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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 Commission File Number 1-10294
HIBERNIA CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 72-0724532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
313 Carondelet Street, New Orleans, Louisiana 70130
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (504) 533-5332
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1995
Class A Common Stock, no par value 119,252,802 Shares
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Consolidated Balance Sheets
Hibernia Corporation and Subsidiaries September 30 December 31 September 30
Unaudited ($ in thousands) 1995 1994 1994
<S> <C> <C> <C>
Assets
Cash and due from banks $311,749 $380,895 $312,435
Short-term investments 90,195 205,143 90,404
Securities available for sale 528,547 583,614 707,227
Securities held to maturity (estimated fair values at
September 30, 1995, December 31, 1994 and September 30, 1994,
were $1,674,573, $1,759,679, and $1,816,961, respectively) 1,669,856 1,831,429 1,869,732
Loans, net of unearned income 4,205,114 3,627,663 3,532,636
Reserve for possible loan losses (151,161) (152,838) (161,433)
Loans, net 4,053,953 3,474,825 3,371,203
Bank premises and equipment 117,450 117,966 118,482
Customers' acceptance liability 115 4,589 9,750
Other assets 190,581 180,882 188,582
Total assets $6,962,446 $6,779,343 $6,667,815
Liabilities
Deposits:
Demand, noninterest-bearing $1,077,609 $1,128,091 $1,042,528
Interest-bearing 4,846,254 4,772,902 4,743,180
Total deposits 5,923,863 5,900,993 5,785,708
Short-term borrowings 238,668 160,218 142,153
Liability on acceptances 115 4,589 9,750
Other liabilities 117,898 109,716 133,861
Debt 8,837 11,846 10,662
Total liabilities 6,289,381 6,187,362 6,082,134
Shareholders' equity
Preferred Stock, no par value:
Authorized - 100,000,000 shares; issued and
outstanding - none - - -
Class A Common Stock, no par value:
Authorized - 200,000,000 shares; issued 119,297,491,
119,152,347, and 118,751,365 at September 30, 1995,
December 31, 1994, and September 30, 1994, respectively 229,051 228,772 228,003
Surplus 377,940 377,569 376,854
Retained earnings 80,837 11,996 (64)
Treasury stock at cost, 300,000 and 200,000 shares at
December 31, 1994 and September 30, 1994, respectively - (2,414) (1,620)
Unrealized gains (losses) on securities available for sale 1,281 (23,942) (17,492)
Unearned compensation (16,044) - -
Total shareholders' equity 673,065 591,981 585,681
Total liabilities and shareholders' equity $6,962,446 $6,779,343 $6,667,815
See notes to consolidated financial statements.
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<TABLE>
Consolidated Income Statements
Hibernia Corporation and Subsidiaries
Three Months Ended Nine Months Ended
September 30 September 30
Unaudited ($ in thousands, except per share data) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $93,784 $75,433 $267,629 $210,975
Interest on securities available for sale 8,892 11,631 28,193 32,511
Interest on securities held to maturity 28,413 26,637 86,663 81,907
Interest on short-term investments 2,225 1,467 5,513 5,205
Total interest income 133,314 115,168 387,998 330,598
Interest expense
Interest on deposits 53,548 40,692 156,624 112,321
Interest on short-term borrowings 3,799 1,642 9,615 4,190
Interest on debt 136 648 464 2,414
Total interest expense 57,483 42,982 166,703 118,925
Net interest income 75,831 72,186 221,295 211,673
Provision for possible loan losses - (18,993) - (18,173)
Net interest income after provision
for possible loan losses 75,831 91,179 221,295 229,846
Noninterest income
Service charges on deposits 11,425 11,301 32,832 33,251
Trust fees 3,015 3,014 8,718 9,463
Other service, collection and exchange charges 7,165 5,333 19,934 15,965
Gain on divestiture of banking offices - - 2,361 -
Gain on sale of business lines 281 - 3,345 -
Other operating income 2,177 3,666 5,814 9,184
Securities gains (losses), net (20) 1,634 (65) 1,824
Total noninterest income 24,043 24,948 72,939 69,687
Noninterest expense
Salaries and employee benefits 31,801 30,440 94,534 93,957
Occupancy expense, net 6,530 6,311 19,089 18,998
Equipment expense 5,452 4,001 14,893 11,316
Data processing expense 4,340 5,192 14,571 15,688
Foreclosed property expense, net (218) (1,503) (775) (5,722)
Other operating expense 15,619 37,344 55,668 82,346
Total noninterest expense 63,524 81,785 197,980 216,583
Income before income taxes 36,350 34,342 96,254 82,950
Income tax expense 2,790 3,352 7,148 6,686
Net income $33,560 $30,990 $89,106 $76,264
Net income per share $0.29 $0.26 $0.75 $0.64
See notes to consolidated financial statements.
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Consolidated Statements of Changes in Shareholders' Equity
Hibernia Corporation and Subsidiaries
Shares of Unrealized
Common Gains (Losses)
Nine Months Ended September 30, 1995 Stock Common Retained Treasury on Securities Unearned
Unaudited ($ in thousands) Outstanding Stock Surplus Earnings Stock Available for Sale Compensation Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1994 118,852,347 $228,772 $377,569 $11,996 ($2,414) ($23,942) $ - $591,981
Net income - - - 89,106 - - - 89,106
Issuance of common stock:
Dividend Reinvestment Plan 88,637 170 477 - - - - 647
Stock Option Plan 40,061 57 97 - 94 - - 248
Retirement Security Plan 62,845 - (32) - 512 - - 480
Stock Awards 264,347 52 (122) - 1,902 - - 1,832
Aquisition of treasury stock (10,746) - - - (94) - - (94)
Purchase of common shares by ESOP - - - - - - (16,044) (16,044)
Cash dividends declared:
Common ($.18 per share) - - - (20,135) - - - (20,135)
By pooled companies prior to merger - - - (224) - - - (224)
Change in unrealized gains (losses) on
securities available for sale - - - - - 25,223 - 25,223
Other - - (49) 94 - - - 45
Balances at September 30, 1995 119,297,491 $229,051 $377,940 $80,837 $- $1,281 ($16,044) $673,065
Shares of Unrealized
Common Gains (Losses)
Nine Months Ended September 30, 1994 Stock Common Retained Treasury on Securities Unearned
Unaudited ($ in thousands) Outstanding Stock Surplus Earnings Stock Available for Sale Compensation Total
Balances at December 31, 1993 118,459,820 $227,443 $374,265 ($63,220) $ - $13,703 ($400) $551,791
Net income - - - 76,264 - - - 76,264
Issuance of common stock:
Dividend Reinvestment Plan 151,685 291 918 - - - - 1,209
Stock Option Plan 11,954 23 36 - - - - 59
Exercise of Purchase Warrants 127,906 246 106 - - - - 352
By pooled companies prior to merger - - 1,529 - - - - 1,529
Cash dividends declared:
Common ($.13 per share) - - - (11,536) - - - (11,536)
By pooled companies prior to merger - - - (1,585) - - - (1,585)
Aquisition of Treasury Stock (200,000) - - - (1,620) - - (1,620)
Change in unrealized gains (losses) on
securities available for sale - - - - - (31,195) - (31,195)
Reduction of ESOP commitment - - - - - - 400 400
Other - - - 13 - - - 13
Balances at September 30, 1994 118,551,365 $228,003 $376,854 ($64) ($1,620) ($17,492) $- $585,681
See notes to consolidated financial statements.
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<TABLE>
Consolidated Statements of Cash Flows
Hibernia Corporation and Subsidiaries
Nine Months Ended September 30
<S> <C> <C>
Unaudited ($ in thousands) 1995 1994
Operating Activities
Net income $89,106 $76,264
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses - (18,173)
Amortization of intangibles and deferred charges 2,773 20,666
Depreciation and amortization 13,149 10,621
Premium amortization, net of discount accretion 5,430 12,077
Realized securities (gains) losses, net 65 (1,824)
Gain on sale of assets (1,298) (5,668)
Gain on divestiture of banking offices (2,361) -
Gain on sale of business lines (3,345) -
Provision for losses on foreclosed and other assets 759 1,086
Increase in deferred income tax asset (11,893) (14,520)
Decrease (increase) in interest receivable and other assets (129) 8,894
Increase (decrease) in interest payable and other liabilities 8,342 (3,968)
Net Cash Provided By Operating Activities 100,598 85,455
Investing Activities
Purchases of securities held to maturity (156,037) (197,218)
Purchases of securities available for sale (17,712) (248,671)
Proceeds from sales of securities available for sale 28,433 22,875
Maturities of securities held to maturity 314,960 311,840
Maturities of securities available for sale 66,724 165,378
Net increase in loans (820,237) (553,304)
Proceeds from sales of loans 107,904 213,015
Purchases of premises, equipment and other assets (18,201) (17,830)
Proceeds from sales of foreclosed assets 5,308 16,372
Proceeds from divestiture of banking offices, net of $1,069 cash sold (13,708) -
Proceeds from sale of business lines 114,865 -
Proceeds from sales of premises, equipment and other assets 561 65
Net Cash Used By Investing Activities (387,140) (287,478)
Financing Activities
Net increase in domestic deposits 65,821 46,793
Net increase (decrease) in time deposits - foreign office (7,007) 17,921
Net increase (decrease) in short-term borrowings 79,933 (15,216)
Payments on debt (3,009) (28,036)
Issuance of common stock 3,207 3,149
Purchase of common stock by ESOP (16,044) -
Dividends paid (20,359) (13,121)
Aquisition of treasury stock (94) (1,620)
Net Cash Provided By Financing Activities 102,448 9,870
Decrease in Cash and Cash Equivalents (184,094) (192,153)
Cash and Cash Equivalents at Beginning of Period 586,038 594,992
Cash and Cash Equivalents at End of Period $401,944 $402,839
See notes to consolidated financial statements.
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Notes to Consolidated Financial Statements
Hibernia Corporation and Subsidiaries
Unaudited
Note 1 BASIS OF PRESENTATION The accompanying unaudited
consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the
nine-month period ended September 30, 1995, are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1995. For further information, refer to the audited
consolidated financial statements and notes included in Hibernia
Corporation's annual report on Form 10-K for the year ended
December 31, 1994, and the Registrant's Current Report on Form 8-K
dated October 12, 1995.
Note 2 MERGER AGREEMENTS Mergers with FNB Bancshares, Inc.
and Bunkie Bancshares, Inc. are pending shareholder and regulatory
approvals, and are expected to be consummated in the first quarter
of 1996. It is anticipated that these pending mergers will be
accounted for as poolings of interests.
Note 3 EMPLOYEE BENEFIT PLANS The Company's stock option
plans provide incentive and non-qualified options to various key
employees and non-employee directors to purchase shares of Class A
Common Stock at no less than the fair market value of the stock at
the date of grant. All options granted prior to 1992 became
exercisable six months from the date of grant. The remaining
options granted under the 1987 Stock Option Plan, the Long-Term
Incentive Plan and the 1993 Directors' Stock Option Plan become
exercisable in the following increments: 50% after the expiration
of two years from the date of grant, an additional 25% three years
from the date of grant and the remaining 25% four years from the
date of grant.
Options granted under the 1987 Stock Option Plan generally
expire 10 years from the date granted. Options granted under the
Long-Term Incentive Plan and the 1993 Directors' Stock Option Plan
do not expire unless the holder dies, retires, becomes permanently
disabled or leaves the employ of the Company, at which time the
options expire at various times ranging from 30 to 365 days. All
options vest immediately upon a change in control of the Company.
At September 30, 1995, the number of shares available for
grant under the 1987 Stock Option Plan, the Long-Term Incentive
Plan and the 1993 Directors' Stock Option Plan totaled 155,897;
697,557; and 765,000, respectively.
The table below summarizes the activity in the plans during
the third quarter of 1995:
<TABLE>
Incentive Non-Qualified
---------- -------------
1987 STOCK OPTION PLAN
<S> <C> <C>
Outstanding, June 30, 1995 190,741 1,367,472
Granted - -
Canceled (7,500) (1,474)
Exercised - (16,089)
-------- ----------
Outstanding, September 30, 1995 183,241 1,349,909
======== ==========
Exercisable, September 30, 1995 103,385 971,557
======== ==========
</TABLE>
<TABLE>
Incentive Non-Qualified
--------- -------------
LONG-TERM INCENTIVE PLAN
<S> <C> <C>
Outstanding, June 30, 1995 12,598 3,877,935
Granted - 9,600
Canceled - (120,637)
Exercised (18,000)
Issuances - (600)
------ ----------
Outstanding, September 30, 1995 12,598 3,748,298
====== ==========
Exercisable, September 30, 1995 - 414,039
====== ==========
</TABLE>
Non-qualified stock options outstanding at September 30, 1995
in the 1993 Directors' Stock Option Plan totaled 235,000, of which
37,500 were exercisable. There was no activity in this plan for
the third quarter of 1995.
Effective April 1, 1995, the Company instituted an employee
stock ownership plan (ESOP) in which substantially all employees
can participate. The ESOP is expected to acquire up to $30 million
of Hibernia Corporation Class A Common Stock in open-market
purchases. At September 30, 1995, $16 million of stock (2,008,588
shares) had been acquired.
Note 4 PER SHARE DATA Income per common share is based on
the weighted average number of shares outstanding of 117,317,895
and 118,038,657 for the three months and nine months ended
September 30, 1995, and 118,643,358 and 118,555,306 for the
three months and nine months ended September 30, 1994. These
weighted averages exclude uncommitted shares held by the ESOP.
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QUARTERLY CONSOLIDATED SUMMARY OF INCOME
AND SELECTED FINANCIAL DATA (1)
Hibernia Corporation and Subsidiaries
Three Months Ended Nine Months Ended
September 30 June 30 September 30 September 30 September 30
($ in thousands, except per-share data) 1995 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C>
Interest income $133,314 $129,892 $115,168 $387,998 $330,598
Interest expense 57,483 56,694 42,982 166,703 118,925
Net interest income 75,831 73,198 72,186 221,295 211,673
Provision for possible loan losses - - (18,993) - (18,173)
Net interest income after provision for possible loan losses 75,831 73,198 91,179 221,295 229,846
Noninterest income:
Noninterest income 24,063 25,097 23,314 73,004 67,863
Securities gains (losses), net (20) (49) 1,634 (65) 1,824
Noninterest income 24,043 25,048 24,948 72,939 69,687
Noninterest expense 63,524 66,087 81,785 197,980 216,583
Income before taxes 36,350 32,159 34,342 96,254 82,950
Income tax expense 2,790 2,082 3,352 7,148 6,686
Net Income $33,560 $30,077 $30,990 $89,106 $76,264
Income per share (2) $0.29 $0.26 $0.26 $0.75 $0.64
Cash dividends declared per share (2) $0.06 $0.06 $0.05 $0.18 $0.13
Average shares outstanding (000s) (2) 117,318 117,681 118,643 118,039 118,555
Selected Quarter-End Balances (in millions)
Loans $4,205.1 $3,993.0 $3,532.6
Deposits 5,923.9 5,976.7 5,785.7
Debt 8.8 9.1 10.7
Equity 673.1 644.6 585.7
Total assets 6,962.4 7,002.6 6,667.8
Selected Average Balances (in millions)
Loans $4,077.3 $3,929.6 $3,445.6 $3,917.5 $3,308.2
Deposits 5,935.7 5,898.7 5,764.7 5,924.0 5,768.9
Debt 8.9 10.6 17.2 10.2 29.2
Equity 655.1 628.5 577.4 631.0 566.4
Total assets 7,007.0 6,921.2 6,669.9 6,929.4 6,697.0
Selected Ratios (%)
Return on average assets 1.92 1.74 1.86 1.71 1.52
Return on average equity 20.49 19.14 21.47 18.83 17.95
Net interest margin (taxable-equivalent) 4.70 4.62 4.70 4.66 4.60
Efficiency (3) 62.75 66.29 84.44 66.34 76.40
Tier 1 risk-based capital 14.72 14.70 15.37
Total risk-based capital 15.99 15.98 16.66
Leverage 9.33 9.04 8.69
(1) All financial information has been restated for mergers accounted for as poolings of interests. Prior periods have been
conformed to current-year presentation.
(2) Income per share is based on the weighted average number of common shares outstanding (net of uncommitted ESOP
shares) in the respective period. Dividends per share are historical amounts.
(3) Noninterest expense as a percentage of taxable-equivalent net interest income plus noninterest income (excluding
securities transactions).
</TABLE>
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summary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion presents a review of the major factors
and trends affecting the performance of Hibernia Corporation (the
"Company" or "Hibernia") and its bank subsidiary (the "Bank") and
should be read in conjunction with the accompanying consolidated
financial statements, notes and tables. Financial data for all
periods presented have been restated for mergers accounted for as
poolings of interests.
THIRD-QUARTER 1995 HIGHLIGHTS
Hibernia Corporation's third-quarter 1995 results showed a 12%
improvement in earnings per share over the third quarter of 1994;
strong loan growth; and improved asset quality and efficiency.
Net income totaled $33.6 million ($.29 per share),
up 8% from $31.0 million ($.26 per share) in the
third quarter of 1994. For the first nine months
of 1995, net income totaled $89.1 million ($.75 per
share), a 17% increase from $76.3 million ($.64 per
share) in the same period of 1994.
Returns on assets (ROA) increased to 1.92% for the
third quarter of 1995 and 1.71% for the first nine
months of 1995 compared to 1.86% and 1.52%,
respectively, for the same periods in 1994.
Returns on equity (ROE) were 20.49% for the third
quarter of 1995 and 18.83% for the first nine
months of 1995, while ROE for the comparable
periods of 1994 were 21.47% and 17.95%,
respectively. On a fully tax-effected basis, ROA
would have been 1.31% and ROE would have been
13.98% for the third quarter of 1995.
Third-quarter 1995 results improved compared to the
same period last year because of a $3.6 million
increase in net interest income resulting from
higher earning assets and a $3.6 million reduction
in FDIC insurance premiums. These positive effects
were partially offset by a $1.4 million accrual for
an office automation project designed to improve
productivity and enhance customer service.
Loans grew $672.5 million (19%) from a year ago to
$4.2 billion at September 30, 1995. Consumer loans
increased $441.6 million (28%) to $2.0 billion and
commercial loans grew $230.9 million (12%) to $2.2
billion. Compared to June 30, 1995, loans
increased at an annual rate of 21% as consumer
loans grew 32% and commercial loans grew 11%.
Nonperforming assets declined to $27.6 million,
down 43% from a year ago and down 4% from $28.7
million at June 30, 1995. Nonperforming assets as
a percentage of loans plus foreclosed assets were
reduced to .66%, compared to 1.37% at September 30,
1994 and .72% at June 30, 1995.
In October of 1995, Hibernia's board of directors
increased the quarterly cash dividend to $.07 per
share, a 17% increase per share over the dividend
declared in October of 1994.
On July 1, Hibernia completed mergers with
Progressive Bancorporation, Inc. with total assets
of approximately $150 million and the Bank of St.
John with total assets of approximately $115
million.
Pending merger activity is summarized below:
Assets @ 9/30/95
Bank Holding Company / Bank
(millions) Merger Date
FNB Bancshares, Inc. /
$ 51 First Quarter 1996 *
The First National Bank
of Lake Providence
Bunkie Bancshares, Inc. /
$105 First Quarter 1996 **
Bunkie Bank & Trust Company
* Estimated. Pending shareholder approval.
** Estimated. Pending regulatory and shareholder
approval.
FINANCIAL CONDITION:
EARNING ASSETS
Earning assets averaged $6,535.3 million in the third quarter
of 1995, a $302.6 million (5%) increase from the third-quarter 1994
average of $6,232.7 million. For the first nine months of 1995,
average earning assets increased $200.9 million (3%) over the
comparable period in 1994 to $6,465.1 million. Compared to the
third quarter of 1994, average loans increased $631.7 million
(18%), and short-term investments were up $19.3 million (15%),
while securities available for sale decreased $197.2 million (27%),
and securities held to maturity decreased $151.2 million (8%). For
the first nine months of 1995, average loans were up $609.3 million
(18%), while securities available for sale decreased $217.0 million
(28%), securities held to maturity decreased $129.2 million (7%)
and short-term investments decreased $62.2 million (33%). Hibernia
has increased its loan portfolio by offering quality service and
innovative lending products in existing markets as well as in the
markets of merger partners. The sources of funding for the
increase in loans have been redeployment from lower-yielding short-
term investments, reinvestment of proceeds from maturing securities
and increases in deposits and borrowed funds.
Loans. Average loans for the third quarter of 1995 of
$4,077.3 million were up $147.7 million (4%) from the second
quarter of 1995 and up $631.7 million (18%) compared to the third
quarter of 1994. Average loans increased $609.3 million (18%) in
the first nine months of 1995 compared to the same period in 1994.
Table 1 presents the Company's loan portfolio classified
according to industry concentration at September 30, 1995, June 30,
1995, December 31, 1994 and September 30, 1994. Total loans
increased $212.1 million (5%) during the third quarter of 1995.
Commercial loans increased $61.1 million (3%), while consumer loans
increased $151.0 million (8%), primarily due to increases in
adjustable-rate residential mortgage loans, indirect lending and
direct consumer loans, partially offset by a decrease in student
loans as Hibernia substantially completed the sale of its student
loan portfolio. Hibernia management determined that student
lending was not profitable and began liquidating its student loan
portfolio in the second quarter of 1995.
Compared to September 30, 1994, loans increased $672.5 million
(19%). Consumer loans were up $441.6 million (28%), and commercial
loans increased $230.9 million (12%). Consumer loans comprised
47.8% of the loan portfolio at September 30, 1995 compared to 44.3%
at September 30, 1994. Hibernia's lending strategy is to increase
consumer lending while maintaining preeminence in Louisiana
commercial lending.
Securities Available for Sale. Average securities available
for sale decreased $197.2 million (27%) from the third quarter of
1994 to $538.4 million. For the nine-month period in 1995
securities available for sale averaged $570.4 million, a $217.0
million (28%) decrease from the comparable period in 1994.
Securities classified as available for sale are primarily mortgage-
backed securities.
Securities Held to Maturity. Average securities held to
maturity for the third quarter of 1995 compared to the same period
a year ago decreased $151.2 million (8%) to $1,771.2 million.
Securities held to maturity for the first nine months of 1995
averaged $1,850.9 million, a $129.2 million (7%) decrease compared
to the same period in 1994. The decreases are the result of the
reinvestment of principal received from matured securities into
higher-yielding loans.
Short-Term Investments. Average short-term investments
(primarily federal funds sold) for the three months ended September
30, 1995, increased $19.3 million (15%) compared to the third
quarter of 1994. For the first nine months of 1995 average short-
term investments decreased $62.2 million (33%) compared to the same
period a year ago as the opportunities for quality loans have
continued to increase.
ASSET QUALITY
Table 2 presents a summary of nonperforming assets at the end
of the past five quarters. Table 3 presents a summary of changes
in nonperforming loans for the three-month and nine-month periods
ended September 30, 1995.
Nonperforming assets -- which include nonaccrual loans,
restructured loans and foreclosed assets -- totaled $27.6 million
at September 30, 1995, down 43% compared to $48.7 million at
September 30, 1994 and down 4% compared to $28.7 million June 30,
1995. Nonperforming loans, which totaled $19.2 million at
September 30, 1995, declined $18.1 million (49%) from a year ago
and $1.4 million (7%) from June 30, 1995. Foreclosed assets
totaled $8.4 million at September 30, 1995, down $3.0 million (26%)
from a year earlier, and up slightly ($.3 million) from June 30,
1995.
As illustrated in Table 3, $12.1 million of the decline in
nonperforming loans in 1995 was due to loans returned to performing
status. Also, payments on nonperforming loans totaled $8.6
million. As a percentage of total loans plus foreclosed assets,
nonperforming assets at September 30, 1995 improved to .66% from
1.37% a year ago and .72% at June 30, 1995.
As of January 1, 1995, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting by
Creditors for Impairment of a Loan," which, as it related to in-
substance foreclosures, required that a creditor receive physical
possession of the collateral. Accordingly, upon adoption, $7.1
million of in-substance foreclosures were transferred from
foreclosed assets to nonperforming loans and related loss reserves
of $.2 million were transferred to the reserve for possible loan
losses. The Company reclassified in-substance foreclosures and
related loss reserves for all prior periods to conform to the new
classification requirements. At September 30, 1995, the recorded
investment in loans that were considered to be impaired under SFAS
No. 114 was $18.3 million. The related reserve for possible loan
losses was $2.0 million. These loans are included in nonaccrual
loans in Table 2.
In addition to the nonperforming assets discussed above, other
commercial loans for which payments are current that are subject to
potential future classification as nonperforming totaled $4.4
million as of September 30, 1995.
RESERVE AND PROVISION FOR POSSIBLE LOAN LOSSES
No provision for possible loan losses was recorded for the
third quarter of 1995 or for the first nine months of 1995 compared
to negative provisions of $19.0 million and $18.2 million for the
same periods in 1994. The absence of a provision thus far in 1995
was the result of continued improvement in asset quality, evidenced
by lower levels of nonperforming loans. With the declining level
of nonperforming loans and low net charge-offs, the reserve
coverage continued to strengthen. The reserve for possible loan
losses as a percentage of nonperforming loans increased to 788% at
September 30, 1995, compared to 433% a year ago, and 734% at June
30, 1995.
Net charge-offs totaled less than $.1 million in the third
quarter of 1995, compared to net recoveries of $.5 million in the
third quarter of 1994. For the nine months ended September 30, net
charge-offs totaled $1.7 million in 1995 and $1.1 million in 1994.
As a percentage of average loans, annualized net charge-offs were
.01% for the third quarter of 1995 and .06% for the first nine
months of 1995. These percentages compare to net recoveries of
.05% for the third quarter of 1994 and net charge-offs of .04% for
the first nine months of 1994.
The reserve for possible loan losses totaled $151.2 million,
or 3.6% of total loans, at September 30, 1995, compared to $161.4
million, or 4.6%, a year earlier. Even though the reserve for
possible loan losses has been declining over the last five
quarters, in terms of both dollar amount and as a percentage of
loans, the present level is considered adequate to absorb future
potential loan losses. In making this determination, management
considered the significant improvements in asset quality discussed
earlier, and the reduced levels of net loan charge-offs, as well as
current economic conditions and market trends. Because factors
such as loan growth and the future collectibility of loans are
uncertain, the level of future provisions (positive or negative),
if any, cannot be predicted. Table 4 presents an analysis of the
activity in the reserve for possible loan losses for the three
month and nine month periods of 1995 and 1994.
FUNDING SOURCES:
DEPOSITS AND BORROWINGS
Deposits. Average deposits totaled $5,935.7 million in the
third quarter of 1995, a $171.0 million (3%) increase from the
third quarter of 1994. Average core deposits were up $122.9
million (3%) due to increases in consumer time deposits, demand
deposits and NOW accounts. These increases were partially offset
by a moderate decrease in money market deposit accounts as rising
rates made these accounts less competitive with other investment
products. Hibernia's OneWay certificates of deposit have grown 56%
in the last year, totaling $763.4 million at September 30, 1995.
These certificates of deposit allow customers a one-time option to
adjust the rate to then-current rates at any time during the two-
year term. The OneWay CD enabled Hibernia to retain much of the
funds leaving money market deposit accounts and attract new funds.
Noncore deposits increased $48.1 million (6%) from the third
quarter of 1994 as public fund certificates of deposit increased
$64.9 million and foreign time deposits increased $19.6 million,
while other large denomination certificates of deposits decreased
$36.4 million.
Table 5 presents the composition of average deposits for the
third and second quarters of 1995 and the third quarter of 1994.
Borrowings. Average borrowings (which include federal funds
purchased, securities sold under agreements to repurchase and debt)
increased $106.1 million to $297.3 million for the third quarter of
1995 compared to the third quarter of 1994. For the first nine
months of 1995 average borrowed funds totaled $253.5 million
compared to $198.7 million for the first nine months of 1994.
Short-term borrowings in the third quarter of 1995 increased
$114.4 million over the comparable period in 1994 while the
increase for the first nine months of 1995 over the same period in
1994 was $73.8 million. A single transaction accounted for almost
$40 million of the increase for the quarter and over $13 million
of the increase for the nine-month period. This transaction
involved an influx of funds that was temporarily placed in short-
term investments before being transferred to Hibernia's trust
department and reinvested. The remaining increases were primarily
the result of growth in cash management products which allow
Hibernia customers to earn interest on idle deposits. Fluctuations
in short-term borrowings can also stem from differences in the
timing of the expansion of lending opportunities and the growth of
other funding sources (deposits and proceeds from maturing
securities). The Company's reliance on these funds, while higher
than a year ago, is still within parameters determined by
management to be prudent in terms of liquidity and rate
sensitivity. The increases in short-term borrowings were partially
offset by decreases in long-term debt totaling $8.3 million for the
third quarter of 1995 compared to the same period in 1994 and $19.0
million for the first nine months of 1995 compared to the first
nine months of 1994. These reductions reflect the Company's
practice of retiring debt acquired through mergers if the terms of
such debt are not favorable. The Company's long-term debt at
September 30, 1995 is comprised primarily of Federal Home Loan Bank
of Dallas advances totaling $7.6 million.
INTEREST RATE SENSITIVITY
The primary objective of asset/liability management is
controlling interest rate risk. On a monthly basis, management
monitors the sensitivity of net interest income to changes in
interest rates through methods that include simulation and gap
reports, and attempts to optimize the asset/liability mix to
minimize the impact of significant rate movements within a broad
range of interest rate scenarios. Management may alter the mix of
floating- and fixed-rate assets and liabilities, change pricing
schedules and enter into derivative contracts as a means of
limiting interest rate risk.
On a limited basis, the Company has entered into interest rate
swap, forward and option contracts to hedge interest rate risk on
specific assets and liabilities. The total notional amount of
these contracts at September 30, 1995 was $10.0 million.
Derivative financial instruments are also held or issued by the
Company for trading purposes to provide customers the ability to
manage their own interest rate and foreign exchange risk. In
general, matched trading positions are established to minimize risk
to the Company. The notional value of these instruments totaled
$273.1 million at September 30, 1995. As of that date, Hibernia had
no risk of loss due to interest rate fluctuations.
RESULTS OF OPERATIONS:
NET INTEREST INCOME
Taxable-equivalent net interest income for the three months
ended September 30, 1995, totaled $77.2 million, a $3.6 million
increase from the same period in 1994 and a $2.6 million increase
from the second quarter of 1995. For the first nine months of 1995,
net interest income totaled $225.4 million, up $9.8 million from
the comparable period in 1994. Factors contributing to these
increases were the positive effect of the change in the mix of
earning assets from lower-yielding investments to loans (62.4% of
average earning assets in the third quarter of 1995 compared to
55.3% in the third quarter of 1994); the higher value of Hibernia's
net noninterest bearing funds (demand deposits, other liabilities
and equity, net of nonearning assets) as these funds can earn
higher yields in the current interest rate environment; overall
growth in earning assets; and higher yields on securities and
loans. These factors were partially offset by higher rates paid on
deposits and the shift of funds from lower rate money market
deposits into certificates of deposit.
The net interest margin was 4.70% for the third quarter of
1995, unchanged from the third quarter of 1994, and up 8 basis
points from the second quarter of 1995. For the nine months ended
September 30, the net interest margin was 4.66% in 1995 and 4.60%
in 1994. The net interest margin has remained relatively stable
over the past five quarters despite pressure on the net interest
spread as the value of Hibernia's noninterest-bearing funds has
increased in the current rate environment. Table 6 details the net
interest margin for the most recent five quarters.
Table 7 presents an analysis of the Company's taxable-
equivalent net interest income and average balance sheets for the
three months ended September 30, 1995, June 30, 1995 and September
30, 1994, and for the first nine months of 1995 and 1994. Table 8
presents an analysis of changes in taxable-equivalent net interest
income between the third quarter of 1995 and the second quarter of
1995 and between the third quarter of 1995 and the third quarter of
1994.
NONINTEREST INCOME
Noninterest income for the third quarter of 1995 was down $.9
million (4%) to $24.0 million compared to the same period of 1994,
while noninterest income for the first nine months of 1995 was up
$3.3 million (5%) to $72.9 million compared to the first nine
months of 1994.
The decrease in noninterest income in the third quarter of
1995 was due to gains recorded in the third quarter of 1994 of $1.6
million from the sale of securities and $1.8 million related to the
buy-back of residual balances of loans securitized and sold in
1990. The $3.3 million increase in noninterest income in the first
nine months of 1995 compared to the same period of 1994 was due to
a $2.4 million gain related to the divestiture of three banking
offices in Northwest Louisiana in connection with Hibernia's merger
with Pioneer Bancshares Corporation and $3.3 million in gains from
the sale of the Company's student loan portfolio and municipal bond
administration business. These gains were partially offset by the
$3.4 million in gains mentioned above recorded in the third quarter
of 1994. The sale of the student loan portfolio and the municipal
bond administration business resulted from strategic initiatives
designed to focus Hibernia's efforts on businesses in which it
enjoys a competitive advantage and which provide acceptable returns
on investment.
Excluding the items mentioned above, noninterest income
increased $2.6 million in the third quarter of 1995 over the third
quarter of 1994 and increased $.9 million for the first nine months
of 1995 compared to 1994. The major categories of noninterest
income for the three months and nine months ended September 30,
1995 and the comparable periods in 1994 are presented in Table 9.
Service charges on deposits increased $.1 million (1%) for the
1995 quarter and decreased $.4 million (1%) for the first nine
months of 1995. The value of balances maintained by commercial
customers increased in 1995 compared to 1994 due to higher money
market rates. Many customers "paid" for Bank services with these
balances instead of by payment of fees.
Trust fees were flat for the third quarter of 1995 compared to
the same period in 1994 and were down $.7 million (8%) for the
first nine months of 1995, primarily due to the sale of the Bank's
municipal bond administration business.
Other service, collection and exchange fees were up $1.8
million (34%) in the third quarter of 1995 compared to the third
quarter of 1994 and up $4.0 million (25%) for the first nine months
of 1995 compared to the same period of 1994. The major factors in
these increases were significant growth in fees generated by the
Bank's upgraded and expanded ATM network and an increase in
commissions from the sale of credit insurance products.
Other income decreased $1.2 million (33%) in the third quarter
of 1995 while increasing $2.3 million (25%) for the first nine
months of 1995 compared to the same periods in 1994, primarily due
to the nonrecurring items mentioned above. In addition, other
income increased for the 1995 quarter and nine months due to an
increase in gains related to the sale of mortgage loans, partially
offset by a decrease in income from computer services provided to
third parties as the Company shifts its focus away from this
business.
Securities gains totaled less than $100 thousand in the third
quarter and first nine months of 1995, compared to $1.6 million and
$1.8 million in gains recorded in the third quarter and first nine
months of 1994, respectively.
NONINTEREST EXPENSE
For the third quarter of 1995, noninterest expense totaled
$63.5 million, a $18.3 million (22%) decrease from the third
quarter of 1994. For the first nine months of 1995, noninterest
expense decreased $18.6 million (9%) compared to the same period in
1994. Excluding a $16.1 million charge in the third quarter of
1994 for the impairment of goodwill associated with mergers
consummated in the mid- to late- 1980's, noninterest expense would
have been down $2.1 million for the third quarter of 1995 compared
to the third quarter of 1994, and down $2.5 million in the first
nine months of 1995 compared to the same period in 1994.
Noninterest expense for the three months and nine months ended
September 30, 1995 and September 30, 1994, is presented by major
category in Table 10.
Staff costs, the largest component of noninterest expense,
increased $1.4 million (4%) in the third quarter of 1995 and $.6
million (1%) for the first nine months of 1995 compared to the same
periods a year ago. Costs related to the Hibernia employee stock
ownership plan (ESOP) which was instituted in the second quarter of
1995, and an increase in Hibernia's contributions to the 401(k)
plan were the major factors contributing to these increases.
Hibernia's contributions to the plan are made with Hibernia stock
as a way of aligning the interests of employees with those of
shareholders.
Equipment expenses increased $1.5 million (36%) in the third
quarter of 1995 and $3.6 million (32%) for the first nine months of
1995 compared to the same periods in 1994 due to higher
depreciation expenses related to the purchase of computer equipment
to facilitate system conversions for acquired banks and to upgrade
the Company's teller systems and ATM network.
Data processing expenses decreased $.9 million (16%) and $1.1
million (7%) in the third quarter of 1995 and the first nine months
of 1995, respectively. The decreases are primarily due to lower
processing expenses due to Hibernia's conversion to a new data
processor.
Income from foreclosed property, net of expenses, totaled $.2
million in the third quarter of 1995, compared to $1.5 million for
the same period a year ago. For the nine month period, income from
foreclosed property totaled $.8 million in 1995 and $5.7 million in
1994 as the first quarter of 1994 included significant gains on the
sale of several properties included in foreclosed assets.
Regulatory expenses decreased $3.5 million (100%) in the 1995
quarter compared to 1994 and $4.1 million (37%) in the first nine
months of 1995 compared to 1994. Strengthened FDIC reserves
recently prompted federal regulators to reduce the deposit-
insurance assessment rate that most banks pay by 83%, resulting in
a $2.7 million reduction in FDIC premiums expense recorded in the
third quarter of 1995. In addition, Hibernia received refunds from
June totaling $.9 million.
Postage rose by more than 25% in both the third quarter and
first nine months of 1995 due to increased mailings related to
mergers and the postal rate increase which became effective January
1, 1995. Telecommunications expenses increased over 100% in both
periods as Hibernia built and outsourced the operation of its own
wide area network instead of using the network of its data
processing provider. In addition, data line expenses related to
its enhanced ATM network also increased telecommunications
expenses.
Professional fees decreased $.1 million (4%) and $1.6 million
(19%) in the third quarter of 1995 and the first nine months of
1995, respectively. The 1994 level of professional fees was higher
due to merger-related expenses. State taxes on equity increased
$.3 million (42%) in the 1995 quarter compared to 1994 and $1.0
million (45%) in the first nine months of 1995 compared to 1994 due
to the increased level of equity.
Advertising and promotional expenses decreased in the third
quarter of 1995 compared to the same period of 1994. In the nine-
month period, these expenses increased because of merger-related
marketing efforts and a general increase in advertising and product
development. The reductions in amortization of intangibles reflect
the $16.1 million charge in the third quarter of 1994 for the
impairment of goodwill, and the lower amortization expense on the
remaining intangibles. Other noninterest expenses decreased $2.6
million (31%) to $5.7 million in the third quarter of 1995 and
decreased $8.7 million (33%) for the first nine months of 1995
compared to the same period in 1994.
The Company's efficiency ratio, defined as noninterest expense
as a percentage of taxable-equivalent net interest income plus
noninterest income (excluding securities transactions), was 62.75%
for the third quarter of 1995 compared to 84.44% for the same
period in 1994. The ratio for the first nine months of 1995
compared to 1994 showed a similar decline -- to 66.34% from 76.40%.
The improvement in efficiency reflects the writeoff of impaired
goodwill in the third quarter of 1994, the nonrecurring income
items previously discussed, as well as continued cost control
efforts and increases in net interest income and noninterest
income.
INCOME TAXES
The Company recorded provisions for income taxes of $2.8
million in the third quarter of 1995 and $7.1 million in the first
nine months of 1995. Provisions recorded in the comparable periods
in 1994 were $3.4 million and $6.7 million, respectively. During
1995, the Company recorded federal income taxes at a lower-than-
normal effective tax rate due to previously unrecognized deferred
tax benefits. Hibernia will recognize federal income tax expense
throughout 1995, but at an estimated annual effective tax rate
significantly less than the federal statutory tax rate. The
deferred tax benefits are expected to be fully recognized by the
end of 1995, so that beginning in 1996, the Company's effective tax
rate will approach the statutory state and federal tax rates.
The Bank is subject to a Louisiana shareholder tax based
partly on income. The income portion of this tax is recorded as
state income tax. In addition, certain subsidiaries of the Company
and the Bank are subject to Louisiana state income tax.
CAPITAL
Shareholders' equity totaled $673.1 million at September 30,
1995, compared to $585.7 million at September 30, 1994. The
increase is primarily the result of net income over the most recent
12 months totaling $120.1 million and an $18.8 million decrease in
unrealized losses on securities available for sale, partially
offset by $26.0 million in dividends and a $16.0 million increase
in unearned compensation related to the ESOP instituted on April 1,
1995. Risk-based capital and leverage ratios for the Company and
the Bank exceed the ratios required for designation as a "well-
capitalized" institution under regulatory guidelines. Table 11
presents these ratios for the Company and the Bank for the most
recent five quarters.
LIQUIDITY
The loan-to-deposit ratio, one measure of liquidity, was 71.0%
at September 30, 1995, 66.8% at June 30, 1995 and 61.1% at
September 30, 1994. This ratio shows that loans are growing faster
than deposits and thus necessitates greater reliance on other
sources of funds. Although short-term borrowings have increased in
the past year, a significant portion of the purchased funds are
part of a total customer relationship, and thus is not subject to
the same volatility as other sources of noncore funds. A measure
of reliance on short-term borrowings and other large liabilities
(such as large-denomination and public fund CD's and foreign
deposits) is the large liability dependence ratio. For the third
quarter of 1995, 16.31% of Hibernia's loans and investment
securities were funded by net large liabilities (total large
liabilities less short-term investments) compared to 14.72% for the
same period in 1994.
Management believes that projected liquidity needs can be met
by various means, including conversion of short-term investments
and assets available for sale to cash, and with deposits generated
by Hibernia's extensive retail office network. In addition, the
Company's strong financial condition and profitability provide
ample access to large-denomination liabilities as a source of
liquidity. These include certificates of deposit greater than
$100,000 and public funds deposits, as well as funds which can be
purchased through the Bank's membership in the Federal Home Loan
Bank of Dallas and from correspondent banks.
<PAGE>
<TABLE>
TABLE 1 - COMPOSITION OF LOAN PORTFOLIO
<CAPTION>
Sept. 30, 1995 June 30, 1995
($ in millions) Loans % Loans %
<S> <C> <C> <C> <C>
Commercial:
Commercial and
industrial $ 829.8 19.6 % $ 757.1 18.9 %
Commercial real estate 470.5 11.2 478.0 12.0
Services 334.6 8.0 346.1 8.7
Health care 196.7 4.7 216.2 5.4
Transportation,
communications
and utilities 190.2 4.5 158.6 4.0
Individual 95.9 2.3 99.1 2.5
Energy 79.9 1.9 81.4 2.0
Total commercial 2,197.6 52.2 2,136.5 53.5
Consumer:
Residential mortgages:
1st mortgages 923.3 22.0 837.2 20.9
Junior liens 88.4 2.1 86.6 2.2
Indirect 627.6 14.9 585.4 14.7
Revolving credit 86.3 2.1 84.4 2.1
Student 1.0 - 22.9 0.6
Other 280.9 6.7 240.0 6.0
Total consumer 2,007.5 47.8 1,856.5 46.5
Total loans $4,205.1 100.0 % $3,993.0 100.0 %
Dec. 31, 1994 Sept. 30, 1994
Loans % Loans %
Commercial:
Commercial and
industrial $ 652.2 18.0 % $ 662.9 18.8 %
Commercial real estate 494.5 13.6 539.0 15.3
Services 288.6 7.9 287.9 8.1
Health care 214.7 5.9 219.3 6.2
Transportation,
communications
and utilities 114.8 3.2 96.7 2.7
Individual 97.4 2.7 93.7 2.7
Energy 94.2 2.6 67.2 1.9
Total commercial 1,956.4 53.9 1,966.7 55.7
Consumer:
Residential mortgages:
1st mortgages 725.6 20.0 688.0 19.5
Junior liens 84.7 2.3 85.2 2.4
Indirect 486.0 13.4 452.5 12.8
Revolving credit 74.6 2.1 71.9 2.0
Student 92.7 2.6 79.5 2.3
Other 207.7 5.7 188.8 5.3
Total consumer 1,671.3 46.1 1,565.9 44.3
Total loans $3,627.7 100.0 % $3,532.6 100.0 %
</TABLE>
<TABLE>
TABLE 2 - NONPERFORMING ASSETS
<CAPTION>
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
($ in thousands) 1995 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $ 19,189 $ 20,602 $ 21,486 $ 21,298 $ 32,569
Restructured loans - - - 6,024 4,706
Total nonperforming loans 19,189 20,602 21,486 27,322 37,275
Foreclosed assets 8,420 8,142 8,611 9,147 11,426
Total nonperforming assets $ 27,609 $ 28,744 $ 30,097 $ 36,469 $ 48,701
Accruing loans past due
90 days or more $ 2,615 $ 4,936 $ 3,375 $ 4,016 $ 2,639
Reserve for possible loan losses $151,161 $151,239 $152,658 $152,838 $161,433
Nonperforming assets as a percentage
of loans plus foreclosed assets 0.66 % 0.72 % 0.79 % 1.00 % 1.37 %
Reserve for possible loan losses as a
percentage of nonperforming loans 787.75 % 734.10 % 710.50 % 559.40 % 433.09 %
</TABLE>
<TABLE>
TABLE 3 - SUMMARY OF NONPERFORMING LOAN ACTIVITY
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
($ in thousands) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Nonperforming loans
at beginning of period $ 20,602 $ 57,140 $ 27,322 $ 95,258
Additions 2,389 3,692 10,920 7,637
Charge-offs, gross (2,802) (3,853) (9,180) (10,726)
Returns to performing status (338) (1,041) (3,850) (12,390)
Payments / sales / other (662) (18,663) (6,023) (42,504)
Nonperforming loans
at end of period $ 19,189 $ 37,275 $ 19,189 $ 37,275
</TABLE>
<TABLE>
TABLE 4 - RESERVE FOR POSSIBLE LOAN LOSSES ACTIVITY
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
($ in thousands) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Balance at beginning of period $151,239 $182,321 $152,838 $183,126
Loans charged off (5,071) (5,510) (15,805) (15,162)
Recoveries 4,993 5,961 14,128 14,095
Net loans charged off (78) 451 (1,677) (1,067)
Provision for possible loan losses - (18,993) - (18,173)
Net activity related to
in-substance foreclosures - (2,346) - (2,453)
Balance at end of period $151,161 $161,433 $151,161 $161,433
Reserve for possible loan losses
as a percentage of loans 3.59 % 4.57 % 3.59 % 4.57 %
Annualized net charge-offs as a
percentage of average loans 0.01 % (0.05)% 0.06 % 0.04 %
</TABLE>
<TABLE>
TABLE 5 - DEPOSIT COMPOSITION
<CAPTION>
Third Quarter 1995 Second Quarter 1995 Third Quarter 1994
Average % of Average % of Average % of
($ in millions) Balances Deposits Balances Deposits Balances Deposit
<S> <C> <C> <C> <C> <C> <C>
Demand, noninterest-bearing $1,082.2 18.2 % $1,068.3 18.1 % $1,032.3 17.9 %
NOW accounts 670.3 11.3 667.1 11.3 636.6 11.0
Money market deposit accounts 948.3 16.0 961.3 16.3 1,117.4 19.4
Savings accounts 341.1 5.7 336.3 5.7 369.3 6.4
Other consumer time deposits 1,992.0 33.6 1,950.0 33.1 1,755.4 30.5
Total core deposits 5,033.9 84.8 4,983.0 84.5 4,911.0 85.2
Public fund certificates of
deposit of $100,000 or more 702.3 11.8 705.9 12.0 637.4 11.0
Certificates of deposit of
$100,000 or more 159.3 2.7 178.3 3.0 195.7 3.4
Foreign time deposits 40.2 0.7 31.5 0.5 20.6 0.4
Total deposits $5,935.7 100.0 % $5,898.7 100.0 % $5,764.7 100.0 %
</TABLE>
<TABLE>
TABLE 6 - NET INTEREST MARGIN (taxable-equivalent)
<CAPTION>
1995 1994
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Yield on earning assets 8.19 % 8.14 % 7.98 % 7.63 % 7.43 %
Rate on interest-bearing liabilities 4.43 4.45 4.21 3.77 3.46
Net interest spread 3.76 3.69 3.77 3.86 3.97
Contribution of
noninterest-bearing funds 0.94 0.93 0.88 0.80 0.73
Net interest margin 4.70 % 4.62 % 4.65 % 4.66 % 4.70 %
Noninterest-bearing funds
supporting earning assets 21.18 % 20.95 % 20.92 % 21.28 % 21.00 %
</TABLE>
<TABLE>
TABLE 7 - CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (1)
Taxable-equivalent basis (2)
<CAPTION>
Third Quarter 1995 Second Quarter 1995 Third Quarter 1994
(Average balances $ in millions, Average Average Average
interest $ in thousands) Balances Interest Rate Balances Interest Rate Balances Interest Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans (3) $4,077.3 $ 94,834 9.23 % $3,929.6 $ 90,633 9.25 % $3,445.6 $ 76,456 8.81 %
Securities available for sale (4) 538.4 8,892 6.61 580.5 9,585 6.60 735.6 11,632 6.32
Securities held to maturity 1,771.2 28,695 6.47 1,909.1 30,407 6.38 1,922.4 26,974 5.60
Short-term investments 148.4 2,226 5.95 47.1 670 5.71 129.1 1,467 4.52
Total interest-earning assets 6,535.3 $134,647 8.19 % 6,466.3 $131,295 8.14 % 6,232.7 $116,529 7.43 %
Reserve for possible loan losses (151.3) (152.8) (182.6)
Noninterest-earning assets:
Cash (excluding items in process
of collection) 160.1 157.8 179.0
Items in process of collection 152.4 144.1 119.1
Other assets 310.5 305.8 321.7
Total noninterest-earning assets 623.0 607.7 619.8
Total assets $7,007.0 $6,921.2 $6,669.9
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 670.3 $ 3,620 2.14 % $ 667.1 $ 3,597 2.16 % $ 636.6 $ 2,787 1.74 %
Money market deposit accounts 948.3 6,222 2.60 961.3 6,460 2.70 1,117.4 7,094 2.52
Savings accounts 341.1 1,801 2.09 336.3 1,845 2.20 369.3 1,949 2.09
Other consumer time deposits 1,992.0 28,867 5.75 1,950.0 27,496 5.66 1,755.4 19,552 4.42
Public fund certificates of deposits
of $100,000 or more 702.3 10,408 5.88 705.9 10,778 6.12 637.4 7,244 4.51
Certificates of deposits
of $100,000 or more 159.3 2,037 5.07 178.3 2,158 4.85 195.7 1,817 3.68
Foreign time deposits 40.2 593 5.85 31.5 477 6.06 20.6 249 4.81
Total interest-bearing deposits 4,853.5 53,548 4.38 4,830.4 52,811 4.39 4,732.4 40,692 3.41
Short-term borrowings 288.4 3,799 5.23 270.4 3,724 5.52 174.0 1,642 3.74
Debt 8.9 136 6.03 10.6 159 5.99 17.2 648 14.97
Total interest-bearing liabilities 5,150.8 $ 57,483 4.43 % 5,111.4 $ 56,694 4.45 % 4,923.6 $ 42,982 3.46 %
Noninterest-bearing liabilities:
Demand deposits 1,082.2 1,068.3 1,032.3
Other liabilities 118.9 113.0 136.6
Total noninterest-bearing liabilities 1,201.1 1,181.3 1,168.9
Total shareholders' equity 655.1 628.5 577.4
Total liabilities and shareholders'
equity $7,007.0 $6,921.2 $6,669.9
SPREAD AND NET YIELD
Interest rate spread 3.76 % 3.69 % 3.97 %
Cost of funds supporting interest-earning assets 3.49 % 3.52 % 2.73 %
Net interest income/margin $ 77,164 4.70 % $ 74,601 4.62 % $ 73,547 4.70 %
(1) All financial information has been restated for mergers accounted for as poolings of interests.
(2) Based on the statutory income tax rate of 35%.
(3) Excludes unearned income. Yield computations include nonaccrual loans in loans outstanding.
(4) Yield computations are based on book values of securities available for sale.
</TABLE>
<TABLE>
TABLE 7 - CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (1)
Taxable-equivalent basis (2)
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
(Average balances $ in millions, Average Average
interest $ in thousands) Balances Interest Rate Balances Interest Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans (3) $3,917.5 $270,846 9.24 % $3,308.2 $213,942 8.65 %
Securities available for sale (4) 570.4 28,193 6.59 787.4 32,514 5.51
Securities held to maturity 1,850.9 87,594 6.31 1,980.1 82,901 5.59
Short-term investments 126.3 5,513 5.83 188.5 5,205 3.69
Total interest-earning assets 6,465.1 $392,146 8.11 % 6,264.2 $334,562 7.14 %
Reserve for possible loan losses (152.1) (183.8)
Noninterest-earning assets:
Cash (excluding items in process
of collection) 160.6 184.8
Items in process of collection 146.3 113.5
Other assets 309.5 318.3
Total noninterest-earning assets 616.4 616.6
Total assets $6,929.4 $6,697.0
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 676.3 $ 10,903 2.16 % $ 655.1 $ 8,229 1.68 %
Money market deposit accounts 982.6 19,931 2.71 1,138.9 20,452 2.40
Savings accounts 340.9 5,552 2.18 373.5 5,755 2.06
Other consumer time deposits 1,948.2 81,216 5.57 1,719.3 54,032 4.20
Public fund certificates of deposits
of $100,000 or more 693.0 30,904 5.96 619.1 18,038 3.90
Certificates of deposits
of $100,000 or more 175.8 6,563 4.99 196.9 5,352 3.63
Foreign time deposits 35.8 1,555 5.81 14.7 463 4.21
Total interest-bearing deposits 4,852.6 156,624 4.32 4,717.5 112,321 3.18
Short-term borrowings 243.3 9,615 5.28 169.5 4,190 3.30
Debt 10.2 464 6.07 29.2 2,414 11.07
Total interest-bearing liabilities 5,106.1 $166,703 4.36 % 4,916.2 $118,925 3.23 %
Noninterest-bearing liabilities:
Demand deposits 1,071.4 1,051.4
Other liabilities 120.9 163.0
Total noninterest-bearing liabilities 1,192.3 1,214.4
Total shareholders' equity 631.0 566.4
Total liabilities and shareholders'
equity $6,929.4 $6,697.0
SPREAD AND NET YIELD
Interest rate spread 3.75 % 3.91 %
Cost of funds supporting interest-earning assets 3.45 % 2.54 %
Net interest income/margin $225,443 4.66 % $215,637 4.60 %
(1) All financial information has been restated for mergers accounted for as poolings of interests.
(2) Based on the statutory income tax rate of 35%.
(3) Excludes unearned income. Yield computations include nonaccrual loans in loans outstanding.
(4) Yield computations are based on book values of securities available for sale.
</TABLE>
<TABLE>
TABLE 8 - CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME (1)
<CAPTION>
Third Quarter 1995 Compared to:
Second Quarter 1995 Third Quarter 1994
Increase (Decrease) Due to Change In:
Volume Rate Total Volume Rate Total
<S> <C> <C> <C> <C> <C> <C>
Taxable-equivalent
interest earned on:
Loans $ 3,429 $ 772 $ 4,201 $14,551 $ 3,827 $18,378
Securities available for sale (695) 2 (693) (3,237) 497 (2,740)
Securities held to maturity (2,227) 515 (1,712) (2,232) 3,953 1,721
Short-term investments 1,518 38 1,556 242 517 759
Total 2,025 1,327 3,352 9,324 8,794 18,118
Interest paid on:
NOW accounts 17 6 23 154 679 833
Money market
deposit accounts (87) (151) (238) (1,103) 231 (872)
Savings accounts 26 (70) (44) (149) 1 (148)
Other consumer time deposits 599 772 1,371 2,880 6,435 9,315
Public fund certificates of
deposit of $100,000 or more (54) (316) (370) 794 2,370 3,164
Certificates of deposit
of $100,000 or more (238) 117 (121) (380) 600 220
Foreign deposits 128 (12) 116 280 64 344
Short-term borrowings 242 (167) 75 1,347 810 2,157
Debt (26) 3 (23) (229) (283) (512)
Total 607 182 789 3,594 10,907 14,501
Taxable-equivalent
net interest income $ 1,418 $ 1,145 $ 2,563 $ 5,730 $(2,113) $ 3,617
(1) Change due to mix (both rate and volume) has been allocated to volume and rate changes in proportion to
the relationship of the absolute dollar amounts to the changes in each.
</TABLE>
<TABLE>
TABLE 9 - NONINTEREST INCOME
<CAPTION>
Three Months Ended Nine Months Ended
Percentage Percentage
Sept. 30 Sept. 30 Increase Sept. 30 Sept. 30 Increase
($ in thousands) 1995 1994 (Decrease) 1995 1994 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Service charges on deposits $11,425 $ 11,301 1 % $ 32,832 $ 33,251 (1)%
Trust fees 3,015 3,014 - 8,718 9,463 (8)
Other service, collection and
exchange charges:
Mortgage loan servicing income 1,877 1,785 5 5,679 5,516 3
ATM fees 1,556 954 63 3,910 2,051 91
Retail investment service income 1,490 1,314 13 4,646 4,607 1
Other 2,242 1,280 75 5,699 3,791 50
Total other service, collection
and exchange charges 7,165 5,333 34 19,934 15,965 25
Other income:
Gain on divestiture
of banking offices - - - 2,361 - -
Gain on sale of business lines 281 - - 3,345 - -
Other income 2,177 3,666 (41) 5,814 9,184 (37)
Total other income 2,458 3,666 (33) 11,520 9,184 25
Securities gains (losses), net (20) 1,634 N/M (65) 1,824 N/M
Total Noninterest Income $24,043 $ 24,948 (4)% $ 72,939 $ 69,687 5 %
N/M = Not meaningful
</TABLE>
<TABLE>
TABLE 10 - NONINTEREST EXPENSE
<CAPTION>
Three Months Ended Nine Months Ended
Percentage Percentage
Sept. 30 Sept. 30 Increase Sept. 30 Sept. 30 Increase
($ in thousands) 1995 1994 (Decrease) 1995 1994 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 27,124 $ 25,839 5 % $ 80,056 $ 78,975 1 %
Benefits 4,677 4,601 2 14,478 14,982 (3)
Total staff costs 31,801 30,440 4 94,534 93,957 1
Occupancy, net 6,530 6,311 3 19,089 18,998 -
Equipment 5,452 4,001 36 14,893 11,316 32
Total occupancy and equipment 11,982 10,312 16 33,982 30,314 12
Data processing 4,340 5,192 (16) 14,571 15,688 (7)
Foreclosed property expense, net (218) (1,503) 85 (775) (5,722) 86
Regulatory expense 11 3,523 (100) 7,026 11,106 (37)
Postage 1,206 968 25 3,614 2,873 26
Stationery and supplies 1,345 1,768 (24) 4,504 4,617 (2)
Telecommunications 1,820 903 102 5,236 2,421 116
Professional fees 2,045 2,135 (4) 6,520 8,088 (19)
State taxes on equity 1,143 804 42 3,321 2,290 45
Advertising and promotional expenses 1,412 1,441 (2) 5,116 4,081 25
Amortization of intangibles 928 17,528 (95) 2,780 20,602 (87)
Other 5,709 8,274 (31) 17,551 26,268 (33)
Total Noninterest Expense $ 63,524 $ 81,785 (22)% $197,980 $216,583 (9)%
Efficiency ratio (1) 62.75 % 84.44 % 66.34 % 76.40 %
(1) Noninterest expense as a percentage of taxable-equivalent net interest income plus noninterest income
(excluding securities transactions).
</TABLE>
<TABLE>
TABLE 11 - QUARTERLY SELECTED CAPITAL RATIOS
<CAPTION>
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
1995 1995 1995 1994 1994
<S> <C> <C> <C> <C> <C>
Hibernia Corporation
Risk-based capital:
Tier 1 risk-based capital ratio 14.72 % 14.70 % 15.38 % 15.25 % 15.37 %
Total risk-based capital ratio 15.99 % 15.98 % 16.66 % 16.53 % 16.66 %
Leverage ratio 9.33 % 9.04 % 8.99 % 8.90 % 8.69 %
Hibernia National Bank
Risk-based capital:
Tier 1 risk-based capital ratio 14.42 % 14.23 % 14.36 % 14.38 % 14.60 %
Total risk-based capital ratio 15.70 % 15.51 % 15.64 % 15.67 % 15.89 %
Leverage ratio 9.16 % 8.77 % 8.39 % 8.39 % 8.26 %
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
A report on Form 8-K dated October 6, 1995, was filed
by the registrant reporting Item 5 Other Events.
A report on Form 8-K dated October 12, 1995, was filed
by the registrant reporting Item 2 Acquisition of
Assets.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized to sign on behalf of the registrant.
HIBERNIA CORPORATION
(Registrant)
Date: November 13, 1995 By: /s/ Ron E. Samford, Jr.
-----------------------
Ron E. Samford, Jr.
Executive Vice President
and Controller
(principal accounting
officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR 9-MOS
<PERIOD-END> SEP-30-1995 DEC-31-1994 SEP-30-1994
<EXCHANGE-RATE> 1 1 1
<CASH> 311,749 380,895 312,435
<INT-BEARING-DEPOSITS> 195 6,979 5,595
<FED-FUNDS-SOLD> 90,000 198,164 84,735
<TRADING-ASSETS> 0 0 74
<INVESTMENTS-HELD-FOR-SALE> 528,547 583,614 707,227
<INVESTMENTS-CARRYING> 1,669,856 1,831,429 1,869,732
<INVESTMENTS-MARKET> 1,674,573 1,759,679 1,816,961
<LOANS> 4,205,114 3,627,663 3,532,636
<ALLOWANCE> 151,161 152,838 161,433
<TOTAL-ASSETS> 6,962,446 6,779,343 6,667,815
<DEPOSITS> 5,923,863 5,900,993 5,785,708
<SHORT-TERM> 238,668 160,218 142,153
<LIABILITIES-OTHER> 118,013 114,305 143,611
<LONG-TERM> 8,837 11,846 10,662
<COMMON> 229,051 228,772 228,003
0 0 0
0 0 0
<OTHER-SE> 444,014 363,209 357,678
<TOTAL-LIABILITIES-AND-EQUITY> 6,962,446 6,779,343 6,667,815
<INTEREST-LOAN> 267,629 290,504 210,975
<INTEREST-INVEST> 114,856 150,942 114,418
<INTEREST-OTHER> 5,513 7,279 5,205
<INTEREST-TOTAL> 387,998 448,725 330,598
<INTEREST-DEPOSIT> 156,624 157,106 112,321
<INTEREST-EXPENSE> 166,703 165,513 118,925
<INTEREST-INCOME-NET> 221,295 283,212 211,673
<LOAN-LOSSES> 0 (18,069) (18,173)
<SECURITIES-GAINS> (65) (2,451) 1,824
<EXPENSE-OTHER> 197,980 287,046 216,583
<INCOME-PRETAX> 96,254 101,175 82,950
<INCOME-PRE-EXTRAORDINARY> 89,106 95,617 76,264
<EXTRAORDINARY> 0 (597) 0
<CHANGES> 0 0 0
<NET-INCOME> 89,106 95,020 76,264
<EPS-PRIMARY> .75 .80 .64
<EPS-DILUTED> .75 .80 .64
<YIELD-ACTUAL> 4.66 4.61 4.60
<LOANS-NON> 19,189 21,298 32,569
<LOANS-PAST> 2,615 4,016 2,639
<LOANS-TROUBLED> 0 6,024 4,706
<LOANS-PROBLEM> 4,376 12,000 17,300
<ALLOWANCE-OPEN> 152,838 183,126 183,126
<CHARGE-OFFS> 15,805 24,282 15,162
<RECOVERIES> 14,128 17,979 14,095
<ALLOWANCE-CLOSE> 151,161 152,838 161,433
<ALLOWANCE-DOMESTIC> 151,161 152,838 161,433
<ALLOWANCE-FOREIGN> 0 0 0
<ALLOWANCE-UNALLOCATED> 69,800 36,700 44,900
</TABLE>
