant and
Alternative Warrant (6,632) 6,632
BALANCE,
DECEMBER 31, 1992 3,150 3,150 - 7,600 12,063 -
Net Income 6,954
Unrealized Gain 740
BALANCE,
DECEMBER 31, 1993 3,150 $3,150 $ - $7,600 $19,017 $740
</TABLE>
NOTE 19. OTHER OPERATING INCOME AND EXPENSES.
Other Charges, Commissions and Fees included the following
amounts of Trust Income: $611,000 in 1993; $577,000 in 1992; and
$490,000 in 1991.
Other operating expenses consisted of the following for the
years ended December 31, 1993, 1992 and 1991 (in thousands):
1993 1992 1991
Amortization of Purchase
Adjustments $ 831 $ 832 $ 848
Legal and Professional 1,313 1,342 968
Data Processing 755 756 675
FDIC Assessment 984 816 726
Note Offering Expenses - 237 -
Other 1,954 2,101 2,093
$5,837 $6,084 $5,310
NOTE 20. SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES.
As discussed in Note 12, the Company restructured its note
payable to First City during 1990. The following noncash
transactions were recorded (in thousands):
Discount on Note Payable $ 482
Forgiveness of Accrued Interest Payable 2,212
Transfer of 19.9% of Investment in
Subsidiary Bank (3,560)
Issuance of Senior Debenture (500)
Write-Off of Goodwill, Net (1,434)
Loss on Transfer of Assets $(2,800)
As is also discussed in Note 12, in 1992, the Company again
restructured its debt with the then current holder of the note, the
FDIC. Pursuant to this restructure, there were certain non-cash
transactions recorded. Those transactions were as follows (in
thousands):
Forgiveness of Debt Associated With Note Payable
Including Accrued Interest $12,532
Release of Senior Debenture and
Related Accretion 720
Release of Minority Interest Position 3,938
Gain on Extinguishment of Debt $17,190
APPENDIX A
AGREEMENT AND PLAN OF MERGER
OF
FIRST CONTINENTAL BANCSHARES, INC.
WITH AND INTO
HIBERNIA CORPORATION
AGREEMENT AND PLAN OF MERGER dated as of December 4, 1993
(this "Agreement"), adopted and made by and between First
Continental Bancshares, Inc. ("FCB") and Hibernia Corporation
("Hibernia").
FCB is a corporation duly organized and existing under the
laws of the State of Louisiana; has its registered office at 203
Huey P. Long Avenue, Gretna, Louisiana 70053; 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 FCB is 5,500,000 shares,
consisting of 500,000 shares of preferred stock, par value $1.00
per share and 5,000,000 shares of common stock, par value $1.00 per
share ("FCB Common Stock"). As of September 30, 1993, 140,000
shares of Class A Cumulative Convertible Preferred Stock ("FCB
Preferred Stock") had been established, 135,974 shares of FCB
Preferred Stock and 2,145,151 shares of FCB Common Stock had been
issued, 135,974 shares of FCB Preferred Stock and 2,128,096 shares
of FCB Common Stock were outstanding, and 17,055 shares of FCB
Common Stock were held in FCB's treasury. As of September 30,
1993, FCB had issued and outstanding $6,000,000 principal amount of
12% Mandatory Convertible Subordinated Debentures Due November 15,
1996 ("Debentures"), $4,407,000 principal amount of 10.75% Class A
Senior Secured Notes due 1997 ("Class A" Notes"), and $993,000
principal amount of 10.75% Class B Senior Secured Notes due 1997
("Class B Notes"). All outstanding shares of FCB's capital stock
have been duly issued and are validly outstanding, fully paid, and
nonassessable. FCB Common Stock and FCB Preferred Stock are the
only voting securities of FCB authorized, issued, or outstanding,
and there are no existing options, warrants, calls, or commitments
of any kind obligating FCB to issue any share of its capital stock
or any other security of which it is or will be the issuer, other
than the obligation to issue shares upon conversion of the
Preferred Stock and the Debentures and upon the exercise of certain
rights by holders of the Class A Notes. None of the shares of
FCB's capital stock has been issued in violation of preemptive
rights of shareholders. FCB owns 100 percent of the outstanding
voting shares of First National Bank of Jefferson Parish, Gretna,
Louisiana ("Bank"), a national banking association duly organized
and existing under the laws of the United States.
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, 100,000,000
shares of Class B non-voting common stock, no par value, and
100,000,000 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 September 30, 1993, no shares of
Hibernia's preferred stock or its Class B non-voting common stock
were outstanding, 83,582,341 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. Hibernia Common Stock is 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 as
at September 30, 1993, Hibernia had authorized or reserved (i)
1,500,000 shares of Hibernia Common Stock for issuance under its
1987 Stock Option Plan, pursuant to which options covering 908,517
shares of Hibernia Common Stock were outstanding, (ii) 2,823,970
(as adjusted) shares of Hibernia Common Stock for issuance under
its 1992 Long-Term Incentive Plan, pursuant to which options
covering 873,000 shares of Hibernia Common Stock were outstanding,
(iii) 1,000,000 shares of Hibernia Common Stock for issuance under
its 1993 Director Stock Option Plan, pursuant to which no options
were outstanding, (iv) 701,795 shares of Hibernia Common Stock
available for issuance pursuant to Hibernia's Dividend Reinvestment
and Stock Purchase Plan, (v) 660,847 shares of Hibernia Common
Stock available for issuance pursuant to certain outstanding
warrants, and approximately 2,233,000 shares of Hibernia Common
Stock pursuant to an Agreement and Plan of Merger dated September
28, 1993, with Commercial Bancshares, Inc., Franklin, Louisiana.
None of the shares of Hibernia's capital stock has been issued in
violation of preemptive rights of shareholders.
The Boards of Directors of FCB and Hibernia have duly approved
this Agreement and have authorized the execution hereof by FCB's
President and Hibernia's President and Chief Executive Officer,
respectively. FCB will direct 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 FCB
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), FCB 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. FCB Securities.
3.1. Conversion. On the Effective Date and subject to
the provisions of Section 3.7 hereof,
(a) each share of FCB 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) each share of FCB Preferred 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 multiplied by 1.63 plus the
right to receive cash in the amount of all accumulated and unpaid
dividends thereon plus interest as calculated in accordance with
Section 4.2.1.1. of the Articles of Incorporation of FCB in
existence as of the date of this Agreement;
(c) holders of certificates which represent shares of
FCB Common Stock or FCB Preferred Stock outstanding immediately
prior to the Effective Date ("Old Certificates") shall cease to be,
and shall have no rights as, shareholders of FCB;
(d) each share of FCB Common Stock and FCB Preferred
Stock held in the treasury of FCB or owned beneficially by Hibernia
or any of its subsidiaries shall be cancelled; and
(e) 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 and, in the case of FCB Preferred
Stock, cash as provided in paragraph (b) 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 FCB Common Stock and FCB Preferred 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
ten business days preceding the Effective Date as reported in The
Wall Street Journal, 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 FCB 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, and, in the case of FCB
Preferred Stock, cash as herein provided. The letter of
transmittal will contain instructions with respect to the surrender
of Old Certificates and the distribution of the consideration to be
received with respect thereto. 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 holders of FCB
Common Stock and FCB Preferred Stock 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 FCB Common Stock
or FCB Preferred 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 FCB of the shares of FCB Common Stock or FCB Preferred
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 and, in the case of FCB Preferred Stock, cash 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 FCB Common Stock or FCB Preferred 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. Further Assistance. From time to time, as and when
requested by Hibernia and to the extent permitted by Louisiana law,
the officers and directors of FCB 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 FCB, and otherwise to carry out the purposes of this
Agreement.
3.7. Dissenters' Shares. Shares of FCB Common Stock and
FCB Preferred 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 FCB
Common Stock or FCB Preferred Stock, at which time such shares
shall be converted as provided in Section 3.1 hereof.
3.8. Exchange Rate.
(a) The Exchange Rate shall be the number that is
obtained by dividing $12.00 by the Average Market Price of Hibernia
Common Stock on the Closing Date (as defined in paragraph (b)
below), which calculation shall be carried out to the nearest one-
hundredth of one cent.
(b) For purposes of this Agreement, the Average Market
Price of Hibernia Common Stock on the Closing Date shall be the
average of the mean of the high and low prices of one share of
Hibernia Common Stock for the ten business days preceding the last
trading day immediately prior to the Closing Date as reported in
The Wall Street Journal. Notwithstanding the foregoing, the
Average Market Price of Hibernia Common Stock on the Closing Date
shall not be less than $6.00 nor more than $8.50 for the purposes
of the calculation under paragraph (a) of this Section only.
3.9. Debentures and Notes.
(a) On the Effective Date, the Debentures shall be
redeemed for cash in accordance with the provisions of Section
11.01 of the Debenture Agreement dated as of November 15, 1986, by
and between FCB and Bank as Trustee.
(b) On the Effective Date, the Class A Notes and the
Class B Notes shall be redeemed for cash in accordance with the
provisions of Section 1109 of the Indenture dated as of November 9,
1992, by and between FCB and First National Bank of Commerce as
Trustee (the "Indenture"); provided, however that in lieu of any
right to receive any Cash Premium (as defined in Section 202(a) of
the Indenture), each holder of Class A Notes who elects to exercise
his Share Option (as defined in Section 311 of the Indenture) shall
receive Hibernia Common Stock in such amount as shall equal the
number of whole shares of Hibernia Common Stock into which such
holder's FCB Common Stock resulting from the exercise of the Share
Option would be converted pursuant to Section 3.1 hereof and cash
in lieu of fractional shares in accordance with the provisions of
Section 3.2 hereof.
4. Articles of Incorporation and 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 FCB
and 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 FCB or 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 FCB or 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, FCB
covenants and agrees that it will not do, or agree to commit to do,
and FCB will cause 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 FCB (and not Bank), make, declare,
set aside or pay any dividend, other than regularly declared
dividends in accordance with past practice, or declare or make any
distribution on, or directly or indirectly combine, redeem,
purchase or otherwise acquire, any shares of FCB Common Stock
(other than in a fiduciary capacity);
(b) except with respect to FCB Common Stock issued in
connection with the conversion of FCB Preferred Stock or Debentures
or the exercise of any rights by holders of Class A Notes,
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) except as otherwise contemplated in this Agreement,
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 and past practices;
(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;
(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, (ii) amend
its or Bank's Articles of Incorporation or Association or Bylaws,
(iii) impose, or suffer the imposition, on any share of stock held
by FCB in Bank, of any material lien, charge, or encumbrance, or
permit any such lien, except as disclosed in Schedule 7.3 hereto,
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, (vi) sell assets, including but not limited
to, loans or securities (other than securities listed as held for
sale on the FCB Financial Statements), for the purpose of taking
profits or (vii) 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
FCB'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; 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.
7. Representations and Warranties of FCB. FCB (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. FCB is a
corporation and Bank 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, respectively. Each
of FCB and its direct and indirect 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 FCB has all requisite power and authority to execute
and deliver this Agreement and perform its obligations hereunder.
7.3. Ownership of Other Entities. Except as provided on
Schedule 7.3, FCB 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 Bank. The
presently authorized capital stock of Bank consists solely of
2,000,000 shares of common stock, par value of $10.00 per share, of
which 315,000 shares of common stock are outstanding and no such
shares are held in treasury. The outstanding shares of capital
stock of Bank are validly issued and outstanding, fully paid and
nonassessable (subject to 12 U.S.C. Section 55) and, except as provided
on Schedule 7.3 hereto, all of such shares are owned by FCB 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 FCB'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 FCB 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 FCB, enforceable against FCB 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 FCB 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 FCB or Bank or to which FCB or 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 FCB and Bank taken as a whole or on the
transactions contemplated hereby, (ii) to the best of the knowledge
of the executive officers of FCB and Bank, 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 FCB or Bank or to which FCB
or Bank is subject, or (iii) a breach or violation of, or a default
under, the Articles of Incorporation or Association or Bylaws of
FCB or 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. FCB
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 "FCB Financial
Statements"): FCB's Consolidated Balance Sheets as of September
30, 1993 and 1992 (unaudited) and December 31, 1992, 1991 and 1990
(audited); Consolidated Statements of Income and Changes in
Stockholders' Equity and Consolidated Statements of Cash Flows for
the years ended December 31, 1992, 1991 and 1990 (audited), and
Consolidated Statements of Income for the nine-month periods ended
September 30, 1993 and 1992 (unaudited). Each of the FCB Financial
Statements (including the related notes) fairly presents the
consolidated results of operations of FCB and Bank for the
respective periods covered thereby and the consolidated financial
condition of FCB and 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 FCB 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 national banks
generally) precluding FCB or Bank from paying dividends, in each
case when, as and if declared by its Board of Directors.
7.7. No Material Adverse Change. Since September 30,
1993, there has been no event or condition of any character
(whether actual, or to the knowledge of the executive officers of
FCB or Bank, threatened or contemplated) that has had or can
reasonably be anticipated to have, or that, if concluded or
sustained adversely to FCB, would reasonably be anticipated to
have, a material adverse effect on the financial condition, results
of operations, or business of FCB or 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 FCB that
in the opinion of the executive officers of FCB and Bank is likely
to have a material and adverse effect on the business, results of
operations or financial condition of FCB and Bank taken as a whole,
and, to the best of their knowledge, no such litigation, proceeding
or controversy has been threatened or is contemplated. Except as
disclosed on Schedule 7.8 hereto, no member of FCB'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 FCB nor Bank is bound by any
material contract to be performed after the date hereof that is not
terminable by FCB or Bank without penalty or liability on thirty
days prior notice.
7.10. Brokers' or Finders' Fees. Except as disclosed on
Schedule 7.10 hereto, no agent, broker, investment banker,
investment or financial advisor or other person acting on behalf of
FCB or 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.
7.11. Contingent Liabilities. Except as disclosed on
Schedule 7.11 hereto or as reflected in the FCB Financial
Statements and except in the case of Bank for unfunded loan
commitments made in the ordinary course of business consistent with
past practices, as of September 30, 1993, neither FCB nor Bank have
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 FCB and 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 September 30, 1993, or from any action omitted to be taken
during such period that, to the knowledge of the executive officers
of FCB and Bank, 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 FCB 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 September 30,
1993, neither FCB nor Bank have incurred or paid any obligation or
liability that would be material to FCB on a consolidated basis,
except for obligations incurred or paid in connection with
transactions by it in the ordinary course of its business
consistent with its past practices.
7.14. Tax Returns; Payment of Taxes. 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 FCB or 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, and
all returns filed are complete and accurate to the best information
and belief of the executive officers of FCB; all taxes shown on
filed returns have been paid. 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 FCB or Bank except as reserved
against in the FCB Financial Statements. All taxes, interest,
additions and penalties due with respect to completed and settled
examinations or concluded litigation have been paid, and FCB'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 the
executive officers of FCB and Bank, each loan reflected as an asset
of FCB in the FCB Financial Statements, as of September 30, 1993,
or acquired since that date, is the legal, valid, and binding
obligation of the obligor named therein, enforceable in accordance
with its terms, and no loan is subject to any asserted defense,
offset or counterclaim known to the executive officers of FCB and
Bank, except as disclosed in writing to Hibernia on or prior to the
date hereof.
7.16. Allowance for Loan Losses. The allowances for
possible loan losses shown on the balance sheets of FCB as of
September 30, 1993, 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 September
30, 1993, and each such allowance has been established in
accordance with GAAP.
7.17. Title to Assets; Adequate Insurance Coverage.
(a) As of September 30, 1993, FCB and 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 FCB Financial Statements, free and clear of all
mortgages, liens, pledges, restrictions, security interests,
charges and encumbrances of any nature except for (i) mortgages and
encumbrances which secure indebtedness which is properly reflected
in the FCB 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
September 30, 1993, 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; (v) the pledge of the
stock of Bank to First National Bank of Commerce as Trustee
disclosed on Schedule 7.3 hereto, and (vi) capital leases and
leases, if any, to third parties for fair and adequate
consideration. FCB and 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 FCB or 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 FCB or Bank is a
party, except for financing leases in which FCB or 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 Bank and
HNB will constitute a default or a cause for termination or
modification of such lease.
(c) Neither FCB nor 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 the executive
officers of FCB and Bank, the policies of fire, theft, liability
and other insurance, including fidelity bonds, maintained with
respect to the assets or businesses of FCB and Bank provide
adequate coverage against loss.
7.18. Employee Plans. To the knowledge and belief of
the executive officers of FCB and Bank, FCB, 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 FCB or
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. On or prior to the date
hereof, FCB 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 Bank for its
or 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 FCB nor 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. Except as disclosed in the FCB
Financial Statements, neither FCB nor 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 thirty days after the date
hereof, FCB will make available to Hibernia, for inspection
pursuant to the terms of Section 9.5 hereof, the minutes of
meetings of FCB's and Bank's Boards 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.
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 FCB or Bank at the date hereof. Except as disclosed
on Schedule 7.23 hereto, neither FCB nor 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 three years,
neither FCB nor Bank has been refused any insurance coverage sought
or applied for, and the executive officers of FCB and Bank have 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 FCB or
Bank.
7.24. Investments. Except for pledges to secure public
or trust deposits, none of the investments reflected in the FCB
Financial Statements under the heading "Investment Securities," and
none of the investments made by FCB or Bank since September 30,
1993, and none of the assets reflected in the FCB 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 FCB or Bank freely to dispose of
such investment at any time. With respect to all repurchase
agreements to which FCB or Bank is a party, FCB or 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. Neither FCB nor Bank nor,
to the knowledge of the executive officers of FCB and 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 FCB or Bank or used by FCB or Bank in their respective
business ("FCB Properties") used, generated, treated, stored, or
disposed of any hazardous waste, toxic substance, or similar
materials on, under, or about FCB Properties except in material
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"). Neither FCB nor 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
FCB Properties.
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, 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, 1992, its Quarterly Reports on Form 10-Q for the
periods ended March 31, June 30, and September 30, 1993, and its
proxy statement for its 1993 annual meeting of shareholders, each
in the form (including exhibits) filed with the Securities and
Exchange Commission (the "SEC"), and its annual report to
shareholders for the fiscal year ended December 31, 1992, and its
quarterly report to shareholders for the period ended September 30,
1993 (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 FCB on or
before the date hereof.
8.7. No Material Adverse Change. Since September 30,
1993, 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.
8.8. Loans. To the best knowledge and belief of its
management, and management of HNB, each loan reflected as an asset
of Hibernia in the unaudited consolidated balance sheet contained
in Hibernia's quarterly report to shareholders for the period ended
September 30, 1993, or acquired since that date, is the legal,
valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, and no loan is subject to
any asserted defense, offset, or counterclaim known to Hibernia,
except as disclosed on Schedule 8.8 hereto.
8.9. Allowance for Loan Losses. The allowances for
possible loan losses shown on the balance sheets of Hibernia as of
September 30, 1993, 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 September
30, 1993, and each such allowance has been established in
accordance with GAAP.
8.10. Litigation. Except as disclosed on Schedule 8.10
hereto, no litigation, proceeding or controversy before any court
or governmental agency is pending 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 Hibernia
and its subsidiaries 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
8.10, neither Hibernia nor HNB is subject to any written agreement,
memorandum or order with or by any bank or bank holding company
regulatory authority that materially restricts its operations or
requires any material actions.
8.11. Environmental Matters. Hibernia and HNB are in
material compliance with all environmental laws and regulations
applicable to them as to which failure to comply could be
reasonably anticipated to result in a material adverse change in
the financial condition of Hibernia or a material loss to Hibernia
or HNB.
8.12. Community Reinvestment Act Performance Evaluation.
Attached hereto as Schedule 8.12 is copy of the Community
Reinvestment Act Performance Evaluation presently in effect with
respect to HNB.
8.13. Restrictions on Operations or Dividends. There
are no regulatory orders or agreements (except for statutes or
regulations applicable to Louisiana corporations or national banks
generally) restricting the operations of, or precluding the payment
of dividends by, Hibernia or HNB.
9. Agreements and Covenants. Hibernia and FCB each hereby
agrees and covenants to the other that:
9.1. Shareholder and Noteholder Approvals. If required
by applicable law, this Agreement shall be submitted to its
respective shareholders and holders of Debentures, Class A Notes,
and Class B Notes, 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 and other
security holders 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 holders of other securities) and cooperate
fully with the other party hereto to that end; provided, however,
that neither party shall be obligated to satisfy any materially
burdensome condition placed upon any regulatory approval required
in order to consummate 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 FCB relating
to FCB, (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 FCB 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 and FCB in advance, FCB and Hibernia 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 FCB so long as FCB is furnished with a copy
of such report prior to its filing.
9.5. Material Developments; Access to Information.
(i) In order to afford FCB 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 FCB 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 FCB and such representatives with such
financial and operating data and other information of any kind
respecting its business and properties as FCB shall from time to
time reasonably request to perform such review, (B) furnish FCB
with copies of all reports filed by Hibernia with the SEC
throughout the period after the date hereof prior to the Effective
Date promptly after such reports are so filed, and (C) promptly
advise FCB 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 FCB to be acquired
as a result of the Merger, FCB shall (and shall cause 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 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 FCB and Bank and all committees
thereof), and it shall (and shall cause 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 FCB nor 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, FCB or Bank or
any business combination with FCB or Bank other than as
contemplated by this Agreement. FCB shall instruct each officer,
director, agent, or affiliate of it or Bank to refrain from doing
any of the above, and FCB 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, FCB; provided, however, that nothing
contained in this section shall be deemed to prohibit any officer
or director of FCB or Bank from taking any action that, in the
opinion of counsel to FCB or Bank is required by applicable law.
9.7. Affiliates. Prior to the Closing Date (as defined
in Section 14 hereof), FCB shall deliver to Hibernia a letter
identifying all persons whom it believes to be "affiliates" of FCB
for purposes of Rule 145(c) or Rule 144 (as applicable) under the
1933 Act ("Affiliates"). FCB shall 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 FCB shall
have no such obligation 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, FCB shall, and it shall cause Bank to, take any and
all necessary or appropriate actions to cause Bank to become merged
with and into HNB effective as of, or as soon as practicable after,
the Effective Date.
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), FCB shall, and it shall
cause 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 FCB or 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 FCB herein.
9.12. 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.
9.13. Cooperation in Rule 144 Transfers. Hibernia
agrees to use its best efforts to file in a timely manner all
materials required to be filed pursuant to Section 13, 14, or 15(d)
of the Securities and Exchange Act of 1934, as amended, or the
rules and regulations promulgated thereunder, so as to continue the
availability of Rule 144 for sales of Hibernia Common Stock. In
the event of any proposed sale by any former shareholder of FCB who
receives shares of Hibernia Common Stock by reason of the Merger,
Hibernia covenants to use its best efforts to cooperate with such
shareholder so as to enable such sale to be made in accordance with
Rule 144, the requirements of Hibernia's transfer agent and the
reasonable requirements of any broker through which such a sale is
proposed to be executed, including, but not limited to, furnishing
at its expense an opinion of counsel or other statement
satisfactory to the transfer agent to the effect that the shares
may be transferred, to the extent it is able to furnish such an
opinion.
9.14. Indemnification of Directors and Officers of FCB
and Bank.
(a) For a period of five years 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 FCB or Bank and
such person's estate and heirs (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 FCB or 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 FCB or 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 9.14 are subject to the following limitations: (i) the
total aggregate indemnification to be provided by Hibernia pursuant
to subsection 9.14(a) shall not exceed, as to all of the
Indemnified Persons as a group, the sum of $12 million, 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 9.14 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 9.14
hereto; and (iii) amounts otherwise required to be paid by Hibernia
to an Indemnified Person pursuant to this subsection 9.14 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 $12 million indemnification
limit set forth in paragraph (c) of this Section 9.14 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 (i) the matters for which indemnification is provided in
Section 11.2 hereof or (ii) actions or inactions occurring after
the Effective Date by any officer, director, or employee of
Hibernia or HNB.
9.15. Debentureholder and Noteholder Notices. FCB agrees to
prepare and mail to each holder of Debentures, Class A Notes, and
Class B Notes such notices and other materials, in form and
substance acceptable to Hibernia, as may be necessary or desirable
so as to permit the redemption of such securities on the Effective
Date.
9.16. Retention Agreements and Severance. To the extent not
prohibited by applicable law or administrative or court order or
decree, Hibernia agrees to assume and pay without modification or
amendment all obligations of FCB and Bank under those certain
retention agreements and severance policies identified on Schedule
9.16 hereto.
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) FCB shall have its Affiliates execute a written
agreement in substantially the form of Exhibit 9.7 hereto; and
(d) FCB shall have each of the directors of FCB, and each
shareholder owning 5 percent or more of the outstanding shares of
FCB Common Stock, execute a written agreement in substantially the
form of Exhibit 10(d) hereto.
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 FCB 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 FCB
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 FCB, each of its directors and officers and each person,
if any who controls FCB or 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 FCB or 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 subsequently incurred by such
indemnified party; provided, however, that if the defendants in
such action include both an indemnified party and any of Hibernia,
HNB, or an officer, director, or employee of Hibernia or HNB
(collectively, the "Hibernia Group"), and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties that are different
from or additional to those available to any member of the Hibernia
Group, the indemnified party shall have the right to employ
separate counsel to represent such indemnified party, and in that
event the fees and expenses of such counsel shall be paid by
Hibernia.
12. Conditions. The consummation of the Merger is
conditioned upon:
12.1. Shareholder Approval; Dissenters. Approval of
this Agreement by the required vote of holders of FCB Common Stock
and FCB Preferred Stock and exercise and perfection of dissenters'
rights pursuant to Section 12:131 of the LBCL by holders of FCB
Common Stock and FCB Preferred Stock holding in the aggregate no
more than 10 percent of the FCB Common Stock and FCB Preferred
Stock outstanding on the Closing Date.
12.2. Federal Reserve Board and Comptroller Approvals.
Procurement by Hibernia of the approval of the Federal Reserve
Board and the Comptroller of the Merger and any and all other
transactions contemplated hereby and the agreement of the Federal
Reserve Board and the Comptroller to terminate any supervisory
orders or agreements pertaining to FCB or Bank upon consummation of
the Merger and all other transactions contemplated hereby.
12.3. 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 FCB shall be prohibited by any order of any
court or other governmental authority from consummating the
transactions provided for in this Agreement.
12.4. Opinion of Hibernia Counsel. FCB and its
directors shall have received an opinion, dated the Closing Date,
of counsel for Hibernia, in form and substance reasonably
satisfactory to FCB as to such matters FCB may reasonably request
with respect to the transactions contemplated hereby.
12.5. Opinion of FCB Counsel. Hibernia, its directors
and its officers who sign the Registration Statement shall have
received an opinion, dated the Closing Date, of McGlinchey Stafford
Lang, a Law Corporation, counsel for FCB, in form and substance
reasonably satisfactory to Hibernia as to such matters Hibernia may
reasonably request with respect to the transactions contemplated
hereby.
12.6. Representations, Warranties and Agreements of FCB.
Each of the representations, warranties, and agreements of FCB
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 President of FCB, dated
the Closing Date, to such effect; FCB 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. FCB shall have furnished
Hibernia with such further documents or other materials as Hibernia
shall have reasonably requested in connection with the transactions
contemplated hereby.
12.7. 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 FCB
shall have received a certificate signed by the President and Chief
Executive Officer of Hibernia, dated the Closing Date, to such
effect; Hibernia shall have furnished to FCB such other
certificates as FCB 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 FCB with such further documents or other materials as FCB
shall have reasonably requested in connection with the transactions
contemplated hereby.
12.8. 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 FCB 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).
12.9. Blue Sky. Hibernia shall have received all state
securities laws and "blue sky" permits and other authorizations
necessary to consummate the transactions contemplated hereby.
12.10. Tax Ruling. FCB shall have received a tax
ruling, or in lieu thereof an opinion of a big six public
accounting firm or law firm satisfactory to FCB, satisfactory in
form and substance to FCB, 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) of the Internal
Revenue Code; that the exchange of FCB Common Stock and/or FCB
Preferred Stock to the extent exchanged for Hibernia Common Stock
will not give rise to gain or loss to the holders of FCB Common
Stock and/or FCB Preferred Stock with respect to such exchange; and
that the Louisiana income tax treatment to the holders of FCB
Common Stock and/or FCB Preferred Stock will be substantially the
same as the federal income tax treatment to such shareholders.
12.11. Accounting Treatment. The Merger shall be
eligible to be treated as a pooling-of-interests for accounting
purposes.
12.12. Assertion of Conditions. A failure to satisfy
any of the requirements set forth in Section 12.4, 12.7, or 12.10
shall only constitute conditions to consummation of the Merger if
asserted by FCB, and a failure to satisfy any of the requirements
set forth in Section 12.5, 12.6, or 12.11 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, or business, 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 by FCB, such breach results in a material
increase in the cost to Hibernia to perform its obligations under
Section 3 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 December 31, 1994, or (ii) any condition to Closing
cannot be satisfied by December 31, 1994, 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 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 FCB.
13.6. Dissenters. By Hibernia, if holders of more than
10 percent of the outstanding FCB Common Stock and FCB Preferred
Stock exercise statutory rights of dissent and appraisal pursuant
to Part XIII of the LBCL.
13.7. Material Adverse Change. By FCB, 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. Price of Hibernia Common Stock. By FCB, if both
(a) the quotient of the Average Market Price of Hibernia Common
Stock on the Closing Date divided by the average of the mean of the
high and low prices of one share of Hibernia Common Stock for the
ten business days preceding the date of this Agreement, as reported
in The Wall Street Journal, (the "Hibernia Quotient") is less than
0.8 and (b) the quotient of the average closing value of the
Standard & Poors Regional Bank Index for the ten business days
preceding the Closing Date divided by the average closing value of
the Standard & Poors Regional Bank Index for the ten business days
preceding the date of this Agreement (the "S&P Quotient") exceeds
the Hibernia Quotient by more than 0.1.
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 last business day of the month
occurring after the last to occur of: (i) 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; (ii)
the date that falls 30 days after the date of the order of the
Comptroller approving the merger of Bank with and into HNB pursuant
to the Bank Merger Act; and (iii) 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, 9.13, 9.14, 9.16, 11, and 15 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 FCB who are the intended beneficiaries of such provisions;
provided, however, that the provisions of Section 9.14 shall
survive the Closing for a period of five years from the Effective
Date only.
15.3. The provisions of Section 11 and liabilities for
a breach of the provisions of Sections 9.2 or 9.12 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 9.12 shall survive
the termination of the Agreement for a period of 180 days following
the date on which the Agreement terminates. The parties further
agree that a breach of Section 9.2 or 9.12 may be enforced by an
action for specific performance of this Agreement. 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 FCB) 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 FCB shall change the number of shares
of Hibernia Common Stock into which shares of FCB Common Stock and
FCB Preferred 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 President 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:
Hibernia National Bank
313 Carondelet Street
New Orleans, Louisiana 70130
Attention: Gary L. Ryan, Esq.
and a copy of all notices or other communications directed to FCB
shall be sent to:
McGlinchey Stafford Lang
A Law Corporation
634 Magazine Street
New Orleans, Louisiana 70130
Attention: B. Franklin Martin, III, Esq.
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
/S/ STEPHEN A. HANSEL
Stephen A. Hansel
President and Chief Executive
Officer
Attest:
/S/ PATRICIA C. MERINGER
Patricia C. Meringer
Secretary
FIRST CONTINENTAL BANCSHARES, INC.
/S/ ELTON A. ARCENEAUX, JR.
Elton A. Arceneaux, Jr.
President
Attest:
/S/ GOLDIE T. LANAUX
Goldie T. Lanaux
Secretary
Exhibit 1
MERGER AGREEMENT
This Merger Agreement is made and entered into this day
of , 1994, by and between Hibernia
Corporation, a Louisiana corporation ("Hibernia") and First
Continental Bancshares, Inc., a Louisiana corporation ("FCB").
W I T N E S S E T H:
WHEREAS, Hibernia and FCB (collectively, the "Corporations")
and their respective Boards of Directors deem it advisable and in
the best interests of the Corporations that FCB 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 December 4, 1993 (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), FCB shall be merged with
and into Hibernia, and the separate existence of FCB 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 FCB Common Stock, par value $1.00 per share ("FCB Common
Stock") shall be exchange for and converted into shares
of Hibernia Class A Common Stock, no par value ("Hibernia Stock")
and each share of FCB Class A Cumulative Convertible Preferred
Stock ("FCB Preferred Stock") shall be exchanged for and converted
into shares of Hibernia Stock plus the right to receive
cash in the amount of $ . The exchange of certificates
representing Hibernia Common Stock for certificates formerly
representing FCB Common Stock and FCB Preferred 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 FCB Common Stock or FCB Preferred
Stock. Shareholders of FCB 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
FCB as provided in the Plan, then the fact of such approval shall
be certified hereon by the secretary or assistant secretary of FCB,
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 Jefferson and shall also be recorded in the conveyance
records for the parishes of Orleans and Jefferson 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 , 1994.
/S/ PATRICIA C. MERINGER
Patricia C. Meringer
Secretary
CERTIFICATE OF THE SECRETARY
OF FIRST CONTINENTAL BANCSHARES, INC.
I hereby certify that I am the duly elected Secretary of First
Continental Bancshares, Inc., 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 First Continental
Bancshares, Inc., at a meeting duly held pursuant to notice on
, 1994, at which meeting a quorum was
present and acting throughout by a vote of shares "for"
to shares "against or not voting.
Certificate dated , 1994.
/S/ GOLDIE T. LANAUX
Goldie T. Lanaux
Secretary
EXECUTION BY CORPORATIONS
In consideration of the approval of this Merger Agreement by
the shareholders of First Continental Bancshares, Inc. 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 , 1994.
HIBERNIA CORPORATION
By: /S/ STEPHEN A. HANSEL
Stephen A. Hansel
President and Chief Executive Officer
ATTEST:
/S/ PATRICIA C. MERINGER
Patricia C. Meringer
Secretary
FIRST CONTINENTAL BANCSHARES, INC.
By:/S/ ELTON A. ARCENEAUX, JR.
Elton A. Arceneaux, Jr.
President
ATTEST:
/S/ GOLDIE T. LANAUX
Goldie T. Lanaux
Secretary
ACKNOWLEDGEMENT
HIBERNIA CORPORATION
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, on this day of
, 1994, 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
FIRST CONTINENTAL BANCSHARES, INC.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, on this day of
, 1994, in the presence of the undersigned
competent witnesses, personally came and appeared Elton A.
Arceneaux, Jr., who, being duly sworn, declared and acknowledged
before me that he is the President of First Continental Bancshares,
Inc., 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
ARTICLE 4.1.2.3.(v) OF
FIRST CONTINENTAL'S
ARTICLES OF INCORPORATION
(v) Consolidations, Mergers, Recapitalizations, Sale of Assets.
If any capital reorganization or reclassification of the capital
stock of the Corporation, or consolidation or merger of the
Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation (any of
which transactions shall be referred to in this section (v) as a
"Reorganization") shall be effected at any time, then, as a
condition of such Reorganization, (i) the rights and preferences of
the holders of the Class A Preferred Stock provided for in these
Articles shall be preserved in the securities to be received by the
holders of Class A Preferred Stock upon the consummation of the
Reorganization, whether or not the Corporation shall be the
surviving entity in any such Reorganization, (ii) lawful and
adequate provision shall be made whereby the holders of shares of
the Class A Preferred Stock shall thereafter, so long as the
conversion rights to the Class A Preferred Stock shall exist, have
the right to receive (upon exercise of the conversion rights to
which holders of Class A Preferred Stock are entitled) in respect
of each share of Class A Preferred Stock, and in lieu of the shares
of Common Stock immediately theretofore receivable upon such
conversion had such Reorganization not taken place, that number of
the securities or that amount of consideration other than
securities into which each share of Common Stock is converted upon
such Reorganization multiplied by the Conversion Ratio provided for
herein as it shall exist at the time of such Reorganization, and
(iii) prior to or simultaneously with the consummation of the
Reorganization the successor corporation (if other than the
Corporation) resulting from such Reorganization shall assume by
written instrument, executed and mailed or delivered to the holders
of record of the Class A Preferred Stock at the last addresses of
such holders appearing on the books of the Corporation, all
obligations to the holders of the Class A Preferred Stock to which
such holders shall be entitled.
B-1
APPENDIX C
OPINION OF MONTGOMERY SECURITIES
December 2, 1993
Board of Directors
First Continental Bancshares, Inc.
203 Huey P. Long Avenue
Gretna, Louisiana 70053
Members of the Board:
We understand that First Continental Bancshares, Inc., a
Louisiana corporation (the "Company") and Hibernia Corporation, a
Louisiana corporation ("Acquiror") have entered into an Agreement
and Plan of Merger, dated as of December 4, 1993, and related
Merger Agreement (collectively the "Agreement"), pursuant to which
the Company will be merged with and into Acquiror (the "Merger").
Pursuant to the Merger, as more fully described in the Agreement,
(a) holders of the Company's Common Stock, $1.00 par value ("Common
Stock"), other than Acquiror, its subsidiaries or dissenting
shareholders of the Company ("Dissenters"), will be entitled to
receive for each share of Common Stock that number of shares of
Hibernia Class A Voting Common Stock, no par value ("Hibernia
Common Stock"), that is obtained by dividing $12.00 by the Average
Market Price of Hibernia Common Stock on the Closing Date (as
defined in the Agreement), subject to certain limitations and
adjustments (such quotient being hereinafter referred to as the
"Exchange Rate") and (b) holders of the Company's Class A
Cumulative Convertible Preferred Stock, $1.00 par value ("Preferred
Stock"), other than Acquiror, its subsidiaries and Dissenters, will
be entitled to receive for each share of Preferred Stock both that
number of shares of Hibernia Common Stock that is obtained by
multiplying the Exchange Rate by 1.63, and cash in the amount of
all accumulated and unpaid dividends on the Preferred Stock plus
interest thereon. The holders of the Common Stock and Preferred
Stock of the Company are hereinafter collectively referred to as
"Shareholders", and the shares of Hibernia Common Stock and cash to
be received by the Shareholders in the Merger are hereinafter
collectively referred to as the "Consideration".
You have asked for our opinion as to whether the Consideration
to be received by the Shareholders pursuant to the Merger, when
taken as a whole, is fair to the Shareholders (other than Acquiror
or any of its subsidiaries) from a financial point of view, as of
the date hereof. You have not asked for and we are not expressing
any opinion as to the allocation of the Consideration between the
holders of the Common Stock and the holders of the Preferred Stock.
C-1
In connection with our opinion, we have, among other things:
(1) reviewed certain publicly available financial and other data
with respect to the Company and Acquiror, including the
consolidated financial statements for recent years and interim
periods to September 30, 1993, and certain other relevant financial
and operating data relating to the Company made available to us
from published sources and from the internal records of the
Company; (ii) reviewed the Agreement; (iii) reviewed certain
historical market prices and trading volumes of Hibernia Common
Stock as reported by the New York Stock Exchange; (iv) compared the
Company and Acquiror from a financial point of view with certain
other companies in the banking industry which we deemed to be
relevant; (v) considered the financial terms, to the extent
publicly available, of selected recent business combinations of
companies in the financial services industry which we deemed to be
comparable, in whole or in part, to the Company and the Merger;
(vi) reviewed and discussed with representatives of the management
of the Company and Acquiror certain information of a business and
financial nature regarding the Company and Acquiror, furnished to
us by them, including financial projections and related assumptions
of the Company; (vii) made inquiries regarding and discussed the
Merger and the Agreement and other matters related thereto with the
Company's counsel; and (viii) performed such other analyses and
examinations as we have deemed appropriate.
In connection with our review, we have not independently
verified any of the foregoing information with respect to the
Company or Acquiror, have relied on all such information, and have
assumed that all such information is complete and accurate in all
material respects. With respect to the financial forecasts for the
Company provided to us by the management of the Company, we have
assumed for purposes of our opinion that they have been reasonably
prepared on bases reflecting the best available estimates and
judgments of the management at the time of preparation as to the
future financial performance of the Company and that they provide
a reasonable basis upon which we can form our opinion. We have
also assumed that there have been no material changes in the
Company's or Acquiror's assets, financial condition, results of
operations, business or prospects since the respective dates of
their last financial statements made available to us. We have
relied on advice of counsel to the Company as to all legal matters
with respect to the Company, the Merger and the Agreement. In
addition, we have not made an independent evaluation, appraisal or
physical inspection of the assets or individual properties of the
Company or Acquiror, nor have we been furnished with any such
appraisals. Further, our opinion is based on economic, monetary
and market conditions existing as of the date hereof.
C-2
Based upon the foregoing, and in reliance thereon, it is our
opinion that, as of the date hereof, the Consideration to be
received by the Shareholders pursuant to the Merger, when taken as
a whole, is fair to the Shareholders (other than Acquiror or any of
its subsidiaries) from a financial point of view.
This opinion is furnished pursuant to our engagement letter,
dated July 12, 1993, and is solely for the benefit of the Board of
Directors of the Company. Except as provided in such engagement
letter, this opinion may not be used or referred to by the Company
or quoted or disclosed to any person in any manner without our
prior written consent.
Very truly yours,
MONTGOMERY SECURITIES
C-3
APPENDIX D
OPINION OF KEEFE, BRUYETTE & WOODS, INC.
____________________, 1994
The Board of Directors
First Continental Bancshares, Inc.
201 Huey P. Long Avenue
Gretna, LA 70053
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, of the Consideration, as
hereinafter defined, offered to the holders of the outstanding
shares of Class A Cumulative Convertible Preferred Stock, $1.00 par
value (the "Preferred Stock"), of First Continental Bancshares,
Inc. ("First Continental") by Hibernia Corporation ("Hibernia") in
the proposed merger (the "Merger") of First Continental, with and
into Hibernia, pursuant to the Agreement and Plan of Merger, dated
December 4, 1993, between First Continental and Hibernia and
related Merger Agreement (the "Agreement"). All capitalized terms
used herein and not otherwise defined shall have the meaning
ascribed thereto in the Agreement.
Pursuant to, and subject to certain adjustment provisions in
the Agreement, Hibernia will exchange for each share of Preferred
Stock the aggregate consideration (the "Consideration') of: (i)
such number of shares of Class A Voting Common Stock, no par value,
of Hibernia ("Hibernia Common Stock") as is equal to the Exchange
Rate multiplied by 1.63, and (ii) cash in the amount of all
accumulated and unpaid dividends plus interest thereon calculated
in accordance with Section 4.2.1.1 of the Articles of Incorporation
of First Continental.
Keefe, Bruyette & Woods, Inc., as part of its investment
banking business, is continually engaged in the valuation of bank
and thrift securities in connection with acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for various other
purposes. As specialists in the securities of banking and thrift
companies, we have experience in, and knowledge of, the valuation
of these institutions. In the ordinary course of our business as
a broker-dealer, we may, from time to time, purchase securities
from, and sell securities to, First Continental and Hibernia and as
a market maker in securities we may from time to time have a long
D-1
or short position in, and buy or sell, debt or equity securities of
First Continental and Hibernia for our own account and for the
accounts of our customers. To the extent we have any such position
as of the date of this opinion, it has been disclosed to First
Continental.
Keefe, Bruyette & Woods, Inc. has not provided investment
banking and financial advisory services to First Continental in
connection with the Merger outside of rendering this fairness
opinion and will receive a fee from First Continental for our
services. This opinion is directed only to the fairness of the
Consideration and does not constitute a recommendation to any First
Continental shareholder as to how such shareholder should vote or
as to what other actions, if any, such shareholders should take in
connection with the Merger.
In arriving at our opinion, we have reviewed, analyzed and
relied upon material bearing upon the financial and operating
condition of First Continental and Hibernia, including, among other
things, the following: (i) the Agreement; (ii) the Registration
Statement on Form S-4 of Hibernia as filed with the Securities and
Exchange Commission on __________ ___, 1994 including the Proxy
Statement/Prospectus relating to the special meeting of
shareholders of First Continental to be held in connection with the
Merger (the "Proxy Statement/Prospectus"); (iii) Annual Reports to
Stockholders and Annual Reports on Form 10-K for each of the years
ended December 31, 1992, 1991 and 1990 of First Continental and
Hibernia; (iv) certain interim reports to stockholders and
Quarterly Reports on Form 10-Q of First Continental and Hibernia
and certain other communications from First Continental and
Hibernia to their respective stockholders; (v) other financial
information concerning the business and operations of First
Continental furnished to us by First Continental for purposes of
our analysis, including certain audited financial information and
certain internal financial analyses and projections for First
Continental prepared by the senior management of First Continental;
(vi) certain publicly available information concerning trading of,
and the trading market for, the Hibernia Common Stock and the
Common Stock, $1.00 par value, and Preferred Stock of First
Continental; and (vii) certain publicly available information with
respect to banking companies and the nature and terms of certain
other transactions that we consider relevant to our evaluation. We
have held discussions with senior management of First Continental
concerning their past and current operations, financial condition
and prospects, as well as the results of regulatory examinations.
We have been retained by the Board of Directors of First
Continental solely for the purpose of rendering our opinion to the
Board of Directors as set forth herein. We were not authorized to
solicit indications of potential interest from other institutions
D-2
and were not authorized to and did not participate in any of the
negotiations pertaining to the Merger.
In conducting our review and arriving at our opinion, we have
relied upon and assumed the accuracy and completeness of all the
financial and other information provided to us or publicly
available and we have not attempted independently to verify such
information. We have relied upon the management of First
Continental as to the reasonableness and achievability of the
financial and operational projections (and the assumptions and
basis therefor) provided to us, and we have assumed that such
projections reflect the best currently available estimates and
judgments of such managements and that such projections will be
realized in the amounts and in the time periods currently estimated
by such managements. We have also assumed, without independent
verification, that the aggregate allowances for loan losses for
First Continental and Hibernia are adequate to cover such losses.
We have not made or obtained any evaluations or appraisals of the
property of First Continental or Hibernia, nor have we examined any
individual loan credit files.
We have considered such financial and other factors as we have
deemed appropriate under the circumstances, including among others
the following: (i) the historical and current financial position
and results of operations of First Continental and Hibernia; (ii)
the assets and liabilities of First Continental and Hibernia; and
(iii) the nature and terms of certain other merger transactions
involving banks and bank holding companies. We have also taken
into account our assessment of general economic, market and
financial conditions and our experience in other transactions, as
well as our experience in securities valuation and our knowledge of
the banking and thrift industry generally. Our opinion is
necessarily based upon conditions as they exist and can be
evaluated on the date hereof and the information made available to
us through the date hereof.
In rendering this opinion, we have relied upon the accuracy of
First Continental's description of the relative rights of the
various classes of the security holders in First Continental as set
forth in the Proxy Statement/Prospectus and First Continental's
Articles of Incorporation, as amended. We have considered that the
Consideration represents a discount to liquidation value of the
Preferred Stock and have based our opinion on the fact that the
holders of the Preferred Stock do not have the ability to compel
liquidation of First Continental at the present time, that the
Consideration being provided to holders of Preferred Stock in the
Merger is the maximum amount offered by any prospective purchaser
following a comprehensive bidding process and that the net present
value of the Consideration offered in the Merger is, in our
opinion, greater than the net present value of the future cash
D-3
flows that would be paid to holders of Preferred Stock absent a
sale or similar merger transaction.
Based upon and subject to the foregoing, we are of the opinion
that, as of the date hereof, the Consideration offered in the
Merger is fair, from a financial point of view, to the holders of
Preferred Stock of First Continental.
Very truly yours,
Keefe, Bruyette & Woods, Inc.
D-4
APPENDIX E
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
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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
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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 the corporation, or the
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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.
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APPENDIX F
FORM OF OPINION OF ERNST & YOUNG
REGARDING CERTAIN TAX MATTERS
April 5, 1994
Hibernia Corporation First Continental Bancshares, Inc.
313 Carondelet 203 Huey P. Long Avenue
P.O. Box 61540 Gretna, Louisiana 70053
New Orleans, LA 70161
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 First
Continental Bancshares, Inc. ("FCB") with and into Hibernia
Corporation ("Hibernia") (the "FCB Merger"), and the proposed
merger of First National Bank of Jefferson Parish, Gretna,
Louisiana (the "Bank") with and into Hibernia National Bank ("HNB")
(the "Bank Merger"). (Hereinafter, the FCB 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 December 4, 1993 provided by the managements
of FCB, Hibernia and HNB; in the Agreement and Plan of Merger made
and entered into by FCB and Hibernia as of December 4, 1993 (the
"Agreement"); in the form of the Agreement to Merge between HNB and
Bank (the "Bank Plan of Merger"); and in the Registration Statement
(Form S - 4), dated April 5, 1994, filed with the Securities and
Exchange Commission and containing the preliminary Proxy Statement
- - Prospectus of FCB and Hibernia ("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
material facts and circumstances concerning the proposed Mergers.
We have made no independent determination regarding such facts and
circumstances and, therefore, have relied upon the facts and
representations in the documents set forth above for purposes of
this letter. Any changes to the facts or documents set forth above
may affect the conclusions stated herein.
We understand that you will include a reference to Ernst &
Young and our opinion in the Prospectus relating to the issuance of
Hibernia Common Stock in connection with the proposed Mergers and
the Proxy Statement relating to the special meeting of the FCB
shareholders with respect thereto. We consent to such reference in
the Prospectus under the captions, "Material Tax Consequences" and
"Summary." We also understand that this letter will be submitted
for inclusion as an appendix to the Form S-4 Registration
Statement. We consent to such inclusion.
STATEMENT OF FACTS
FCB is a bank holding company organized under the laws of the
State of Louisiana. FCB's assets consist of cash and 100 percent
of the issued and outstanding Bank Common Stock. FCB conducts no
material business other than acting as a bank holding company of
Bank. The presently authorized capital stock of FCB is 5,500,000
shares, consisting of 500,000 shares of preferred stock, par value
$1.00 per share and 5,000,000 shares of common stock, par value
$1.00 per share ("FCB Common Stock"). As of December 31, 1993,
140,000 shares of preferred stock had been designated as Class A
Cumulative Convertible Preferred Stock ("FCB Preferred Stock"),
135,974 shares of FCB Preferred Stock and 2,145,151 shares of FCB
Common Stock had been issued, 135,974 shares of FCB Preferred Stock
and 2,128,096 shares of FCB Common Stock were outstanding, and
17,055 shares of FCB Common Stock were held in FCB's treasury. As
of December 31, 1993, FCB had issued and outstanding $6,000,000
principal amount of 12% Mandatory Convertible Subordinated
Debentures Due November 15, 1996 ("Debentures"), $4,407,000
principal amount of 10.75% Class A Senior Secured Notes due 1997
("Class A Notes"), and $993,000 principal amount of 10.75% Class B
Senior Secured Notes due 1997 ("Class B Notes"). Such outstanding
shares are closely held by approximately 1,100 shareholders. FCB
has no options, warrants, subscription rights or other rights to
purchase FCB Common Stock, other than the obligation to issue
shares upon conversion of the FCB Preferred Stock and the
Debentures and upon the exercise of certain rights by holders of
the Class A Notes.
Bank is a national banking association organized under the
laws of the United States of America, engaged principally in the
banking business. Bank has 2,000,000 authorized shares of Common
Stock, par value of $10.00 per share, of which 315,000 were issued
and outstanding and held by FCB as of December 4, 1993 ("Bank
Common Stock").
Hibernia is a bank holding company organized under the laws of
the State of Louisiana with shares registered under the Securities
Act. The presently authorized capital stock of Hibernia is
300,000,000 shares, consisting of 100,000,000 shares of preferred
stock, no par value; 100,000,000 shares of Class B non-voting
Common Stock, no par value; and 100,000,000 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
December 31, 1993, no shares of Hibernia's preferred stock or its
Class B non-voting Common Stock were outstanding; 83,611,764 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 1,812,000 warrants to purchase an aggregate of
1,812,000 shares of Hibernia Common Stock pursuant to the terms of
the Senior Secured Restructuring Agreement dated May 27, 1992,
pursuant to which 660,847 warrants were outstanding as of December
31, 1993. Additionally, Hibernia has authorized or reserved
1,706,250 shares of Hibernia Common Stock for issuance under its
1987 Stock Option Plan, pursuant to which options covering
1,549,437 shares of Hibernia Common Stock were outstanding as of
December 31, 1993, 2,823,970 (as adjusted) shares of Hibernia
Common Stock for issuance under its 1992 Long-Term Incentive Plan,
pursuant to which options covering 905,000 shares of Hibernia
Common Stock were outstanding as of December 31, 1993, 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 were outstanding and 675,468
shares of Hibernia Common Stock are available for issuance pursuant
to Hibernia's Dividend Reinvestment and Stock Purchase Plan.
Hibernia Common Stock is traded on the New York Stock Exchange.
HNB is a nationally chartered commercial bank engaged
principally in the full service banking business. HNB is a wholly-
owned subsidiary of Hibernia.
BUSINESS PURPOSE
The management of Hibernia represents 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 FCB 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 transaction has been proposed:
1. After all necessary regulatory an shareholder approvals
have been granted, there will be simultaneous mergers (i.e., the
Mergers) of FCB with and into Hibernia in accordance with the
provisions of the Louisiana Business Corporation Law ("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"). In the documents covering the Mergers,
upon completion of the FCB Merger, Hibernia will cause the Bank
Merger to occur.
2. In the FCB Merger, Hibernia will acquire all of the
assets and assume all of the liabilities of FCB in exchange for
Hibernia Common Stock and cash. As a result of the FCB Merger,
each share of the issued and outstanding FCB Common Stock shall be
converted into and become the number of shares of Hibernia Common
Stock determined in accordance with the exchange rate. As a result
of the FCB Merger, each share of the issued and outstanding FCB
Preferred Stock shall be converted into and become the number of
shares of Hibernia Common Stock determined in accordance with the
exchange rate, multiplied by 1.63 plus the right to receive cash in
the amount of all accumulated and undeclared dividends plus
interest thereon as calculated in accordance with the Articles of
Incorporation of FCB in existence as of the date of the Agreement.
The exchange rate shall be the number obtained by dividing
$12.00 by the Average Market Price of Hibernia Common Stock on the
closing date (defined below), which calculation shall be carried
out to the nearest one-hundredth of one cent. The Average Market
Price equals the average of the high and low sales prices of one
share of Hibernia Common Stock for the ten business days
immediately preceding the trading date prior to the closing date as
reported in The Wall Street Journal. Notwithstanding the foregoing,
the Average Market Price of Hibernia Common Stock on the closing
date shall not be less than $6.00 per share nor more than $8.50 per
share for the purposes of this calculation. Holders of
certificates which represent shares of FCB Common Stock or FCB
Preferred Stock outstanding immediately prior to the effective date
of the FCB Merger (hereinafter called "Old Certificates") shall
cease to be, and shall have no rights as shareholders of FCB after
the FCB Merger.
3. No fractional shares will be issued. Each holder of Old
Certificates 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.
4. On the effective date, the Debentures will be redeemed for
cash in accordance with the provisions of Section 11.01 of the
Debenture Agreement dated as of November 15, 1986 by and between
FCB and Bank as Trustee. Section 11.01 of the Debenture Agreement
stipulates that any successor corporation in a merger with FCB may
either redeem the entire amount of the Debentures ( as set forth in
Article 4, Section 4.01 of the Debenture Agreement) or may assume
the obligations. Article 4, Section 4.01 provides that the
Debentures will be redeemed for 105 percent of the principal amount
if the redemption occurs during the twelve month period ending
November 15, 1994.
5. On the effective date, the Class A Notes and the Class B Notes
will be redeemed for cash in accordance with the provision of the
Indenture dated as of November 9, 1992, by and between FCB and
First National Bank of Commerce as Trustee (the "Indenture")
provided, however, that in lieu of any right to receive any Cash
Premium (as defined in Section 202(a) of the Indenture), each
holder of Class A Notes who elects to exercise his Share Option (as
defined in Section 311 of the Indenture) will receive Hibernia
Common Stock into which such holder's FCB Common Stock resulting
from the exercise of the Share Option would have been converted and
cash in lieu of fractional shares.
6. 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.
7. By following certain statutory procedures, shareholders of FCB
may exercise dissenters' rights entitling them to receive in cash
the value of their respective FCB Common Stock and FCB Preferred
Stock in lieu of receiving Hibernia Common Stock in the FCB Merger.
REPRESENTATIONS
For purposes of our evaluation, we have received from the
respective managements of FCB, Bank, Hibernia and HNB, Statements
of Facts and Representations, dated December 4, 1993, 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 FCB merger:
(a) The fair market value of the Hibernia Common Stock to be
received by each shareholder of FCB Common Stock will be
approximately equal to the fair market value of the FCB Common
Stock surrendered in the exchange.
(b) The fair market value of the Hibernia Common Stock and
cash to be received by each shareholder of FCB Preferred Stock will
be approximately equal to the fair market value of the FCB
Preferred Stock surrendered in the exchange.
(c) There is no plan or intention by the shareholders of FCB
who own five percent or more of the FCB Common Stock and to the
best knowledge of management of FCB, there is no intention on the
part of the remaining shareholders of FCB, to sell, exchange or
otherwise dispose of a number of shares of Hibernia Common Stock
received in the transaction that would reduce the FCB 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 of the formerly outstanding Common Stock of FCB
as of the same date. For purposes of this representation, any
shares of FCB Common Stock surrendered by dissenters, or exchanged
for cash in lieu of fractional shares of Hibernia Common Stock,
will be treated as outstanding FCB Common Stock on the date of the
transaction. Moreover, shares of FCB Common Stock and shares of
Hibernia Common Stock held by former FCB shareholders and otherwise
sold, redeemed, or disposed of prior or subsequent to the
transaction will be considered in making this representation.
(d) There is no plan or intention by the shareholders of FCB
who own five percent or more of the FCB Preferred Stock and to the
best knowledge of management of FCB, there is no intention on the
part of the remaining shareholders of FCB, to sell, exchange or
otherwise dispose of a number of shares of Hibernia Common Stock
received in the transaction that would reduce the FCB 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 of the formerly outstanding Preferred Stock of
FCB as of the same date. For purposes of this representation, any
shares of FCB Preferred Stock surrendered by dissenters, or
exchanged for cash in lieu of fractional shares of Hibernia Common
Stock, will be treated as outstanding FCB Preferred Stock on the
date of the transaction. Moreover, shares of FCB Preferred Stock
and shares of Hibernia Common Stock held by former FCB shareholders
and otherwise sold, redeemed, or disposed of prior or subsequent to
the transaction will be considered in making this representation.
(e) Hibernia has no plan or intention to reacquire any of its
Common Stock issued in the FCB Merger other than a nominal amount
of shares of Common Stock that may be acquired in ordinary businss
transactions (including, but not limited to, open market purchases
in brokers' transactions).
(f) Hibernia has no plan or intention to sell or otherwise
dispose of any of the assets of FCB acquired in the transaction
except for dispositions made in the ordinary course of business.
(g) Any liabilities of FCB assumed by Hibernia and any
liabilities to which the transferred assets of FCB are subject were
incurred by FCB in the ordinary course of its business.
(h) Following the transaction, Hibernia will continue,
substantially unchanged, the banking business of FCB operated
through FCB's banking subsidiary, Bank, which will be merged into
HNB.
(i) 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, FCB, and the
shareholders of FCB will pay their respective expenses, if any,
incurred in connection with the transaction.
(j) There is no intercorporate indebtedness existing between
FCB 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.
(k) No two parties to the transaction are investment
companies as defined in Section 368(a)(2)(F)(iii) and (iv) of the
Code.
(l) FCB 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.
(m) The fair market value of the assets of FCB 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.
(n) 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 FCB 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 FCB shareholders in
exchange for their shares of FCB Common Stock and FCB Preferred
Stock. The fractional share interests of each FCB shareholder will
be aggregated, and no FCB shareholder will receive cash in an
amount equal to or greater than the value of one full share of
Hibernia Common Stock.
(o) None of the compensation received by any shareholder-
employees of FCB will be separate consideration for, or allocable
to, any of their shares of FCB Common Stock and FCB Preferred
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.
(p) The FCB Merger will qualify as a statutory merger under
the Louisiana Business Corporation Law ("LBCL").
(q) The shareholders of FCB (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.
(r) The initial issuance of the FCB Preferred Stock did not
meet the definition of Section 306 stock as set forth in Section
306(c) of the Code.
The following representations have been made in connection
with the Bank Merger:
(aa) No additional Hibernia Common Stock is being issued or
exchanged in the merger of Bank into HNB. No additional HNB Common
Stock is being issued or exchanged in the merger of Bank into HNB.
(bb) There is no plan or intention by the shareholder of Bank,
FCB, 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 Bank Common Stock 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 the Bank shareholder and otherwise sold, redeemed, or
disposed of prior 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
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 HNB Common Stock; 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 "Proforma Financial
Information" in the Prospectus provides a complete list of all
pending acquisitions that are covered by definitive agreements.
However, no HNB Common Stock 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.
(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 Bank Merger 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 FCB with and into
Hibernia, wherein Hibernia Common Stock is to be exchanged for FCB
Common Stock and Hibernia Common Stock and cash is to be exchanged
FCB Preferred 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 incurred in
connection with the Mergers is taken into consideration in applying
the "substantially all" test.
In the proposed Bank Merger, it has been represented by the
managements 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 December 4, 1993, the 50 percent continuity
of interest test of Revenue Procedure 77-37, supra, will be met in
the FCB Merger and the Bank Merger. It has been represented by the
management of FCB that the shareholders of FCB 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 FCB Merger
there will be a continuing interest through Common Stock ownership
in Hibernia on the part of the former shareholders of FCB.
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 FCB shareholders
in the FCB 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, 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 reorganizations under 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. 92-3, 1992-1 C.B. 561, 564), 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 FCB Merger because Hibernia
through its wholly-owned subsidiary HNB, will continue the banking
business indirectly conducted by FCB.
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 FCB's shareholders
will have already received fair value for their shares, the shares
of Bank Common Stock obtained by Hibernia in the FCB 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 FCB 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 FCB 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 and Technical Authority
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.
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 356(a)(1) of the Code provides that if Section 354
would apply to an exchange but for the fact that the property
received in the exchange consists not only of property permitted by
Section 354 to be received without the recognition of gain but also
of other property or money, then the gain if any, to the recipient
will be recognized, but in an amount not in excess of the sum of
such money and the fair market value of such other property. No
loss from the exchange or distribution will be recognized. Section
356(c) of the Code.
Section 356(a)(2) of the Code provides that if an exchange is
described in Section 356(a)(1) of the Code, but has the effect of
the distribution of a dividend, then the recipient of the other
property will recognize ordinary dividend income to the extent of
his ratable share of the accumulated earnings and profits of the
acquired company. The remainder, if any, of the gain recognized
under Section 356(a)(1) of the Code will be treated as gain from
the exchange of property.
Determinations of whether the receipt of boot has the effect
of a dividend are made by applying the principles of Section 302.
(Clark v. CIR, 489 US 726 (1989)) Section 302 contains rules for
determining whether payments received in redemption of stock are
treated as payments in exchange for the stock or as distributions
for which Section 301 of the Code applies. Section 302(a) of the
Code provides that if a redemption of stock fits within any one of
the four categories set out in Section 302(b) of the Code, the
redemption shall be treated as a distribution in part or full
payment in exchange for the stock and thus not regarded as a
dividend. Section 302(b)(2) of the Code provides that redemptions
in which the taxpayer relinquishes more than 20 percent of his or
her share of the corporation's voting stock and retains less than
50 percent of the voting stock after the redemption, shall not be
treated as distributions of a dividend.
In Clark v. CIR, 489 US 726 (1989), the Supreme Court
determined whether gain recognized under Section 356 of the Code on
the receipt of boot (i.e., other property or money received in an
exchange) should be treated as a dividend distribution. In
applying Section 302 of the Code to determine whether boot payment
had the effect of a dividend distribution, the Court stated that
the treatment of boot under Section 356(a)(2) should be determined
"by examining the effect of the transaction as a whole."
Consequently, the Court tested whether the boot payment had the
effect of a dividend by comparing the interest that the taxpayer
actually received in the acquiring corporation with the interest
that taxpayer would have had if solely stock of the acquiring
corporation had been received. If that hypothetical reduction
would have passed one of the tests enumerated in Section 302(b) of
the Code, taking into account attribution under Section 318 of the
Code, then exchange treatment would be available.
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.
Section 1271 of the Code provides that amounts received by the
holder on retirement of any debt instrument shall be considered as
amounts received in exchange therefor, unless there was an intent
at the time of original issue to call the debt instrument prior to
its maturity.
Section 1272(a) of the Code and Proposed Treasury Regulation
Section 1.1272-1 require a holder of any debt instrument having
original issue discount issued after July 1, 1982, to include in
income an amount equal to the sum of the daily portions of the
allocable original issue discount for each day of the taxable year
or portion thereof during which a holder holds the debt instrument.
Since a holder of the debt instrument will be required to include
original issue discount in income as it accrues, the tax basis of
the debt obligation will be increased by the amount of original
issue discount on such debt obligation that is included in the
holder's gross income.
Original issue discount of a debt instrument is defined by
Section 1273 of the Code as the stated redemption price at maturity
less the issue price. The stated redemption price at maturity
includes all payments under the debt instrument except qualified
periodic interest. Qualified periodic interest is defined by the
proposed regulations outstanding at the date the Class A Notes were
issued as interest payments required to be made at a single fixed
rate at fixed periodic intervals of one year or less through the
entire term of the debt instrument.
Contingent payments under a debt instrument are not included
in the stated redemption price at maturity since they cannot be
measured. Rather, under Proposed Treasury Regulations at Section
1.1275-4, contingent payments are characterized as interest or
principal at the time they become fixed. If characterized as
interest they are deductible by the issuer and includible in income
of the holder in the taxable year in which the payment becomes
fixed. The exercise of the Share Option in lieu of the Cash
Premium could be viewed as contingent interest under Proposed
Treasury Regulation Section 1.1275-4.
If the Cash Premium on the Class A Notes is characterized as
additional non-contingent interest, it is not considered qualified
periodic interest under the rules in effect at the time the Class
A Notes were issued (1986 Proposed Treasury Regulation Section
1.1273-1(b)). As such, it constitutes original issue discount
which is accrued over the life of the notes and included in income
by the note holders as it accrues, thereby increasing the adjusted
issue price or tax basis of the notes to the note holders. On
redemption of the Class A Notes a holder opting to receive the Cash
Premium will have no taxable income arising from payment of the
premium to the extent that it has already been included in taxable
income as original issue discount. Alternatively, if the Cash
Premium is considered a contingent payment because the payment is
uncertain, it would constitute interest income on the date that the
payment becomes fixed and would be includible in taxable income of
the note holders at that time.
The exercise of the Share Option to receive FCB Common Stock
in lieu of the Cash Premium could be viewed as though the stock had
been purchased for the amount of the Cash Premium. In this case,
the Cash Premium would be taxable as above and the purchase of the
stock would be a non taxable event. The basis of the stock would
be the amount of the Cash Premium foregone.
Alternatively, exercise of the Share Option to receive FCB
Common Stock in lieu of the Cash Premium could be treated as a
property right to acquire stock of the company. As such it could
cause the Class A Notes to be treated as investment units at the
time they are issued. Under this result, Section 1273(c)(2) of the
Code would require a portion of the issue price of the Class A
Notes to be allocated to the warrants resulting in increased
original issue discount recognition on the debt portion of the
instrument equal to the issue price allocated to the property
right. Under Rev. Rul. 58-234, 58-1 C.B. 279, there would be no
gain or loss to the Class A Note holders on the exercise of their
Share Option to acquire the stock. The Cash Premium would be
taxable as described above, whether the Class A Note holder
receives the cash or exercises his Share Option. The Cash Premium,
although not received, would be deemed paid to exercise the right
to acquire the stock. In this case, the Class A Note holder's
basis in the stock would be the amount allocated to the property
right at the issue date plus the amount of the Cash Premium
foregone.
FEDERAL INCOME TAX CONSEQUENCES
Based solely upon the facts orally represented to us, 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 FCB with and into Hibernia:
(1) Provided the proposed merger of FCB with and into Hibernia
qualifies as a statutory merger under the Louisiana Business
Corporation Law, the FCB Merger will be a reorganization within the
meaning of Section 368(a)(1)(A) of the Code. FCB 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 to FCB upon the transfer of
its assets to Hibernia in exchange for Hibernia Common Stock, cash,
and the assumption by Hibernia of the liabilities of FCB, since
cash will be distributed only to its shareholders. (Sections
361(b) and 357(a) of the Code).
(3) No gain or loss will be recognized to Hibernia on receipt of
the FCB assets in exchange for Hibernia Common Stock, cash, and the
assumption by Hibernia of the liabilities of FCB. (Section 1032(a)
of the Code).
(4) The basis of the assets of FCB in the hands of Hibernia will,
in each case, be the same as the basis of those assets in the hands
of FCB immediately prior to the transaction (Section 362(b) of the
Code).
(5) The holding period of the assets of FCB in the hands of
Hibernia will, in each case, include the period for which such
assets were held by FCB (Section 1223(2) of the Code).
(6) No gain or loss will be recognized by the shareholders of FCB
who receive solely Hibernia Common Stock in exchange for their
shares of FCB Common Stock (Section 354(a)(1) of the Code).
(7) The gain, if any, realized by the holders of FCB Preferred
Stock who do not hold any shares of FCB Common Stock upon the
receipt of cash, in addition to Hibernia Common Stock, in exchange
for their shares of FCB Preferred Stock will be recognized, but in
an amount not to exceed the amount of the cash received by the
shareholders. (Section 356(a)(1) of the Code) If the exchange has
the effect of the distribution of a dividend (determined with the
application of Section 318 of the Code), then the amount of the
gain recognized that is not in excess of the FCB shareholder's
ratable share of undistributed earnings and profits will be treated
as a dividend. (Section 356(a)(2) of the Code) The determination
of whether the gain has the effect of the distribution of a
dividend will be made in accordance with the principles of Clark v.
CIR, 489 US 726 (1989) and such gain will generally be treated as
gain from the exchange of property, if one of the tests enumerated
in Section 302(b) of the Code is satisfied. No loss will be
recognized on the exchange pursuant to Section 356(c) of the Code.
(8) The gain, if any, realized by the holders of FCB Preferred
Stock who own both FCB Preferred Stock and FCB Common Stock upon
the receipt of cash, in addition to Hibernia Common Stock, in
exchange for their shares of FCB Preferred Stock will be
recognized, but in an amount not to exceed the amount of the cash
received by the shareholders. (Section 356(a)(1) of the Code) If
the exchange has the effect of the distribution of a dividend
(determined with the application of Section 318 of the Code), then
the amount of the gain recognized that is not in excess of the FCB
shareholder's ratable share of undistributed earnings and profits
will be treated as a dividend. (Section 356(a)(2) of the Code)
The determination of whether the gain has the effect of the
distribution of a dividend will be made in accordance with the
principles of Clark v. CIR, 489 US 726 (1989) and such gain will
generally be treated as gain from the exchange of property, if one
of the tests enumerated in Section 302(b) of the Code is satisfied.
No loss will be recognized on the exchange pursuant to Section
356(c) of the Code.
(9) The basis of Hibernia Common Stock to be received by the
shareholders of FCB Common Stock and FCB Preferred Stock will be,
in each instance, the same as the basis of their stock surrendered
in exchange therefor, decreased by the amount of cash received, if
any, and increased by the amount of gain, if any, recognized in the
exchange. (Section 358(a)(1) of the Code).
(10) The holding period of the Hibernia Common Stock to be received
by the shareholders of FCB Common Stock and FCB Preferred Stock in
the transaction will include, in each instance, the period during
which the FCB Common Stock and/or FCB Preferred Stock surrendered
in exchange therefor was held as a capital asset on the date of the
exchange (Section 1223(l) of the Code).
(11) The five percent redemption premium received by the Debenture
holders will be recognized and taxed to the Debenture holders under
the provisions of Section 1271 of the Code.
(12) Any Cash Premium received by the holders of Class A Notes will
be included in taxable income as interest to the extent that it has
not been previously included as original issue discount under the
provisions of Section 1272 of the Code. Stock received in lieu of
the Cash Premium as a result of the exercise of the Share Option
(as described in Section 311 of the Indenture) by the holders of
Class A Notes may be treated as contingent interest on the Class A
Notes. As such, it would be taxable when the amount is fixed to
the extent that it exceeds the Cash Premium already included in
taxable income. Alternatively, stock received in lieu of the Cash
Premium could be considered received in exchange for the right to
receive cash. As such, the receipt of stock would be non-taxable
to the extent that the Cash Premium has been accrued into taxable
income. As a third alternative, if the Class A Notes were treated
as investment units at the time they were issued, there would be no
gain or loss to the Class A Note holder on exercise of the Share
Option to acquire the stock. The amount of the Cash Premium,
whether received or not, would be included in income to the extent
it has not already been accrued as original issue discount. Class
A Note holders should consult their tax advisors as to the proper
treatment of this item.
(13) Hibernia will succeed to and take into account those tax
attributes of FCB 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.
(14) 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 FCB as of the date of transfer. Any deficit in the
earnings and profits of Hibernia or FCB will be used only to offset
the earning and profits accumulated after the date of transfer.
(15) Cash received by a dissenting shareholder of FCB in exchange
for his or her FCB Common Stock and FCB Preferred 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.
(16) 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:
(17) 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 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.
(18) 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, and the assumption of Bank's liabilities
by HNB, since any cash for dissenters will be distributed to the
Bank shareholder (Sections 361 and 357(a) of the Code).
(19) No gain or loss will be recognized to either Hibernia or HNB
upon the acquisition by HNB of substantially all of the assets of
Bank in constructive exchange for Hibernia Common Stock, and the
assumption of Bank's liabilities (Section 1032(a) of the Code).
(Rev. Rul. 57-278, 1957-1 C.B. 124.)
(20) 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).
(21) 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).
(22) 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).
(23) 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.
(24) 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.)
(25) 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.)
(26) Bank will close its taxable year 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.)
(27) 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 FCB
will be substantially the same as the federal income tax treatment
to the shareholders of FCB.
SCOPE OF OPINION
The scope of this opinion is expressly limited to the federal
income tax issues specifically addressed in (1) through (26) 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 (other than those enumerated under "State
Income Tax Consequences" above) 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 FCB dividend
distributions have been sufficient to eliminate any undistributed
personal holding company tax liability. 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, preferred shares and debt instruments 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 to FCB, 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
thereof.
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
proxystatement 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)
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) Consents of Patricia C. Meringer, Esq.
(included with Exhibit 5)
23(b) Consent of Ernst & Young
Consent of Arthur Andersen & Company
24 Powers of Attorney
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 Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of New Orleans, State of Louisiana, on April 6, 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,
the Registration Statement has been signed by the following persons
in the capacities indicated on April 6, 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.
<PAGE>
*
_____________________________ Director
J. Terrell Brown
*
_____________________________ 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
Joe D. Smith, Jr.
*
_____________________________ 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.
23(a) Consent of Patricia C. Meringer, Esq. (included with
Exhibit 5)
23(b) Consent of Ernst & Young*
Consent of Arthur Andersen & Co.
24 Powers of Attorney
________
* To be filed by amendment
EXHIBIT 5
April __, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
I am Associate Counsel and Secretary of Hibernia Corporation
(the "Company") and am delivering this opinion in connection with
the registration by the Company of shares of Class A Common Stock
(the "Shares) to be issued by the Company in a proposed merger (the
"Merger") with First Bancorp of Louisiana, Inc. ("First Bancorp")
in which the shareholders of First Bancorp will receive the Shares
in exchange for their shares of common stock of First Bancorp, to
which registration statement (the "Registration Statement") this
opinion is attached. The Shares will be reserved for issuance upon
the closing of the Merger. The Shares will be issued to
shareholders of First Bancorp upon consummation of the Merger
pursuant to the registration statement after it has been declared
effective by the Securities and Exchange Commission.
In furnishing this opinion, I or attorneys under my
supervision have examined such documents and have made such
investigation of matters of fact and law as I have deemed necessary
or appropriate to provide a basis for the opinions set forth
herein. In such examination and investigation, I have assumed the
genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted as originals
and the conformity to original documents of all documents submitted
as certified or photostatic copies.
In rendering this opinion, I do not express any opinion
concerning any law other than the law of the State of Louisiana and
the federal law of the United States, and I do not express any
opinion, either implicitly or otherwise, on any issue not expressly
addressed below.
Based upon and limited by the foregoing, and based upon legal
considerations which I deem relevant and upon laws or regulations
in effect as of the date hereof, I am of the opinion that:
1. Hibernia Corporation has been duly incorporated and is
validly existing and in good standing under the laws of the State
of Louisiana.
2. The Shares have been duly authorized and either are, or,
upon issuance thereof pursuant to the terms of the offering
thereof, will be, validly issued, fully paid and non-assessable.
I hereby expressly consent to the inclusion of this Opinion as
exhibit to the Registration Statement and to the reference to this
Opinion therein.
This opinion is being furnished to you pursuant to the filing
of the Registration Statement and may not be relied upon by any
other person or used for any other purpose, except as provided for
in the preceding paragraph.
Very truly yours,
/S/ PATRICIA C. MERINGER
Patricia C. Meringer
Associate Counsel
and Secretary
EXHIBIT 23(b)(ii)
CONSENT OF ARTHUR ANDERSEN & CO.
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of
our report and to all references to our Firm included in or made a
part of this registration statement.
s/ARTHUR ANDERSEN & CO.
New Orleans, Louisiana
April 5, 1994
EXHIBIT 24
POWERS OF ATTORNEY
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/W. JAMES AMOSS, JR.
W. James Amoss, Jr.
Director
HIBERNIA CORPORATION
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Chairman
and 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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/ROBERT H. BOH
Robert H. Boh
Chairman and Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/J. TERRELL BROWN
J. Terrell Brown
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/BROOKE H. DUNCAN
Brooke H. Duncan
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/RICHARD W. FREEMAN, JR.
Richard W. Freeman, Jr.
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/ROBERT L. GOODWIN
Robert L. Goodwin
Director
HIBERNIA CORPORATION
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
President, Chief Executive Officer and 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 First Bancorp of Louisiana, Inc.
("First Bancorp") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of First Bancorp and merge First Bancorp into the
Corporation, authorized by resolutions adopted by the Board of
Directors on November 16, 1993, 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 14th day of December, 1993.
S/STEPHEN A. HANSEL
Stephen A. Hansel
President, Chief Executive Officer
and Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/DICK H. HEARIN
Dick H. Hearin
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/ROBERT T. HOLLEMAN
Robert T. Holleman
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/HUGH J. KELLY
Hugh J. Kelly
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/JOHN P. LABORDE
John P. Laborde
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/SIDNEY W. LASSEN
Sidney W. Lassen
Director
HIBERNIA CORPORATION
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Vice
Chairman and 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 First Bancorp of Louisiana, Inc. ("First Bancorp") wherein the
Corporation agrees to exchange shares of its common stock for all
of the outstanding shares of common stock of First Bancorp and
merge First Bancorp into the Corporation, authorized by resolutions
adopted by the Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/DONALD J. NALTY
Donald J. Nalty
Vice Chairman and Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 25th day of January, 1994.
S/ROBERT T. RATCLIFF
Robert T. Ratcliff
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/JOE D. SMITH, JR.
Joe D. Smith, Jr.
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/JAMES H. STONE
James H. Stone
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 25th day of January, 1994.
S/VIRGINIA EASON WEINMANN
Virginia Eason Weinmann
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/ERNEST L. WILLIAMSON
Ernest L. Williamson
Director
HIBERNIA CORPORATION
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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/ROBERT E. ZETZMANN
Robert E. Zetzmann
Director
HIBERNIA CORPORATION
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
Controller of Hibernia Corporation, a Louisiana corporation (the
"Corporation"), does hereby name, constitute and appoint Robert W.
Close and Patricia C. Meringer, 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 First Bancorp of Louisiana, Inc.
("First Bancorp") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of First Bancorp and merge First Bancorp into the
Corporation, authorized by resolutions adopted by the Board of
Directors on November 16, 1993, 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 14th day of December, 1993.
S/RON E. SAMFORD, JR.
Ron E. Samford, Jr.
Controller
HIBERNIA CORPORATION
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Treasurer
and Chief Financial Officer of Hibernia Corporation, a Louisiana
corporation (the "Corporation"), does hereby name, constitute and
appoint 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 First Bancorp of
Louisiana, Inc. ("First Bancorp") wherein the Corporation agrees to
exchange shares of its common stock for all of the outstanding
shares of common stock of First Bancorp and merge First Bancorp
into the Corporation, authorized by resolutions adopted by the
Board of Directors on November 16, 1993, 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 14th day of December, 1993.
S/ROBERT W. CLOSE
Robert W. Close
Treasurer and Chief Financial Officer
HIBERNIA CORPORATION
