May 24, 1995
Mr. Max A. Webb
Mr. John Feeney
Corporate Finance Division
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Re: Hibernia Corporation Registration Statement on Form S-4
filed April 11, 1995, File No. 33-58537
Dear Messrs. Webb and Feeney:
Hibernia Corporation (the "Company") has reviewed your
comment letter of May 11, 1995 and has set forth below its
responses to the comments contained in that letter. The
responses below have been numbered to correspond with the
numbering of the paragraphs in your letter of May 11. Please
note that the information responding to comments addressed to
Progressive or Montgomery Securities ("Montgomery") has been
provided to us by those parties.
General
1. The Articles of Incorporation of Progressive
Bancorporation, Inc. ("Progressive") provide that "subject to the
voting rights expressly conferred herein, by law and by the Board
of Directors in establishing and fixing the relative rights and
preferences of the shares of any series of Preferred Stock, the
holders of the common stock shall exclusively possess full voting
power for the election of directors and for all other purposes."
Progressive's Articles of Incorporation do not provide for voting
rights by holders of Class A Preferred Stock with respect to any
merger. In addition, the Louisiana Business Corporation Law does
not extend voting rights to non-voting stock of the merging
corporation in a merger such as this one. Consequently, the
Progressive Preferred Stock has no voting rights with respect to
this merger.
2. Please note that all the appendices have been included
in this filing, including the tax opinion requested in Comment
28.
Mr. Max A. Webb
Mr. John Feeney
May 24, 1995
Page 2
3. The disclosure under "Background of and Reasons for the
Merger" has been expanded to include a statement to the effect
that the final acquisition proposal submitted by Hibernia
included the exchange rate and other financial terms of the
Merger and that the exchange rate was negotiated between Hibernia
and Progressive. Montgomery had no involvement in the
negotiation of the exchange rate for the merger.
4. The information disclosed in Note 21 to the
consolidated financial statements contained in the Company's
Annual Report to Shareholders and in Item 3. "Legal Proceedings"
in the Company's December 31, 1994 Form 10-K remains current.
There have been no significant changes or further developments
which require disclosure at this time. As stated in Note 21 to
the consolidated financial statements, "insurance coverage and
previously established reserves will cover the costs of the
settlement." Therefore, the settlement will not have a material
effect on the financial condition or results of operations of the
Company.
Given the above, management of the Company does not believe
that a "Recent Events" section discussing the litigation
settlement is necessary or required to be included in the Form S-
4.
Accounting Treatment
5. We noted the error with regard to the number of shares
of Progressive owned by Hibernia. This disclosure has been
revised to indicate that Hibernia owns 2,908 shares of
Progressive which represents approximately .5% of the outstanding
shares of Progressive Common Stock.
Opinion of Financial Advisor
6. We have deleted the sixth and seventh sentences as you
have requested and, at the request of Montgomery Securities,
replaced those sentences with disclosure that disclaims their
status as an "expert" under the Securities Act. Montgomery has
also agreed to delete the word "only" in the eighth sentence to
address your concern regarding shareholder reliance.
7. In response to this request, Progressive has provided
you with a copy of Montgomery's presentation to the Progressive
Board on November 18, 1994 under separate cover.
Mr. Max A. Webb
Mr. John Feeney
May 24, 1995
Page 3
Present Value Analysis
8. Montgomery has advised us that it believes that the
existing language is an accurate representation of the process by
which its fairness opinion was rendered and that it believes it
would be misleading and inappropriate to attempt to assign
specific weights to the various analyses mentioned in the
disclosure currently included in the prospectus. Montgomery has
assured us that the existing disclosure describes all analyses
presented by Montgomery to the Progressive Board that were
material to Montgomery's finding of fairness.
9. In response to this comment, we have added specific
disclosure with regard to the contingent nature of Montgomery's
fee. You should note that we have clarified that the fee is not
contingent necessarily upon the completion of the acquisition by
Hibernia, but rather is contingent upon the acquisition of
Progressive by any prospect identified by Montgomery within a
year after termination of Montgomery's engagement. The
disclosure also indicates that Montgomery has no particular
incentive to favor Hibernia over any other potential acquiror.
Material Tax Consequences
10. You are correct in your assumption that the tax opinion
covers the consequences described in the third and fourth
paragraphs of this section. See paragraphs 7 and 9 of the tax
opinion under the heading "Federal Income Tax Consequences".
Also, the tax opinion states that the transaction will be tax-
free assuming the accuracy of the representations of the parties
regarding the terms and effects of the merger. Therefore, in our
opinion, the use of the word "if" is appropriate under these
circumstances.
Rights of Dissenting Shareholders
11. We have added the disclosure that you requested
regarding apportionment of court costs.
Security Ownership of Principal Shareholders and Management
12. While the disclosure concerning the aggregate amount of
votes and percentage of the individuals who have agreed to vote
in favor of the merger is included in the prospectus under the
headings "Vote Required" and "Solicitation and Revocation of
Proxies", where we believe it is most relevant, we have also
included this disclosure in the discussion of the security
ownership of principal shareholders and management.
Mr. Max A. Webb
Mr. John Feeney
May 24, 1995
Page 4
MD&A for Progressive
13. Progressive has informed us that the staff's assumption
as set forth in this comment is correct. Progressive had no
loans classified as either loss or doubtful. Any loans
classified substandard or special mention that have not been
disclosed under Item III of Industry Guide 3 do not (i) represent
or result from trends or uncertainties which management
reasonably expects will materially impact future operating
results, liquidity or capital resources, or (ii) represent
material credits about which management is aware of any
information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment
terms.
14. Progressive has confirmed to us that its management is
not aware of any current recommendations by regulatory
authorities which, if implemented, would have any material effect
on the liquidity, capital resources or results of operations of
Progressive. Further, management of Progressive is not aware of
any other known trends, events or uncertainties that would likely
have any material effect on Progressive. Progressive continues,
however, to be subject to extensive federal regulation, and is at
any time subject to changes in regulations, governmental policies
and accounting principles, any of which could effect the business
operations of Progressive.
15. The specific individual underwriting criteria for each
major loan category is outlined in detail in Progressive Bank &
Trust's formal written loan policy. The loan policy for
Progressive Bank is the responsibility of that bank's Board of
Directors. The policies of Progressive Bank, and more
specifically the criteria for major loan categories, are
constantly changing, and each change is approved by Progressive
Bank's Board of Directors. New criteria and new policies are the
result of regulatory changes, the experience of the existing
portfolio, financial and market conditions and local competition.
Progressive Bank's Board weighs each new criteria after
considering the above factors and against the overall condition
and performance of the bank. Progressive Bank's underwriting
criteria are routinely reviewed by management and external
examiners as a result of bank policy.
Progressive has added a paragraph under the heading "Loans"
in its MD&A to address this comment.
Mr. Max A. Webb
Mr. John Feeney
May 24, 1995
Page 5
MD&A for Hibernia
13. The staff's assumption regarding compliance with Item
III of Industry Guide 3 is correct. Management of the Company
believes that additional disclosure regarding problem assets is
not required. Management has identified and discussed both the
amounts of and trends in nonperforming assets in considerable
detail throughout the Annual Report to Shareholders and has
further noted the amount of potential problem loans.
Management's problem asset identification process, loan grading
methods and reserve adequacy assessment techniques are considered
to be appropriate and, pursuant to recent supervisory
examination, have proven satisfactory.
14. Management of the Company is not currently aware of any
recommendations by regulatory authorities that, if implemented,
would have or would be reasonably likely to have a material
effect on liquidity, capital resources or results of operations
of the Company.
16. This comment will be taken into consideration in future
filings.
Accounting
MD&A
17. Management of the Company believes that adequate
disclosures of the unrealized losses on the available for sale
portfolio are made on the face of the consolidated financial
statements and in Notes 1 and 3 thereto, and that the level of
unrealized losses ($22 million at December 31, 1994, the highest
unrealized loss reported since the adoption of FAS No. 115) is
not material given total equity of $557 million.
The "Securities" section of MD&A contains disclosure
regarding the mark-to-market nature of the available for sale
securities and the purposes for holding and potential sale of
these securities. In addition, the "Liquidity" section of MD&A
discusses the potential liquidation of these securities if needed
to fund loan commitments and meet deposit maturities and
withdrawals. If liquidation of a significant portion of the
portfolio were expected and such liquidation were to result in
the realization of material losses, further discussion would be
included in MD&A.
Mr. Max A. Webb
Mr. John Feeney
May 24, 1995
Page 6
Management does not believe that predictions of future
interest rate changes are necessarily reliable and, therefore,
discussions of anticipated future declines or increases in the
value of the available for sale portfolio are not prudent.
Given the above, Management believes that no revisions of
the disclosures regarding securities available for sale are
required.
FINANCIAL STATEMENTS
Derivatives, Note (19) - Supplemental
18. As noted in the twelfth paragraph of Note 19 to the
consolidated financial statements contained in the Company's
Annual Report to Shareholders, the table presented contains
information for derivative financial instruments held or issued
for trading purposes only. Therefore, the $15 million notional
deposit hedge, which acts to reduce overall interest rate risk,
is not included in the table.
As stated in the ninth paragraph of Note 19, to provide its
customers the ability to manage their interest rate risk, the
Company maintains trading positions in derivative financial
instruments. When possible, matched positions are established to
minimize risk to the Company. As you will note in the table
included as Exhibit I to this letter, these matched positions
comprise the majority of the Company's derivative financial
instruments at December 31, 1994. With the exception of the
Company's guarantee of a $74 million notional interest rate swap
discussed separately in the textual portion of Note 19, the
notional amount of customer-related derivative financial
instruments which are not matched is immaterial. Management
believes that the risk associated with the customer-related
derivative financial instruments (including the matched
positions), that were not specifically discussed in the textual
portion of Note 19, is minimal.
Future Comments
Derivative Instruments - Note (19)
19. As can be seen in Exhibit I to this letter, the Company
is party to a limited number of derivative contracts (18 total
contracts at December 31, 1994) and the notional balances of the
contracts are not material. Management believes that the
derivative activity disclosed in Note 19 and in the "Interest
Rate Sensitivity" section of MD&A is adequate given the level of
Mr. Max A. Webb
Mr. John Feeney
May 24, 1995
Page 7
derivative activity. These disclosures were made to fully inform
the readers of the Annual Report to Shareholders of the lack of
derivative risk in the Company, given the recent attention
derivatives have received. Management will continue to monitor
the level of derivative activity and evaluate the materiality of
the activity and associated risk. When it is determined that the
activity and associated risk is material, additional disclosures
will be made.
20. See 19 above.
21. See 19 above.
22. In future filings, the impact of hedging activities
will be presented as a separate line item in the "Interest
Sensitivity and Gap Analysis" when such activities are material.
23. See 19 above.
Accounting - General
24. We note your reference to Rule 3-12 of Regulation S-X
regarding the age of the financial statements. Financial
statements (unaudited) of Progressive relating to the quarter
ending March 31, 1995 has been included in the registration
statement (including the MD&A for the same period), the pro forma
and other financial information included in the registration
statement has been updated to include the first quarter of 1995,
and Hibernia's quarterly report on Form 10-Q for the period ended
March 31, 1995 has been incorporated by reference.
25. Currently dated accountants' consents are provided in
the attached amendment. Actually signed consents are not filed
electronically, but those consents are included in our files.
Undertakings
26. We have included the undertaking required by 512 (a)
with the understanding that continuous aspect of the offering
begins when the proxy statement is mailed and ends when the
shareholder vote is complete. If this is not the Staff's view of
the period during which the registration statement remains
effective, please let us know. We have also included the
undertaking required by Item 512(h).
Exhibit 5
27. We have revised the last paragraph of the legal opinion
to clarify that shareholders of Progressive may rely upon it.
Mr. Max A. Webb
Mr. John Feeney
May 24, 1995
Page 8
Exhibit 8
28. The tax opinion is included as Appendix D to the
prospectus.
10-K
MD&A - Asset Quality
29. Management believes that the increase in both the
commercial loan delinquency ratio and the overall loan
delinquency ratio (both of which on an absolute basis continue to
be very favorable) are temporary in nature. These modest
increases are primarily the result of transitional issues related
to significant merger activity during the last half of 1995. Due
to the overall low level of loan delinquencies, the temporary
nature of the increase in loan delinquencies and the fact that
Management does not believe that the increase was the result of a
deterioration of the financial condition of the borrowers,
further discussion of loan delinquencies was not warranted in
MD&A.
Given the above, Management believes that no additional
disclosures regarding loan delinquencies are necessary in the
Form S-4.
If you have any questions with regard to the information
included in this letter, or the attached amendment to the
registration statement, please contact me at (504) 533-2486 or
David Steiner at (504) 584-5357. Questions concerning responses
to accounting comments should be directed to Troy Hester at
Hibernia at (504) 533-5336.
Mr. Max A. Webb
Mr. John Feeney
May 24, 1995
Page 9
We look forward to finalizing this registration statement
with you in the near future.
Very truly yours,
Patricia C. Meringer
Secretary and Associate
Counsel
PCM/gbp
Enclosures
cc: David P. Steiner, Esq. (w/enclosures)
Charles L. Evans, Esq. (w/enclosures)
Troy L. Hester (w/enclosures)
Stephen D. M. Schuetz (w/enclosures)
Debra L. von Storch (w/enclosures)
Montgomery Securities (w/enclosures)
g:10632.gbp<TABLE>
Hibernia Corporation EXHIBIT I
Derivative Financial Instruments
($ in thousands)
<CAPTION>
December 31, 1994 # of contracts Notional Value Fair Value Average Fair Value
Assets/ Liabilities/ Assets/ Liabilities/ Assets/ Liabilities/ Assets/ Liabilities/
Held Written Held Written Held Written Held Written
Held or Issued for Trading Purposes
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Customers - matched 2 2 $5,477 $5,477 $283 ($263) $305 ($285)
Guarantee of customer interest
rate swap - unmatched 0 1 - 74,000 - (2,202) - (3,841)
Other customers - unmatched 1 1 2,240 850 37 (46) 129 (26)
3 4 7,717 80,327 320 (2,511) 434 (4,152)
Options, caps & floors
Customers - matched 3 3 134,100 134,100 829 (839) 806 (815)
Customers - unmatched 0 3 - 1,581 - (39) - (28)
3 6 134,100 135,681 829 (878) 806 (843)
Total Held or Issued for Trading Purposes 6 10 141,817 216,008 1,149 (3,389) 1,240 (4,995)
Held or Issued for Purposes
Other than Trading
Interest Rate Swaps - Deposit Hedges 0 2 15,000 - 143 - 537 -
TOTAL DERIVATIVE FINANCIAL INSTRUMENTS 6 12 $156,817 $216,008 $1,292 ($3,389) $1,777 ($4,995)
<CAPTION>
December 31, 1993 # of contracts Notional Value Fair Value Average Fair Value
Assets/ Liabilities/ Assets/ Liabilities/ Assets/ Liabilities/ Assets/ Liabilities/
Held Written Held Written Held Written Held Written
Held or Issued for Trading Purposes
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Customers - matched 1 2 $3,506 $3,506 $350 ($341) $473 ($430)
Guarantee of customer interest
rate swap - unmatched 0 1 - 74,000 - (7,001) - (8,137)
Other customers - unmatched 2 1 3,548 850 246 10 311 10
3 4 7,054 78,356 596 (7,332) 784 (8,557)
Options, caps & floors
Customers - matched 1 1 2,329 2,329 1 (1) 6 (6)
Customers - unmatched 0 1 - 317 - - - (1)
1 2 2,329 2,646 1 (1) 6 (7)
Total Held or Issued for Trading Purposes 4 6 9,383 81,002 597 (7,333) 790 (8,564)
Held or Issued for Purposes
Other than Trading
Interest Rate Swaps - Deposit Hedges 0 2 15,000 - 1,087 - 1,313 -
TOTAL DERIVATIVE FINANCIAL INSTRUMENTS 4 8 $24,383 $81,002 $1,684 ($7,333) $2,103 ($8,564)
</TABLE>
As filed with the Securities and Exchange Commission on May 24,
1995.
Registration No. 33-58537
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Hibernia Corporation
(Exact name of Registrant as specified in its charter)
LOUISIANA 72-0724532
(State or other (I.R.S. Employer
jurisdiction of incorporation Identification Number)
or organization)
Hibernia Corporation
313 Carondelet Street
New Orleans, Louisiana 70130
(504) 533-5552
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Gary L. Ryan, Esq.
Vice President and Associate Counsel
Hibernia Corporation
313 Carondelet Street
New Orleans, Louisiana 70130
(504) 533-5560
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Patricia C. Meringer, Esq.
Associate Counsel and Secretary
Hibernia Corporation
225 Baronne Street, 11th Floor
New Orleans, Louisiana 70112
(504) 533-2486
Virginia Boulet, Esq. Charles L. Evans, Esq.
Phelps Dunbar, L.L.P. McGlinchey Stafford Lang
30th Floor, 400 Poydras Street A Professional Limited
New Orleans, Louisiana 70130-3245 Liability Company
(504) 566-1311 2777 Stemmons Freeway
Dallas, Texas 75207
(214) 634-3939
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this
Registration Statement
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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
maximum maximum
Title of each Amount offering aggregate
class of securities to be price per offering Amount of
to be registered registered unit (1) price (1) registration fee (1)
Class A Common Stock, no par value 2,500,000 shares $2.61 $6,525,000 $2249.82
(1) Based upon the book value of the Common Stock of Progressive Bancorporation, Inc. on December 31,
1994 and estimated solely for the purpose of calculating the registration fee in accordance with Rule
457(f)(2) under the Securities Act of 1933. Registration fee has been previously paid.
</TABLE>
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 Commission, acting
pursuant to said Section 8(a), may determine.
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K
<S> <C>
Item of Form S-4 Location or Caption in Prospectus
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus....................................Introduction
2. Inside Front and Outside Back
Cover Pages of Prospectus.....................Table of Contents; Available
Information
3. Risk Factors, Ratio of Earnings to
Fixed Charges, and Other
Information...................................Summary; The Merger; Meeting
Information
4. Terms of the Transaction......................Summary; The Merger
5. Pro Forma Financial Information...............Summary; Pro Forma Financial
Information
6. Material Contacts with the
Company Being Acquired........................Not Applicable
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be Underwriters.............Not Applicable
8. Interests of Named Experts and Counsel........Validity of Shares
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities...............................Not Applicable
10. Information with Respect to S-3
Registrants...................................Certain Information About Hibernia
11. Incorporation of Certain
Information by Reference......................Available Information; Incorporation
by Reference
12. Information With Respect to S-2 or
S-3 Registrants...............................Not Applicable
13. Incorporation of Certain
Information by Reference......................Incorporation by Reference
14. Information with Respect to
Registrants Other Than S-3 or S-2
Registrants...................................Not Applicable
15. Information With Respect to S-3
Companies.....................................Not Applicable
16. Information With Respect to S-2 or
S-3 Companies.................................Not Applicable
17. Information With Respect to
Companies Other Than S-2 or S-3
Companies.....................................Available Information; Incorporation
by Reference; Certain Information
Concerning Progressive; Consolidated
Financial Statements of Progressive
18. Information if Proxies, Consents or
Authorizations Are to be Solicited............Incorporation by Reference;
Summary; Meeting Information; The
Merger; Rights of Dissenting
Shareholders; Beneficial Ownership
of Directors, Executive Officers and
Principal Shareholders of Progressive
19. Information if Proxies, Consents or
Authorizations Are Not to be
Solicited, or in an Exchange Offer............Not Applicable
</TABLE>
PROGRESSIVE BANCORPORATION, INC.
One Progressive Square
Houma, Louisiana 70360
May __, 1995
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of Progressive Bancorporation, Inc. ("Progressive")
to be held on Thursday, June 29, 1995, at 11:00 a.m., Central
time, at the main office of Progressive Bank and Trust Company,
One Progressive Square, Houma, Louisiana.
At the meeting, holders of Common Stock of Progressive will
be asked to consider and vote upon a proposal to approve an
Agreement and Plan of Merger (the "Agreement"), between
Progressive and Hibernia Corporation ("Hibernia"), pursuant to
which Progressive will be merged with and into Hibernia (the
"Merger"), all as more fully described in the attached Proxy
Statement-Prospectus. You are urged to read carefully the Proxy
Statement-Prospectus for a more complete description of the terms
of the Agreement and the proposed Merger.
The Agreement and the Merger contemplated thereby have been
approved unanimously by your Board of Directors. The Board
believes, based on its own analysis and the opinion of
Progressive's financial advisor (all of which are described in
the accompanying Proxy Statement-Prospectus), that the proposed
Merger is in the best interests of Progressive's shareholders.
As a result of the Merger, holders of Common Stock of Progressive
will become shareholders of Hibernia and own common stock which
is publicly traded on the New York Stock Exchange, Inc. With its
greater financial resources and ability to offer a broad range of
financial services, the Board believes that Hibernia is better
able to compete in the current market environment. Holders of
Preferred Stock of Progressive will receive cash in the amount of
$12.50 per share plus all accrued and unpaid dividends on their
shares. We believe the Merger presents a rare opportunity for
our shareholders, and I urge holders of Common Stock of
Progressive to vote their shares in favor of this transaction.
Your Board of Directors recommends that you vote your shares
of Common Stock of Progressive "FOR" the Agreement and the
proposed Merger by marking, signing, dating and returning the
proxy card, which is enclosed if you are a holder of Common Stock
of Progressive, promptly in the accompanying envelope.
Very truly yours,
John H. Laing
President
PROGRESSIVE BANCORPORATION, INC.
One Progressive Square
Houma, Louisiana 70360
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 29, 1995
To the Shareholders of
Progressive Bancorporation, Inc.:
Notice is hereby given that a Special Meeting of
Shareholders of Progressive Bancorporation, Inc., a Louisiana
corporation ("Progressive"), is to be held on Thursday, June 29,
1995, at 11:00 a.m., Central time, at the main office of
Progressive Bank and Trust Company, One Progressive Square,
Houma, Louisiana, for the following purposes:
1. To consider and vote upon a proposal to approve an
Agreement and Plan of Merger, between Progressive and Hibernia
Corporation ("Hibernia"), dated as of December 1, 1994, and the
related Merger Agreement (collectively, the "Agreement"),
pursuant to which (i) Progressive will be merged with and into
Hibernia (the "Merger"); (ii) upon consummation of the Merger,
each outstanding share of Common Stock of Progressive will be
converted into approximately 4.0475 shares of Common Stock of
Hibernia as determined in accordance with the Agreement and each
outstanding share of Preferred Stock of Progressive will be
converted into the right to receive cash in the amount of $12.50
per share plus all undeclared and accumulated dividends thereon;
and (iii) Progressive Bank and Trust Company will be merged with
and into Hibernia National Bank.
2. To transact such other business as may properly come
before the Special Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on
May 19, 1995 as the record date for determining shareholders
entitled to receive notice of, and to vote at, the Special
Meeting or any adjournment thereof. Only holders of Common Stock
of Progressive are entitled to vote on the matters to be
presented at the Special Meeting.
As more fully described in the accompanying Proxy Statement-
Prospectus, dissenting holders of Common Stock of Progressive who
comply with the procedural requirements of the Louisiana Business
Corporation Law attached as Appendix C to the Proxy Statement-
Prospectus 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 Progressive.
Your vote is important regardless of the number of shares of
Common Stock of Progressive that you may own. Whether or not you
plan to attend the Special Meeting, please mark, date and sign
the proxy card that is enclosed if you are a holder of Common
Stock of Progressive and return it promptly in the enclosed,
postage-paid envelope. Your proxy may be revoked at any time
prior to the vote at the Special Meeting by notice to the
Secretary of Progressive or by execution and delivery of a later
dated proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Elton A. Arceneaux, Jr.
Secretary
Houma, Louisiana
May ___, 1995
PROSPECTUS
2,500,000 SHARES
HIBERNIA CORPORATION
Class A Common Stock
PROXY STATEMENT
Progressive Bancorporation, Inc.
Special Meeting of Shareholders
to be held on June 29, 1995
This Proxy Statement-Prospectus is being furnished to the
shareholders of Progressive Bancorporation, Inc. ("Progressive")
in connection with the solicitation of proxies by Progressive's
Board of Directors for use at the Special Meeting of Progressive
shareholders to be held at 11:00 a.m., Central time, on Thursday,
June 29, 1995, at One Progressive Square, Houma, Louisiana, and
at any adjournment thereof (the "Special Meeting").
At the Special Meeting, the shareholders of Progressive will
consider and vote upon a proposal to approve an Agreement and
Plan of Merger, dated as of December 1, 1994, by and between
Hibernia Corporation ("Hibernia") and Progressive, and the
related Merger Agreement (collectively, the "Agreement"),
pursuant to which Progressive will merge (the "Merger") with and
into Hibernia. Upon consummation of the Merger, each outstanding
share of Common Stock of Progressive, $.10 par value
("Progressive Common Stock"), will be converted into
approximately 4.0475 shares of Class A Common Stock of Hibernia,
no par value ("Hibernia Common Stock") and each share of Class A
Preferred Stock of Progressive, $1.00 par value ("Progressive
Preferred Stock"), will be converted into the right to receive
cash in the amount of $12.50 plus all undeclared and accumulated
dividends thereon. A copy of the Agreement is included herein as
Appendix A to this Proxy Statement-Prospectus. See "The Merger."
This document also constitutes a prospectus of Hibernia with
respect to the Hibernia Common Stock to be issued to the
shareholders of Progressive pursuant to the terms of the Merger.
The outstanding shares of Hibernia Common Stock are, and the
shares offered hereby will be, listed on the New York Stock
Exchange, Inc. (the "NYSE"). The last reported sale price of
Hibernia Common Stock on the NYSE on May __, 1995 was $__________
per share.
______________________
THE SHARES OF HIBERNIA COMMON STOCK OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK
OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE 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 date of this Proxy Statement-Prospectus is May __, 1995.
AVAILABLE INFORMATION
Hibernia is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and, in accordance therewith, files reports, proxy statements and
other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other
information can be inspected at, and copies thereof may be
obtained at prescribed rates from the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at 7 World Trade Center, Suite 1300, New York,
New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60621-2511.
The Hibernia Common Stock is listed for trading on the NYSE
and any reports, proxy statements and other information
concerning Hibernia may be inspected at its offices which are
located at 20 Broad Street, New York, New York 10005.
Hibernia has filed with the Commission a Registration
Statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act") with respect to the
securities of Hibernia that may be issued in connection with the
transaction described herein. This Proxy Statement-Prospectus
does not contain all of the information set forth in the
Registration Statement or the exhibits thereto. For further
information with respect to Hibernia and the Hibernia Common
Stock offered hereby, reference is hereby made to such
Registration Statement and exhibits. 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.
All information contained in this Proxy Statement-Prospectus
relating to Hibernia and its subsidiaries has been supplied by
Hibernia, and all information relating to Progressive has been
supplied by Progressive.
INCORPORATION BY REFERENCE
This Proxy Statement-Prospectus incorporates documents by
reference which are not presented herein or delivered herewith.
These documents are available, without charge, to any person
receiving this Proxy Statement-Prospectus, including beneficial
owners of Progressive Common Stock. The request may be written
or oral and should be directed to the Assistant Corporate
Secretary of Hibernia Corporation, 313 Carondelet Street, New
Orleans, Louisiana 70130, telephone number (504) 533-3411. To
ensure timely delivery of the documents, any request should be
made by June 10, 1995.
The following documents, or the indicated portions thereof,
are hereby incorporated by reference into this Proxy Statement-
Prospectus:
(1) Hibernia's Annual Report on Form 10-K for the year
ended December 31, 1994;
(2) Hibernia's Quarterly Report on Form 10-Q for the three
months ended March 31, 1995;
(3) Hibernia's definitive Proxy Statement dated March 17,
1995 relating to its 1995 Annual Meeting of Shareholders held on
April 18, 1995, except the information contained under the
headings "Executive Compensation -- Report of the Executive
Compensation Committee" and "-- Stock Performance Graph";
(4) The description of Hibernia Common Stock set forth in
Hibernia's Current Report on Form 8-K dated November 2, 1994;
(5) Those certain Current Reports on Form 8-K dated January
27, 1995, March 2, 1995 and March 20, 1995 (as amended),
respectively.
(6) All other reports 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 Special Meeting shall be deemed to be
incorporated by reference from the date such documents are filed.
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 of this Proxy Statement-
Prospectus to the extent that a statement in this Proxy
Statement-Prospectus, or any subsequently filed document that is
also 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 Proxy Statement-Prospectus.
No person is authorized to give any information or to make
any representations other than those contained herein and, if
given or made, such information or representations may not be
relied upon as having been authorized. This document does not
constitute an offer or solicitation by anyone in any jurisdiction
in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to
do so or to any person to whom it is unlawful to make such offer
or solicitation.
TABLE OF CONTENTS
SUMMARY.................................................... i
MEETING INFORMATION........................................ 1
Solicitation and Revocation of Proxies................... 1
Vote Required............................................ 2
Recommendation........................................... 2
THE MERGER................................................. 3
Consideration to be Received in the Merger............... 3
Conversion of Shares..................................... 3
Surrender and Exchange of Certificates................... 4
Background of and Reasons for the Merger................. 5
Opinion of Financial Advisor............................. 6
Representations and Warranties; Conditions to
the Merger; Waiver.....................................12
Regulatory Approvals.....................................13
Business Pending the Merger..............................14
Effective Date of the Merger; Termination................14
Management and Operations After the Merger...............15
Certain Differences in Rights of Shareholders............16
Interests of Certain Persons in the Merger...............18
Employee Benefits........................................20
Expenses.................................................20
Material Tax Consequences................................20
Resale of Hibernia Common Stock..........................22
Dividend Reinvestment Plan...............................23
Accounting Treatment.....................................23
RIGHTS OF DISSENTING SHAREHOLDERS..........................24
PRO FORMA FINANCIAL INFORMATION............................26
CERTAIN INFORMATION ABOUT HIBERNIA.........................36
Supervision and Regulation...............................36
CERTAIN INFORMATION CONCERNING PROGRESSIVE.................39
Description of Business..................................39
Supervision and Regulation...............................39
Competition..............................................40
Employees................................................41
Property.................................................41
Legal Proceedings........................................41
Market Prices and Dividends..............................41
Security Ownership of Principal Shareholders
and Management.........................................42
PROGRESSIVE MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS AT AND FOR
THE YEAR ENDED DECEMBER 31, 1994...........................45
PROGRESSIVE MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS AT AND FOR
THE THREE MONTHS ENDED MARCH 31, 1995......................67
VALIDITY OF SHARES.........................................71
EXPERTS....................................................71
PROGRESSIVE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1995..................72
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF PROGRESSIVE..77
Appendix A - Agreement and Plan of Merger...............A-1
Appendix B - Fairness Opinion of Montgomery
Securities, Inc............................B-1
Appendix C - Tax Opinion of Ernst & Young LLP...........C-1
Appendix D - Selected Provisions of State
Law Relating to the Rights of
Dissenting Shareholders....................D-1
SUMMARY
This summary is not intended to be a complete explanation of
the matters covered in this Proxy Statement-Prospectus and is
qualified in its entirety by reference to the more detailed
information contained elsewhere in this Proxy Statement-
Prospectus, the Appendices hereto and the documents incorporated
herein by reference, all of which shareholders are urged to read
carefully prior to the Special Meeting. Unless otherwise
indicated, historical financial information concerning Hibernia
is derived from Hibernia's financial statements contained in its
Annual Report on Form 10-K for the year ended December 31, 1994,
and financial information about Progressive is derived from
Progressive's financial statements included herein under the
caption "Consolidated Financial Statements of Progressive."
The Parties to the Merger
Hibernia. Hibernia is a Louisiana corporation registered
under the Bank Holding Company Act of 1956, as amended (the
"BHCA"). As of March 31, 1995, Hibernia had total consolidated
assets of approximately $6.5 billion and shareholders' equity of
approximately $602 million. Hibernia has a single banking
subsidiary, Hibernia National Bank ("HNB"), a national banking
association that provides retail and commercial banking services
through approximately 143 branches throughout Louisiana. The
principal executive offices of Hibernia are located at 313
Carondelet Street, New Orleans, Louisiana 70130, and its
telephone number is (504) 533-5532. See "Certain Information
About Hibernia," "Available Information" and "Incorporation By
Reference."
In March of 1995 HNB acquired American Bank, headquartered
in Norco, Louisiana ("American Bank"). In addition, from time to
time Hibernia investigates and holds discussions and negotiations
in connection with possible transactions with other banks and
financial institutions. Hibernia has executed definitive merger
agreements with two institutions other than Progressive, STABA
Bancshares, Inc. ("STABA"), the holding company of State Bank and
Trust Company, headquartered in Donaldsonville, Louisiana and
Bank of St. John, headquartered in Reserve, Louisiana ("Bank of
St. John"). The proposed transactions with STABA and Bank of St.
John are subject to various conditions, including applicable
regulatory approvals. The completed acquisition of American
Bank, and the proposed acquisition of STABA and Bank of St. John
are not reflected in the financial statements contained in
Hibernia's Annual Report on Form 10-K for the year ended December
31, 1994. Such transactions are described further herein under
"Other Pending and Completed Merger Transactions for Hibernia"
and under "Pro Forma Financial Information." At the date hereof,
Hibernia has not entered into any agreements or understandings
with respect to any other significant merger transaction.
Although it is anticipated that such transactions may be entered
into both before and after the Merger, there can be no assurance
as to when or if, or the terms upon which, such transactions may
be pursued or consummated.
-i-
SELECTED FINANCIAL DATA ABOUT HIBERNIA
The following table sets forth certain consolidated
financial information for Hibernia. The historical information
is based on the historical financial statements and related notes
of Hibernia contained in its Annual Report on Form 10-K for the
year ended December 31, 1994, after giving effect for the merger
with American Bank consummated on March 1, 1995 which was
accounted for as a pooling of interests, and its Quarterly Report
on Form 10-Q for March 31, 1995. The restated information
reflects the impact of the merger with STABA consummated on May
1, 1995, which was accounted for as a pooling of interests. Pro
forma financial information giving effect to the Merger and each
of the other probable and consummated mergers is included herein
under "Pro Forma Financial Information."
-ii-<TABLE>
HISTORICAL HIBERNIA CORPORATION (1)
SELECTED FINANCIAL INFORMATION
<CAPTION>
Year Ended December 31 3 Months Ended March 31
Unaudited ($ in thousands, except per share amounts) 1994 1993 1992 1991 1990 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $265,309 $261,753 $261,394 $285,155 $302,752 $67,913 $64,783
Income (loss) from continuing operations 86,571 62,273 2,964 (139,049) (17,441) 26,359 23,116
Per share:
Income (loss) from continuing operations 0.78 0.57 0.05 (2.53) (0.32) 0.24 0.21
Cash dividends 0.19 0.03 - 0.15 0.90 0.06 0.04
Book value 5.10 4.80 4.15 4.68 7.70 5.41 4.85
SELECTED PERIOD-END BALANCES
Debt 5,650 30,194 32,587 134,809 146,784 4,815 28,796
Total assets 6,424,040 6,317,199 6,188,874 7,445,266 8,724,922 6,502,662 6,542,266
(1) Refer to "PRO FORMA FINANCIAL INFORMATION".
</TABLE>
<TABLE>
RESTATED HIBERNIA CORPORATION (2)
SELECTED FINANCIAL INFORMATION
<CAPTION>
Year Ended December 31 3 Months Ended March 31
Unaudited ($ in thousands, except per share amounts) 1994 1993 1992 1991 1990 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $269,562 $265,772 $264,950 $287,859 $304,929 $68,949 $65,810
Income (loss) from continuing operations 87,971 63,525 4,028 (138,287) (16,944) 26,452 23,440
Per share:
Income (loss) from continuing operations 0.78 0.57 0.07 (2.42) (0.30) 0.23 0.21
Cash dividends 0.19 0.03 - 0.15 0.90 0.06 0.04
Book value 5.07 4.77 4.12 4.59 7.48 5.38 4.82
SELECTED PERIOD-END BALANCES
Debt 5,650 30,194 32,587 134,809 146,784 4,815 28,796
Total assets 6,516,380 6,412,388 6,280,706 7,517,779 8,783,541 6,599,894 6,638,950
(2) Refer to "PRO FORMA FINANCIAL INFORMATION".
</TABLE>
Progressive and the Bank. Progressive is a Louisiana
corporation registered as a bank holding company under the BHCA.
At March 31, 1995, Progressive had total consolidated assets of
approximately $153.5 million and shareholders' equity of
approximately $10.1 million. Progressive's wholly-owned
subsidiary, Progressive Bank and Trust Company (the "Bank"), is a
Louisiana state bank having its main office and five other
banking branches in Terrebonne and Lafourche Parishes, Louisiana.
The Bank engages in a full range of retail and commercial banking
services, including taking deposits and extending secured and
unsecured credit. At March 31, 1995, the Bank had total deposits
of approximately $133.1 million.
The executive offices of Progressive are located at One
Progressive Square, Houma, Louisiana 70360, and its telephone
number at such address is (504) 868-1770. For additional
information concerning the business of Progressive and its
financial condition and operating results, see "Consolidated
Financial Statements of Progressive," "Certain Information
Concerning Progressive" and "Selected Financial Information of
Progressive."
-iv-
SELECTED FINANCIAL INFORMATION OF PROGRESSIVE
The following selected financial information of Progressive
with respect to each year in the five-year period ended
December 31, 1994 and the three-month periods ended March 31,
1995 and 1994 has been derived from the consolidated financial
statements of Progressive. The information set forth below
should be read in conjunction with Progressive's consolidated
financial statements, the notes thereto, and "Progressive
Management's Discussion and Analysis of Financial Condition and
Results of Operations At and For the Year Ended December 31,
1994" and "__The Three Months Ended March 31, 1995" appearing
elsewhere in this Proxy Statement-Prospectus.
<TABLE>
<CAPTION>
Three-Month Periods Year Ended December 31,
Ended March 31,
1995 1994 1994 1993 1992 1991 1990
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Interest income $ 3,014 $ 2,710 $ 12,126 $ 11,343 $ 10,694 $ 10,101 $ 9,588
Net interest income 1,693 1,603 7,564 6,630 5,562 4,112 3,211
Provision for loan losses - - (648) 168 101 30 265
Other operating income 180 428 1,356 1,462 1,281 801 1,912
Non-interest expense 2,198 1,370 5,448 5,611 4,879 4,185 4,280
Income (loss) before
extraordinary item (325) 661 4,716 1,391 1,813 653 578
Extraordinary item - - (597) (143) 5,314 - -
Net income (loss) (292) 429 4,119 1,248 7,127 653 578
Unpaid dividends on
preferred stock (41) (41) (162) (164) (179) (179) (179)
Net income (loss)
applicable to
common stock (333) 388 3,957 1,084 6,948 474 399
Balance Sheet Data:
Total assets 153,525 138,164 $141,693 $132,909 $131,305 $114,951 $104,673
Earning assets 145,720 132,900 129,102 126,027 118,885 108,079 96,405
Loans (net of unearned
discount) 80,835 73,214 79,773 73,032 70,323 58,316 58,600
Deposits 132,645 118,617 121,761 113,666 115,169 106,554 96,439
Shareholders' equity 10,092 6,812 9,894 6,302 5,101 (2,026) (2,679)
Per Share Data:
Income (loss) before
extraordinary item
per common share (0.54) 0.62 $7.33 $1.94 $2.51 $0.73 $0.62
Net income (loss)
applicable to
common stock (0.54) 0.62 6.37 1.71 10.67 0.73 0.62
Cash dividends - - - - - - -
Book value per
common share 10.81 5.67 10.55 4.92 2.66 (8.00) (8.73)
Selected Ratios:
Return on average assets 0.20% -0.31% 2.93% 0.93% 5.83% 0.60% 0.57%
Return on average equity -2.83% 6.14% 53.63% 20.65% 190.56% -33.03% -23.08%
Equity to average assets 6.82% 4.99% 5.47% 4.50% 3.06% -1.80% 2.45%
</TABLE>
-v-
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
(Unaudited)
The table on the next page sets forth certain unaudited pro
forma combined financial information for Hibernia, after giving
effect to the merger with American Bank, consummated on March 1,
1995 as discussed in Note A to the Pro Forma Combined Financial
Statements, the merger with STABA consummated on May 1, 1995, as
discussed in Note B to the Pro Forma Combined Financial Statement
and Progressive. The table also gives effect to another probable
merger as discussed in Note E to the Pro Forma Combined Financial
Statements. The pro forma information, which reflects the Merger
and other probable and consummated mergers, using the pooling of
interests method of accounting, is presented for informational
purposes only and should not be construed as indicative of the
actual operations that would have occurred had any of the mergers
been consummated at the beginning of the periods indicated or
that may be obtained in the future. See "Pro Forma Financial
Information" and the "Notes to Pro Forma Combined Financial
Statements" contained elsewhere herein.
-vi-
<TABLE>
PRO FORMA HIBERNIA CORPORATION*
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
<CAPTION>
Year Ended December 31 3 Months Ended March 31
Unaudited ($ in thousands, except per share amounts) 1994 1993 1992 1995 1994
<S> <C> <C> <C> <C> <C>
Net interest income $277,126 $272,402 $270,512 $70,642 $67,413
Income from continuing operations 92,687 64,916 5,841 26,160 23,869
Per share:
Income from continuing operations 0.80 0.57 0.10 0.23 0.21
Cash dividends 0.19 0.03 - 0.06 0.04
Book value 5.02 4.72 4.07 5.32 4.77
SELECTED PERIOD-END BALANCES
Debt 11,846 36,809 37,568 10,872 35,215
Total assets 6,651,920 6,545,297 6,412,011 6,747,366 6,777,114
* Includes restated Hibernia Corporation and Progressive Bancorporation, Inc.
</TABLE>
<TABLE>
TOTAL PRO FORMA HIBERNIA CORPORATION**
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
<CAPTION>
Year Ended December 31 3 Months Ended March 31
Unaudited ($ in thousands, except per share amounts) 1994 1993 1992 1995 1994
<S> <C> <C> <C> <C> <C>
Net interest income $284,000 $278,322 $275,682 $72,229 $68,919
Income from continuing operations 95,617 66,846 7,442 25,486 24,381
Per share:
Income from continuing operations 0.81 0.57 0.12 0.21 0.21
Cash dividends 0.19 0.03 - 0.06 0.04
Book value 4.98 4.67 4.03 5.27 4.73
SELECTED PERIOD-END BALANCES
Debt 11,846 36,809 37,568 10,872 35,215
Total assets 6,775,701 6,651,806 6,519,435 6,863,710 6,892,219
** Includes restated Hibernia Corporation, Progressive Bancorporation, Inc.
and Bank of St. John
</TABLE>
COMPARATIVE PER SHARE INFORMATION
(Unaudited)
The following table sets forth for Hibernia Common Stock and
Progressive Common Stock certain historical, restated, unaudited
pro forma combined and unaudited pro forma equivalent per share
financial information for the three months ended March 31, 1995
and 1994 and for the years ended December 31, 1994, 1993 and
1992. Information under the column titled "Historical Hibernia
Corporation" is based on, and should be read in conjunction with
the historical financial statements and related notes of
Hibernia, incorporated by reference into this Proxy Statement-
Prospectus, after giving effect for the merger with American Bank
consummated on March 1, 1995 which was accounted for as a pooling
of interests. Information under the column titled "Restated
Hibernia Corporation" reflects the impact of the merger with
STABA consummated on May 1, 1995, which was accounted for as a
pooling of interests. Information under the column titled
"Historical Progressive Bancorporation, Inc." is based on, and
should be read in conjunction with, the historical financial
statements and related notes of Progressive contained elsewhere
in this Proxy Statement-Prospectus. Information under the column
entitled "Pro Forma Hibernia Corporation (With Progressive
Bancorporation, Inc.)" is based upon the Pro Forma Financial
Statements and related notes contained elsewhere herein. Such
pro forma combined information, which reflects the Merger and the
consummated mergers with American Bank and STABA 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
any of the mergers been consummated at the beginning of the
periods indicated or that may be obtained in the future. The pro
forma combined information gives effect to the issuance, in each
of the periods presented, of 2,098,968 shares of Hibernia Common
Stock for all of the outstanding shares of American Bank,
2,180,133 shares of Hibernia Common Stock for all of the
outstanding shares of STABA and 2,500,000 shares of Hibernia
Common Stock for all of the outstanding shares of Progressive
Common Stock, which assumes that each share of Progressive Common
Stock will be exchanged for 4.0475 shares of Hibernia Common
Stock. The information under the column entitled "Progressive
Bancorporation, Inc. Pro Forma Equivalent" is derived by
multiplying the numbers contained in the column titled "Pro Forma
Hibernia (With Progressive Bancorporation, Inc.)" by such assumed
exchange rate of 4.0475. See "The Merger -- Consideration to be
Received in the Merger."
-viii-<TABLE>
HIBERNIA CORPORATION AND PROGRESSIVE BANCORPORATION, INC.
COMPARATIVE PER SHARE INFORMATION
Unaudited
<CAPTION>
PRO FORMA
HIBERNIA PROGRESSIVE
HISTORICAL RESTATED HISTORICAL CORPORATION BANCORPORATION, INC.
HIBERNIA HIBERNIA PROGRESSIVE (WITH PROGRESSIVE PRO FORMA
CORPORATION CORPORATION BANCORPORATION, INC. BANCORPORATION, INC.) EQUIVALENT
Per Common Share:
<S> <C> <C> <C> <C> <C>
Income from continuing operations:
For the three months ended March 31,
1995 $0.24 $0.23 $0.54 $0.23 $0.93
1994 0.21 0.21 0.62 0.21 0.85
For the year ended December 31,
1994 $0.78 $0.78 $7.33 $0.80 $3.24
1993 0.57 0.57 1.94 0.57 2.31
1992 0.05 0.07 2.51 0.10 0.40
Cash dividends:
For the three months ended March 31,
1995 $0.06 $0.06 - $0.06 $0.24
1994 0.04 0.04 - 0.04 0.16
For the year ended December 31,
1994 $0.19 $0.19 - $0.19 $0.77
1993 0.03 0.03 - 0.03 0.12
1992 - - - - -
Book Value:
At March 31, 1995 $5.41 $5.38 $10.81 $5.32 $21.53
At December 31, 1994 5.10 5.07 10.55 5.02 20.32
</TABLE>
The Special Meeting
A Special Meeting of shareholders of Progressive to consider
and vote upon the Agreement will be held on Thursday, June 29,
1995 at 11:00 a.m., Central time at the main office of
Progressive, One Progressive Square, Houma, Louisiana. Only
holders of record of Progressive Common Stock at the close of
business on May 19, 1995 (the "Record Date") will be entitled to
notice of and to vote at the Special Meeting. On the Record
Date, 617,670 shares of Progressive Common Stock were outstanding
and entitled to vote on the Merger. For additional information
with respect to the Special Meeting and the voting rights of
shareholders of Progressive, see "Meeting Information."
The Merger
In accordance with the terms of the Agreement, Progressive
will be merged with and into Hibernia (the "Merger"), and
thereafter the Bank will be merged with and into HNB, whereupon
the separate existence of each of Progressive and the Bank will
cease. The Merger will become effective at the date and time
(the "Effective Date") set forth in a certificate issued by the
Louisiana Secretary of State. Unless otherwise agreed upon by
Hibernia and Progressive, the Effective Date will occur on the
last business day of the month occurring after the last to occur
of (i) the date that falls 15 days after the date of the order of
the Federal Reserve Board approving the Merger or the date of the
order of the Office of the Comptroller of the Currency (the
"OCC") approving the merger of the Bank with and into HNB (the
"Bank Merger"); (ii) the date that falls 5 days after the Special
Meeting; or (iii) such other date within 60 days of the Special
Meeting as may be agreed upon by the parties.
On the Effective Date, the holders of Progressive Common
Stock will be entitled to receive an aggregate of 2,500,000
shares of Hibernia Common Stock. Each outstanding share of
Progressive Common Stock (other than shares held by a shareholder
who perfects dissenters' rights in accordance with applicable
law) will be converted into the number of shares of Hibernia
Common Stock equal to 2,500,000 divided by the total number of
outstanding shares of Progressive Common Stock on the date of the
closing (the number so determined is the "Exchange Rate"). Based
upon the 617,670 shares of Progressive Common Stock issued and
outstanding on the Record Date, the Exchange Rate in the Merger
will be 4.0475. On the Record Date, there were no options,
warrants, convertible securities or other rights to receive
shares of Progressive Common Stock or Progressive Preferred Stock
outstanding.
On the Effective Date each share of Progressive Preferred
Stock will be converted into the right to receive a cash payment
equal to $12.50 plus all undeclared and accumulated dividends on
each such share of Progressive Preferred Stock as of the
Effective Date.
-x-
Management and Operations After the Merger
After the Effective Date, the offices of Progressive will be
operated as branch banking offices of HNB. As of the Effective
Date, the directors of Progressive will no longer hold their
positions as directors. See "The Merger -- Management and
Operations After the Merger."
Recommendation of the Board of Directors
The Board of Directors of Progressive (the "Progressive
Board") has unanimously approved the Agreement, believes that the
Merger is in the best interests of the shareholders of
Progressive and recommends that the shareholders vote FOR the
Merger. The Progressive Board has received from its financial
advisor, Montgomery Securities, Inc. ("Montgomery"), an opinion
that the consideration to be received by the holders of
Progressive Common Stock pursuant to the Merger is fair to such
shareholders from a financial point of view. See "The Merger -
Opinion of Financial Advisor." The Progressive Board believes
that the Merger will provide significant value to all Progressive
shareholders and will enable holders of Progressive Common Stock
to participate in opportunities for growth as equity
participants, with a more liquid investment, in a strong
statewide banking organization. The Progressive Board also
believes that the Merger will provide expanded product and
service capabilities to the customers of Progressive and will
enable the combined entity to compete more effectively with other
commercial banks and financial institutions in the region. See
"The Merger -- Background of and Reasons for the Merger."
Basis for the Terms of the Merger
The terms of the Agreement, including the amount of
consideration to be received by shareholders of Progressive, were
determined by arms' length negotiations between certain officers
of Progressive and Hibernia. A number of factors were considered
by the Progressive Board in approving the terms of the Merger,
including, without limitation, information concerning the
financial condition, results of operations and prospects of
Hibernia and Progressive, the ability of the combined entity to
compete in the relevant banking markets, the market price of
Hibernia Common Stock, the absence of an active trading market
for the Progressive Common Stock, the anticipated tax-free nature
of the Merger to holders of Progressive Common Stock for federal
income tax purposes, the financial terms of other business
combinations in the banking industry, and certain non-monetary
factors. See "The Merger -- Background of and Reasons for the
Merger."
Advice and Opinion of Investment Advisor
Montgomery, Progressive's financial advisor, has rendered
both oral and written opinions to the Progressive Board that the
consideration to be received by the holders of Progressive Common
Stock pursuant to the Merger is fair to such shareholders from a
financial point of view. A copy of the opinion of Montgomery is
-xi-
attached hereto as Appendix B, and should be read in its
entirety. Progressive 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. See "The Merger -- Opinion of Financial
Advisor" for further information regarding, among other things,
the selection of such firm and its compensation in connection
with the Merger.
Vote Required
Approval of the Agreement requires the affirmative vote of
two-thirds of the voting power present at the Special Meeting.
Under the Progressive Articles of Incorporation, shares of
Progressive Common Stock have voting power, and shares of
Progressive Preferred Stock have no voting power. Directors of
Progressive have voting power with respect to a total of 108,286
shares of Progressive Common Stock, representing approximately
17.5% of the Progressive Common Stock outstanding as of the
Record Date. Such directors and other major shareholders have
agreed to vote their stock, representing an aggregate of
approximately 59% of the Progressive Common Stock outstanding, in
favor of the Merger, unless they are legally required to abstain
from voting or to vote against the Merger. See "Meeting
Information -- Vote Required."
Other Pending and Completed Merger Transactions of Hibernia
During 1994, Hibernia consummated acquisitions of six
financial institutions. In March of 1995, HNB acquired American
Bank by merger and on May 1, 1995, Hibernia merged with STABA.
Hibernia has also entered into a definitive merger agreement with
Bank of St. John. The consummation of the Bank of St. John
transaction is subject to certain conditions, similar to the
conditions to the Merger described herein. The pending
transaction may be consummated, if at all, before or after
consummation of the Merger. Shareholders of Progressive will not
have the right to vote on the Bank of St. John transaction. In
addition, if the Merger is consummated prior to consummation of
the pending transaction, former holders of Progressive Common
Stock who have not exercised and perfected dissenters' rights
will be shareholders of Hibernia at the time that transaction is
consummated. Shareholders of Hibernia do not have the right to
vote on the pending merger transaction.
The table below includes certain information concerning Bank
of St. John as of March 31, 1995. Further information concerning
the effects of the pending merger transaction, including complete
pro forma financial information, is included elsewhere herein
under "Pro Forma Financial Information." All information
included in the following table is as of March 31, 1995, and all
percentages are percentages of Hibernia combined with Bank of St.
John and Progressive.
-xii-
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Name Deposits Deposits Assets Assets Shareholders' Equity
as & of as % of Equity as % of
Total Total Total
Bank of $103 million 1.7% $116 million 1.8% $11 million 2.0%
St. John
</TABLE>
On a pro forma basis, as of March 31, 1995, the book value
of the shares of Hibernia Common Stock would be slightly
decreased by the pending transactions. The effect of the Merger
on the book value of Hibernia Common Stock, as well as
Progressive Common Stock, is shown under "Comparative Per Share
Information" included elsewhere herein.
Conditions; Abandonment; Amendment
Consummation of the Merger is subject to the satisfaction of
a number of conditions, including approval of the Agreement and
the transactions contemplated thereby by the shareholders of
Progressive, the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") and the OCC. Applicable law
provides that the Merger may not be consummated until at least
15, but no more than 180, days after approval of the Federal
Reserve Board and the OCC is obtained. Hibernia filed
applications for approvals of the OCC and of the Federal Reserve
Board in late January of 1995. See "Representations and
Warranties; Conditions to the Merger; Waiver" and "Regulatory
Approvals" under "The Merger."
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 Progressive's shareholders may change the Exchange
Rate. In addition, the Agreement may be terminated, either
before or after shareholder approval, under certain
circumstances. See "Representations and Warranties; Conditions
to the Merger; Waiver" and "Effective Date of the Merger;
Termination" under "The Merger."
Interests of Certain Persons in the Merger
In considering the Merger, Progressive shareholders should
be aware that directors, officers and employees of Progressive
and the Bank have certain interests in the Merger that may
conflict with the interests of shareholders. An employee
severance plan and certain management retention agreements were
adopted by the Bank in 1994 to encourage its employees and senior
-xiii-
management to continue their employment with the Bank in the
context of ongoing merger discussions between Progressive and
certain non-affiliated financial institutions, as described
elsewhere herein. Also, the employment agreement of John H.
Laing, President and Chief Executive Officer of the Bank and
President of Progressive, provides for certain severance payments
if Mr. Laing is terminated or voluntarily resigns his employment
within the thirty days immediately following a "Change of
Control" of the Bank (which term, as defined in such agreement,
includes the Merger). Mr. Laing has agreed to the terms of an
employment agreement with Hibernia which provides for employment
at approximately his current level of compensation for a period
of three years. The Agreement also provides for the
indemnification of officers, directors and employees of
Progressive for certain liabilities, up to specified aggregate
limitations. See "The Merger -- Interests of Certain Persons in
the Merger."
Employee Benefits
The Agreement provides generally that Hibernia will offer to
all employees of Progressive who are employed as of the Effective
Date and who become employees of Hibernia or HNB after the
Merger, the same employee benefits as those offered by Hibernia
and HNB to their employees. For the purposes of the Hibernia
401(k) plan (the "Retirement Security Plan") and the Hibernia
employee stock option plan (the "ESOP"), each employee of
Progressive or the Bank will be treated as if they were employed
by Hibernia (for both eligibility and vesting) for the full time
that they were employed by Progressive or the Bank. Hibernia has
also agreed to pay or provide certain other benefits to employees
of Progressive and the Bank. See "The Merger -- Employee
Benefits."
Certain Material Income Tax Consequences
It is a condition to consummation of the Merger that the
parties receive 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 Internal Revenue Code of 1986, as amended (the "Code"),
and that the exchange of Progressive Common Stock for Hibernia
Common Stock will not give rise to the recognition of gain or
loss for federal income tax purposes to the holders of
Progressive Common Stock and that the Louisiana income tax
treatment to the shareholders of Progressive will be
substantially the same as the federal income tax treatment to the
shareholders of Progressive. The parties have received the
opinion of Ernst & Young LLP, certified public accountants, to
the effects set forth above. The full text of the opinion is
included herein as Appendix C and should be read carefully and in
its entirety. The payment of cash to the holders of Progressive
Preferred Stock will be a taxable transaction. See "The Merger -
- Material Tax Consequences."
-xiv-
Because of the complexities of the income tax laws and
because the tax consequences may vary depending upon a holder's
individual circumstances or tax status, it is recommended that
each shareholder of Progressive consult his, her or its tax
advisor concerning the federal (and any applicable state, local
or other) tax consequences of the Merger to such shareholder.
Dissenters' Rights
Progressive is a Louisiana business corporation, and, as
such, is governed by the Louisiana Business Corporation Law (the
"LBCL"). The LBCL provides that, if the Merger is not approved
by at least 80% of the total voting power of Progressive, the
shareholders voting against the Merger will have the right to
dissent from the Merger and to receive the fair value of their
shares in cash if the Merger is consummated. The relevant
provisions of the LBCL on dissenters' rights are attached hereto
as Appendix D.
If dissenters' rights are exercised and perfected with
respect to 10% or more of the outstanding shares of Progressive
Common Stock, Hibernia has the option to abandon the Merger,
because the Merger could not be accounted for as a pooling of
interests. It is expected that Hibernia would abandon or attempt
to renegotiate the Merger in that case. See "Rights of
Dissenting Shareholders" and "The Merger -- Accounting
Treatment."
Differences in Shareholders' Rights
Upon completion of the Merger, holders of Progressive Common
Stock, to the extent they receive shares of Hibernia Common Stock
in the Merger, will become shareholders of Hibernia, and their
rights as such will be governed by Hibernia's Articles of
Incorporation and Bylaws. The rights of shareholders of Hibernia
are different in certain respects from the rights of shareholders
of Progressive. See "The Merger -- Certain Differences in Rights
of Shareholders."
Accounting Treatment
The parties intend the Merger to be treated as a pooling of
interests for financial accounting purposes. The rules governing
pooling of interest accounting generally permit 10% of the
outstanding Progressive Common Stock to be exchanged for cash in
the exercise of dissenters' rights or otherwise not exchanged for
shares of Hibernia common stock as a result of the Merger.
Hibernia currently owns 2,908 shares of Progressive Common Stock,
or approximately .5% of the outstanding shares of Progressive
Common Stock, which shares will be included in the calculation of
the 10% limitation described in the preceding sentence. If,
among other things, holders of more than 9.5% of the outstanding
shares of Progressive Common Stock exercise and perfect
dissenters' rights, the Merger will not qualify for pooling of
interests accounting treatment, and Hibernia will not be
obligated to effect the Merger. See "The Merger -- Accounting
Treatment."
-xv-
MEETING INFORMATION
Each copy of this Proxy Statement-Prospectus mailed to
holders of Progressive Common Stock is accompanied by a proxy
card furnished in connection with the Progressive Board's
solicitation of proxies for use at the Special Meeting and at any
adjournment thereof. The Special Meeting is scheduled to be held
at 11:00 a.m., Central time, on Thursday, June 29, 1995, at the
main office of Progressive, One Progressive Square, Houma,
Louisiana. Only holders of record of Progressive Common Stock at
the close of business on the Record Date are entitled to receive
notice of and to vote at the Special Meeting. At the Special
Meeting shareholders will consider and vote upon (a) a proposal
to approve the Agreement, and (b) such other matters as may
properly be brought before the Special Meeting or any adjournment
thereof.
HOLDERS OF PROGRESSIVE COMMON STOCK ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED, POSTAGE PAID ENVELOPE TO THE HERMAN
GROUP, INC., P.O. BOX 803248, DALLAS, TEXAS 75380, OR BY
OVERNIGHT OR HAND DELIVERY TO 13760 NOEL ROAD, SUITE 320, DALLAS,
TEXAS 75240.
Solicitation and Revocation of Proxies
Any holder of Progressive Common Stock who has delivered a
proxy may revoke it any time before it is voted by attending the
Special Meeting and voting in person, or by giving notice of
revocation in writing to the Secretary of Progressive prior to
the date of the Special Meeting or submitting a signed proxy card
bearing a later date before the Special Meeting. The shares of
Progressive Common Stock represented by properly executed proxy
cards received at or prior to the Special Meeting and not
subsequently revoked will be voted as directed by the
shareholders submitting such proxies. If instructions are not
given, executed proxy cards received by Progressive will be voted
FOR approval of the Agreement. If any other matters are properly
presented at the Special Meeting for consideration, the persons
named in the proxy card enclosed herewith will have discretionary
authority to vote on such matters in accordance with their best
judgment. The Progressive Board is unaware of any matter to be
presented at the Special Meeting other than the proposal to
approve the Agreement.
The cost of soliciting proxies from shareholders of
Progressive will be borne by Progressive. Such solicitation will
be made by mail but also may be made by telephone or other means
of telecommunications or in person by the directors, officers and
employees of Progressive (who will receive no additional
compensation for doing so). An outside solicitation firm, The
Herman Group, Inc., has been retained by Progressive to assist in
the solicitation of proxies for an aggregate fee of $3,000, plus
out-of-pocket expenses.
-1-
PROGRESSIVE SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK
CERTIFICATES WITH THEIR PROXY CARDS. IF THE MERGER IS APPROVED,
SHAREHOLDERS WILL RECEIVE INSTRUCTIONS REGARDING THE EXCHANGE OF
THEIR STOCK CERTIFICATES AFTER THE MERGER HAS BEEN CONSUMMATED.
Vote Required
Approval of the Agreement requires the affirmative vote of
the holders of two-thirds of the voting power present, in person
or by proxy, at the Special Meeting. The Progressive Board has
fixed the close of business on May 19, 1995, as the record date
for the determination of shareholders entitled to notice of and
to vote at the Special Meeting. As of the Record Date, there
were 617,670 shares of Progressive Common Stock outstanding and
entitled to vote at the Special Meeting, with each share being
entitled to one vote in its class. Shares of Progressive
Preferred Stock are not entitled to vote on the Merger.
A majority of the outstanding shares of Progressive Common
Stock constitutes a quorum for purposes of the Special Meeting.
An abstention will be considered present for quorum purposes, but
will have the same effect as a vote against the proposal to be
considered at the Special Meeting. A broker non-vote will not
count for quorum or voting purposes because brokers will not have
discretionary authority to vote with respect to the proposal and,
therefore, a broker non-vote will have no effect on the vote on
the proposal.
As of the Record Date, the directors and executive officers
of Progressive have voting power with respect to a total of
108,286 shares, or approximately 17.5% of the outstanding shares
of Progressive Common Stock. Such directors and executive
officers, as well as other major shareholders, have agreed to
vote their stock, representing an aggregate of approximately 59%
of the Progressive Common Stock outstanding, in favor of the
Merger, unless they are legally required to abstain from voting
or to vote against the Merger.
As of the Record Date, Hibernia beneficially owned 2,908
shares of Progressive Common Stock and no shares of Progressive
Preferred Stock. Hibernia has agreed to vote these shares in
favor of the Merger. No directors or executive officers of
Hibernia own any shares of Progressive Common Stock or Preferred
Stock.
Recommendation
For the reasons described below, the Progressive Board has
unanimously approved the Agreement, believes the Merger is in the
best interests of Progressive and its shareholders and recommends
that holders of Progressive Common Stock vote FOR approval of the
Agreement. In making its recommendation to shareholders, the
Progressive Board considered, among other things, the opinion of
Progressive's financial advisor, Montgomery, that the
consideration to be received by the holders of Progressive Common
Stock pursuant to the Merger is fair to such shareholders from a
financial point of view. See "Background of and Reasons for the
Merger" and "Opinion of Financial Advisor" under "The Merger."
-2-
THE MERGER
This section of the Proxy Statement-Prospectus describes
certain aspects of the Merger and the Agreement. The following
description does not purport to be complete and is qualified in
its entirety by reference to the Agreement, which is attached as
Appendix A to this Proxy Statement-Prospectus and is incorporated
herein by reference. All shareholders are urged to read the
Agreement carefully and in its entirety.
Consideration to be Received in the Merger
On the Effective Date, the holders of Progressive Common
Stock will be entitled to receive an aggregate of 2,500,000
shares of Hibernia Common Stock. Each outstanding share of
Progressive Common Stock (other than shares held by a shareholder
who perfects dissenters rights in accordance with applicable law)
will be converted into the number of shares of Hibernia Common
Stock equal to 2,500,000 divided by the total number of
outstanding shares of Progressive Common Stock on the date of the
closing. Based on an aggregate of 617,740 shares of Progressive
Common Stock outstanding on the Record Date, each outstanding
share of Progressive Common Stock will be converted into
approximately 4.0475 shares of Hibernia Common Stock. On the
Effective Date each share of Progressive Preferred Stock will be
converted into the right to receive a cash payment equal to
$12.50 plus all undeclared and accumulated dividends on each such
share of Progressive Preferred Stock as of the Effective Date.
As of the Record Date, each share of Progressive Preferred Stock
would have been entitled to an aggregate payment of approximately
$26.66 per share. Pursuant to the terms of the Agreement,
Progressive is prohibited from issuing additional shares of
Progressive Common Stock or Progressive Preferred Stock, or any
options, warrants, convertible securities or other rights to
receive shares of Progressive Common Stock or Progressive
Preferred Stock without the prior written consent of Hibernia.
Conversion of Shares
Upon the effectiveness of the Merger, the conversion of
shares of Progressive Common Stock and Progressive Preferred
Stock into Hibernia Common Stock and the right to receive cash,
respectively, will occur without any action on the part of the
holders thereof, and holders of Progressive Common Stock will
automatically be entitled to all of the rights and privileges
afforded to Hibernia shareholders as of such date. The exchange
of Progressive Common Stock certificates for certificates
representing Hibernia Common Stock and of Progressive Preferred
Stock certificates for cash, however, will occur after the
Effective Date of the Merger.
SHAREHOLDERS OF PROGRESSIVE SHOULD NOT FORWARD THEIR
CERTIFICATES TO PROGRESSIVE OR HIBERNIA AT THIS TIME. IF THE
MERGER IS CONSUMMATED, PROGRESSIVE SHAREHOLDERS WILL RECEIVE
INSTRUCTIONS REGARDING THE EXCHANGE OF THEIR CERTIFICATES FOR
HIBERNIA COMMON STOCK OR CASH, AS THE CASE MAY BE.
-3-
No fractional shares of Hibernia Common Stock will be issued
in connection with the Merger. In lieu of fractional shares,
Hibernia will make a cash payment equal to the fractional
interest which a Progressive shareholder would otherwise receive
multiplied by the Average Market Price of Hibernia Common Stock,
and no such holder shall be entitled to dividends, voting rights
or any other right of shareholders in respect of any fractional
share. If, prior to the Effective Date the outstanding shares of
Hibernia Common Stock are increased, decreased, changed into or
exchanged for a different number or class of shares or securities
through a change in Hibernia's capitalization, then the number of
shares to be issued in the Merger will be adjusted accordingly.
The receipt of cash in lieu of fractional shares will not
adversely affect the tax-free nature of the exchange of common
stock in the Merger. See "Material Tax Consequences," below.
For a discussion of the rights of dissenting shareholders,
see "Rights of Dissenting Shareholders."
Surrender and Exchange of Certificates
As soon as practicable after the Effective Date, the
transfer agent of Hibernia, in its capacity as exchange agent, or
Hibernia, will mail all non-dissenting shareholders of
Progressive a letter of transmittal, which will contain
instructions for the surrender and exchange of their Progressive
Common Stock certificates for certificates representing Hibernia
Common Stock and the surrender of Progressive Preferred Stock
certificates for the cash payment due thereon. Until so
exchanged, each certificate representing Progressive Common Stock
or Progressive 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 or the
cash payment, as applicable, into which such shares have been
converted on the Effective Date. Shareholders should not send
their Progressive Common Stock or Progressive Preferred Stock
certificates for surrender until they receive further
instructions from the exchange agent.
Shareholders who cannot locate their Progressive Common Stock
certificates or Progressive Preferred Stock certificates are
encouraged to contact Susan B. Snyder, Chief Financial Officer,
at One Progressive Square, Houma, Louisiana 70630, telephone
number (504) 876-8252, prior to the Special Meeting. New
certificates will be issued to Progressive shareholders who have
misplaced their certificates only if the shareholder executes an
affidavit certifying that the certificate cannot be located and
agreeing to indemnify Progressive and Hibernia (as its
successor), against any claim that may be made against either of
them by any person claiming to own any or all of the shares
represented by the lost certificate(s). Progressive or Hibernia
(as its successor) may require a shareholder to post a bond in an
amount sufficient to support the shareholder's indemnification
obligation. Shareholders who cannot locate their stock
certificates and shareholders who hold certificates in names
-4-
other than their own are encouraged to resolve those matters
prior to the Effective Date of the Merger in order to avoid
delays in receiving their Hibernia Common Stock certificate or
cash payment if the Merger is approved and consummated.
Background of and Reasons for the Merger
Background. As a result of a number of factors, including
the recent improvement in the Louisiana economy, there has been a
sharp increase in the level of interest in and the number of
acquisitions of financial institutions in Louisiana over the past
two years. One of the responsibilities of the Board of Directors
of Progressive is to consider various strategic alternatives,
including whether to affiliate with a larger, more diversified
financial institution, as viable opportunities arise.
In August of 1994, the Board of Directors of Progressive
engaged Montgomery to evaluate strategic alternatives for
Progressive and to solicit preliminary indications of interest
for the purchase of Progressive from interested and capable
buyers. Montgomery contacted seven local and regional financial
institutions. Four potential buyers expressed an acceptable
preliminary indication of interest and were allowed to conduct
document and record review before the submission of final
acquisition proposals. Hibernia conducted on-site document and
record review and submitted a final acquisition proposal which
included the Exchange Rate and other financial terms of the
Merger. Montgomery did not negotiate or determine the
consideration to be paid by Hibernia in the Merger. Two other
financial institutions received confidential information and
submitted proposals subject to the completion of on-site document
and record review. The proposals were considered by the
Progressive Board at a special meeting held for that purpose on
November 18, 1994. At the meeting, representatives of Montgomery
made a presentation to the Progressive Board regarding, among
other things, the competing proposals. Based upon the foregoing
and its analysis of the competing proposals, the Progressive
Board determined that the sale of Progressive to Hibernia
pursuant to its acquisition proposal was in the best interest of
Progressive and its shareholders and therefore the Progressive
Board unanimously approved the Agreement.
Reasons for the Merger. In reaching its decision that the
Merger is in the best interests of Progressive and its
shareholders, the Progressive Board consulted with its financial
and other advisors, as well as with Progressive'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 Progressive;
(b) the amount and type of consideration to be received by
Progressive's shareholders pursuant to the Agreement;
-5-
(c) the Hibernia Common Stock to be received by holders of
Progressive Common Stock pursuant to the Agreement will be listed
for trading on the NYSE and will provide liquidity that is
unavailable to holders of Progressive Common Stock, for which an
active trading market does not exist;
(d) the Agreement will allow holders of Progressive Common
Stock to become shareholders of Hibernia, an institution which is
currently the second largest bank holding company headquartered
in Louisiana and the 100th largest bank holding company in the
United States;
(e) the Progressive Board believes that recent changes in
the regulatory environment will result in Progressive 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;
(f) the Merger is expected to qualify as a tax-free
reorganization so that neither Progressive nor the holders of
Progressive Common Stock (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
(g) the opinion received from Montgomery that the
consideration to be received by the holders of Progressive Common
Stock pursuant to the Agreement was fair to such shareholders
from a financial point of view as of the date of such opinion
(see "Opinion of Financial Advisor").
The Progressive Board did not assign any specific or
relative weight to the foregoing factors in its considerations.
The Progressive Board believes that the Agreement and the Merger
will provide significant value to all Progressive shareholders
and will enable holders of Progressive Common Stock to
participate in opportunities for growth that the Progressive
Board believes the Merger will make possible.
Based on the foregoing, the Progressive Board has
unanimously approved the Agreement and the Merger, believes that
the Agreement and the Merger are in the best interests of
Progressive's shareholders, and recommends that all holders of
Progressive Common Stock vote "FOR" the approval of the Agreement
and the Merger.
Opinion of Financial Advisor
General. Pursuant to an engagement letter dated August 8,
1994 (the "Engagement Letter"), Progressive engaged Montgomery to
act as its financial advisor in connection with its evaluation of
its strategic alternatives, including the possible sale of
Progressive. 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
-6-
securities in connection with merger transactions and other types
of acquisitions, negotiated underwritings, placements and
valuations for corporate and other purposes. Progressive
selected Montgomery as its financial advisor on the basis of its
experience and expertise in transactions similar to the Merger
and its reputation in the banking and investment communities.
At a meeting of the Progressive Board on November 18, 1994,
Montgomery delivered its oral opinion that the consideration to
be received by the holders of Progressive Common Stock pursuant
to the Agreement was fair to such shareholders from a financial
point of view as of the date of such opinion. Montgomery's oral
opinion was subsequently confirmed in writing on December 1,
1994. No limitations were imposed by Progressive 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 Progressive Board, dated December 1, 1994, which
sets forth the assumptions made, matters considered, and
limitations of the review by Montgomery, is attached hereto as
Appendix B and is incorporated herein by reference. The
following summary of Montgomery's opinion is qualified in its
entirety by reference to the full text of the opinion, which
should be read carefully and in its entirety. In furnishing such
opinion, Montgomery does not admit that it is an expert with
respect to the Registration Statement of which this Proxy
Statement - Prospectus is a part within the meaning of the term
"experts" as used in the Securities Act and the rules and
regulations promulgated thereunder. Montgomery's opinion is
addressed to the Progressive Board and does not constitute a
recommendation to any holder of Progressive Common Stock 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 Hibernia and Progressive, including
the consolidated financial statements for recent years and
interim periods to September 30, 1994, and certain other relevant
financial and operating data relating to Progressive and Hibernia
made available to Montgomery from published sources and from the
internal records of Progressive; (ii) reviewed the Agreement;
(iii) reviewed certain historical market prices and trading
volumes of Hibernia Common Stock on the NYSE; (iv) compared
Progressive and Hibernia from a financial point of view with
certain other companies in the banking 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 banking industry that Montgomery
deemed to be comparable, in whole or in part, to the Merger; (vi)
reviewed and discussed with representatives of the management of
Progressive and Hibernia certain information of a business and
financial nature regarding Progressive and Hibernia, furnished to
Montgomery by Progressive and Hibernia, including financial
forecasts and related assumptions of Progressive; (vii) made
inquiries regarding and discussed the Merger, the Agreement and
other matters related thereto with Progressive's counsel; and
(viii) performed such other analyses and examinations as
Montgomery deemed appropriate.
-7-
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
forecasts for Progressive provided to Montgomery by Progressive's
management, Montgomery assumed for purposes of its opinion that
such forecasts were reasonably prepared on bases reflecting the
best available estimates and judgments of Progressive's
management at the time of preparation as to the future financial
performance of Progressive and provided a reasonable basis upon
which Montgomery could form its opinion. Montgomery also assumed
that there were no material changes in Progressive'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 Progressive as to all legal
matters with respect to Progressive, the Merger and the
Agreement. Montgomery is not expert in the evaluation of loan
portfolios for purposes of assessing the adequacy of the
allowances for losses with respect thereto and assumed that such
allowances for each of Progressive and Hibernia are in the
aggregate adequate to cover such losses. In addition, Montgomery
did not review any individual credit files, did not make an
independent evaluation, appraisal or physical inspection of the
assets or individual properties of Progressive or Hibernia, and
was not furnished with any such appraisals. Further,
Montgomery's oral and written opinions were based on economic,
monetary and market conditions existing as of November 18, 1994
and December 1, 1994, respectively, and on the assumption that
the Agreement will be consummated in accordance with its terms,
without any amendment thereto and without waiver by Progressive
of any of the conditions to its obligations thereunder.
Set forth below is a brief summary of the report presented
by Montgomery to the Progressive Board of Directors on
November 18, 1994 in connection with its opinion.
Comparable Company Analysis. Using public and other
available information, Montgomery compared certain financial
ratios of Hibernia (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 of
noninterest expense to revenue ("cost control"), net interest
margin and certain credit ratios) for the four years ended
December 31, 1993 and for the nine months ended September 30,
1994, to a national proxy group consisting of the 50 largest
banks (the "National Bank Proxy Group"), and to a southeast proxy
group consisting of nine banks located in the Southeast region of
the United States (the "Southeast Bank Proxy Group"). No company
used in the analysis is identical to Hibernia. The analysis
necessarily involved complex considerations and judgments
concerning differences in financial and operating characteristics
of the companies.
-8-
Analysis of Selected Bank Merger Transactions. Montgomery
reviewed the consideration paid in recently announced
transactions whereby certain banks were acquired. Specifically,
Montgomery reviewed 335 transactions involving acquisitions of
banks in the Southeast region of the United States announced
since January 1990 (the "Southeast Acquisitions") and
acquisitions of 32 selected Louisiana banks announced since
January 1990 (the "Louisiana Acquisitions"). For each bank
acquired or to be acquired in such transactions, 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 and the Louisiana Acquisitions produced:
(i) median return on average equity of 10.49% and 16.11%,
respectively; (ii) median return on average assets of .92% and
1.33%, respectively; and (iii) median nonperforming assets to
average assets of 1.19% and 1.38%, respectively. In comparison,
Montgomery determined that for the year ended December 31, 1993
and the nine months ended September 30, 1994, Progressive's
return on average equity was 24.4% and 18.44%, respectively, its
return on average assets was 1.04% and .97%, respectively, and
its nonperforming assets to average assets were .3% and .11%,
respectively.
The figures for the Southeast Acquisitions and the Louisiana
Acquisitions produced: (i) median percentage of premium to core
deposits of 6.97% and 10.43%, respectively; (ii) median
percentage of purchase price to deposits of 16.42% and 19.94%,
respectively; (iii) median ratio of purchase price to book value
of 1.6 and 1.87, respectively; and (iv) median ratio of purchase
price to LTM earnings of 15.52 and 13.32, respectively. In
comparison, based upon an exchange ratio in the Merger of 4.0475
shares of Hibernia Common Stock for each share of Progressive
Common Stock, representing shares of Hibernia Common Stock with a
value of $32.89 at November 16, 1994, Montgomery determined that
the consideration to be received by the holders of Progressive
Common Stock in the Merger represented a percentage of premium to
core deposits of 17.7%, a percentage of price to deposits of
22.07%, a ratio of price to book value of 2.26 and a ratio of
price to Progressive's LTM earnings for the twelve months ended
September 30, 1994 of 13.84.
Montgomery also calculated implied values for Progressive
based upon the median figures for the Southeast Acquisitions and
the Louisiana Acquisitions described above. These calculations
produced implied valuations of (i) $15.61 and $19.37 per share,
respectively, based upon the median ratio of purchase price to
book value, (ii) $38.06 and $31.27 per share, respectively, based
on the median ratio of purchase price to LTM earnings,
(iii) $21.95 and $28.76, respectively, based on the median
percentage of purchase price to deposits, and (iv) $13.80 and
$19.40, respectively, based on the median percentage of premium
to core deposits. These implied values were compared with the
$32.89 value of shares of Hibernia Common Stock at November 16,
1994, based upon an exchange ratio of 4.0475.
-9-
No other company or transaction used in the above analysis
as a comparison is identical to Progressive or the Agreement.
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
Progressive and the Merger are being compared.
Contribution Analysis. Montgomery analyzed the contribution
of each of Progressive and Hibernia to, among other things,
common equity and net income of the pro forma combined companies
for the year ended December 31, 1993, and for the nine month
period ended September 30, 1994. This analysis showed, among
other things, that based on pro forma combined balance sheets and
income statements for Progressive and Hibernia at December 31,
1993 and September 30, 1994, Progressive would have contributed
1.4% and 1.6%, respectively, of the common equity, for the year
ended December 31, 1993 and the nine months ended
September 30, 1994, and Progressive would have contributed 2.8%
and 4.3%, respectively, of the net income (before extraordinary
items) of the combined companies for such periods. Based upon an
exchange ratio in the Merger of 4.0475 shares of Hibernia Common
Stock for each share of Progressive Common Stock, holders of
Progressive Common Stock would own approximately 2.52% of the
combined companies based on common shares outstanding on
September 30, 1994.
Dilution Analysis. Using estimates of future earnings
prepared by Progressive management and analysts' estimates for
Hibernia, Montgomery compared the calendar year 1995 estimated
earnings per share of Progressive Common Stock and Hibernia
Common Stock to the calendar year 1995 estimated earnings per
share of the common stock of the pro forma combined companies.
Based on such analysis and an exchange ratio in the Merger of
4.0475 shares of Hibernia Common Stock for each share of
Progressive Common Stock, the proposed transaction would be
dilutive to Hibernia's earnings per share in 1995, prior to
projected revenue enhancements and cost savings, and accretive to
Progressive's earnings per share.
Present Value Analysis. In performing the present value
analysis, Montgomery assumed that the Merger was consummated as
of January 1, 1995 on the basis of an exchange ratio of 4.0475
shares of Hibernia Common Stock for each share of Progressive
Common Stock. This ratio was derived from the consideration to
be paid in the Merger of an aggregate of 2,500,000 shares of
Hibernia Common Stock for all 617,670 outstanding shares of
Progressive Common Stock. The market value of the 4.0475 shares
of Hibernia Common Stock was $32.89, based upon a trading price
of Hibernia Common Stock of $8.125 per share on November 16,
1994. In performing the analysis, Montgomery estimated the
present value of the future streams of annual pre-tax dividend
income that the combined company could produce over a five year
period under various assumptions. Montgomery then estimated the
-10-
terminal value of 4.0475 shares of the combined company at the
end of the five year period by applying various multiples
(ranging from 8x to 12x) to the combined company's projected 1999
earnings. Montgomery then added the dividend stream to each of
the terminal values and discounted the sums using a 10% discount
rate. This analysis indicated a reference range of pre-tax
present value of between $35.97 and $51.42 per 4.0475 shares of
Hibernia Common Stock. In comparison, Montgomery noted that if
Progressive were to remain independent, based on the sum of the
present value of the future stream of annual pre-tax dividend
income that Progressive could produce over a five year period and
certain terminal values derived from applying multiples ranging
from 6x to 10x to Progressive's projected 1999 earnings, and
discounting such sums using a 14% discount rate (reflecting the
higher risks associated with remaining the holding company for an
independent community bank), the pre-tax present value of one
share of Progressive Common Stock ranged between $17.31 and
$25.76.
The summary set forth above does not purport to be a
complete description of the presentation by Montgomery to
Progressive's 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 factors, without
considering all analyses and factors, would create an incomplete
view of the process underlying the analyses set forth in its
presentation to Progressive's 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 Progressive 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 Progressive 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 holders of
Progressive's Common Stock in the Merger and were provided to
Progressive's 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 any time in the future. Montgomery used
-11-
in its analyses various projections of future performance
prepared by the management of Progressive. 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
Progressive's Board of Directors were among the many factors
taken into consideration by the Board in making its determination
to approve the Agreement.
Pursuant to the Engagement Letter, Progressive paid
Montgomery a retainer fee of $25,000, which will be credited
against any other fee to be paid to Montgomery under the
Engagement Letter. If the Merger is consummated, Montgomery will
be paid a fee equal to 1.5% of the total consideration involved
in the Merger, but in no event less than $250,000. Under the
terms of Montgomery's engagement, the payment of substantially
all of Montgomery's fees is contingent upon consummation of the
Merger, or upon consummation within one year of the termination
of its engagement of an acquisition of Progressive by any entity
contacted by Montgomery or which, during the period of
Montgomery's engagement, contacts or is contacted by Progressive
independently of Montgomery. Progressive 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
$15,000 which Progressive also agreed to reimburse. Progressive
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 Progressive has paid Montgomery any other fees
during the last two years.
In the ordinary course of its business, Montgomery may trade
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.
Representations and Warranties; Conditions to the Merger; Waiver
The Agreement contains representations and warranties by
Progressive regarding, among other things, its organization,
ownership of the Bank, authority to enter into the Agreement,
properties and other assets, insurance policies, financial
statements, pending and threatened litigation or other
proceedings, contractual obligations, contingent liabilities,
conflicts, taxes, loans, employee plans, investments and
environmental matters. The Agreement also contains
representations and warranties by Hibernia regarding, among other
things, its organization and authority to enter into the
Agreement, capitalization, conflicts, accounting methods,
regulatory evaluations, financial statements and other public
reports. Except as otherwise provided in the Agreement, these
representations and warranties will not survive the Effective
Date.
-12-
The obligations of Hibernia and Progressive to consummate
the Merger are conditioned upon, among other things, approval of
the Agreement by Progressive's shareholders; the receipt of
necessary regulatory approvals; 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
Progressive Common Stock is exchanged for Hibernia Common Stock,
Progressive's shareholders will recognize no gain or loss for
federal income tax purposes with respect to such exchange, and
that the Louisiana income tax treatment of the Merger to such
shareholders will be substantially the same as the federal income
tax treatment of the Merger to such shareholders; 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 any pending or
threatened litigation or any proceeding initiated by any
governmental authority to restrain or prohibit consummation of
the Merger; the absence of any order, decree or injunction of any
court or other governmental authority enjoining or prohibiting
the consummation of the Merger; the receipt of all required state
securities law permits or authorizations; the accuracy of the
representations and warranties of both parties to the Merger set
forth in the Agreement as of the Closing Date; the listing of the
Hibernia Common Stock to be issued in the Merger on the NYSE; the
receipt of certain opinions of counsel; in the case of
Progressive, the receipt of the fairness opinion of Montgomery;
and in the case of Hibernia, the ability to account for the
Merger as a pooling of interests.
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 Progressive's
shareholders may change the aggregate number of shares to be
received in the Merger.
Regulatory Approvals
Hibernia, as a registered bank holding company, is regulated
by the Federal Reserve Board. Accordingly, in addition to
approval of the shareholders of Progressive, consummation of the
Merger will require the approval of the Federal Reserve Board.
HNB, as a national banking association, is regulated by the OCC,
and the merger between it and the Bank consequently must be
approved by the OCC before it may be effected. Hibernia filed
applications seeking the approval of the Merger by the Federal
Reserve Board and of the Bank Merger by the OCC in late January
of 1995.
After the approval of the OCC has been obtained, the Bank
and HNB must wait at least 15 days before consummating the Bank
Merger. During this 15-day period, the Department of Justice may
object to the Bank Merger on antitrust grounds.
-13-
The shares of Hibernia Common Stock to be issued in the
Merger will be registered with the Securities and Exchange
Commission and the state securities regulators in those states in
which such registration is required. The shares will also be
listed on the NYSE.
Failure to receive the requisite regulatory approvals will
result in a termination of the Agreement, regardless of whether
the Merger is approved at the Special Meeting.
Business Pending the Merger
Under the terms of the Agreement, Progressive may not and it
will cause the Bank not to, without the prior written consent of
Hibernia or as otherwise provided in the Agreement, among other
things: (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 any employment contracts
with, increase the compensation of or pay any bonus to, any of
Progressive's directors, officers, or employees, other than in
accordance with existing policy or past practice, except that
extraordinary bonuses may be paid in 1995 prior to the Effective
Date of the Merger (a) with respect to 1994's performance not
more than $77,500 and (b) with respect to 1995's performance not
more than an amount equal to $52,000 multiplied by a percentage
representing the number of months elapsed in 1995 prior to the
Effective Date of the Merger; (iii) enter into or substantially
modify any employee benefits plans; (iv) establish any automatic
teller machines, branches or other banking offices, other than
the branch office under construction in Prairieville, Louisiana,
the costs of construction of which shall not exceed $500,000; (v)
make any capital expenditures in excess of $100,000; (vi) merge
with any other company or bank or liquidate or otherwise dispose
of its assets outside the ordinary course of its business; or
(vii) acquire another company or bank (except in a fiduciary
capacity or in connection with foreclosures related to bona fide
loan transactions). Progressive is also prohibited by the terms
of the Agreement from declaring, setting aside or paying
dividends or, directly or indirectly, combining, redeeming,
purchasing or otherwise acquiring, any shares of Progressive
Common Stock prior to the Effective Date.
Effective Date of the Merger; Termination
Unless otherwise agreed upon by Hibernia and Progressive,
the closing of the Merger (the "Closing," and the date thereof
the "Closing Date") will occur on the first business day after
the later of: (i) the date that falls 30 days after the later of
the date of the order of the Federal Reserve Board approving the
Merger or the date of the order of the OCC approving the Bank
Merger; and (ii) the date that falls 5 days after the Special
Meeting. The parties may agree to close the Merger on any such
later date within 60 days of the Special Meeting. The Merger of
Progressive into Hibernia will become effective at the date and
time (the "Effective Date") set forth in a certificate issued by
the Louisiana Secretary of State.
-14-
The Agreement may be terminated prior to the Closing Date by
either party, whether before or after approval of the Agreement
by the Progressive shareholders: (i) in the event of a breach by
the other party of any representation, warranty, covenant or
agreement which has not been cured within any cure 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 June 30, 1995; (iii) if any
application for any required regulatory approval has been denied,
and the time for all appeals of such denial has run; (iv) if the
shareholders of Progressive fail to approve the Merger; (v) if
there is a material adverse change in the financial condition of
either party; or (vi) absent an agreement of the parties to the
contrary, if the Merger is not consummated by June 30, 1995. The
Agreement may also be terminated by Hibernia if the holders of
more than 10% of the Progressive Common Stock exercise and
perfect dissenters' rights or if the Merger otherwise does not
qualify for pooling of interests accounting treatment. The
Agreement may be terminated by Progressive if (i) the opinion
from Montgomery that the consideration to be received in the
Merger by the holders of Progressive Common Stock is fair to such
shareholders from a financial point of view is withdrawn by
Montgomery prior to the Closing Date, or (ii) both (a) the
quotient of the Average Market Price of Hibernia Common Stock on
the Closing Date divided by $______ (the "Hibernia Quotient") is
less than .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 $_____ exceeds the
Hibernia Quotient by more than .1. For these purposes, 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. The Agreement also
may be terminated at any time by the mutual consent of the
parties. If terminated, the Agreement will become 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 will survive any such termination,
and any such termination will 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, Progressive will be merged with and
into Hibernia and the Bank will be merged with and into HNB, and
the separate existences of Progressive and the Bank will cease.
The offices of the Bank will thereafter be operated as branch
banking offices of HNB. The employees of the Bank on the
Effective Date will become employees of HNB, and will be employed
on an "at will" basis thereafter, subject to any existing
employment agreements or similar contractual obligations assumed
by Hibernia.
-15-
The Boards of Directors of Hibernia and HNB following the
Merger will consist of those persons serving as directors
immediately prior thereto. Information regarding the directors
of Hibernia elected at its annual meeting of shareholders on
April 18, 1995 is contained in documents incorporated herein by
reference. See "Available Information" and "Incorporation by
Reference." The directors of Progressive and the Bank will cease
to serve as directors as of the Effective Date.
Certain Differences in Rights of Shareholders
If the shareholders of Progressive approve the Merger and
the Merger is subsequently consummated, all holders of
Progressive Common Stock, 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 Progressive's Articles of Incorporation
and Bylaws. The following is a summary of the principal
differences between the rights of shareholders of Progressive and
Hibernia not described elsewhere in this Proxy Statement-
Prospectus.
Number and Classes of Shares. Hibernia's Articles of
Incorporation authorize 200,000,000 shares of common stock and
100,000,000 shares of preferred stock. The Hibernia Board of
Directors has the authority to determine the designations, voting
powers, preferences and relative participating, option or other
special rights, and the qualifications, limitations or
restrictions on such shares of capital stock. The Articles of
Incorporation of Progressive authorize 2,000,000 shares of common
stock and 1,000,000 shares of preferred stock. The Progressive
Board of Directors has the authority to establish one or more
series of preferred stock, and to determine the relative rights
and preferences of the shares of any series of preferred stock.
The Articles of Incorporation of Progressive have established a
class of 225,000 shares of preferred stock designated as "Class A
Preferred Stock." The shares of Class A Preferred Stock are
entitled to the preferential right, among other things, to
receive a cumulative annual dividend of $1.25 per share, and are
subject to redemption at a price of $12.50 plus all accrued and
unpaid dividends. Such shares of Class A Preferred Stock have no
voting rights, except in certain limited circumstances not
involved in the Merger.
Directors. Hibernia's Articles of Incorporation provide
that the number of directors is determined by reference to the
Hibernia Bylaws. The Bylaws provide that the exact number of
directors is the number determined, from time to time, by
resolution of the Board of Directors. Currently, such resolution
calls for 22 directors. Such resolution can be modified or
repealed at any time by the Board of Directors. Hibernia's Board
is divided into three classes, each of which is elected for a
three-year term. The Progressive Articles of Incorporation
provide for an initial board of four persons, subject to the
authority of the Progressive Board of Directors to change the
exact number of directors.
-16-
The Bylaws of Progressive provide that directors of
Progressive may be removed, with or without cause, by vote of a
majority of the total voting power. Hibernia's Bylaws provide
that a director may be removed by the Board of Directors for
cause, if he is interdicted or adjudicated an incompetent or
bankrupt, is unable to perform his duties for six months or
becomes affiliated with a competitor of Hibernia. Shareholders
may remove a director by vote of two-thirds of the total voting
power, or by a majority of the voting power if removed for cause.
"Cause" is defined in the Hibernia Bylaws to mean gross
negligence or willful misconduct.
The Bylaws of Hibernia provide that all directors must meet
certain criteria as to age, number of shares of voting securities
held, and non-affiliation with competitors in order to serve on
the Board of Directors. There are no criteria for service on the
Progressive Board of Directors specified in Progressive's
Articles or Bylaws.
Shareholder Proposals. Hibernia's Bylaws contain certain
provisions that allow shareholders to submit a proposal to be
voted upon at any shareholders meeting or to nominate an
individual for election as a director only under certain
circumstances and provided that the shareholder complies with all
of the conditions set forth in the Bylaws. The Progressive
Bylaws do not contain any provisions relating to shareholder
proposals or the nomination of persons to serve as directors.
Certain Transfer Restrictions Relating to Five Percent
Shareholders. The Articles of Incorporation and Bylaws of
Progressive do not restrict the transfer of shares of Progressive
stock. With respect to Hibernia, however, Article IX of
Hibernia's Articles of Incorporation restricts the transfer 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 that
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
that has been approved in advance by the Board of Directors of
Hibernia, or that 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 carry
forwards 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.
-17-
The Five Percent Restriction may adversely affect the
marketability of the Hibernia Common Stock by discouraging
potential investors from acquiring equity securities of Hibernia.
However, although 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.
Liquidity of Stock. There currently is no market for shares
of Progressive Common Stock, and such a market is not likely to
develop in the future. Shares of Hibernia Common Stock are
listed for trading on the NYSE. Current quotes of the market
price of Hibernia Common Stock are available from brokerage firms
and other securities professionals, as well as other sources, and
are published in major newspapers on a daily basis. Shares of
Hibernia Common Stock to be issued in the Merger may be freely
resold by persons who are not "affiliates" of Progressive or
Hibernia. See "Resale of Hibernia Common Stock," below.
Amendment of Bylaws. The Bylaws of Hibernia may be amended
by vote of two-thirds of the continuing directors, subject to the
power of the shareholders to change or repeal any bylaw so made
by vote of a majority of the total voting power. Pursuant to the
Bylaws of Progressive, the Board of Directors may alter, amend or
repeal the bylaws or adopt new bylaws.
Vote for Merger or Consolidation. The Articles of
Incorporation of Hibernia provide that a merger or consolidation
may be approved by vote of a majority of the voting shares issued
and outstanding. The Articles of Incorporation of Progressive
are silent as to such vote; therefor, the vote of two-thirds of
the voting power present is required to approve such a
transaction pursuant to the LBCL.
Interests of Certain Persons in the Merger
Indemnification of Progressive and the Bank Directors. The
Agreement includes certain provisions that protect the officers
and directors of Progressive and the Bank from and against
liability for actions arising while they served in those
capacities for Progressive and the Bank. The Agreement provides
for indemnification of such persons to the same extent as they
would have been indemnified under the Articles of Incorporation
and/or Bylaws of Hibernia, in the case of a claim against him in
his capacity as an officer or director of Progressive, or HNB, in
the case of a claim against him in his capacity as an officer or
director of the Bank, as such documents were in effect on the
date of the Agreement, except that the Agreement limits
Hibernia's aggregate liability for such indemnification to $5
-18-
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 the existence of which such person knew or should have
known but failed to make a good faith effort to require
Progressive and the Bank to notify its director and officer
liability insurance carrier of prior to the Closing Date.
The Agreement also provides for indemnification of
Progressive's officers, directors and any person who controls
Progressive or the Bank within the meaning of the Securities Act
from and against any 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 in the Registration Statement 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 Progressive or the Bank for use in the
Registration Statement, which includes this Proxy Statement-
Prospectus. The Agreement sets no limit on the aggregate amount
of Hibernia's obligations to indemnify individuals for liability
under the Securities Act.
Severance and Retention Benefits. An employee severance
plan and certain management retention agreements were adopted by
the Bank in 1994 to encourage its employees and senior management
to continue their employment with the Bank in the context of
ongoing merger discussions between Progressive and certain non-
affiliated financial institutions as described elsewhere herein.
Pursuant to such severance plan, employees of the Bank
(other than the President) who work at least 37.5 hours per week
and have been employed by the Bank for at least twelve months
will receive special severance benefits based upon years of
service and level of compensation if they remain in the employ of
the Bank until the date of the Merger (which will constitute a
"Change in Control" under the severance plan and retention
agreements) and either are not offered employment by Hibernia or
HNB following the Merger, are offered employment with Hibernia or
HNB involving a position that is substantially different (within
the meaning of the severance plan) from such employee's position
with the Bank immediately prior to the Merger, or are terminated
by Hibernia or HNB following the Merger other than "for cause"
(as defined in the severance plan). The Bank's retention
agreements entered into with certain employees of the Bank also
provide for benefits if the covered employees remain in the
employ of the Bank following a Change in Control until the
Closing Date (as defined therein). If the Merger is consummated
and the other conditions of the severance plan and retention
agreements applicable to the Bank's executive officers are
satisfied, each executive officer of the Bank (other than John H.
Laing, the Bank's President and Chief Executive Officer) will
receive severance and retention benefits equal to between 10 and
12 months of such officer's current base compensation in a lump
sum payment.
-19-
In addition, Mr. Laing currently has an employment agreement
with the Bank that provides for certain severance payments if Mr.
Laing is terminated or voluntarily resigns his employment within
the thirty days immediately following a "Change of Control" of
the Bank (which term, as defined in such agreement, includes the
Merger). As a result, if the Merger is consummated and Mr. Laing
is involuntarily terminated for reasons other than cause, death,
disability or retirement, or voluntarily resigns his employment
within the first thirty days following consummation of the
Merger, Mr. Laing will be entitled to a severance payment equal
to his full base salary at regular intervals for the thirty-six
months following his termination or resignation, and incentive
compensation for such period equal to the average of the annual
incentive compensation received by Mr. Laing during each of the
five years immediately preceding his termination or resignation,
which compensation shall be payable at the conclusion of each
succeeding year that ends during the thirty-six months following
his termination or resignation.
Mr. Laing has agreed to the terms of a three-year employment
agreement with Hibernia a approximately his current level of
compensation. This agreement also provides for the payment of
any severance benefits due under his existing employment contract
over a longer period of time than would otherwise be required
under that contract.
Employee Benefits
The Agreement provides that Hibernia will use its best
efforts to cause to be provided to all employees of Progressive
and the Bank who are employed as of the Effective Date the same
employee benefits as those offered by Hibernia and HNB to their
employees, except that employees of Progressive and the Bank will
not be required to wait for any period in order to be eligible to
participate in Hibernia's Flex Plan (including its medical and
dental coverage). For the purposes of the Hibernia 401(k) plan
(the Retirement Security Plan) and the Hibernia ESOP, each
employee of Progressive or the Bank will be treated as if they
were employed by Hibernia (for both eligibility and vesting) for
the full time that they were employed by Progressive or the Bank.
Expenses
The Agreement provides that all expenses incurred in
connection with the negotiation and execution of the Agreement
and the consummation of the Merger, other than printing expenses,
which shall be borne by Hibernia, will be borne by the party that
incurred them, regardless of whether the Merger is consummated.
Material Tax Consequences
The following is a summary description of the material tax
consequences of the Merger to the shareholders of Progressive;
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
-20-
consequences to such shareholder. In addition, no specific
analysis is provided with respect to the tax consequences of the
Merger under applicable state, local or other tax laws. Each
shareholder is therefore urged to consult a tax advisor regarding
the tax consequences of the Merger to him, her or it.
Consummation of the Merger is conditioned upon the receipt
of an opinion to the effect that, subject to the assumptions,
qualifications and exception contained therein 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 the exchange of Progressive Common Stock
for Hibernia Common Stock will not give rise to the recognition
of gain or loss for federal income tax purposes to Progressive's
shareholders. The parties have received the opinion of Ernst &
Young LLP, certified public accountants, to the foregoing
effects. A copy of such opinion is attached hereto as Appendix
C.
If the Merger constitutes a reorganization within the
meaning of Section 368(a) of the Cod, which the tax opinion
assumes is true based upon certain representations of Hibernia
and Progressive: (i) no gain or loss will be recognized by
Progressive, the Bank, Hibernia or HNB by reason of the Merger or
the Bank Merger; (ii) a shareholder of Progressive will not
recognize any gain or loss for federal income tax purposes to the
extent Hibernia Common Stock is received in the Merger in
exchange for Progressive Common Stock; (iii) the tax basis in
Hibernia Common Stock received by a shareholder of Progressive
will be the same as the tax basis in the Progressive Common Stock
surrendered in exchange therefor; (iv) the holding period, for
federal income tax purposes, for Hibernia Common Stock received
in exchange for Progressive Common Stock will include the period
during which the shareholder held the Progressive Common Stock
surrendered in the exchange, provided that the Progressive Common
Stock was held as a capital asset at the Effective Date; and (v)
cash received in the Merger in lieu of fractional shares will not
adversely affect the income tax treatment of the exchange of
shares, but will be treated as a partial redemption of the
shareholder's interest in his stock and therefore will generally
result in the recognition of capital gain or loss, if the shares
surrendered were held as a capital asset, depending upon the
shareholder's basis in the Progressive Common Stock surrendered.
Any cash payment received in exchange for shares of
Progressive Preferred Stock and by dissenting shareholders will
be treated as a complete redemption of the shareholders'
interests in their Progressive Preferred Stock or Progressive
Common Stock, as the case may be, and will generally be subject
to federal and state income tax as a capital gain or loss. For
more information regarding the income tax consequences of cash
payments received by dissenting shareholders, see "Rights of
Dissenting Shareholders."
-21-
The Louisiana income tax treatment of the Merger to the
shareholders of Progressive should generally be substantially the
same as the federal income tax treatment described above.
Shareholders residing in states other than Louisiana are
encouraged to consult their tax advisors regarding the state
income tax implications of the Merger to them.
Resale of Hibernia Common Stock
The shares of Hibernia Common Stock to be exchanged for
Progressive shares in the Merger have been registered under the
Securities Act and have been approved for listing on the NYSE.
This registration permits the Hibernia shares to be freely
transferred by anyone who is not an "affiliate" of Hibernia after
the Merger and anyone who was not an "affiliate" of Progressive
prior to the Merger, within the meaning of Rule 145 under the
Securities Act. For the purposes of that rule, affiliates are
generally persons (including corporations and partnerships) that
control, are controlled by, or are under common control with
Hibernia or Progressive, as the case may be. Executive officers,
directors and 10% shareholders may be deemed to be affiliates for
these purposes.
Rule 145 imposes certain restrictions on the sale of stock
received in a merger or consolidation by an affiliate of the
acquired company, even if that person does not become an
affiliate of the acquiring company. Affiliates of Progressive
will only be permitted to resell any Hibernia shares received by
them in the Merger if they register those shares for resale or
they comply with the restrictions of Rule 145. Anyone who is or
may be an affiliate of Progressive should carefully consider the
resale restrictions imposed by Rule 145 before he attempts to
transfer any shares of Hibernia Common Stock received in the
Merger.
Each of the persons identified by Progressive as an
"affiliate" has executed an agreement in which those individuals
commit to transferring their Hibernia shares only in accordance
with the securities laws and in a manner that does not jeopardize
the treatment of the Merger as a pooling of interests for
accounting purposes. The pooling of interests accounting rules
will prohibit affiliates of Progressive from transferring any
Hibernia stock received by them until Hibernia has published
financial results that include at least thirty days of operations
after the consummation of the Merger, which generally will occur
in the month following the fiscal quarter-end that follows the
Effective Date. In addition to the aforementioned agreements,
Hibernia intends to place stop transfer instructions with its
transfer agent with respect to shares of Hibernia Common Stock
issued to affiliates of Progressive.
-22-
Dividend Reinvestment Plan
Hibernia maintains a Dividend Reinvestment Plan through
which shareholders of Hibernia may reinvest dividends in Hibernia
Common Stock. Shares are purchased for participants in the plan
at their market value, which is determined by the market price of
Hibernia Common Stock 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 and 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 Progressive who
become shareholders of Hibernia will have the same opportunity to
participate in the plan as other shareholders of Hibernia.
Accounting Treatment
It is anticipated that the Merger will be accounted for as a
"pooling of interests" transaction. Among other requirements, in
order for the Merger to qualify for pooling of interests
accounting treatment, 90% or more of the outstanding Progressive
Common Stock must be exchanged for Hibernia Common Stock.
Consequently, if holders of 10% or more of the outstanding
Progressive Common Stock exercise and perfect dissenters' rights,
the Merger will not qualify for pooling of interests accounting,
and it is anticipated that Hibernia would abandon or attempt to
renegotiate the Merger. Also, in order for the pooling of
interests accounting method to apply, "affiliates" of Progressive
cannot reduce their holdings of Hibernia Common Stock received in
the Merger for a period beginning on the Effective Date and
ending upon the publication of at least 30 days of post-Merger
combined operations of Progressive and Hibernia. Persons
believed by Progressive to be "affiliates" have agreed to comply
with these restrictions. See "Resale of Hibernia Common Stock,"
above.
Progressive has agreed to use its best efforts to permit the
transaction to be accounted for as a pooling of interests.
Hibernia is not obligated to consummate the Merger if the Merger
does not qualify for pooling of interests accounting treatment.
-23-
RIGHTS OF DISSENTING SHAREHOLDERS
Each holder of Progressive Common Stock who objects to the
Merger is entitled to the rights and remedies of dissenting
shareholders provided in Section 131 of the LBCL, a copy of which
is set forth as Appendix D 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 date of 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 eighty
percent 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 may then file with the
corporation a written demand for the fair cash value of his or
her shares as of the day 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 or her shares in escrow at
a bank or trust corporation, 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 provide notice to the
shareholder (the "Notice") 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. If the dissenting shareholder institutes
a suit seeking an amount in excess of the amount offered by the
corporation to the dissenting shareholder in the Notice, the
corporation shall deposit the amount offered with the court. If
the amount finally awarded by the court, exclusive of interest
and costs (the "Awarded Amount"), is more than the amount so
offered and deposited, then all costs of the court proceedings
shall be paid by the corporation. If the Awarded Amount is equal
to or less than the amount so offered and deposited, then all
costs of the court proceedings shall be paid by the dissenting
shareholder.
The amount received by a dissenting shareholder may be more
or less than, or equal to, the value of the Hibernia Common Stock
received by other Progressive shareholders in the Merger.
-24-
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
Progressive Common Stock to perfect dissenters' rights. Holders
of Progressive Common Stock will lose their right to dissent from
the Merger unless they both (i) file with Progressive a written
objection to the Merger prior to or at the Special Meeting and
(ii) vote their shares (in person or by proxy) against the
proposed Agreement and the Merger at the Special Meeting.
THE FOREGOING SUMMARY OF THE PROVISIONS OF THE LBCL RELATING
TO DISSENTERS' RIGHTS IS NECESSARILY INCOMPLETE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO EXCERPTS FROM THE LBCL SET FORTH
HEREIN AS APPENDIX D.
Holders of Progressive Common Stock who exercise and perfect
dissenters' rights and who receive cash for their shares will
generally be subject to federal and state income tax on all or a
portion of the amount of cash received. Furthermore, if the
Merger is effected, the cash paid to dissenting shareholders may
be more or less than the value of the Hibernia Common Stock
issued to those shareholders of Progressive who voted in favor of
the Merger. The receipt of cash for shares will be generally
treated as a distribution in redemption of the shareholder's
stock and, depending on the individual shareholder's
circumstances, may be deemed to be a complete termination of
interest resulting in a capital gain or loss to such shareholder.
The tax opinion rendered by Ernst & Young LLP and attached hereto
as Appendix C states that payments to dissenting shareholders are
not exempt from federal or state income tax. Shareholders
desiring to dissent from the Merger are urged to consult their
tax advisors with regard to the tax implications to them of
exercising dissenters' rights.
-25-
PRO FORMA FINANCIAL INFORMATION
The following pro forma financial statements reflect all of
Hibernia's pending mergers giving effect to the assumptions and
adjustments described in the accompanying notes.
The information in the column titled "Historical Hibernia
Corporation" on the Pro Forma Combined Balance Sheet and the Pro
Forma Combined Income Statements is summarized from the
consolidated financial statements of Hibernia incorporated by
reference into its Annual Report on Form 10-K for the year ended
December 31, 1994, after giving effect for the merger with
American Bank on March 1, 1995 which was accounted for as a
pooling of interests, and its Quarterly Report on Form 10-Q for
March 31, 1995. The information in the column titled "Restated
Hibernia Corporation" reflects the impact of the merger with
STABA consummated on May 1, 1995, which was accounted for as a
pooling of interests. The information contained in the columns
"Progressive Bancorporation, Inc.," and "Bank of St. John" is
based on March 31, 1995 and 1994 and December 31, 1994, 1993 and
1992 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 Merger, or the
other consummated and probable mergers had occurred on the dates
or during the periods or that may be obtained in the future.
On January 25, 1995 Hibernia announced that it had reached
an agreement to merge with Bank of St. John, headquartered in
LaPlace, Louisiana. As of March 31, 1995, Bank of St. John had
total assets of approximately $116 million, shareholders' equity
of $11.5 million and operated four banking offices, two in
LaPlace and one each in Reserve and Edgard, Louisiana, and one
loan production office in Metairie, Louisiana. The terms of the
merger agreement provide that Bank of St. John shareholders will
receive shares of Hibernia Common Stock valued at an aggregate of
$25,875,000. For the purposes of these pro forma financial
statements, it is assumed that Hibernia will issue 3,338,710
shares of Hibernia Common Stock in connection with the Bank of
St. John merger and that the transaction will be accounted for as
a pooling of interests.
The merger with Bank of St. John is subject to the
satisfaction of certain conditions similar to those described
herein with regard to the Merger. There can be no assurance that
this proposed merger will occur.
-26-
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
The following unaudited pro forma combined balance sheet
combines the restated balance sheet of Hibernia and the
historical balance sheet of Progressive as if the Merger had been
effective on March 31, 1995. This unaudited pro forma combined
balance sheet should be read in conjunction with the historical
financial statements and related notes of Hibernia, incorporated
by reference into this Proxy Statement-Prospectus, and the
historical financial statements and related notes of Progressive,
contained elsewhere herein. The restated balance sheet reflects
the impact of the merger with STABA consummated on May 1, 1995 as
discussed in Note B to the pro forma financial statements. The
unaudited pro forma combined balance sheet also gives effect to
another probable merger of Hibernia with Bank of St. John as
discussed in Note E to the pro forma combined financial
statements. The probable merger has been included in the pro
forma combined balance sheet as though the merger had been
effective on March 31, 1995.
-27-<TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET
March 31, 1995
<CAPTION>
(B)
HISTORICAL RESTATED PROGRESSIVE PRO PRO FORMA
HIBERNIA HIBERNIA BANCORPORATION, FORMA HIBERNIA
Unaudited ($ in thousands) CORPORATION CORPORATION INC. ADJ CORPORATION
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $279,471 $283,752 $6,516 $290,268
Short-term investments 83,730 93,042 6,484 ($3,417)(C) 96,109
Securities available for sale 546,360 567,811 29,056 596,867
Securities held to maturity 1,850,267 1,863,371 27,361 1,890,732
Loans, net of unearned income 3,599,398 3,646,033 80,835 (2,595)(D) 3,724,273
Reserve for possible loan losses (149,441) (150,487) (1,225) (151,712)
Loans, net 3,449,957 3,495,546 79,610 (2,595) 3,572,561
Bank premises and equipment 111,653 113,953 2,596 116,549
Customers' acceptance liability 2,850 2,850 - 2,850
Other assets 178,374 179,569 1,902 (41)(D) 181,430
TOTAL ASSETS $6,502,662 $6,599,894 $153,525 ($6,053) $6,747,366
LIABILITIES
Deposits:
Demand, noninterest-bearing $1,010,181 $1,024,854 $22,553 $1,047,407
Interest-bearing 4,592,787 4,666,699 110,092 4,776,791
Total Deposits 5,602,968 5,691,553 132,645 - 5,824,198
Short-term borrowings 192,986 192,986 - 192,986
Liability on acceptances 2,850 2,850 - 2,850
Other liabilities 97,080 97,596 2,136 ($41)(D) 99,691
Debt 4,815 4,815 8,652 (2,595)(D) 10,872
TOTAL LIABILITIES 5,900,699 5,989,800 143,433 (2,636) 6,130,597
SHAREHOLDERS' EQUITY
Preferred Stock - - 130 (130)(C) -
Common Stock 213,597 217,783 65 4,735 (C) 222,583
Surplus 388,174 387,263 2,016 (4,760)(C) 381,232
(3,287)(C)
Retained earnings 8,627 13,651 7,941 21,592
Treasury Stock - - (25) 25 (C) -
Unrealized losses on securities available for sale (8,435) (8,603) (35) (8,638)
TOTAL SHAREHOLDERS' EQUITY 601,963 610,094 10,092 (3,417) 616,769
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,502,662 $6,599,894 $153,525 ($6,053) $6,747,366
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET, (continued)
March 31, 1995
<CAPTION>
TOTAL
PRO FORMA PRO PRO FORMA
HIBERNIA BANK OF FORMA HIBERNIA
Unaudited ($ in thousands) CORPORATION ST. JOHN ADJ CORPORATION
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $290,268 $4,930 $295,198
Short-term investments 96,109 6,025 102,134
Securities available for sale 596,867 24,055 620,922
Securities held to maturity 1,890,732 11,568 1,902,300
Loans, net of unearned income 3,724,273 68,065 3,792,338
Reserve for possible loan losses (151,712) (946) (152,658)
Loans, net 3,572,561 67,119 - 3,639,680
Bank premises and equipment 116,549 1,203 117,752
Customers' acceptance liability 2,850 - 2,850
Other assets 181,430 1,444 182,874
TOTAL ASSETS $6,747,366 $116,344 - $6,863,710
LIABILITIES
Deposits:
Demand, noninterest-bearing $1,047,407 $15,578 $1,062,985
Interest-bearing 4,776,791 87,121 4,863,912
Total Deposits 5,824,198 102,699 - 5,926,897
Short-term borrowings 192,986 137 193,123
Liability on acceptances 2,850 - 2,850
Other liabilities 99,691 2,055 101,746
Debt 10,872 - 10,872
TOTAL LIABILITIES 6,130,597 104,891 - 6,235,488
SHAREHOLDERS' EQUITY
Preferred Stock - - -
Common Stock 222,583 750 $5,660 (E) 228,993
Surplus 381,232 2,250 (5,660)(E) 377,822
Retained earnings 21,592 8,773 30,365
Treasury Stock - - -
Unrealized losses on securities available for sale (8,638) (320) (8,958)
TOTAL SHAREHOLDERS' EQUITY 616,769 11,453 - 628,222
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,747,366 $116,344 - $6,863,710
See notes to Pro Forma Combined Financial Statements.
</TABLE>
PRO FORMA COMBINED INCOME STATEMENTS
(Unaudited)
The following unaudited pro forma combined income for the
three months ended March 31, 1995 and the years ended December
31, 1994, 1993 and 1992 combine the restated income statements of
Hibernia and the historical income statements of Progressive as
if the Merger had each been effective on January 1, 1992. The
unaudited pro forma combined income statements should be read in
conjunction with the historical financial statements and related
notes of Hibernia, incorporated by reference into this Proxy
Statement-Prospectus, and the historical financial statements and
related notes of Progressive, contained elsewhere herein. The
restated income statements reflect the impact of the merger with
American consummated in the first quarter of 1995 as discussed in
Note A to the pro forma financial statements and the merger with
STABA consummated in the second quarter of 1995 as discussed in
Note B to the pro forma financial statements. The costs
associated with the Merger, estimated to be approximately
$656,000, are accounted for as a current period expense when
incurred. The unaudited pro forma combined income statements
also give effect to the probable merger with Bank of St. John to
which Hibernia is a party as discussed in Note E to the pro forma
combined financial statements. The probable merger has been
included in the pro forma combined income statements as though
the merger had been effective on January 1, 1992.
-29-<TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Three Months Ended March 31, 1995
<CAPTION>
(B) TOTAL
HISTORICAL RESTATED PROGRESSIVE PRO FORMA PRO FORMA
HIBERNIA HIBERNIA BANCORPORATION, HIBERNIA BANK OF HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION INC. CORPORATION ST. JOHN CORPORATION
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $79,570 $80,615 $2,046 $82,661 $1,608 $84,269
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 35,581 36,039 678 36,717 573 37,290
Obligations of states and political subdivisions 302 373 213 586 50 636
Trading account interest 1 1 - 1 - 1
Interest on time deposits in domestic banks 5 15 77 92 - 92
Interest on federal funds sold and securities
purchased under agreements to resell 2,364 2,429 - 2,429 95 2,524
Total Interest Income 117,823 119,472 3,014 122,486 2,326 124,812
Interest Expense
Interest on deposits 47,748 48,359 1,259 49,618 737 50,355
Interest on federal funds purchased and
securities sold under agreements to repurchase 2,087 2,089 - 2,089 - 2,089
Interest on debt and other 75 75 62 137 2 139
Total Interest Expense 49,910 50,523 1,321 51,844 739 52,583
Net Interest Income 67,913 68,949 1,693 70,642 1,587 72,229
Provision for possible loan losses - 0 - 0 - 0
Net Interest Income After Provision for
Possible Loan Losses 67,913 68,949 1,693 70,642 1,587 72,229
Noninterest Income
Trust fees 2,821 2,821 - 2,821 - 2,821
Service charges on deposits 10,275 10,403 240 10,643 166 10,809
Other service, collection and exchange charges 5,827 5,847 98 5,945 25 5,970
Gain on divestiture of banking offices 2,361 2,361 - 2,361 - 2,361
Other operating income 1,845 1,871 (159) 1,712 56 1,768
Securities gains, net - 0 1 1 - 1
Total Noninterest Income 23,129 23,303 180 23,483 247 23,730
Noninterest Expense
Salaries and employee benefits 29,564 29,862 976 30,838 1,086 31,924
Occupancy expense, net 5,887 5,949 175 6,124 350 6,474
Equipment expense 4,250 4,376 20 4,396 92 4,488
Data processing expense 5,326 5,337 86 5,423 99 5,522
Foreclosed property expense (262) (262) 5 (257) 13 (244)
Other operating expense 17,859 18,413 936 19,349 684 20,033
Total Noninterest Expense 62,624 63,675 2,198 65,873 2,324 68,197
Income Before Income Taxes 28,418 28,577 (325) 28,252 (490) 27,762
Income tax expense 2,059 2,125 (33) 2,092 184 2,276
Income from Continuing Operations $26,359 $26,452 ($292) $26,160 ($674) $25,486
Pro Forma Weighted Average Common Shares 111,129,883 113,310,016 2,500,000 115,810,016 3,338,710 119,148,726
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.24 $0.23 $0.23 $0.21
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Three Months Ended March 31, 1994
<CAPTION>
(B) TOTAL
HISTORICAL RESTATED PROGRESSIVE PRO FORMA PRO FORMA
HIBERNIA HIBERNIA BANCORPORATION, HIBERNIA BANK OF HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION INC. CORPORATION ST. JOHN CORPORATION
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $61,631 $62,620 $1,836 $64,456 $1,433 $65,889
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 35,693 36,188 671 36,859 557 37,416
Obligations of states and political subdivisions 22 96 185 281 27 308
Trading account interest 5 5 - 5 - 5
Interest on time deposits in domestic banks 1 10 18 28 2 30
Interest on federal funds sold and securities
purchased under agreements to resell 2,081 2,114 - 2,114 79 2,193
Total Interest Income 99,433 101,033 2,710 103,743 2,098 105,841
Interest Expense
Interest on deposits 32,734 33,307 1,004 34,311 591 34,902
Interest on federal funds purchased and
securities sold under agreements to repurchase 1,181 1,181 - 1,181 - 1,181
Interest on debt and other 735 735 103 838 1 839
Total Interest Expense 34,650 35,223 1,107 36,330 592 36,922
Net Interest Income 64,783 65,810 1,603 67,413 1,506 68,919
Provision for possible loan losses 475 535 - 535 - 535
Net Interest Income After Provision for
Possible Loan Losses 64,308 65,275 1,603 66,878 1,506 68,384
Noninterest Income
Trust fees 3,046 3,046 - 3,046 - 3,046
Service charges on deposits 10,132 10,245 227 10,472 147 10,619
Other service, collection and exchange charges 5,340 5,356 135 5,491 46 5,537
Other operating income 2,892 2,941 62 3,003 68 3,071
Securities gains, net 162 186 4 190 - 190
Total Noninterest Income 21,572 21,774 428 22,202 261 22,463
Noninterest Expense
Salaries and employee benefits 29,078 29,358 518 29,876 352 30,228
Occupancy expense, net 6,066 6,119 141 6,260 106 6,366
Equipment expense 3,559 3,666 12 3,678 48 3,726
Data processing expense 5,146 5,151 40 5,191 132 5,323
Foreclosed property expense (3,710) (3,710) 7 (3,703) 15 (3,688)
Other operating expense 21,490 21,724 652 22,376 364 22,740
Total Noninterest Expense 61,629 62,308 1,370 63,678 1,017 64,695
Income Before Income Taxes 24,251 24,741 661 25,402 750 26,152
Income tax expense 1,135 1,301 232 1,533 238 1,771
Income from Continuing Operations $23,116 $23,440 $429 $23,869 $512 $24,381
Pro Forma Weighted Average Common Shares 110,476,124 112,656,257 2,500,000 115,156,257 3,338,710 118,494,967
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.21 $0.21 $0.21 $0.21
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Year Ended December 31, 1994
<CAPTION>
(A) (B) TOTAL
HISTORICAL RESTATED PROGRESSIVE PRO FORMA PRO FORMA
HIBERNIA HIBERNIA BANCORPORATION, HIBERNIA BANK OF HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION INC. CORPORATION ST. JOHN CORPORATION
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $272,391 $276,527 $7,858 $284,385 $6,163 $290,548
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 140,956 142,975 3,381 146,356 2,266 148,622
Obligations of states and political subdivisions 1,256 1,560 762 2,322 170 2,492
Trading account interest 22 22 - 22 - 22
Interest on time deposits in domestic banks 11 53 125 178 5 183
Interest on federal funds sold and securities
purchased under agreements to resell 6,808 6,899 - 6,899 772 7,671
Total Interest Income 421,444 428,036 12,126 440,162 9,376 449,538
Interest Expense
Interest on deposits 148,354 150,680 3,914 154,594 2,495 157,089
Interest on federal funds purchased and 0
securities sold under agreements to repurchase 5,775 5,788 16 5,804 1 5,805
Interest on debt and other 2,006 2,006 632 2,638 6 2,644
Total Interest Expense 156,135 158,474 4,562 163,036 2,502 165,538
Net Interest Income 265,309 269,562 7,564 277,126 6,874 284,000
Provision for possible loan losses (17,601) (17,421) (648) (18,069) - (18,069)
Net Interest Income After Provision for
Possible Loan Losses 282,910 286,983 8,212 295,195 6,874 302,069
Noninterest Income
Trust fees 12,420 12,420 - 12,420 - 12,420
Service charges on deposits 42,496 42,974 931 43,905 651 44,556
Other service, collection and exchange charges 20,747 20,798 477 21,275 146 21,421
Other operating income 10,783 10,974 72 11,046 266 11,312
Securities gains, net (3,652) (3,628) (124) (3,752) 653 (3,099)
Total Noninterest Income 82,794 83,538 1,356 84,894 1,716 86,610
Noninterest Expense
Salaries and employee benefits 119,994 121,222 2,582 123,804 1,390 125,194
Occupancy expense, net 26,042 26,203 352 26,555 439 26,994
Equipment expense 15,998 16,322 251 16,573 190 16,763
Data processing expense 20,342 20,363 156 20,519 539 21,058
Foreclosed property expense (6,994) (6,991) 102 (6,889) 94 (6,795)
Amortization of intangibles 23,113 23,113 118 23,231 - 23,231
Other operating expense 76,455 77,542 1,887 79,429 1,630 81,059
Total Noninterest Expense 274,950 277,774 5,448 283,222 4,282 287,504
Income Before Income Taxes 90,754 92,747 4,120 96,867 4,308 101,175
Income tax expense 4,183 4,776 (596) 4,180 1,378 5,558
Income from Continuing Operations $86,571 $87,971 $4,716 $92,687 $2,930 $95,617
Pro Forma Weighted Average Common Shares 110,587,841 112,767,974 2,500,000 115,267,974 3,338,710 118,606,684
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.78 $0.78 $0.80 $0.81
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Year Ended December 31, 1993
<CAPTION>
(A) (B) TOTAL
HISTORICAL RESTATED PROGRESSIVE PRO FORMA PRO FORMA
HIBERNIA HIBERNIA BANCORPORATION, HIBERNIA BANK OF HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION INC. CORPORATION ST. JOHN CORPORATION
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $248,251 $252,202 $7,691 $259,893 $5,276 $265,169
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 142,614 144,687 2,969 147,656 2,871 150,527
Obligations of states and political subdivisions 1,359 1,653 596 2,249 64 2,313
Trading account interest 33 33 - 33 - 33
Interest on time deposits in domestic banks 556 633 87 720 7 727
Interest on federal funds sold and securities
purchased under agreements to resell 9,717 9,883 - 9,883 96 9,979
Total Interest Income 402,530 409,091 11,343 420,434 8,314 428,748
Interest Expense
Interest on deposits 133,143 135,685 3,905 139,590 2,386 141,976
Interest on federal funds purchased and
securities sold under agreements to repurchase 4,016 4,016 24 4,040 3 4,043
Interest on debt and other 3,618 3,618 784 4,402 5 4,407
Total Interest Expense 140,777 143,319 4,713 148,032 2,394 150,426
Net Interest Income 261,753 265,772 6,630 272,402 5,920 278,322
Provision for possible loan losses (3,734) (3,464) 168 (3,296) 50 (3,246)
Net Interest Income After Provision for
Possible Loan Losses 265,487 269,236 6,462 275,698 5,870 281,568
Noninterest Income
Trust fees 13,314 13,314 - 13,314 - 13,314
Service charges on deposits 39,227 39,629 933 40,562 649 41,211
Other service, collection and exchange charges 20,025 20,079 307 20,386 109 20,495
Gain on settlement of acquired loans 1,308 1,308 - 1,308 - 1,308
Other operating income 8,546 8,669 159 8,828 365 9,193
Securities gains, net 97 188 63 251 34 285
Total Noninterest Income 82,517 83,187 1,462 84,649 1,157 85,806
Noninterest Expense
Salaries and employee benefits 109,647 110,767 2,228 112,995 1,306 114,301
Occupancy expense, net 25,074 25,237 331 25,568 405 25,973
Equipment expense 13,791 14,109 138 14,247 122 14,369
Data processing expense 17,633 17,660 265 17,925 427 18,352
Foreclosed property expense 8,470 8,470 209 8,679 484 9,163
Provision for data processing enhancements 11,991 11,991 - 11,991 - 11,991
Other operating expense 90,252 91,263 2,440 93,703 1,410 95,113
Total Noninterest Expense 276,858 279,497 5,611 285,108 4,154 289,262
Income Before Income Taxes and
Cumulative Effect of Accounting Change 71,146 72,926 2,313 75,239 2,873 78,112
Income tax expense 8,873 9,401 922 10,323 943 11,266
Income from Continuing Operations $62,273 $63,525 $1,391 $64,916 $1,930 $66,846
Pro Forma Weighted Average Common Shares 110,016,103 112,196,236 2,500,000 114,696,236 3,338,710 118,034,946
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.57 $0.57 $0.57 $0.57
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<TABLE>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Year Ended December 31, 1992
<CAPTION>
(A) (B) TOTAL
HISTORICAL RESTATED PROGRESSIVE PRO FORMA PRO FORMA
HIBERNIA HIBERNIA BANCORPORATION, HIBERNIA BANK OF HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION INC. CORPORATION ST. JOHN CORPORATION
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $317,937 $321,653 $7,305 $328,958 $4,549 $333,507
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 130,651 132,674 3,184 135,858 3,590 139,448
Obligations of states and political subdivisions 1,425 1,707 17 1,724 11 1,735
Trading account interest 99 99 - 99 - 99
Interest on time deposits in domestic banks 617 698 188 886 4 890
Interest on federal funds sold and securities
purchased under agreements to resell 15,954 16,328 - 16,328 175 16,503
Total Interest Income 466,683 473,159 10,694 483,853 8,329 492,182
Interest Expense
Interest on deposits 184,281 187,201 4,514 191,715 3,151 194,866
Interest on federal funds purchased and
securities sold under agreements to repurchase 6,910 6,910 - 6,910 2 6,912
Interest on debt and other 14,098 14,098 618 14,716 6 14,722
Total Interest Expense 205,289 208,209 5,132 213,341 3,159 216,500
Net Interest Income 261,394 264,950 5,562 270,512 5,170 275,682
Provision for possible loan losses 71,093 71,456 101 71,557 - 71,557
Net Interest Income After Provision for
Possible Loan Losses 190,301 193,494 5,461 198,955 5,170 204,125
Noninterest Income
Trust fees 12,860 12,860 - 12,860 - 12,860
Service charges on deposits 40,951 41,357 861 42,218 653 42,871
Other service, collection and exchange charges 18,442 18,473 244 18,717 146 18,863
Gain on settlement of acquired loans 4,151 4,151 - 4,151 - 4,151
Loss on sale of Texas bank (2,934) (2,934) - (2,934) - (2,934)
Other operating income 10,936 11,003 62 11,065 478 11,543
Securities gains, net 17,442 17,442 114 17,556 63 17,619
Total Noninterest Income 101,848 102,352 1,281 103,633 1,340 104,973
Noninterest Expense
Salaries and employee benefits 109,347 110,345 1,894 112,239 1,049 113,288
Occupancy expense, net 27,607 27,769 280 28,049 364 28,413
Equipment expense 15,941 16,159 139 16,298 78 16,376
Data processing expense 19,189 19,208 243 19,451 390 19,841
Foreclosed property expense 26,335 26,348 371 26,719 1,111 27,830
Other operating expense 85,231 86,105 1,952 88,057 1,117 89,174
Total Noninterest Expense 283,650 285,934 4,879 290,813 4,109 294,922
Income Before Income Taxes and
Extraordinary Items 8,499 9,912 1,863 11,775 2,401 14,176
Income tax expense 5,535 5,884 50 5,934 800 6,734
Income from Continuing Operations $2,964 $4,028 $1,813 $5,841 $1,601 $7,442
Pro Forma Weighted Average Common Shares 56,449,253 58,629,386 2,500,000 61,129,386 3,338,710 64,468,096
Pro Forma Income Per Common Share
from Continuing Operations (F) $0.05 $0.07 $0.10 $0.12
See notes to Pro Forma Combined Financial Statements.
</TABLE>
Notes To Pro Forma Combined Financial Statements.
A. In March 1995, HNB merged with American Bank in a transaction
accounted for as a pooling of interests. Hibernia issued
2,098,968 shares of Hibernia Common Stock in such transaction,
with a market price of $7.4875 and a stated value of $4,030,019.
B. In May 1995, Hibernia merged with STABA Bancshares, Inc. in a
transaction accounted for as a pooling of interests. Hibernia
issued 2,180,133 shares of Hibernia Common Stock in such
transaction, with a market price of $8.2563 and a stated value of
$4,185,855.
C. Hibernia plans to issue 2,500,000 shares of Hibernia Common
Stock, with an aggregate market value at the date of the Merger
of $20,000,000 based upon an assumed market value of $8.00 per
share, to effect the Merger. Based upon the 617,670 shares of
Progressive Common Stock outstanding on the Record Date, the
Exchange Rate in the Merger will be approximately 4.0475. 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.
In addition, upon the Merger each issued and outstanding
share of Progressive Preferred Stock will be converted into the
right to receive cash in the amount of $12.50 per share plus all
accumulated and unpaid dividends thereon, estimated to be
$3,417,000.
D. The Progressive debt of $2,595,000 is held by HNB and will be
offset against the outstanding HNB loan balance upon consummation
of the Merger with Progressive.
E. In addition to the Merger, Hibernia is a party to a pending
merger with Bank of St. John. It is assumed that Hibernia will
issue 3,338,710 shares of Hibernia Common Stock with an aggregate
market value at the date of the merger of $26,709,680 based upon
an assumed market value of $8.00 per share, to effect the merger.
Based upon the 300,000 shares of Bank of St. John Common Stock
outstanding the exchange rate in the merger will be approximately
11.13. 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.
-34-
F. 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 consolidation of certain operations. The extent to which
the savings will be achieved depends, among other things, on the
regulatory environment and economic conditions, and may be
affected by unanticipated changes in business activities,
inflation and certain external factors such as Federal Deposit
Insurance Corporation (the "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.
-35-
CERTAIN INFORMATION ABOUT HIBERNIA
Hibernia is a Louisiana corporation registered under the
BHCA. At March 31, 1995, Hibernia had total consolidated assets
of approximately $6.5 billion and shareholders' equity of
approximately $602 million. Hibernia has a single banking
subsidiary, HNB, a national banking association that provides
retail and commercial banking services through approximately 143
branches throughout Louisiana. The principal executive offices
of Hibernia are located at 313 Carondelet Street, New Orleans,
Louisiana 70130, and its telephone number is (504) 533-5532.
During 1994, Hibernia consummated mergers with six financial
institutions. In March 1995 HNB merged with American Bank and in
May 1995, Hibernia merged with STABA. In addition, Hibernia has
entered into a definitive merger agreement with Bank of St. John.
This transaction is subject to certain conditions, similar to the
conditions to the Merger described herein and may be consummated,
if at all, before or after consummation of the Merger.
Shareholders of Progressive will not have the right to vote on
the Bank of St. John transaction. In addition, if the Merger is
consummated prior to consummation of the Bank of St. John
transaction, former shareholders of Progressive who have not
exercised and perfected dissenters' rights will be shareholders
of Hibernia at the time that transaction is consummated.
Shareholders of Hibernia do not have the right to vote on any of
the pending merger transactions.
On a pro forma basis, as of March 31, 1995, the book value
of the shares of Hibernia Common Stock would be decreased by the
pending transactions. The effect of the Merger on the book value
of Hibernia Common Stock, as well as Progressive Common Stock, is
shown under "Comparative Per Share Information" included
elsewhere herein.
Further information concerning the business of Hibernia, and
its financial condition, management, principal shareholders, and
certain other information has been incorporated by reference into
this Proxy Statement-Prospectus. See "Available Information" and
"Incorporation by Reference."
Supervision and Regulation
General. As a bank holding company, Hibernia is subject to
the regulations 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 in nonbanking activities,
subject to certain exceptions.
-36-
Hibernia's banking subsidiary, HNB, is subject to
supervision and examination by applicable federal and state
banking agencies. HNB is a national banking association subject
to the regulations 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 offered. Various consumer laws
and regulations also affect the operations of HNB. In addition
to the impact of such 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 derives substantially all of
its income from the payment of dividends by HNB, and its ability
to pay dividends is affected by the ability of HNB to pay
dividends. HNB is subject to various statutory and contractual
restrictions on its ability to pay dividends to Hibernia. Under
such restrictions, the amount available for payment of dividends
to Hibernia by HNB without OCC approval was approximately $124
million at December 31, 1994. 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 currently, and could be
further, influenced by bank regulatory policies or agreements and
by capital guidelines. However, HNB paid dividends to Hibernia
in the second and third quarter of 1994 without objection by the
OCC. Additional information in this regard is contained in
documents incorporated by reference herein. See "Available
Information" and "Incorporation by Reference."
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 shareholders 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 condition.
Hibernia reinstated its dividend on Hibernia Common Stock in
September of 1993. Quarterly dividends ranging from $.03 to $.06
per share have been paid on the Hibernia Common Stock since that
time.
-37-
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.
-38-
CERTAIN INFORMATION CONCERNING PROGRESSIVE
Description of Business
Progressive is a one-bank holding company organized in 1983
as a business corporation under the laws of the State of
Louisiana for the purpose of acquiring 100% of the stock of
Progressive Bancshares Corporation, the former holding company of
the Bank. As the holder of 100% of the outstanding stock of the
Bank, Progressive is registered as a bank holding company subject
to regulation under the BHCA. At March 31, 1995, Progressive had
total consolidated assets and shareholders' equity of
approximately $153.5 million and $10.1 million, respectively, and
the Bank had total deposits of approximately $133.1 million.
Progressive derives all of its consolidated revenue and income
from the banking and banking-related operations of the Bank.
Progressive's executive offices are located at One Progressive
Square, Houma, Louisiana 70360.
The Bank, which is the only subsidiary of Progressive, was
organized as a Louisiana state bank in 1973. The Bank provides
full service commercial banking services to businesses, industry,
public and governmental organizations and individuals from six
locations in Terrebonne and Lafourche Parishes, including its
main office in Houma, Louisiana and branch offices in Houma,
Chauvin and Thibodaux, Louisiana. The Bank offers an array of
banking services to individuals and businesses, including demand
accounts, NOW accounts, certificates of deposit, money market
accounts, savings, and individual retirement accounts, and
provides safe deposit boxes, night depository, automated teller
machines, and drive-in banking services. The Bank's lending
activities consist principally of real estate, consumer,
education, and commercial loans. The Bank also provides
depository and related financial services to commercial,
industrial, financial and governmental customers. The Bank'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 the
Bank's loans is concentrated within a single industry or group of
related industries. There are no material seasonal factors that
would have an adverse effect on Progressive or the Bank.
Supervision and Regulation
As a bank holding company, Progressive is subject to the
supervision of and regulations adopted by the Federal Reserve
Board pursuant to the BHCA. Progressive is required under the
BHCA to file annual reports with the Federal Reserve Board and
such additional information as the Federal Reserve Board may
require. The Federal Reserve Board may also make examinations of
Progressive and the Bank. Under the BHCA, Progressive also is
generally prohibited, with certain exceptions, from engaging in
or acquiring control of any company that is engaged in non-
banking activities or from engaging in certain tie-in
arrangements in connection with any extension of credit or
provision of any property or services.
-39-
As a state non-member bank, the Bank is subject to
regulation and regular examination by the FDIC and the Louisiana
Office of Financial Institutions (the "OFI"). Applicable
regulations relate to reserves, investments, loans, issuance of
securities, establishment of branches and other aspects of the
Bank's operations. The Bank must also furnish quarterly and
annual reports to the FDIC.
The Bank's deposits are insured by the FDIC, which insures
up to $100,000 per each insured deposit account. The Bank is
currently paying an insurance premium of $230 for each $100,000
of deposits. As of January 1, 1993 the FDIC implemented a
traditional risk-related insurance assessment system whereby the
FDIC places each insured bank in one of nine risk categories
based on its level of capital and other relevant information.
Under the system, there is an eight basis point spread between
the highest and lowest assessment, with the strongest banks
(including the Bank) paying an insurance premium equal to .23% of
deposits and the weakest banks paying a premium of .31% of
deposits.
The operations of the Bank, and therefore Progressive, are
affected significantly by the actions of the Federal Reserve
Board intended to control the money supply and credit
availability in order to influence the national economy.
Competition
The Bank'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. The Bank's primary market area, Houma-
Thibodaux, has a current population of approximately 187,000 and
has approximately 12 banks and two savings and loan associations
currently conducting banking and thrift operations within the
market area. The Bank competes with these local institutions
and, especially as to larger accounts, with banks and bank
holding companies located outside Terrebonne and Lafourche
Parishes, particularly in adjacent parishes and the metropolitan
areas of New Orleans and Baton Rouge, Louisiana.
Under Louisiana law, state banks are permitted to open
branches throughout the State of Louisiana and, as a result, all
national banks domiciled in Louisiana are permitted to establish
branches on a statewide basis. 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.
A number of holding companies with greater resources than
those of Progressive have acquired banks or holding companies or
established branches that operate in the Bank's primary market
area and this process of consolidation is continuing. The
Progressive Board believes that the size of these institutions
-40-
allows certain economies of scale that permit their operation on
a narrower profit margin than that of the Bank. 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. The Bank 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 the Bank 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 Bank's market area.
Employees
Progressive and the Bank have, in the aggregate,
approximately 78 full-time and 22 part-time employees. None of
such employees are subject to a collective bargaining agreement.
Management of Progressive considers its relationship with such
employees to be good.
Property
The executive office of Progressive and main banking office
of the Bank is an 11,008 square foot structure located at One
Progressive Square, on West Tunnel Boulevard, in Houma,
Louisiana. This building and land, as well as the building and
land where the Bank's branches in West Houma, East Houma and
Chauvin, Louisiana are operated, are owned by the Bank and are
not subject to a mortgage. All of these full service facilities
are of modern construction and, except for the Chauvin branch,
have 24-hour automated teller machines. The Bank's Concorde
Branch in Houma, Louisiana and Thibodaux Branch in Thibodaux,
Louisiana are each located in Winn Dixie stores pursuant to
leases expiring in December of 1999 and May of 1999,
respectively.
Legal Proceedings
Progressive and the Bank 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 Progressive and the Bank, or either of them. As of
December 31, 1994, neither Progressive nor the Bank had any
litigation pending, other than ordinary routine litigation
incidental to their business that was not material in amount in
respect of Progressive's assets on a consolidated basis.
Market Prices and Dividends
Market Prices. Progressive Common Stock is not traded on
any exchange or in any other established public trading market.
There are no bid or asked prices available for Progressive Common
Stock.
-41-
At March 31, 1995, there were 450 shareholders of record of
Progressive Common Stock.
Cash Dividends. Progressive has not paid any cash dividends
on Progressive Common Stock during the last two years.
Progressive has agreed in the Agreement that it will not make,
declare, set aside or pay any dividend prior to the Effective
Date of the Merger without the written consent of Hibernia.
The Progressive Preferred Stock accumulates dividends at an
annual rate of $1.25 per share. Progressive has never declared a
dividend on the Progressive Preferred Stock and does not
anticipate declaring a dividend on the Progressive Preferred
Stock in the foreseeable future. At March 31, 1995, the amount
of accumulated dividends on the Progressive Preferred Stock was
approximately $13.85 per share, or an aggregate of $1.80 million.
Progressive may not pay a cash dividend in respect of the
Progressive Common Stock until all accumulated dividends in
respect of the Progressive Preferred Stock have been paid.
The payment of dividends by the Bank, which would be the
source of any dividends paid by Progressive on its shares, is
subject to certain legal restrictions applicable to all Louisiana
state banks. The prior approval of the OFI is required if the
total of all dividends declared in any one year will exceed the
sum of the Bank's net profits of that year and net profits of the
immediately preceding year. Additionally, dividends may not be
declared or paid by a Louisiana state bank unless the bank has
unimpaired surplus equal to 50% of the outstanding capital stock
of the bank, and no dividend payment may reduce the bank's
unimpaired surplus below 50%. At March 31, 1995, the Bank had
approximately $4.6 million available for the payment of dividends
without prior approval of the OFI.
Security Ownership of Principal Shareholders and Management
Ownership of Principal Shareholders. The following table
sets forth information concerning all persons known to
Progressive to be the beneficial owners, directly or indirectly,
of more than 5% of the outstanding shares of Progressive Common
Stock, Progressive's only class of voting securities, as of the
Record Date. Unless otherwise indicated, the named persons have
direct beneficial ownership of the shares with sole voting and
investment power.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
Gerald H. Smith 151,862 (1) 24.6%
P. O. Box 131405
Houston, TX 77219
R. Preston Wailes 62,564 10.1%
1528 Nashville Ave.
New Orleans, LA 70115
-42-
Linda Marie Perry 52,597 (2) 8.5%
Arceneaux
#9 Wren Road
Covington, LA 70433
Financial Corporation of 51,762 8.4%
Louisiana
P. O. Box 267
Crowley, LA 70527
John H. Laing 34,391 5.6%
104 Krumbhaar Court
Houma, LA 70360
(1) Includes 28,175 shares held of record by Mr. Smith as
trustee of a family trust and 42,263 shares acquired by Mr. Smith
from an estate, as to all of which shares Mr. Smith has sole
voting and investment power.
(2) Includes 45,200 shares, in seven equal lots of 5,650 shares,
held of record by Mrs. Arceneaux as usufructuary for certain
family members and 5,650 shares held of record by Mrs. Arceneaux
as trustee of a family trust. Mrs. Arceneaux has sole voting
power with respect to the shares held as usufructuary and sole
voting and investment power with respect to the shares held as
trustee. Also includes 1,800 shares in three custodial accounts
of 600 shares each and held of record jointly by Mrs. Arceneaux
and other family members on behalf of minor heirs, as to which
shares Mrs. Arceneaux has shared voting and investment power.
Does not include 11,331 shares beneficially owned by Elton A.
Arceneaux, Jr., Mrs. Arceneaux's spouse, as to which Mrs.
Arceneaux disclaims beneficial ownership.
Ownership of Management. The following table sets forth
information concerning the shares of Progressive Common Stock and
Progressive Preferred Stock beneficially owned, directly or
indirectly, by each director and executive officer of
Progressive, and all directors and executive officers as a group,
as of the Record Date. Unless otherwise indicated, the named
persons have direct beneficial ownership of the shares with sole
voting and investment power.
-43-
<TABLE>
(CAPTION>
Name and Address Class Amount and Nature of Percent
of Beneficial Owner of Stock Beneficial Ownership of Class
<S> <C> <C> <C>
John H. Laing Common 34,391 5.6%
Preferred 5,660 4.4%
R. Preston Wailes Common 62,564 10.1%
Preferred 3,421 2.6%
Elton A. Arceneaux, Jr. Common 11,331 (1) 1.8%
Preferred 3,299 2.5%
All Directors and Common 108,286 17.5%
Executive Officers Preferred 12,380 9.5%
as a Group (3 persons)
</TABLE>
(1) Does not include 5,597 shares of Progressive Common Stock
owned by Linda Marie Perry Arceneaux, Mr. Arceneaux's spouse,
45,200 shares of Progressive Common Stock, in seven equal lots of
5,650 shares, held of record by Mrs. Arceneaux as usufructuary
for certain family members or 5,650 shares of Progressive Common
Stock held of record by Mrs. Arceneaux as trustee for a family
trust, or 1,800 shares of Progressive Common Stock, in three
custodial accounts of 600 shares each, held of record jointly by
Mrs. Arceneaux and other family members on behalf of minor heirs,
as to all of which shares Mr. Arceneaux disclaims beneficial
ownership.
As of the Record Date, the directors and executive officers
of Progressive have voting power with respect to a total of
108,286 shares, or approximately 17.5% of the outstanding shares
of Progressive Common Stock. Such directors and executive
officers, as well as other major shareholders, have agreed to
vote their stock, representing an aggregate of approximately of
the Progressive Common Stock outstanding, in favor of the Merger,
unless they are legally required to abstain from voting or to
vote against the Merger.
-44-
PROGRESSIVE MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AT AND FOR THE YEAR ENDED DECEMBER 31, 1994
Overview
Progressive reported consolidated net income of $4,119,000
for the year ended December 31, 1994, which represents a 230%
increase from net income of $1,248,000 for the year ended
December 31, 1993. Net income for the year ended December 31,
1993 reflected an 82.5% decrease from net income of $7,127,000
for the year ended December 31, 1992. Net income per common
share was $6.37, $1.71 and $10.67, for 1994, 1993 and 1992,
respectively.
The primary reasons for the improvement in net income for
the year ended December 31, 1994 were the payment on August 1,
1994 of a fully reserved investment by the Bank in the 12%
Mandatory Convertible Subordinated Debentures due 1996 (the "FCB
Debentures") of First Continental Bancshares, Inc. which
contributed $1,346,000, the reversal of deferred income taxes
which contributed $1,808,000 and a net negative provision for
loan losses of $648,000. Partially offsetting these positive
contributions to net income were losses of $874,000 resulting
from the year end sale of certain securities in the Bank's
available for sale securities portfolio which had declined in
value because of the 300 basis point rise in short-term interest
rates during 1994.
The decrease in net income for the year ended December 31,
1993 as compared to the year ended December 31, 1992, was
principally attributable to an extraordinary gain of $5,314,000,
net of tax effect, included in net income for 1992. Excluding
extraordinary items, Progressive's consolidated earnings before
tax considerations for the year ended December 31, 1993 reflected
increased Bank profitability.
Improving loan quality and lower net charge-offs resulted in
the negative provision for loan losses of $648,000 for 1994, as
compared to provisions of $168,000 in 1993 and $101,000 in 1992.
Net interest income increased $934,000, or 14.1%, to $7,564,000
in 1994 as compared to net interest income of $6,630,000 in 1993.
Net interest income in 1993 reflected an increase of 19.2% as
compared to 1992 net interest income of $5,562,000. The primary
reasons for the increase in net interest income in 1994 were the
payment of the interest portion of the FCB Debentures, as well as
increased interest income on the Bank's municipal bond portfolio
as a result of growth in the portfolio during 1993 and 1994 and
an increase in interest and fees on loans resulting from the
growth in the Bank's loan portfolio during 1994. The increase in
net interest income experienced in 1993 is attributable to a
lower cost of funds at the Bank level, along with an increase in
interest income on the Bank's municipal bond portfolio resulting
from growth in the portfolio during this period and an increase
in interest and fees on loans based on the Bank's corresponding
loan growth in 1993.
-45-
Progressive's consolidated assets were $141,693,000 and
total deposits were $121,761,000 at December 31, 1994. Total
assets reflected a 6.6% increase in 1994 compared to total assets
of $132,909,000 at December 31, 1993 and total deposits reflected
a 7.1% increase in 1994 compared to total deposits of
$113,666,000 in 1993. Total assets at December 31, 1993
reflected a 1.2% increase over total assets of $131,305,000 at
December 31, 1992. Total deposits at December 31, 1993 reflected
a 1.3% decrease as compared to total deposits of $115,169,000 at
December 31, 1992. Loans, net of reserve for possible loan
losses, reflected a trend of growth in the Bank's loan portfolio
over the last three year end periods. Loans, net of reserve for
possible loan losses, were $78,557,000 at December 31, 1994,
which represented a 10.4% increase over net loans of $71,176,000
at December 31, 1993, which in turn represented an increase of
3.6% as compared to net loans of $68,735,000 at December 31,
1992. The increase in total assets at December 31, 1994 as
compared to December 31, 1993 was due primarily to the growth
experienced in the Bank's loan portfolio, coupled with a
significant increase in cash and due from banks caused by a
growth in deposits generated by a newly-opened branch.
The following table sets forth certain information regarding
Progressive's results of operations for the periods indicated.
Year Ended December 31,
1994 1993 1992
(Dollars in thousands,
except per share data)
Net income applicable to common shares $3,957 $1,084 $6,948
Net income per share* $ 6.37 $ 1.71 $10.67
Return on average assets 2.93% 0.93% 5.83%
Return on average equity 53.63% 20.65% 190.56%
Average equity to average assets 5.47% 4.50% 3.06%
Dividend pay-out ratio - - -
* Per share data are based upon a weighted average number of
shares outstanding of 621,560 for the year ended December 31, 1994,
632,878 for the year ended December 31, 1993 and 651,312 for the
year ended December 31, 1992.
A more detailed review of Progressive's financial condition
and results of operations for the years ended December 31, 1994,
1993 and 1992 follows. This discussion and analysis should be read
in conjunction with Progressive's Consolidated Financial Statements
and the Notes thereto appearing elsewhere in this Proxy Statement-
Prospectus.
-46-
Results of Operations
Net Interest Income. Net interest income is the primary
source of income for Progressive and represents the amount by which
interest and fees generated by earning assets exceed the cost of
funds, primarily interest paid to depositors on interest-bearing
accounts. Net interest income, before deduction of the provision
for possible loan losses, for the year ended December 31, 1994 was
$7,564,000, which represents a 14.1% increase over net interest
income for 1993. Net interest income, before deduction of the
provision for possible loan losses, for the year ended December 31,
1993 was $6,630,000, which represents a 19.2% increase over net
interest income of $5,562,000 for the year ended December 31, 1992.
The primary reasons for the increase in net interest income in 1994
were the payment of the interest portion of the FCB Debentures, as
well as increased interest income on the Bank's municipal bond
portfolio as a result of growth in the portfolio during 1993 and
1994 and an increase in interest and fees on loans resulting from
the growth in the Bank's loan portfolio during 1994. Three factors
contributed to the increase in net interest income in 1993. First,
an increase in interest income resulted from the Bank deploying its
excess deposits in purchasing state and municipal obligations.
Interest income on state and municipal obligations increased 3405%
from $17,000 in 1992 to $596,000 in 1993. Second, interest and
fees on loans increased 5.3% as a result of loan growth during the
period. Third, total interest expense decreased 8.2% because of
the ability of the Bank to reprice certain portions of its deposits
in a more favorable rate environment.
The trend in net interest income is commonly evaluated in
terms of average rates using the net interest margin and the
interest rate spread. The net interest margin, or the net yield on
earning assets, is computed by dividing net interest income by
average earning assets and represents the difference between the
average yield returned on average earning assets and the average
rate paid for funds used to support those earning assets. The net
interest margin for Progressive for 1994 was 4.75%, which
represents a decrease from a net interest margin of 5.08% in 1993
and 4.88% in 1992. The interest rate spread measures the
difference between the average yield on earning assets and the
average rate paid on interest-bearing sources of funds. The
interest rate spread also decreased from 4.28% in 1993 to 3.82% in
1994. Both the net interest margin and the interest rate spread
declined in 1994 because of Progressive's rising cost of funds
throughout this period as a result of rising short-term interest
rates during 1994. The decline in net interest margins and the
interest rate spread was somewhat mitigated by the ability of the
Bank to reprice certain portions of its assets faster than its
liabilities. While short-term interest rates declined in 1993,
this trend reversed itself in 1994 through a series of increases in
the Federal discount rate totaling 300 basis points for the year.
The net interest rate, net interest margin and overhead ratios for
1994, 1993 and 1992 are as follows:
-47-
1994 1993 1992
Net interest spread 3.82% 4.28% 4.12%
Net interest margin 4.75% 5.08% 4.88%
Net overhead ratio 1.92% 2.71% 2.82%
Progressive's interest-earning assets include loans,
investment securities, demand and time deposits with the Federal
Home Loan Bank of Dallas and other commercial banks, and federal
funds sold. Average interest-earning assets were $132,317,000 for
the year ended December 31, 1994 and $126,463,000 for the year
ended December 31, 1993. Interest-earning assets were 4.6% higher
in 1994 due to loan growth of 5% during 1994 and 3% growth in the
Bank's non-taxable investment securities portfolio as a result of
growth in the municipal bond portfolio during 1994. Progressive's
primary earning asset is its loan portfolio. Average loans rose
from $69,356,000 in 1993 to $72,796,000 in 1994.
The following table sets forth certain information concerning
the average balances, interest income and expense and interest
rates on Progressive's interest-earning assets and interest-bearing
liabilities for the years indicated.
-48-
<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES
1994 1993
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Interest Rate Balance Interest Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-bearing deposits with banks $ 5,577 $ 125 2.24% $ 4,821 $ 87 1.80%
Investment securities:
Taxable (1) 40,489 3,381 8.35% 41,936 2,969 7.08%
Non-Taxable 13,455 762 5.66% 10,350 596 5.76%
Loans, net of unearned discount & reserves (2) 72,796 7,858 10.79% 69,356 7,691 11.09%
Federal funds sold & securities purchased
under agreements to resell - - -% - - -%
________ _______ ______ ________ _______ ______
Total interest-earning assets 132,317 12,126 9.16% 126,463 11,343 8.97%
_______ ______ _______ ______
_______ ______ _______ ______
Cash & due from banks 2,487 2,286
Other assets 5,573 5,476
________ ________
Total assets $140,377 $134,225
________ ________
________ ________
LIABILITIES & SHAREHOLDERS' EQUITY:
Interest-bearing deposits:
Savings deposits $ 36,736 $ 876 2.38% $ 35,020 $ 915 2.61%
Time deposits 63,026 3,038 4.82% 60,977 2,990 4.90%
Federal funds purchased & securities sold
under agreements to repurchase 125 16 12.80% 625 24 3.84%
Long-term debt, subordinated debentures
& other borrowings 8,214 632 7.69% 6,427 784 12.20%
________ _______ ______ ________ _______ ______
Total interest-bearing liabilities $108,101 $ 4,562 4.22% $103,049 $ 4,713 4.57%
_______ ______ _______ ______
_______ ______ _______ ______
Interest free deposits 20,921 19,311
Other liabilities 3,674 5,822
Shareholders' equity 7,681 6,043
________ ________
________ ________
Total liabilities & shareholders' equity $140,377 $134,225
________ ________
________ ________
Interest income $12,126 $11,343
Interest expense 4,562 4,713
_______ _______
Net yield on earning assets $ 7,564 5.72% $ 6,630 5.24%
_______ ______ _______ ______
_______ ______
(1) Includes interest on the FCB Debentures.
(2) Includes non-accrual loans.
</TABLE>
-49-
The following table sets forth for the periods indicated
changes in interest earned and interest paid for each major
category of interest-earning assets and interest-bearing
liabilities attributable to changes in average volume or rates.
<TABLE>
<CAPTION>
INTEREST DIFFERENTIAL
1994 compared to 1993 1993 compared to 1992
Due to change in: Due to change in:
Volume Volume
Net and Net and
Change Volume Rate Rate Change Volume Rate Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in:
Interest earned on:
Loans $ 167 $ 381 $ (208) $ (6) $ 386 $ 532 $ (136) $(10)
Federal funds sold & securities
purchased under agreements
to resell - - - - - - - -
Investment securities:
Taxable 412 (102) 533 (19) (215) 33 (245) (3)
Non-Taxable 166 179 (10) (3) 579 493 3 83
Interest-bearing deposits
with banks 38 14 21 3 (101) (52) (68) 19
________ ________ ______ ______ ________ ______ _______ ____
Total interest-earning
assets $ 783 $ 472 $ 336 $ (25) $ 649 $1,006 $ (446) $ 89
________ ________ ______ ______ ________ ______ _______ ____
________ ________ ______ ______ ________ ______ _______ ____
Increase (decrease) in:
Interest paid on:
Savings deposits $ (39) $ 45 $ (80) $ (4) $ (157) $ 111 $ (244) $(24)
Time deposits 48 100 (49) (3) (452) 11 (462) (1)
Federal funds purchased &
securities sold under
agreements to repurchase (8) (19) 56 (45) 24 - 3 21
Long-term debt, subordinated
debentures & other
borrowings (152) 218 (290) (80) 166 (42) 223 (15)
________ ________ _____ ______ ________ _______ _______ _____
Total interest-bearing
liabilities $ (151) $ 344 $(363) $ (132) $ (419) $ 80 $ (480) $(19)
________ ________ _____ ______ ________ _______ _______ ____
________ ________ _____ ______ ________ _______ _______ ____
Interest differential $ 934 $ 128 $ 699 $ 107 $ 1,068 $ 926 $ 34 $108
</TABLE>
Provision for Possible Loan Losses. The provision for possible
loan losses is the amount that is added to Progressive's allowance
for possible loan losses, by a charge against earnings, in order to
maintain a balance in the allowance for possible loan losses that
is deemed by management to be adequate to absorb the inherent risk
of future loan losses in Progressive's loan portfolio. The amount
of the provision is dependent upon many factors, including
management's evaluation of historical loan loss experience in
relation to outstanding loans, the existing level of the allowance,
reviews of loan quality, loan growth, changes in the composition of
the loan portfolio, general economic factors, the financial
condition of the borrowers, their ability to repay the loan and the
value and liquidity of collateral.
-50-
Progressive's annual provision for possible loan losses
decreased 486% from 1993 to 1994 from $168,000 to a negative
provision of $648,000. The annual provision increased between 1992
and 1993, from $101,000 for the year ended December 31, 1992 to
$168,000 for the year ended December 31, 1993. Because of fewer
nonperforming loans and lower net charge-offs over the past two
years, Progressive took the one-time negative provision for loan
losses in 1994.
Non-interest Income. Progressive's primary sources of non-
interest income are service charges and fees on deposit accounts,
wire transfer collections, cashier's check fees, fees from safe
deposit box rentals and net securities gains or losses. Non-
interest income decreased 7.3% from $1,462,000 for the year ended
December 31, 1993 to $1,356,000 for the year ended December 31,
1994. Non-interest income increased 14.13% between 1992 and 1993,
from $1,281,000 for the year ended December 31, 1992 to $1,462,000
for the year ended December 31, 1993. The decrease can be
attributed primarily to loss on sale of securities of approximately
$895,000 during 1994, which was somewhat offset by the $750,000
payment of the FCB Debentures during 1994. The reasons for the
increase in 1993 were increases in service charges on deposit
accounts and miscellaneous other income.
Non-interest Expense. Progressive's non-interest expense
primarily includes salaries and employee benefits and other types
of business expenses that Progressive incurs in the course of day-
to-day operations, such as expense for occupancy, depreciation and
maintenance of equipment, professional fees, and supplies. Non-
interest expense was $5,448,000 for the year ended December 31,
1994, which represents a 2.9% decrease from 1993. Progressive's
non-interest expense was $5,611,000 for the year ended December 31,
1993, which represents a 15% increase from non-interest expense of
$4,879,000 for the year ended December 31, 1992. The decrease in
non-interest expense for 1994 was due to a decrease in writedowns
of other real estate and other assets from $339,000 in 1993 to
$67,000 in 1994, the elimination of the stock subject to transfer
expense during 1994 and the elimination of data processing fees to
an affiliate in 1994, which was partially offset by an increase in
salaries and employee benefits during 1994. The increase in 1993
was primarily attributable to increases in salaries and employee
benefits during the period in anticipation of opening new branch
facilities in 1994. The primary cause of this increase in 1993 was
the increase in personnel associated with the change in handling of
data processing for the Bank.
Income Taxes. Progressive's effective tax rate decreased
significantly during 1994 in comparison to 1993 and 1992 due to the
reversal of deferred taxes previously provided on the difference
between the book basis and the tax basis of Progressive's
investment in the stock of the Bank. Progressive adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"), on January 1, 1993. The adoption of SFAS 109,
which is included in "Other" in the rate reconciliation table
included in Note 7 to Progressive's Consolidated Financial
Statements contained elsewhere herein, did not materially impact
Progressive's financial statements.
-51-
Financial Condition
Total Assets. At December 31, 1994, total consolidated assets
were $141,693,000, compared to $132,909,000 at December 31, 1993
and $131,305,000 at December 31, 1992. Total average assets
reflect a 9.7% increase from $122,343,000 at December 31, 1992 to
$134,225,000 at December 31, 1993, and a 4.6% increase to
$140,377,000 at December 31, 1994. These increases were primarily
the result of the continued growth of the Bank's loan portfolio
throughout this three year period as interest-bearing and non
interest-bearing deposits increased.
The major components and their percentage of total assets at
December 31, 1994, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
Amount Percent Amount Percent Amount
Percent
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits with banks $ 5,941 4.19% $ 1,972 1.48% $ 4,081 3.10%
Investment securities:
Taxable 33,958 23.97% 40,730 30.65% 47,618 36.27%
Non-taxable 14,579 10.29% 12,265 9.23% 2,483 1.89%
Loans, net of unearned discount
& reserves 78,557 55.44% 71,176 53.55% 68,735 52.35%
Federal funds sold & securities
purchased under agreements to
resell - -% - - - -%
Cash & due from banks 3,401 2.40% 2,126 1.60% 2,956 2.25%
Other assets 5,257 3.71% 4,640 3.49% 5,432 4.14%
________ ______ ________ ______ ________ ______
Total assets $141,693 100% $132,909 100% $131,305 100%
</TABLE>
Investment Securities. Progressive adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments and Debt Securities" ("SFAS 115"), as of January 1,
1994. SFAS 115 addresses the accounting and reporting for
investment in equity securities that have readily determinable fair
value and for all investment in debt securities and requires
classification of securities as trading, available for sale or held
to maturity. Management determines the classification of
securities when they are purchased. The Bank does not hold
securities in or operate a trading account. Securities which
Progressive has the intent and ability to hold to maturity are
classified as held to maturity and are stated at cost, adjusted for
amortization of premiums and accretion of discounts. Securities
which may be sold in response to interest rates, liquidity needs or
other factors are classified as available for sale. These
securities are reflected at fair value, and net unrealized gains or
losses are reflected as a separate component of shareholders'
equity, net of income tax effects.
-52-
The composition of Progressive's investment portfolio directly
reflects Progressive's investment strategy of maximizing portfolio
yields subject to risk and liquidity considerations. The combined
value of the available for sale portfolio of $22,881,000 and the
held to maturity portfolio of $25,656,000 was $48,537,000 at
December 31, 1994, which represents an 8.4% decrease from
December 31, 1993. During December 1994, the Bank sold $5,597,000
of its available for sale securities, the proceeds of which were
not reinvested prior to year end causing a corresponding decrease
in the entire portfolio. The total book value of Progressive's
investment portfolio at December 31, 1993 was $52,995,000, which
represents an increase of 5.78% over total investment securities of
$50,101,000 at December 31, 1992.
The composition, amortized cost and estimated fair value of
investment securities at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
December 31, 1994
Amortized Estimated
Cost Fair Value
(Dollars in thousands)
<S> <C> <C>
Available for Sale
U.S. Treasury and other U.S. government agencies $ 2,832 $ 2,799
Mortgage-backed securities and collateral mortgage obligations 14,565 14,030
States of the U.S. and political subdivisions 5,509 5,285
Banker's acceptances and other investments 767 767
_________ _________
Total $ 23,673 $ 22,881
_________ _________
_________ _________
Held to Maturity
U.S. Treasury and other U.S. government agencies $ 3,979 $ 3,829
Mortgage-backed securities and collateral mortgage obligations 12,183 11,570
States of the U.S. and political subdivisions 9,494 8,972
_________ _________
Total $ 25,656 $ 24,371
_________ _________
_________ _________
</TABLE>
The composition and book value of investment securities at the
dates indicated were as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(Dollars in thousands)
<S> <C> <C>
U.S. Treasury and other U.S. government agencies $ 7,508 $ 8,264
Mortgage-backed securities and collateral mortgage obligations 32,516 38,840
States of the U.S. and political subdivisions 12,265 2,483
Banker's acceptances and other investments 706 514
________ ________
Total $ 52,995 $ 50,101
________ ________
________ ________
</TABLE>
-53-
Mortgage-backed securities and collateral mortgage obligations
("CMOs") totaled $26,748,000, or 54% of Progressive's total
investment portfolio at amortized cost at December 31, 1994.
Mortgage-backed securities and CMOs totaled $32,516,000, or 61% of
Progressive's total investment portfolio at December 31, 1993
compared with $38,840,000, or 77% of Progressive's total investment
portfolio at December 31, 1992. During 1994, the Bank invested and
reinvested its funds primarily in CMOs and U.S. Government agency
securities to take advantage of favorable yields, while maintaining
a high degree of security in the portfolio. Because of the
dramatic change in the Bank's tax rate and to achieve further
diversification, the Bank entered into a strategic plan to purchase
tax free municipal bonds to replace its maturing securities and
CMOs with accelerated cash flows. During 1993, the investment
division of the Bank completed its plan of redistributing the
portfolio by purchasing mortgage-backed securities, CMOs, U.S.
Government agency securities and tax-free municipal bonds.
Progressive consistently maintains the largest portion of its
investment portfolio in mortgage-backed securities and CMOs because
these investments offer a high degree of security at acceptable
market yields since they are collateralized by government or
government-sponsored agencies. The stated life of these maturities
extends the average maturity of the investment portfolio. However,
management's experience with these securities indicates that the
actual life will be far shorter than the stated life because of
significant prepayments. Reasons for the shorter stated life
include sales of houses, interest rate changes, and prepayments to
liquidate debt.
The following table sets forth the maturities and weighted
average yields of Progressive's investment securities, other than
mortgage-backed securities and collateral mortgage obligations, at
December 31, 1994. Yields on tax-exempt obligations have not been
computed on a tax equivalent basis.
<TABLE>
<CAPTION>
MATURITY AND WEIGHTED AVERAGE YIELD
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years
Amount Yield Amount Yield Amount Yield Amount Yield
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available for Sale (1)
U.S. Treasury and other U.S.
government agencies $ 1,000 8.44% $ 1,483 6.87% $ - -% $ 350 7.15%
Banker's acceptances and
other investments - -% - -% - -% 767 5.69%
States of the U.S. and
political subdivisions - -% - -% 3,534 5.39% 1,974 5.71%
________ ______ ________ _____ _________ ______ _________ ______
Total $ 1,000 8.44% $ 1,483 6.87% $ 3,534 5.39% $ 3,091 5.87%
________ ______ ________ ______ _________ ______ _________ ______
________ ______ ________ ______ _________ ______ _________ ______
-54-
Held to Maturity
U.S. Treasury and other U.S.
government agencies $ - -% $ 1,993 7.15% $ 486 6.42% $ 1,500 7.75%
Banker's acceptances and
other investments - -% - -% - -% 767 5.69%
States of the U.S. and
political subdivisions - -% - -% - -% 9,494 6.03%
_________ ______ _________ ______ _________ ______ _________ ______
Total $ - -% $ 1,993 7.15% $ 486 6.42% $ 10,994 6.03%
_________ ______ _________ ______ _________ ______ _________ ______
_________ ______ _________ ______ _________ ______ _________ ______
(1) Amounts are at amortized cost.
</TABLE>
No maturity distributions for mortgage-backed securities or
CMOs are shown because principal is recovered monthly through
scheduled repayments and unscheduled prepayments. These amounts
can vary significantly, particularly when market interest rates
change. At December 31, 1994, CMOs and mortgage-backed securities
with an amortized cost of $26,748,000 had an average yield of
7.48%.
As of December 31, 1994, no securities exceeded, in aggregate
by issuer, 10% or more of shareholders' equity, other than issues
secured by the U.S. Government.
Loans. Progressive engages in real estate lending through
real estate mortgage and construction lending, and commercial and
consumer lending. The specific underwriting criteria for each
major loan category is outlined in detail in the Bank's formal
written loan policy and is established by the Bank's Board of
Directors. In general, each loan is evaluated based on, among
other things, character and leverage capacity of the borrower,
capital and investment in a particular property, if applicable,
cash flow, collateral, market conditions for the borrower's
business or project and prevailing economic trends and conditions.
The loan policies of the Bank, including the underwriting criteria
for major loan categories, are adjusted on a regular basis, and
each change is approved by the Bank's Board of Directors. New
criteria and new policies are the result of regulatory changes, the
experience of the existing portfolio, financial and market
conditions and competition in the Bank's primary market. The
Bank's Board of Directors weighs each new criteria after
considering the foregoing factors and in light of the overall
financial condition and performance of the Bank. The Bank's
underwriting criteria are routinely reviewed by management and
external examiners consistent with Bank policy and banking
regulation.
The table below sets forth the type and amount of Progressive's
loans, net of unearned discount, at December 31, 1994, 1993, and
1992.
-55-
<TABLE>
<CAPTION>
December 31,
1994 1993 1992
(Dollars in thousands)
<S> <C> <C> <C>
Commercial, financial, and agricultural loans not secured
by real estate $ 13,123 $ 11,103 $ 13,421
Real estate construction loans 1,420 999 1,061
Real estate mortgage loans 51,097 47,258 42,285
Installment loans to consumers not secured by real estate 14,133 13,672 13,556
________ ________ ________
Total loans $ 79,773 $ 73,032 $ 70,323
________ ________ ________
________ ________ ________
</TABLE>
As of December 31, 1994, the Bank had no concentrations in
excess of 10% of its loan portfolio to any one customer or in any
one business or industry classification.
Loans have increased over the last three-year period. At
December 31, 1994, loans, net of unearned discount, of $79,773,000
reflect a 9% increase compared to net loans of $73,032,000 at
December 31, 1993, which also represented an increase of 4% as
compared to $70,323,000 at December 31, 1992. The Bank experienced
loan growth primarily in real estate mortgage loans throughout this
three-year period as a result of growing strength in the local
economy.
The percentage of loans in each category to total loans for
each of the periods indicated is shown below:
<TABLE>
<CAPTION>
PERCENTAGE OF LOANS
IN EACH CATEGORY
TO TOTAL LOANS
December 31,
1994 1993 1992
<S> <C> <C> <C>
Real estate loans:
Construction 1.78% 1.37% 1.51%
Mortgage 64.05% 64.71% 60.13%
_______ _______ _______
Total real estate loans 65.83% 66.08% 61.64%
_______ _______ _______
Commercial, financial and agricultural 16.45% 15.20% 19.08%
Installment 17.72% 18.72% 19.28%
_______ _______ _______
Total loans 100.00% 100.00% 100.00%
_______ _______ _______
_______ _______ _______
</TABLE>
-56-
The maturity schedule and rate structure of Progressive's loan
portfolio has an impact on Progressive's ability to meet its
liquidity demands and respond favorably to changes in interest
rates. At December 31, 1994, 40% of Progressive's total loans were
scheduled to mature within one year or less and 24% of
Progressive's total loans had floating or adjustable interest
rates. The following table provides information concerning loan
portfolio maturity, based on remaining scheduled repayments of
principal, by type of loan. Real estate loans are included in
either the commercial or installment classifications depending upon
the use of the real estate pledged as collateral and are aged
accordingly.
<TABLE>
<CAPTION>
MATURITY
Over One
One Year through 5 Over 5
Or Less years years Total
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial and agricultural loans
Fixed rate $ 6,339 $12,279 $ 968 $19,586
Variable rate 18,858 - - 18,858
Installment loans
Fixed rate to resell 6,723 23,986 10,389 41,098
Variable rate - - - -
_______ _______ _______ _______
Total loans (excluding non-accruals) 31,920 36,265 11,357 79,542
Non-accrual loans 115 - 116 231
_______ _______ _______ _______
Total loans $32,035 $36,265 $11,473 $79,773
_______ _______ _______ _______
_______ _______ _______ _______
</TABLE>
Normally, borrowers are expected to meet contractual terms.
In some cases, however, borrowers are permitted to roll over
obligations after appropriate review of the credit quality and
determination of the borrower's ability and willingness to repay.
The data shown above is in a format which conforms with
reports to the bank regulatory agencies and has not been restated
to reflect anticipated rollovers, which management does not believe
would materially affect the data presented.
In addition, the Bank is currently a member of the Federal
Home Loan Bank of Dallas, Texas, which also allows the Bank to
borrow funds to support its liquidity on a daily basis, as
necessary. This agency provides long-term secured loans to the
Bank which allow the Bank to provide long-term real estate loans to
qualified customers.
-57-
Nonaccrual, Past Due and Modified Loans. Non-performing
assets include non-performing loans and foreclosed real estate held
for sale. Non-performing loans include loans classified as non-
accrual or renegotiated to provide a reduction or deferral of
interest or principal and those past due 90 days or more on which
interest is still being accrued. It is the general policy of
Progressive to place loans on non-accrual status when, in the
opinion of management, there exists sufficient uncertainty as to
the collectibility of the contractual interest or principal or if
the loan becomes 90 days delinquent, whichever comes first.
Placing a loan on non-accrual status causes an immediate charge
against earnings for the interest which has been accrued but not
yet collected on the loan and eliminates future interest earnings
with respect to that loan. Interest on such loans is not
recognized until all of the principal is collected or until the
loan is returned to a performing status.
As of December 31, 1994, Progressive had non-performing assets
totaling $537,000, or approximately .68% of total loans and
foreclosed property at such date. This represents a 33% increase
in total non-performing assets from $405,000 as of December 31,
1993. This favorable level of non-performing assets is primarily
the result of an aggressive workout program implemented by
management, a higher quality loan portfolio, and an improvement in
the overall economy over the past three years.
Progressive's non-performing loans at December 31, 1994, 1993
and 1992 are shown below.
<TABLE>
<CAPTION>
December 31,
1994 1993 1992
(Dollars in thousands)
<S> <C> <C> <C>
Loans accounted for on a non-accrual basis $ 231 $ 75 $ 13
Loans which are contractually past due 90 or more days 4 11 3
Loans, the term of which have been renegotiated - - 408
______ _____ _____
Total non-performing loans $ 235 $ 86 $ 424
______ _____ _____
______ _____ _____
</TABLE>
There was no interest income from non-performing loans
included in net interest income during the year ended December 31,
1994. If the non-accrual loans listed above had performed
according to their original terms, gross interest income would have
increased by approximately $11,000 for the year ended December 31,
1994. Management believes that all loans identified as containing
significant risk of collectibility have been included above as a
past due or renegotiated loan or a loan on non-accrual status.
In addition to the above classified loans, regulatory
authorities have classified $11,000 of performing loans in 1994.
Management does not believe that these loans represent or result
from trends or uncertainties that could materially impact future
operating results, liquidity, or capital resources of Progressive
or cause management to have serious doubts as to the ability of
such borrowers to comply with the loan repayment terms.
-58-
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan" ("SFAS 114"). This standard
requires the measurement of certain impaired loans based on the
present value of expected future cash flows discounted at the
loan's effective interest rate. Adoption of this new standard is
required for fiscal years beginning after December 15, 1994. The
effect of adopting SFAS 114 on Progressive's financial statements
has not yet been determined, but is not expected to be material.
Allowance for Loan Losses. The Bank charges to operating
expense an amount necessary to maintain the balance in the
allowance for possible loan losses at a level that is deemed to be
adequate to absorb all expected loan losses. Management determines
the adequacy of its reserve and the amount of any additional
provision or negative provision for possible loan losses based on
many factors, including an evaluation of historical loan loss
experience in relation to outstanding loans, the existing level of
the allowance, reviews of loan quality, loan growth, changes in the
composition of the loan portfolio, general economic factors, the
financial condition of the borrowers and their ability to repay the
loan and the value and liquidity of collateral. The amount in the
allowance for possible loan losses is reviewed by management on a
monthly basis to determine whether additional provisions should be
made or whether transfers from the allowance to earnings are
justified. The Bank's board of directors reviews the adequacy of
the reserve on a quarterly basis.
The following table summarizes averages of loan balances,
changes in the allowance for possible loan losses arising from
loans charged off and recoveries on loans previously charged off,
by loan category, and the provision for possible loan losses
charged to operating expense as of the dates and for the periods
indicated.
<TABLE>
<CAPTION>
December 31,
1994 1993 1992
(Dollars in thousands)
<S> <C> <C> <C>
Average total loans $ 72,796 $ 69,356 $ 64,646
________ ________ ________
________ ________ ________
Beginning balance $ 1,856 $ 1,588 $ 1,553
Loans charged off:
Real Estate:
Construction - - -
Mortgage 14 34 19
Commercial, financial and agricultural 33 8 108
Installment 48 42 105
________ ________ ________
Total charged off 95 84 232
________ ________ ________
________ ________ ________
Recoveries
Real Estate:
Construction - - -
Mortgage 22 76 12
Commercial, financial and agricultural 19 67 132
Installment 62 41 22
________ ________ ________
Total recoveries 103 184 166
________ ________ ________
-59-
Net loans charged off (8) (100) 66
________ ________ ________
Provision for possible loan losses (648) 168 101
Amount of allowance for possible loan losses at
the end of period $ 1,216 $ 1,856 $ 1,588
________ ________ ________
________ ________ ________
Ratio of net charge-offs during period to average
loans outstanding -0.01% -0.14% 0.10%
</TABLE>
Net recoveries for the year ended December 31, 1994 were
($8,000), or (0.01%) of average loans outstanding, compared to
($100,000), or (0.14%) of average loans outstanding for the year
ended December 31, 1993. Net charge-offs were $66,000, or 0.10% of
average loans outstanding, for the year ended December 31, 1992.
During 1994, total recoveries of $103,000 exceeded net charge-offs
of $95,000, which is a reflection of the quality of the loan
portfolio. After two consecutive years of negative net charge-offs
and a third party evaluation of the portfolio and the reserves
needed and a comparison of the loans to reserve ratio with other
peer group banks, management recommended and the Board of Directors
approved a one-time negative provision. Progressive's allowance
for possible loan losses at December 31, 1994 was $1,216,000,
which, in management's opinion, is adequate to cover possible
losses in its current loan portfolio. However, no assurance can be
given that future changes in economic conditions that might
adversely affect Progressive's principal market area, borrowers or
collateral values, and other circumstances will not result in
increased losses in Progressive's loan portfolio in the future.
Progressive has allocated the allowance for possible loan
losses account within the categories of loans set forth in the
table below. The approximate dollar amount of the allowance
allocable to the stated loan categories, and the percent of total
loans in each such category for the periods presented, are as
follows:
<TABLE>
<CAPTION>
ALLOCATION OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
December 31,
1994 1993 1992
Allowance Loans Allowance Loans Allowance Loans
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans
Construction $ 15 1.78% $ 10 1.37% $ - 1.51%
Mortgage 555 64.05% 500 64.71% 504 60.13%
_________ ______ _________ ______ _________ ______
Total real estate loans 570 65.83% 510 66.08% 504 61.64%
_________ ______ _________ ______ _________ ______
Commercial, financial and agricultural 175 16.45% 177 15.20% 166 19.08%
Installment and credit-card 135 17.72% 137 18.72% 138 19.28%
Foreign - -% - -% - -%
Not allocated 336 -% 1,032 -% 780 -%
_________ ______ _________ ______ _________ ______
Total loans $ 1,216 100% $ 1,856 100% $ 1,588 100%
_________ ______ _________ ______ _________ ______
_________ ______ _________ ______ _________ ______
</TABLE>
-60-
Deposits and Other Liabilities. Progressive's average total
deposits increased from $108,589,000 in 1992 to $115,308,000 in
1993 to $120,683,000 in 1994. Non interest-bearing demand deposits
increased from an average of $16,037,000 in 1992 to $19,311,000 in
1993 to $20,921,000 in 1994. The growth in deposits in 1994 is
primarily attributable to new customer deposits resulting from the
opening of a new branch in a new market area for the Bank during
the second quarter of 1994. Progressive does not rely on brokered
deposits, and Progressive did not change its strategy of pursuing
large public fund deposits during 1994 or 1993. Progressive had
total public fund deposits at December 31, 1994 and December 31,
1993 of $8,498,000 and $6,547,000, respectively.
Jumbo CDs (Certificates of Deposit in excess of $100,000)
totaled $20,440,000 at December 31, 1994, which represents an
increase over Jumbo CDs of $18,414,000 at December 31, 1993 and
$16,047,000 in 1992. The consistent stability in the amount of
Jumbo CDs over the past three years has primarily been the result
of customer confidence in the Bank, particularly on the part of a
few key customers, public bodies and directors. At December 31,
1994, approximately 71% of the Jumbo CDs were scheduled to mature
in one year or less. Previously, Jumbo CDs commanded higher rates
of interest than smaller retail deposits and funds applied to Jumbo
CDs were subject to being moved to other financial institutions if
a higher rate could be obtained by the depositor. Thus, Jumbo CDs
were considered less stable than other deposits. In 1991, the Bank
instituted pricing changes which did not offer a premium yield for
Jumbo CDs. As a result, the majority of Progressive's Jumbo CDs
are held by bank directors or public fund depositors and have
historically shown stability. Consequently, management does not
consider these Jumbo CDs to represent highly volatile deposits.
The remaining maturities of Jumbo CDs issued by Progressive at
December 31, 1994 are summarized in the table below.
<TABLE>
<CAPTION>
TIME CERTIFICATES OF
DEPOSIT OF $100,000 OR MORE
(Dollars in thousands)
<S> <C>
Maturing within:
3 months or less $ 7,100
Over 3 through 6 months 6,800
Over 6 through 12 months 625
Over 12 months 5,915
_______
Total $20,440
</TABLE>
The following table summarizes the amounts of average deposits
and average rates for the past three years:
-61-
<TABLE>
<CAPTION>
December 31,
1994 1993 1992
Amount Rate Amount Rate Amount Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand deposits $ 20,921 -% $ 19,311 -% $ 16,037 -%
Interest-bearing money market/NOW
deposits 25,919 2.32% 25,016 2.44% 23,078 3.27%
Savings deposits 10,817 2.67% 10,004 3.01% 8,684 3.71%
Time deposits 63,026 4.82% 60,977 4.90% 60,790 5.65%
________ _____ ________ _____ ________ _____
Total average deposits $120,683 3.26% $115,308 3.38% $108,589 4.16%
________ _____ ________ _____
________ _____ ________ _____
</TABLE>
From time to time, Progressive also has liabilities in the
form of borrowed funds, which generally consist of federal funds
purchased, securities sold under agreements to repurchase, short-
term and long-term borrowings from the Federal Home Loan Bank of
Dallas, Texas, other short-term borrowings, and long-term debt.
The Bank is a member of the Federal Home Loan Bank of Dallas,
Texas, which enables members to borrow both short-term and long-
term funds to facilitate liquidity and establish long-term lending
programs. At December 31, 1994, the Bank had no short-term
borrowings and long-term borrowings totaling $6,196,000.
Progressive had long-term debt due to Progressive Houma Group, Inc.
("PHG") totaling approximately $1,804,000 at December 31, 1993,
which was retired on April 26, 1994. Progressive obtained a loan
from HNB amounting to $3,904,000 to facilitate the retirement of
the PHG debt and to exercise its option to repurchase the right to
acquire 19.5% of the stock of the Bank. At December 31, 1994,
Progressive's long-term debt due HNB had been reduced to
approximately $2,735,000. See Note 8 to Progressive's Consolidated
Financial Statements contained elsewhere in this Proxy Statement-
Prospectus.
Liquidity and Interest Rate Sensitivity Management. The
primary functions of asset and liability management are to assure
adequate liquidity and to maintain an appropriate balance between
interest-earning assets and interest-bearing liabilities.
Liquidity represents the Bank's ability to meet the daily demand
for funds from its customers to pay maturing deposits, honor checks
and drafts, extend credit and meet other commitments. Management
monitors liquidity requirements as warranted by interest rate
trends, changes in the economy, changes in the scheduled maturity,
and interest rate sensitivity of the investment and loan portfolios
as well as deposits. The Bank attempts to match rate-sensitive
assets and liabilities in order to minimize exposure from
fluctuations in interest rates and to enhance consistent growth of
net interest income through periods of changing interest rates.
-62-
The asset portion of the balance sheet provides liquidity
primarily through cash and due from banks, loan principal
repayments and maturities of investment securities. Principal
repayments due in one year or less on all of the Bank's outstanding
loans aggregated $32,035,000 at December 31, 1994, while investment
securities maturing or repricing in the same time frame totaled
$9,540,000 at December 31, 1994. Other short-term investments,
such as deposits in the Federal Home Loan Bank of Dallas, Texas,
federal funds sold, securities purchased under agreements to
resell, cash flow from securities portfolio and maturing deposits
with other banks are additional sources of liquidity. The amounts
of these other short-term investments at December 31, 1994, 1993
and 1992 were $7,304,000, $997,000 and $4,081,000, respectively.
These amounts vary due to year-end investment strategies in
anticipation of rate movements in the securities market and year-
end fluctuations in customer and public funds deposits.
The liability portion of the balance sheet provides liquidity
through various interest and non interest-bearing deposit accounts,
federal funds purchased, securities sold under agreements to
repurchase, and other short-term borrowings. Long-standing
relationships with many institutions have provided the Bank with
the opportunity to buy and sell federal funds and loans on a daily
basis.
The Bank's liquidity is monitored and managed by an Asset-
Liability Committee. For monitoring purposes, the Bank computes a
liquidity ratio expressed as liquid assets as a percentage of total
unsecured liabilities. At December 31, 1994, the Bank's liquidity
ratio was 39.46%, as compared with a liquidity ratio of 43.10% at
December 31, 1993 and 42.55% at December 31, 1992. This range of
liquidity provided the Bank with the flexibility needed to confront
liquidity demands presented in the current economic cycle and the
market conditions of the past three years. The Asset-Liability
Committee also monitors interest rate sensitivity. Plans to deal
with gaps include planned roll-over and growth in deposits and
additional borrowing matched to mortgage loans. Interest rate
sensitivity is measured in terms of an interest sensitivity gap,
which is the excess of interest-sensitive earning assets over
interest-bearing liabilities for a given time period. The Bank had
a one-year interest sensitivity gap of ($19,979,000) or (15.6%) of
earning assets as of December 31, 1994. The following table sets
forth interest sensitivity gaps for the Bank at the intervals
indicated based on contractual maturities or earliest repricing
dates as of December 31, 1994:
-63-
<TABLE>
<CAPTION>
December 31, 1994
0 - 91 - 181 - 1 to Over
90 day 180 days 365 days 5 years 5 years Total
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Earning Assets
Loans $ 21,188 $ 4,477 $ 6,370 $ 36,265 $ 11,473 $ 79,773
Taxable Securities 3,624 1,809 3,917 16,621 7,787 33,758
Non-taxable Securities - - - 1,557 13,222 14,779
________ _________ _________ ________ ________ ________
Total Earning Assets $ 24,812 $ 6,286 $ 10,287 $ 54,443 $ 32,482 $128,310
________ _________ _________ ________ ________ ________
Interest Bearing Liabilities
Savings & MMA 33,885 - - - - 33,885
Other Time 11,170 9,139 6,377 39,461 - 66,147
Repurchase Agreements - - - - - -
Other Borrowed Money 208 201 384 3,995 1,408 6,196
________ _________ _________ ________ ________ ________
Total Interest Bearing
Liabilities $ 45,263 $ 9,340 $ 6,761 $ 43,456 $ 1,408 $106,228
________ _________ _________ ________ ________ ________
Interest sensitivity gap $(20,451) $ (3,054) $ 3,526 $ 10,987 $ 31,074 $ 22,082
________ _________ _________ ________ ________ ________
Cumulative interest sensitivity gap $(20,451) $ (23,505) $ (19,979) $ (8,992) $ 22,082
________ _________ _________ ________ ________
Percentage of total earning assets -15.9% -18.3% -15.6% -7.0% 17.2%
Percentage of interest-sensitive
assets to interest-sensitive
liabilities 54.8% 67.3% 152.2% 125.3% 2,307.0%
</TABLE>
Capital Resources. The FDIC has implemented risk-based
capital guidelines which are applicable to all federally-insured
state banks. These guidelines require such banks to maintain a
certain risk-based capital ratio, which takes factors such as the
riskiness of a bank's assets and off-balance sheet items into
consideration. The risk-based capital ratio derived from the risk-
based capital guidelines is more systematically sensitive to the
differences in risk profiles among banks than a capital ratio that
is based strictly on a bank's total consolidated assets without
regard to type. The "Risk-Based Capital Ratio" is obtained by
dividing a bank's qualifying capital by its weighted risk assets.
Qualifying capital is composed of (i) "Tier 1 Capital", which
consists of common stockholders' equity, noncumulative perpetual
preferred stock up to 25% of all Tier 1 Capital elements, and
minority interests in the equity capital accounts of consolidated
subsidiaries; and (ii) "Tier 2 Capital", which consists of the
allowance for loan and lease losses up to 1.25% of the bank's risk
weighted assets, cumulative perpetual preferred stock not included
in Tier 1 Capital, hybrid capital instruments, and certain term
subordinated debt instruments. Goodwill and certain other
intangible assets, investment in certain subsidiaries, and
reciprocal holdings of a bank's capital instruments are deducted
from qualifying capital before computing the Risk-Based Capital
Ratio. Tier 2 Capital may be included in a bank's qualifying
capital base up to a maximum of 100% of the bank's Tier 1 Capital.
A bank's risk-weighted assets are determined by assigning a bank's
assets and off-balance sheet items to one of four categories, each
-64-
of which has a specific risk weight ranging from 0% for items such
as cash, deposit reserves at Federal Reserve Banks and securities
issued as direct obligations of the U.S. government, 20% for such
items as cash in the process of collection, securities issued by
U.S. Government-sponsored agencies and assets collateralized by
cash held in a segregated deposit account in the Bank, 50% for
certain fully secured residential mortgage loans, privately-issued
mortgage-backed securities and securities issued by state and
political subdivisions and 100% for loans other than those
specifically assigned lower risk categories and investments in
fixed assets, premises and other real estate owned.
As of December 31, 1992, all federally-insured state banks
must maintain a Total Risk-Based Capital Ratio of 8.0%. As of
December 31, 1994, the Bank had a Total Risk-Based Capital Ratio of
14.46%, which exceeded the minimum Total Risk-Based Capital Ratio
required by the FDIC.
On April 10, 1991, the FDIC implemented new capital adequacy
guidelines with which all federally-insured state banks must
comply. The new capital adequacy guidelines are based, in part, on
the risk-based capital guidelines for insured state banks and
require all insured state banks to maintain a minimum ratio of
Tier 1 Capital to total assets of at least 3% ("Leverage Ratio").
Insured state banks with greater risk profiles or with problems are
required to maintain a minimum Leverage Ratio of at least 4%. For
purposes of calculating these ratios, the FDIC uses the same
definition of Tier 1 Capital as used in the FDIC's risk-based
capital guidelines. The capital adequacy guidelines supplement the
risk-based capital guidelines discussed above, and all insured
state banks are required to be in compliance with both sets of
guidelines. As of December 31, 1994, the Bank had a Leverage Ratio
of 8.66%, which is in compliance with the FDIC's capital adequacy
guidelines.
Using year end financial data, the following table indicates
the capital adequacy of the Bank at the dates indicated as compared
to the regulatory requirements that were in effect at such dates:
<TABLE>
<CAPTION>
December 31,
1994 1993 1992
(Dollars in thousands)
<C> <C> <C> <C>
Capital:
Tier 1 Capital $ 12,216 $ 10,266 $ 8,129
Allowance for possible loan losses 1,216 1,856 1,588
Disallowed portion of allowance (59) (797) (623)
________ ________ ________
Primary capital (1) 13,373 11,325 9,094
________ ________ ________
________ ________ ________
Total assets $140,992 $132,568 $130,631
Total risk-weighted assets $ 92,474 $ 83,893 $ 77,549
Capital Ratios:
Leverage Ratio 8.66% 7.74% 6.22%
(Regulatory minimum) (4.00%) (4.00%) (4.00%)
Tier 1 Risk-Based Capital Ratio 13.21% 12.24% 10.48%
(Regulatory minimum) (4.00%) (4.00%) (4.00%)
Total Risk-Based Capital Ratio 14.46% 13.50% 11.72%
(Regulatory minimum) (8.00%) (8.00%) (8.00%)
-65-
(1) The Bank's Total Capital is equal to its Primary Capital because the Bank has no secondary capital.
</TABLE>
Because Progressive has consolidated total assets of less than
$150,000,000, it is not subject to the capital adequacy guidelines
promulgated for certain bank holding companies by the Federal
Reserve Board. Progressive had a consolidated Primary Capital
Ratio of 7.84% at December 31, 1994, compared to a consolidated
Primary Capital Ratio of 6.13% at December 31, 1993 and 5.09% at
December 31, 1992. Progressive's capital resources continued to
show improvements in 1994 as a result of profitable operations, as
well as the payment of the FCB Debentures, the reversal of deferred
income taxes and the one-time negative loan loss provision. As a
result of the successful renegotiation of Progressive's debt to
First Interstate, Progressive's capital resources improved
significantly in 1992. The Bank's earnings continued to improve
during 1993 and 1994. The Bank had approximately $1,464,000 in
earnings during 1992, $2,425,000 in earnings during 1993, and
$3,446,000 in earnings during 1994. These earnings contributed to
net income from operations of $4,119,000 for Progressive during
1994, $1,248,000 during 1993 and $7,127,000 during 1992.
Progressive's shareholders' equity was $9,894,000 at December 31,
1994, reflecting an increase over shareholders' equity of
$6,302,000 at December 31, 1993 and $5,101,000 at December 31,
1992.
The Bank's regulators have proposed additional capital
guidelines related to incorporating an interest rate risk measure
into the capital computation. Given the Bank's effective
management of its interest rate sensitivity position as discussed
above (See "Liquidity and Interest Rate Sensitivity Management"),
management does not believe these proposed guidelines will have a
significant adverse effect on the Bank's regulatory capital
position, once the guidelines become effective.
-66-
PROGRESSIVE MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
The following is management's discussion and analysis of
certain significant factors which have affected Progressive's
financial condition and results of operations at and for the
periods included in the unaudited consolidated financial statements
included elsewhere in this Proxy Statement/Prospectus.
Overview
The consolidated results of operations for the first quarter
of 1995 reflected a net loss of ($292,000) as compared to net
income of $429,000 for the first quarter of 1994. Although net
operating income for the quarter ended March 31, 1995 showed an
increase of $90,000 over the quarter ended March 31, 1994, non-
interest income for this period declined and non-interest expense
increased as a result of the accrual of approximately $1,237,000 in
merger related expenses during the period, causing the net loss for
the quarter ended March 31, 1995.
A summary of the period-to-period changes in the principal
components of the statements of income (loss) as of March 31, 1995
and 1994, respectively, is shown below:
Change Between
Three Months Ended
March 31, 1995 and 1994
(Dollars in thousands)
Interest Income.............................$ 304 11.22%
Interest Expense............................$ 214 19.33%
Provision for Possible Loan Losses..........$ - -
Other Income................................$ (248) -57.94%
Other Expenses..............................$ 828 66.04%
Income Before Income Taxes..................$ (986) -149.17%
Provision for Income Taxes..................$ (265) -114.22%
Income from Operations......................$ (721) -168.07%
Interest Income and Expense
Interest income for the period ended March 31, 1995 reflects
an increase when compared to the period ended March 31, 1994. At
the Bank level, interest on state and municipal subdivisions
reflected an increase due to growth in this sector of the
investment portfolio for the period. Interest on deposits with
banks also showed an increase due to a corresponding increase in
cash and due from banks. The Bank's loan portfolio reflected
significant growth in the first quarter of 1995 as compared to the
-67-
same period in 1994. Total outstanding loans increased by
approximately $7,621,000 from March 31, 1994 to March 31, 1995.
The growth in the loan portfolio, along with increasing market
interest rates during this period, contributed to the increase in
interest and fees on loans at March 31, 1995 as compared to March
31, 1994.
Interest expense on the Bank's deposits increased for the
period ended March 31, 1995 over the same period ended March 31,
1994. Interest-bearing deposits increased approximately
$12,756,000 at March 31, 1995 as compared to March 31, 1994.
Interest rates paid on deposits increased from March 31, 1994 to
March 31, 1995 as a result of gradual increases in short-term
interest rates caused by continued tightening by the Federal
Reserve Board throughout this period.
Provision for Loan Losses
The provision for possible loan losses reflected no additions
during the first three months of 1995 or 1994. At March 31, 1995,
the Bank had a reserve for possible loan losses totaling
$1,225,000. The amount of the provision is based on several
factors: (1) regular examinations of the loan portfolio by the
Bank's Loan Review Staff, its independent auditors, and Federal
regulatory agencies; (2) an on going review of overall portfolio
quality, specifically problem loans; and (3) management's judgement
as to the existing and expected economic conditions and their
potential impact on the loan portfolio.
A formal evaluation of the adequacy of the reserve for
possible loan losses is done after consideration of the above noted
factors. As of March 31, 1995, the reserve for possible loan
losses was 1.52% of outstanding loans, which is consistent with the
peer group average of banks the same size. Management continues
its policy to charge off, on a current basis, loans or portions of
loans it believes will not be paid. Management believes that the
reserve is sufficient to protect Progressive against current risk
of loss in the loan portfolio. However, because of the subjective
judgement elements involved, there can be no assurance that the
loan portfolio may not require additions to the reserve during the
remainder of 1995.
As of March 31, 1995 and December 31, 1994 non-accrual loans
and other real estate owned were as follows:
March 31, December 31,
1995 1994
(Dollars in thousands)
Non-accrual Loans $ 89 $ 231
Other Real Estate Owned $ 253 $ 302
As of March 31, 1995, non-accrual loans are at an acceptable
and favorable level. Other real estate owned trends are favorable
and the Bank continues to dispose of these assets.
-68-
Non-interest Income/Expense
Consolidated non-interest income reflected a $248,000 decrease
from $428,000 at March 31, 1994 to $180,000 at March 31, 1995. The
most significant factor contributing to this decrease was a
$221,000 decline in other operating income from $62,000 in 1994 to
a loss of ($159,000) in 1995, caused by the write down of the
Bank's computer hardware, software, and data processing equipment
which will not be used subsequent to the pending merger with
Hibernia. Another factor contributing to the decrease was a
$37,000 decline in other charges, commitments and fees from
$135,000 in 1994 to $98,000 in 1995. This change was due to
decreases in FNMA loan origination fees and service release
premiums resulting from lower customer demand for secondary market
financing because of rising market interest rates from March 31,
1994 to March 31, 1995. These declines were somewhat offset by a
$13,000 increase in service charges on deposit accounts as a result
of deposit growth from March 31, 1994 to March 31, 1995.
Consolidated non-interest expense increased by approximately
$828,000 from $1,370,000 at March 31, 1994 to $2,198,000 at March
31, 1995. The largest increase was at the Bank level with salaries
and benefits increasing approximately $458,000 from 1994 to 1995,
primarily as a result of the accruals made during the first quarter
of 1995 for the payment of retention agreements, severance pay,
vacation earned during 1994, bonuses and taxes in connection with
the pending merger with Hibernia. A significant increase was also
noted in other operating expenses which rose by $336,000 from
$711,000 in March 31, 1994 to $1,047,000 in March 31, 1995. This
increase was caused by accruals made in March 1995 at both the Bank
and Progressive levels for various types of expenses in
anticipation of the pending merger. At the Bank level, early
contract cancellation fees of $140,000 were accrued in March 1995,
related to ATM/check card processing and data processing service
contracts. These increases at the Bank level were somewhat offset
by decreases in various other accounts, including management
consulting fees, audit and accounting fees and personal property
taxes. At the Progressive level, accruals of approximately
$484,000 primarily included legal fees, accounting fees and broker
fees associated with the pending merger transaction. Occupancy
expense also increased by $34,000 from 1994 to 1995 reflecting
increased expenses at the Bank level due to the opening of a new
supermarket branch during the second quarter of 1994 and due to
approximately $8,000 of accruals made in March 1995.
For the period ended March 31, 1995, if all merger accruals
accounted for during March 1995, totaling approximately $1,237,000,
had not been charged against income, the consolidated income before
taxes would have totaled approximately $912,000 for the first
quarter. This indicates improved profitability from operations for
the first quarter of 1995 as compared to the same period for 1994.
-69-
Income Taxes
Progressive's effective tax rate at March 31, 1994 was 35.1%
as compared to a tax benefit at March 31, 1995 of 10.0%. The
reason for this change at March 31, 1995 was the effect of the
accrual of merger related expenses during March 1995, which caused
Progressive to incur a loss for the first quarter of 1995. Some
expenses are non-deductible, resulting in a lower effective tax
rate (benefit) on the loss.
Capital
The Bank's leverage ratio for March 31, 1995 and March 31,
1994 was 8.60% and 8.03%, respectively. The total risk-based
capital ratio for the Bank was 13.97% at March 31, 1995 and 14.20%
at March 31, 1994. The consolidated capital ratio of the Company,
including reserves, was 7.37% as of March 31, 1995 as compared to
6.30% as of March 31, 1994.
At March 31, 1995, accounting under SFAS 115 had the effect of
decreasing Progressive's shareholders' equity account by $35,000,
net of taxes, as reflected in the account, "Net unrealized gain
(loss) on securities available for sale, net of tax effect." At
March 31, 1995, investments with a book value of $28,311,000 were
classified as "available for sale."
Liquidity
The Bank monitors and manages liquidity through an Asset-
Liability Committee. The Bank's quarterly liquidity ratios from
March 31, 1994 through March 31, 1995 were as follows:
March 31, 1994 43.44%
June 30, 1994 42.75%
September 30, 1994 41.94%
December 31, 1994 39.46%
March 31, 1995 41.37%
Pending Merger
Progressive and Hibernia have entered into an Agreement and
Plan of Merger (the "Agreement"), dated as of December 1, 1994,
pursuant to which Progressive would merge with and into Hibernia
(the "Merger"). Upon consummation of the Merger, each outstanding
share of Progressive's common stock, $.10 par value, would be
converted into and become exchangeable for approximately 4.0475
shares of Hibernia Class A common stock, no par value, based upon
617,670 shares of Common Stock outstanding and valued at $32.89 per
share as of November 16, 1994, and each outstanding share of the
Company's preferred stock, $1.00 par value ("Preferred Stock"),
would be converted into the right to receive cash in the amount of
$12.50 per share plus all undeclared and accumulated dividends in
the approximate amount of $13.85 per share (as of March 31, 1995).
Consummation of the Merger is subject, among other things, to
receipt of regulatory and shareholder approvals, and is currently
expected to occur during the second quarter of 1995.
-70-
VALIDITY OF SHARES
Patricia C. Meringer, Associate Counsel and Secretary of
Hibernia, has rendered an opinion that the shares of Hibernia
Common Stock to be issued in connection with the Merger have been
duly authorized and, if and when issued pursuant to the terms of
the Agreement, will be validly issued, fully paid and non-
assessable. As of the date of this prospectus, Ms. Meringer owned
191 shares of Hibernia Common Stock in a 401(k) plan account and
1,948 shares of restricted stock. Ms. Meringer also held options
to purchase 24,216 shares of Hibernia Common Stock, none of which
are currently exercisable.
EXPERTS
The consolidated financial statements of Hibernia for the year
ended December 31, 1994 incorporated in this Proxy Statement-
Prospectus by reference from Hibernia's Annual Report on Form 10-K
for the year ended December 31, 1994 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report
thereon incorporated herein by reference, and have been so
incorporated by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The Statements of Income, Statements of Stockholders' Equity
and Statements of Cash Flows for Progressive for the three years
ended December 31, 1994, 1993 and 1992 and the Balance Sheets of
Progressive as of December 31, 1994 and 1993 have been audited by
Arthur Andersen LLP, independent public accountants, as set forth
in their report with respect thereto and are included herein in
reliance upon the authority of Arthur Andersen LLP as experts in
accounting and auditing and giving said reports.
-71-
PROGRESSIVE BANCORPORATION, INC.
CONSOLIDATED STATEMENTS OF CONDITION
(In Thousands) (Unaudited)
March 31, December 31,
1995 1994
___________ ____________
ASSETS
Cash and Due from Banks $ 13,000 $ 9,342
Interest-Bearing Deposits in Banks 0 0
Investment Securities:
Investment Securities Available
for Sale 29,056 22,881
Investment Securities Held to
Maturity (Market value of
$27,234 in 1995 and $24,371
in 1994) 27,361 25,656
___________ ____________
Total Investments 56,417 48,537
___________ ____________
Federal Funds Sold Loans, Net of 0 0
Unearned Discount Reserve for Loan 80,835 79,773
Losses (1,225) (1,216)
___________ ____________
Total Loans 79,610 78,557
___________ ____________
Bank Premises and Equipment Other 2,596 2,856
Assets Goodwill 1,438 1,908
464 493
___________ ____________
TOTAL ASSETS $ 153,525 $ 141,693
___________ ____________
___________ ____________
LIABILITIES
Deposits:
Demand Deposits $ 22,553 $ 21,729
Savings Deposits & NOW Accounts 32,580 33,895
Time Deposits 77,512 66,137
___________ ____________
Total Deposits 132,645 121,761
___________ ____________
Federal Funds Purchased 0 0
Notes Payable 2,595 2,735
Other Liabilities 8,193 7,303
___________ ____________
TOTAL LIABILITIES 143,433 131,799
SHAREHOLDERS' EQUITY
Preferred Stock 130 130
Common Stock 65 65
Capital Surplus 2,016 2,016
Undivided Profits 7,941 8,233
Net Unrealized Gain (Loss) on
Securities AFS, Net of Tax Effect (35) (525)
Treasury Stock (25) (25)
___________ ____________
TOTAL SHAREHOLDERS' EQUITY 10,092 9,894
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 153,525 $ 141,693
___________ ___________
___________ ___________
See accompanying notes to consolidated financial statements.
-72-
PROGRESSIVE BANCORPORATION, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands) (Unaudited)
For the Three Unaudited
Months Ended March 31,
1995 1994
_____________ ____________
INTEREST INCOME:
Interest and Fees on Loans $ 2,046 $ 1,836
Interest on Securities:
U. S. Government & Agencies 666 665
State & Political Subdivisions 213 185
Other Investments 12 6
Interest on Federal Funds Sold 0 0
Interest on Deposits with Banks 77 18
___________ ____________
Total Interest Income 3,014 2,710
___________ ____________
INTEREST EXPENSE:
Interest on Deposits 1,259 1,004
Interest on Federal Funds Purchased 0 0
Other Interest Expense 62 103
___________ ____________
Total Interest Expense 1,321 1,107
___________ ____________
NET INTEREST INCOME 1,693 1,603
PROVISION FOR LOAN LOSSES 0 0
___________ ____________
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,693 1,603
OTHER INCOME:
Service Charges on Deposit Accounts 240 227
Other Charges, Commitments & Fees 98 135
Other Operating Income (Loss) (159) 62
Securities Gains (Losses) 1 4
____________ ____________
Total Other Income 180 428
OTHER EXPENSES:
Salaries and Benefits 976 518
Occupancy Expense 175 141
Other Operating Expense 1,047 711
___________ ____________
Total Other Expenses 2,198 1,370
___________ ____________
INCOME (LOSS) BEFORE INCOME TAXES (325) 661
PROVISION (BENEFIT) FOR INCOME TAXES (33) 232
___________ ____________
NET INCOME (LOSS) BEFORE PREFERRED
DIVIDEND REQUIREMENT $ (292) $ 429
PREFERRED DIVIDEND REQUIREMENT (41) (41)
___________ ____________
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCK $ (333) $ 388
___________ ____________
___________ ____________
EARNINGS PER COMMON SHARE $ (0.54) $ 0.62
See accompanying notes to consolidated financial statements.
-73-
PROGRESSIVE BANCORPORATION, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Month Period Ended March 31, 1995
Unaudited
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (292)
Adjustments to reconcile net income to
cash provided from operating activities:
Writedowns of other real estate 6
Depreciation 99
Provision for loan losses 0
Amortization of goodwill 33
Amortization of premium on investments, net of
accretion of discount on investments (23)
Extraordinary loss on extinguishment of debt 0
(Gain) Loss on sales of assets 198
(Increase) Decrease in other assets, net 335
Increase (Decrease) in accrued liabilities 577
____________
Net cash provided (used) by operating activities 933
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
investment securities 722
Purchase of investment securities (7,798)
Principal collected on loans 6,289
Loans made to customers (7,351)
Proceeds from sales of other real estate 54
Additions to property, net of retirements 204
____________
Net cash provided (used) by investing activities (7,880)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in non-interest bearing demand deposits 824
Net decrease in interest bearing deposits other than
certificates of deposit (1,315)
Proceeds from sales of certificates of deposit 36,454
Payments for maturing certificates of deposit (25,079)
Payments on notes (139)
Increase (Decrease) in other borrowed money (140)
____________
Net cash provided (used) by financing activities 10,605
____________
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,658
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,342
____________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 13,000
____________
____________
-74-
PROGRESSIVE BANCORPORATION, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Period Ended March 31, 1994
Unaudited
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 429
Adjustments to reconcile net income to
cash provided from operating activities:
Writedowns of other real estate 31
Depreciation 79
Provision for loan losses 0
Amortization of goodwill 30
Amortization of premium on investments, net of
accretion of discount on investments 26
Gains on sales of assets 5
(Increase) Decrease in other assets, net 53
Increase (Decrease) in accrued liabilities 571
____________
Net cash provided (used) by operating activities 1,224
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
investment securities 5,736
Purchase of investment securities (6,751)
Additions to property, net of retirements (100)
Principal collected on loans (9,306)
Loans made to customers 9,488
Proceeds from sales of other real estate 77
Increase (Decrease) in other borrowings (242)
____________
Net cash provided (used) by investing activities (1,098)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in non-interest bearing demand deposits 3,079
Net increase in interest bearing deposits other than
certificates of deposit 1,476
Proceeds from sales of certificates of deposit 20,072
Payments for maturing certificates of deposit (19,676)
Decrease in repurchase agreements (1,000)
____________
Net cash provided (used) by financing activities 3,951
____________
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,077
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,098
____________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,175
____________
____________
-75-
PROGRESSIVE BANCORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Reference is made to the Notes to the consolidated financial
statement included in Progressive Bancorporation, Inc.'s
Annual Report on Form 10-K for the year ended December 31,
1994 (File No. 0-11724).
2. In the opinion of management of Progressive Bancorporation,
Inc. ("Company"), the accompanying unaudited consolidated
financial statements contain all adjustments necessary to
present fairly the Company's financial position as of March
31, 1995 and December 31, 1994, the results of operations for
the three month periods ended March 31, 1995 and 1994, and the
cash flows for the three month periods ended March 31, 1995
and 1994.
3. The weighted average number of common shares outstanding at
March 31, 1995 of 617,670 and at March 31, 1994 of 627,670
were used in the per share calculation. Net income (loss) for
the periods was reduced by a proportionate amount of unpaid
cumulative preferred dividends, using $1.25 per annum per
share as a basis. The unpaid dividends on the Company's
preferred stock was $40,515 for each of the three month
periods ended March 31, 1995 and March 31, 1994.
4. On December 1, 1994, the Company and Hibernia Corporation
("Hibernia") entered into an Agreement and Plan of Merger
pursuant to which the Company would merge with and into
Hibernia and each outstanding share of the Company's preferred
stock would be converted into the right to receive cash in the
amount of $12.50 per share plus all accumulated and unpaid
dividends (totaling $1,796,000 as of March 31, 1995) and each
outstanding share of the Company's Common Stock would be
converted into the number of shares of Hibernia Class A Common
Stock that equals the exchange rate as determined on the
closing date. The exchange rate is based on 2,500,000 shares
of Hibernia Class A Common Stock being exchanged for all
outstanding shares of the Company's Common Stock. The merger
is subject, among other things, to receipt of regulatory and
shareholder approvals, and is currently expected to be
completed during the second quarter of 1995.
The Company and the Bank have accrued approximately $484,000
and $753,000, respectively, in costs in anticipation of the
pending merger with Hibernia. At the Company level, these
costs primarily included legal fees, accounting fees and
broker fees. At the Bank level, these costs primarily
included fixed assets writedowns, retention agreements,
severance pay, accrued vacation pay, bonuses, taxes and early
contract cancellation fees.
-76-
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF PROGRESSIVE
Report of Independent Public Accountants F-2
Consolidated Balance Sheets F-3
Consolidated Statements of Income F-5
Consolidated Statement of Shareholders' Equity F-6
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-8
-77-
ARTHUR ANDERSEN LLP
PROGRESSIVE BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 AND 1993
TOGETHER WITH AUDITORS' REPORT
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
of Progressive Bancorporation, Inc.:
We have audited the accompanying consolidated balance sheets of
Progressive Bancorporation, Inc. (a Louisiana corporation) and
subsidiary as of December 31, 1994 and 1993, and the related
consolidated statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended December 31,
1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Progressive Bancorporation, Inc. and subsidiary as of December 31,
1994 and 1993 and the results of their operations and cash flows
for each of the three years in the period ended December 31, 1994,
in conformity with generally accepted accounting principles.
As discussed in Note 1, effective January 1, 1994 the Company
changed its method of accounting for investment securities.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
New Orleans, Louisiana,
February 10, 1995
<TABLE>
PROGRESSIVE BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
<CAPTION>
ASSETS
<S> <C> <C>
1994 1993
CASH AND DUE FROM BANKS (Note 11) $ 9,342 $ 4,098
INVESTMENT SECURITIES (Note 3):
Investment securities (market value of $54,947 in 1993) - 52,995
Investment securities available for sale 22,881 -
Investment securities held to maturity (market value of $24,371 in 1994) 25,656 -
Total investment securities 48,537 52,995
LOANS (Notes 4 and 11) 79,773 73,032
Less: Reserve for possible loan losses (Note 4) (1,216) (1,856)
Net loans 78,557 71,176
BANK PREMISES AND EQUIPMENT (Notes 5 and 10) 2,856 2,594
OTHER REAL ESTATE 302 319
ACCRUED INTEREST RECEIVABLE 912 869
GOODWILL 493 612
OTHER ASSETS 694 246
Total assets $141,693 $132,909
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
PROGRESSIVE BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
1994 1993
DEPOSITS (Note 11):
Non-interest bearing $ 21,729 $ 18,202
Interest bearing 100,032 95,464
Total deposits 121,761 113,666
REPURCHASE AGREEMENTS - 1,000
OTHER BORROWED MONEY (Note 6) 6,196 5,612
ACCRUED TAXES, INTEREST AND EXPENSES 1,095 1,206
DEFERRED TAX LIABILITY (Note 7) 12 2,231
NOTE PAYABLE (Note 8) 2,735 -
NOTE PAYABLE TO AFFILIATED GROUP (Note 8) - 1,003
LIABILITY FOR STOCK SUBJECT TO TRANSFER (Note 8) - 1,889
Total liabilities 131,799 126,607
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY (Note 9):
Preferred stock, $1.00 par value, 1,000,000 shares authorized, 129,644 shares
issued and outstanding at December 31, 1994 and 1993; total liquidation
preference $12.50 per share plus cumulative unpaid dividends of $1,756 and
$1,594 at December 31, 1994 and 1993, respectively 130 130
Common stock, $.10 par value, 2,000,000 shares authorized, 617,670 and
627,670 shares issued and outstanding after deduction of treasury stock at
December 31, 1994 and 1993, respectively 65 65
Paid-in capital 2,016 2,016
Unrealized loss on investment securities available for sale (525) -
Accumulated earnings 8,233 4,114
Less: Treasury stock (33,642 and 23,642 shares at December 31, 1994
and 1993, respectively) (25) (23)
Total shareholders' equity 9,894 6,302
Total liabilities and shareholders' equity $141,693 $132,909
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
PROGRESSIVE BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in Thousands, except share data)
<S> <C> <C> <C>
1994 1993 1992
INTEREST INCOME:
Interest and fees on loans $ 7,858 $ 7,691 $ 7,305
Interest on securities-
U.S. Treasury and agencies 2,744 2,948 3,165
State and municipal 762 596 17
Interest on other investments 637 21 19
Interest on deposits with banks 125 87 188
Total interest income 12,126 11,343 10,694
INTEREST EXPENSE:
Interest on deposits 3,914 3,905 4,514
Interest on Federal funds purchased and repurchase agreements 16 24 -
Interest on notes payable and other borrowings 632 784 618
Total interest expense 4,562 4,713 5,132
NET INCOME 7,564 6,630 5,562
PROVISION FOR POSSIBLE LOAN LOSSES (Note 4) (648) 168 101
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE
LOAN LOSSES 8,212 6,462 5,461
OTHER OPERATING INCOME:
Service charges on deposit accounts 931 933 861
Net securities gains (losses) (124) 63 114
Other income 549 466 306
Total other operating income 1,356 1,462 1,281
NON-INTEREST EXPENSE:
Salaries and benefits 2,582 2,228 1,894
Occupancy expense 603 469 419
Data processing fees to an affiliate (Note 10) - 265 243
FDIC assessments 265 256 237
Writedowns of Other Real Estate and other assets 67 339 518
Other operating expenses 1,780 1,668 1,359
Subsidiary earnings attributable to stock subject to transfer (Note 8) 151 386 209
Total non-interest expense 5,448 5,611 4,879
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 4,120 2,313 1,863
PROVISION (BENEFIT) FOR INCOME TAXES (Note 7):
Current 908 778 117
Deferred (1,504) 144 (67)
(596) 922 50
NET INCOME BEFORE EXTRAORDINARY ITEM 4,716 1,391 1,813
EXTRAORDINARY ITEMS:
Extraordinary gain-forgiveness of debt (net of current and deferred
tax provisions of $156 and $2,225, respectively) - - 5,314
Extraordinary loss-early extinguishment of debt (net of deferred
tax benefit of $458 and $73 at December 31, 1994 and 1993,
respectively (597) (143) -
NET INCOME 4,119 1,248 7,127
UNPAID DIVIDENDS ON PREFERRED STOCK (Note 9) (162) (164) (179)
NET INCOME APPLICABLE TO COMMON STOCK $ 3,957 $ 1,084 $ 6,948
EARNINGS PER COMMON SHARE BEFORE EXTRAORDINARY ITEM $ 7.33 $ 1.94 $ 2.51
EXTRAORDINARY ITEM (.96) (.23) 8.16
EARNINGS PER COMMON SHARE (Note 9) $ 6.37 $ 1.71 $ 10.67
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
PROGRESSIVE BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
FOR THE YEARS ENDING DECEMBER 31, 1994, 1993 AND 1992
(Dollars in Thousands except share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unrealized Losses on Accumulated
Preferred Stock Common Stock Treasury Stock Paid-in Available for Sale Earnings
Shares Amount Shares Amount Shares Amount Capital Securities (Deficit)
BALANCE, December 31, 1991 142,954 $143 651,312 $65 - $ - $2,016 $ - $(4,250)
NET INCOME-1992 - - - - - - - - 7,127
BALANCE, December 31, 1992 142,954 143 651,312 65 - - 2,016 - 2,877
PURCHASE OF PREFERRED
STOCK (13,310) (13) - - - - - - (11)
PURCHASE OF TREASURY STOCK - - - - (23,642) (23) - - -
NET INCOME-1993 - - - - - - - - 1,248
BALANCE, December 31, 1993 129,644 130 651,312 65 (23,642) (23) 2,016 - 4,114
PURCHASES OF TREASURY STOCK - - - - (10,000) (2) - - -
UNREALIZED LOSSES ON
INVESTMENT SECURITIES - - - - - - - (525) -
NET INCOME-1994 - - - - - - - - 4,119
BALANCE, December 31, 1994 129,644 $130 651,312 $65 (33,642) $(25) $2,016 $(525) $ 8,233
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
PROGRESSIVE BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in Thousands)
<S> <C> <C> <C>
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,119 $ 1,248 $ 7,127
Adjustments to reconcile net income to cash provided by operating
activities-
Writedowns of other real estate 67 332 398
Depreciation 326 220 209
Provision for loan losses (648) 168 101
Amortization of goodwill 118 118 118
Amortization of premium on investments, net of accretion of
discount on investments (31) 55 108
Extraordinary gain on forgiveness of debt - - (5,314)
Extraordinary loss on extinguishment of debt 597 143 -
Gain on sales of other real estate (146) (109) (48)
Net securities (gains) losses 124 (63) (114)
Subsidiary earnings attributable to stock subject to transfer 151 386 209
Accretion of discount on note payable 62 186 91
(Increase) decrease in other assets and accrued interest receivable (491) 108 125
Increase (decrease) in accrued liabilities (111) (150) 143
Deferred tax provision (benefit) (1,504) 144 (67)
Net cash provided by operating activities 2,633 2,786 3,086
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from debentures 750 - -
Proceeds from sales of investment securities 13,944 4,659 6,202
Proceeds from maturities on investment securities 10,936 10,529 11,986
Purchase of investment securities (22,083) (18,074) (24,463)
Net increase in loans (6,827) (2,337) (11,918)
Proceeds from sales of other real estate 352 244 500
Additions to bank premises and equipment (634) (393) (148)
Decrease in interest bearing deposits at banks - 49 89
Net cash used in investing activities (3,562) (5,323) (17,752)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing demand deposits 3,527 (1,083) 4,626
Net increase (decrease) in interest bearing deposits other than
certificates of deposit (688) (411) 5,263
Net increase (decrease) in certificates of deposit 5,256 (9) (1,277)
Increase (decrease) in repurchase agreements (1,000) (35) 1,035
Net proceeds on debt restructure 3,900 - 579
Payments on notes (3,285) (446) -
Payment on liability for stock subject to transfer (2,119) - -
Increase in other borrowed money 584 1,678 3,934
Purchase of preferred stock - (24) -
Purchase of treasury stock (2) (23) -
Net cash provided by (used in) financing activities 6,173 (353) 14,160
NET INCREASE (DECREASE) IN CASH 5,244 (2,890) (506)
CASH AT BEGINNING OF YEAR 4,098 6,988 7,494
CASH AT END OF YEAR $ 9,342 $ 4,098 $6,988
SUPPLEMENTAL DISCLOSURE:
Income taxes paid $ 1,299 $ 1,140 $ 4
Cash interest expenses paid $ 4,586 $ 4,673 $5,218
NON-CASH TRANSACTIONS:
Loans transferred to other real estate $ 258 $ - $ 225
Loans made to facilitate sales of other real estate $ - $ 272 $ 373
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
PROGRESSIVE BANCORPORATION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, except share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
Progressive Bancorporation, Inc. (the Company) is a bank holding
company whose only subsidiary is Progressive Bank and Trust Company
(Progressive or the Bank).
The Company was incorporated under Louisiana law on July 5, 1983
and acquired 100% of the shares of Progressive Bancshares
Corporation, the former holding company of the Bank, effective
March 8, 1984.
Certain reclassifications have been made to the prior period
financial information in order to conform to current year
presentation.
The accounting principles and reporting policies of the Company
conform with generally accepted accounting principles. The
following is a description of the more significant of these
policies.
Consolidation
The consolidated financial statements include the accounts of the
Company and its 100% owned subsidiary, Progressive Bank and Trust
Company. Intercompany accounts and transactions are eliminated in
consolidation.
Investment Securities
Effective January 1, 1994, the Company adopted Financial Accounting
Standards Board (FASB) Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." This standard
addresses the accounting and reporting for investments in equity
securities that have a readily determinable fair value and for all
investments in debt securities and requires classification of
securities as trading, available for sale or held to maturity.
Management determines the classification of its securities when
they are purchased. The Company does not engage in trading
activities related to any of its investment securities. Securities
which the Company has the intent and ability to hold until maturity
are classified as held to maturity. These securities are stated at
cost, adjusted for amortization of premiums and accretion of
discounts. Securities which may be sold in response to interest
rates, liquidity needs or other factors are classified as available
for sale. These securities are reflected at fair value, and net
unrealized gains or losses are reflected as a separate component of
shareholders" equity, net of income tax effects. As of January 1,
1994 the unrealized gain on available for sale securities, net of
tax effects, was $695.
During 1994, the Bank sold $14,839 of securities out of its
available for sale portfolio, resulting in gross realized losses of
$909 and gross realized gains of $35. In addition, the Company
realized a gain of $750 on the redemption of FCB debentures, as
discussed further in Note 3. No securities were sold from the
Bank's held to maturity portfolio. Prior to the adoption of FASB
Statement No. 115, the Company accounted for all securities at
cost, adjusted for amortization of premiums and accretion of
discounts. During 1993, the Bank sold $4,596 of its securities
resulting in gross realized gains of $78 and gross realized losses
of $15. During 1992, the Bank sold $6,088 of its securities
resulting in gross realized gains of $114 and no realized losses.
Interest earned on investment securities is included in interest
income. Amortization of premiums and accretion of discounts are
computed using the interest method. The adjusted cost of the
specific security sold is used to compute the gain or loss on the
sale of an investment security. Such gains or losses are shown
separately as a component of other income in the consolidated
statements of income.
Loans
Loans are stated at the principal balance outstanding less unearned
discount on consumer loans. Interest on loans, other than consumer
loans, is recognized as income based on the principal balance
outstanding. Interest on certain consumer loans is recognized as
income over the term of the loan using the sum-of-the-months-digits
method, which approximates the interest method. Loans are placed
on non-accrual status when, in the opinion of management, there
exists sufficient uncertainty as to the collectibililty of the
contractual principal. Income is recorded on a cash basis for non-
accrual loans.
Provision and Reserve for Possible Loan Losses
The provision for possible loan losses charged to operating expense
is determined by management based on a review of Progressive's past
loan loss experience and an evaluation of the quality of the
current loan portfolio. The reserve for possible loan losses is
based upon estimates, and ultimate losses may vary from 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.
Premises and Equipment
Bank premises and equipment are stated at cost, less accumulated
depreciation. Depreciation expense is computed primarily on a
straight-line basis over the estimated useful lives of the
depreciable assets (Note 5). Maintenance and repairs are charged
to operating expense, and gains or losses on dispositions are
reflected currently in the consolidated statements of income.
Income Taxes
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards No. 109, which was adopted by the
Company on January 1, 1993. Under this statement, deferred income
taxes are provided for by the liability method (Note 7).
Other Real Estate
The cost basis of foreclosed real estate and other assets is
established at the lower of the loan balance or estimated fair
value less estimated selling costs at the time of foreclosure. Any
excess of the loan balance over the fair value less estimated
selling costs at foreclosure is charged to the reserve for possible
loan losses. The other real estate portfolio is evaluated
periodically and subsequent declines in the fair value of the
assets below the initial cost basis are reflected in earnings in
the period the decline is noted. Cost basis is periodically
adjusted for each asset as its fair value changes; however, the
carrying value of each asset never exceeds the initial cost basis.
Expenses associated with owning and operating other real estate and
gains and losses on disposition of such assets are recorded in
earnings in the period incurred.
Goodwill
The excess of cost over fair value of tangible assets acquired in
purchase transactions, identified as goodwill, is being amortized
to other operating expense on a straight-line basis over 15 years.
New Financial Accounting Standards
Statement of Financial Accounting Standards No. 107, issued by the
FASB during 1991, requires disclosure of fair value information for
financial instruments. The Company is required to adopt this
statement for the year ended December 31, 1995.
In November, 1992, the FASB issued Statement No. 112, "Employers'
Accounting for Postemployment Benefits," which is effective for the
Company for the year ended December 31, 1994. This statement had
no material impact on the Company.
In May, 1993, the FASB issued Statement No. 114, "Accounting by
Creditors for Impairment of a Loan," as amended by Statement No.
118, 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. As of December 31, 1994, $231 of loans would be impacted
by the standards. 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.
In October, 1994, the FASB issued Statement No. 119, "Disclosure
about Derivative Financial Instruments and Fair Value of Financial
Instruments." The Company is required to adopt this statement for
the year ended December 31, 1995.
Regulatory Matters
Certain normal restrictions exist regarding the ability of the Bank
to transfer funds to the Company as loans, advances or dividends.
The Bank's capital ratios exceeded regulatory requirements as of
December 31, 1994.
2. MERGER PLAN:
On December 1, 1994, the Company and Hibernia Corporation
("Hibernia") entered into an Agreement and Plan of Merger (the
"Agreement") pursuant to which the Company would merge with and
into Hibernia and each outstanding share of the Company's preferred
stock would be converted into the right to receive cash in the
amount of $12.50 per share plus all accumulated and unpaid
dividends (totalling $1,756 as of December 31, 1994) and each
outstanding share of the Company's Common Stock would be converted
into the number of shares of Hibernia Class A Common Stock that
equals the exchange rate as determined on the closing date. The
exchange rate is based on 2,500,000 shares of Hibernia Class A
Common Stock being exchanged for all outstanding shares of the
Company's common stock.
The merger is subject, among other things, to receipt of regulatory
and shareholder approvals, and is currently expected to be
completed during the second quarter of 1995.
3. INVESTMENT SECURITIES:
The amortized cost and estimated fair value of investment
securities at December 31, were:
<TABLE>
<CAPTION>
1994
Amortized Gross Unrealized Estimated
Description Cost Gains Losses Fair Value
Available for Sale
<S> <C> <C> <C> <C>
U. S. Treasury $ 1,000 $ 10 $ - $ 1,010
U. S. government agencies:
Mortgage-backed securities 6,581 21 (296) 6,306
Collateral mortgage obligations 7,984 19 (279) 7,724
Other 1,832 - (43) 1,789
State and municipal obligations, net 5,509 16 (240) 5,285
Other 767 - - 767
Totals $ 23,673 $ 66 $ (858) $ 22,881
Held to Maturity
U. S. Treasury $ 395 $ - $ (19) $ 376
U. S. government agencies:
Mortgage-backed securities 10,170 26 (462) 9,734
Collateral mortgage obligations 2,013 - (177) 1,836
Other 3,584 - (131) 3,453
State and municipal obligations, net 9,494 - (522) 8,972
Totals $ 25,656 $ 26 $(1,311) $ 24,371
</TABLE>
<TABLE>
<CAPTION>
1993
Amortized Gross Unrealized Estimated
Description Cost Gains Losses Fair Value
Available for Sale
<S> <C> <C> <C> <C>
U. S. Treasury $ 4,996 $ 200 $ - $ 5,196
U. S. government agencies:
Mortgage-backed securities 17,657 561 (58) 18,160
Collateral mortgage obligations 14,859 311 (82) 15,088
Other 2,512 67 - 2,579
State and municipal obligations, net 12,265 981 (28) 13,218
Other 706 - - 706
Totals $ 52,995 $ 2,120 $ (168) $ 54,947
</TABLE>
Amortized cost and estimated fair value of debt securities at
December 31, 1994, by contractual maturity, are shown below.
Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
Amortized Estimated
Cost Fair Value
Available for Sale
Due in 1 year or less $ 1,000 $ 1,010
Due after 1 year through 5 years 1,693 1,662
Due after 5 years through 10 years 3,534 3,416
Due after 10 years 2,881 2,763
Subtotal 9,108 8,851
Mortgage-backed securities, including
collateral mortgage obligations 14,565 14,030
Total $ 23,673 $ 22,881
Held to Maturity
Due in 1 year or less $ - $ -
Due after 1 year through 5 years 1,994 1,943
Due after 5 years through 10 years 1,190 1,110
Due after 10 years 10,289 9,748
Subtotal 13,473 12,801
Mortgage-backed securities, including
collateral mortgage obligations 12,183 11,570
Total $ 25,656 $ 24,371
The Bank's mortgage-backed securities consist of ownership
interests in pools of residential mortgages guaranteed by a U. S.
government agency with contract maturities ranging from 2 to 29
years; however, the underlying mortgages are subject to significant
prepayments, primarily when the contractual interest rates exceed
the current market rate on similar mortgages. Based on current
prepayment assumptions, the estimated average remaining life of
fixed rate mortgage-backed securities and collateral mortgage
obligations is approximately 5 years at December 31, 1994.
Investment securities with book values of $11,940 and $12,457 at
December 31, 1994 and 1993, respectively, were pledged to secure
public funds and for other purposes.
Progressive held a $750 investment in debentures of an affiliated
bank representing 12% mandatory convertible subordinated debentures
of First Continental Bancshares, Inc. (FCB). The debentures were
issued in 1986 and were to mature in 1996 with principal payment to
be made with 78 shares of FCB common stock per thousand in
debenture face value. During 1988, a reserve equal to the cost of
these debentures was recorded. During 1994, FCB and Hibernia
Corporation (Hibernia) merged. Under the terms of the agreement,
Hibernia redeemed all of the outstanding principal and accrued
interest related to FCB's outstanding debentures. The debenture
agreement required a redemption price of 105% if redeemed during
the twelve-month period ending November 15, 1994. Therefore, the
Bank received $750 of principal and accrued interest of $558 on
August 1, 1994 and a premium of approximately $38. As discussed
above, the Bank had assigned no value to the FCB debentures and
related accrued interest in the accompanying financial statements;
therefore, the Bank recognized income upon collection of the
principal, accrued interest and related premium. The accrued
interest and premium are included in interest on other investments.
The collection of principal is included in net securities gains
(losses).
4. LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES:
The composition of the loan portfolio at December 31, was as
follows:
1994 1993
Commercial, financial and agricultural not
secured by real estate $13,123 $11,103
Real estate-construction 1,420 999
Real estate-mortgage 51,097 47,258
Consumer 14,656 14,212
Gross loans 80,296 73,572
Less: Unearned income (523) (540)
Total loans $79,773 $73,032
The Bank grants commercial, real estate and consumer loans to
customers located primarily in Terrebonne Parish and the
surrounding area. Although the Bank's portfolio consists of
business loans extending across many industry types, as well as
loans to individuals, a substantial portion of its debtors' ability
to honor their contracts is dependent upon the marine
transportation, agricultural and petro-chemical business economic
sectors.
The Bank evaluates the credit risk of each customer on an
individual basis and, where deemed appropriate, collateral is
obtained. Collateral varies by individual loan customer but may
include accounts receivable, inventory, real estate, equipment,
deposits, personal and government guarantees, and general security
agreements. Access to collateral is dependent upon the type of
collateral obtained. On an on-going basis, the Bank monitors its
collateral and the collateral value related to the loan balance
outstanding.
Nonperforming and under performing loans at December 31, were as
follows:
1994 1993
Loans:
90 days or more past due, but still accruing interest $ 4 $ 11
Non-accrual loans 231 75
Total nonperforming and under performing loans $ 235 $ 86
There was no income recognized on the cash basis for non-accrual
loans in 1994, 1993 and 1992, respectively. If the accrual of
interest on non-accrual loans had not been suspended, the income
recorded would have been approximately $11, $3, and $9 in 1994,
1993 and 1992, respectively. There were no material renegotiated
loans outstanding during 1994 or 1993.
In the opinion of management, progress has been made in its credit
risk management process, and only normal risk and loss potential
remain in the loan portfolio. Consequently, the Company does not
anticipate significant increases in the level of nonperforming
assets in the foreseeable future. The current level of
nonperforming assets is not anticipated to have a significant,
adverse effect on the results of operations of the Company.
Progressive's provision for possible loan losses charged to expense
is determined in accordance with the policy described in Note 1.
Transactions in the reserve for possible loan losses for 1994, 1993
and 1992 were as follows:
1994 1993 1992
Balance, beginning of year $1,856 $1,588 $1,553
Provision for possible loan losses (648) 168 101
Losses charged to the reserve (95) (84) (232)
Recoveries of loans previously charged-off 103 184 166
Balance, end of year $1,216 $1,856 $1,588
5. BANK PREMISES AND EQUIPMENT
Bank premises and equipment, stated at cost less accumulated
depreciation, were as follows at December 31, 1994 and 1993:
Estimated
Useful Lives 1994 1993
Land - $ 808 $ 808
Buildings 10-25 years 2,962 2,729
Furniture, fixtures and equipment 3-10 years 1,279 2,358
5,049 5,895
Less-accumulated depreciation (2,193) (3,301)
$2,856 $2,594
Depreciation included in occupancy expenses totalled $326, $220 and
$209 in 1994, 1993 and 1992, respectively. During the year, the
Company wrote off certain fully depreciated assets which were no
longer in use.
6. OTHER BORROWED MONEY:
Other borrowed money consists of borrowings from the Federal Home
Loan Bank with maturities ranging from 2-15 years. The rates on
these borrowings range from 4.6%-6.9% and are offset by mortgage
loans of similar duration with higher interest rates. The Company
collateralizes its other borrowings with a blanket floating lien on
portions of its residential loan portfolio, which had a value of
$12,672 at December 31, 1994.
7. FEDERAL INCOME TAX:
On January 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
The adoption of this statement did not have a material effect on
the Company's financial statements and is included in deferred tax
provision in the 1993 statement of income.
As of December 31, deferred income taxes consisted of the
following:
Tax Effect of
Temporary Differences
1994 1993
DEFERRED ASSETS:
Reserve for loan losses $ - $ 101
Other real estate 311 372
Unrealized loss on available for sale securities 270 -
Other 32 33
Subtotal 613 506
DEFERRED LIABILITIES:
Basis difference in investment in Bank - (1,883)
Bank premises and equipment (474) (469)
Note payable discount - (279)
Reserve for loan losses (119) -
Other (32) (7)
Subtotal (625) (2,638)
VALUATION ALLOWANCE - (99)
NET DEFERRED LIABILITY $ (12) $(2,231)
As of December 31, 1993, deferred taxes had been provided on the
difference between the book basis and the tax basis of the
Company's investment in the stock of the Bank. As a result of the
exercise of its option to repurchase the right to 19.5% ownership
of the Bank (see Note 8), whereby the Company will continue to own
100% of the Bank, and the merger agreement with Hibernia, the
Company has determined that such deferred taxes are no longer
required. Such amount has been recorded as a reduction of the
deferred tax provision in 1994.
Under SFAS No. 109, a valuation allowance must be established
against deferred tax assets if, based on all available evidence, it
is more likely than not that some or all of the assets will not be
realized. In 1993, the Company provided a valuation allowance to
the extent that a loss would have been generated for tax purposes
upon the transfer of 19.5% of its share of the Bank's stock (Note
8) due to the uncertainty regarding its ultimate realization. The
valuation allowance was reversed in 1994 as part of the tax benefit
on the extraordinary loss on early extinguishment of debt.
Total tax expense on income before taxes for 1994, 1993, and 1992
resulted in effective tax rates that differed from the Federal
statutory income tax rate. A reconciliation follows:
Consolidated
1994 1993 1992
Statutory Federal income tax rate 34.0% 34.0% 34.0%
Non-taxable income on investments and loans (5.7) (8.2) (0.9)
Amortization of purchase accounting adjustments 1.0 1.8 2.5
Reversal of basis differences (44.0) - -
Recognition of net operating loss carryforwards - - (37.1)
Alternative minimum taxes receivable - - (1.3)
Change in valuation allowance - 4.3 -
Other items .2 8.0 5.5
Effective tax rate (14.5%) 39.9% 2.7%
As of December 31, 1994, the Company has no operating loss
carryforward available to offset future taxable income for
financial statement or tax purposes.
The Company and its bank subsidiary have a tax sharing arrangement
whereby Progressive's income taxes are determined as if it were a
separate taxpayer. Any such taxes are payable by Progressive to
the Company if the Company is required to pay current taxes.
8. NOTES PAYABLE:
On May 18, 1992, the Company borrowed $2,250 from a group of
investors affiliated with the Bank (affiliated group). The note
bore interest at 17% with interest at 12% payable quarterly and
simple interest in excess of 12% due on April 30, 1997 along with
all principal outstanding. The loan proceeds were used to retire
the Company's debt, along with all accrued interest payable to the
previous lenders. The Company recognized an extraordinary gain on
the retirement of this debt of approximately $5,314, net of tax
effect, which is reflected in the accompanying consolidated
statements of income. At the earlier of April 30, 1997 or the
repayment of all principal and interest on the note, the affiliated
group had the right to effect the transfer of 435 shares,
representing 19.5% of the total number of issued and outstanding
shares of common stock of the Bank, from the Company to the
affiliated group. Until April 30, 1994, the Company had the option
to purchase the affiliated group's right to the stock at book
value. For financial statement purposes, the book value of the
19.5% interest in the outstanding common stock of the Bank at May
18, 1992 was calculated based on the Company's investment in the
Bank at that date and amounted to $1,294. The note payable to the
affiliated group was reduced by this amount as a discount which was
being accreted over the term of the note at 10.3% compounded
quarterly, or approximately 48% per year. The original discount
amount plus 19.5% of the undistributed earnings of the Bank from
May 18, 1992 was reflected in the consolidated balance sheet as
liability for stock subject to transfer. This amount was
equivalent to 19.5% of the book value of the Company's investment
in the Bank.
During 1993, the Company prepaid $446 of principal on this note,
resulting in accelerated accretion of the discount related to this
prepaid principal. On April 26, 1994, the Company retired this
note by paying the affiliated group approximately $1,800 in
principal and $300 in interest accrued through that date. As a
result of the early debt retirement, the Company recognized an
extraordinary loss of $597, net of tax effect, in April, 1994.
In connection with the affiliated debt retirement, the Company
exercised its option to purchase, for 19.5% of the book value of
the Bank's stockholders' equity as of March 31, 1994, the
affiliated group's right to receive 19.5% of the Company's
investment in the Bank's stock upon retirement of the debt. The
consideration paid to the affiliated group on April 26, 1994
amounted to approximately $2,100. This amount eliminated the
Company's liability for stock subject to transfer account balance
during April, 1994.
The Company obtained a loan from Hibernia National Bank amounting
to $3,904 to facilitate the retirement of the affiliated debt and
the exercise of its option to purchase the affiliated group's right
to receive 19.5% of the Company's investment in the Bank's stock.
The terms of the loan from Hibernia National Bank require quarterly
payments of principal and interest, with principal payments based
on a seven-year amortization and interest accruing at the Citibank
Prime Rate plus .60%. The loan is unsecured and matures on April
26, 1999. As of December 31, 1994, the Company owed $2,735 on the
loan to facilitate this debt extinguishment. Principal repayments
on this obligation are required as follows:
Year Amount Due
1995 $ 93
1996 558
1997 558
1998 558
1999 968
$2,735
9. SHAREHOLDERS' EQUITY:
Consolidated net income per common share is calculated based upon
weighted average common shares outstanding of 621,560 for the year
ended December 31, 1994, 632,878 for the year ending December 31,
1993 and 651,312 for the year ending December 31, 1992, with the
consolidated net income adjusted to reflect unpaid annual dividends
on cumulative preferred stock of $162 (at $1.25 per share) in 1994,
$164 (at $1.25 per share) in 1993, and $179 (at $1.25 per share) in
1992.
During 1993, the Company purchased and retired 13,310 shares of
preferred stock outstanding. The shares (face value of $13) and
all accumulated dividends in arrears related to the shares ($146
through the dates of purchase) were retired for $24. During 1994
and 1993, the Company purchased 10,000 and 23,642 shares of
outstanding common stock for $.10 per share and $1.00 per share,
respectively. The total costs of these purchases are reflected as
treasury stock in the consolidated balance sheets.
During 1993, the Bank declared a 1-for-100 reverse stock split,
which had the effect of reducing the number of outstanding shares
and increasing the par value of the Bank's common stock. The
purpose of the reverse stock split was to cash out small minority
interest owners of the Bank. All share amounts at Note 14 were
restated to reflect this reverse stock split. The reverse stock
split had no effect on the consolidated financial statements.
10. RELATED PARTY TRANSACTIONS:
Progressive has a number of banking relationships with other banks
which have certain significant shareholders and directors in
common. The most significant of these relationships relates to
loan participations purchased from and sold to these banks.
Participations purchased amounted to $2,947 and $2,337 and
participations sold totalled $3,775 and $3,716 at December 31, 1994
and 1993, respectively, related to these banks.
In September 1987, Progressive entered into an agreement with an
affiliated bank for data processing services. Fees paid under this
agreement were $265 and $243 in 1993 and 1992, respectively. This
agreement was terminated at the end of 1993. In 1994 Progressive
contracted with an outside third party to perform certain data
processing services and other such services were performed in-
house.
In 1993 and 1992 certain loan review, internal audit and consulting
services were performed for the Bank by a related bank. Charges
for these services are included in other operating expenses and
totalled approximately $43 and $40 in 1993 and 1992, respectively.
These services were discontinued at the end of 1993.
The Company sold land and buildings utilized as the main office and
operations center to the Bank in 1985 for $2,100 based on
appraisals obtained. These fixed assets had a net book value at
the time of sale of $1,527 and the Company recognized a gain of
$573. Due to the related party nature of this transaction, this
gain has not been recognized in the consolidated or parent company
financial statements, with the excess of sales price over book
basis being eliminated in consolidation. As of December 31, 1994,
$375 of net excess basis remains on the Bank's financial
statements.
In the ordinary course of business, Progressive makes loans to its
directors, principal shareholders and officers. 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 customers, and do not involve more than
normal risk of collectibility or present other unfavorable
features. An analysis of loans outstanding during 1994 to
directors, principal shareholders and officers, including their
family members and companies in which they have a significant
ownership interest, follows:
Balance Balance
12/31/93 Additions Repayments 12/31/94
$4,196 $2,945 $3,294 $3,847
11. COMMITMENTS AND CONTINGENCIES:
The Company is involved in various litigation which is routine to
the nature of its business. Management believes that resolution of
these matters will not result in any material adverse effect on the
financial statements.
Progressive is required to maintain cash on hand and non-interest
bearing balances with correspondent banks to fulfill its regulatory
reserve requirements. The average required reserve was
approximately $544 and $637 in 1994 and 1993, respectively.
In the normal course of business, there are various outstanding
commitments to extend credit which are not reflected in the
consolidated financial statements. At December 31, 1994 and 1993
outstanding commitments under standby letters of credit were
approximately $520 and $378, respectively.
Additionally, in the normal course of business, there are various
other commitments and contingent liabilities which are not
reflected in the financial statements. Loan commitments are
single-purpose commitments to lend which will be funded and reduced
according to specified repayment schedules. Most of these
commitments have maturities of less than one year. Total loan
commitments outstanding at December 31, 1994 were approximately
$2,458. Lines of credit are commitments to lend up to a specified
amount for a period not to exceed one year. Amounts outstanding
under lines of credit fluctuate because they are generally used to
finance short-term, seasonal working capital needs of the borrower.
Total unfunded lines of credit outstanding as of December 31, 1994
were approximately $6,805. The Bank also offers credit cards to
its customers; unfunded lines of credit outstanding under credit
card agreements were approximately $2,263 at December 31, 1994.
The Bank uses the same credit policies in making commitments and
issuing standby letters of credit as it does for on-balance-sheet
instruments. The Bank evaluates each customer's credit worthiness
on a case-by-case basis. The amount of collateral obtained if
deemed necessary by the Bank upon extension of credit is based on
management's credit evaluation of the counterparty. Collateral
held varies but may include certificates of deposit, accounts
receivable, inventory, property, plant and equipment, and income-
producing properties. There are no commitments which present an
unusual risk to the Bank, and no material losses are anticipated as
a result of these transactions.
The principal source of liquidity for Progressive is core deposits.
Progressive has none of its deposits brokered or purchased in the
national market. At December 31, 1994, 30% of Progressive's
interest-bearing deposits were equal to or exceeded $100. In
management's opinion, funding and liquidity at Progressive is
adequate to meet its current financial commitments.
12. EMPLOYEE BENEFIT PLANS:
Effective January 1, 1988, the Company adopted a defined
contribution savings plan for its employees. Under the terms of
the plan, the Company makes a matching contribution of no less than
40% of the first 3% of the employee's compensation contributed.
For both 1994 and 1993, the employer made discretionary
contributions as authorized by the Board of Directors of 200% of
the first 4% and 3%, respectively, of the employees' compensation
contributed, resulting in contributions of $119 and $76,
respectively. The Company offers no postretirement benefits to its
employees.
The Chief Executive Officer has an employment agreement which
provides for a payment of three years' salary upon change of
control of the Company. In addition, retention agreements were
adopted in 1994 to encourage certain other 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. The retention
agreements, including the Chief Executive's employment agreement,
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 $862. This amount will be
recorded as compensation expense upon consummation of the merger
discussed in Note 2.
13. PARENT COMPANY ONLY FINANCIAL INFORMATION:
Condensed financial statements of Progressive Bancorporation, Inc.,
parent company only, follow:
PROGRESSIVE BANCORPORATION, INC.
CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
1994 1993
ASSETS:
Cash and temporary investments held at subsidiary bank $ 289 $ 1,136
Investment securities 395 -
Investment in subsidiary bank 11,306 9,706
Goodwill 493 612
Other assets 188 124
Total assets $12,671 $ 11,578
LIABILITIES:
Deferred tax liability $ - $ 2,261
Notes payable 2,735 1,003
Liability for stock subject to transfer - 1,889
Other liabilities 42 123
Total liabilities 2,777 5,276
SHAREHOLDERS' EQUITY:
Preferred stock 130 130
Common stock 65 65
Paid-in capital 2,016 2,016
Retained earnings 8,233 4,114
Unrealized loss on available for sale securities (525) -
Treasury stock (25) (23)
Total shareholders' equity 9,894 6,302
Total liabilities and shareholders' equity $12,671 $ 11,578
PROGRESSIVE BANCORPORATION, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in Thousands)
1994 1993 1992
REVENUES:
Other income $ 29 $ 34 $ 28
29 34 28
EXPENSES:
Interest and other expenses 519 659 534
Amortization of purchase accounting adjustments 127 122 122
Stock subject to transfer expense 797 1,167 865
LOSS BEFORE TAXES, DIVIDENDS, EQUITY IN
UNDISTRIBUTED INCOME OF SUBSIDIARY BANK AND
EXTRAORDINARY ITEM (768) (1,133) (837)
BENEFIT FOR INCOME TAXES 2,021 82 1,169
DIVIDENDS FROM SUBSIDIARY BANK 1,339 446 -
EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARY
BANK 2,124 1,996 1,481
NET INCOME BEFORE EXTRAORDINARY ITEM 4,716 1,391 1,813
EXTRAORDINARY ITEMS:
Debt forgiveness - - 5,314
Debt extinguishment (597) (143) -
NET INCOME $ 4,119 $ 1,248 $ 7,127
<TABLE>
<CAPTION>
PROGRESSIVE BANCORPORATION, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in Thousands)
1994 1993 1992
<C> <S> <S> <S>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,119 $ 1,248 $ 7,127
Adjustments to reconcile net income to cash provided by
operating activities:
Amortization of purchase accounting adjustments 127 122 122
Accretion of note payable discount 62 186 91
Equity in subsidiary Bank's net income (3,463) (2,442) (1,481)
Extraordinary gain on forgiveness of debt - - (5,314)
Extraordinary loss on early extinguishment of debt 597 143 -
Decrease in other assets (72) - (20)
Increase (decrease) in liability for stock subject to transfer (1,889) 386 269
Increase (decrease) in other liabilities (1,885) 66 230
Net cash provided by (used in) operating activities (2,404) (423) 1,024
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities (395) - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of notes payable (3,285) (446) -
Net proceeds on debt restructure 3,900 - 579
Purchase of preferred stock - (24) -
Purchase of treasury stock (2) (23) -
Dividends from subsidiary bank 1,339 446 -
Net cash provided by (used in) financing activities 1,952 (47) 579
NET INCREASE (DECREASE) IN CASH (847) (470) 1,603
CASH AT BEGINNING OF YEAR 1,136 1,606 3
CASH AT END OF YEAR $ 289 $ 1,136 $ 1,606
CASH INTEREST EXPENSES PAID $ 293 $ 268 $ 135
CASH INCOME TAXES PAID $ 1,299 $ 259 $ 4
</TABLE>
14. BANK ONLY FINANCIAL INFORMATION:
The condensed balance sheets and statements of income of Progressive Bank and
Trust follow:
<TABLE>
<CAPTION>
PROGRESSIVE BANK AND TRUST COMPANY
CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
ASSETS
1994 1993
<S> <C> <C>
CASH AND DUE FROM BANKS $ 9,342 $ 4,098
INVESTMENTS, at cost - 52,995
INVESTMENTS, available for sale 22,881 -
INVESTMENTS, held to maturity 25,261 -
LOANS 79,773 73,032
Less-Reserve for possible loan losses (1,216) (1,856)
Net loans 78,557 71,176
BANK PREMISES AND EQUIPMENT 3,231 2,989
OTHER REAL ESTATE 302 319
ACCRUED INTEREST RECEIVABLE 908 869
OTHER ASSETS 510 122
Total assets $ 140,992 $ 132,568
LIABILITIES AND SHAREHOLDER'S EQUITY
DEPOSITS:
Non-interest bearing $ 21,729 $ 18,202
Interest bearing 100,321 96,600
Total deposits 122,050 114,802
REPURCHASE AGREEMENTS - 1,000
OTHER BORROWED MONEY 6,196 5,612
ACCRUED TAXES, INTEREST AND EXPENSES 1,066 1,056
Total liabilities 129,312 122,470
SHAREHOLDER'S EQUITY:
Common stock, $500 par value at December 31, 1994 and 1993,
2,232 shares issued and outstanding at December 31, 1994 and 1993 1,116 1,116
Paid-in capital 3,883 3,883
Unrealized loss on available for sale securities (525) -
Retained earnings 7,206 5,099
Total shareholder's equity 11,680 10,098
Total liabilities and shareholder's equity $ 140,992 $ 132,568
</TABLE>
<TABLE>
<CAPTION>
PROGRESSIVE BANK AND TRUST COMPANY
CONDENSED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
1994 1993
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 7,858 $ 7,691
Interest on securities-
U. S. Treasury and agencies 2,732 2,969
State and municipal 762 596
Interest on other investments 637 -
Interest on deposits with banks 125 87
Total interest income 12,114 11,343
INTEREST EXPENSE:
Interest on deposits 3,931 3,939
Interest on Federal funds purchased and repurchase agreements 16 24
Interest on other borrowings 335 339
Total interest expense 4,282 4,302
NET INTEREST INCOME 7,832 7,041
PROVISION FOR POSSIBLE LOAN LOSSES (648) 168
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 8,480 6,873
OTHER OPERATING INCOME:
Service charges on deposit accounts 931 933
Net securities gains (losses) (124) 63
Other income 547 466
Total other operating income 1,354 1,462
NON-INTEREST EXPENSE:
Salaries and benefits 2,582 2,228
Occupancy expense 620 486
Data processing fees to an affiliate - 265
Other operating expenses 1,761 1,927
Total non-interest expense 4,963 4,906
INCOME BEFORE INCOME TAXES 4,871 3,429
PROVISION FOR INCOME TAXES:
Current 1,125 977
Deferred 300 27
1,425 1,004
NET INCOME $ 3,446 $ 2,425
</TABLE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
OF
PROGRESSIVE BANCORPORATION, INC.
WITH AND INTO
HIBERNIA CORPORATION
AGREEMENT AND PLAN OF MERGER dated as of December 1, 1994
(this "Agreement"), adopted and made by and between Progressive
Bancorporation, Inc. ("Progressive") and Hibernia Corporation
("Hibernia").
Progressive is a corporation duly organized and existing
under the laws of the State of Louisiana; has its registered
office at One Progressive Square, Houma, Louisiana 70630; 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 Progressive is
3,000,000 shares, consisting of 1,000,000 shares of preferred
stock, par value $1.00 per share and 2,000,000 shares of common
stock, par value $0.10 per share ("Progressive Common Stock").
As of September 30, 1994, 225,000 shares of Class A Preferred
Stock ("Progressive Preferred Stock") had been established and
651,312 shares of Progressive Common Stock had been issued,
129,644 shares of Progressive Preferred Stock and 617,670 shares
of Progressive Common Stock were outstanding, and 33,642 shares
of Progressive Common Stock were held in Progressive's treasury.
All outstanding shares of Progressive's capital stock have been
duly issued and are validly outstanding, fully paid, and
nonassessable. Progressive Common Stock and Progressive
Preferred Stock are the only voting securities of Progressive
authorized, issued, or outstanding, and there are no existing
options, warrants, calls, or commitments of any kind obligating
Progressive to issue any share of its capital stock or any other
security of which it is or will be the issuer. None of the
shares of Progressive's capital stock has been issued in
violation of preemptive rights of shareholders. Progressive owns
100 percent of the outstanding voting shares of Progressive Bank
and Trust Company, ("Bank"), a banking corporation duly organized
and existing under the laws of the State of Louisiana.
Hibernia is a corporation duly organized and existing
under the laws of the State of Louisiana; has its registered
office at 313 Carondelet Street, New Orleans, Louisiana 70130;
and is a bank holding company within the meaning of the Bank
Holding Company Act. Hibernia owns all of the issued and
outstanding shares of capital stock of Hibernia National Bank
("HNB"). The presently authorized capital stock of Hibernia is
A-1
300,000,000 shares, consisting of 100,000,000 shares of preferred
stock, no par value, and 200,000,000 shares of Class A voting
common stock, no par value (the Class A voting common stock being
referred to hereinafter as "Hibernia Common Stock"). As of
September 30, 1994, no shares of Hibernia's preferred stock were
outstanding, 96,924,803 shares of Hibernia Common Stock were
outstanding, and no shares of Hibernia Common Stock were held in
Hibernia's treasury. All outstanding shares of Hibernia Common
Stock have been duly issued and are validly outstanding, fully
paid and nonassessable. The foregoing are the only voting
securities of Hibernia authorized, issued or outstanding and
there are no existing options, warrants, calls or commitments of
any kind obligating Hibernia to issue any share of its capital
stock or any other security of which it is or will be the issuer,
except that Hibernia has authorized or reserved 1,711,428 shares
of Hibernia Common Stock for issuance under its 1987 Stock Option
Plan, pursuant to which options covering 1,555,212 shares of
Hibernia Common Stock were outstanding as of September 30, 1994,
3,849,787 (as adjusted) shares of Hibernia Common Stock for
issuance under its 1992 Long-Term Incentive Plan, pursuant to
which options covering 2,539,646 shares of Hibernia Common Stock
were outstanding as of September 30, 1994, 1,000,000 shares of
Hibernia Common Stock for issuance under its 1993 Director Stock
Option Plan, pursuant to which options covering 155,000 shares of
Hibernia Common Stock are outstanding on the date hereof, 523,783
shares of Hibernia Common Stock are available for issuance
pursuant to Hibernia's Dividend Reinvestment and Stock Purchase
Plan. Mergers that have been consummated with Commercial
Bancshares, Inc., Bastrop National Bank, First Bancorp of
Louisiana, Inc. and First Continental Bancshares, Inc. will
result in the issuance of an aggregate of approximately 1.5
million additional shares. Pending mergers with Pioneer
Bancshares Corporation, First State Bank and Trust Company,
American Bank and STABA Bancshares, Inc. will result in the
issuance of an estimated approximately 10.9 million shares of
Hibernia Common Stock. None of the shares of Hibernia's capital
stock has been issued in violation of preemptive rights of
shareholders.
HNB is a national banking association organized and existing
under the laws of the United States of America having its
principal registered office at 313 Carondelet Street, New
Orleans, Louisiana 70130. All of the issued and outstanding
shares of capital stock of HNB are owned by Hibernia. HNB is (i)
an "insured bank" as defined in the Federal Deposit Insurance Act
and applicable regulations thereunder, and (ii) has been duly
organized and is validly existing as a national bank under the
laws of the United States, and has full authority to conduct its
business as and where currently conducted.
The Boards of Directors of Progressive and Hibernia have
duly approved this Agreement and have authorized the execution
A-2
hereof by Progressive's President and Hibernia's President and
Chief Executive Officer, respectively. Progressive 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 Progressive 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), Progressive 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. Progressive Securities.
3.1. Conversion. On the Effective Date and subject to
the provisions of Section 3.7 hereof,
(a) each share of Progressive 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 Progressive Preferred Stock issued
and outstanding immediately prior to the Effective Date, other
than 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 right to receive cash in the amount of $12.50 per share
plus all accumulated and unpaid dividends thereon as calculated
in accordance with Section 4.2.1.3 of the Articles of
Incorporation of Progressive in existence as of the date of this
Agreement;
A-3
(c) holders of certificates which represent shares of
Progressive Common Stock or Progressive Preferred Stock
outstanding immediately prior to the Effective Date ("Old
Certificates") shall cease to be, and shall have no rights as,
shareholders of Progressive;
(d) each share of Progressive Common Stock and
Progressive Preferred Stock held in the treasury of Progressive
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, in the case of Progressive Common
Stock, 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 Progressive
Preferred Stock, cash as provided in paragraph (b) hereof.
3.2. Fractional Shares. Each holder of Old
Certificates representing shares of Progressive Common Stock who
would otherwise have been entitled to receive a fraction of a
share of Hibernia Common Stock (after taking into account all
shares of Progressive Common Stock represented by the Old
Certificates then delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such
fractional part of a share multiplied by the average of the mean
of high and low prices of one share of Hibernia Common Stock for
the 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
Progressive transmittal materials for use in exchanging Old
Certificates for, in the case of Progressive Common Stock,
certificates representing Hibernia Common Stock and a check
representing cash paid in lieu of fractional shares, if any, and,
in the case of Progressive 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
A-4
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
Progressive Common 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 Progressive Common Stock
are converted, regardless of whether they have exchanged their
Old Certificates. Whenever a dividend is declared by Hibernia on
the Hibernia Common Stock after the Effective Date, the
declaration shall include dividends on all shares issuable
hereunder, but no shareholder will be entitled to receive his
distribution of such dividends until physical exchange of his Old
Certificates shall have been effected. Upon physical exchange of
his Old Certificates, any such person shall be entitled to
receive from Hibernia an amount equal to all dividends (without
interest thereon and less the amount of taxes, if any, that may
have been withheld, imposed or paid thereon) declared, and for
which the payment has occurred, on the shares represented
thereby.
3.5. Cancellation of Old Certificates. On and after
the Effective Date there shall be no transfers on the stock
transfer books of Progressive of the shares of Progressive Common
Stock or Progressive 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, in the case
of Progressive Common Stock, certificates representing shares of
Hibernia Common Stock and a check representing cash paid in lieu
of fractional shares and, in the case of Progressive 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 Progressive Common
Stock or Progressive 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 Progressive 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
Progressive, and otherwise to carry out the purposes of this
Agreement.
A-5
3.7. Dissenters' Shares. Shares of Progressive Common
Stock held by any holder having rights of a dissenting
shareholder as provided in Part XIII of the LBCL, who shall have
properly objected to the Merger and who shall have properly
demanded payment on his stock in accordance with and subject to
the provisions of Section 12:131 of the LBCL, shall not be
converted as provided in Section 3.1 hereof until such time as
such holder shall have failed to perfect, or shall have
effectively lost, his right to appraisal of and payment for his
shares of Progressive Common Stock at which time such shares
shall be converted as provided in Section 3.1 hereof.
3.8. Exchange Rate. The Exchange Rate shall be the
number that is obtained by dividing 2,500,000 by the total number
of issued and outstanding shares of Progressive Common Stock on
the Closing Date.
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
Progressive 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 Progressive 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 Progressive
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,
Progressive covenants and agrees that it will not do, or agree to
commit to do, and Progressive 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 Progressive (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 Progressive
Common Stock (other than in a fiduciary capacity);
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(b) authorize the creation or issuance of or issue any
additional shares of its capital stock, or any options, calls,
warrants, stock appreciation rights or commitments relating to
its capital stock or any securities or obligations convertible
into or exchangeable for, or giving any person any right to
subscribe for or acquire from it, shares of its capital stock;
(c) 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 Progressive 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,
except as disclosed on Schedule 6(e) hereto, (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 Progressive 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 Progressive'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
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(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 Progressive.
Progressive (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. Progressive is a
corporation and Bank is a Louisiana banking association duly
organized, validly existing, and in good standing under the laws
of the State of Louisiana. Each of Progressive 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
Progressive 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, Progressive 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 authorized capital stock of Bank
consists solely of 3,000 shares of common stock, par value of
$500.00 per share, of which 2,232 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 La.
Rev. Statute 6: 262) and, except as provided on Schedule 7.3
hereto, all of such shares are owned by Progressive 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
Progressive'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
Progressive 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 Progressive, enforceable against Progressive 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
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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
Progressive 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 Progressive or Bank or to
which Progressive 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 Progressive and Bank taken as a whole or on the
transactions contemplated hereby, (ii) to the best of the
knowledge of the executive officers of Progressive 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 Progressive or
Bank or to which Progressive or Bank is subject, or (iii) a
breach or violation of, or a default under, the Articles of
Incorporation or Association or Bylaws of Progressive 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.
Progressive 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 "Progressive Financial Statements"): Progressive's
Consolidated Balance Sheets as of September 30, 1994 and 1993
(unaudited) and December 31, 1993, 1992 and 1991 (audited);
Consolidated Statements of Income and Changes in Stockholders'
Equity and Consolidated Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991 (audited), and
Consolidated Statements of Income for the nine-month periods
ended September 30, 1994 and 1993 (unaudited). Each of the
Progressive Financial Statements (including the related notes)
fairly presents the consolidated results of operations of
Progressive and Bank for the respective periods covered thereby
and the consolidated financial condition of Progressive 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 Progressive
Financial Statements, including the notes thereto, or Schedule
7.6 hereto, and except as otherwise required by this Agreement,
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there are no restrictions in any note, indenture, agreement,
statute or otherwise (except for statutes or regulations
applicable to Louisiana corporations or banks generally)
precluding Progressive 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,
1994, there has been no event or condition of any character
(whether actual, or to the knowledge of the executive officers of
Progressive or Bank, threatened or contemplated) that has had or
can reasonably be anticipated to have, or that, if concluded or
sustained adversely to Progressive, would reasonably be
anticipated to have, a material adverse effect on the financial
condition, results of operations, or business of Progressive 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
Progressive that in the opinion of the executive officers of
Progressive and Bank is likely to have a material and adverse
effect on the business, results of operations or financial
condition of Progressive 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 Progressive'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 Progressive nor Bank is
bound by any material contract to be performed after the date
hereof that is not terminable by Progressive or Bank without
penalty or liability on thirty days prior notice.
7.10. Brokers' or Finders' Fees. No agent, broker,
investment banker, investment or financial advisor or other
person acting on behalf of Progressive 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, except that
Progressive has engaged Montgomery Securities in connection with
the Merger and has agreed to compensate Montgomery Securities for
such services. A copy of the Agreement by which Progressive has
engaged Montgomery Securities is attached hereto as Exhibit 7.10
and contains all agreements between Progressive and Montgomery
Securities relating to services in connection with the Merger and
compensation therefor.
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7.11. Contingent Liabilities. Except as disclosed on
Schedule 7.11 hereto or as reflected in the Progressive 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, 1994, neither
Progressive 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
Progressive 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, 1994, or
from any action omitted to be taken during such period that, to
the knowledge of the executive officers of Progressive 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 Progressive 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,
1994, neither Progressive nor Bank has incurred or paid any
obligation or liability that would be material to Progressive 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 Progressive 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, 1993, and all returns filed are complete and
accurate to the best information and belief of the executive
officers of Progressive; 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 Progressive or Bank except as
reserved against in the Progressive Financial Statements. All
taxes, interest, additions and penalties due with respect to
completed and settled examinations or concluded litigation have
been paid, and Progressive's reserves for bad debts at December
31, 1993, as filed with the Internal Revenue Service were not
greater than the maximum amounts permitted under the provisions
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of Section 585 of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code").
7.15. Loans. To the knowledge and belief of the
executive officers of Progressive and Bank, each loan reflected
as an asset of Progressive in the Progressive Financial
Statements, as of September 30, 1994, or acquired since that
date, is the legal, valid, and binding obligation of the obligor
named therein, enforceable in accordance with its terms, and no
loan is subject to any asserted defense, offset or counterclaim
known to the executive officers of Progressive 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 Progressive
as of September 30, 1994, are adequate in all material respects
under the requirements of GAAP to provide for possible losses,
net of recoveries, relating to loans previously charged off, on
loans outstanding (including accrued interest receivable) as of
September 30, 1994, and each such allowance has been established
in accordance with GAAP.
7.17. Title to Assets; Adequate Insurance Coverage.
(a) As of September 30, 1994, Progressive 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 Progressive 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 Progressive Financial
Statements or which secure deposits of public funds as required
by law; (ii) liens for taxes accrued but 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,
1994, provided that the obligations secured by such liens are not
delinquent or are being contested in good faith; (iv) such
imperfections of title and encumbrances, if any, as do not
materially detract from the value or materially interfere with
the present use of any of such properties or assets or the
potential sale of any such owned properties or assets; and (v)
capital leases and leases, if any, to third parties for fair and
adequate consideration. Progressive 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
Progressive or Bank are held under valid, subsisting and
enforceable leases with such exceptions as are not material and
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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 Progressive or
Bank is a party, except for financing leases in which Progressive
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 Progressive 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 Progressive and Bank, the policies of fire, theft,
liability and other insurance, including fidelity bonds,
maintained with respect to the assets or businesses of
Progressive and Bank provide adequate coverage against loss.
7.18. Employee Plans. To the knowledge and belief of
the executive officers of Progressive and Bank, Progressive,
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
Progressive 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.
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7.19. Copies of Employee Plans. On or prior to the
date hereof, Progressive 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 Progressive 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
Progressive Financial Statements, neither Progressive 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, Progressive will make available to Hibernia, for
inspection pursuant to the terms of Section 9.5 hereof, the
minutes of meetings of Progressive'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 Progressive or Bank at the date hereof. Except as
disclosed on Schedule 7.23 hereto, neither Progressive 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 Progressive nor Bank has
been refused any insurance coverage sought or applied for, and
the executive officers of Progressive and Bank have no reason to
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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 Progressive or
Bank.
7.24. Investments. Except for pledges to secure
public or trust deposits, none of the investments reflected in
the Progressive Financial Statements under the heading
"Investment Securities," and none of the investments made by
Progressive or Bank since September 30, 1994, and none of the
assets reflected in the Progressive 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 Progressive or Bank freely to dispose of
such investment at any time. With respect to all repurchase
agreements to which Progressive or Bank is a party, Progressive
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 Progressive nor
Bank nor, to the knowledge of the executive officers of
Progressive 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 Progressive or Bank
or used by Progressive or Bank in their respective business
("Progressive Properties") used, generated, treated, stored, or
disposed of any hazardous waste, toxic substance, or similar
materials on, under, or about Progressive 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
Progressive 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 Progressive 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.
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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. 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
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hereby, (ii) to the best of the knowledge of Hibernia's
management, a breach or violation of, or a default under, any
law, rule, or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture, or
instrument of Hibernia or its subsidiaries or to which Hibernia
or any of its subsidiaries is subject, or (iii) a breach or
violation of, or a default under the Articles of Incorporation or
Association or Bylaws of Hibernia, or of its subsidiaries, and
the consummation of the transactions contemplated hereby will not
require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or
license or the consent or approval of any other party to any such
agreement, indenture, or instrument, other than any required
approvals of shareholders and applicable regulatory authorities.
8.6. Reports of Hibernia. As of their respective
dates, none of its Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, its Quarterly Reports on Form 10-Q for
the periods ended March 31, June 30, and September 30, 1994, and
its proxy statement for its 1994 annual meeting of shareholders,
each in the form (including exhibits) filed with the Securities
and Exchange Commission (the "SEC"), and its annual report to
shareholders for the fiscal year ended December 31, 1993, and its
quarterly report to shareholders for the period ended September
30, 1994 (collectively, the "Hibernia Reports"), contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under
which they were made, not misleading. There is no fact or
circumstance that, individually or in the aggregate, materially
and adversely has affected or is so affecting, or, in the opinion
of the executive officers of Hibernia, may reasonably be expected
in the future to so affect, the business, financial condition,
net worth, properties, prospects or results of operations of
Hibernia and its subsidiaries, taken as a whole, that has not
been disclosed in the Hibernia Reports. Each of the balance
sheets in or incorporated by reference into the Hibernia Reports
(including the related notes) fairly presents the financial
position of the entity or entities to which it relates as of its
date and each of the statements of income and stockholders'
equity and statement of cash flows or equivalent statements in
the Hibernia Reports (including any related notes and schedules)
fairly presents the results of operations and changes in
stockholders' equity, as the case may be, of the entity or
entities to which it relates for the periods set forth therein
(subject, in the case of unaudited statements, to year-end audit
adjustments that will not be material in amount or effect), in
each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein. Copies of the
Hibernia Reports have been furnished to Progressive on or before
the date hereof.
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8.7. No Material Adverse Change. Since September 30,
1994, there has been no event or condition of any character
(whether actual, or to the knowledge of Hibernia or HNB,
threatened or contemplated) that has had or can reasonably be
anticipated to have, or that, if concluded or sustained adversely
to Hibernia, would reasonably be anticipated to have, a material
adverse effect on the financial condition, results of operations,
business or prospects of Hibernia or HNB, excluding changes in
laws or regulations 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, 1994, or acquired since that date, is
the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms, and 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, 1994, are adequate in all material respects
under the requirements of GAAP to provide for possible losses,
net of recoveries, relating to loans previously charged off, on
loans outstanding (including accrued interest receivable) as of
September 30, 1994, 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
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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 Progressive
each hereby agrees and covenants to the other that:
9.1. Shareholder Approvals. If required by applicable
law, this Agreement shall be submitted to its respective
shareholders having voting power 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 having voting power 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 take or cause to be taken any action which is or
creates a material burden on such party, except to the extent
such actions are reasonably anticipated to be required in order
to effect the Merger.
9.3. Preparation of Registration Statement and Proxy
Statement. It shall prepare as promptly as practicable jointly
with the other party hereto a proxy statement to be mailed to the
shareholders of each party the shareholders of which are to vote
upon this Agreement in connection with the transactions
contemplated hereby and to be part of a registration statement
(the "Registration Statement") to be filed by Hibernia with the
SEC pursuant to the Securities Act of 1933, as amended (the "1933
Act") with respect to the shares to be issued in the Merger.
When the Registration Statement or any post-effective amendment
thereto shall become effective, and at all times subsequent to
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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 Progressive relating to Progressive, (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 Progressive 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 the other party in advance, neither Progressive nor
Hibernia will 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 or
Progressive 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 the other party so long as that party is furnished with a
copy of such report prior to its filing.
9.5. Material Developments; Access to Information.
(i) In order to afford Progressive access to such
information as it may reasonably deem necessary to perform its
due diligence review with respect to Hibernia and HNB and their
assets in connection with the Merger, Hibernia shall (and shall
cause HNB to), (A) upon reasonable notice, afford Progressive 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 Progressive and
such representatives with such financial and operating data and
other information of any kind respecting its business and
properties as Progressive shall from time to time reasonably
request to perform such review, (B) furnish Progressive with
copies of all reports filed by Hibernia with the SEC throughout
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the period after the date hereof prior to the Effective Date
promptly after such reports are so filed, and (C) promptly advise
Progressive 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 Progressive
and the Bank to be acquired as a result of the Merger,
Progressive 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 Progressive 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 Progressive 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,
Progressive or Bank or any business combination with Progressive
or Bank other than as contemplated by this Agreement.
Progressive shall instruct each officer, director, agent, or
affiliate of it or Bank to refrain from doing any of the above,
and Progressive 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, Progressive; provided, however, that
nothing contained in this section shall be deemed to prohibit any
officer or director of Progressive or Bank from taking any action
that, in the opinion of counsel to Progressive or Bank is
required by applicable law. In the event such opinion is
rendered in writing, Progressive or the Bank, as the case may be,
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agrees to furnish a copy thereof to Hibernia promptly after its
issuance.
9.7. Affiliates. Prior to the Closing Date (as
defined in Section 14 hereof), Progressive shall deliver to
Hibernia a letter identifying all persons whom it believes to be
"affiliates" of Progressive for purposes of Rule 145(c) or Rule
144 (as applicable) under the 1933 Act ("Affiliates").
Progressive 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 Progressive
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 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, Progressive 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), Progressive 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 Progressive or Bank at the request of
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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 Progressive 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 Progressive 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
Progressive 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
Progressive 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
Progressive 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, in
the case of a claim against him in his capacity as an officer or
director of Progressive, or HNB, in the case of a claim against
him in his capacity as an officer or director of the Bank, at all
relevant times (regardless of whether such Articles or Bylaws are
subsequently amended or repealed); provided, however, that the
indemnification provided by this Section shall not apply to any
claim against an Indemnified Person if such Indemnified Person
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knew or should have known of the existence of the claim and
failed to make a good faith effort to require Progressive 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 $5 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 $5 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. 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 Progressive and Bank under those
certain retention agreements and severance policies identified on
Schedule 9.15 hereto; provided, however, that Hibernia shall not
be obligated to pay any severance or retention payments to any
individual who was paid severance or retention amounts, or is
entitled to receive severance or retention amounts, in connection
with Hibernia's merger with First Continental Bancshares, Inc.
and First National Bank of Jefferson Parish or American Bank
(Norco).
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9.16. Voting of Progressive Shares. Hibernia agrees that,
in the event either Hibernia or HNB owns any shares of
Progressive Common Stock as of the date of the Progressive
shareholders' meeting at which approval of the Merger is sought,
Hibernia will vote such shares, or cause such shares to be voted,
in favor of the Merger.
10. Permits, Consents, and Approvals. As promptly as
practicable after the date hereof:
(a) Hibernia shall submit an application to the Board
of Governors of the Federal Reserve System (the "Federal Reserve
Board") for approval of the transactions contemplated hereby in
accordance with the provisions of the Bank Holding Company Act;
(b) Hibernia shall submit an application to the
Comptroller of the Currency (the "Comptroller") for approval of
the transactions contemplated hereby in accordance with the
provisions of the Bank Merger Act;
(c) Progressive shall endeavor to have its Affiliates
execute a written agreement in substantially the form of Exhibit
9.7 hereto; provided, however, that Progressive shall have no
such obligation prior to the receipt by the Board of Directors of
Progressive of the Fairness Opinion described in Section 12.14
hereof; and
(d) Progressive shall endeavor to have each of the
directors of Progressive, and each shareholder owning 5 percent
or more of the outstanding shares of Progressive Common Stock,
execute a written agreement in substantially the form of Exhibit
10(d) hereto; provided, however, that Progressive shall have no
such obligation prior to the receipt by the Board of Directors of
Progressive of the Fairness Opinion described in Section 12.14
hereof.
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
Progressive agree, on behalf of themselves, and 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
A-25
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 Progressive 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 Progressive, each of its directors and officers and each
person, if any, who controls Progressive 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 Progressive 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
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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 Progressive
Common Stock and exercise and perfection of dissenters' rights
pursuant to Section 12:131 of the LBCL by holders of Progressive
Common Stock holding in the aggregate no more than 10 percent of
the Progressive Common 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 Progressive or Bank upon
consummation of the Merger and all other transactions
contemplated hereby.
12.3 Other Approvals. Procurement of all other
consents and approvals and satisfaction of all other requirements
prescribed by law that are necessary to the consummation of the
transactions contemplated by this Agreement.
12.4. No Restraining Action. No litigation or
proceeding initiated by any governmental authority shall be
pending before any court or agency that shall present a claim to
restrain, prohibit or invalidate the transactions contemplated
hereby and neither Hibernia nor Progressive shall be prohibited
by any order of any court or other governmental authority from
consummating the transactions provided for in this Agreement.
12.5. Opinion of Hibernia Counsel. Progressive and
its directors shall have received an opinion, dated the Closing
Date, of counsel for Hibernia, in form and substance reasonably
satisfactory to Progressive as to such matters Progressive may
reasonably request with respect to the transactions contemplated
hereby.
12.6. Opinion of Progressive 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
Progressive, in form and substance reasonably satisfactory to
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Hibernia as to such matters Hibernia may reasonably request with
respect to the transactions contemplated hereby.
12.7. Representations, Warranties and Agreements of
Progressive. Each of the representations, warranties, and
agreements of Progressive 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 Progressive, dated the Closing Date,
to such effect; Progressive 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. Progressive shall have
furnished Hibernia with such further documents or other materials
as Hibernia shall have reasonably requested in connection with
the transactions contemplated hereby.
12.8. Representations, Warranties and Agreements of
Hibernia. Each of the representations, warranties and agreements
of Hibernia contained herein in all material respects shall be
true on, or complied with by, the Closing Date as if made on such
date (or the date when made in the case of any representations or
warranty which specifically relates to an earlier date) and
Progressive 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
Progressive such other certificates as Progressive 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 Progressive
with such further documents or other materials as Progressive
shall have reasonably requested in connection with the
transactions contemplated hereby.
12.9. Effective Registration Statement. The
Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC and Progressive
shall have received a certificate to such effect from the officer
of Hibernia designated as its agent for service on the cover page
of the Registration Statement (which certificate may be to the
knowledge of such officer).
12.10. Blue Sky. Hibernia shall have received all
state securities laws and "blue sky" permits and other
authorizations necessary to consummate the transactions
contemplated hereby.
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12.11. Tax Ruling. Progressive shall have received a
tax ruling, or in lieu thereof an opinion of a big six public
accounting firm or law firm satisfactory to Progressive,
satisfactory in form and substance to Progressive, 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
Progressive Common Stock to the extent exchanged for Hibernia
Common Stock will not give rise to gain or loss to the holders of
Progressive Common Stock with respect to such exchange; and that
the Louisiana income tax treatment to the holders of Progressive
Common Stock and/or Progressive Preferred Stock will be
substantially the same as the federal income tax treatment to
such shareholders.
12.12. Accounting Treatment. The Merger shall be
eligible to be treated as a pooling-of-interests for accounting
purposes.
12.13 Listing on New York Stock Exchange. The shares
of Hibernia Common Stock issuable to the holders of Progressive
Common Stock in the Merger shall have been approved for listing
on the New York Stock Exchange, Inc. on or before the Closing
Date, subject to official notice of issuance.
12.14 Fairness Opinion. Progressive shall have
received a letter from Montgomery Securities dated prior to the
scheduled date of mailing of the Proxy Statement to its
shareholders, which had not been withdrawn prior to the Closing
Date, to the effect that the consideration to be paid in the
Merger, when taken as a whole, is fair to the shareholders of
Progressive from a financial point of view.
12.15. Assertion of Conditions. A failure to satisfy
any of the requirements set forth in Section 12.5, 12.8, 12.11,
12.13 or 12.14 shall only constitute conditions to consummation
of the Merger if asserted by Progressive, and a failure to
satisfy any of the requirements set forth in Section 12.6, 12.7,
or 12.12 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.
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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 such breach
results in a material increase in the cost to the non-breaching
party's performance of its obligations under this Agreement.
13.3. Passage of Time; Inability to Satisfy
Conditions. By either party hereto, in the event that (i) the
Merger is not consummated by June 30, 1995, or (ii) any condition
to Closing cannot be satisfied by June 30, 1995, and will not be
waived by the party or parties entitled to waive it.
13.4. Failure to Obtain Regulatory Approval. By
either party hereto, at any time after the Federal Reserve Board
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 Progressive.
13.6. Dissenters. By Hibernia, if holders of more
than 10 percent of the outstanding Progressive Common Stock
exercise statutory rights of dissent and appraisal pursuant to
Part XIII of the LBCL.
13.7. Material Adverse Change. By Progressive, 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 Progressive,
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
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(the "S&P Quotient") exceeds the Hibernia Quotient by more than
0.1. 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.
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, 9.15, 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 Progressive who are the intended beneficiaries of
such provisions; provided, however, that the provisions of
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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 Progressive) 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
Progressive shall change the number of shares of Hibernia Common
Stock into which shares of Progressive Common Stock will be
converted by the Merger.
17. Execution in Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed to
constitute an original. Each such counterpart shall become
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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: Patricia C. Meringer
and a copy of all notices or other communications directed to
Progressive shall be sent to:
McGlinchey Stafford Lang
A Law Corporation
2777 Stemmons Freeway
Suite 925
Dallas, Texas 75207
Attention: Alan Jacobs, 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.
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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.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed in counterparts by their duly authorized officers and their
corporate seals to be hereunto affixed, all as of the day and year first
above written.
HIBERNIA CORPORATION
Stephen A. Hansel
President and Chief Executive
Officer
Attest:
Patricia C. Meringer
Secretary
PROGRESSIVE BANCORPORATION,
INC.
John H. Laing
President and Chief Executive
Officer
Attest:
Elton A. Arceneaux, Jr.
Secretary
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APPENDIX B
FAIRNESS OPINION OF MONTGOMERY SECURITIES, INC.
December 1, 1994
Members of the Board of Directors
Progressive Bancorporation, Inc.
One Progressive Square
Houma, LA 70360
Gentlemen:
We understand that Progressive Bancorporation, Inc., a
Louisiana corporation ("Acquiror), have entered into an Agreement
and Plan of Merger dated as of December 1, 1994 (the "Merger
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 Merger Agreement, we understand that
each outstanding share of the common stock, $0.10 par value per
share, of the Company (the "Common Stock"), other than shares of
Common Stock as to which dissenters' rights have been perfected
and not withdrawn or otherwise forfeited and shares of Common
Stock owned by Acquiror or its subsidiaries, will be converted
into and exchangeable for that number of shares of the Class A
voting common stock, no par value per share, of Acquiror obtained
by dividing 2,500,000 by the total number of issued and
outstanding shares of Common Stock on the Closing Date (as
defined in the Merger Agreement), subject to certain adjustments
(the "Consideration").
You have asked for our opinion as to whether the
Consideration to be received by the holders of the Common Stock,
other than Acquiror or its subsidiaries, pursuant to the Merger
is fair to such shareholders from a financial point of view, as
of the date hereof.
In connection with our opinion, we have, among other things:
(i) 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, 1994 and certain other relevant
financial and operating data relating to the Company and Acquiror
made available to us from published sources and from the internal
records of the Company; (ii) reviewed the Merger Agreement; (iii)
reviewed certain historical market prices and trading volumes of
Acquiror Class A voting 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 acquisitions of companies in the banking industry
which we deemed to be comparable, in whole or in part, to 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,
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furnished to us by them, including financial forecasts and
related assumptions of the Company; (vii) made inquiries
regarding and discussed the Merger and the Merger 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 assumed and relied
upon the accuracy and completeness of the foregoing information
with respect to the Company and Acquiror and we have not assumed
responsibility for independent verification of such information.
With respect to the financial forecasts for the Company provided
to us by its management, we have assumed for purposes of our
opinion that the forecasts have been reasonably prepared on bases
reflecting the best available estimates and judgments of the
Company's 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 Merger
Agreement. We are not experts in the evaluation of loan
portfolios for purposes of assessing the adequacy of the
allowances for losses with respect thereto and have assumed that
such allowances for each of the Company and Acquiror are in the
aggregate adequate to cover such losses. In addition, we have
not assumed responsibility for reviewing any individual credit
files or making 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 as in effect on, and the information made available to
us as of, the date hereof.
We have further assumed that the Merger will be consummated
in accordance with the terms described in the Merger Agreement,
without any further amendments thereto, and without waiver by the
Company of any of the conditions to its obligations thereunder.
Based upon the foregoing and in reliance thereon, it is our
opinion that the Consideration to be received by the holders of
the Common Stock, other than Acquiror or its subsidiaries,
pursuant to the Merger is fair to such shareholders from a
financial point of view, as of the date hereof.
This opinion is furnished pursuant to our engagement letter
dated August 8, 1994, 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
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the Company, or quoted or disclosed to any person in any manner
without prior written consent. In furnishing this opinion, we do
not admit that we are experts within the meaning of the term
"experts" as used in the Securities Act of 1933 and the rules
promulgated thereunder. This opinion is not intended to be and
shall not be deemed to be a recommendation to any shareholder of
the Company as to how such shareholder should vote with respect
to the Merger.
Very truly yours,
/s/ MONTGOMERY SECURITIES
MONTGOMERY SECURITIES
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APPENDIX C
May ___, 1995
Hibernia Corporation
313 Carondelet
P.O. Box 61540
New Orleans, Louisiana 70161
Progressive Bancorporation, Inc.
One Progressive Square
Houma, Louisiana 70630
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 Progressive Bancorporation, Inc. ("Progressive") with
and into Hibernia Corporation ("Hibernia") (the "Progressive
Merger"), and the proposed merger of Progressive Bank and Trust
Company ("Bank") with and into Hibernia National Bank ("HNB")
(the "Bank Merger"). (Hereinafter, the Progressive 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 May ___, 1995 provided by the
respective managements of Progressive, Bank, Hibernia, and HNB;
in the Agreement and Plan of Merger made and entered into by and
between Progressive and Hibernia as of December 1, 1994 (the
"Agreement"); in the form of the Agreement to Merge between Bank
and HNB (the "Bank Plan of Merger"); and in the Registration
Statement (Form S-4), as declared effective by the Securities and
Exchange Commission on May ___, 1995 and containing the Proxy
Statement - Prospectus of Progressive and Hibernia dated May ___,
1995 ("Prospectus"). (These are sometimes hereinafter referred
to collectively as "Documents.")
You have represented to us that the facts contained in the
Documents provide an accurate and complete description of the
facts and circumstances concerning the proposed Mergers. We have
made no independent investigation of the factual matters and
circumstances and, therefore, have relied upon the facts and
representations in the Documents for purposes of this letter.
Any changes to the facts or Documents may affect the conclusions
stated herein.
We understand that reference to Ernst & Young LLP and our opinion
is included in the Prospectus relating to the issuance of
Hibernia Common Stock in connection with the proposed Mergers and
the special meeting of the Progressive shareholders with respect
thereto. We consent to such reference in the Prospectus under
the captions "Summary," "Proposed Merger--Conditions to the
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Merger," "--Accounting Treatment," "--Material Tax
Consequences," and "--Rights of Dissenting Shareholders." We
also understand that the form of this letter is included as an
appendix to the Form S-4 Registration Statement and the
Prospectus. We consent to such inclusion.
STATEMENT OF FACTS
Progressive is a corporation organized and existing under the
laws of the State of Louisiana, and is a bank holding company
within the meaning of the Bank Holding Company Act of 1956, as
amended. The presently authorized capital stock of Progressive
is 3,000,000 shares, consisting of 1,000,000 shares of preferred
stock, 225,000 of such shares have been designated as Class A
preferred stock (referred to hereinafter as "Progressive
Preferred Stock") and 2,000,000 shares of common stock (referred
to hereinafter as "Progressive Common Stock"). As of the date
hereof, 1,000,000 shares of Progressive Preferred Stock had been
authorized and 129,644 shares of Progressive Preferred Stock were
issued and outstanding. As of the date hereof, 651,312 shares of
Progressive Common Stock had been issued and 617,670 shares of
Progressive Common Stock were outstanding, and 33,642 shares of
Progressive Common Stock were held in Progressive's treasury.
The shares of Progressive Preferred Stock and the Progressive
Common Stock are held by approximately 465 shareholders. There
are no options, warrants, subordinated rights or other rights to
purchase Progressive Common Stock or Progressive Preferred Stock
outstanding as of the date hereof. Progressive's assets include
100 percent of the outstanding voting shares of Bank, a Louisiana
banking corporation duly organized and existing under the laws of
the State of Louisiana.
Bank is a state banking corporation organized under the laws of
the State of Louisiana, engaged principally in the banking
business. Bank has 3,000 authorized shares of common stock of
which 2,232 shares were issued and outstanding and held by
Progressive as of the date hereof (referred to as "Bank Common
Stock").
Hibernia is a bank holding company organized and existing under
the laws of the State of Louisiana with a class of securities
registered under the Securities Exchange Act of 1934. The
presently authorized capital stock of Hibernia is 300,000,000
shares, consisting of 100,000,000 shares of preferred stock, no
par value, and 200,000,000 shares of Class A voting common stock,
no par value (the Class A voting common stock being referred to
hereinafter as "Hibernia Common Stock"). As of March 31, 1995,
no shares of Hibernia's preferred stock were outstanding,
111,248,665 shares of Hibernia Common Stock were outstanding, and
no shares of Hibernia Common Stock were held in Hibernia's
treasury. Hibernia has the following existing options, warrants,
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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: Hibernia has issued warrants to purchase
shares of Hibernia Common Stock pursuant to the terms of the
Senior Secured Restructuring Agreement dated May 27, 1992, of
which warrants to purchase 213,176 shares of Hibernia Common
Stock were outstanding as of March 31, 1995. Additionally,
Hibernia has authorized or reserved 1,706,939 shares of Hibernia
Common Stock for issuance under its 1987 Stock Option Plan,
pursuant to which options covering 1,550,016 shares of Hibernia
Common Stock were outstanding as of March 31, 1995; 4,485,003 (as
adjusted) shares of Hibernia Common Stock for issuance under its
Long-Term Incentive Plan, pursuant to which options covering
3,897,071 shares of Hibernia Common Stock were outstanding as of
March 31, 1995; 1,000,000 shares of Hibernia Common Stock for
issuance under its 1993 Directors' Stock Option Plan, pursuant to
which options covering 155,000 shares of Hibernia Common Stock
are outstanding as of March 31, 1995; and 360,999 shares of
Hibernia Common Stock are available for issuance pursuant to
Hibernia's Dividend Reinvestment and Stock Purchase Plan.
Pending mergers with STABA Bancshares, Inc. and Bank of St. John
will result in the issuance of approximately 5.6 million shares
of Hibernia Common Stock. Additionally, on March 14, 1995,
Hibernia and its Board of Directors authorized an employee stock
ownership plan (ESOP) to be funded with $30.0 million of Hibernia
Common Stock. The $30.0 million purchase of Hibernia Common
Stock will be funded through a loan from HNB. Hibernia Common
Stock for the ESOP will be purchased as it becomes available on
the open market at market prices, or in private negotiated
transactions, other than former shareholders of Progressive
Common Stock, at such prices as maybe agreed by the parties to
the transaction, using funds drawn down on the loan as needed.
Hibernia Common Stock is traded on the New York Stock Exchange.
HNB is a nationally chartered commercial bank engaged principally
in the banking business. HNB is a wholly owned subsidiary of
Hibernia.
BUSINESS PURPOSE
The management of Hibernia has represented to us that Hibernia
desires to consummate the Mergers in order to improve its
presence in the Louisiana market. As discussed in the Prospectus
under the caption, "Background of and Reasons for the Merger,"
the Progressive 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.
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PROPOSED TRANSACTIONS
In accordance with the above-stated business purpose, the
following transactions have been proposed:
1. After all necessary regulatory and shareholder approvals
have been granted, there will be simultaneous mergers (i.e., the
Mergers) of Progressive with and into Hibernia in accordance with
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"). Upon the completion of the Progressive
Merger, Hibernia will cause the Bank Merger to occur.
2. In the Progressive Merger, Hibernia will acquire all of
the assets and assume all of the liabilities of Progressive in
exchange for Hibernia Common Stock and cash. As a result of the
Progressive Merger, each share of the issued and outstanding
Progressive Common Stock shall be converted into and become the
number of shares of Hibernia Common Stock determined in
accordance with the exchange rate. The exchange rate shall be
the number that is obtained by dividing 2,500,000 by the total
number of issued and outstanding shares of Progressive Common
Stock on the closing date.
As a result of the Progressive Merger, each share of the
issued and outstanding Progressive Preferred Stock shall by
virtue of the Progressive Merger automatically and without any
action on the part of the holder thereof be converted into the
right to receive cash in the amount of $12.50 per share plus all
accumulated and unpaid dividends thereon as calculated in
accordance with the Articles of Incorporation of Progressive in
existence as of the date of the Agreement.
Holders of certificates which represent shares of
Progressive Common Stock or Progressive Preferred Stock
outstanding immediately prior to the effective date of the
Progressive Merger shall cease to be, and shall have no rights
as, shareholders of Progressive after the Progressive Merger.
3. In the Bank Merger, HNB will acquire all the assets and
assume all of the liabilities of Bank. As a result of the Bank
Merger, each share of the issued and outstanding Bank Common
Stock shall cease to be outstanding and will be canceled. No
additional shares of Hibernia Common Stock nor shares of HNB
Common Stock will be issued in the Bank Merger.
4. No fractional shares will be issued. Each holder of
Progressive Common Stock who would otherwise have been entitled
to receive a fraction of a share of Hibernia Common Stock shall
receive in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share multiplied by the
average of the mean of high and low prices of one share of
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Hibernia Common Stock for the ten business days preceding the
Effective Date as reported in The Wall Street Journal.
5. By following certain statutory procedures, shareholders
of Progressive Common Stock may exercise dissenter's rights
entitling them to receive in cash the value of their respective
Progressive Common Stock in lieu of receiving Hibernia Common
Stock in the Progressive Merger.
REPRESENTATIONS
For purposes of our evaluation, we have received from the
respective managements of Progressive, Bank, Hibernia, and HNB,
Statements of Facts and Representations, dated May ___, 1995, 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 Progressive Merger:
(a) The fair market value of the Hibernia Common Stock to be
received by each shareholder of Progressive Common Stock will be
approximately equal to the fair market value of the Progressive
Common Stock surrendered in the exchange.
(b) The cash to be received by each shareholder of Progressive
Preferred Stock will be approximately equal to the fair market
value of the Progressive Stock surrendered in the exchange.
(c) There is no plan or intention by the shareholders of
Progressive who own five percent or more of the Progressive
Common Stock and to the best knowledge of management of
Progressive, there is no intention on the part of the remaining
shareholders of Progressive, to sell, exchange, or otherwise
dispose of a number of shares of Hibernia Common Stock received
in the transaction that would reduce the Progressive
shareholders' ownership of Hibernia Common Stock to a number of
shares having a value, as of the date of the transaction, of less
than 50 percent of the value of all the formerly outstanding
stock of Progressive as of the same date. For purposes of this
representation, any shares of Progressive Common Stock
surrendered by dissenters, or exchanged for cash in lieu of
fractional shares of Hibernia Common Stock, and Progressive
Preferred Stock, will be treated as outstanding on the date of
the transaction. Moreover, shares of Progressive Common Stock
and shares of Hibernia Common Stock held by former Progressive
shareholders and otherwise sold, redeemed, or disposed of prior
to December 1, 1994 or subsequent to the transaction will be
considered in making this representation.
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(d) Hibernia has no plan or intention to reacquire any of its
Common Stock issued in the Progressive Merger other than to
acquire a nominal amount of shares of Common Stock that may be
acquired in ordinary business transactions (including, but not
limited to, open market purchases in brokers' transactions).
(e) Hibernia has no plan or intention to sell or otherwise
dispose of any of the assets of Progressive acquired in the
transaction except for dispositions made in the ordinary course
of business.
(f) Any liabilities of Progressive assumed by Hibernia and any
liabilities to which the transferred assets of Progressive are
subject were incurred by Progressive in the ordinary course of
its business.
(g) Following the transaction, Hibernia will continue,
substantially unchanged, the business of Progressive operated
through Progressive's subsidiary, Bank, which will be merged with
and into HNB.
(h) Except for expenses relating to the registration of the
Hibernia Common Stock and certain proxy printing and mailing
expenses to be paid solely by Hibernia, which are directly
related to the Mergers in accordance with the guidelines
established in Revenue Ruling 73-54, 1973-1 C.B. 187, Hibernia,
Progressive, and the shareholders of Progressive will pay their
respective expenses, if any, incurred in connection with the
transactions.
(i) There is no intercorporate indebtedness existing between
Progressive and its affiliate on the one hand and Hibernia and
its affiliates on the other hand which was issued, acquired, or
will be settled at a discount.
(j) No two parties to the transaction are investment companies
as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(k) Progressive 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.
(l) The fair market value of the assets of Progressive 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.
(m) 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 Progressive shareholders instead of issuing fractional shares
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of Hibernia will not exceed one percent of the total
consideration that will be issued in the transaction to the
Progressive shareholders in exchange for their shares of
Progressive Common Stock. The fractional share interests of each
holder of Progressive Common Stock will be aggregated, and no
Progressive shareholder will receive cash in an amount equal to
or greater than the value of one full share of Hibernia Common
Stock for its Progressive Common Stock.
(n) None of the compensation received by any shareholder-
employees of Progressive will be separate consideration for, or
allocable to, any of their shares of Progressive 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.
(o) The Progressive Merger will qualify as a statutory merger
under the Louisiana Business Corporation Law ("LBCL").
(p) The shareholders of Progressive (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.
(q) The Progressive Preferred Stock does not meet the definition
of Section 306 stock as defined 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 will be issued or
exchanged in the Bank Merger. No HNB Common Stock will be issued
or exchanged in the Bank Merger.
(bb) There is no plan or intention by the shareholder of Bank or
its shareholders to sell, exchange or otherwise dispose of a
number of shares of Hibernia Common Stock constructively received
in the transaction that would reduce the Bank shareholder's
ownership of Hibernia Common Stock to a number of shares having a
value, as of the date of the transaction, of less than 50 percent
of the value of all of the formerly outstanding Common Stock of
Bank as of the same date. For purposes of this representation,
any shares of Bank Common Stock constructively exchanged for cash
or other property, surrendered by dissenters, or exchanged for
cash in lieu of fractional shares of HNB Common Stock will be
treated as outstanding Bank Common Stock on the date of the
transaction. Moreover, shares of Bank Common Stock and shares of
Hibernia Common Stock held by Bank or its shareholders and
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otherwise sold, redeemed, or disposed of prior to December 1,
1994 or subsequent to the transaction will be considered in
making this representation.
(cc) HNB will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair
market value of the gross assets held by Bank immediately prior
to the Bank Merger. For purposes of this representation, amounts
paid by Bank to dissenters, Bank assets used to pay its
reorganization expenses, and all redemptions and distributions
(except for regular, normal dividends) made by Bank immediately
preceding the transfer, will be included as assets of Bank held
immediately prior to the transaction.
(dd) Prior to the transaction, Hibernia will be in control of HNB
within the meaning of Section 368(c) of the Code wherein
"control" is defined to mean the ownership of stock possessing at
least 80 percent of the total combined voting power of all
classes of stock entitled to vote and at least 80 percent of the
total number of shares of all other classes of the corporation.
(ee) Following the transaction, HNB will not issue additional
shares of its Common Stock that would result in Hibernia losing
control of HNB within the meaning of Section 368(c) of the Code.
(ff) Hibernia has no plan or intention to reacquire any of its
Common Stock constructively issued in the Bank Merger.
(gg) Hibernia has no plan or intention to liquidate HNB; to merge
HNB into another corporation; to sell or otherwise dispose of the
Common Stock of HNB; or to cause HNB to sell or otherwise dispose
of any of the assets of Bank acquired in the transaction, except
for dispositions made in the ordinary course of business. As
Hibernia consummates other mergers, it is likely that some or all
of the merged banks will be merged with and into HNB. At this
time, the discussion provided under the caption "Summary - Other
Pending Transactions for Hibernia" in the Prospectus provides a
complete list of all pending mergers that are covered by
definitive agreements as of May ___, 1995. However, no Common
Stock of HNB will be issued as consideration in any of the
pending acquisitions.
(hh) The liabilities of Bank assumed by HNB and the liabilities
to which the transferred assets of Bank are subject were incurred
by Bank in the ordinary course of its business.
(ii) Following the transaction, HNB will continue the historic
business of Bank or will use a significant portion of Bank's
historic business assets in its business.
(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
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Ruling 73-54, 1973-1 C.B. 187, Hibernia, HNB, Bank and the
shareholder 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 Bank Merger 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 the amount of liabilities, if
any, to which the transferred assets are subject.
(oo) The merger of Bank into HNB will qualify as a statutory
merger under the Bank Merger Act.
TECHNICAL ANALYSIS
Section 368(a)(1)(A) of the Code provides that a reorganization
(a "Type A" reorganization) includes a statutory merger or
consolidation. Such a reorganization can only be achieved by
strict compliance with the applicable corporation laws of the
United States or a state or territory of the United States. A
statutory merger occurs wherein one party (the surviving
corporation) to the transaction absorbs the other party whose
corporate existence ceases. It has been represented by the
management of Hibernia that the merger of Progressive with and
into Hibernia, wherein Hibernia Common Stock is to be exchanged
for Progressive Common Stock and Hibernia cash is to be exchanged
for Progressive 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
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Common Stock, is to occur as a statutory merger under applicable
law.
Revenue Procedure 77-37, 1977-2 C.B. 568 ( 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
management's of Bank and HNB that HNB will acquire assets
representing at least 90 percent of the fair market value of the
net assets and 70 percent of the fair market value of the gross
assets of Bank and that, for this purpose, the fair market value
of the net and gross assets of Bank will be determined before
payment by Bank of any expenses incurred by it in connection with
the Bank Merger, before payment to any dissenters to the Bank
Merger, and before any redemptions and distributions (except for
regular, normal dividends) made by Bank immediately preceding the
transfer. Based upon the foregoing representations, the
"substantially all" requirement will be met in the Bank Merger.
Additional Requirements
Sections 1.368-1(b) and 1.368-2(g) of the Income Tax Regulations
(the "Regulations") provide that the following additional
requirements must be met for a transaction to qualify as a
reorganization within the meaning of Section 368 of the Code:
(i) "continuity of interest" must be present,
(ii) "continuity of business enterprise" must exist, and
(iii) the transaction must be undertaken for reasons
pertaining to the continuance of the business of a corporation
which is a party to the transaction.
Continuity of Interest
In general, the continuity of interest test requires the owners
of the reorganized entity to receive and retain a meaningful
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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 May ___, 1995, the 50 percent continuity of interest test
of Revenue Procedure 77-37, supra, will be met in the Progressive
Merger and the Bank Merger. It has been represented by the
management of Progressive that the shareholders of Progressive
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 Progressive Merger there will be a continuing
interest through Common Stock ownership in Hibernia on the part
of the former shareholders of Progressive.
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
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rationale of the above Revenue Rulings suggests that the
continuity of interest maintained by the Progressive shareholders
in the Progressive Merger is relevant in determining whether the
continuity of interest requirement is satisfied in the Bank
Merger. See also PLR 9109044 (December 4, 1990) where the
Service, after applying the step transaction doctrine, ruled that
a sideways merger of a Bank Holding Company and its wholly owned
banking subsidiary into an acquiring bank holding company and its
banking subsidiary respectively constituted reorganizations under
Section 368(a)(1)(C) and Section 368(a)(2)(D).
In the past, the Service has frequently ruled on certain facts
that the simultaneous mergers of a parent and its wholly-owned
subsidiary into an acquiring parent corporation and its wholly-
owned subsidiary, respectively each qualified as a Section
368(a)(1)(A) reorganization (see e.g., PLR 9111025 (December 14,
1990), 9047015 (August 24, 1990) and 9003053 (October 26, 1989)).
In other rulings involving slightly different facts (i.e.,
minority shareholders in the subsidiary), the Service held that
the subsidiary mergers were Section 368(a)(1)(A) reorganizations
by reason of Section 368(a)(2)(D) (see e.g., PLR 9109044
(December 4, 1990), 8943067 (August 2, 1989) and 8942090 (July
27, 1989)).
Although private letter rulings are not binding on the Service as
precedent, they are cited to illustrate a consistent rulings
position. In recent years, while the Service has declined to
rule on whether a transaction qualifies as a reorganization
pursuant to Section 368(a)(1)(A) of the Code (see section
3.01(26) of Rev. Proc. 95-3) 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.
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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 Progressive Merger because
Hibernia through its wholly-owned subsidiary HNB, will continue
the banking business indirectly conducted by Progressive.
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 Progressive's
shareholders will have already received fair value for their
shares, the shares of Bank Common Stock obtained by Hibernia in
the Progressive 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
Progressive 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 Progressive 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
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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 9247019
(August 24, 1992) and 9137029 (June 13, 1991) citing Revenue
Ruling 78-47; PLR 9319017 (February 5, 1993) citing Revenue
Ruling 70-240; PLR 8750071 (September 17, 1987), 8722021
(February 25, 1987), 8620043 (February 14, 1986), 8403028
(October 17, 1983), and 8306010 (November 4, 1982).
Based on the above, the constructive exchange described herein
does not prevent the Bank Merger from qualifying as a tax-free
reorganization.
Other Statutory Provisions
Section 368(b) of the Code defines the term "a party to a
reorganization" to include a corporation resulting from a
reorganization, and both corporations, in the case of a
reorganization resulting from the acquisition by one corporation
of stock or properties of another.
Section 361(a) of the Code provides that no gain or loss shall be
recognized to a transferor corporation which is a party to a
reorganization on any exchange pursuant to the plan of
reorganization solely for stock or securities in another
corporation which is a party to the reorganization.
Section 1032 of the Code provides that no gain or loss shall be
recognized to a corporation on the receipt of money or other
property in exchange for stock of such corporation. Revenue
Ruling 57-278, 1957-1 C.B. 124, provides that a subsidiary will
not recognize gain upon the exchange of its parent's stock for
property in connection with a tax-free reorganization. See also
Proposed Treasury Regulations (Prop. Treas. Regs.) Section
1.1032-2.
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
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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. For purposes of Section 354, dividend arrearages
constitute stock. See PLR 9236007. 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.
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. See Revenue Ruling 93-61, 1993-2 C.B. 118.
Cash received by shareholders of Progressive Preferred Stock who
hold no Progressive Common Stock, and by shareholders of
Progressive Common Stock who dissent, will be treated as received
in exchange for his or her stock subject to the provisions and
limitations of Section 302. See Treas. Reg. Sec. 1.354-1(d), Ex.
(3). If, as a result of such distribution, a shareholder owns no
Progressive Preferred Stock or Progressive Common Stock either
directly or indirectly through the application of Section 318,
the redemption will be treated as a complete termination of
interest under Section 302(b)(3) and such cash will be treated as
a distribution in exchange for stock under Section 302(a).
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.
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Section 1223(2) of the Code provides that in determining a
taxpayer's holding period for property, there shall be included
the period for which such property was held by another person, if
such property has, for the purpose of determining gain or loss
from a sale or exchange, the same basis in whole or in part in
such taxpayer's hands as it would have had in the hands of such
other person.
Section 381 of the Code applies to certain transactions,
including those transactions to which Section 361 of the Code
applies, where there is a transfer in connection with a
reorganization described in Section 368(a)(1)(A) or in Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Code.
FEDERAL INCOME TAX CONSEQUENCES
Based solely upon the Statements of Facts and Representations,
the Agreement, and the Bank Plan of Merger, it is our opinion
that the following federal income tax consequences will result:
In the merger of Progressive with and into Hibernia:
(1) Provided the proposed merger of Progressive with and into
Hibernia qualifies as a statutory merger under Louisiana law, the
Progressive Merger will be a reorganization within the meaning of
Section 368(a)(1)(A) of the Code. Progressive and Hibernia will
each be a party to a reorganization within the meaning of Section
368(b) of the Code.
(2) No gain or loss will be recognized by Progressive upon the
transfer of its assets to Hibernia in exchange solely for
Hibernia Common Stock, cash for dissenters, if any, cash for
Progressive Preferred Stock, and the assumption by Hibernia of
the liabilities of Progressive, since any cash for dissenters
will be distributed to the shareholders (Sections 361(a), 361(b),
and 357(a) of the Code).
(3) No gain or loss will be recognized by Hibernia on receipt of
the Progressive assets in exchange for Hibernia Common Stock,
cash and the assumption by Hibernia of the liabilities of
Progressive (Section 1032(a) of the Code).
(4) The basis of the assets of Progressive in the hands of
Hibernia will, in each case, be the same as the basis of those
assets in the hands of Progressive immediately prior to the
transaction (Section 362(b) of the Code).
(5) The holding period of the assets of Progressive in the hands
of Hibernia will, in each case, include the period for which such
assets were held by Progressive (Section 1223(2) of the Code).
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(6) No gain or loss will be recognized by the shareholders of
Progressive who receive solely Hibernia Common Stock in exchange
for their shares of Progressive Common Stock (Section 354(a)(1)
of the Code).
(7) The cash received by the dissenters and by shareholders of
Progressive Preferred Stock, who do not hold any shares of
Progressive Common Stock either directly or indirectly through
Section 318, in exchange for their shares of Progressive
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 Progressive Preferred Stock or Progressive Common Stock either
directly or indirectly through the application of Section 318,
the redemption will be treated as a complete termination of
interest under Section 302(b)(3) and such cash will be treated as
a distribution in exchange for stock under Section 302(a).
(8) The gain, if any, realized by the shareholders of
Progressive Preferred Stock who own both Progressive Preferred
Stock and Progressive Common Stock, and who do not dissent, upon
the receipt of cash in exchange for their shares of Progressive
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 Progressive
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 (Revenue Ruling 93-61, 1993-2 C.B. 118). 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 Progressive Common 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 Progressive Common Stock in the
transaction will include in each instance, the period during
which the Progressive Common Stock surrendered in exchange
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therefor is held as a capital asset on the date of the surrender
(Section 1223(l) of the Code).
(11) Hibernia will succeed to and take into account those tax
attributes of Progressive 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.
(12) 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 Progressive as of the date of transfer.
Any deficit in the earnings and profits of Progressive will be
used only to offset the earnings and profits accumulated after
the date of transfer.
Cash received by a dissenting shareholder of Progressive in
exchange for his or her Progressive Common Stock will be treated
as having been received by such shareholder as a distribution in
redemption of his or her stock, subject to the provisions and
limitations of Section 302 of the Code. If, as a result of such
distribution, a shareholder owns no stock either directly or
through the application of Section 318(a) of the Code, the
redemption will be a complete termination of interest within the
meaning of Section 302(b)(3) of the Code and such cash will be
treated as a distribution in full payment in exchange for his or
her stock, as provided by Section 302(a) of the Code.
(13) 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,
subject to the provisions and limitations of 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:
(14) Provided the proposed merger of Bank with and into HNB
qualifies as statutory merger under the Bank Merger Act, the
acquisition by HNB of substantially all of the assets of Bank
solely in constructive exchange for Hibernia Common Stock, cash
for dissenters, if any, and the assumption by HNB of the
liabilities of Bank, will qualify as a reorganization under the
provisions of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code.
Bank, Hibernia and HNB will each be a party to a reorganization
within the meaning of Section 368(b) of the Code.
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(15) No gain or loss will be recognized by either Hibernia or HNB
upon the acquisition by HNB of substantially all of the assets of
Bank in constructive exchange for Hibernia Common Stock, cash for
dissenters, if any, and the assumption of Bank's liabilities
(Section 1032(a) of the Code). (See Prop. Treas. Regs. Section
1.1032-2 and Rev. Rul. 57-278, 1957-1 C.B. 124.)
(16) The basis of the assets of Bank acquired by HNB will be the
same in the hands of HNB as the basis of such assets in the hands
of Bank immediately prior to the exchange (Section 362(b) of the
Code).
(17) The basis of the HNB Common Stock in the hands of Hibernia
will be increased by an amount equal to the basis of the Bank
assets in the hands of HNB and decreased by the sum of the amount
of the liabilities of Bank assumed by HNB and the amount of
liabilities to which the assets of Bank are subject (Section
1.358-6(c)(1) of Prop. Treas. Regs.).
(18) The holding period of the assets of Bank received by HNB
will, in each instance, include the period for which such assets
were held by Bank (Section 1223(2) of the Code).
(19) As provided by Section 381(c) of the Code and Section
1.381(c)(2)-1 of the Regulations, HNB will succeed to and take
into account the earnings and profits, or deficit in earnings and
profits, of Bank as of the date of transfer. Any deficit in the
earnings and profits of Bank or HNB will be used only to offset
the earnings and profits accumulated after the date of transfer.
(20) The shareholder of HNB will recognize no gain or loss upon
the constructive exchange of Bank Common Stock solely for
Hibernia Common Stock. (Section 354(a)(1) of the Code.)
(21) Bank will recognize no gain or loss on the transfer of its
assets to HNB in constructive exchange for Hibernia Common Stock
and the assumption by HNB of the liabilities of Bank, as
described above. (Sections 361(a) and 357(a) of the Code.)
(22) Progressive and Bank will close their taxable years as of
the date of the distribution or transfer. HNB will not close its
taxable year merely because of the Bank Merger. (Section 381(b)
of the Code.)
(23) Pursuant to Section 381(a) of the Code and Section 1.381(a)-
1 of the Regulations, HNB will succeed to and take into account
the items of Bank described in Section 381(c) of the Code. These
items will be taken into account by HNB subject to the provisions
and limitations specified in Sections 381, 382, 383 and 384 of
the Code and Regulations promulgated thereunder.
C-19
STATE INCOME TAX CONSEQUENCES
(1) The Louisiana income tax treatment to the shareholders of
Progressive will be substantially the same as the federal income
tax treatment to the shareholders of Progressive.
SCOPE OF OPINION
The scope of this opinion is expressly limited to the federal
income tax issues specifically addressed in (1) through (23) in
the section entitled "Federal Income Tax Consequences" above and
(1) in the section entitled "State Income Tax Consequences"
above. Specifically, our opinion has not been requested and none
is expressed with regard to the federal, foreign, state or local
income tax consequences for the shareholders of Hibernia and HNB.
We have made no determination nor expressed any opinion as to any
limitations, including those which may be imposed under Section
382, on the availability of net operating loss carryovers (or
built-in gains or losses), if any, after the Mergers, the
application (if any) of the alternative minimum tax to this
transaction, nor the application of any consolidated return or
employee benefit issues which may arise as a result of the
Mergers. Further, we have made no determination as whether
Progressive dividend distributions have been sufficient to
eliminate any undistributed personal holding company tax
liability, if applicable. We have made no determination nor
expressed any opinion as to the fair market value of any of the
assets being transferred in the Mergers nor the common shares
being exchanged in the Mergers. Furthermore, our opinion has not
been requested and none is expressed with respect to any foreign,
state or local tax consequences (other than those enumerated in
(1) above of State Income Tax Consequences) to Progressive, Bank,
Hibernia, and HNB.
Our opinion, as stated above, is based upon the analysis of the
Code, the Regulations thereunder, current case law, and published
rulings. The foregoing are subject to change, and such change
may be retroactively effective. If so, our views, as set forth
above, may be affected and may not be relied upon. Further, any
variation or differences in the facts or representations recited
herein, for any reason, might affect our conclusions, perhaps in
an adverse manner, and make them inapplicable. In addition, we
have undertaken no obligation to update this opinion for changes
in facts or law occurring subsequent to the date hereof.
This letter represents our views as to the interpretation of
existing law and, accordingly, no assurance can be given that the
Service or the courts will agree with the above analysis.
C-20
APPENDIX D
SELECTED PROVISIONS OF STATE LAW RELATING
TO THE RIGHTS OF DISSENTING SHAREHOLDERS
Each holder of Progressive Common Stock who objects to the
Merger is entitled to the rights and remedies of dissenting
shareholders provided in Section 131 of the LBCL, a copy of which
is set forth as Appendix D 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 date of 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 eighty
percent 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 may then file with the
corporation a written demand for the fair cash value of his or
her shares as of the day 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 or her shares in escrow at
a bank or trust corporation, 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 provide notice to the
shareholder (the "Notice") within twenty days after receipt of
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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. If the dissenting shareholder institutes
a suit seeking an amount in excess of the amount offered by the
corporation to the dissenting shareholder in the Notice, the
corporation shall deposit the amount offered with the court. If
the amount finally awarded by the court, exclusive of interest
and costs (the "Awarded Amount"), is more than the amount so
offered and deposited, then all costs of the court proceedings
shall be paid by the corporation. If the Awarded Amount is equal
to or less than the amount so offered and deposited, then all
costs of the court proceedings shall be paid by the dissenting
shareholder.
The amount received by a dissenting shareholder may be more
or less than, or equal to, the value of the Hibernia Common Stock
received by other Progressive 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
Progressive Common Stock to perfect dissenters' rights. Holders
of Progressive Common Stock will lose their right to dissent from
the Merger unless they both (i) file with Progressive a written
objection to the Merger prior to or at the Special Meeting and
(ii) vote their shares (in person or by proxy) against the
proposed Agreement and the Merger at the Special Meeting.
THE FOREGOING SUMMARY OF THE PROVISIONS OF THE LBCL RELATING
TO DISSENTERS' RIGHTS IS NECESSARILY INCOMPLETE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO EXCERPTS FROM THE LBCL SET FORTH
HEREIN AS APPENDIX D.
Holders of Progressive Common Stock who exercise and perfect
dissenters' rights and who receive cash for their shares will
generally be subject to federal and state income tax on all or a
portion of the amount of cash received. Furthermore, if the
Merger is effected, the cash paid to dissenting shareholders may
be more or less than the value of the Hibernia Common Stock
issued to those shareholders of Progressive who voted in favor of
the Merger. The receipt of cash for shares will be generally
treated as a distribution in redemption of the shareholder's
stock and, depending on the individual shareholder's
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circumstances, may be deemed to be a complete termination of
interest resulting in a capital gain or loss to such shareholder.
The tax opinion rendered by Ernst & Young LLP and attached hereto
as Appendix C states that payments to dissenting shareholders are
not exempt from federal or state income tax. Shareholders
desiring to dissent from the Merger are urged to consult their
tax advisors with regard to the tax implications to them of
exercising dissenters' rights.
D-3
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
II-1
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
II-2
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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
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 3.1 to Registrant's Annual Report on
Form 10-K filed with the Commission by the
II-3
Registrant (Commission File No. 0-7220) is
hereby incorporated by reference (Articles of
Incorporation of the Registrant, as amended
to date)
3.2 Exhibit 3.2 to the Registrant's Annual Report
on Form 10-K filed with the Commission by the
Registrant (Commission File No. 0-7220) is
hereby incorporated by reference (By-Laws of
the Registrant, as amended to date)
4.1 Pursuant to Item 601(b) (4) (iii) of Regulation S-
K, instruments defining the rights of holders of
long-term debt of the Registrant and its
consolidated subsidiaries are not being filed as
the total amount of securities authorized
thereunder does not exceed 10% of the total assets
of the Registrant and its subsidiaries on a
consolidated basis. The Registrant hereby agrees
to furnish copies of such instruments to the
Commission upon request.
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)
II-4
10.28 Exhibit M and N to the Registrant's
definitive proxy statement dated September
27, 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 September 27, 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)
10.34 Exhibit C to the Registrant's definitive
proxy statement dated September 27, 1992
relating to its 1993 Annual Meeting of
Shareholders filed by the Registrant with the
Commission is hereby incorporated by
reference (Long-Term Incentive Plan of
Hibernia Corporation)
10.35 Exhibit A to the Registrant's definitive
proxy statement dated March 23, 1993 relating
to its 1993 Annual Meeting of Shareholders
filed by the Registrant with the Commission
is hereby incorporated by reference (1993
Director Stock Option Plan of Hibernia
Corporation)
10.36 Exhibit 10.36 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 filed with the Commission
(Commission file number 0-7220) is hereby
incorporated by reference (Employment
Agreement between Stephen A. Hansel and
Hibernia Corporation)
10.37 Exhibit 10.37 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994 (Commission File No. 0-
7220) is hereby incorporated by reference
(Employment agreement between J. Herbert
Boydstun and Hibernia Corporation)
II-5
10.38 Exhibit 10. 38 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994 (Commission File No. 0-
7220) is hereby incorporated by reference
(Employment agreement between E. R. Campbell,
Jr. and Hibernia Corporation)
22 Exhibit 22 to the Annual Report on Form 10-K
of the Registrant for the fiscal year ended
December 31, 1994 filed with the Commission
(Commission file No. 0-7220) is hereby
incorporated by reference (Subsidiaries of
the Registrant)
23(a) Consent of Patricia C. Meringer, Esq.
(included with Exhibit 5)*
23(c) Consent of Ernst & Young LLP
Consent of Arthur Anderson LLP
Consent of Montgomery Securities, Inc.
(included with Appendix B to Prospectus)
24 Powers of Attorney
28.23 Exhibit 28.22 to a Current Report on Form 8-K
dated January 27, 1995 filed with the
Commission is hereby incorporated by
reference (News release issued by the
Registrant)
28.24 Exhibit 28.23 to a Current Report on Form 8-K
dated March 2, 1995 filed with the Commission
is hereby incorporated by reference (News
release issued by the Registrant)
28.25 Exhibit 28.23 to a Current Report on Form 8-K
dated March 20, 1995 filed with the
Commission is hereby incorporated by
reference (News release issued by the
Registrant)
-------
Item 22. Undertakings.
The undersigned registrant hereby undertakes:
II-6
(i) to file, during any period in which offers or sales are
being made pursuant to this Registration Statement, a post-
effective amendment to this Registration Statement:
(a) to include prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(b) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment hereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement; and
(c) to inclue any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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.
(vi) 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
II-7
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.
(vii) 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.
II-8
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 11, 1995.
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 __, 1995.
Signatures Title
*
_____________________________ Chairman of the Board
Robert H. Boh
*
_____________________________ Chief Executive Officer
Stephen A. Hansel and Director
*
_____________________________ Chief Financial Officer
Robert W. Close
*
_____________________________ Chief Accounting Officer
Ron E. Samford, Jr.
*
_____________________________ Director
W. James Amoss, Jr.
*
_____________________________ Director
J. Terrell Brown
II-9
*
_____________________________ Director
J. Herbert Boydstun
*
_____________________________ Director
Brooke H. Duncan
*
_____________________________ Director
Richard W. Freeman
*
_____________________________ Director
Robert L. Goodwin
*
_____________________________ Director
Dick H. Hearin
*
_____________________________ Director
Robert T. Holleman
*
_____________________________ Director
Hugh J. Kelly
*
_____________________________ Director
John P. Laborde
*
_____________________________ Director
Sidney W. Lassen
*
_____________________________ Director
Donald J. Nalty
*
_____________________________ Director
Robert T. Ratcliff
*
_____________________________ Director
H. Duke Shackelford
*
_____________________________ Director
James H. Stone
II-10
*
_____________________________ Director
Virgnia E. Weinmann
*
_____________________________ Director
E. L. Williamson
*
_____________________________ Director
Robert E. Zetzmann
*By: /s/ PATRICIA C. MERINGER
Patricia C. Meringer
Attorney-in-Fact
II-11
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(c) Consent of Ernst & Young
Consent of Arthur Andersen LLP
Consent of Montgomery Securities
24 Powers of Attorney
________
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EXHIBIT 5
April 5, 1995
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 Progressive Bancorporation, Inc.
("Progressive") in which the shareholders of Progressive will
receive the Shares in exchange for their shares of common stock
of Progressive 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 Progressive 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:
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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 (other than a holder of Progressive Common
Stock) or used for any other purpose, except as provided for in
the preceding paragraph.
Very truly yours,
Patricia C. Meringer
Associate Counsel
and Secretary
II-14
EXHIBIT 23 (c)(i)
CONSENT OF ERNST & YOUNG LLP
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-4 No. 33-58537) and
and related Prospectus of Hibernia Corporation for the registration
of 2,500,000 shares of its common stock to be issued pursuant to its
proposed merger with Progressive Bancorporation, Inc. and to the
incorporation by reference therein of our report dated January 9,
1995, with respect to the consolidated financial statements of
Hibernia Corporation incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1994 filed
with the Securities and Exchange Commission.
s/ERNST & YOUNG LLP
Ernst & Young LLP
New Orleans, Louisiana
May 22, 1995
II-15
EXHIBIT 23(c)(ii)
CONSENT OF ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use
of our report dated February 10, 1995, with respect to the
balance sheets of Progressive Bancorporation, Inc. as of December
31, 1994 and 1993, and the related statements of income,
shareholders' equity, and cash flows for the three years in the
period ended December 31, 1994 and to all references to our Firm
included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
New Orleans, Louisiana
April 7, 1995
II-16
Exhibit 23(c)(iii)
Consent of Montgomery Securities
April 6, 1995
Progressive Bancorporation, Inc.
One Progressive Square
Houma, LA 70360
Gentlemen:
This letter will constitute our consent to include our
opinion dated December 1, 1994 regarding the sale of Progressive
Bancorporation, Inc. (the "Company"), in the Company's proxy
statement (the "Proxy Statement") and the summary of our opinion
in such Proxy Statement. In giving the foregoing consent, we do
not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of the
1933, as amended (the "Securities Act"), or the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder, nor do we admit that we are experts with respect to
any part of such Proxy Statement within the meaning of the term
"experts" as used in the Securities Act and the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder.
Very truly yours,
MONTGOMERY SECURITIES
By: /s/ J. RICHARD FREDERICH
J. Richard Frederich
Managing Director
II-17
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/W. JAMES AMOSS, JR.
W. James Amoss, Jr.
Director
HIBERNIA CORPORATION
II-18
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/ROBERT H. BOH
Robert H. Boh
Chairman and Director
HIBERNIA CORPORATION
II-19
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/J. HERBERT BOYDSTUN
J. Herbert Boydstun
Director
HIBERNIA CORPORATION
II-20
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/J. TERRELL BROWN
J. Terrell Brown
Director
HIBERNIA CORPORATION
II-21
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/E.R. "BO" CAMPBELL
E. R. "Bo" Campbell
Director
HIBERNIA CORPORATION
II-22
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/BROOKE H. DUNCAN
Brooke H. Duncan
Director
HIBERNIA CORPORATION
II-23
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/RICHARD W. FREEMAN, JR.
Richard W. Freeman, Jr.
Director
HIBERNIA CORPORATION
II-24
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/ROBERT L. GOODWIN
Robert L. Goodwin
Director
HIBERNIA CORPORATION
II-25
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 Progressive
Bancorporation, Inc. ("Progressive") wherein the Corporation
agrees to exchange shares of its common stock for all of the
outstanding shares of common stock of Progressive and merge
Progressive into the Corporation, authorized by resolutions
adopted by the Board of Directors on December 13, 1994, 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 24th day of January, 1995.
S/STEPHEN A. HANSEL
Stephen A. Hansel
President, Chief Executive Officer
and Director
HIBERNIA CORPORATION
II-26
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/DICK H. HEARIN
Dick H. Hearin
Director
HIBERNIA CORPORATION
II-27
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/ROBERT T. HOLLEMAN
Robert T. Holleman
Director
HIBERNIA CORPORATION
II-28
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/HUGH J. KELLY
Hugh J. Kelly
Vice Chairman and Director
HIBERNIA CORPORATION
II-29
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/ELTON R. KING
Elton R. King
Director
HIBERNIA CORPORATION
II-30
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/JOHN P. LABORDE
John P. Laborde
Director
HIBERNIA CORPORATION
II-31
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/SIDNEY W. LASSEN
Sidney W. Lassen
Director
HIBERNIA CORPORATION
II-32
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/DONALD J. NALTY
Donald J. Nalty
Vice Chairman and Director
HIBERNIA CORPORATION
II-33
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/ROBERT T. RATCLIFF
Robert T. Ratcliff
Director
HIBERNIA CORPORATION
II-34
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/H. DUKE SHACKELFORD
H. Duke Shackelford
Director
HIBERNIA CORPORATION
II-35
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/JAMES H. STONE
James H. Stone
Director
HIBERNIA CORPORATION
II-36
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/VIRGINIA EASON WEINMANN
Virginia Eason Weinmann
Director
HIBERNIA CORPORATION
II-37
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/ERNEST L. WILLIAMSON
Ernest L. Williamson
Director
HIBERNIA CORPORATION
II-38
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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/ROBERT E. ZETZMANN
Robert E. Zetzmann
Director
HIBERNIA CORPORATION
II-39
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, 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 Progressive Bancorporation, Inc.
("Progressive") wherein the Corporation agrees to exchange shares
of its common stock for all of the outstanding shares of common
stock of Progressive and merge Progressive into the Corporation,
authorized by resolutions adopted by the Board of Directors on
December 13, 1994, 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 24th day of January, 1995.
S/RON E. SAMFORD, JR.
Ron E. Samford, Jr.
Controller
HIBERNIA CORPORATION
II-40
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 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 Progressive
Bancorporation, Inc. ("Progressive") wherein the Corporation
agrees to exchange shares of its common stock for all of the
outstanding shares of common stock of Progressive and merge
Progressive into the Corporation, authorized by resolutions
adopted by the Board of Directors on December 13, 1994, 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 24th day of January, 1995.
S/ROBERT W. CLOSE
Robert W. Close
Treasurer and Chief Financial Officer
HIBERNIA CORPORATION
II-41
