AMERICAN BANK
22 Apple Street
Post Office Box 70
Norco, Louisiana 70079
January 13, 1995
To Our Shareholders:
You are cordially invited to attend a Special Meeting of
Shareholders of American Bank to be held at the main office of
American Bank, 22 Apple Street, Norco, Louisiana, on Wednesday,
February 15, 1995, at 10:00 a.m., Central time.
At this meeting, you will be asked to consider and vote upon
a proposal to approve an Agreement and Plan of Merger (the
"Agreement") pursuant to which American Bank will be merged with
and into Hibernia National Bank ("HNB"), a wholly-owned subsidiary
of Hibernia Corporation ("Hibernia") (the "Merger"). The Agreement
provides that, on the effective date of the Merger, each
outstanding share of common stock of American Bank will be
converted into shares of Hibernia common stock as more fully
described in the accompanying 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 has been approved unanimously by your Board of
Directors. The Board believes, based on its own analysis and the
opinion of American Bank's financial advisor (all of which are
described in the accompanying Proxy Statement-Prospectus), that the
proposed Merger is in the best interests of American Bank's
shareholders. As a result of the Merger, you, as a shareholder of
Hibernia, will own common stock in a bank holding company whose
stock is publicly traded on the New York Stock Exchange, Inc., and,
with its greater financial resources and ability to offer a broad
range of financial services, is better able to compete in the
current market environment. The Merger presents a rare opportunity
for our shareholders, and I urge you to vote your shares in favor
of this transaction.
Your Board of Directors recommends that you vote "FOR" the
Agreement and the proposed Merger by marking, signing, dating and
returning the enclosed proxy card promptly in the accompanying
envelope.
Very truly yours,
/s/ DARRYL J. CHAUVIN
Darryl J. Chauvin
President and Chief Executive Officer
<PAGE>
AMERICAN BANK
22 APPLE STREET
POST OFFICE BOX 70
NORCO, LOUISIANA 70079
(504) 764-7581
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of
American Bank:
Notice is hereby given that a Special Meeting of Shareholders
of American Bank will be held at the main office of American Bank,
22 Apple Street, Norco, Louisiana, on Wednesday, February 15, 1995,
at 10:00 a.m., Central time, for the following purposes:
1. To consider and vote upon a proposal to approve an
Agreement and Plan of Merger dated as of September 19, 1994
(the "Agreement"), pursuant to which (a) American Bank will be
merged with and into Hibernia National Bank, a wholly-owned
banking subsidiary of Hibernia Corporation ("Hibernia") (the
"Merger"); and (b) on the effective date of the Merger, each
outstanding share of Common Stock of American Bank will be
converted into a number of shares of Hibernia Common Stock as
determined in accordance with the Agreement; and
2. To transact such other business as may properly come
before the Special Meeting and any adjournment thereof.
Only those shareholders of record at the close of business on
December 30, 1994 will be entitled to notice of and to vote at the
Special Meeting.
DISSENTING SHAREHOLDERS WHO COMPLY WITH THE PROCEDURAL
REQUIREMENTS OF THE LOUISIANA BANKING LAW WILL BE ENTITLED TO THE
FAIR CASH VALUE OF THEIR SHARES IF THE MERGER IS EFFECTED.
Your vote is important regardless of the number of shares that
you own. Even if you plan to attend the Special Meeting, please
mark, date and sign the enclosed proxy card and return it promptly
in the enclosed envelope, which requires no postage. Your proxy
may be revoked at any time prior to the vote at the Special Meeting
by notice to the Secretary of American Bank or by execution and
delivery of a later dated proxy. If you attend the Special
Meeting, you may withdraw your proxy and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
Manuel Dugas
Secretary
Norco, Louisiana
January 13, 1995
<PAGE>
PROXY STATEMENT
AMERICAN BANK
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on February 15, 1995
__________________________________
PROSPECTUS
HIBERNIA CORPORATION
2,250,000 SHARES OF
CLASS A COMMON STOCK
(NO PAR VALUE)
This Proxy Statement-Prospectus is being furnished to the
holders of the Common Stock, $1.00 par value ("American Bank Common
Stock"), of American Bank, a Louisiana state bank ("American Bank")
in connection with the solicitation of proxies by the Board of
Directors of American Bank for use at a special meeting of
shareholders (the "Special Meeting") to be held at 10:00 a.m.,
central time, on Wednesday, February 15, 1995, at the main office
of American Bank, 22 Apple Street, Norco, Louisiana, and at any
adjournment thereof.
At the Special Meeting, the holders of record of American Bank
Common Stock as of the close of business on December 30, 1994 (the
"Record Date") will consider and vote upon a proposal to approve
the merger of American Bank with and into Hibernia National Bank
("HNB"), a national banking association and a subsidiary of
Hibernia Corporation ("Hibernia") (the "Merger"), and the related
Agreement and Plan of Merger dated as of September 19, 1994 (the
"Agreement") between American Bank, HNB and Hibernia. Upon
consummation of the Merger, each outstanding share of American Bank
Common Stock, except for shares owned beneficially by Hibernia and
its subsidiaries, and shares as to which dissenters' rights have
been perfected and not withdrawn or otherwise forfeited, will be
converted into the number of shares of Hibernia Class A Common
Stock, no par value ("Hibernia Common Stock"), determined in the
manner described below under the heading "PROPOSED MERGER -- Terms
of the Merger," with cash being paid in lieu of any fractional
share interests. For a description of the Agreement, which is
included in its entirety as Appendix A to this Proxy Statement-
Prospectus, see "PROPOSED MERGER."
This Proxy Statement-Prospectus also constitutes a
prospectus of Hibernia with respect to the shares of Hibernia
Common Stock to be issued pursuant to the Agreement if the Merger
is consummated. The actual number of shares of Hibernia Common
Stock to be issued will be determined in accordance with the terms
of the Agreement. See "PROPOSED MERGER -- Terms of the Merger."
<PAGE>
The outstanding shares of Hibernia Common Stock are
listed on the New York Stock Exchange, Inc. (the "NYSE"). The
reported last sale price of Hibernia Common Stock on the NYSE
Composite Transactions Reporting System on January 11, 1995 was
$7.50 per share.
This Proxy Statement-Prospectus and the accompanying
proxy card are first being mailed to shareholders of American Bank
on or about January 13, 1995.
No person is authorized to give any information or to make any
representations other than those contained in this Proxy Statement-
Prospectus, and, if given or made, such information or
representation may not be relied upon as having been made by
Hibernia or American Bank. This Proxy Statement-Prospectus does
not constitute an offer to sell or solicitation of an offer to buy
by Hibernia, nor will there be any sale of Hibernia Common Stock
offered hereby, in any state in which, or to any person to whom, it
would be unlawful to make such an offer or solicitation prior to
registration or qualification under applicable state law.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF HIBERNIA COMMON STOCK OFFERED HEREBY ARE
NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR
SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this Proxy Statement-Prospectus is January 13, 1995.
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . 3
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . 4
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . 5
MEETING INFORMATION. . . . . . . . . . . . . . . . . . 23
General . . . . . . . . . . . . . . . . . . . . . 23
Purpose of the Special Meeting. . . . . . . . . . 23
Solicitation; Voting and Revocation of Proxies. . 23
Shares Entitled to Vote; Quorum; Vote Required. . 24
Recommendation of American Bank's
Board of Directors . . . . . . . . . . . . . . . 25
Other Matters . . . . . . . . . . . . . . . . . . 25
PRO FORMA FINANCIAL INFORMATION. . . . . . . . . . . . 26
PROPOSED MERGER. . . . . . . . . . . . . . . . . . . . 39
Background of and Reasons for the Merger. . . . . 39
Opinion of Financial Advisor . . . . . . . . . . 41
Terms of the Merger . . . . . . . . . . . . . . . 47
Surrender and Exchange of Stock Certificates. . . 49
Employee Benefits . . . . . . . . . . . . . . . . 50
Expenses. . . . . . . . . . . . . . . . . . . . . 51
Representations and Warranties; Conditions to
the Merger; Waiver. . . . . . . . . . . . . . . 51
Regulatory and Other Approvals. . . . . . . . . . 52
Business Pending the Merger . . . . . . . . . . . 52
Effective Date of the Merger; Termination . . . . 53
Management and Operations After the Merger. . . . 54
Certain Differences in Rights of Shareholders . . 54
Interests of Certain Persons in the Merger. . . . 58
Material Tax Consequences . . . . . . . . . . . . 59
Resale of Hibernia Common Stock . . . . . . . . . 61
Rights of Dissenting Shareholders . . . . . . . . 62
Dividend Reinvestment Plan. . . . . . . . . . . . 63
Accounting Treatment. . . . . . . . . . . . . . . 64
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . 64
CERTAIN INFORMATION RELATING TO AMERICAN BANK. . . . . 66
Description of the Business . . . . . . . . . . . 66
Competition . . . . . . . . . . . . . . . . . . . 66
Property . . . . . . . . . . . . . . . . . . . . 67
Employees . . . . . . . . . . . . . . . . . . . . 67
Market Prices and Dividends . . . . . . . . . . . 67
Legal Proceedings . . . . . . . . . . . . . . . . 68
Security Ownership of Principal Shareholders and
Management. . . . . . . . . . . . . . . . . . . 68
<PAGE>
AMERICAN BANK MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . 71
VALIDITY OF SHARES . . . . . . . . . . . . . . . . . . 88
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . 88
INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . F-1
APPENDIX A -- AGREEMENT AND PLAN OF MERGER
APPENDIX B -- OPINION OF MONTGOMERY SECURITIES
APPENDIX C -- SELECTED PROVISIONS OF LAW RELATING
TO RIGHTS OF DISSENTING SHAREHOLDERS
APPENDIX D -- OPINION OF ERNST & YOUNG LLP REGARDING CERTAIN
TAX MATTERS
<PAGE>
INTRODUCTION
The Registration Statement of which this Proxy Statement-
Prospectus is a part relates to shares of Hibernia Common Stock
which will be issued in connection with the Merger of American Bank
with and into HNB pursuant to the Agreement. The shares of
Hibernia Common Stock offered hereby will be exchanged, upon
consummation of the Merger, for the outstanding shares of American
Bank Common Stock.
Shareholders of American Bank will be asked to approve the
Agreement and Merger at a Special Meeting to be held on February
15, 1995. The proxy statement relating to such Special Meeting is
included in this Proxy Statement-Prospectus.
The terms of the Merger are described in this Proxy Statement-
Prospectus, and a copy of the Agreement and Plan of Merger between
Hibernia, HNB, and American Bank is attached hereto as Appendix A
for reference.
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 and copied at the public reference
facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices
located at 75 Park Place, 14th Floor, New York, New York 10007 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials can be obtained
from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, reports, proxy statements and other information
concerning Hibernia may be inspected at the offices of the New York
Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New
York 10005, on which the shares of Hibernia Common Stock are
listed.
Hibernia has filed with the Commission a registration
statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act") with respect to the shares
of Hibernia Common Stock offered hereby. This Proxy Statement-
Prospectus does not contain all of the information set forth in the
Registration Statement. For further information with respect to
Hibernia and the Hibernia Common Stock offered hereby, reference is
hereby made to the Registration Statement. Statements contained in
this Prospectus concerning the provisions of certain documents are
not necessarily complete and, in each instance, reference is made
<PAGE>
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 American Bank has been
supplied by American Bank.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated by reference in this Proxy Statement-Prospectus
are the following documents filed by Hibernia with the Commission
pursuant to the Exchange Act: Hibernia's (1) Annual Report on Form
10-K for the year ended December 31, 1993 (the financial statements
included in the Form 10-K have been restated in a Current Report on
Form 8-K to give effect to four mergers consummating during the
third quarter of 1994 and accounted for as poolings of interests),
(2) definitive Proxy Statement dated April 8, 1994 relating to its
1994 Annual Meeting of Shareholders held on April 26, 1994 except
for the information contained therein under the headings "Executive
Compensation -- Report of the Executive Compensation Committee" and
"-- Stock Performance Graph", which are expressly excluded from
incorporation in this Registration Statement, (3) Quarterly Reports
on Form 10-Q for the fiscal quarters ended March 31, 1994; June 30,
1994; and September 30, 1994, and (4) Current Reports on Form 8-K
dated October 11, November 12, November 14 and December 9, 1994,
respectively.
All documents subsequently filed by Hibernia with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Proxy Statement-Prospectus and
prior to the termination of the offering of Hibernia Common Stock
made hereby shall be deemed to be incorporated by reference in this
Proxy Statement-Prospectus and to be a part hereof from the date
such documents are filed, except that any and all information
included in any proxy statement filed by Hibernia under the
headings "Executive Compensation -- Report of the Executive
Compensation Committee" and "-- Stock Performance Graph" are hereby
expressly excluded from such incorporation by reference. Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for the purposes hereof to the extent that a statement
herein (or contained in any subsequently filed document which also
is incorporated by reference herein) modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this Proxy Statement-Prospectus.
<PAGE>
Hibernia will provide, without charge, to each person to whom
this Proxy Statement-Prospectus is delivered, on the written or
oral request of any such person, a copy of any or all of the
information incorporated herein by reference other than exhibits to
such information (unless such exhibits are specifically
incorporated by reference into such information). Written or oral
requests should be directed to Hibernia Corporation, 313 Carondelet
Street, New Orleans, Louisiana 70130, Attention: Assistant
Corporate Secretary, Telephone (504) 533-3411.
SUMMARY
THIS SUMMARY IS NECESSARILY GENERAL AND ABBREVIATED AND HAS
BEEN PREPARED TO ASSIST SHAREHOLDERS OF AMERICAN BANK IN THEIR
REVIEW OF THIS PROXY STATEMENT-PROSPECTUS. THIS SUMMARY IS NOT
INTENDED TO BE A COMPLETE EXPLANATION OF THE MATTERS COVERED IN
THIS PROXY STATEMENT-PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT-PROSPECTUS, THE APPENDICES HERETO AND THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE, ALL OF WHICH
SHAREHOLDERS ARE URGED TO READ CAREFULLY PRIOR TO THE SPECIAL
MEETING.
THE PARTIES TO THE MERGER
HIBERNIA AND HNB. Hibernia is a Louisiana corporation
registered under the Bank Holding Company Act of 1956, as amended
("BHCA"). As of September 30, 1994, Hibernia had total
consolidated assets of approximately $5.7 billion and shareholders'
equity of approximately $500 million.
As of September 30, 1994 Hibernia had a single banking
subsidiary, Hibernia National Bank ("HNB"), that provides retail
and commercial banking services through 120 branches throughout
Louisiana. As of September 30, 1994, HNB was the largest bank
headquartered in Louisiana.
Hibernia consummated four mergers in the third quarter of
1994, two each as of July 1 and August 1, and each of which was
accounted for as a pooling of interests. Restated consolidated
financial statements of Hibernia as of December 31, 1993 reflecting
the impact of these mergers were included in a Current Report on
Form 8-K filed with the Commission on October 11, 1994 and are
incorporated herein by reference. As restated to reflect those
mergers, Hibernia's total assets and shareholders' equity as of
December 31, 1993 were $5.7 billion and $474 million, respectively.
The principal executive offices of Hibernia are located at 313
Carondelet Street, New Orleans, Louisiana 70130, and its telephone
number is (504) 533-5532. For additional information concerning
the business and financial condition of Hibernia, reference should
be made to the Hibernia reports incorporated herein by reference.
<PAGE>
See "AVAILABLE INFORMATION."
From time to time, Hibernia investigates and holds discussions
and negotiations in connection with possible merger or similar
acquisition transactions with other financial institutions. At the
date hereof, Hibernia has entered into definitive merger agreements
with two financial institutions in addition to American Bank which
are described in documents incorporated herein by reference and
described under "PRO FORMA FINANCIAL INFORMATION" below. In
addition, Hibernia is pursuing other possible acquisition
opportunities and intends to continue to pursue such opportunities
in the near future when available and feasible in the light of
Hibernia's business and strategic plans. Although it is
anticipated that such transactions may be entered into both before
and after the Merger, there can be no assurance as to when or if,
or the terms upon which, such transactions may be pursued or
consummated. If required under applicable law, any such
transactions would be subject to regulatory approval and the
approval of shareholders.
AMERICAN BANK. American Bank, a Louisiana state bank
organized in 1964, provides full-service consumer and commercial
banking services in Norco, Louisiana and surrounding areas of St.
Charles Parish, Louisiana, through its main banking office at 22
Apple Street, Norco, Louisiana, and four full service branches
located in Boutte, Destrehan, Hahnville and Luling, Louisiana. At
September 30, 1994, American Bank had total assets of approximately
$92.7 million, shareholders' equity of approximately $9.3 million
and total deposits of approximately $82.2 million. American Bank's
principal executive offices are located at 22 Apple Street, Norco,
Louisiana 70079, and its telephone number at such address is
(504) 764-7581.
For additional information concerning the business of American
Bank and its financial condition, see "CERTAIN INFORMATION
CONCERNING AMERICAN BANK" and "AMERICAN BANK FINANCIAL
INFORMATION."
THE SPECIAL MEETING
A special meeting of the shareholders of American Bank will be
held at the main office of American Bank, 22 Apple Street, Norco,
Louisiana, on Wednesday, February 15, 1995, at 10:00 a.m., Central
time (the "Special Meeting"). Only record holders of American Bank
Common Stock at the close of business on the Record Date are
entitled to notice of and to vote at the Special Meeting. On the
Record Date, there were 483,686 shares of American Bank Common
Stock issued and outstanding.
<PAGE>
PURPOSE OF THE SPECIAL MEETING
The purpose of the Special Meeting is to consider and vote
upon a proposal to approve the Agreement, pursuant to which (a)
American Bank will be merged with and into HNB; and (b) on the
effective date of the Merger, each outstanding share of American
Bank Common Stock will be converted into a number of shares of
Hibernia Common Stock, as determined in accordance with the
Agreement. As a result of the Merger, the business and properties
of American Bank will become the business and properties of HNB,
and shareholders of American Bank will receive the consideration
described below under "Terms of the Merger." See "MEETING
INFORMATION -- Purpose of the Special Meeting."
VOTE REQUIRED
The Agreement must be approved at the Special Meeting by the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of American Bank Common Stock, with each
shareholder of American Bank Common Stock entitled to one vote for
each share owned by him. As a condition to the consummation of the
Merger, each shareholder of American Bank who is also a director of
American Bank is required to execute prior to the Merger an
agreement pursuant to which such shareholder, among other things,
commits to vote in favor of the approval of the Agreement, unless
he is prohibited by law from voting in favor of the Agreement in
the opinion of his counsel. The nine persons who have executed or
will execute such agreements beneficially owned, as of the Record
Date, an aggregate of 92,328 shares, or approximately 19.09%, of
the outstanding American Bank Common Stock on that date.
Additionally, Hibernia and HNB beneficially owned, as of the Record
Date, an aggregate of 47,763 shares, or approximately 9.87%, of the
outstanding American Bank Common Stock on that date. As a
condition to consummation of the Merger, Hibernia and HNB have
agreed to vote their shares in favor of the approval of the
Agreement. Under Louisiana law, shareholders of Hibernia are not
required to approve the Agreement. See "MEETING INFORMATION --
Shares Entitled to Vote; Quorum; Vote Required."
TERMS OF THE MERGER
On the Effective Date, each outstanding share of American Bank
Common Stock, other than shares held by shareholders who exercise
and perfect dissenters' rights in accordance with applicable law,
will be converted into 4.65 shares of Hibernia Common Stock, unless
the average market price of Hibernia Common Stock for the five
business days ("Average Market Price") preceding the last trading
day immediately prior to the closing of the Merger (the "Closing
Date") is less than $7.75 per share, or is greater than $8.875 per
share. If the Average Market Price of Hibernia Common Stock is
less than $7.75, then holders of American Bank Common Stock will
receive an aggregate number of shares of Hibernia Common Stock
<PAGE>
determined by dividing $17,437,500 by the Average Market Price. If
the Average Market Price is more than $8.875, then the holders of
American Bank Common Stock will receive an aggregate number of
shares of Hibernia Common Stock determined by dividing $19,968,750
by the Average Market Price. As long as the Average Market Price
is at least $7.75 but not more than $8.875, however, holders of
American Bank Common Stock will receive 4.65 shares of Hibernia
Common Stock for each share of American Bank Common Stock held by
them. The consideration to be exchanged by Hibernia for American
Bank Common Stock in the Merger may be reduced in the event certain
expenses of American Bank exceed amounts specified in the
Agreement. If expenses exceed the specified levels, the aggregate
consideration to be exchanged by Hibernia will be correspondingly
reduced by the amount of the excess.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
After the Effective Date, the offices of American Bank will
operate as branch banking offices of HNB. As of the Effective
Date, the directors of American Bank will no longer hold their
positions as directors. See "PROPOSED MERGER -- Management and
Operations After the Merger." Hibernia maintains a city advisory
board of directors in the Baton Rouge region of Louisiana on which
some or all of the directors of American Bank may serve after the
Merger. In addition, Hibernia will assume American Bank's
obligations under an employment contract with Darryl J. Chauvin,
President and Chief Executive Officer of American Bank, which is
described more fully below. See "PROPOSED MERGER -- Interests of
Certain Persons in the Merger."
OTHER PENDING MERGER TRANSACTIONS FOR HIBERNIA
In addition to American Bank, Hibernia has entered into
definitive merger agreements with four financial institutions as of
the date of this Proxy Statement-Prospectus. These transactions
are subject to certain conditions, similar to the conditions to the
Merger described herein. These transactions may be consummated
before or after consummation of the Merger. Shareholders of
American Bank will not have the right to vote on the other pending
transactions, or any other transaction that might be entered into
by Hibernia prior to the Effective Date of the Merger. In
addition, if the Merger is consummated prior to consummation of
another transaction, former shareholders of American Bank who have
not exercised and perfected dissenters' rights will be shareholders
of Hibernia at the time those transactions are consummated.
Shareholders of Hibernia do not have the right to vote on any of
the pending Hibernia merger transactions.
The table below includes certain information concerning the
pending merger transactions, other than American Bank, to which
Hibernia is a party as of the date of this Proxy Statement-
Prospectus. Further information concerning the effects of these
<PAGE>
transactions, including complete pro forma financial information,
is included herein below. See "PRO FORMA FINANCIAL INFORMATION."
All information included in the following table is as of September
30, 1994, and all percentages are percentages of the total combined
entity, assuming consummation of all pending mergers, including the
Merger of American Bank with and into HNB.
<PAGE>
Name Deposits Deposits Assets Assets Equity Equity
as % of as % of as % of
Total Total Total
(Dollars in millions)
First
State $127 2.23% $149 2.27% $ 20 3.50%
Pioneer $314 5.52% $354 5.40% $ 31 5.42%
STABA
Banc-
shares $ 89 1.56% $ 97 1.48% $ 8 1.40%
Progressive
Bancorpor-
ation $119 2.09% $140 2.14% $ 8 1.40%
<PAGE>
On a pro forma basis, and based upon historical results, if
each of the pending mergers had been effective on January 1, 1991,
the pending transactions, including American Bank and taken as a
whole, would have decreased earnings per share in each of the years
1991, 1992 and 1993, as shown on the Pro Forma Combined Statements
of Income included in the Pro Forma Financial Statements below.
On a pro forma basis, as of September 30, 1994, the book value
of the shares of Hibernia would be slightly decreased by the
pending transactions. The effect of the Merger on the book value
of Hibernia Common Stock, as well as American Bank Common Stock, is
shown in the Comparative Per Share Information table included
herein.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of American Bank has unanimously
approved the Agreement, believes that the Merger is in the best
interests of the shareholders of American Bank and recommends that
the shareholders vote FOR the Merger. The Board of Directors has
received from Montgomery Securities ("Montgomery") an opinion that
the consideration to be received by the shareholders of American
Bank pursuant to the Merger, when taken as a whole, is fair to such
shareholders from a financial point of view. See "PROPOSED MERGER
- -- Opinion of Financial Advisor." American Bank's Board believes
that the Merger will provide significant value to all American Bank
shareholders and will enable them to participate in opportunities
for growth that American Bank's Board believes the Merger makes
possible. In recommending the Merger to the shareholders, American
Bank's Board of Directors considered, among other factors, the
financial terms of the Merger, the liquidity it will afford
American Bank's shareholders and the business earnings and
potential for future growth of American Bank and Hibernia. See
"PROPOSED MERGER -- Background of and Reasons for the Merger."
BASIS FOR THE TERMS OF THE MERGER
A number of factors, in addition to those stated above, were
considered by the Board of Directors of American Bank in approving
the terms of the Merger, including, without limitation, information
concerning the financial condition, results of operations and
prospects of each of Hibernia, HNB and American Bank; the ability
of the combined entity to compete in the relevant banking markets;
the market price of Hibernia Common Stock; the absence of a public
trading market for American Bank's common stock; the consideration
to be received by American Bank shareholders in relation to
American Bank's earnings and book value; the historical dividends
paid by American Bank and Hibernia; the anticipated tax-free nature
of the Merger to American Bank's shareholders for federal income
tax purposes, to the extent Hibernia Common Stock is received; and
the financial terms of other recent business combinations in the
<PAGE>
banking industry. See "PROPOSED MERGER -- Background of and
Reasons for the Merger."
ADVICE AND OPINION OF FINANCIAL ADVISOR
Montgomery, American Bank's financial advisor, has rendered
its opinion that the consideration to be received by the
shareholders of American Bank pursuant to the Merger, when taken as
a whole, is fair, from a financial point of view, to such
shareholders. The opinion of Montgomery is attached hereto as
Appendix B and should be read in its entirety with respect to the
assumptions made therein and other matters considered. See
"PROPOSED MERGER -- Opinion of Financial Advisor" for further
information regarding, among other things, the selection of
Montgomery and its compensation in connection with the Merger.
CONDITIONS; ABANDONMENT; AMENDMENT
Consummation of the Merger is subject to the satisfaction of
a number of conditions, including approval of the Agreement by the
shareholders of American Bank and approval of the Merger of
American Bank with and into HNB by the Office of the Comptroller of
the Currency ("OCC"). The OCC approved the Merger on November 30,
1994. Applicable law provides that the Merger may not be
consummated until at least 15, but no more than 360, days after
approval of the OCC is obtained. See "PROPOSED MERGER --
Representations and Warranties; Conditions to Closing; Waiver" and
"-- Regulatory and Other Approvals."
Substantially all of the conditions to consummation of the
Merger (except for required shareholder and regulatory approvals)
may be waived at any time by the party for whose benefit they were
created, and the Agreement may be amended or supplemented at any
time by written agreement of the parties, except that no such
waiver, amendment or supplement executed after approval of the
Agreement by American Bank's shareholders may reduce the ratio of
Hibernia Common Stock to American Bank Common Stock to be issued in
the Merger (the "Exchange Ratio") or adversely affect the holders
of American Bank Common Stock. Any other material change to the
Agreement after the date of the Special Meeting would require the
approval of American Bank's shareholders. In addition, the
Agreement may be terminated, either before or after shareholder
approval, under certain circumstances. See "PROPOSED MERGER --
Representations and Warranties; Conditions to Closing; Waiver" and
"-- Effective Date of the Merger; Termination."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the Merger, American Bank shareholders should
be aware that the American Bank directors, officers and employees
have an interest in the Merger, as described below. Certain
severance plans and retention agreements were adopted by American
<PAGE>
Bank in 1994 to encourage its employees and senior management to
continue their employment with American Bank in the context of
ongoing merger discussions between American Bank and certain non-
affiliated financial institutions as described elsewhere herein.
The employment agreement of Darryl J. Chauvin, American Bank's
President and Chief Executive Officer, also provides for certain
severance payments if Mr. Chauvin is terminated or voluntarily
resigns his employment within the 30 days immediately following a
"Change of Control" of American Bank (such term, as defined in such
agreement, includes the Merger). The Agreement also provides for
the indemnification by Hibernia and HNB of the officers, directors
and employees of American Bank for certain liabilities, subject to
certain conditions and aggregate dollar limitations. See "PROPOSED
MERGER -- Interests of Certain Persons in the Merger."
EMPLOYEE BENEFITS
Hibernia has agreed that it will use its best efforts to
provide (or cause to be provided by HNB) to all employees of
American Bank who are employed as of the Effective Date and who
become employees of Hibernia or HNB after the Merger, the same
employee benefits as those offered by Hibernia and HNB to their
employees, except that employees of American 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). Employees of American Bank will not be denied
health insurance coverage solely as a result of a pre-existing
condition that existed on the Effective Date but did not exist on
the date the employee commenced his or her employment with American
Bank. Hibernia will also give American Bank employees who become
Hibernia or HNB employees full credit for their years of service
(for both eligibility, vesting and benefits) with American Bank for
purposes of each of Hibernia's benefits plans. Hibernia has also
agreed to pay or provide certain other benefits. See "PROPOSED
MERGER -- Employee Benefits."
MATERIAL TAX CONSEQUENCES
It is a condition to consummation of the Merger that the
parties receive an opinion of counsel or a public accounting firm
to the effect that the Merger, when consummated in accordance with
the terms of the Agreement, will constitute a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), that the exchange of American Bank Common
Stock for Hibernia Common Stock will not give rise to the
recognition of gain or loss for federal income tax purposes to
American Bank's shareholders with respect to such exchange, and
that the Louisiana income tax treatment to the shareholders of
American Bank will be substantially the same as the federal income
tax treatment of the Merger to such shareholders. The parties have
received an opinion from Ernst & Young LLP, certified public
accountants, who also serve as independent auditors for Hibernia,
<PAGE>
to the effect that the Merger, when consummated in accordance with
the terms of the Agreement, will constitute a reorganization within
the meaning of Section 368(a) of the Code. A copy of such opinion
is attached hereto as Appendix D. See "PROPOSED MERGER -- Material
Tax Consequences."
Because of the complexities of the tax laws and because the
tax consequences may vary depending upon a holder's individual
circumstances or tax status, it is recommended that each
shareholder of American Bank consult his or her tax advisor
concerning the federal (and any applicable state, local or other)
tax consequences of the Merger to him or her.
DISSENTERS' RIGHTS
Under the applicable federal laws governing mergers involving
national banks such as HNB, each holder of American Bank Common
Stock who objects to the Merger is entitled to the rights and
remedies of dissenting shareholders in accordance with the
applicable provisions of La. R.S. Section 6:376. The relevant
provisions of both federal and state law on dissenters' rights are
attached hereto as Appendix C. However, due to Hibernia's
ownership of shares of American Bank, if dissenters' rights are
exercised and perfected with respect to .10% or more of the
outstanding shares of American Bank Common Stock, Hibernia may
abandon the Merger as the transaction may not qualify as a pooling
of interest. See "Rights of Dissenting Shareholders" and
"Accounting Treatment" under "PROPOSED MERGER."
DIFFERENCES IN SHAREHOLDERS' RIGHTS
Upon completion of the Merger, shareholders of American Bank,
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 American Bank.
See "PROPOSED MERGER -- Certain Differences in Rights of
Shareholders."
ACCOUNTING TREATMENT
The parties intend the Merger to be treated as a pooling-of-
interests for financial accounting purposes. If, among other
things, holders of more than approximately 1% of the outstanding
shares of American Bank Common Stock exercise and perfect
dissenters' rights, the Merger will not qualify for pooling-of-
interests accounting treatment, and Hibernia will not be obligated
to effect the Merger. See "PROPOSED MERGER -- Accounting
Treatment."
<PAGE>
SELECTED FINANCIAL INFORMATION OF HIBERNIA
Selected Financial Data. The closing market price per share
of Hibernia Common Stock on the NYSE on September 16, 1994, the day
prior to the announcement of the proposed Merger, was $8.125.
There can be no assurance of the market price of Hibernia Common
Stock on the Closing Date.
The following table sets forth certain restated consolidated
information for Hibernia Corporation. the restated information is
derived from the restated consolidated financial statements of
Hibernia Corporation as of December 31, 1993 and its Quarterly
Report on Form 10-Q for September 30, 1994. These financial
statements reflect the impact of four mergers consummated in the
third quarter of 1994, two each as of July 1 and August 1, each of
which was accounted for a s a pooling of interests. Pro forma
financial information giving effect to the Merger and other
probable mergers is included below under PRO FORMA FINANCIAL
INFORMATION.
<PAGE>
<TABLE>
<CAPTION>
RESTATED HIBERNIA CORPORATION(1)
SELECTED FINANCIAL INFORMATION
9 Months Ended
Year Ended December 31 September 30
- -------------------------------------------------------------------------------------------------------------------------
Unaudited ($ in thousands, except per share amounts) 1993 1992 1991 1990 1989 1994 1993
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $234,064 $234,398 $263,348 $285,614 $238,989 $178,465 $175,997
Income (loss) from continuing operations 55,391 (1,752) (141,367) (17,014) 58,148 61,021 38,999
Per share:
Income (loss) from continuing operations 0.58 (0.04) (3.44) (0.42) 1.46 0.63 0.14
Cash dividends 0.03 -- 0.15 0.90 0.91 0.13 --
Book value 4.91 4.24 5.18 9.52 10.33 5.17 4.62
SELECTED PERIOD-END BALANCES
Debt 23,981 25,710 127,566 123,145 91,077 3,679 24,521
Total assets 5,720,013 5,592,710 6,862,752 8,172,331 7,531,137 5,727,792 5,489,350
</TABLE>
(1) Refer to "PRO FORMA FINANCIAL INFORMATION".
<PAGE>
SELECTED FINANCIAL INFORMATION OF AMERICAN BANK
The following selected financial information of American Bank
with respect to each year in the five-year period ended December
31, 1993 and with respect to the nine-month periods ended September
30, 1994 and 1993, has been derived from the financial statements
of American Bank. The selected financial information for the nine
months ended September 30, 1994 and 1993 is unaudited but, in the
opinion of American Bank management, reflects all adjustments that
are necessary for a fair presentation of the results of operations
for the interim periods presented. Results of operations for the
nine-month period ended September 30, 1994 are not necessarily
indicative of the results for the entire year. The information set
forth below should be read in conjunction with American Bank's
financial statements, the notes thereto, and "American Bank
Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing elsewhere in this Proxy
Statement-Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------- -----------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
(Dollars in thousands, except per share amounts)
INCOME STATEMENT DATA:
Interest income $ 5,331 $ 5,272 $ 6,613 $ 6,773 $ 6,626 $ 6,663 $ 6,989
Net interest income 3,924 3,733 4,762 4,320 3,003 2,728 2,810
Provision for loan losses (370) - - - 90 200 100
Income before
cumulative effect of
accounting change/extra-
ordinary item 2,339 956 1,211 1,001 367 242 459
Cumulative effect of
accounting change/extra-
ordinary item - 61 50 - 122 - -
Net income 2,339 1,017 1,261 1,001 489 242 459
AVERAGE BALANCE SHEET DATA:
Total assets $93,174 $87,051 $86,873 $84,120 $79,146 $77,503 $80,287
Earning assets 84,985 77,201 78,139 73,469 69,716 67,832 70,981
Loans (net of unearned
discount) 52,994 46,465 46,777 38,468 37,729 39,713 41,059
Deposits 85,000 79,147 78,806 77,370 73,396 71,523 75,067
Shareholders' equity 8,069 6,731 6,892 5,767 4,886 4,676 4,205
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------- -------------------------------------
1994 1993 1993 1992 1991 1990
-------- ------- ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Income before
cumulative effect of
accounting change/extra-
ordinary item $ 4.83 $ 1.98 $ 2.50 $ 2.07 $ .76 $ .50
Cumulative effect of
accounting change/extra-
ordinary item - .12 .10 - .24 -
Net income 4.83 2.10 2.60 2.07 1.00 .50
Cash dividends declared - - .10 - - -
Book value 19.17 14.88 15.20 12.69 10.62 9.61
SELECTED RATIOS:
Return on average assets 2.48 1.17 1.45 1.19 .62 .31
Return on average equity 28.98 15.11 18.30 17.36 10.01 5.18
Equity to average assets 8.56 7.73 7.93 6.86 6.17 6.03
</TABLE>
<PAGE>
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
(UNAUDITED)
The following table sets forth certain unaudited pro forma combined
financial information for Hibernia Corporation (on a restated
basis, after giving effect for the mergers of Commercial
Bancshares, Inc. and Bastrop National Bank, consummated on July 1,
1994 and the mergers of First Continental Bancshares, Inc. and
First Bancorp of Louisiana, Inc. consummated on August 1, 1994 [See
Note A to the Pro Forma Combined Financial Statements.]) and
American Bank. Year end information in this table is based on, and
should be read in conjunction with, the restated consolidated
financial statements and related notes of Hibernia Corporation,
incorporated into this Proxy Statement - Prospectus by reference to
Hibernia's Current Report on Form 8-K dated October 11, 1994, and
the historical financial statements of American Bank, contained
elsewhere in this Proxy Statement - Prospectus. The interim
information in this table is based on, and should be read in
conjunction with, the Quarterly Report on Form 10-Q for September
30, 1994 for Hibernia Corporation, incorporated into this Proxy
Statement - Prospectus by reference and the American Bank interim
period financial statements included in this Proxy Statement -
Prospectus. The table also gives effect to probable mergers with
Pioneer Bancshares Corporation, First State Bank and Trust Company,
STABA Bancshares, Inc. and Progressive Bancorporation, Inc. to
which Hibernia Corporation is a party, as discussed in Notes C
through E to the Pro Forma Combined Financial Statements. The pro
forma information, which reflects each of the consummated and
probable mergers using the pooling of interests method of
accounting, is presented for informational purposes only and should
not be construed as indicative of the actual operations that would
have occurred had the mergers been consummated at the beginning of
the periods indicated below or which may occur after all the
mergers are consummated. The pro forma information gives effect to
the issuance in each of the periods presented, of 13,021,494 shares
of Hibernia Corporation common stock for all of the outstanding
shares of Commercial, Bastrop, First Continental, and First Bancorp
and assumes the issuance of 2,250,000 shares of Hibernia
Corporation common stock for all the outstanding shares of American
Bank, 8,370,512 shares of Hibernia Corporation Common Stock for all
the outstanding shares of Pioneer Bancshares, 3,350,000 shares of
Hibernia Corporation common stock for all the outstanding shares of
First State Bank and Trust Company, 2,250,000 shares of Hibernia
Corporation common stock for all the outstanding shares of STABA
Bancshares, Inc. and 2,500,000 shares of Hibernia Corporation
common stock for all the outstanding shares of Progressive
Bancorporation, Inc.
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA HIBERNIA CORPORATION*
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
Year Ended December 31 9 Months Ended September 30
- ------------------------------------------------------------------------------------------- ---------------------------
Unaudited ($ in thousands, except per
share amounts) 1993 1992 1991 1994 1993
-------------------------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
Net interest income $ 238,826 $ 238,718 $ 266,351 $ 182,389 $ 179,730
Income (loss) from continuing 56,602 (751) (141,000) 63,360 39,955
operations
Per share:
Income (loss) from continuing
operations 0.57 (0.02) (3.25) 0.64 0.41
Cash dividends 0.03 - 0.15 0.13 -
Book value 4.87 4.20 5.03 5.15 4.59
SELECTED PERIOD-END BALANCES
Debt 23,981 25,710 127,566 3,679 24,521
Total assets 5,814,151 5,678,992 6,945,054 5,820,491 5,576,064
* Includes Hibernia Corporation and American Bank
TOTAL PRO FORMA HIBERNIA CORPORATION**
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
Year Ended December 31 9 Months Ended September 30
- ------------------------------------------------------------------------------------------- ---------------------------
Unaudited ($ in thousands, except per
share amounts) 1993 1992 1991 1994 1993
-------------------------------------------- ---------------------------
Net interest income $ 272,402 $ 270,512 $ 291,971 $ 206,755 $ 204,362
Income (loss) from continuing operations 64,916 5,841 (137,634) 71,694 45,663
Per share:
Income (loss) from continuing
operations 0.56 0.10 (2.30) 0.62 0.40
Cash dividends 0.03 - 0.15 0.13 -
Book value 4.70 4.06 4.35 4.96 4.45
SELECTED PERIOD-END BALANCES
Debt 36,809 37,568 141,339 8,591 38,013
Total assets 6,544,448 6,412,025 7,632,827 6,552,223 6,314,109
** Includes Hibernia Corporation, American Bank, Pioneer Bancshares Corporation, First State
Bank and Trust Company, STABA Bancshares, Inc. and Progressive Bancorporation, Inc.
</TABLE>
<PAGE>
COMPARATIVE PER SHARE INFORMATION
(UNAUDITED)
The following table sets forth for Hibernia Corporation common
stock and American Bank common stock certain restated, historical
unaudited pro forma combined and unaudited pro forma equivalent per
share financial information. This table is based on and should be
read in conjunction with the restated consolidated financial
statements and related notes of Hibernia Corporation, incorporated
by reference into this Proxy Statement - Prospectus, and American
Bank, contained elsewhere in this Proxy Statement - Prospectus. The
restated information reflects the impact of four mergers
consummated in the second quarter of 1994, two each as of July 1
and August 1, each of which was accounted for as a pooling of
interests. The pro forma information, which reflects the merger
with American Bank using the pooling of interests method of
accounting, is presented for informational purposes only and should
not be construed as indicative of the actual operations that would
have occurred had the merger been consummated at the beginning of
the periods indicated below or which may occur after the merger is
consummated. The pro forma information gives effect to the issuance
of 2,250,000 shares of Hibernia Corporation common stock for all
the outstanding shares of American Bank, which assumes that each
share of American Bank common stock will be exchanged for 4.65
shares of Hibernia Corporation common stock. See "Proposed
Merger-Terms of the Merger."
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION AND AMERICAN BANK
COMPARATIVE PER SHARE INFORMATION
- -------------------------------------------------------------------------------
Unaudited
PRO FORMA
HIBERNIA AMERICAN
RESTATED HISTORICAL CORPORATION BANK
HIBERNIA AMERICAN (WITH AMERICAN PRO FORMA
CORPORATION (1) BANK BANK) (1) EQUIVALENT (2)
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations:
For the nine months ended September 30,
1994 $0.63 $4.83 $0.64 $2.98
1993 0.41 1.98 0.41 1.91
For the year ended December 31,
1993 $0.58 $2.50 $0.57 $2.65
1992 (0.04) 2.07 (0.02) ($0.09)
1991 (3.44) 0.76 (3.25) ($15.11)
Cash dividends:
For the nine months ended September 30,
1994 $0.13 -- $0.13 $0.60
1993 -- -- -- --
For the year ended December 31,
1993 $0.03 $0.10 $0.03 $0.14
1992 -- -- -- --
1991 0.15 -- 0.15 0.70
Book Value:
At September 30, 1994 $5.17 $19.17 $5.15 $23.95
At December 31, 1993 $4.91 $15.20 $4.87 $22.65
</TABLE>
(1) Refer to "PRO FORMA FINANCIAL INFORMATION".
(2) Pro forma equivalent amounts are computed by multiplying the pro forma
combined amount by the American exchange ratio of 4.65.
<PAGE>
MEETING INFORMATION
General
Each copy of this Proxy Statement-Prospectus mailed to holders
of American Bank Common Stock is accompanied by a proxy card
furnished in connection with the solicitation of proxies by
American Bank's Board of Directors for use at the Special Meeting
and at any adjournment thereof. This Proxy Statement-Prospectus
and the accompanying proxy card are first being mailed to
shareholders of American Bank on approximately January 13, 1995.
The Special Meeting is scheduled to be held on February 15, 1995,
at 10:00 a.m. central time, at the main office of American Bank, 22
Apple Street, Norco, Louisiana 70079-2214. Only holders of record
of American Bank Common Stock at the close of business on the
Record Date are entitled to notice of and to vote at the Special
Meeting.
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider and vote
upon a proposal to approve the Agreement between Hibernia and its
wholly-owned subsidiary HNB, on the one hand, and American Bank, on
the other. Pursuant to the Agreement, American Bank will merge
with and into HNB and each outstanding share of American Bank
Common Stock will be converted into a number of shares of Hibernia
Common Stock as described below under the heading "PROPOSED MERGER
- -- Terms of the Merger."
HOLDERS OF AMERICAN BANK 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., 13760 NOEL ROAD, SUITE 320, DALLAS, TEXAS 75240.
Solicitation; Voting and Revocation of Proxies
When a proxy in the form accompanying this Proxy Statement-
Prospectus is properly executed and returned, the shares voted
thereby will be voted in accordance with the instructions marked
thereon. ALL EXECUTED BUT UNMARKED PROXIES THAT ARE RETURNED WILL
BE VOTED "FOR" THE PROPOSAL TO APPROVE THE AGREEMENT.
No matters are expected to be considered at the Special
Meeting other than the proposal to approve the Agreement, but if
any other matters should properly come before the Special Meeting,
it is intended that proxies in the form accompanying this Proxy
Statement-Prospectus will be voted on all such matters in
accordance with the judgment of the person(s) voting such proxies.
<PAGE>
Any proxy may be revoked at any time before it is voted. A
shareholder may revoke a proxy: (i) by submitting a subsequently
dated proxy; (ii) by giving written notice of such revocation to
the Secretary of American Bank, provided that such notice is
received by such Secretary at the principal offices of American
Bank prior to the date of the Special Meeting, or (iii) upon
request, if such shareholder is present at the Special Meeting and
advises the inspector(s) of election that he is revoking a proxy.
Mere attendance at the Special Meeting will not of itself revoke a
previously submitted proxy. Revocation of a proxy will not affect
a vote on any matter taken prior to receipt of such revocation.
The cost of soliciting these proxies, including any and all
professional fees paid to attorneys and accountants in connection
with the preparation and filing with the Commission of this Proxy
Statement-Prospectus and other proxy materials, and the cost of
printing and mailing these proxy materials, will be borne by
American Bank. In addition to the use of the mails, proxies may be
solicited personally, by telephone, telecopier, or telegram by
directors, officers and employees of American Bank. Such officers,
directors and employees will continue to receive any compensation
from American Bank to which they are entitled by virtue of their
employment or status as an officer or director, but will not
receive any additional fee, compensation, or other remuneration for
soliciting proxies in connection with the Special Meeting. An
outside solicitation firm, The Herman Group, Inc., has been
retained by American Bank to assist in the solicitation of proxies
for an aggregate fee of $4,000 plus out-of-pocket expenses.
AMERICAN BANK SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK
CERTIFICATES WITH THEIR PROXY CARDS. IF THE MERGER IS CONSUMMATED,
SHAREHOLDERS OF AMERICAN BANK WILL RECEIVE INSTRUCTIONS REGARDING
THE EXCHANGE OF THEIR AMERICAN BANK STOCK CERTIFICATES FOR
CERTIFICATES REPRESENTING HIBERNIA COMMON STOCK.
Shares Entitled to Vote; Quorum; Vote Required
The Board of Directors of American Bank has fixed the close of
business on December 30, 1994, 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 483,686
shares of American Bank Common Stock outstanding. Each share of
American Bank Common Stock is entitled to one vote on all matters
to come before the Special Meeting. With respect to all matters to
come before the Special Meeting, the presence at the Special
Meeting, in person or by proxy, of the holders of a majority of the
outstanding shares of American Bank Common Stock is necessary to
constitute a quorum. For these purposes, shares of American Bank
Common Stock which are present in person or represented by proxy at
the Special Meeting will be counted for quorum purposes regardless
whether the holder of the shares or proxy actually votes on the
Merger or whether a broker with discretionary authority fails to
<PAGE>
exercise its discretionary voting authority with respect to the
Merger. Accordingly, an "abstention" will be considered present
for quorum purposes, but will have the same effect as a vote
"against" the proposal as to which the abstention is made. The
Agreement must be approved at the Special Meeting by the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of American Bank Common Stock.
As a condition to the consummation of the Merger, each
shareholder of American Bank who is also a director of American
Bank is required to execute prior to the Merger an agreement
pursuant to which such shareholder, among other things, commits to
vote in favor of the approval of the Agreement, unless he is
prohibited by law from voting in favor of the Agreement in the
opinion of his counsel. The nine persons who have executed or will
execute such agreements beneficially owned, as of the Record Date,
an aggregate of 92,328 shares, or approximately 19.09%, of the
outstanding American Bank Common Stock on that date. Additionally,
Hibernia and HNB beneficially owned, as of the Record Date, an
aggregate of 47,763 shares, or approximately 9.87%, of the
outstanding American Bank Common Stock on that date. As a
condition to consummation of the Merger, Hibernia and HNB have
agreed to vote their shares in favor of the approval of the
Agreement.
Under Louisiana law, shareholders of Hibernia are not required
to approve the Agreement.
Recommendation of American Bank's Board of Directors
American Bank's Board of Directors has unanimously approved
the Merger and the Agreement and unanimously recommends that
American Bank's shareholders vote FOR approval of the Merger and
the Agreement. See "PROPOSED MERGER -- Background of and Reasons
for the Merger" and "-- Opinion of Financial Advisor."
Other Matters
The Board of Directors of American Bank is not aware of any
business to be acted upon at the Special Meeting other than
consideration of the Merger and the Agreement. If, however, other
matters are properly brought before the Special Meeting, or any
adjournment thereof, the persons appointed as proxies will have
discretion to vote or abstain from voting thereon according to
their best judgment.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following pro forma financial statements reflect
Hibernia's pending mergers as described in its public reports and
press releases, giving effect to the assumptions and adjustments
described in the accompanying notes.
The information in the column titled "Historical Hibernia
Corporation" on the Pro Forma Combined Balance Sheet and Pro Forma
Combined Statements of Income are summarized from Hibernia's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994. The information in the column titled "Restated Hibernia
Corporation" on the Pro Forma Combined Statements is summarized
from the supplemental consolidated financial statements of Hibernia
filed on the Current Report on Form 8-K dated October 11, 1994,
which reflects four mergers consummated in the third quarter of
1994, and its Quarter Report on Form 10-Q for the quarter ended
September 30, 1994. The information contained in the columns
titled "Pioneer Bancshares Corporation", "First State Bank and
Trust Company", "American Bank", "STABA Bancshares", and
"Progressive Bancorporation" are based on December 31, 1993, 1992
and 1991 audited financial statements of those entities and
unaudited financial statements of those entities for the quarters
ended September 30, 1994 and 1993. The pro forma financial
statements do not purport to be indicative of the results that
actually would have been obtained if the pending transactions had
occurred on the dates indicated or that may be obtained in the
future.
On June 1, 1994, Hibernia signed an agreement and plan of
merger with Pioneer Bancshares Corporation ("Pioneer"), a bank
holding company headquartered in Shreveport, Louisiana, that owns
Pioneer Bank & Trust Company, headquartered in Shreveport,
Louisiana. At June 30, 1994, Pioneer reported consolidated assets
of $362 million, shareholders' equity of $29.8 million and operated
12 banking branches in Caddo Parish, Louisiana. The terms of the
merger provide that Hibernia will issue 8,370,511 shares of
Hibernia Common Stock for all of the outstanding shares of Pioneer.
If the average market price of Hibernia Common Stock is less than
$7.50, each Pioneer shareholder would receive that number of shares
of Hibernia Common Stock equal to the number of shares of Pioneer
stock held by each shareholder multiplied by the quotient of (a)
$62,779,000 divided by the average market price of Hibernia Common
Stock, (b) divided by the number of issued and outstanding shares
of Pioneer stock. If the average market price of Hibernia Common
Stock is greater than $9.50, each Pioneer shareholder would receive
that number of shares of Hibernia Common Stock equal to the number
of shares of Pioneer stock held by each shareholder multiplied by
the quotient of (a) $72,500,000 divided by the average market price
of Hibernia Common Stock, (b) divided by the number of issued and
outstanding shares of Pioneer stock. The transaction will be
<PAGE>
accounted for as a pooling-of-interests.
On August 16, 1994, Hibernia announced that it had executed an
agreement and plan of merger with First State Bank and Trust
Company, a Louisiana banking association headquartered in Bogalusa,
Louisiana ("First State"). First State operates five branches in
Washington Parish (three in Bogalusa and one each in Franklinton
and Varnado) and two branches in St. Tammany Parish (one each in
Mandeville and Covington) and, as of September 30, 1994, had $149
million in assets and $20 million in shareholders' equity. The
terms of the merger provide that shareholders of First State will
receive an aggregate of 3,350,000 shares of Hibernia Common Stock
in the merger, unless the average market price of Hibernia Common
Stock as of the closing is less than $7.75 (in which case they
would receive in the aggregate Hibernia shares valued at
$25,962,500) or more than $9.75 per share (in which case they would
receive in the aggregate Hibernia shares valued at $32,662,500).
On November 16, 1994, Hibernia announced that it had executed
an agreement and plan of merger with STABA Bancshares, Inc., a
Louisiana corporation which owns all of the stock of State Bank and
Trust Company, a Louisiana banking association headquartered in
Donaldsonville, Louisiana ("STABA"). The terms of the merger
provide that shareholders of STABA will receive a number of shares
of Hibernia Common Stock, the aggregate market value of which is
$18 million in the merger. The number of shares to be exchanged
will depend upon the average market price of Hibernia Common Stock
as of the closing of this merger.
On December 1, 1994, Hibernia announced that it had executed
an agreement and plan of merger with Progressive Bancorporation,
Inc, a Louisiana corporation ("Progressive") and the parent company
of Progressive Bank & Trust Company, a Louisiana banking
association headquartered in Houma, Louisiana. The terms of the
merger provide that shareholders of Progressive will receive an
aggregate of 2,500,000 shares of Hibernia Common Stock in the
merger, regardless of the market price of Hibernia Common Stock at
the closing of the merger.
The mergers with First State, Pioneer, STABA and Progressive
are subject to the satisfaction of certain conditions similar to
those described herein with regard to the Merger. There can be no
assurance that either of these proposed mergers will occur, or that
the timing of the consummation of those mergers will be as assumed in the Pro
Forma Financial Statements.
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
(UNAUDITED)
The following unaudited pro forma combined balance sheet combines
the historical balance sheet of Hibernia Corporation and the
historical balance sheet of American Bank as if the merger had been
effective on September 30, 1994. This unaudited pro forma combined
balance sheet should be read in conjunction with the audited
restated consolidated financial statements and related notes of
Hibernia Corporation, incorporated by reference into this Proxy
Statement - Prospectus by reference to Hibernia's Current Report on
Form 8-K dated October 11, 1994, and American Bank, contained
elsewhere in this Proxy Statement - Prospectus. The unaudited pro
forma combined balance sheet also gives effect to other probable
mergers, to which Hibernia Corporation is a party, as discussed in
Notes C through E of the pro forma combined financial statements.
These mergers include Pioneer Bancshares Corporation, First State
Bank and Trust Company, STABA Bancshares, Inc. and Progressive
Bancorporation, Inc. Each merger has been included in the pro
forma combined balance sheet as if the merger had been effective on
September 30, 1994.
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET
September 30, 1994
- ----------------------------------------------------------------------------------------------
HISTORICAL PRO PRO FORMA PIONEER
HIBERNIA AMERICAN FORMA HIBERNIA BANCSHARES,
Unaudited ($ in thousands) CORPORATION BANK ADJ. CORPORATION CORPORATION
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 270,340 $ 4,373 $ 274,713 $ 16,055
Interest-bearing time
deposits in domestic
banks -- 128 128 3,846
Short-term investments 69,749 3,400 73,149 1,479
Securities available for
sale 529,389 16,630 546,019 45,913
Securities held to
maturity 1,632,539 10,481 1,643,020 130,750
Loans, net of unearned
income 3,081,362 54,362 3,135,724 145,501
Reserve for possible
loan losses (150,178) (715) (150,893) (2,682)
- -----------------------------------------------------------------------------------------------
Loans, net 2,931,184 53,647 -- 2,984,831 142,819
- -----------------------------------------------------------------------------------------------
Bank premises and
equipment 100,448 2,537 102,985 7,265
Customers' acceptance
liability 9,750 -- 9,750 --
Receivables arising from
securities transactions
not yet settled 16,737 -- 16,737 --
Other assets 167,656 1,503 169,159 6,241
- -----------------------------------------------------------------------------------------------
TOTAL ASSETS $5,727,792 $92,699 -- $5,820,491 $354,368
===============================================================================================
LIABILITIES
Deposits:
Demand,
noninterest-bearing $ 882,120 $13,948 $ 896,068 $ 73,194
Interest-bearing 4,070,271 68,296 4,138,567 241,387
- -----------------------------------------------------------------------------------------------
Total Deposits 4,952,391 82,244 -- 5,034,635 314,581
- -----------------------------------------------------------------------------------------------
Federal funds purchased
and securities sold
under agreements to
repurchase 137,632 248 137,880 3,948
Liability on acceptances 9,750 -- 9,750 --
Payables arising from 16,413 -- 16,413 --
securities transactions
not yet settled
Other liabilities 107,641 929 108,570 3,170
Debt 3,679 -- 3,679 2,071
- -----------------------------------------------------------------------------------------------
TOTAL LIABILITIES 5,227,506 83,421 -- 5,310,927 323,770
- -----------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred Stock -- -- -- --
Common Stock 186,096 484 $ 3,836 (B) 190,416 2,880
Surplus 392,282 3,516 (3,836) (B) 391,962 6,742
Retained earnings
(deficit) (63,011) 5,694 (57,317) 22,198
Treasury Stock (1,620) -- (1,620) (813)
Unrealized gain (loss)
on securities available
for sale (13,461) (416) (13,877) (409)
- -----------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS'
EQUITY 500,286 9,278 -- 509,564 30,598
- -----------------------------------------------------------------------------------------------
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY $5,727,792 $92,699 -- $5,820,491 $354,368
===============================================================================================
FIRST (E)
STATE TOTAL
BANK AND STABA PROGRESSIVE PRO FORMA
TRUST BANCSHARES, BANCORPORATION, PRO FORMA HIBERNIA
COMPANY INC. INC. ADJUSTMENTS CORPORATION
- --------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 6,555 $ 4,778 $ 6,256 $ 308,357
Interest-bearing time
deposits in domestic
banks -- 986 -- 4,960
Short-term investments 6,900 2,281 -- ($3,363)(C) 78,345
(2,101)(D)
Securities available for
sale -- 20,834 28,271 641,037
Securities held to
maturity 82,433 18,346 24,610 1,899,159
Loans, net of unearned
income 49,994 47,698 77,030 (3,185)(D) 3,452,762
Reserve for possible
loan losses (1,133) (1,036) (1,192) (156,936)
- -------------------------------------------------------------------------------------------------------
Loans, net 48,861 46,662 75,838 (3,185) 3,295,826
- -------------------------------------------------------------------------------------------------------
Bank premises and
equipment 1,432 2,010 2,797 116,489
Customers' acceptance
liability -- -- -- 9,750
Receivables arising from
securities transactions
not yet settled -- -- -- 16,737
Other assets 2,800 1,490 1,873 181,563
- -------------------------------------------------------------------------------------------------------
TOTAL ASSETS $148,981 $97,387 $139,645 ($8,649) $6,552,223
=======================================================================================================
LIABILITIES
Deposits:
Demand,
noninterest-bearing $ 23,365 $14,515 $ 20,146 $1,027,288
Interest-bearing 104,023 74,887 99,159 4,658,023
- -------------------------------------------------------------------------------------------------------
Total Deposits 127,388 89,402 119,305 -- 5,685,311
- -------------------------------------------------------------------------------------------------------
Federal funds purchased
and securities sold
under agreements to
repurchase -- -- -- 141,828
Liability on acceptances -- -- -- 9,750
Payables arising from
securities transactions
not yet settled -- -- -- 16,413
Other liabilities 1,299 292 4,183 ($30)(D) 117,484
Debt -- -- 8,097 (5,256)(D) 8,591
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 128,687 89,694 131,585 (5,286) 5,979,377
- -------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred Stock -- -- 130 (130)(C) --
Common Stock 1,000 152 65 27,526 (C) 222,039
Surplus 8,000 3,176 2,016 (28,363)(C) 380,300
(3,233)(C)
Retained earnings
(deficit) 11,294 4,646 6,432 (12,747)
Treasury Stock -- -- (24) 837 (C) (1,620)
Unrealized gain (loss)
on securities available
for sale -- (281) (559) (15,126)
- -------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS'
EQUITY 20,294 7,693 8,060 (3,363) 572,846
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY $148,981 $97,387 $139,645 ($8,649) $6,552,223
=======================================================================================================
</TABLE>
<PAGE>
PRO FORMA COMBINED STATEMENTS OF INCOME
(UNAUDITED)
The following unaudited pro forma combined statements of income for
the nine months ended September 30, 1994 and 1993, and the years
ended December 31, 1993, 1992, and 1991 combines the historical and
restated statements of income of Hibernia Corporation and the
historical statements of income of American Bank as if the merger
had been effective on January 1, 1991. These unaudited pro forma
combined statements of income should be read in conjunction with
the audited restated consolidated financial statements and related
notes of Hibernia, filed in Hibernia's Current Report on Form 8-K
dated October 11, 1994, incorporated by reference into this Proxy
Statement - Prospectus, and the historical financial statements and
related notes of American Bank, contained elsewhere in this Proxy
Statement - Prospectus. The cost associated with the merger,
estimated to be approximately $484,000 will be accounted for as a
current period expense upon consummation of the merger and has not
been reflected in the pro forma combined statements of income. The
restated statements of income reflect the impact of four mergers
consummated in the second quarter of 1994 as discussed in Note A.
The unaudited pro forma combined statements of income also give
effect to other probable mergers, to which Hibernia Corporation is
a party, as discussed in Notes C through E to the pro forma
combined financial statements. These mergers include Pioneer
Bancshares Corporation, First State Bank and Trust Company, STABA
Bancshares, Inc. and Progressive Bancorporation, Inc. Each bank has
been included in the pro forma combined statements of income as
though the merger had been effective on January 1, 1991.
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Nine Months Ended September 30, 1994
- ----------------------------------------------------------------------------------------------
HISTORICAL PRO FORMA PIONEER
Unaudited ($ in thousands, HIBERNIA AMERICAN HIBERNIA BANCSHARES
except per share data) CORPORATION BANK CORPORATION CORPORATION
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on
loans $ 180,138 $ 3,972 $ 184,110 $ 10,411
Interest on securities:
U.S. government
securities and
obligations of
U.S. government
agencies 95,870 1,101 96,971 6,515
Obligations of states
and political
subdivisions 846 75 921 7
Trading account interest 20 -- 20 --
Interest on time deposits
in domestic banks -- 4 4 91
Interest on federal funds
sold and securities
purchased under
agreements to resell 4,222 179 4,401 164
- -----------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 281,096 5,331 286,427 17,188
- -----------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 96,833 1,379 98,212 5,086
Interest on federal funds
purchased and securities
sold under agreements
to repurchase 3,935 -- 3,935 56
Interest on debt and other 1,863 28 1,891 223
- -----------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 102,631 1,407 104,038 5,365
- -----------------------------------------------------------------------------------------------
NET INTEREST INCOME 178,465 3,924 182,389 11,823
Provision for possible
loan losses (17,480) (370) (17,850) 125
- -----------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE
LOAN LOSSES 195,945 4,294 200,239 11,698
- -----------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 9,463 -- 9,463 --
Service charges on
deposits 28,692 473 29,165 2,102
Other service, collection
and exchange charges 14,458 91 14,549 1,769
Other operating income 7,356 861 8,217 614
Securities gains
(losses), net (1,517) 750 (767) (3)
- -----------------------------------------------------------------------------------------------
TOTAL NONINTEREST
INCOME 58,452 2,175 60,627 4,482
- -----------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee
benefits 81,330 1,329 82,659 5,789
Occupancy expense, net 16,963 406 17,369 888
Equipment expense 9,638 78 9,716 639
Data processing expense 14,485 470 14,955 119
Foreclosed property
expense (5,191) 15 (5,176) 133
Amortization of
intangibles 20,476 -- 20,476 39
Other operating
expense 53,151 709 53,860 3,337
- -----------------------------------------------------------------------------------------------
TOTAL NONINTEREST
EXPENSE 190,852 3,007 193,859 10,944
- -----------------------------------------------------------------------------------------------
INCOME BEFORE INCOME
TAXES 63,545 3,462 67,007 5,236
Income tax expense 2,524 1,123 3,647 1,786
- -----------------------------------------------------------------------------------------------
INCOME FROM CONTINUING
OPERATIONS $ 61,021 $2,339 $ 63,360 $ 3,450
===============================================================================================
PRO FORMA WEIGHTED
AVERAGE COMMON SHARES 96,728,744 2,250,000 98,978,744 8,370,512
===============================================================================================
PRO FORMA INCOME
PER COMMON SHARE
FROM CONTINUING
OPERATIONS $0.63 $0.64
===============================================================================================
- ----------------------------------------------------------------------------------------------
(E)
FIRST STATE TOTAL
BANK AND STABA PROGRESSIVE PRO FORMA
Unaudited ($ in thousands, TRUST BANCSHARES, BANCORPORATION, HIBERNIA
except per share data) COMPANY INC. INC. CORPORATION
- -----------------------------------------------------------------------------------------------
<C> <C> <C> <C>
INTEREST INCOME
Interest and fees on
loans $3,366 $3,106 $5,654 $206,647
Interest on securities:
U.S. government
securities and
obligations of
U.S. government
agencies 3,260 1,524 2,121 110,391
Obligations of states
and political
subdivisions 9 229 557 1,723
Trading account interest -- -- -- 20
Interest on time deposits
in domestic banks -- 30 104 229
Interest on federal funds
sold and securities
purchased under
agreements to resell 187 72 -- 4,824
- ---------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 6,822 4,961 8,436 323,834
- ---------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 2,570 1,747 2,861 110,476
Interest on federal funds
purchased and securities
sold under agreements
to repurchase -- 8 13 4,012
Interest on debt and other -- -- 477 2,591
- ---------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 2,570 1,755 3,351 117,079
- ---------------------------------------------------------------------------------------------
NET INTEREST INCOME 4,252 3,206 5,085 206,755
Provision for possible
loan losses 124 150 (722) (18,173)
- ---------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE
LOAN LOSSES 4,128 3,056 5,807 224,928
- ---------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 3 -- -- 9,466
Service charges on
deposits 533 348 709 32,857
Other service, collection
and exchange charges 216 45 369 16,948
Other operating income 68 94 783 9,776
Securities gains
(losses), net -- 26 624 (120)
- ---------------------------------------------------------------------------------------------
TOTAL NONINTEREST
INCOME 820 513 2,485 68,927
- ---------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee
benefits 1,640 866 1,769 92,723
Occupancy expense, net 517 131 288 19,193
Equipment expense 142 315 169 10,981
Data processing expense 128 16 117 15,335
Foreclosed property
expense 1 -- 141 (4,901)
Amortization of
intangibles -- -- 89 20,604
Other operating
expense 606 717 1,436 59,956
- ---------------------------------------------------------------------------------------------
TOTAL NONINTEREST
EXPENSE 3,034 2,045 4,009 213,891
- ---------------------------------------------------------------------------------------------
INCOME BEFORE INCOME
TAXES 1,914 1,524 4,283 79,964
Income tax expense 952 517 1,368 8,270
- ---------------------------------------------------------------------------------------------
INCOME FROM CONTINUING
OPERATIONS $962 $1,007 $2,915 $ 71,694
=============================================================================================
PRO FORMA WEIGHTED
AVERAGE COMMON SHARES 3,350,000 2,250,000 2,500,000 115,449,256
=============================================================================================
PRO FORMA INCOME
PER COMMON SHARE
FROM CONTINUING
OPERATIONS $0.62
=============================================================================================
</TABLE>
See notes to Pro Forma Combined Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1993
- ---------------------------------------------------------------------------------------------------------------------------------
(A)
RESTATED PRO FORMA PIONEER
HIBERNIA AMERICAN HIBERNIA BANCSHARES
Unaudited ($ in thousands, except per share data) CORPORATION BANK CORPORATION CORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $167,064 $3,755 $170,819 $10,707
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 96,220 1,407 97,627 6,917
Obligations of states and political subdivisions 855 11 866 8
Trading account interest 24 -- 24 --
Interest on time deposits in domestic banks 188 4 192 173
Interest on federal funds sold and securities
purchased under agreements to resell 7,780 95 7,875 159
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 272,131 5,272 277,403 17,964
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Expense
Interest on deposits 91,187 1,415 92,602 4,990
Interest on federal funds purchased and
securities sold under agreements to repurchase 2,944 1 2,945 4
Interest on debt and other 2,003 123 2,126 709
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 96,134 1,539 97,673 5,703
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 175,997 3,733 179,730 12,261
Provision for possible loan losses 11,983 -- 11,983 1,309
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 164,014 3,733 167,747 10,952
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 9,851 -- 9,851 --
Service charges on deposits 26,148 484 26,632 2,309
Other service, collection and exchange charges 12,270 78 12,348 1,656
Other operating income 7,724 88 7,812 547
Securities gains (losses), net 100 5 105 (73)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 56,093 655 56,748 4,439
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 72,837 1,313 74,150 5,669
Occupancy expense, net 16,532 358 16,890 1,113
Equipment expense 9,369 55 9,424 569
Data processing expense 12,755 399 13,154 285
Foreclosed property expense 5,883 27 5,910 811
Amortization of intangibles 6,119 -- 6,119 52
Other operating expense 53,278 842 54,120 3,063
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 176,773 2,994 179,767 11,562
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS 43,334 1,394 44,728 3,829
Income tax expense 4,335 438 4,773 1,329
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $38,999 $956 $39,955 $2,500
====================================================================================================================================
PRO FORMA WEIGHTED AVERAGE COMMON SHARES 96,055,341 2,250,000 98,305,341 8,370,512
====================================================================================================================================
PRO FORMA INCOME PER COMMON SHARE
FROM CONTINUING OPERATIONS(F) $0.41 $0.41
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FIRST STATE TOTAL
BANK AND STABA PROGRESSIVE PRO FORMA
TRUST BANCSHARES, BANCORPORATION HIBERNIA
Unaudited ($ in thousands, except per share data) COMPANY INC. INC. CORPORATION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME $3,459 $2,398 $5,561 $193,484
Interest and fees on loans
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 3,879 1,571 2,387 112,381
Obligations of states and political subdivisions 23 226 420 1,543
Trading account interest -- -- -- 24
Interest on time deposits in domestic banks -- 60 71 496
Interest on federal funds sold and securities
purchased under agreements to resell 110 149 -- 8,293
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 7,471 4,944 8,439 316,221
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 2,839 1,933 2,986 105,350
Interest on federal funds purchased and
securities sold under agreements to repurchase -- -- 19 2,968
Interest on debt and other -- -- 706 3,541
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 2,839 1,933 3,711 111,859
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 4,632 3,011 4,728 204,362
Provision for possible loan losses 964 180 168 14,604
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 3,668 2,831 4,560 189,758
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 3 -- -- 9,854
Service charges on deposits 529 290 577 30,337
Other service, collection and exchange charges 209 47 266 14,526
Other operating income 265 91 346 9,061
Securities gains (losses), net -- -- 75 107
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 1,006 428 1,264 63,885
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 1,226 781 1,537 83,363
Occupancy expense, net 562 112 239 18,916
Equipment expense 120 262 89 10,464
Data processing expense 112 18 162 13,731
Foreclosed property expense 6 -- (70) 6,657
Amortization of intangibles -- -- 89 6,260
Other operating expense 592 673 1,954 60,402
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 2,618 1,846 4,000 199,793
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS 2,056 1,413 1,824 53,850
Income tax expense 975 420 690 8,187
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $1,081 $993 $1,134 $45,663
====================================================================================================================================
PRO FORMA WEIGHTED AVERAGE COMMON SHARES 3,350,000 2,250,000 2,500,000 114,775,853
====================================================================================================================================
PRO FORMA INCOME PER COMMON SHARE
FROM CONTINUING OPERATIONS(F) $0.40
====================================================================================================================================
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
(A)
RESTATED PRO FORMA PIONEER
HIBERNIA AMERICAN HIBERNIA BANCSHARES
Unaudited ($ in thousands, except per share data) CORPORATION BANK CORPORATION CORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $224,146 $4,705 $228,851 $14,704
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 126,820 1,756 128,576 8,980
Obligations of states and political subdivisions 1,222 21 1,243 86
Trading account interest 33 -- 33 --
Interest on time deposits in domestic banks 295 6 301 255
Interest on federal funds sold and securities
purchased under agreements to resell 9,219 125 9,344 217
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 361,735 6,613 368,348 24,242
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 121,000 1,851 122,851 6,597
Interest on federal funds purchased and
securities sold under agreements to repurchase 4,002 -- 4,002 14
Interest on debt and other 2,669 -- 2,669 949
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 127,671 1,851 129,522 7,560
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 234,064 4,762 238,826 16,682
Provision for possible loan losses (5,607) -- (5,607) 1,509
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 239,671 4,762 244,433 15,173
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 13,310 -- 13,310 --
Service charges on deposits 34,937 625 35,562 2,965
Other service, collection and exchange charges 17,367 92 17,459 2,290
Gain on settlement of acquired loans 1,308 -- 1,308 --
Other operating income 7,326 463 7,789 474
Securities gains (losses), net 165 5 170 (73)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 74,413 1,185 75,598 5,656
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 98,517 1,559 100,076 7,524
Occupancy expense, net 22,757 285 23,042 1,240
Equipment expense 12,577 282 12,859 751
Data processing expense 16,753 534 17,287 186
Foreclosed property expense 7,135 587 7,722 723
Provision for data processing enhancements 11,991 -- 11,991 --
Other operating expense 83,604 981 84,585 4,740
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 253,334 4,228 257,562 15,164
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES,
EXTRAORDINARY ITEM AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 60,750 1,719 62,469 5,665
Income tax expense 5,359 508 5,867 1,975
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $55,391 $1,211 $56,602 $3,690
====================================================================================================================================
PRO FORMA WEIGHTED AVERAGE COMMON SHARES 96,196,623 2,250,000 98,446,623 8,370,512
====================================================================================================================================
PRO FORMA INCOME PER COMMON SHARE
FROM CONTINUING OPERATIONS(F) $0.58 $0.57
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FIRST STATE TOTAL
BANK AND STABA PROGRESSIVE PRO FORMA
TRUST BANCSHARES, BANCORPORATION, HIBERNIA
Unaudited ($ in thousands, except per share data) COMPANY INC. INC. CORPORATION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $4,696 $3,951 $7,691 $259,893
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 5,058 2,073 2,969 147,656
Obligations of states and political subdivisions 30 294 596 2,249
Trading account interest -- -- -- 33
Interest on time deposits in domestic banks -- 77 87 720
Interest on federal funds sold and securities
purchased under agreements to resell 156 166 -- 9,883
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 9,940 6,561 11,343 420,434
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 3,695 2,542 3,905 139,590
Interest on federal funds purchased and
securities sold under agreements to repurchase -- -- 24 4,040
Interest on debt and other -- -- 784 4,402
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 3,695 2,542 4,713 148,032
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 6,245 4,019 6,630 272,402
Provision for possible loan losses 364 270 168 (3,296)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 5,881 3,749 6,462 275,698
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 4 -- -- 13,314
Service charges on deposits 700 402 933 40,562
Other service, collection and exchange charges 276 54 307 20,386
Gain on settlement of acquired loans -- -- -- 1,308
Other operating income 283 123 159 8,828
Securities gains (losses), net -- 91 63 251
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 1,263 670 1,462 84,649
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 2,047 1,120 2,228 112,995
Occupancy expense, net 792 163 331 25,568
Equipment expense 181 318 138 14,247
Data processing expense 160 27 265 17,925
Foreclosed property expense 25 -- 209 8,679
Provision for data processing enhancements -- -- -- 11,991
Other operating expense 927 1,011 2,440 93,703
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 4,132 2,639 5,611 285,108
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES,
EXTRAORDINARY ITEM AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 3,012 1,780 2,313 75,239
Income tax expense 1,031 528 922 10,323
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $1,981 $1,252 $1,391 $64,916
====================================================================================================================================
PRO FORMA WEIGHTED AVERAGE COMMON SHARES 3,350,000 2,250,000 2,500,000 114,917,135
====================================================================================================================================
PRO FORMA INCOME PER COMMON SHARE
FROM CONTINUING OPERATIONS (F) $0.56
====================================================================================================================================
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1992
- ------------------------------------------------------------------------------------------------------------------------------------
(A)
RESTATED PRO FORMA PIONEER
HIBERNIA AMERICAN HIBERNIA BANCSHARES
Unaudited ($ in thousands, except per share data) CORPORATION BANK CORPORATION CORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $293,980 $4,360 $298,340 $14,947
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 111,482 2,250 113,732 11,030
Obligations of states and political subdivisions 1,202 -- 1,202 187
Trading account interest 99 -- 99 --
Interest on time deposits in domestic banks 361 4 365 252
Interest on federal funds sold and securities
purchased under agreements to resell 15,198 159 15,357 343
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 422,322 6,773 429,095 26,759
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 167,648 2,453 170,101 9,158
Interest on federal funds purchased and
securities sold under agreements to repurchase 6,910 -- 6,910 --
Interest on debt and other 13,366 -- 13,366 732
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 187,924 2,453 190,377 9,890
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 234,398 4,320 238,718 16,869
Provision for possible loan losses 68,327 -- 68,327 2,221
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 166,071 4,320 170,391 14,648
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 12,849 -- 12,849 6
Service charges on deposits 36,451 672 37,123 3,129
Other service, collection and exchange charges 15,745 149 15,894 2,284
Gain on settlement of acquired loans 4,151 -- 4,151 --
Loss on planned sale of Texas bank (2,934) -- (2,934) --
Other operating income 9,760 505 10,265 522
Securities gains, net 17,336 84 17,420 22
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 93,358 1,410 94,768 5,963
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 99,480 1,379 100,859 6,506
Occupancy expense, net 25,393 258 25,651 1,188
Equipment expense 15,019 252 15,271 529
Data processing expense 17,726 462 18,188 864
Foreclosed property expense 22,702 967 23,669 2,637
Other operating expense 77,691 989 78,680 5,593
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 258,011 4,307 262,318 17,317
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS 1,418 1,423 2,841 3,294
Income tax expense 3,170 422 3,592 1,094
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS ($1,752) $1,001 ($751) $2,200
====================================================================================================================================
PRO FORMA WEIGHTED AVERAGE COMMON SHARES 42,629,773 2,250,000 44,879,773 8,370,512
====================================================================================================================================
PRO FORMA INCOME (LOSS) PER COMMON SHARE
FROM CONTINUING OPERATIONS(F) ($0.04) ($0.02)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FIRST STATE TOTAL
BANK AND STABA PROGRESSIVE PRO FORMA
TRUST BANCSHARES, BANCORPORATION, HIBERNIA
Unaudited ($ in thousands, except per share data) COMPANY INC. INC. CORPORATION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $4,650 $3,716 $7,305 $328,958
Interest on securities:
U.S. government securities and obligations of
U.S. government agencies 5,889 2,023 3,184 135,858
Obligations of states and political subdivisions 36 282 17 1,724
Trading account interest -- -- -- 99
Interest on time deposits in domestic banks -- 81 188 886
Interest on federal funds sold and securities
purchased under agreements to resell 254 374 -- 16,328
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 10,829 6,476 10,694 483,853
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 5,022 2,920 4,514 191,715
Interest on federal funds purchased and
securities sold under agreements to repurchase -- -- -- 6,910
Interest on debt and other -- -- 618 14,716
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 5,022 2,920 5,132 213,341
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 5,807 3,556 5,562 270,512
Provision for possible loan losses 545 363 101 71,557
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 5,262 3,193 5,461 198,955
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 5 -- -- 12,860
Service charges on deposits 699 406 861 42,218
Other service, collection and exchange charges 264 31 244 18,717
Gain on settlement of acquired loans -- -- -- 4,151
Loss on planned sale of Texas bank -- -- -- (2,934)
Other operating income 149 67 62 11,065
Securities gains, net ` -- -- 114 17,556
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 1,117 504 1,281 103,633
- ------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 1,982 998 1,894 112,239
Occupancy expense, net 768 162 280 28,049
Equipment expense 141 218 139 16,298
Data processing expense 137 19 243 19,451
Foreclosed property expense 29 13 371 26,719
Other operating expense 958 874 1,952 88,057
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 4,015 2,284 4,879 290,813
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES AND,
EXTRAORDINARY ITEMS 2,364 1,413 1,863 11,775
Income tax expense 849 349 50 5,934
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS $1,515 $1,064 $1,813 $5,841
====================================================================================================================================
PRO FORMA WEIGHTED AVERAGE COMMON SHARES 3,350,000 2,250,000 2,500,000 61,350,285
====================================================================================================================================
PRO FORMA INCOME (LOSS) PER COMMON SHARE
FROM CONTINUING OPERATIONS (F) $0.10
====================================================================================================================================
See notes to Pro Forma Combined Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
Year Ended December 31, 1991
- ----------------------------------------------------------------------------------------------
(A)
RESTATED PRO FORMA PIONEER
Unaudited ($ in thousands, HIBERNIA AMERICAN HIBERNIA BANCSHARES
except per share data) CORPORATION BANK CORPORATION CORPORATION
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on
loans $ 495,697 $ 4,060 $ 499,757 $ 16,686
Interest on securities:
U.S. government
securities and
obligations of
U.S. government
agencies 135,929 2,336 138,265 12,041
Obligations of states
and political
subdivisions 6,274 13 6,287 394
Trading account interest 70 -- 70 --
Interest on time deposits
in domestic banks 522 6 528 291
Interest on federal funds
sold and securities
purchased under
agreements to resell 11,417 211 11,628 573
- -----------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 649,909 6,626 656,535 29,985
- -----------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 355,371 3,623 358,994 14,866
Interest on federal funds
purchased and securities
sold under agreements
to repurchase 16,794 -- 16,794 --
Interest on debt and other 14,396 -- 14,396 838
- -----------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 386,561 3,623 390,184 15,704
- -----------------------------------------------------------------------------------------------
NET INTEREST INCOME 263,348 3,003 266,351 14,281
Provision for possible
loan losses 180,589 90 180,679 2,561
- -----------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE
LOAN LOSSES 82,759 2,913 85,672 11,720
- -----------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 14,844 -- 14,844 11
Service charges on
deposits 39,209 677 39,886 2,715
Other service, collection
and exchange charges 21,775 144 21,919 1,636
Credit card income 5,413 24 5,437 --
Gain on settlement
of acquired loans 9,043 -- 9,043 --
Other operating income 7,834 245 8,079 207
Securities gains, net 17,707 -- 17,707 186
- -----------------------------------------------------------------------------------------------
TOTAL NONINTEREST
INCOME 115,825 1,090 116,915 4,755
- -----------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee
benefits 128,063 1,355 129,418 5,547
Occupancy expense, net 30,823 252 31,075 1,169
Equipment expense 15,579 209 15,788 491
Data processing expense 12,783 392 13,175 761
Foreclosed property
expense 28,781 297 29,078 2,421
Credit card expense 3,136 -- 3,136 --
Other operating expense 118,875 1,009 119,884 3,843
- -----------------------------------------------------------------------------------------------
TOTAL NONINTEREST
EXPENSE 338,040 3,514 341,554 14,232
- -----------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE
INCOME TAXES,
EXTRAORDINARY ITEM
AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE (139,456) 489 (138,967) 2,243
Income tax expense 1,911 122 2,033 572
- -----------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
CONTINUING OPERATIONS $(141,367) $367 $(141,000) $ 1,671
===============================================================================================
PRO FORMA WEIGHTED
AVERAGE COMMON SHARES 41,138,432 2,250,000 43,388,432 8,370,512
===============================================================================================
PRO FORMA INCOME
(LOSS) PER COMMON SHARE
FROM CONTINUING
OPERATIONS (F) $(3.44) $(3.25)
===============================================================================================
- -----------------------------------------------------------------------------------------------
FIRST STATE TOTAL
BANK AND STABA PROGRESSIVE PRO FORMA
Unaudited ($ in thousands, TRUST BANCSHARES, BANCORPORATION, HIBERNIA
except per share data) COMPANY INC. INC. CORPORATION
- -----------------------------------------------------------------------------------------------
<C> <C> <C> <C>
INTEREST INCOME
Interest and fees on
loans $4,797 $3,606 $6,741 $531,587
Interest on securities:
U.S. government
securities and
obligations of
U.S. government
agencies 5,674 1,736 3,127 160,843
Obligations of states
and political
subdivisions 64 253 34 7,032
Trading account interest -- -- -- 70
Interest on time deposits
in domestic banks -- 125 53 997
Interest on federal funds
sold and securities
purchased under
agreements to resell 673 349 146 13,369
- -----------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 11,208 6,069 10,101 713,898
- -----------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 6,685 3,365 5,438 389,348
Interest on federal funds
purchased and securities
sold under agreements
to repurchase -- -- 3 16,797
Interest on debt and other -- -- 548 15,782
- -----------------------------------------------------------------------------------------------
TOTAL INTEREST
EXPENSE 6,685 3,365 5,989 421,927
- -----------------------------------------------------------------------------------------------
NET INTEREST INCOME 4,523 2,704 4,112 291,971
Provision for possible
loan losses 1,200 175 30 184,645
- -----------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE
LOAN LOSSES 3,323 2,529 4,082 107,326
- -----------------------------------------------------------------------------------------------
NONINTEREST INCOME
Trust fees 6 -- -- 14,861
Service charges on
deposits 675 367 901 44,544
Other service, collection
and exchange charges 232 83 315 24,185
Credit card income -- -- -- 5,437
Gain on settlement
of acquired loans -- -- -- 9,043
Other operating income 131 28 (38) 8,407
Securities gains, net -- -- (377) 17,516
- -----------------------------------------------------------------------------------------------
TOTAL NONINTEREST
INCOME 1,044 478 801 123,993
- -----------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee
benefits 1,660 868 1,678 139,171
Occupancy expense, net 837 137 315 33,533
Equipment expense 96 201 119 16,695
Data processing expense 108 13 396 14,453
Foreclosed property
expense 34 12 304 31,849
Credit card expense -- -- -- 3,136
Other operating expense 1,095 744 1,373 126,939
- -----------------------------------------------------------------------------------------------
TOTAL NONINTEREST
EXPENSE 3,830 1,975 4,185 365,776
- -----------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE
INCOME TAXES,
EXTRAORDINARY ITEM
AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 537 1,032 698 (134,457)
Income tax expense 257 270 45 3,177
- -----------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
CONTINUING OPERATIONS $280 $762 $653 $(137,634)
===============================================================================================
PRO FORMA WEIGHTED
AVERAGE COMMON SHARES 3,350,000 2,250,000 2,500,000 59,858,944
===============================================================================================
PRO FORMA INCOME (LOSS)
PER COMMON SHARE
FROM CONTINUING
OPERATIONS (F) $(2.30)
===============================================================================================
</TABLE>
See notes to Pro Forma Combined Financial Statements.
<PAGE>
HIBERNIA CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
A. The "Restated Hibernia Corporation" information reflects the results of the
mergers with Commercial Bancshares, Inc. and Bastrop National Bank,
consummated on July 1,1994; and First Continental Bancshares, Inc. and First
Bancorp of Louisiana, Inc., consummated on August 1, 1994, which were
accounted for as poolings of interests. Hibernia Corporation issued
13,021,494 shares of common stock with a stated value of $25,001,000 to
effect these mergers. Debt totaling $17,825,000 and related accrued interest
and premium of $4,930,000 was retired in conjunction with these mergers.
B. Hibernia Corporation will issue common stock with an aggregate market value
at the date of merger of $18,000,000 to effect the merger with American Bank
(American). The Hibernia Corporation common stock is assumed to have a
market value of $8.00 per share resulting in the issuance of 2,250,000
shares of common stock for all the outstanding common stock of American
(exchange ratio of 4.65).
If the Average Market Price is less than $7.75 per share, then the number of
shares of Hibernia Common Stock to be exchanged in the Merger will be
increased proportionately with the decrease in the Average Market Price
below that level to ensure that an aggregate value of $17,437,500 of
Hibernia Common Stock is exchanged in the Merger. Similarly, if the Average
Market Price is more than $8.875 per share, then the number of shares of
Hibernia Common Stock to be exchanged in the Merger will be decreased
proportionately with the increase in the Average Market Price above that
level to ensure that an aggregate value of $19,968,750 of Hibernia Common
Stock is exchanged in the Merger. However, if the Average Market Price is
between $8.875 and $7.75, the number of shares to be exchanged will remain
constant, even if the Average Market Price fluctuates within that range.
The stated value of Hibernia Corporation common stock is $1.92 per share. In
accordance with the pooling of interests method of accounting, the
historical equities of the merged companies are combined.
C. In addition to the American merger, Hibernia Corporation is a party to
pending mergers with Pioneer Bancshares Corporation (Pioneer), STABA
Bancshares, Inc. (STABA) and Progressive Bancorporation, Inc. (Progressive).
Hibernia Corporation will issue common stock to effect these mergers in
transactions using the pooling of interests method of accounting.
The Hibernia Corporation common stock is assumed to have a market value of
$8.00 per share and a stated value of $1.92 per share.
<PAGE>
HIBERNIA CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
If the average market price is less than $7.50 per share, then the number of
shares of Hibernia Common Stock to be exchanged in the Pioneer merger will
be increased proportionately with the decrease in the average market price
below that level to ensure that an aggregate value of $62,779,000 of
Hibernia Common Stock is exchanged in the merger. Similarly, if the average
market price is more than $9.50 per share, then the number of shares of
Hibernia Common Stock to be exchanged in the merger will be decreased
proportionately with the increase in the average market price above that
level to ensure that an aggregate value of $79,520,000 of Hibernia Common
Stock is exchanged in the merger. However, if the average market price is
between $9.50 and $7.50, the number of shares to be exchanged will remain
constant, even if the average market price fluctuates within that range.
If the average market price is less than $7.75 per share, then the number of
shares of Hibernia Common Stock to be exchanged in the First State merger
will be increased proportionately with the decrease in the average market
price below that level to ensure that an aggregate value of $25,962,500 of
Hibernia Common Stock is exchanged in the merger. Similarly, if the average
market price is more than $9.75 per share, then the number of shares of
Hibernia Common Stock to be exchanged in the merger will be decreased
proportionately with the increase in the average market price above that
level to ensure that an aggregate value of $32,662,500 of Hibernia Common
Stock is exchanged in the merger. However, if the average market price is
between $9.75 and $7.75, the number of shares to be exchanged will remain
constant, even if the average market price fluctuates within that range.
The number of shares of Hibernia Common Stock to be exchanged in the STABA
merger will be the number that equals 18,000,000 divided by the average
market price of Hibernia Common Stock on the Closing Date.
The number of shares of Hibernia Common Stock to be exchanged in the
Progressive merger will be 2,500,000 shares. Upon the merger each share of
Progressive Preferred Stock issued and outstanding will be converted into
the right to receive cash in the amount of $12.50 per share plus all
accumulated and unpaid dividends thereon.
In accordance with the pooling of interests method of accounting, the
historical equities of the merged companies are combined.
<TABLE>
<CAPTION>
Hibernia Mkt Value Stated Value Exchange
Shares of Shares of Shares Ratio
-------- --------- ------------ --------
<S> <C> <C> <C> <C>
Pioneer 8,370,512 $ 66,964,000 $16,071,000 30.50
First State 3,350,000 26,800,000 6,432,000 33.50
STABA 2,250,000 18,000,000 4,320,000 18.92
Progressive 2,500,000 20,000,000 4,800,000 4.05
---------- ------------ -----------
Total 16,470,512 $131,764,000 $31,623,000
========== ============ ===========
</TABLE>
<PAGE>
HIBERNIA CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
D. Hibernia Corporation will use available federal funds sold to retire debt
and related accrued interest.
Debt Interest
---- --------
Pioneer $2,071,000 $30,000
Progressive 3,185,000 --
---------- -------
$5,256,000 $30,000
========== =======
The retirement of the Pioneer debt is not a requirement of the merger. The
Progressive debt is held by Hibernia National Bank and will be offset
against the outstanding loan balance upon consummation of the merger.
E. In connection with obtaining regulatory approval of the Pioneer transaction,
Hibernia has agreed to sell three of the branches currently operated by
Pioneer. The sale of these branches will include the physical premises as
well as all deposits, loans and other assets held by those branches.
Aggregate deposits and aggregate loans held by those branches as of June 30,
1994 were approximately $43 million and $21 million, respectively. On
December 16, 1994 Hibernia executed a definitive agreement to sell these
branches. The sale of these branches is expected to close in the first
quarter of 1995. The sale of these branches will not affect the
consideration to be paid to Pioneer Shareholders in that merger. The effect
of the sale of these branches is considered immaterial and has not been
reflected in the pro forma combined financial statements.
F. Hibernia Corporation expects to achieve savings through reductions in
interest expense and operating costs in connection with the proposed
mergers. The savings vary from merger to merger depending upon Hibernia
Corporation's pre-merger operations in the respective geographic area. The
majority of the savings will be achieved through the retirement of long-term
debt upon merger and consolidation of certain operations. The extent to
which the savings will be achieved depends, among other things, on the
regulatory environment and economic conditions, and may be affected by
unanticipated changes in business activities, inflation and certain external
factors such as Federal Deposit Insurance Corporation (FDIC) assessments.
Therefore, there can be no assurance that such savings will be realized. No
adjustment has been included in the unaudited pro forma financial statements
for the anticipated savings.
<PAGE>
PROPOSED MERGER
This section of the Proxy Statement-Prospectus describes
certain aspects of the Agreement and the Merger. The following
description does not purport to be complete and is qualified in its
entirety by reference to the Agreement, which is attached 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.
The ultimate result of the transactions contemplated by the
Agreement will be that the business and properties of American Bank
will become the business and properties of HNB and the shareholders
of American Bank will become shareholders of Hibernia. The steps
taken to achieve this result involve the following transactions:
(i) American Bank will be merged with and into HNB and the separate
existence of American Bank will cease; and (ii) shareholders of
American Bank will receive the consideration described below under
the heading "PROPOSED MERGER -- Terms of the Merger."
Background of and Reasons for the Merger
Background. As a result of recent improvement in the
Louisiana economy, there has been a sharp increase in the level of
interest in and the number of acquisitions of financial
institutions in Louisiana. One of the responsibilities of the
Board of Directors of American Bank is to consider various
strategic alternatives, including whether to affiliate with a
larger, more diversified financial organization, as viable
opportunities might arise.
The Board of Directors of American Bank in April 1994 engaged
Montgomery to evaluate strategic alternatives for American Bank.
Based upon Montgomery's presentation of strategic alternatives
available to American Bank, the Board on April 19, 1994, determined
to solicit preliminary indications of interest for the purchase of
American Bank from interested and capable buyers. Montgomery
contacted six 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. Two of these
financial institutions, including Hibernia, conducted document and
record review and submitted final acquisition proposals. The
proposals were considered by the Board of Directors of American
Bank at a Special Meeting held for that purpose on September 16,
1994. At the meeting, representatives of Montgomery made a
presentation to the Board of Directors regarding, among other
things, the competing proposals. Based upon the foregoing and its
analysis of the competing proposals, the Board of Directors
determined that the sale of American Bank to Hibernia pursuant to
its acquisition proposal was in the best interests of American Bank
and its shareholders and approved the Agreement.
<PAGE>
Reasons for the Merger. In reaching its decision that the
Merger is in the best interests of American Bank and its
shareholders, American Bank's Board of Directors consulted with its
financial and other advisors, as well as with American Bank'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 American Bank;
(b) The amount and type of consideration to be received by
American Bank's shareholders pursuant to the Agreement;
(c) The Hibernia Common Stock to be received pursuant to the
Agreement will be listed for trading on the NYSE and should provide
American Bank's shareholders with liquidity that is unavailable to
holders of American Bank Common Stock, for which a public trading
market does not exist;
(d) The Agreement will allow American Bank's shareholders to
become shareholders of Hibernia, an institution which is the second
largest bank holding company headquartered in Louisiana and the
100th largest bank holding company in the United States;
(e) Recent changes in the regulatory environment will result
in American Bank 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 American Bank nor its shareholders
(except to the extent that cash is received in respect of their
shares) will recognize any gain in the transaction (see "Material
Tax Consequences"); and
(g) The opinion received from Montgomery that the
consideration to be received by the shareholders of American Bank
pursuant to the Agreement, when taken as a whole, is fair to such
shareholders from a financial point of view (see "Opinion of
Financial Advisor").
American Bank's Board of Directors did not assign any specific
or relative weight to the foregoing factors in its considerations.
American Bank's Board of Directors believes that the Agreement and
the Merger will provide significant value to all American Bank
shareholders and will enable them to participate in opportunities
for growth that American Bank's Board of Directors believes the
Merger makes possible.
<PAGE>
Based on the foregoing, the Board of Directors of American
Bank has unanimously approved the Agreement and the Merger,
believes that the Agreement and the Merger are in the best
interests of American Bank's shareholders, and recommends that all
shareholders vote "FOR" the approval of the Agreement and the
Merger.
Opinion of Financial Advisor
General. Pursuant to an engagement letter dated April 15,
1994 (the "Engagement Letter"), American Bank engaged Montgomery to
act as its financial advisor in connection with its evaluation of
its strategic alternatives, including the possible sale of American
Bank. Montgomery is a nationally recognized investment banking
firm and, as part of its investment banking activities, is
regularly engaged in the valuation of businesses and their
securities in connection with merger transactions and other types
of acquisitions, negotiated underwritings, placements and
valuations for corporate and other purposes. American Bank
selected Montgomery as its financial advisor on the basis of its
experience and expertise in transactions similar to the Agreement
and its reputation in the banking and investment communities.
At the September 16, 1994 meeting of American Bank's Board of
Directors, Montgomery delivered its oral opinion, subsequently
confirmed in writing, that the consideration to be received by the
shareholders of American Bank pursuant to the Agreement, when taken
as a whole, is fair to such shareholders from a financial point of
view. No limitations were imposed by American Bank on Montgomery
with respect to the investigations made or procedures followed in
rendering its opinion. The full text of Montgomery's written
opinion to American Bank's Board of Directors, 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 and should be read carefully and in its
entirety in connection with this Proxy Statement-Prospectus. The
following summary of Montgomery's opinion is qualified in its
entirety by reference to the full text of the opinion.
Montgomery's opinion does not constitute a report or valuation
within the meaning of Section 11 of the Securities Act of 1933, as
amended (the "Securities Act") and should not be accorded the
degree of reliance placed upon such reports and valuations.
Montgomery has not assumed responsibility for performing the level
of diligence or independent verification that would be required for
it to render a report or valuation for purposes of the Securities
Act. Montgomery's opinion is addressed to American Bank's Board of
Directors only and does not constitute a recommendation to any
shareholder of American Bank 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
<PAGE>
with respect to Hibernia and certain financial and other data with
respect to American Bank, including the consolidated financial
statements for recent years and interim periods to June 30, 1994,
and certain other relevant financial and operating data relating to
American Bank and Hibernia made available to Montgomery from
published sources and from the internal records of American Bank;
(ii) reviewed the Agreement; (iii) reviewed certain historical
market prices and trading volumes of Hibernia Common Stock on the
NYSE; (iv) compared 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 American Bank
and Hibernia certain information of a business and financial nature
regarding American Bank and Hibernia, furnished to Montgomery by
American Bank and Hibernia, including financial forecasts and
related assumptions of American Bank; (vii) made inquiries regarding
and discussed the Merger, the Agreement and other matters related
thereto with American Bank's counsel; and (viii) performed such
other analyses and examinations as Montgomery deemed appropriate.
In connection with its review, Montgomery did not independently
verify any of the foregoing information, and relied on such
information and assumed such information was complete and accurate
in all material respects. With respect to the financial forecasts
for American Bank provided to Montgomery by American Bank'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 American Bank's management at
the time of preparation as to the future financial performance of
American Bank and provided a reasonable basis upon which Montgomery
could form its opinion. Montgomery also assumed that there were no
material changes in American Bank'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 the advice of counsel to American
Bank as to all legal matters with respect to American Bank, 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 American Bank 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 American Bank or Hibernia, and
was not furnished with any such appraisals. Further, Montgomery's
opinion was based on economic, monetary and market conditions
existing as of September 16, 1994, and on the assumption that the
Agreement will be consummated in accordance with its terms, without
any amendment thereto and without waiver by American Bank of any of
<PAGE>
the conditions to its obligations thereunder.
Set forth below is a brief summary of the report presented by
Montgomery to the American Bank Board of Directors on September 16,
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 six
months ended June 30, 1994, to a national proxy group consisting of
50 selected national banks (the "National Bank Proxy Group"), and
to a southeast proxy group consisting of five 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.
Analysis of Selected Bank Merger Transactions. Montgomery
reviewed the consideration paid in recently announced transactions
whereby certain banks were acquired. Specifically, Montgomery
reviewed 332 transactions involving acquisitions of banks in the
Southeast region of the United States announced since January 1990
(the "Southeast Acquisitions") and acquisitions of 24 selected
Louisiana banks announced since April 1993 (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 10.48% and 16.87%, respectively;
(ii) median return on average assets of .91% and 1.51%,
respectively; and (iii) median nonperforming assets to average
assets of 1.24% and 1.17%, respectively. In comparison, Montgomery
determined that for the year ended December 31, 1993 and the six
months ended June 30, 1994, American Bank's return on average equity
was 17.11% and 18.61%, respectively, its return on average assets
was 1.27% and 1.51%, respectively, and its nonperforming assets to
average assets were 2.14% and 1.05%, respectively.
<PAGE>
The figures for the Southeast Acquisitions and the Louisiana
Acquisitions produced: (i) median percentage of premium to core
deposits of 6.64% and 10.73%, respectively; (ii) median purchase
price to deposits of 16.02% and 20.39%, respectively; (iii) median
ratio of purchase price to book value of 1.58 and 1.84,
respectively; and (iv) median ratio of purchase price to LTM
earnings of 15.5 and 12.6, respectively. In comparison, assuming
the consideration to be paid in the Merger for each share of
American Bank Common Stock equals that number of shares of Hibernia
Common Stock with a value of $38.93, Montgomery determined that the
consideration to be received by the holders of American Bank Common
Stock in the Merger represented a percentage of premium to core
deposits of 14.78%, a percentage of price to deposits of 22.19%, a
ratio of price to book value of 2.41 and a ratio of price to
American Bank's LTM earnings for the twelve months ended June 30,
1994 of 15.2.
No other company or transaction used in the above analysis as
a comparison is identical to American Bank or the Merger.
Accordingly, an analysis of the results of the foregoing is not
mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect
the public trading value of the companies to which American Bank and
the Merger are being compared.
Contribution Analysis. Montgomery analyzed the contribution
of each of American Bank and Hibernia to, among other things,
common equity and net income of the pro forma combined companies
for the years ended December 31, 1993, and for the six-month period
ended June 30, 1994. This analysis showed, among other things,
that based on pro forma combined balance sheets and income
statements for American Bank and Hibernia as of December 31, 1993
and June 30, 1994, American Bank would have contributed 1.7% and
1.7%, respectively, of the common equity, and for the year ended
December 31, 1993 and the six months ended June 30, 1994, American
Bank would have contributed 2.4% and 2.0%, respectively, of the net
income of the combined companies. Assuming the consideration to be
paid in the Merger for each share of American Bank Common Stock
equals that number of shares of Hibernia Common Stock with a value
of $38.93, American Bank's shareholders would own approximately
2.62% of the combined companies based on common shares outstanding
on June 30, 1994.
Dilution Analysis. Using estimates of future earnings
prepared by American Bank management and analysts' estimates for
Hibernia, Montgomery compared the calendar year 1994 estimated
earnings per share of American Bank Common Stock and Hibernia
Common Stock to the calendar year 1994 estimated earnings per share
of the common stock of the pro forma combined companies. Based on
such analysis and assuming the consideration to be paid in the
Merger for each share of American Bank Common Stock equals that
<PAGE>
number of shares of Hibernia Common Stock with a value of $38.93,
the proposed transaction would be dilutive to Hibernia's earnings
per share in 1994, prior to projected revenue enhancements and cost
savings, and accretive to American Bank'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 4.688 shares
of Hibernia Common Stock for each share of American Bank Common
Stock. This ratio was based upon the assumption that the
consideration to be paid in the Merger for each share of American
Bank Common Stock equals that number of shares of Hibernia Common
Stock with a value of $38.93 and upon the trading price of Hibernia
Common Stock as of September 15, 1994 of $8.38. 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 terminal value of 4.688 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 1998 earnings. Montgomery then added the
dividend stream to each of the terminal values and discounted the
sums using a 10% discount rate. This present value analysis
indicated a reference range of between $41.12 and $59.19 per 4.688
shares of Hibernia Common Stock. In comparison, Montgomery noted
that if American Bank were to remain independent, based on the sum
of the present value of the future stream of annual pre-tax
dividend income that American Bank could produce over a five year
period and certain terminal values derived from applying multiples
ranging from 6x to 10x to American Bank's projected 1998 earnings,
and discounting such sums using a 14% discount rate (reflecting the
higher risks associated with remaining an independent community
bank), the present value of one share of American Bank Common Stock
ranged between $15.78 and $24.07.
Historical Common Stock Price. Montgomery reviewed the
historical common stock prices of Hibernia compared to a bank
industry proxy consisting of the 33 commercial banking companies
followed by Montgomery and the Standard & Poor's 500.
The summary set forth above does not purport to be a complete
description of the presentation by Montgomery to American Bank'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 American Bank'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
<PAGE>
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
American Bank 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 American Bank 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 American Bank's shareholders in
the Merger and were provided to American Bank'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 in its analyses various projections of
future performance prepared by the management of American Bank.
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
American Bank'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, American Bank 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. American Bank 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 American Bank also agreed to reimburse.
American Bank 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 American Bank has paid Montgomery any
other fees during the last two years.
<PAGE>
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.
Terms of the Merger
On the Effective Date, each outstanding share of American Bank
Common Stock (other than shares held by dissenting shareholders)
will be converted into 4.65 shares of Hibernia Common Stock, unless
the Average Market Price of Hibernia Common Stock is less than
$7.75 or is greater than $8.875. If the Average Market Price is
less than $7.75, then each outstanding share of American Bank
Common Stock (other than shares held by dissenting shareholders)
will be exchanged for a number of shares of Hibernia Common Stock
determined in accordance with the following formula: [$17,437,500
divided by the Average Market Price of Hibernia Common Stock]
divided by 483,686. If the Average Market Price is more than
$8.875, then each outstanding share of American Bank Common Stock
(other than shares held by dissenting shareholders) will be
exchanged for a number of shares of Hibernia Common Stock
determined in accordance with the following formula: [$19,968,750
divided by the Average Market Price of Hibernia Common Stock]
divided by 483,686. For this purpose, the Average Market Price of
the Hibernia Common Stock will be the average of the high and low
trading prices of the stock for the five business days prior to the
last trading day immediately preceding the Closing Date. On
January 11, 1995, the actual closing price for a share of Hibernia
Common Stock was $7.50, the Average Market Price would have been
$7.725, and, if such date had been the day immediately preceding
the Closing Date, each outstanding share of American Bank Common
Stock (other than shares held by dissenting shareholders) would
have been converted into 4.65 shares of Hibernia Common Stock.
The Agreement provides for a reduction in the number of shares
of Hibernia Common Stock to be exchanged in the Merger in the event
certain expenses related to the Merger and incurred by American
Bank, consisting primarily of legal and accounting fees, exceed
$175,000 in the aggregate. In the event those fees exceed the
amount specified, the excess will be reduced from the aggregate
value of Hibernia Common Stock to be exchanged, which would result
in the shareholders of American Bank receiving fewer shares of
Hibernia Common Stock in the Merger than they would have otherwise
received.
If the Average Market Price is less than $7.75 per share, then
the number of shares of Hibernia Common Stock to be exchanged in
the Merger will be increased proportionately with the decrease in
the Average Market Price below that level to ensure that an
aggregate value of $17,437,500 of Hibernia Common Stock is
exchanged in the Merger. Similarly, if the Average Market Price is
more than $8.875 per share, then the number of shares of Hibernia
<PAGE>
Common Stock to be exchanged in the Merger will be decreased
proportionately with the increase in the Average Market Price above
that level to ensure that an aggregate value of $19,968,750 of
Hibernia Common Stock is exchanged in the Merger. However, if the
Average Market Price is less than $8.875 and more than $7.75, the
number of shares to be exchanged will remain constant, even if the
Average Market Price fluctuates within that range.
The following table shows the aggregate consideration and
number of shares of Hibernia Common Stock to be issued in the
Merger, assuming various market prices of Hibernia Common Stock.
Market Value Aggregate Aggregate Shares
per share of Consideration of Hibernia
Hibernia to be Exchanged to be Exchanged
Common Stock ($$)
$7.50 $17,437,500 2,325,000
$7.75 $17,437,500 2,250,000
$8.00 $18,000,000 2,250,000
$8.50 $19,125,000 2,250,000
$8.75 $19,968,750 2,250,000
$9.00 $19,968,750 2,218,750
<PAGE>
The following table illustrates the effect of exceeding the
expense limitation in each of the above scenarios, assuming
expenses of $250,000 (which would be an excess of $75,000).
Market Value Aggregate Aggregate Shares
per share of Consideration of Hibernia
Hibernia to be Exchangedto be Exchanged
Common Stock ($$)
$7.50 $17,362,500 2,315,000
$7.75 $17,362,503 2,240,323
$8.00 $17,925,000 2,240,625
$8.50 $19,049,996 2,241,176
$8.75 $19,612,500 2,241,428
$9.00 $19,893,750 2,210,417
Upon the effectiveness of the Merger, the conversion of shares
of American Bank Common Stock into Hibernia Common Stock will occur
without any action on the part of the holders thereof, and American
Bank shareholders will automatically be entitled to all of the
rights and privileges afforded to Hibernia shareholders as of such
date. The exchange of American Bank stock certificates for
certificates representing Hibernia Common Stock, however, will
occur after the Effective Date of the Merger.
SHAREHOLDERS OF AMERICAN BANK SHOULD NOT FORWARD THEIR STOCK
CERTIFICATES TO AMERICAN BANK OR HIBERNIA AT THIS TIME. IF THE
MERGER IS CONSUMMATED, AMERICAN BANK SHAREHOLDERS WILL RECEIVE
INSTRUCTIONS REGARDING THE EXCHANGE OF THEIR CERTIFICATES FOR
HIBERNIA COMMON STOCK.
In lieu of the issuance of any fractional share of Hibernia
Common Stock to which a holder of American Bank Common Stock may be
entitled, each shareholder of American Bank, upon surrender of the
certificate or certificates which immediately prior to the
Effective Date represented American Bank Common Stock held by such
shareholder, shall be entitled to receive a cash payment (without
interest) equal to such fractional share multiplied by the Average
Market Price of Hibernia Common Stock (as defined above).
For a discussion of the rights of dissenting shareholders, see
"PROPOSED MERGER -- Rights of Dissenting Shareholders."
Surrender and Exchange of Stock Certificates
As soon as practicable after the Effective Date, the transfer
<PAGE>
agent of Hibernia, in its capacity as Exchange Agent, will mail all
non-dissenting shareholders of American Bank a letter of
transmittal, together with instructions for the exchange of their
American Bank Common Stock certificates for certificates
representing Hibernia Common Stock. Until so exchanged, each
certificate representing American Bank Common Stock outstanding
immediately prior to the Effective Date shall be deemed for all
purposes to evidence ownership of the number of whole shares of
Hibernia Common Stock into which such shares have been converted on
the Effective Date. Shareholders should not send their American
Bank Common Stock certificates for surrender until they receive
further instructions from the Exchange Agent.
American Bank shareholders who cannot locate their American
Bank stock certificates are encouraged to contact Sharon B. Kell,
Vice President and Cashier of American Bank, 22 Apple Street,
Norco, Louisiana 70079-2214, telephone: (504) 764-7581 prior to
the Special Meeting. New certificates will be issued to American
Bank shareholders who cannot locate their certificates only if the
shareholder executes an affidavit certifying that the certificate
cannot be located and agreeing to indemnify American Bank and
Hibernia (as its successor), against any claim that may be made
against either of them by the owner of the lost certificate(s).
American Bank 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 other than their own are encouraged to
resolve those matters prior to the Effective Date of the Merger in
order to avoid delays in receiving their Hibernia Common Stock if
the Merger is approved and consummated.
Employee Benefits
Hibernia has agreed that it will use its best efforts to
provide (or cause to be provided by HNB) to all employees of
American Bank who are employed as of the Effective Date and who
become employees of Hibernia or HNB after the Merger, the same
employee benefits as those offered by Hibernia and HNB to their
employees, except that employees of American 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). Employees of American Bank will not be denied
health insurance coverage solely as a result of a pre-existing
condition that existed on the Effective Date but did not exist on
the date the employee commenced his or her employment with American
Bank. Hibernia will also give American Bank employees who become
Hibernia or HNB employees full credit for their years of service
(for both eligibility, vesting and benefits) with American Bank for
purposes of each of Hibernia's benefits plans. Hibernia has also
agreed to pay or provide certain other benefits. As described more
fully below, Hibernia will assume, as a result of the Merger,
<PAGE>
American Bank's rights and obligations under an employment
agreement between American Bank and Darryl J. Chauvin, President
and Chief Executive Officer of American Bank. See "--Interests of
Certain Persons in the Merger," below.
Expenses
The Agreement provides that all expenses incurred in
connection with the negotiation and execution of the Agreement and
the consummation of the Merger will be borne by the party that
incurred them, regardless whether the Merger is consummated.
Representations and Warranties; Conditions to the Merger; Waiver
The Agreement contains representations and warranties by
American Bank regarding, among other things, its organization,
authority to enter into the Agreement, capitalization, properties,
financial statements, pending and threatened litigation,
contractual obligations and contingent liabilities. The Agreement
also contains representations and warranties by Hibernia regarding,
among other things, its organization and authority to enter into
the Agreement, capitalization, financial statements and public
reports. Except as otherwise provided in the Agreement, these
representations and warranties will not survive the Effective Date.
The obligations of Hibernia and American Bank to consummate
the Merger are conditioned upon, among other things, approval of
the Agreement by American Bank's shareholders; the receipt of
necessary regulatory approvals, including the approval of the OCC;
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 Internal Revenue Code, that to the extent American Bank Common
Stock is exchanged for Hibernia Common Stock, American Bank'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 an
order, decree or injunction 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 set forth in the Agreement as of the
Closing Date; the listing of the Hibernia Common Stock to be issued
in the Merger on the NYSE; the receipt of certain opinions of
counsel; and, in the case of Hibernia, the absence of an event that
would preclude the Merger from being accounted for as a pooling-of-
interests. In this regard, Hibernia may abandon the Merger if
American Bank shareholders holding more than 10% of the outstanding
<PAGE>
American Bank Common Stock exercise and perfect dissenters' rights.
Except with respect to any required shareholder or regulatory
approval, substantially all of the conditions to consummation of
the Merger may be waived at any time by the party for whose benefit
they were created, and the Agreement may be amended or supplemented
at any time by written agreement of the parties, except that no
such waiver, amendment or supplement executed after approval of the
Agreement by American Bank's shareholders may reduce the Exchange
Ratio or adversely affect the holders of American Bank Common
Stock. In addition, any material change in the terms of the
Agreement after the Special Meeting would require the approval of
American Bank's shareholders.
Regulatory and Other Approvals
HNB is regulated by the OCC, and the Merger consequently must
be approved by the OCC before it may be effected. The OCC has
approved the Merger.
American Bank and Hibernia were required to wait at least 15
days after November 30, 1994 (the date of OCC approval) before
consummating the Merger. During this 15-day period, the Department
of Justice was entitled to object to the Merger on antitrust
grounds. The Department of Justice did not object to the Merger
during the statutory waiting period.
The shares of Hibernia Common Stock offered pursuant to the
Proxy Statement-Prospectus will be registered with the Commission
and the state securities regulators in those states that require
such registration. The shares also will be listed on the NYSE.
The regulatory approvals sought in connection with the Merger
may be obtained or denied prior to or after the Special Meeting.
The vote on the Merger at the Special Meeting is not dependent or
conditioned upon receipt of any such approvals prior to the Special
Meeting. Even if the Merger is approved at the Special Meeting, it
may not be consummated thereafter. Failure to receive the
requisite regulatory approvals will result in a termination of the
Agreement.
Business Pending the Merger
Under the terms of the Agreement, American Bank may not,
without the prior written consent of Hibernia or as otherwise
provided in the Agreement: (i) create or issue any additional
shares of capital stock or any options or other rights to purchase
or acquire shares of capital stock, redeem or repurchase any of its
capital stock, or declare or pay any dividends on its capital
stock; (ii) enter into employment contracts with directors,
officers or employees or otherwise agree to increase the
compensation of or pay any bonus to such persons except in
<PAGE>
accordance with existing policy; (iii) enter into or substantially
modify any employee benefits plans; (iv) establish any automatic
teller machines or branch or other banking offices; (v) make any
capital expenditure(s) in excess of $100,000 (except that American
Bank may pay any and all obligations related to the maintenance of
equipment and other capital expenditures required to be paid under
its EDP contract with Bank of St. John, so long as such
expenditures do not exceed $200,000 in the aggregate); (vi) merge
with any other company or bank or liquidate or otherwise dispose of
its assets; or (vii) acquire another company or bank (except in
connection with foreclosures of bona fide loan transactions). In
addition, American Bank may not solicit bids or other transactions
that would result in a merger of American Bank with an entity other
than Hibernia or HNB.
Effective Date of the Merger; Termination
After all conditions to consummation of the Merger have been
satisfied or waived, the effective date of the Merger shall be the
date and time that the Merger will become effective as of the date
and time of the issuance by the Louisiana Secretary of State of a
certificate of merger relating to the Merger (the "Effective
Date").
Prior to the Effective Date, the Agreement may be terminated
by either party, whether before or after approval of the Agreement
and the Merger by American Bank's shareholders: (i) in the event
of a material breach by the other party of any representation,
warranty or covenant which reflects a material adverse change in
the financial condition, results of operations or business taken as
a whole, of the breaching party, which cannot be or has not been
cured within the period allowed by the Agreement, or which results
in a material increase in the cost of the non-breaching party's
performance of the Agreement; (ii) if any of the conditions
precedent to the obligations of such party to consummate the Merger
have not been satisfied, fulfilled or waived as of the Closing
Date; (iii) if any application for any required OCC approval has
been denied, and the time for all appeals of such denial has run;
(iv) if the shareholders of American Bank fail to approve the
Merger at the Special Meeting; or (v) in the event that the Merger
is not consummated by April 30, 1995. The Agreement may be
terminated by Hibernia if the holders of more than 10% of the
outstanding shares of American Bank Common Stock exercise
dissenters' rights, by either party if certain material adverse
changes occur in respect of the other party, and by American Bank
if the market price of Hibernia Common Stock does not satisfy
certain ratios. The Agreement also may be terminated at any time
by the mutual consent of the parties. In the event of termination,
the Agreement becomes null and void, except that certain provisions
thereof relating to expenses and confidentiality and the accuracy
of information provided for inclusion in the Registration Statement
of which this Proxy Statement-Prospectus is a part survive any such
<PAGE>
termination and any such termination does not relieve any breaching
party from liability for any uncured breach of any covenant or
agreement giving rise to such termination.
Management and Operations After the Merger
On the Effective Date, American Bank will be merged with and
into HNB and the separate existence of American Bank will cease.
The offices of American Bank will operate as branch banking offices
of HNB. The employees of American Bank on the Effective Date will
become employees of HNB as of the Effective Date and will be
employed on an "at will" basis thereafter, subject to any existing
employment agreements or similar contractual obligations assumed by
Hibernia or HNB.
The Boards of Directors of Hibernia and HNB following the
Merger shall consist of those persons serving as directors
immediately prior thereto. Certain information regarding the
directors of Hibernia elected at its annual meeting of shareholders
on April 26, 1994 is contained in documents incorporated herein by
reference. See "AVAILABLE INFORMATION." The directors of American
Bank will cease to serve as directors of American Bank as of the
Effective Date. Some of these directors may serve on an advisory
board of Hibernia after the Merger. See "PROPOSED MERGER --
Interests of Certain Persons in the Merger."
Certain Differences in Rights of Shareholders
If the shareholders of American Bank approve the Merger and
the Merger is subsequently consummated, all shareholders of
American Bank, 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 and the
Louisiana Business Corporation Law, rather than American Bank's
Articles of Incorporation and Bylaws and the Louisiana Banking Law.
The following is a summary of the principal differences between the
rights of shareholders of American Bank and Hibernia not described
elsewhere in this Proxy Statement-Prospectus.
Liquidity of Stock. There currently is no ready market for
the shares of American Bank Common Stock, and such a market is not
likely to develop in the future. The shares of Hibernia Common
Stock that will be issued in the Merger will be registered under
applicable securities laws and may therefore be freely resold by
persons who are not "affiliates" of American Bank or Hibernia. In
addition, the Hibernia Common Stock is listed on the NYSE and
actively traded on that exchange. Current quotes of the market
price of Hibernia Common Stock are available from brokerage firms
and other securities professionals, as well as other sources, and
are published in major newspapers on a daily basis.
<PAGE>
Removal of Directors. Shareholders of Hibernia may remove a
director for cause (defined as gross negligence or wilful
misconduct) by the vote of a majority of the total voting power and
may remove a director without cause by a vote of two-thirds of the
total voting power. One or more directors of American Bank shall
cease to be a director upon his or her failure, after election, to
be the owner in his or her own rights of unpledged shares of
American Bank of at least $1,000.00 par value and may be removed by
the affirmative vote of a majority of the total voting power of
American Bank at a meeting called for that purpose.
Amendment of Articles and Bylaws. Hibernia's Articles of
Incorporation may be amended by a vote of a majority of the voting
power present at any meeting called for that purpose. The Articles
of Incorporation of American Bank may be amended by the affirmative
vote of two-thirds of all outstanding stock represented, present
and voted at a meeting called for that purpose, after thirty days
notice.
The Bylaws of Hibernia may be amended or repealed by a vote of
two-thirds of the total voting power outstanding or by a vote of
two-thirds of the "continuing directors" of the company, as defined
in the Bylaws. A "continuing director" for this purpose is
generally a director who was nominated for election by a majority
of the existing directors. The Bylaws of American Bank may be
amended by the Board of Directors and the shareholders, by a
majority of the Directors and/or shareholders at a duly called
meeting at which a quorum is present or represented.
Special Meetings of Shareholders. Special meetings of the
shareholders of Hibernia may be called by the Chairman of the
Board, the President, the Chief Executive Officer or the Treasurer
of Hibernia. In addition, shareholders holding one-fifth or more
of the total voting power of Hibernia may request a special meeting
of shareholders and, upon receipt of such request, the Secretary of
Hibernia is required to call a special meeting of the shareholders.
A special meeting of shareholders of American Bank may be called at
any time by the President, the Board of Directors, or the President
upon the written request of the holders of not less than fifty
percent (50%) of all shares entitled to vote at such meeting.
Shareholder Proposals. Hibernia's Bylaws contain certain
provisions expressly allowing shareholders to submit shareholder
proposals and to nominate individuals for election as directors,
under certain circumstances and provided the shareholder complies
with all of the conditions set forth in those provisions. American
Bank's Articles and Bylaws, contain no such provisions.
Certain Transfer Restrictions Relating to 5-Percent
Shareholders. Article IX of Hibernia's Articles of Incorporation
restricts transfers of equity interests in Hibernia under certain
circumstances. This restriction (the "5-Percent Restriction") is
<PAGE>
intended to protect Hibernia from certain transfers of equity
interests which could have a material adverse effect on Hibernia's
ability to use certain tax benefits to reduce its taxable income.
Under the 5-Percent Restriction, if, before December 29, 1995, a
shareholder transfers or agrees to transfer Hibernia stock or stock
equivalents, the transfer will be prohibited and void to the extent
that it would result under applicable Federal income tax rules in
the identification of a new "5-percent shareholder" of Hibernia or
an increase in the percentage stock ownership of any existing "5-
percent shareholder" is increased.
The 5-Percent Restriction does not apply to any transfer
which has been approved in advance by the Board of Directors of
Hibernia, or which is made in compliance with exceptions
established from time to time by resolution of the Board of
Directors. The Board of Directors may withhold its approval of a
transfer only if, in its judgment, the transfer may result in any
limitation on the use by Hibernia of its net operating loss
carryforwards or built-in tax losses or other tax attributes. The
Board of Directors may adopt further resolutions exempting
additional transfers from the 5-Percent Restriction.
The 5-Percent Restriction may adversely affect the
marketability of the Hibernia Common Stock by discouraging
potential investors from acquiring equity securities of Hibernia.
However, since its adoption in September 1992, the 5-Percent
Restriction does not appear to have had any such adverse affect on
the marketability of the Hibernia Common Stock.
While the 5-Percent Restriction may have the effect of
impeding a shareholder's attempt to acquire a significant or
controlling interest in Hibernia, the purpose of the 5-Percent
Restriction is to preserve the tax benefits of Hibernia's previous
losses, not to insulate management from change. Management of
Hibernia believes the tax benefits outweigh any anti-takeover
impact of the 5-Percent Restriction. Any anti-takeover effect of
the 5-Percent Restriction will end with the termination of the 5-
Percent Restriction on December 29, 1995.
Indemnification of Officers and Directors. Hibernia's
Articles of Incorporation provide for indemnification of officers
and directors of the company under the circumstances permitted by
Louisiana law. This indemnification provision requires
indemnification, except as prohibited by law, of officers and
directors of Hibernia or any of its wholly-owned subsidiaries
against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with any action,
suit or proceeding, whether civil or criminal, administrative or
investigative (including any action by or in the right of Hibernia)
by reason of the fact that the person served as an officer or
director of Hibernia or one of its subsidiaries. Officers and
directors may only be indemnified against expenses in cases brought
<PAGE>
by the officer or director against Hibernia if the action is a
claim for indemnification, the officer or director prevails in the
action, or indemnification is included in any settlement or is
awarded by the court. The indemnification provision further
requires Hibernia to advance defense costs to officers and
directors in such suits and proceedings upon receipt of an
undertaking to repay such expenses unless it is ultimately
determined that the officer or director is entitled to
indemnification as authorized by the Article.
American Bank's Bylaws provide that American Bank shall
indemnify its directors, officers, employees, and agents against
expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or
investigative (including any action by or in the right of American
Bank), if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of American Bank, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. In the case of actions by or in the right of American
Bank, indemnification: (1) is limited to expenses (including
attorneys' fees and amounts paid in settlement not exceeding, in
the judgment of the Board of Directors of American Bank, the
estimated expenses of litigating the action to conclusion) actually
and reasonably incurred in connection with the defense or
settlement of such action, and (2) will not be made in respect of
any claim, issue or matter as to which the person seeking
indemnification has been adjudged liable to American Bank for
negligence or misconduct in the performance of his duty to American
Bank, unless and only to the extent the court determines upon
application that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such expenses which the
court deems proper. Additionally, American Bank's Bylaws authorize
American Bank to purchase insurance against its indemnification
obligations.
Issuance of Preferred Stock. Hibernia's articles of
incorporation authorize the issuance of up to 100 million shares of
preferred stock on such terms and conditions as may be determined
by the Board of Hibernia from time to time, commonly referred to as
"blank check preferred". Hibernia may therefore issue such stock
at any time and from time to time as it deems appropriate.
American Bank's articles of association do not authorize the
issuance of blank check preferred stock.
Application of Certain Louisiana Statutes. As a Louisiana
corporation, Hibernia is subject to all of the rights and
obligations set forth in the LBCL, including, but not limited to,
the application of certain statutes designed to deter hostile bids
for control of Louisiana corporations by limiting the voting rights
<PAGE>
of shareholders in some circumstances and requiring, absent
compliance with certain extraordinary voting provisions, that all
shareholders be paid the same price in the event of a merger not
negotiated by management of a Louisiana company. American Bank is
not subject to these provisions of the LBCL because it is not a
"corporation" within the meaning of the LBCL.
Interests of Certain Persons in the Merger
Indemnification of American Bank Directors. The terms of the
Agreement include certain provisions that protect the officers and
directors of American Bank from and against liability for actions
arising while they served in those capacities for American Bank.
The Agreement provides for indemnification of such persons to the
same extent as they would have been indemnified under the Articles
of Association and Bylaws of HNB in effect on September 19, 1994,
except that the Agreement limits HNB's aggregate liability for such
indemnification to $5 million and requires each officer and
director eligible for such indemnification to execute a joinder
agreement in which each such person agrees to cooperate with HNB in
any litigation or proceeding giving rise to a claim of
indemnification and to permit HNB to participate in and, at its
option assume the defense of, such litigation or proceeding.
The Agreement also provides for indemnification of American
Bank's officers, directors and certain affiliates from and against
liability arising under the Securities Act or otherwise if such
liability arises out of or is based on an untrue statement or
omission of a material fact required to be stated in the
Registration Statement, including this Proxy Statement-Prospectus,
or in any amendment or supplement thereto, or necessary to make the
statements made in any of the foregoing not misleading. This
indemnification does not apply to statements made in reliance on
information furnished to Hibernia by American Bank for use in the
Registration Statement, including this Proxy Statement-Prospectus.
Severance and Retention Benefits. Certain severance plans and
retention agreements were adopted by American Bank in 1994 to
encourage its employees and senior management to continue their
employment with American Bank in the context of ongoing merger
discussions between American Bank and certain non-affiliated
financial institutions as described elsewhere herein.
Pursuant to such severance plans and retention agreements,
employees of American Bank who work at least 30 hours per week and
have been employed by American Bank for at least six months will
receive severance and retention benefits based upon years of
service and level of compensation if they remain in the employ of
American Bank until the date of the Merger and either are not
offered employment by Hibernia or HNB following the Merger, are
offered employment with Hibernia or HNB that is not "comparable
employment" (as defined in the severance plans) to such employee's
<PAGE>
position with American 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 plans). If the Merger is
consummated and the other conditions of the severance plan and
retention agreement applicable to American Bank's executive
officers are satisfied, each executive officer of American Bank
(other than Darryl J. Chauvin, American Bank's President and Chief
Executive Officer) will receive severance and retention benefits
equal to between 18 and 30 months of such officer's total
compensation on a monthly basis for 1994; provided, however, that
the aggregate severance and retention payment to any employee of
American Bank cannot exceed such severance benefits as are payable
to Mr. Chauvin pursuant to his employment agreement, the severance
terms of which are described below.
In addition, Mr. Chauvin currently has an employment agreement
with American Bank that provides for certain severance payments if
Mr. Chauvin is terminated or voluntarily resigns his employment
within the thirty days immediately following a "Change of Control"
of American Bank (such term, as defined in such agreement, includes
the Merger). As a result, if the Merger is consummated and he is
terminated or voluntarily resigns his employment within the first
thirty days following consummation of the Merger, Mr. Chauvin 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 a bonus equal to the average of the
annual incentive compensation received by Mr. Chauvin during each
of the five years immediately preceding his termination or
resignation, which bonus shall be payable at the conclusion of each
succeeding year that ends during the thirty-six months following
his termination or resignation.
Advisory Board of Directors. As of the Effective Date, the
directors of American Bank will no longer hold their positions as
directors. American Bank's rights and obligations under Mr.
Chauvin's employment contract will be assumed by Hibernia upon
consummation of the Merger. In addition, Hibernia maintains a city
advisory board of directors in the Baton Rouge region of Louisiana
on which some or all of the directors of American Bank and its
subsidiaries may serve.
Material Tax Consequences
The following is a summary description of the material federal
income tax consequences of the Merger; it is not intended to be a
complete description of the federal income tax consequences of the
Merger. Tax laws are complex, and each shareholder's individual
circumstances may affect the tax consequences to such shareholder.
In addition, no information is provided with respect to the tax
consequences of the Merger under applicable state, local or other
tax laws. Each shareholder is therefore urged to consult a tax
advisor regarding the tax consequences of the Merger to him or her.
<PAGE>
Consummation of the Merger is conditioned upon the receipt of
an opinion to the effect that the Merger, when consummated in
accordance with the terms of the Agreement, will constitute a
reorganization within the meaning of Section 368(a) of the Code,
and that the exchange of American Bank Common Stock for Hibernia
Common Stock will not give rise to the recognition of gain or loss
for federal income tax purposes to American Bank's shareholders
with respect to such exchange. See "PROPOSED MERGER --
Representations and Warranties; Conditions to the Merger; Waiver."
If the Merger constitutes a reorganization within the meaning
of Section 368(a) of the Code: (i) no gain or loss will be
recognized by American Bank, Hibernia or HNB by reason of the
Merger; (ii) a shareholder of American Bank 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 American
Bank Common Stock; (iii) the tax basis in the Hibernia Common Stock
received by a shareholder of American Bank will be the same as the
tax basis in the American Bank Common Stock surrendered in exchange
therefor; and (iv) the holding period, for federal income tax
purposes, for Hibernia Common Stock received in exchange for
American Bank Common Stock will include the period during which the
shareholder held the American Bank Common Stock surrendered in the
exchange, provided that the American Bank Common Stock was held as
a capital asset at the Effective Date.
Cash received in lieu of fractional shares of Hibernia Common
Stock will be treated as if the fractional shares were distributed
as part of the exchange and then were redeemed by Hibernia. These
cash payments may result in the recognition of gain or loss,
depending upon the shareholder's basis in the shares of American
Bank Common Stock exchanged. Any gain or loss recognized will
generally be a capital gain or loss if the American Bank Common
Stock held by the shareholder was a capital asset.
The Louisiana income tax treatment of the Merger to the
shareholders of American Bank should be substantially the same as
the federal income tax treatment to the shareholders of American
Bank described above. Shareholders residing in states other than
Louisiana are encouraged to consult their tax advisors regarding
the state income tax implications of the Merger to them.
The parties have received the opinion of Ernst & Young LLP,
certified public accountants, to the effect that the Merger, if
consummated in accordance with the terms of the Agreement, will
constitute a reorganization for purposes of Section 368(a) of the
Code and will have the tax effects described in this section. A
copy of the opinion of Ernst & Young LLP in this regard is attached
hereto as Appendix D. As noted in the opinion, the opinion is
based upon certain representations and assumptions described
therein. Shareholders of American Bank are urged to review the
full text of the opinion of Ernst & Young LLP attached hereto as
<PAGE>
Appendix D with regard to the tax consequences of the Merger to
them.
For information regarding the federal income tax consequences
of cash payments received by dissenting shareholders, see "PROPOSED
MERGER -- Rights of Dissenting Shareholders."
Resale of Hibernia Common Stock
The shares of Hibernia Common Stock issuable to shareholders
of American Bank upon consummation of the Merger have been
registered under the Securities Act. It is a condition to closing
of the Merger that all shares of Hibernia Common Stock issued in
connection with the Merger be approved for listing, upon official
notice of issuance, on the NYSE. Such shares may be traded freely
by those shareholders not deemed to be affiliates of American Bank
as that term is defined under the Securities Act. The term
"affiliate" generally means each person who controls, or is a
member of a group that controls, or who is under common control
with, American Bank, and for purposes hereof could be deemed to
include all executive officers, directors and 10% shareholders of
American Bank.
Hibernia Common Stock received and beneficially owned by those
shareholders who are deemed to be affiliates of American Bank may
be resold without registration as provided by Rule 145, or as
otherwise permitted, under the Securities Act. Such affiliates,
provided they are not affiliates of Hibernia Corporation, may
publicly resell Hibernia Common Stock received by them in the
Merger subject to certain limitations, principally as to the manner
of sale, during the two years following the Effective Date. After
the two-year period, such affiliates may resell their shares
without restriction. In addition, shares of Hibernia Common Stock
issued to affiliates of American Bank in the Merger will not be
transferable until financial statements pertaining to at least 30
days of post-Merger combined operations of Hibernia and American
Bank have been published, in order to satisfy certain requirements
of the Commission relating to pooling-of-interests accounting
treatment.
The Agreement provides that American Bank will use its best
efforts to identify those persons who may be deemed to be
affiliates of American Bank and to cause each person so identified
to deliver to Hibernia a written agreement providing that such
person will not dispose of American Bank Common Stock or Hibernia
Common Stock received in the Merger except in compliance with the
Securities Act, the rules and regulations promulgated thereunder
and the Commission's rules relating to pooling-of-interests
accounting treatment. In addition, Hibernia intends to place stop
transfer instructions with its transfer agent regarding Hibernia
Common Stock issued to affiliates of American Bank.
<PAGE>
Rights of Dissenting Shareholders
Under the applicable federal laws governing mergers involving
national banks such as HNB, each shareholder of American Bank who
complies with the provisions of Section 376 of the Louisiana
Banking Law, La. R.S. 6:376, may dissent from the Merger and be
paid the fair cash value of his shares of American Bank Common
Stock as of the Effective Date, determined as described below.
To exercise the right of dissent, a shareholder must file with
American Bank, prior to the Special Meeting, a written objection to
the Merger and must vote his shares against the Merger. Notices of
dissent should be addressed to Sharon B. Kell, Vice President and
Cashier, American Bank, 22 Apple Street, Norco, Louisiana 70079-
2214.
If the Merger is effected, American Bank will send a notice to
each shareholder who filed an objection and voted his shares
against the Merger to such shareholder's last address on American
Bank's records. Within twenty (20) days after the mailing of such
notice, but not thereafter, the shareholder may file with American
Bank a demand in writing for the fair cash value of his shares as
of the day before the Special Meeting. Such demand must contain
the value of the shares demanded and a post office address to which
a reply may be sent. At the same time, such shareholder must
deposit in escrow in a bank or trust company located in St. Charles
Parish, Louisiana the certificates representing his shares on the
sole condition that such shares shall be delivered to American Bank
upon payment of the fair cash value in accordance with the
Louisiana Banking Law. Together with the shareholders' demand,
such shareholder shall deliver to American Bank the written
acknowledgment of the escrow bank or trust company that such bank
or trust company holds the shareholder's certificates.
Unless the objection, demand, and acknowledgment described
above are made and delivered by the shareholder within the period
described above, the shareholder shall be conclusively presumed to
have acquiesced to the Merger.
If American Bank disagrees with the value requested by a
shareholder it shall, within twenty (20) days, notify the
shareholder of the value that American Bank will agree to pay if
any payment should be held to be due; otherwise American Bank shall
be liable for and pay the value demanded by the shareholder. In
the case of a disagreement as to the fair cash value, the
shareholder may file suit in the district court in the parish in
which American Bank or HNB is domiciled. The court will determine
if payment is due, and, if so, the fair cash value to be paid to
the shareholder. If American Bank, in its notice of disagreement,
has offered to pay the dissatisfied shareholder an amount in cash
deemed by it to be the fair cash value, and shall have deposited
such amount in the registry of the court, then, if the amount
<PAGE>
ultimately awarded (exclusive of interest and costs) is more than
the amount so offered, the costs of the proceeding will be paid by
American Bank or HNB, as the case may be; otherwise, the costs of
the proceeding shall be paid by the dissatisfied shareholder.
THE FOREGOING SUMMARY OF THE PROVISIONS OF THE LOUISIANA
BANKING LAW RELATING TO DISSENTERS' RIGHTS IS NECESSARILY
INCOMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
EXCERPTS FROM THE FEDERAL AND STATE BANKING LAWS SET FORTH HEREIN
AS APPENDIX C.
Shareholders of American Bank who exercise and perfect
dissenters' rights and who receive cash for their shares of
American Bank Common Stock 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 American Bank
who voted in favor of the Merger. The receipt of cash for shares
will be treated as a complete redemption of the shareholder's
interest in the stock and, depending on the individual
shareholder's circumstances, may result in a capital gain to him.
The tax opinion rendered by Ernst & Young LLP and attached hereto
as Appendix D addresses the payments to dissenting shareholders and
states that those payments are not covered by the opinion and
therefore 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.
Shareholders of American Bank desiring to exercise dissenters'
rights should be aware that the exercise of dissenters' rights by
shareholders owning more than approximately 500 shares of American
Bank Common Stock may result in the Merger failing to qualify as a
pooling of interests. In that event, Hibernia would have the right
to terminate the Agreement and, if Hibernia exercised that right,
the Merger would not occur. See "--Accounting Treatment," below.
Dividend Reinvestment Plan
Hibernia Corporation maintains a Dividend Reinvestment Plan
through which shareholders of Hibernia who participate in the plan
may reinvest dividends in Hibernia Common Stock. Shares are
purchased for participants in the plan at their market value as
determined by the market price of the stock as listed on the NYSE.
The plan also permits participants to purchase additional shares
with cash at the then-current market price. All shares purchased
through the plan are held in a separate account for each
participant maintained by Hibernia's transfer agent. Shareholders
who participate in the Dividend Reinvestment Plan purchase shares
through the plan without paying brokerage commissions or other
costs ordinarily associated with open market purchases of stock.
<PAGE>
It is anticipated that the Dividend Reinvestment Plan will continue
after the Effective Date and that shareholders of American Bank who
become shareholders of Hibernia will have the same opportunity to
participate in the plan as other shareholders of Hibernia.
Accounting Treatment
It is anticipated that the Merger will be accounted for as a
"pooling-of-interests" transaction. In order for the Merger to
qualify for pooling-of-interests accounting treatment, 90% or more
of the outstanding American Bank Common Stock must be exchanged for
Hibernia Common Stock. Consequently, the amount of American Bank
Common Stock that will not be exchanged cannot exceed 10% of its
shares outstanding.
Included in the 10% calculation for this purpose are (i) any
shares held by Hibernia or its affiliates, (ii) any fractional
shares that are cashed out in the Merger, (iii) certain treasury
shares of American Bank, and (iv) shares as to which dissenters'
rights have been exercised and perfected. As of the date of this
Proxy Statement-Prospectus, it appears that the 10% limitation
would be exceeded if shareholders owning more than approximately
500 shares of American Bank Common Stock exercise dissenters'
rights, as Hibernia acquired over 9% of American Bank's Common
Stock as a result of its merger with First Continental Bancshares
and the terms of the Merger provide for cash to be exchanged for
fractional shares.
Also, in order for the pooling-of-interests accounting method
to apply, "affiliates" of American Bank cannot reduce their
holdings of Hibernia Common Stock received in the Merger for a
period beginning 30 days prior to the Effective Date and ending
upon the publication of at least 30 days of post-Merger combined
operations of American Bank and Hibernia. Persons believed by
American Bank to be "affiliates" have agreed to comply with these
restrictions.
American Bank has agreed to use its best efforts to permit the
transaction to be accounted for as a pooling-of-interests.
Hibernia is not obligated to consummate the Merger if the Merger
does not qualify for pooling-of-interests accounting treatment.
CERTAIN REGULATORY CONSIDERATIONS
General
As a bank holding company, Hibernia is subject to the
regulation and supervision of the Board of Governors of the Federal
Reserve System ("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,
<PAGE>
without the prior approval of the Federal Reserve Board. In
addition, bank holding companies are generally prohibited from
engaging under the BHCA in nonbanking activities, subject to
certain exceptions.
Hibernia's banking subsidiary, HNB, is subject to supervision
and examination by applicable federal and state banking agencies.
HNB is a national banking association subject to the regulation and
supervision of the OCC. HNB is also subject to various
requirements and restrictions under federal and state law,
including requirements to maintain reserves against deposits,
restrictions on the types and amounts of loans that may be granted
and the interest that may be charged thereon and limitations on the
types of investments that may be made and the types of services
that may be offered. Various consumer laws and regulations also
affect the operations of HNB. In addition to the impact of
regulation, commercial banks are affected significantly by the
actions of the Federal Reserve Board as it attempts to control the
money supply and credit availability in order to influence the
economy.
Payment of Dividends
Hibernia generally depends upon payment of dividends by HNB in
order to pay dividends to its shareholders and to meet its other
needs for cash to pay expenses. Hibernia derives substantially all
of its income from the payment of dividends by HNB, and its ability
to pay dividends is affected by the ability of HNB to pay
dividends. HNB is subject to various statutory restrictions on its
ability to pay dividends to Hibernia. Under such restrictions, the
amount available for payment of dividends to Hibernia by HNB was
approximately $61 million at December 31, 1993. In addition, the
OCC has the authority to prohibit any national bank from engaging
in an unsafe or unsound practice, and the OCC has indicated its
view that it generally would be an unsafe and unsound practice to
pay dividends except out of current operating earnings. The
ability of HNB to pay dividends in the future is presently, and
could be further, influenced by bank regulatory policies or
agreements and by capital guidelines. Additional information in
this regard is contained in documents incorporated by reference
herein. See "AVAILABLE INFORMATION."
In addition, consistent with its policy regarding bank holding
companies serving as a source of strength for their subsidiary
banks, the Federal Reserve Board has stated that, as a matter of
prudent banking, a bank holding company generally should not
maintain a rate of cash dividends unless its net income available
to common stockholders has been sufficient to fully fund the
dividends, and the prospective rate of earnings retention appears
to be consistent with the holding company's capital needs, asset
quality and overall financial condition.
<PAGE>
Restrictions on Extensions of Credit
HNB is subject to restrictions imposed by federal law on the
ability of any national bank to extend credit to affiliates,
including Hibernia, to purchase the assets thereof, to issue a
guarantee, acceptance or letter of credit on their behalf
(including an endorsement or standby letter of credit) or to
purchase or invest in the stock or securities thereof or to take
such stock or securities as collateral for loans to any borrower.
Such extensions of credit and issuances generally must be secured
by eligible collateral and are generally limited to 15% of HNB's
capital and surplus.
CERTAIN INFORMATION CONCERNING AMERICAN BANK
Description of the Business
American Bank, a Louisiana state bank organized in 1964,
provides full-service consumer and commercial banking services in
Norco, Louisiana and surrounding areas of St. Charles Parish,
Louisiana, through its main banking office at 22 Apple Street,
Norco, Louisiana, and four full service branches located in Boutte,
Destrehan, Hahnville and Luling, Louisiana. Deposits of American
Bank are insured by the Federal Deposit Insurance Corporation
("FDIC") up to applicable legal limits. American Bank offers an
array of deposit services, including demand accounts, NOW accounts,
certificates of deposit, and money market accounts, and provides
safe deposit boxes, night depository, individual retirement
accounts, and drive-in banking services. American Bank's lending
activities consist principally of real estate, consumer, and
commercial loans. At September 30, 1994, American Bank had total
deposits of approximately $82.2 million, total assets of
approximately $92.7 million, and shareholders' equity of
approximately $9.3 million.
American 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 American 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 American
Bank.
Competition
American 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. American Bank's primary market area, St. Charles
Parish, has a current population of approximately 42,000.
<PAGE>
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. American 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 American 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 area.
At present, several holding companies with greater resources
than those of American Bank have acquired banks or established
branches in American Bank's market area and are continuing to do
so. The size of these institutions allows certain economies of
scale that permit their operation on a narrower profit margin than
would be appropriate for American Bank.
Property
The executive office of American Bank, located at 22 Apple
Street, Norco, Louisiana, is owned by American Bank and is not
subject to a mortgage. American Bank also owns the building and
land where its Boutte, Destrehan and Luling branches are located.
American Bank leases the building and land where its Hahnville
branch is located and the offices in which its New Orleans loan
production office is located, under leases that expire in August
and June 1995, respectively. The lease agreement relating to the
Hahnville branch is subject to a single renewal option for an
additional two-year term. None of the properties owned by American
Bank is subject to a mortgage.
Employees
American Bank has approximately 60 full-time and 13 part-time
employees and considers its relationship with its employees to be
good. None of American Bank's employees are subject to a
collective bargaining agreement.
Market Prices and Dividends
Market Prices. American Bank 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 American Bank Common
Stock.
At December 30, 1994, there were 508 shareholders of Bank.
Cash Dividends. American Bank declared a cash dividend on
Bank Common Stock of $.10 per share during the fiscal year ended
<PAGE>
December 31, 1993 and did not declare a dividend during the fiscal
year ended December 31, 1992. American Bank 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.
American Bank's payment of dividends is subject to certain
legal restrictions applicable to all Louisiana state banks. The
prior approval of the Louisiana Commissioner of Financial
Institutions (the "Commissioner") is required if the total of all
dividends declared in any one year will exceed the sum of American
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 September 30, 1994, American Bank had approximately
$3.6 million available for the payment of dividends without prior
approval of the Commissioner.
Legal Proceedings
American Bank normally is a party to and has pending routine
litigation arising from its 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 American
Bank. As of September 30, 1994, American Bank did not have any
litigation pending other than ordinary routine litigation
incidental to its business that was not material in amount in
respect of American Bank's assets.
Security Ownership of Principal Shareholders. Except for the
American Bank Common Stock, American Bank has no other class of
voting securities issued or outstanding. The following table
provides information concerning all persons known to American Bank
to be beneficial owners, directly or indirectly, of more than 5% of
the outstanding shares of American Bank Common Stock, as of the
Record Date. Unless otherwise noted, the named persons own the
shares directly and have sole voting and investment power with
respect to the shares indicated.
<PAGE>
Name and Address Number of
of Beneficial Owner Shares Owned Percent
of Class
Hibernia Corporation
313 Carondelet Street
New Orleans, LA 70130 47,763(1) 9.87%
Gerald H. Smith
P.O. Box 131405
Houston, TX 77219 120,527(2) 24.92%
R. Preston Wailes
1528 Nashville Avenue
New Orleans, LA 70115 61,915(3) 12.80%
* Less than one percent of class
(1) Includes 1,100 shares held of record by Hibernia and 46,663
shares held of record by HNB.
(2) Includes 98,305 shares held of record by Mr. Smith and 22,222
shares held of record by Mr. Smith as trustee for Elizabeth
Smith.
(3) Includes 4,432 shares held of record by Mr. Wailes and 57,483
shares held of record by Martha P. Wailes, Mr. Wailes' wife,
as to which shares Mr. Wailes disclaims beneficial ownership.
Ownership of Directors and Executive Officers of American
Bank. The following table provides information concerning the
shares of American Bank Common Stock beneficially owned, directly
or indirectly, by each director and executive officer of American
Bank, and all directors and executive officers as a group, as of
the Record Date. Unless otherwise noted, the named persons have
sole voting and investment power with respect to the shares
indicated.
Number of
Shares Owned Percent
Name of Beneficial Owner Beneficially of Class
Elton A. Arceneaux, Jr. 13,663(1) 2.82%
Larry Babin 1,040 *
Darryl J. Chauvin 1,200 *
Manuel V. Dugas 2,024 *
Steven F. Griffith, Sr. 1,000 *
E. L. Holmes 6,164(2) 1.27%
A.J. Migliore 2,990(3) *
R. Preston Wailes 61,915(4) 12.80%
R. C. Zeringue 2,332(5) *
All Directors and 92,328 19.09%
Executive Officers
as a Group (10 persons)
<PAGE>
* Less than one percent of class
(1) Includes 7,599 shares held of record by Mr. Arceneaux. Also
includes 120 shares held of record by Linda P. Arceneaux, Mr.
Arceneaux's wife, 2,474 shares held of record by Ms. Arceneaux
and Anna C. Arceneaux, 838 shares held of record by Ms.
Arceneaux and Charisse Webb for Elise Webb, 837 shares held of
record by Ms. Arceneaux and Charisse Webb for Travis Webb, 838
shares held of record by Ms. Arceneaux and Randal Arceneaux
for Daniel Arceneaux, 837 shares held of record by Ms.
Arceneaux and Randal Arceneaux for Adam Arceneaux, and 120
shares held of record by Ms. Arceneaux as trustee for the
Jonathan Adam Arceneaux Trust, as to which shares Mr.
Arceneaux disclaims beneficial ownership.
(2) Includes 1,000 shares held of record by Mr. Holmes and 5,164
shares held of record by Mr. Holmes and Mary Holmes, Mr.
Holmes' wife.
(3) Includes 1,080 shares held of record by Mr. Migliore and 1,910
shares held of record by Mr. Migliore and Martha Migliore, Mr.
Migliore's wife.
(4) Includes 4,432 shares held of record by Mr. Wailes and 57,483
shares held of record by Martha P. Wailes, Mr. Wailes' wife,
as to which shares Mr. Wailes disclaims beneficial ownership.
(5) Includes 1,082 shares held of record by Mr. Zeringue and 1,100
shares held of record by Mr. Zeringue and Mary Jane Zeringue,
Mr. Zeringue's wife. Also includes 100 shares in two equal
lots held of record by Ms. Zeringue as agent for Kevin
Zeringue and Lannie C. Zeringue, 40 shares held of record by
Ms. Zeringue as agent for Corey J. Zeringue, and 10 shares
held of record by Ms. Zeringue as agent for Christy Ann
Zeringue, as to which shares Mr. Zeringue disclaims beneficial
ownership.
<PAGE>
AMERICAN BANK MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
American Bank reported net income of $2,339,000 for the nine
months ended September 30, 1994, which represents a 130% increase
from the net income of $1,017,000 for the comparable period in
1993. Net income per share was $4.83 for the nine months ended
September 30, 1994 and $2.10 for the same period in 1993. American
Bank's net income for 1993 was $1,261,000, a 26% increase from 1992
net income of $1,001,000. Net income per share was $2.60 in 1993
and $2.07 in 1992.
The primary reasons for the improvement in net income during
the first nine months of 1994 over the first nine months of 1993
were a recovery on August 1, 1994 of a charged-off investment by
American Bank in the 12% Mandatory Convertible Subordinated
Debentures due 1996 (the "FCB Debentures") of First Continental
Bancshares, Inc. ("FCB") and a negative provision for loan losses
of $370,000. Additionally, American Bank received approximately
$152,000 upon the conversion of FCB preferred stock owned by
American Bank into Hibernia Common Stock, representing cash in the
amount of undeclared and accumulated dividends on the FCB preferred
stock, with interest, upon the merger of FCB with and into Hibernia
(the "FCB Merger"), which became effective on August 1, 1994.
American Bank received total cash proceeds of $1,346,000 on
redemption of the FCB Debentures, representing the principal amount
of the FCB Debentures held by American Bank, all accrued and unpaid
interest, and a redemption premium, all of which is included in
pre-tax income for the nine month period ended September 30, 1994.
Absent the recovery on the FCB Debentures and the gain associated
with the conversion of FCB preferred stock owned by American Bank
in the FCB Merger, American Bank would have recorded net income of
$1,246,000 for the nine months ended September 30, 1994, which
represents a 22.5% increase over the same period last year.
The improvement in net income over the two years ended
December 31, 1993 was principally attributable to increases in
average earning assets and lower interest costs. Net income for
1993 also included $50,000 ($.10 per share) of income related to
the adoption by American Bank of a new accounting standard for
income taxes.
Improving loan quality and lower net charge-offs resulted in
the negative provision for loan losses during the first nine months
of 1994, compared to no provision during 1993 or 1992. Net interest
income during the first nine months of 1994 increased $191,000 to
$3,924,000, which represents a 3.7% increase over the same period
of 1993. Net interest income in 1993 increased 10.2% from 1992,
from $4,320,000 to $4,762,000. The primary reasons for the
increase from the first nine months of 1993 to the comparable
period in 1994 were increases in average earning assets and lower
interest costs. The increase from 1992 to 1993 is principally
attributable to volume change.
<PAGE>
At September 30, 1994, American Bank had total assets and
deposits of $92,699,000 and $82,244,000, respectively, which
represented decreases of 1.5% and 4.7%, respectively, from amounts
reported at December 31, 1993. Loans, net of the reserve for
possible loan losses, were $53,647,000 at September 30, 1994, an
increase of 3.8% from the amount reported at the end of 1993. The
decrease in assets as of September 30, 1994 when compared to
December 31, 1993 is principally due to a decline in public fund
deposits, offset by increases in American Bank's investments and
loans. American Bank's total assets and deposits are historically
higher at year-end as the result of deposits of public funds
received from local taxing authorities.
The following table sets forth certain information regarding
American Bank's results of operations for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------ ----------------------
1994 1993 1993 1992
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net income $2,339 $1,017 $1,261 $1,001
Net income per share* $ 4.83 $ 2.10 $ 2.60 $ 2.07
Return on average assets 2.48% 1.17% 1.45% 1.19%
Return on average equity 28.98% 15.11% 18.30% 17.36%
Average equity to average
assets 8.56% 7.73% 7.93% 6.86%
Dividend pay-out ratio - - 3.85% -
</TABLE>
* Per share data are based upon a weighted average number of shares
outstanding of 483,686.
A more detailed review of American Bank's financial condition
and results of operations for the years ended December 31, 1993 and
1992 and the nine months ended September 30, 1994 and 1993 follows.
This discussion and analysis should be read in conjunction with
American Bank's financial statements and the notes thereto
appearing elsewhere in this Proxy Statement-Prospectus.
RESULTS OF OPERATIONS
NET INTEREST INCOME.
The principal component of American Bank's net earnings is net
interest income, which is the difference between interest and fees
earned on interest-earning assets and interest paid on deposits and
borrowed funds. Net interest income, when expressed as a
percentage of total average interest-earning assets, is referred to
as net interest margin. Net interest income for the nine months
ended September 30, 1994 increased to $3,924,000 from $3,733,000
recorded for the comparable period in 1993, an increase of 5.1%.
1993 net interest income of $4,762,000 represents an increase of
$442,000, or 10.2%, from net interest income of $4,320,000 reported
for the year ended December 31, 1992. The improvements in 1994 and
1993 were primarily the result of increases in average earning
assets and lower interest costs.
<PAGE>
Average interest-earning assets were $84,985,000 for the nine
months ended September 30, 1994, $78,139,000 for 1993 and
$73,469,000 for 1992. Interest-earning assets were up significantly
in 1994 due to strong loan demand. Average loans, the Company's
highest yielding assets, rose 21.6% from 1992 to 1993 and 13.3%
from 1993 to September 30, 1994. Net interest margin decreased 2
basis points to 5.64% for the nine months ended September 30, 1994
from 5.66% recorded for 1993. 1993 net interest margin represented
a 15 basis point increase from 1992 net interest margin of 5.51%.
American Bank's net interest income is affected by the change
in the amount and mix of interest-earning assets and
interest-bearing liabilities, and by changes in yields earned on
assets and rates paid on deposits and other borrowed funds. The
following table sets forth certain information concerning average
interest-earning assets and interest-bearing liabilities and the
yields and rates thereon for the periods presented. Average
balances are computed using daily average balances.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1994 YEAR ENDED DECEMBER 31, 1993 YEAR ENDED DECEMBER 31, 1992
----------------------------- ---------------------------------- ----------------------------------
INTEREST AVERAGE INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
--------- -------- -------- --------- ----------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
INTEREST-EARNING ASSETS:
Loans $52,994 $3,620 9.11% $46,777 $4,358 9.32% $38,468 $4,080 10.61%
Interest-bearing deposits
with financial
institutions 166 4 3.47% 189 6 3.27% 89 4 4.30%
Investment securities 25,211 1,176 6.22% 26,948 1,777 6.59% 30,159 2,250 7.46%
Federal funds sold 6,614 179 3.56% 4,225 125 2.95% 4,753 159 3.35%
------- ------ ------- ------ ------- ------
Total interest-earning
assets $84,985 $4,979 7.81% $78,139 $6,266 8.02% $73,469 $6,493 8.84%
------- ------ ------- ------ ------- ------
INTEREST-BEARING
LIABILITIES:
Deposits:
Money market demand $12,667 $ 205 2.17% $12,949 $ 306 2.36% $13,081 $ 396 3.03%
Savings and other
interest-bearing demand 28,685 453 2.10% 25,175 570 2.26% 23,904 672 2.81%
Time deposits 29,053 $ 721 3.30% $27,621 $ 965 3.49% $29,084 $1,375 4.73%
------- ------ ------- ------ ------- ------
Total interest-bearing
liabilities $70,405 $1,379 2.62% $65,745 $1,841 2.80% $66,069 $2,443 3.70%
------- ------ ------- ------ ------- ------
Net interest income $3,600 $4,425 $4,050
------ ------ ------
Net interest margin 5.64% 5.66% 5.51%
</TABLE>
<PAGE>
The following table sets forth changes in interest income and
interest expense for each major category of interest-earning assets
and interest-bearing liabilities and the amount of change
attributable to volume change and rate change for the periods
indicated. The change in interest income due to both volume change
and rate change has been allocated to volume change.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1993 AND 1992 YEARS ENDED DECEMBER 31, 1992 AND 1991
INCREASE (DECREASE) DUE TO CHANGES IN INCREASE (DECREASE) DUE TO CHANGES IN
----------------------------------------- -----------------------------------------
NET NET
VOLUME RATE CHANGE VOLUME RATE CHANGE
-------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
INTEREST-EARNING ASSETS:
Loans $ 572 $(293) $ 279 $201 $ (19) $ 182
Interest-bearing deposits
with financial
institutions 3 (1) 2 - (2) (2)
Investment securities (211) (262) (473) 133 (233) (100)
Federal funds sold (15) (20) (35) 35 (86) (51)
----- ----- ----- ---- ------ -------
Total $ 349 $(576) $(227) $369 $ (340) $ 29
===== ===== ===== ==== ======= =======
INTEREST-BEARING
LIABILITIES:
Money market demand $ (3) $ (88) $ (91) $ 43 $ (231) $ (188)
Savings and other
interest-bearing deposits 29 (131) (102) 77 (442) (365)
Time deposits (50) (361) (411) (49) (566) (615)
Federal funds purchased - - - - - -
----- ----- ----- ---- ------- -------
Total $ (24) $(580) $(604) $ 71 $(1,239) $(1,168)
===== ===== ===== ==== ======= =======
Interest differential $ 373 $ 4 $ 377 $298 $ 899 $ 1,197
</TABLE>
PROVISION FOR LOAN LOSSES.
The provision for loan losses is the periodic charge to
earnings for potential losses in the loan portfolio. The amounts
provided for loan losses are determined by management after
evaluations of the loan portfolio. This evaluation process
requires that management apply various judgments, assumptions and
estimates concerning the impact certain factors may have on amounts
provided. Factors considered by management in its evaluation
process include known and inherent losses in the loan portfolio,
the current economic environment, the composition of and risk in
the loan portfolio, prior loss experience and underlying collateral
values. While management considers the amounts provided through
September 30, 1994 to be adequate, subsequent changes in these
factors and related assumptions may warrant significant adjustments
in amounts provided, based on conditions prevailing at the time.
In addition, various regulatory agencies, as an integral part of
the examination process, review American Bank's allowance for loan
losses. Such agencies may require American Bank to make additions
to the allowance based on their judgments of information available
to them at the time of their examinations.
The provision for loan losses for the nine months ended
September 30, 1994 and 1993 was $(370,000) and $-0-, respectively.
No provision for loan losses was made for the years ended December
31, 1993 and 1992. Fewer nonperforming loans and lower net
charge-offs resulted in the negative provision for loan losses in
1994. A continuation of negative provisions is unlikely, although
any provision in the fourth quarter of 1994 is not expected to be
significant.
<PAGE>
NON-INTEREST INCOME.
Non-interest income, excluding securities transactions, was
$829,000 for the nine months ended September 30, 1994, compared to
$650,000 for the comparable period of 1993. Non-interest income,
excluding securities transactions, was $1,180,000 for the year
ended December 31, 1993, compared to $1,326,000 for 1992. The
increase in non-interest income from September 30, 1993 to the
comparable period in 1994 was attributable primarily to the receipt
of $152,000 in accumulated and unpaid dividends, and interest
thereon, on FCB preferred stock owned by American
Bank, upon the conversion of such FCB preferred stock in the FCB
Merger, and increased commissions on the sale of credit life
insurance. The decrease in non-interest income from 1992 to 1993
was due principally to decreases in income booked on Owned Real
Estate and credit life insurance commissions.
NON-INTEREST EXPENSE.
Non-interest expense for the nine months ended September 30,
1994 and 1993 was $3,007,000 and $2,994,000, respectively, a .43%
increase. Non-interest expense for the year ended December 31,
1993 decreased $79,000, or 1.83%, from 1992. The decrease in
non-interest expense during these periods was attributable
principally to decreased loan collection and ORE expense.
INCOME TAXES.
American Bank's provision for income taxes was $1,123,000 for
the nine months ended September 30, 1994, compared to $438,000 for
the nine months ended September 30, 1993. Such provision was
$508,000 for 1993 compared to $422,000 for 1992. The increase from
the first nine months of 1993 to the comparable period of 1994 was
due principally to the increase in pre-tax income associated with
the recovery on the FCB Debentures. The increase from 1992 to 1993
was due primarily to an increase in pre-tax income from 1992 to
1993 of $296,000 and an increase in the marginal federal income tax
rate from 34% to 35%.
American Bank adopted a new standard for accounting for income
taxes effective January 1, 1993. Under Statement of Financial
Accounting Standards No. 109 ("SFAS 109") deferred income taxes are
provided for by the liability method. The effect of adopting SFAS
109 was a one-time increase in the deferred tax asset by $50,000,
which is reflected in American Bank's Statement of Income for 1993
as the cumulative effect of an accounting change.
<PAGE>
FINANCIAL CONDITION
The following table sets forth the Company's average assets,
liabilities and shareholders' equity and the percentage
distribution of these items for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED ---------------------------------------
SEPTEMBER 30, 1994 1993 1992
------------------ ------------------- ------------------
AVERAGE AVERAGE AVERAGE
BALANCE PERCENT BALANCE PERCENT BALANCE PERCENT
--------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS:
Cash and due from banks $ 2,107 2.26% $ 2,185 2.51% $ 2,267 2.69%
Interest-bearing deposits with
financial institutions 166 .18% 189 .22% 89 .11%
Investment securities 25,211 27.05% 26,948 31.02% 30,159 35.85%
Federal funds sold 6,614 7.10% 4,225 4.86% 4,753 5.65%
Loans (net of allowance for
credit losses) 52,994 56.88% 46,777 53.85% 38,468 45.73%
Other assets 6,082 6.53% 6,549 7.54% 8,384 9.97%
------- ------ -------- ------ ------- ------
Total assets
$93,174 100.00% $ 86,873 100.00% $84,120 100.00%
======= ====== ======== ====== ======= ======
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Demand deposits $14,595 15.67% $13, 061 15.03% $11,301 13.43%
Interest-bearing deposits 70,405 75.56% 65,745 75.68% 66,069 78.54%
Other liabilities 105 .11% 1,175 1.35% 983 1.17%
------- ------ -------- ------ ------- ------
Total liabilities 85,105 91.34% 79,981 92.06% 78,353 93.14%
Shareholders' equity 8,069 8.66% 6,892 7.94% 5,767 6.86%
------- ------ -------- ------ ------- ------
Total liabilities and
shareholders' equity
$93,174 100.00% $ 86,873 100.00% $84,120 100.00%
======= ====== ======== ====== ======= ======
</TABLE>
TOTAL ASSETS.
At September 30, 1994, total assets were approximately
$92,699,000, compared to $94,138,000 at December 31, 1993 and
$86,282,000 at December 31, 1992. Total average assets for the
nine months ended September 30, 1994 were $93,174,000, an increase
of 7.25%, from the $86,873,000 average for the year ended December
31, 1993. The increases in average assets during the first nine
months of 1994 and the year ended December 31, 1993 reflect
increased loan demand, partially offset by a decline in investment
securities from 1992 to 1993. The mix of average assets during the
first nine months of 1994 and the year ended December 31, 1993
represent shifts from investment securities to loans and Federal
funds sold, and American Bank's ability during these periods to
increase its loan portfolio as interest-bearing deposits increased.
INVESTMENT SECURITIES.
At September 30, 1994, American Bank's investment securities
portfolio aggregated $27,740,000, an increase of $7,354,000 from
the $20,386,000 reported at December 31, 1993, which reflects a
decrease of $5,795,000 from the $26,181,000 reported at December
31, 1992.
<PAGE>
The following table sets forth the composition of American Bank's
investment portfolio at the end of each period presented.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------------
1994 1993 1992
------------- -------- --------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
U.S. Treasuries $ 7,448 $ 5,009 $ 4,979
U.S. Government agencies 1,502 1,506 2,910
Municipal securities 2,921 917 -
Government Guaranteed
Mortgage Backed Securities 7,560 7,006 8,572
Government Guaranteed &
Private Issue CMO's 8,309 5,948 9,720
------- ------- -------
Total $27,740 $20,386 $26,181
======= ======= =======
</TABLE>
Effective January 1, 1994, American Bank adopted
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities" ("SFAS
115"), which requires the classification of securities into one of
three categories: Trading, Available-for-Sale, or Held-to-Maturity.
Management determines the appropriate classification of debt
securities at the time of purchase and re-evaluates this
classification periodically. Trading account securities are held
for resale in anticipation of short-term market movements.
American Bank has not engaged in trading activities related to any
of its investment securities and has no securities classified as
Trading. Debt securities are classified as held-to-maturity when
American Bank has the positive intent and ability to hold the
securities to maturity. Held-to-maturity securities are stated at
amortized cost. Securities not classified as trading or
held-to-maturity are classified as available-for-sale.
Available-for-sale securities are stated at fair value, with
unrealized gains and losses, net of tax, reported in a separate
component of shareholders' equity. American Bank may sell these
securities in response to liquidity demands. Available-for-Sale
securities also may be used as a means of adjusting the interest
rate sensitivity of American Bank's balance sheet through sale and
reinvestment.
The following table presents selected contractual
maturity data for the investment securities in American Bank's
portfolio at September 30, 1994.
<TABLE>
<CAPTION>
AFTER ONE YEAR AFTER FIVE YEARS
ONE YEAR OR LESS THROUGH FIVE YEARS THROUGH 10 YEARS AFTER 10 YEARS
----------------- ------------------- ----------------- ----------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
-------- ------- --------- -------- -------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
U.S. Treasuries $1,999 6.03% $5,449 5.53% $ - $ -
U.S. Government agencies - 500 5.33% 1,003 7.70% -
Municipal securities - - 1,260 6.99% 1,662 8.37%
Government Guaranteed
Mortgage Backed
Securities - 743 7.25% 2,765 4,052 7.24%
Government Guaranteed & 7.49%
Private Issue CMO's - 592 4.71% 1,924 7.47% 5,791 6.20%
------ ------ ------ -------
Total $1,999 $7,284 $6,952 $11,505
====== ====== ====== =======
</TABLE>
<PAGE>
The following table presents selected contractual maturity
data for the investment securities in American Bank's portfolio at
December 31, 1993.
<TABLE>
<CAPTION>
AFTER ONE YEAR AFTER FIVE YEARS
ONE YEAR OR LESS THROUGH FIVE YEARS THROUGH 10 YEARS AFTER 10 YEARS
----------------- ------------------- ----------------- ---------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
-------- ------- --------- -------- -------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
U.S. Treasuries $2,000 5.53% $3,009 5.83% $ - $ -
U.S. Government agencies - 500 5.32% 1,006 7.39% -
Municipal securities - - 917 7.07% -
Government Guaranteed
Mortgage Backed
Securities - 1,102 7.86% 553 8.85% 5,351 8.73%
Government Guaranteed &
Private Issue CMO's - 367 5.21% 1,941 6.75% 3,640 6.55%
------ ------ ------ ------
Total $2,000 $4,978 $4,417 $8,991
====== ====== ====== ======
</TABLE>
See Note 2 to American Bank's Financial Statements appearing
elsewhere in this Proxy Statement-Prospectus for information
concerning the amortized cost and Estimated fair values of American
Bank's investment securities at December 31, 1993 and 1992.
LOANS.
American Bank engages in real estate lending through real
Estate construction and mortgage loans, and commercial and consumer
lending. The lending activities of American Bank are guided by the
basic lending policy established by its Board of Directors. 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 following table sets forth the type and amount of loans
outstanding as of the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
-------------- --------------------
1994 1993 1992
-------------- --------- ---------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Commercial/Industrial $ 5,449 $ 5,686 $ 5,053
Commercial Real Estate 18,249 16,823 12,896
Residential Real Estate 26,337 25,341 18,247
Consumer/Installment 4,296 4,679 5,154
Unearned Discount (2) (3) (10)
Other 33 63 47
------- ------- -------
Total loans $54,362 $52,589 $41,387
======= ======= =======
</TABLE>
<PAGE>
Except as otherwise set forth in the table above, as of
September 30, 1994, American Bank did not have any concentration of
loans in any particular industry exceeding 10% of total outstanding
loans. A concentration is defined as amounts loaned to a multiple
number of borrowers engaged in similar activities, which would
cause them to be similarly impacted by economic or other
conditions, where the amount exceeds 10% of total outstanding
loans.
At September 30, 1994, loans were $54,362,000, as compared to
$52,589,000 at December 31, 1993 and $41,387,000 at December 31,
1992. Average loans have increased over these periods as well,
from $38,468,000 and $46,777,000, respectively, for 1992 and 1993,
to $52,994,000 for the nine months ended September 30, 1994. These
increases in the amount of outstanding loans are attributable
principally to increased loan demand in the market served by
American Bank as the local economy strengthened. American Bank's
average loan to deposit ratio was 53.9% during the first nine
months of 1994 as compared to 47.9% and 63.2% during 1993 and 1992,
respectively. The increases are primarily the product of increased
loan demand.
At September 30, 1994, residential real estate, commercial
real estate and commercial/industrial loans comprised approximately
48%, 34% and 10% respectively, of total outstanding loans. This
compares to 48%, 32% and 11% categorized as residential real
estate, commercial real estate and commercial/industrial loans,
respectively, at December 31, 1993 and 44%, 31% and 12% categorized
as residential real estate, commercial real estate and
commercial/industrial loans, respectively, at December 31, 1992.
The following table provides information concerning loan
portfolio maturity as of December 31, 1993. Loan portfolio
maturity by type of loan as presented in the table above is not
readily available.
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
ONE YEAR OR LESS
Floating interest rate $ 1,682
Fixed interest rate 6,724
AFTER ONE YEAR THROUGH FIVE YEARS:
Floating interest rate 4,525
Fixed interest rate 10,457
AFTER FIVE YEARS:
Floating interest rate 6,384
Fixed interest rate 22,817
-------
TOTAL $52,589
=======
</TABLE>
NONACCRUAL, PAST DUE AND MODIFIED LOANS.
The performance of American Bank's loan portfolio is evaluated
regularly by Senior Management and the Board of Directors.
Interest on loans is accrued monthly as earned. A loan is
generally placed on nonaccrual status when principal or interest is
past due 90 days or more, except when management determines the
loan remains likely to be fully collectible. Upon being placed on
nonaccrual status, the accrual of income from a loan is
discontinued and previously accrued but unpaid interest is reversed
<PAGE>
against income. Each loan that is 90 days or more past due is
evaluated to determine its collectibility and the adequacy of its
collateral.
The following table sets forth the amount of American Bank's
nonperforming loans (nonaccrual loans and loans past due 90 days or
more and still accruing interest) and loans with modified terms as
of the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- --------------------
1994 1993 1992
------------- --------- ---------
<S> <C> <C> <C>
Nonaccrual loans $124,028 $818,000 $478,000
Loans past due 90 days or more and
still accruing interest 86,854 51,197 141,000
Renegotiated debt, still accruing interest - 317,000 783,000
</TABLE>
As a percent of total loans, loans past due 90 days or more
and not on nonaccrual status were .16% at September 30, 1994,
compared to .10% and .34% of total loans at December 31, 1993 and
1992. Nonaccrual loans were .23% of total loans at September 30,
1994, 1.56% at year-end 1993 and 1.15% at year-end 1992. Loans
with modified terms represented 0% of total loans at September 30,
1994, compared to .60% and 1.89% respectively, at December 31, 1993
and 1992. If loans classified as nonperforming at September 30,
1994 and year-end 1993 and 1992 had performed in accordance with
their original terms, interest income would not have increased by
material amounts. Income recognized on nonaccrual loans was not
material during these periods.
At September 30, 1994, American Bank had three loans in the
amount of $124,028 on nonaccrual status, each of which is secured
by real estate. One of these loans, in the amount of $6,764,
subsequently has become current and returned to accrual status.
As of September 30, 1994, American Bank was not aware of any
other loans where known information about possible credit problems
of the borrower caused management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment terms.
American Bank's primary regulators and internal auditors review the
loan portfolio as part of their regular examinations and their
assessment of specific credits, based on information available to
them at the time of their examination, may affect the level of
American Bank's non-performing loans. Additionally, the loan
portfolio is regularly monitored by Senior Management and the
Board. Accordingly, there can be no assurance that other loans will
not be placed on nonaccrual, become 90 days or more past due, or
have terms modified in the future.
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.
American Bank will adopt this statement beginning January 1, 1995.
The effect of adopting SFAS 114 on American Bank's financial
statements has not yet been determined, but is not expected to be
material.
<PAGE>
ALLOWANCE FOR LOAN LOSSES.
A certain degree of risk is inherent in the extension of
credit. Management has credit policies in place to monitor and
attempt to control the level of loan losses and nonperforming
loans. One product of American Bank's credit risk management is
the maintenance of the allowance for loan losses at a level
considered by management to be adequate to absorb estimated known
and inherent losses in the existing portfolio, including
commitments and standby letters of credit. The allowance for loan
losses is established through charges to operations in the form of
provisions for loan losses.
The allowance is based upon a regular review of current
economic conditions, which might affect a borrower's ability to
pay, underlying collateral values, risk in and the composition of
the loan portfolio, prior loss experience and industry averages. In
addition, American Bank's primary regulators, as an integral part
of their examination process, periodically review American Bank's
allowance for loan losses and may recommend additions to the
allowance based on their assessment of information available to
them at the time of their examination. Loans that are deemed to be
uncollectible are charged-off and deducted from the allowance. The
provision for loan losses and recoveries on loans previously
charged-off are added to the allowance.
The following table sets forth American Bank's loan loss
experience and certain information relating to its allowance for
loan losses as of the dates and for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ -------------------------
1994 1993 1992
------------------ ------------ -----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Average net loans outstanding $52,994 $46,777 $38,468
Balance of allowance for credit losses
at beginning of period 885 1,215 1,245
Charge offs:
Commercial loans (14) (327) (107)
Consumer loans (9) (13) (15)
Recoveries 223 9 92
------- ------- -------
Net recoveries (charge-offs) 200 (331) (30)
------- ------- -------
Provisions charged to expense (370) - -
------- ------- -------
Balance of allowance for credit losses
at end of period $ 715 $ 885 $ 1,215
======= ======= =======
Ratio of net charge-offs to average
loans outstanding (.38)% 0.71% 0.10%
</TABLE>
The allowance for loan losses was $715,000 or 1.32% of average
loans, $885,000 or 1.89% of average loans, and $1,215,000 or 3.16%
of average loans at September 30, 1994, December 31, 1993 and
December 31, 1992, respectively. Net charged-off loans during this
period were $(200,000) during the first nine months of 1994,
compared to $331,000 and $40,000 in 1993 and 1992, respectively.
The allowance for credit losses should not be interpreted as an
indication of future charge-off trends.
<PAGE>
Management believes that the allowance for loan losses at
September 30, 1994 was adequate to absorb the known and inherent
risks in the loan portfolio at that time. However, no assurance
can be given that future changes in economic conditions that might
adversely affect American Bank's principal market area, borrowers
or collateral values, and other circumstances will not result in
increased losses in American Bank's loan portfolio in the future.
Although American Bank does not normally allocate the
allowance for loan losses to specific loan categories, an
allocation has been made for purposes of this discussion as set
forth below. The following table sets forth the approximate dollar
amount of the allowance for loan losses allocable to the stated
loan categories, and the percent of total loans in each such
category for the periods presented.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------------
1994 1993 1992
------------------ --------------- ----------------
ALLOW. LOAN ALLOW. LOAN ALLOW. LOAN
-------- -------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Commercial $ 70 43.59% $120 42.80% $ 241 43.36%
Real Estate 1 48.45% 4 48.18% 7 44.08%
Installment 1 7.96% 8 9.02% 31 12.56%
Unallocated 643 753 936
---- ------ ---- ------ ------ ------
$715 100.00% $885 100.00% $1,215 100.00%
==== ====== ==== ====== ====== ======
</TABLE>
The allocation of the allowance for loan losses should not be
interpreted as an indication of future credit trends or that losses
will occur in these amounts or proportions. Furthermore, the
portion allocated to each loan category is not the total amount
available for future losses that might occur within such
categories, since even on the above basis there is a substantial
unallocated portion of the allowance, and the total allowance is a
general allowance applicable to the entire portfolio.
In determining the adequacy of the allowance for credit
losses, management considers such factors as known problem loans,
evaluations made by bank regulatory agencies and an independent
firm retained to perform loan reviews, assessment of economic
conditions, concentrations and other appropriate data in order to
identify the risks in the portfolio. The adequacy of the allowance
is evaluated by applying a combination of specific reserves and a
percentage formula for graded loans and at least 1% of ungraded
commercial and installment loans. If, following a review of the
allowance, the allowance is determined to be inadequate or
excessive, the amount of the allowance is adjusted accordingly.
<PAGE>
DEPOSITS.
Deposits are the primary source of funding for American Bank's
earning assets. Total deposits at September 30, 1994 and at the
end of 1993 and 1992 were approximately $82,244,000, $86,218,000,
and $78,983,000, respectively. Time certificates of deposit of
$100,000 or more, which were approximately $4,115,000 at September
30, 1994 and $3,969,000 at December 31, 1993, had remaining
maturities as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994 DECEMBER 31, 1993
------------------- -------------------
MATURING WITHIN: (DOLLARS IN THOUSANDS)
<S> <C> <C>
Three months or less $ 3,001 $ 2,858
Over three months to six months 618 499
Over six months to twelve months 269 300
Over twelve months 227 312
------- -------
Total $ 4,115 $ 3,969
======= =======
</TABLE>
Average deposit balances are summarized for the periods
indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------
AVERAGE AVERAGE AVERAGE
1994 RATE 1993 RATE 1992 RATE
------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits $14,595 0.00% $13,061 0.00% $11,301 0.00%
Money market demand 12,667 2.62% 12,949 2.36% 13,081 3.03%
Savings and other interest-
bearing demand deposits 28,685 2.10% 25,175 2.26% 23,904 2.81%
Time Deposits 29,053 3.30% 27,621 3.49% 29,084 4.73%
------- ------- -------
Total $85,000 2.60% $78,806 2.80% $77,370 3.70%
======= ======= =======
</TABLE>
At September 30, 1994 and December 31, 1993, American Bank had
no brokered deposits.
INTEREST RATE SENSITIVITY.
Interest rate risk is the potential impact of changes in
interest rates on net interest income and results from disparities
in repricing opportunities of assets and liabilities over a period
of time. Management estimates the effects of changing interest
rates and various balance sheet strategies on the level of net
interest income. Management may alter the mix of floating- and
fixed-rate assets and liabilities, change pricing schedules, and
adjust maturities through sales and purchases of securities
available for sale as a means of limiting interest rate risk.
The degree of interest rate sensitivity is not equal for all
types of assets and liabilities. American Bank's experience has
indicated that the repricing of interest-bearing demand, savings
and money market accounts does not move with the same magnitude as
general market rates. Additionally, these deposit categories,
along with non-interest demand, have historically been stable
sources of funds to American Bank, which indicates a much longer
implicit maturity than their contractual availability. American
Bank's cumulative gap to total assets at September 30, 1994 was
2.55% within the three-month period. A positive gap implies that
earnings would increase in a rising interest rate environment and
decrease in a falling interest rate environment.
<PAGE>
LIQUIDITY.
American Bank seeks to manage its liquidity position to
attempt to ensure that sufficient funds are available to meet
customers' needs for borrowing and deposit withdrawals. Liquidity
is derived from both the asset and liability sides of the balance
sheet. Asset liquidity arises from the ability to convert assets
to cash and self-liquidation or maturity of assets. Liquid asset
balances include cash, interest-bearing deposits with financial
institutions, short-term investments and federal funds sold.
Liability liquidity arises from a diversity of funding sources as
well as from the ability of American Bank to attract deposits of
varying maturities. If American Bank were limited to only one
source of funding or all its deposits had the same maturity, its
liquidity position would be adversely impacted.
American Bank's funding source is primarily its deposit base
which is comprised of interest-bearing and noninterest-bearing
accounts, augmented through federal funds purchased, securities
sold under repurchase agreements and other short-term borrowings,
which are interest-bearing. American Bank's non-interest bearing
demand deposits are, by their very nature, subject to withdrawal
upon demand. Declines in one form of funding source require
American Bank to obtain funds from another source. If American
Bank were to experience a decline in noninterest-bearing demand
deposits and was to have a significant increase in loan volume
without a commensurate increase in such deposits, it would utilize
alternative sources of funds, probably at higher cost, to maintain
its liquidity and to meet its loan funding needs. This would place
downward pressure on American Bank's net interest margin and might
have a negative impact on American Bank's liquidity position.
American Bank's liquidity expressed as a percentage of net
liquid assets to net liabilities was 28.55% and 36.72% at September
30, 1994 and December 31, 1993, respectively. The decreased
percentage at September 30, 1994 was due to American Bank's
adoption of SFAS 115, effective January 1, 1994. Under SFAS 115,
securities classified as held-to-maturity are not included in net
liquid assets.
CAPITAL ADEQUACY.
At September 30, 1994, American Bank's total shareholders'
equity was $9,278,000, an increase of 26.1% from $7,355,000 at
December 31, 1993. Book value per common share is presented in the
table below.
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------------------
1994 1993 1992
------------- -------------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Shares outstanding 484 484 484
Shareholders' equity $9,278 $7,355 $6,142
Book value per common share $19.17 $15.20 $12.69
</TABLE>
Adequate levels of capital are necessary over time to sustain
growth and absorb losses. In the case of banks and bank holding
companies, capital levels must also meet minimum regulatory
requirements. All risk-based and other capital ratios improved
from year-end 1992 to 1993 and from year-end 1993 to September 30,
1994, and remain well above regulatory minimums. At September 30,
1994, Tier I capital was 19.14% of risk-weighted assets and total
capital was 20.40% of risk-weighted assets, compared to the
regulatory minimums of 4.0% and 8.0%, respectively. American
Bank's regulatory leverage ratio, which compares Tier I capital to
adjusted total assets, was 10.49% at September 30, 1994, compared
to the regulatory minimum of 4.0%. Under present regulations,
American Bank was classified as "well-capitalized" based upon its
capital ratios at September 30, 1994 and December 31, 1993 and
1992. The following table sets forth American Bank's risk based
capital and capital ratios at September 30, 1994 and year-end 1993
and 1992.
<TABLE>
<CAPTION>
REGULATORY
SEPTEMBER 30, DECEMBER 31, MINIMUM
------------- ------------------ -----------
1994 1993 1992
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Capital:
Tier I $ 9,694 $ 7,353 $ 6,187
Tier II 634 664 599
------- ------- -------
Total capital $10,328 $ 8,017 $ 6,786
Risk-weighted assets $50,634 $52,878 $47,299
Ratios:
Tier I capital to risk-weighted assets 19.14% 13.91% 13.08% 4.0%
Tier II capital to risk-weighted assets 1.25% 1.26% 1.27% -
Total capital to risk-weighted assets 20.40% 15.16% 14.35% 8.0%
Leverage Ratio 10.49% 8.32% 7.09% 4.0%
</TABLE>
<PAGE>
VALIDITY OF SHARES
The validity of the shares of Hibernia Common Stock offered
hereby has been passed upon for Hibernia by Patricia C. Meringer,
Associate Counsel and Secretary of Hibernia. As of the date of
this Proxy Statement-Prospectus, Ms. Meringer owned no shares of
Hibernia Common Stock and held options to purchase 15,716 shares of
Hibernia Common Stock, which options are not currently exercisable.
EXPERTS
The consolidated financial statements of Hibernia incorporated
in this Proxy Statement-Prospectus by reference from Hibernia's
Annual Report on Form 10-K for the year ended December 31, 1993
have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon incorporated herein by reference,
and have been so incorporated by reference in reliance upon such
report given upon the authority of such firm as experts in
accounting and auditing. The consolidated financial statements
referred to above have been restated in a Current Report on Form
8-K to give effect to four mergers consummated during the third
quarter of 1994 and accounted for as poolings of interests.
The consolidated financial statements of Hibernia for the year
ended December 31, 1993, restated to give effect to four mergers
consummated during the third quarter of 1994 and accounted for as
poolings of interests, incorporated in this Proxy
Statement-Prospectus by reference from Hibernia's Current Report on
Form 8-K dated October 11, 1994 have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon
incorporated by reference, which is based in part on the reports of
the following independent auditors -- Arthur Andersen LLP; KPMG
Peat Marwick LLP; Roger C. Parker; and Castaing, Hussey & Lolan.
The consolidated financial statements referred to in this paragraph
incorporated by reference in reliance upon such reports given upon
the authority of such firms as experts in accounting and auditing.
The audited consolidated financial statements of American Bank
as of December 31, 1993 and 1992 and for each of the years in the
two-year period ended December 31, 1993 contained in this Proxy
Statement-Prospectus have been audited by Arthur Andersen LLP,
certified public accountants, as set forth in their report
contained therein, and have been included herein in reliance upon
such report given upon the authority of such firm as experts in
accounting and auditing.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
OF
AMERICAN BANK
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountant........ F-2
Balance Sheets as of
December 31, 1993 and 1992
and September 30, 1994.................... F-3
Statements of Income for
the Years Ended December 31, 1993
and 1992 and the Nine
Months ended September 30, 1994 and 1993.. F-5
Statements of Shareholders'
Equity for the Years Ended
December 31, 1993 and 1992
and the Nine Months ended
September 30, 1994........................ F-6
Statements of Cash Flows for
the Years Ended December 31, 1993
and 1992 and the Nine
Months ended September 30, 1994 and 1993.. F-7
Notes to Financial Statements.................. F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of American Bank:
We have audited the accompanying balance sheets of American Bank (a
Louisiana corporation) as of December 31, 1993 and 1992, and the
related statements of income, shareholders' equity and cash flows
for the years then ended. These financial statements are the
responsibility of the Bank'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 American Bank as of
December 31, 1993 and 1992, and the results of its operations and
its cash flows for the years then ended in conformity with
generally accepted accounting principles.
As discussed in Note 5 to the financial statements, the Bank
changed its method of accounting for income taxes as of January 1,
1993.
Arthur Andersen LLP
New Orleans, Louisiana,
April 15, 1994
F-2
<PAGE>
BALANCE SHEETS
--------------
AS OF DECEMBER 31, 1993 AND 1992
--------------------------------
AND SEPTEMBER 30, 1994
----------------------
(Dollars in Thousands)
ASSETS
------
<TABLE>
<CAPTION>
(Unaudited)
September 30,
1994 1993 1992
-------------- --------- ---------
<S> <C> <C> <C>
CASH AND DUE FROM BANKS $ 4,373 $ 4,286 $ 5,206
FEDERAL FUNDS SOLD 3,400 13,400 8,600
INTEREST BEARING DEPOSITS IN
OTHER BANKS 128 157 77
INVESTMENTS (Market value of $20,893
in 1993 and $26,948 in 1992) 27,740 20,386 26,181
Net Unrealized Loss (629) _ _
LOANS 54,362 52,589 41,387
Less: Reserve for possible loan losses (715) (885) (1,215)
------- ------- -------
Net Loans 53,647 51,704 40,172
BANK PREMISES AND EQUIPMENT 2,537 2,738 2,709
OTHER REAL ESTATE, net 394 815 2,633
ACCRUED INTEREST RECEIVABLE 554 482 526
OTHER ASSETS 555 170 178
------- ------- -------
Total Assets $92,699 $94,138 $86,282
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-3
<PAGE>
BALANCE SHEETS
--------------
AS OF DECEMBER 31, 1993 AND 1992
--------------------------------
AND SEPTEMBER 30, 1994
----------------------
(Dollars in Thousands, Except Par Value and per Share Data)
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
September 30,
1994 1993 1992
-------------- -------- --------
<S> <C> <C> <C>
DEPOSITS:
Non-interest bearing $13,948 $18,158 $13,340
Interest bearing 68,296 68,060 65,643
------- ------- -------
Total deposits 82,244 86,218 78,983
ACCRUED INTEREST AND OTHER LIABILITIES 1,177 565 1,157
------- ------- -------
83,421 86,783 80,140
Total liabilities ------- ------- -------
COMMITMENTS AND CONTINGENCIES - - -
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 1,000,000 shares
authorized, 484,000 shares issued and outstanding 484 484 484
Surplus 3,516 3,516 3,516
Undivided profits 5,278 3,355 2,142
------- ------- -------
Total shareholders' equity 9,278 7,355 6,142
------- ------- -------
Total liabilities and shareholders' equity $92,699 $94,138 $86,282
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-4
<PAGE>
STATEMENTS OF INCOME
--------------------
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
----------------------------------------------
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
-----------------------------------------------------
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
(Unaudited)
Nine Months
Ended September 30, Year Ended December 31,
--------------------- -------------------------
1994 1993 1993 1992
---------- --------- ------------ -----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 3,972 $3,755 $4,705 $4,360
Interest on investments-
United States Treasury and agencies 347 474 586 763
Mortgage-backed securities 754 933 1,170 1,487
Other investments 75 11 21 -
Interest on Federal funds sold 179 95 125 159
Interest on deposits with other banks 4 4 6 4
------- ------ ------ ------
Total interest income 5,331 5,272 6,613 6,773
------- ------ ------ ------
INTEREST ON DEPOSITS 1,407 1,539 1,851 2,453
------- ------ ------ ------
NET INTEREST INCOME 3,924 3,733 4,762 4,320
PROVISION FOR POSSIBLE LOAN LOSSES (370) - - -
------- ------ ------ ------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 4,294 3,733 4,762 4,320
------- ------ ------ ------
NON-INTEREST INCOME:
Service charges on deposit accounts 473 484 625 672
Other income 356 166 555 654
------- ------ ------ ------
Total non-interest income 829 650 1,180 1,326
------- ------ ------ ------
GAIN ON SALE OF SECURITIES 1,346 5 5 84
------- ------ ------ ------
NON-INTEREST EXPENSE:
Salaries and employee benefits 1,329 1,313 1,559 1,379
Occupancy expense 226 215 285 258
Other operating expense 1,452 1,466 2,384 2,670
------- ------ ------ ------
Total non-interest expense 3,007 2,994 4,228 4,307
------- ------ ------ ------
INCOME BEFORE INCOME TAXES 3,462 1,394 1,719 1,423
PROVISION FOR INCOME TAXES:
Current (1,123) (438) (347) (422)
Deferred - - (161) -
------- ------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 2,339 956 1,211 1,001
------- ------ ------ ------
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - 61 50 -
------- ------ ------ ------
NET INCOME $ 2,339 $1,017 $1,261 $1,001
======= ====== ====== ======
EARNINGS PER SHARE:
Income before cumulative effect of accounting change $4.83 $1.98 $2.50 $2.07
Cumulative effect of accounting change - 0.12 0.10 -
------- ------ ------ ------
Net income per share $4.83 $2.10 $2.60 $2.07
======= ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-5
<PAGE>
STATEMENTS OF SHAREHOLDERS' EQUITY
----------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
----------------------------------------------
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1994
--------------------------------------------
(Dollars in Thousands, Except per Share Data)
<TABLE>
<CAPTION>
Common Stock
--------------- Undivided
Shares Amount Surplus Profits
------- ------ ------- ---------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1991 484,000 $484 $3,516 $1,141
Net income - - - 1,001
------- ---- ------ ------
BALANCE, December 31, 1992 484,000 484 3,516 2,142
------- ---- ------ ------
Net income - - - 1,261
Dividends declared
($0.10 per share) - - - (48)
------- ---- ------ ------
BALANCE, December 31, 1993 484,000 484 3,516 3,355
------- ---- ------ ------
Net income through September 30, 1994* - - - 2,339
------- ---- ------ ------
Net change in investment securities
market valuation - net of tax* - - - (416)
------- ---- ------ ------
BALANCE, September 30, 1994 484,000 $484 $3,516 $5,278
======= ==== ====== ======
</TABLE>
- ---------------------
* Unaudited information
The accompanying notes are an integral part of these financial
statements.
F-6
<PAGE>
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
----------------------------------------------
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
-----------------------------------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
Nine Months
Ended September 30, Year Ended December 31,
-------------------- ---------------------
1994 1993 1993 1992
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,339 $ 1,017 $ 1,261 $ 1,001
Adjustments to reconcile net income to
net operating cash flows-
Depreciation 256 170 227 209
Provision for other real estate losses - 355 555 911
Gains on sales of other real estate (48) (147) (151) (105)
Decrease in accrued interest receivable and other
assets (67) (123) 52 123
(Decrease) increase in accrued interest payable
and other liabilities 402 (368) (592) 406
Gain on sale of securities (1,346) (5) (5) (84)
Net accretion of discount or amortization of
on investments 18 5 3 45
-------- -------- -------- -------
Net operating cash flows $ 1,554 $ 904 1,350 2,506
-------- -------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities (12,602) (8,602) (8,663) (7,792)
Proceeds from maturities of investment securities 5,161 9,252 11,960 13,433
Proceeds from sales of investment securities 500 2,500 2,500 614
Net cash increase in loans (1,095) (10,156) (11,452) (4,868)
Increase in Federal funds sold 10,000 6,600 (4,800) (5,600)
Additions to bank premises and equipment (25) (247) (256) (315)
Proceeds from sales of other real estate 541 1,299 1,334 1,253
(Increase) decrease in interest bearing deposits with
other banks 29 $ (81) (80) 7
-------- -------- -------- -------
Net investing cash flows $ 2,509 $ 565 (9,457) (3,268)
-------- -------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in non-interest bearing deposits (4,267) (701) 4,818 1,861
Increase in interest bearing deposits other than
certificates of deposit (2,200) (463) 4,323 2,689
Decrease in certificates of deposit 2,491 (1,752) (1,906) (1,976)
Dividends paid - - (48) -
-------- -------- -------- -------
Net financing cash flows $ (3,976) $ (2,916) 7,187 2,574
-------- -------- -------- -------
NET INCREASE (DECREASE) IN CASH AND
DUE FROM BANKS 87 (1,447) (920) 1,812
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 4,286 5,206 5,206 3,394
-------- -------- -------- -------
CASH AND DUE FROM BANKS AT END OF YEAR $ 4,373 $ 3,759 $ 4,286 $ 5,206
======== ======== ======== =======
CASH INTEREST EXPENSE PAID $ 1,350 $ 1,485 $ 1,897 $ 2,595
======== ======== ======== =======
CASH INCOME TAXES PAID $ 821 $ 785 $ 860 $ 25
======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1993 AND 1992
--------------------------
(Dollars in Thousands, Except per Share Data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
The accounting principles and reporting policies of the Bank
conform with generally accepted accounting principles. The more
significant accounting policies used in preparing the financial
statements are summarized below.
Certain reclassifications have been made to the prior period
financial information in order to conform to current year
presentation.
Investment Securities
- ---------------------
Securities purchased for the investment portfolio are those
securities in which the bank has the intent and ability to hold on
a long-term basis or until maturity and are stated at cost,
adjusted for amortization of premiums and accretion of discounts.
Market value for securities is determined from quoted prices or
quoted prices of similar securities of comparable risk and maturity
where no quoted market price exists.
Securities to be held for indefinite periods of time and not on
along-term basis or until maturity are classified as securities
held for resale and are accounted for at the lower of cost or
market. During 1993, the Bank sold $2,500 of its securities
resulting in gross realized gains of $5 and no gross realized
losses. During 1992, the Bank sold $530 of its securities
resulting in gross realized gains of $84 and no gross realized
losses. As of December 31, 1993 there were no securities held for
resale.
In May, 1993, the Financial Accounting Standards Board (FASB)
issued 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
readily determinable fair values and for all investments in debt
securities. Adoption of the new standard is required for fiscal
years beginning after December 15, 1993. The Bank will adopt this
statement on January 1, 1994. After reviewing the investment
portfolio, the Bank intends to classify investments with book value
of $11,464 as "Available for Sale" which will have an effect of
increasing stockholders' equity to the extent market value of the
securities exceeds book value on January 1, 1994, net of tax. As
of December 31, 1993, this effect would be a $129 increase in
stockholders' equity, net of tax. Under current regulatory
guidelines (which are subject to change), this effect is excluded
from regulatory capital. In deciding which securities to classify
as "Available for Sale" as of January 1, 1994, management followed
SFAS No. 115 criteria and considered securities which may be sold
in the future in response to changes in interest rates, liquidity
requirements and other factors. The Bank does not engage in
trading activities related to any of its investment securities.
F-8
<PAGE>
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 and losses are shown
separately as a component of other income in the 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 collectibility of the
contractual interest. 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 the Bank'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 the current
estimates. These estimates are reviewed periodically and, as
adjustments become necessary, they are reported in earnings in the
period in which they become known.
Bank 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. Maintenance and repairs are charged to
operating expense, and gains or losses on dispositions are
reflected currently in the statement of income.
Income Taxes
- ------------
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, which was adopted by
the Bank on January 1, 1993. Under this statement, deferred income
taxes are provided for by the liability method (Note 5).
F-9
<PAGE>
Other Real Estate
- -----------------
Real estate and other assets acquired through foreclosure are
stated at the lower of the loan balance or fair value (less
estimated costs to sell) of the asset. The initial excess of the
loan balance over the fair value of the asset is charged to the
reserve for possible loan losses. Subsequent declines in value of
the assets below their carrying values are reflected in earnings in
the period the decline is noted. During 1992, management
established a reserve for possible declines in value of other real
estate and to provide for estimated disposal costs. The reserve
was approximately $100 and $281 at December 31, 1993 and 1992,
respectively. Revenues and expenses associated with owning and
operating other real estate and gains and losses on disposition of
such assets are recorded in income in the period incurred.
Writedowns of other real estate of $555 and $911 in 1993 and 1992,
respectively, were included in other operating expense in the
accompanying financial statements.
Earnings Per Share
- ------------------
Earnings per share is computed using the weighted average number of
shares outstanding of 484,000 shares during each of the periods.
New Financial Accounting Standards
- ----------------------------------
In December 1990 the FASB issued SFAS No. 106. This statement,
which is effective for fiscal years beginning after December 15,
1994, requires recognition of estimated future post retirement
costs over employees' periods of service. The Bank offers no
post-retirement benefits to its employees. SFAS No. 107, issued by
the FASB during 1991, requires disclosure of fair value information
for financial instruments. The Bank is not required to adopt this
statement until the year ended December 31, 1995. SFAS No. 114,
issued by the FASB during 1993, changes accounting for impaired
loans. The Bank is not required to adopt this statement until
January 1, 1995.
Regulatory Matters
- ------------------
During 1993, the Bank was released from an Order to Cease and
Desist by the Federal Deposit Insurance Corporation (FDIC) which
had been in place since 1989.
F-10
<PAGE>
2. INVESTMENT SECURITIES:
----------------------
The amortized cost and estimated market value of investment
securities at December 31, were:
<TABLE>
<CAPTION>
1993
------------------------------------
Gross
Unrealized
Book --------------- Market
Value Gains Losses Value
-------- ----- ------ --------
<S> <C> <C> <C> <C>
U.S. Treasury $ 5,009 $ 89 $ $ 5,098
U.S. Government agencies: -
Mortgage-backed securities 7,006 317 (23) 7,300
Collateral mortgage
obligations 5,948 92 (33) 6,007
Other 2,423 67 (2) 2,488
------- ---- ---- -------
Total $20,386 $565 $(58) $20,893
======= ==== ==== =======
1992
-----------------------------------
Gross
Unrealized
Book --------------- Market
Value Gains Losses Value
------ ----- ------ -------
U.S. Treasury $ 4,979 $148 $ - $ 5,127
U.S. Government agencies:
Mortgage-backed securities 8,572 395 (27) 8,940
Collateral mortgage
obligations 9,720 180 (31) 9,869
Other 2,910 102 - 3,012
------- ---- ---- -------
Total $26,181 $825 $(58) $26,948
======= ==== ==== =======
</TABLE>
F-11
<PAGE>
The amortized cost and estimated market value of investment
securities at December 31, 1993, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Book Market
-------- --------
<S> <C> <C>
Due in 1 year or less $ 2,000 $ 2,013
Due after 1 year through 5 years 3,509 3,583
Due after 5 years through 10 years 1,923 1,990
------- -------
Subtotal 7,432 7,586
Mortgage-backed securities, including
collateral mortgage obligations 12,954 13,307
------- -------
Total $20,386 $20,893
======= =======
</TABLE>
The Bank's mortgage-backed securities and collateral mortgage
obligations consist of ownership interests in pools of residential
mortgages guaranteed by U.S. Government agencies with contract
maturities ranging from approximately 3 to 34 years; however, the
underlying mortgages are subject to significant prepayments,
primarily when the contractual interest rates exceed the current
market rates 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 4 years at December 31, 1993.
Investment securities with book values of $14,197 and $21,344 at
December 31, 1993 and 1992, respectively, were pledged to secure
public funds and for other purposes.
The Bank holds 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 mature in 1996 with principal payment to be made
with 78 shares of FCB common stock per thousand in debenture face
value. There is no active market for these debentures or for the
common stock into which they convert. During 1988 and 1989, a
reserve equal to the cost of these debentures was recorded due to
FCB's default on its then senior debt. During December, 1993, FCB
and Hibernia Corporation (Hibernia) entered into a definitive
agreement to merge. Under the terms of the agreement, Hibernia
will redeem all of the outstanding principal and accrued interest
related to FCB's outstanding debentures. The transaction is
subject, among other things, to approval by FCB shareholders and
certain regulatory bodies. The transaction is expected to close
before the end of 1994.
The debenture agreement requires a redemption price of 105% and
103% if redeemed during the twelve month period ending November 15,
1994 and 1995, respectively. Therefore, the Bank will receive $750
of principal, all outstanding accrued interest, which approximated
$503 as of December 31, 1993, and a premium of $38 if the
transaction is closed before November 15, 1994.
F-12
<PAGE>
As discussed above, the Bank has assigned no value to the FCB
debentures and related accrued interest in the accompanying
financial statements; therefore, the Bank will recognize income
when it collects the principal, accrued interest, and related
premium upon closing of the merger transaction.
3. LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES:
------------------------------------------
The composition of the loan portfolio at December 31, was as
follows:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Commercial and industrial $ 5,686 $ 5,053
Residential real estate 25,341 18,247
Commercial real estate 16,823 12,896
Consumer 4,679 5,154
Other 63 47
------- -------
Gross loans 52,592 41,397
Less: Unearned discount (3) (10)
------- -------
Total loans $52,589 $41,387
======= =======
</TABLE>
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.
Non-performing and underperforming loans at December 31, were as
follows:
<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C>
Loans:
90 days or more past due, but still accruing
interest $ 51 $ 141
Renegotiated loans which are not on non-accrual 317 783
Non-accrual loans 818 478
------ ------
Total non-performing and underperforming $1,186 $1,402
loans ====== ======
</TABLE>
Income recognized on the cash basis for non-accrual loans in 1993
and 1992 totaled $77 and $130, respectively. If the accrual of
interest on non-accrual loans had not been suspended, the income
recorded would have been approximately $79 and $75 in 1993 and
1992, respectively.
F-13
<PAGE>
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 Bank does not
anticipate significant increases in the level of non-performing
assets in the foreseeable future. The current level of
non-performing assets is not anticipated to have a significant
adverse effect on the results of operations of the Bank.
The Bank'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 during 1993
and 1992 were as follows:
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Balance, beginning of year $1,215 $1,245
Provision - -
Losses charged to the reserve (339) (122)
Recoveries of loans previously charged-
off 9 92
------ ------
Balance, end of year $ 885 $1,215
====== ======
</TABLE>
4. BANK PREMISES AND EQUIPMENT:
---------------------------
Bank premises and equipment, stated at cost less accumulated
depreciation, were as follows at December 31:
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Land $ 768 $ 768
Buildings 2,707 2,429
Furniture, fixtures and
equipment 1,788 1,820
------- -------
5,263 5,017
Less- Accumulated depreciation (2,525) (2,308)
------- -------
$ 2,738 $ 2,709
======= =======
</TABLE>
Depreciation included in occupancy expense totaled $227 in 1993 and
$209 in 1992.
F-14
<PAGE>
5. FEDERAL INCOME TAXES:
--------------------
Effective January 1, 1993, the Bank adopted SFAS No. 109,
"Accounting for Income Taxes." The effect of adopting this
statement was to increase the deferred tax asset by $50, which is
reflected in the statement of income as the cumulative effect of an
accounting change. Net deferred tax assets/(liabilities), which
are included in other assets/(liabilities) in the balance sheets,
were approximately $(23) and $88 as of December 31, 1993 and 1992,
respectively. The components of the net deferred tax liability as
of December 31, 1993 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Reserve for possible loan losses $ 12
Other real estate 562
Other 18
-----
$ 592
-----
Deferred tax liabilities:
Bank premises and equipment (576)
Investments (39)
-----
(615)
-----
Net deferred tax liability $ (23)
=====
</TABLE>
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. Based on income taxes paid during the available
carryback period, a valuation allowance is not required as of
December 31, 1993. Also, there are no regulatory capital
restrictions related to the Bank's deferred tax assets as of
December 31, 1993.
The following schedule reconciles the statutory Federal income tax
rate to the effective tax rate for the years ended December 31,
1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Statutory tax rate 34.0% 34.0%
Tax exempt interest income (2.9) (4.4)
Non-deductible expenses 0.3 0.4
Other (1.8) (0.3)
---- ----
Effective tax rate 29.6% 29.7%
==== ====
</TABLE>
F-15
<PAGE>
6. RELATED PARTY TRANSACTIONS:
--------------------------
In the ordinary course of business, the Bank makes loans to its
directors, officers and principal shareholders. These loans are
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other customers, and do not involve more than
normal risk of collectibility or present other unfavorable
features. Loans made to directors, officers and principal
shareholders, including their family members and companies in which
they have a significant ownership interest, are summarized as
follows:
<TABLE>
<S> <C>
Balance, December 31, 1992 $ 809
Additions and new loans 197
Repayments (255)
-----
Other (4)
-----
Balance, December 31, 1993 $ 747
=====
</TABLE>
In addition, the Bank 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 from related banks amounted to
approximately $1,984 and $1,383 and participations sold totaled
$2,758 and $1,867 at December 31, 1993 and 1992, respectively.
At December 31, 1993 and 1992, the Bank also had approximately $60
and $82, respectively, of deposits in related banks.
Certain data processing services are performed for the Bank by a
related bank. Fees under this agreement (included in other
operating expenses) were $399 and $374 in 1993 and 1992,
respectively.
Certain loan processing services are performed by the Bank for a
related bank. The Bank billed the related bank $284 and $201 for
the years ended December 31, 1993 and 1992, respectively,
effectively reducing the costs of operating the loan processing
center which are included in other operating expenses in the
financial statements.
Certain loan review, internal audit and consulting services are
performed for the Bank by related banks. Charges for these
services are included in other operating expenses and totaled $19
and $18 in 1993 and 1992, respectively.
7. COMMITMENTS AND CONTINGENCIES:
-----------------------------
The Bank 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.
F-16
<PAGE>
The Bank 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 $557 and $473 in 1993 and 1992, respectively.
In the normal course of business, there are various outstanding
commitments to extend credit which are not reflected in the
financial statements. At December 31, 1993 and 1992, outstanding
commitments under standby letters of credit were approximately $567
and $447, 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 specific repayment schedules. Most of these
commitments have maturities of less than one year. Total loan
commitments outstanding at December 31, 1993 were approximately
$3,763. 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, 1993
were approximately $2,518.
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 the Bank is core deposits.
The Bank has none of its deposits brokered or purchased in the
national market. At December 31, 1993, 6% of the Bank's
interest-bearing deposits were equal to or exceeded $100. In
management's opinion, funding and liquidity at the Bank is adequate
to meet its current financial commitments.
8. EMPLOYEE BENEFIT PLANS:
----------------------
Effective January 1, 1988, the Bank adopted a defined contribution
savings plan for its employees. Under the terms of the plan, the
Bank shall make a matching contribution of no less than 40% of the
first 3% of the employee's compensation contributed. For 1993 and
1992, the Bank matched 40% of the first 4% and 3%, respectively, of
employee contributions representing contributions of $18 and $12,
respectively. In addition, the employer may make a discretionary
contribution as authorized by the Board of Directors. The Bank
made discretionary contributions of 60% of employee contributions
for 1993 and 1992, resulting in contributions of $28 and $17,
respectively.
F-17
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
OF
AMERICAN BANK OF NORCO
WITH AND INTO
HIBERNIA NATIONAL BANK
AGREEMENT AND PLAN OF MERGER dated as of September 19, 1994
(this "Agreement"), adopted and made between and among American
Bank, a banking association organized and existing under the laws
of the State of Louisiana ("American Bank"), Hibernia National Bank
("HNB") and Hibernia Corporation ("Hibernia").
American Bank is a Louisiana banking association duly
organized and existing under the laws of the State of Louisiana and
has its registered office at 22 Apple Street, Norco, Louisiana
70079-2214. The presently authorized capital stock of American
Bank consists solely of 1,000,000 shares of common stock of the par
value of $1.00 each ("American Bank Common Stock") and 500 shares
of preferred stock of the par value of $1,000 each ("American Bank
Preferred Stock"). As of June 30, 1994, 484,000 shares of American
Bank Common Stock had been issued, 484,000 shares of American Bank
Common Stock were outstanding, and no shares of American Bank
Common Stock were held in American Bank's treasury. As of June 30,
1994, no shares of American Bank Preferred Stock had been issued or
were outstanding. All outstanding shares of American Bank Common
Stock have been duly issued and are validly outstanding, fully paid
and nonassessable. The foregoing are the only voting securities of
American Bank authorized, issued, or outstanding, and there are no
existing options, warrants, calls, or commitments of any kind
obligating American Bank 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 American Bank's capital stock has been issued in
violation of preemptive rights of shareholders.
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 HNB. The presently authorized capital stock of Hibernia
is 300,000,000 shares, consisting of 100,000,000 shares of
preferred stock, no par value, and 200,000,000 shares of Class A
voting common stock, no par value (the Class A voting common stock
being referred to hereinafter as "Hibernia Common Stock"). As of
June 30, 1994, no shares of Hibernia's preferred stock were
outstanding, 83,717,760 shares of Hibernia Common Stock were
outstanding, and no shares of Hibernia Common Stock were held in
Hibernia's treasury. 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
<PAGE>
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 1,718,707 shares of Hibernia
Common Stock for issuance under its 1987 Stock Option Plan,
pursuant to which options covering 1,557,491 shares of Hibernia
Common Stock were outstanding as of June 30, 1994, 3,660,087 (as
adjusted) shares of Hibernia Common Stock for issuance under its
1992 Long-Term Incentive Plan, pursuant to which options covering
2,505,055 shares of Hibernia Common Stock were outstanding as of
June 30, 1994, 1,000,000 shares of Hibernia Common Stock for
issuance under its 1993 Director Stock Option Plan, pursuant to
which options covering 155,000 shares of Hibernia Common Stock are
outstanding on the date hereof and 574,147 shares of Hibernia
Common Stock are available for issuance pursuant to Hibernia's
Dividend Reinvestment and Stock Purchase Plan. Mergers that have
been consummated with Commercial Bancshares, Inc., Bastrop National
Bank, First Bancorp of Louisiana, Inc. and First Continental
Bancshares, Inc. will result in the issuance of an aggregate of
approximately 13,021,494 shares. Pending mergers with Pioneer
Bancshares Corporation and First State Bank and Trust Company of
Bogalusa will result in the issuance of approximately 11.9 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 American Bank, HNB and Hibernia
have duly approved this Agreement and have authorized the execution
hereof by their respective undersigned officers. American Bank has
directed that this Agreement be submitted to a vote of its
shareholders in accordance with 12 U.S.C. Section 215a, et seq.
(the "Bank Merger Act") 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
American Bank with and into HNB and prescribe the terms and
conditions of such merger and the mode of carrying it into effect,
which shall be as follows:
<PAGE>
1. The Merger. On the Effective Date (as defined in Section
14 hereof), American Bank shall be merged with and into HNB under
the Articles of Association of HNB, pursuant to the provisions of,
and with the effect provided in, 12 U.S.C. Section 215a, et seq.
(the "Bank Merger Act") (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. American Bank Common Stock.
3.1. Conversion. On the Effective Date and subject to
the provisions of Section 3.7 hereof,
(a) the transfer books of American Bank shall be closed
and all records relating thereto promptly forwarded to Hibernia;
(b) each share of American Bank 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 the Bank Merger Act 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;
(c) holders of certificates which represent shares of
American Bank Common Stock outstanding immediately prior to the
Effective Date (hereinafter called "Old Certificates") shall cease
to be, and shall have no rights as, shareholders of American Bank;
(d) each share of American Bank Common Stock held in the
treasury of American Bank or owned beneficially by Hibernia or any
of its subsidiaries shall be cancelled; and
(e) Old Certificates shall be exchangeable by the
holders thereof in the manner provided in the transmittal materials
described below for new certificates for the number of whole shares
of Hibernia Common Stock to which such holders shall be entitled in
accordance with the Exchange Rate set forth in Section 3.8 and a
check representing cash paid in lieu of fractional shares as
provided in Section 3.2 hereof.
3.2. Fractional Shares. Each holder of Old Certificates
who would otherwise have been entitled to receive a fraction of a
share of Hibernia Common Stock (after taking into account all
shares of American Bank Common Stock represented by the Old
<PAGE>
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 Market Price
(as defined in Section 3.8 below) of Hibernia Common Stock, or, if
the Hibernia Common Stock is not then so reported, the average of
the fair market values of one share of Hibernia Common Stock on the
five business days preceding the Effective Date determined pursuant
to such reasonable method as the Board of Directors of Hibernia may
adopt in good faith for such purpose, and no such holder shall be
entitled to dividends, voting rights or any other right of
shareholders in respect of any fractional share.
3.3. Transmittal Materials. As promptly as practicable
after the Effective Date, Hibernia shall send or cause to be sent
to each former shareholder of record of American Bank transmittal
materials for use in exchanging Old Certificates for certificates
representing Hibernia Common Stock and a check representing cash
paid in lieu of fractional shares, if any. The letter of
transmittal will contain instructions with respect to the surrender
of Old Certificates and the distribution of certificates
representing Hibernia Common Stock. If any certificate for shares
of Hibernia Common Stock is to be issued in a name other than that
in which an Old Certificate surrendered for exchange is issued, the
Old Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and the person requesting
such exchange shall affix any requisite stock transfer tax stamps
to the Old Certificate surrendered or provide funds for their
purchase or establish to the satisfaction of the exchange agent to
be appointed by Hibernia in connection with such exchange (the
"Exchange Agent") that such taxes are not payable.
3.4. Rights as Shareholders. Former shareholders of
American Bank 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 American Bank Common Stock are converted,
regardless of whether they have exchanged their Old Certificates.
Whenever a dividend is declared by Hibernia on 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 American Bank of the shares of American Bank Common Stock
<PAGE>
which were issued and outstanding immediately prior to the
Effective Date. If, after the Effective Date, Old Certificates are
properly presented to Hibernia, they shall be cancelled and
exchanged for certificates representing shares of Hibernia Common
Stock and a check representing cash paid in lieu of fractional
shares as herein provided. Any other provision of this Agreement
notwithstanding, neither the Exchange Agent nor any party hereto
shall be liable to a holder of American Bank Common Stock for any
amount paid or property delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat, or
similar law.
3.6. Property Transfers. From time to time, as and when
requested by Hibernia and to the extent permitted by law, the
officers and directors of American Bank 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 HNB title to, and possession of, all the property,
interests, assets, rights, privileges, immunities, powers,
franchises, and authorities of American Bank, and otherwise to
carry out the purposes of this Agreement.
3.7. Dissenters' Shares. Shares of American Bank Common
Stock held by any holder having rights of a dissenting shareholder
as provided in 12 U.S.C. Section 215a, et seq., 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 12 U.S.C. Section 215a, et seq. 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
American Bank Common Stock, at which time such shares shall be
converted as provided in Section 3.1 hereof.
3.8. Exchange Rate.
(a) Except as provided in paragraphs (b) and (c) below
in this Section 3.8, the Exchange Rate shall be the number that is
obtained by dividing 2,250,000 by the total number of issued and
outstanding shares of American Bank Common Stock on the Closing
Date.
(b) In the event the Average Market Price of Hibernia
Common Stock (as defined below) is less than $7.75, the Exchange
Rate shall be calculated as follows: [$17,437,500 divided by the
Average Market Price of Hibernia Common Stock] divided by 484,000
(the number of issued and outstanding shares of American Bank
Common Stock)]. In the event the Average Market Price of Hibernia
Common Stock (as defined below) is greater than $8.875, the
Exchange Rate shall be calculated as follows: [$19,968,750
divided by the Average Market Price of Hibernia Common Stock]
<PAGE>
divided by 484,000 (the number of issued and outstanding shares of
American Bank Common Stock)]. Notwithstanding anything in this
Section 3 to the contrary, if, after the date of this Agreement and
prior to the Effective Time, (i) Hibernia shall announce that it
has entered into an agreement, understanding or arrangement to
merge, consolidate or otherwise participate in a business
combination as a result of which Hibernia or HNB is to be merged or
consolidated with, or to exchange in excess of 50% of its shares of
outstanding common stock with, or sell all or substantially all of
its assets to, a person, entity, or group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934) which is not an
affiliate of Hibernia or HNB (a "Person") which agreement,
understanding or arrangement has not been terminated as of the
tenth trading prior to the Closing Date, and, as a result of such
transaction, less than a majority of the combined voting power of
the then-outstanding securities of such Person immediately after
such transaction is held in the aggregate by the holders of shares
of Hibernia immediately prior to such transaction, or (ii) a Person
has acquired, or commenced a public offer that has not been
withdrawn or otherwise terminated as of the tenth trading day prior
to the Closing Date, to acquire control of Hibernia, through share
ownership or otherwise, then in either case described in (i) or
(ii) of this provision, this paragraph (b) shall be inapplicable
and the Exchange Rate shall be determined pursuant to paragraph (a)
of Section 3.8.
(c) Notwithstanding any provision hereof to the
contrary, including Section 19 hereof, if the aggregate
professional fees, including fees of counsel and accountants,
including expense reimbursements to such professionals, but
excluding fees of Montgomery Securities, incurred by American Bank
in connection with the Merger exceed $175,000, then (i) the number
of shares of Hibernia Common Stock to be issued in the Merger shall
be reduced by the number of shares resulting from application of
the following formula (if the Exchange Rate is calculated pursuant
to paragraph (a) of this Section 3.8): (x - $175,000) divided by
Average Market Price of Hibernia Common Stock where x = the actual
aggregate professional fees and expenses incurred by American Bank,
and (ii) in the event the Exchange Rate is calculated pursuant to
paragraph (b) of this Section 3.8, the aggregate dollar amount of
consideration to be paid in the form of Hibernia Common Stock shall
be reduced by the amount by which the actual aggregate professional
fees and expenses incurred by American Bank in connection with the
Merger exceeds $175,000.
(d) 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 five business days preceding the last
trading day immediately prior to the Closing Date as reported in
The Wall Street Journal.
<PAGE>
4. Articles of Incorporation; Bylaws. The Articles of
Incorporation and Bylaws of Hibernia in force immediately prior to
the Effective Date shall on and after the Effective Date continue
to be the Articles of Incorporation and Bylaws of Hibernia,
respectively, unless altered, amended or repealed in accordance
with applicable law.
5. Employees. Hibernia shall use its best efforts to cause
to be provided as soon as practicable after the Effective Date for
the employees of American 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 American Bank 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 American Bank shall be deemed equivalent to
having been employed for that same period by Hibernia and/or its
subsidiaries, (and employees of American Bank will not be denied
health insurance coverage solely as a result of a pre-existing
condition that existed on the Effective Date but did not exist on
the date the employee commenced his or her employment with American
Bank) and provided, however, that if Hibernia determines in good
faith that it cannot merge any benefit plan of American Bank into
a comparable benefit plan of Hibernia or HNB without creating
material potential liability for Hibernia's or HNB's plan, then
Hibernia shall be entitled to freeze the existing benefit plan of
American Bank and prohibit participation by former employees of
American Bank in Hibernia's plan for the period of time required by
applicable law to ensure that Hibernia's and HNB's benefit plans
are not deemed to be successor plans of the American Bank plan in
question.
6. Negative Covenants. From the date hereof until the
Effective Date, or until the termination of this Agreement,
American Bank covenants and agrees that it will not do, or agree to
commit to do, without the prior written consent of Hibernia, any of
the following:
(a) make, declare, set aside or pay any dividend or
declare or make any distribution on, or directly or indirectly
combine, redeem, purchase or otherwise acquire, any shares of
American Bank Common Stock (other than in a fiduciary capacity);
(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;
<PAGE>
(c) enter into any employment contracts with, increase
the rate of compensation of, or except in accordance with the
existing policy and past practice in the two years preceding such
bonus, pay or agree to pay any bonus to, any of its directors,
officers or employees; provided, however, that American Bank may
make a discretionary 401(k) plan distribution with respect to
fiscal year 1993 consistent in amount and timing with past practice
in the previous two years, so long as the aggregate amount of such
distribution does not exceed $32,000, and such amount is fully
accrued prior to its payment;
(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, including,
but not limited to, recording any negative provision for loan
losses, (ii) amend its Articles of Association or Bylaws, (iii)
establish or add any automatic teller machines or branch or other
banking offices, (iv) make any capital expenditures in excess of
$100,000 (except that American Bank may pay any and all obligations
related to the maintenance of equipment and other capital
expenditures required to be paid prior to the Effective Date under
its EDP contract with Bank of St. John, so long as such
expenditures do not exceed $200,000 in the aggregate) or (v) take
any action that would materially 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 American Bank's ability to perform its
covenants and agreements hereunder;
(f) except as otherwise provided herein, merge with any
other corporation or bank or permit any other corporation or bank
to merge into it or consolidate with any other corporation or bank;
acquire control over any other firm, bank, corporation or
organization or create any subsidiary (except in a fiduciary
capacity or in connection with foreclosures in bona fide loan
transactions); liquidate; or sell or dispose of any assets or
acquire any assets, otherwise than in the ordinary course of its
business consistent with its past practice; or
(g) knowingly fail to comply with any laws, regulations,
ordinances, or governmental actions applicable to it and to the
conduct of its business in a manner significant, material and
adverse to its business.
<PAGE>
7. Representations and Warranties of American Bank.
American Bank 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. American Bank is
a bank duly organized, validly existing, and in good standing under
the laws of the State of Louisiana; 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
has all requisite power and authority to execute and deliver this
Agreement and perform its obligations hereunder.
7.3. Ownership of Other Banks and Subsidiaries; Validity
of Stock. American Bank 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.
Attached hereto as Schedule 7.3 is a list of all direct and
indirect subsidiaries of American Bank, the officers and directors
of each and the business and purpose of each such subsidiary. The
outstanding shares of capital stock of American Bank are validly
issued and outstanding, fully paid and, except as may be affected
by Louisiana Revised Statute Section 6:262, nonassessable.
7.4. Corporate Authorization. The execution, delivery
and performance of this Agreement have been authorized by American
Bank's Board of Directors, and, subject to the approval of this
Agreement by its shareholders in accordance with the Bank Merger
Act, all corporate acts and other proceedings required for the due
and valid authorization, execution, delivery and performance by
American Bank 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 American Bank, enforceable against American Bank in
accordance with its terms, except that enforcement may be limited
by bankruptcy, reorganization, insolvency and other similar laws
and court decisions relating to or affecting the enforcement of
creditors' rights generally and by general equitable principles or
principles of Louisiana law that are similar to equitable
principles in jurisdictions that recognize a distinction between
law and equity.
7.5. No Conflicts. Except as disclosed on Schedule 7.5
hereto, the execution and delivery of this Agreement by American
Bank 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 American Bank or to which
American Bank is subject, which breach, violation or default would
<PAGE>
have a material adverse effect on the financial condition,
properties, businesses or results of operations of American Bank or
on the transactions contemplated hereby, (ii) to the knowledge of
American Bank's executive officers, 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 American Bank or to which American Bank is subject,
or (iii) a breach or violation of, or a default under, the Articles
of Association or Bylaws of American 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.
American Bank has delivered to Hibernia prior to the execution of
this Agreement true and correct copies of the following financial
statements (collectively referred to herein as the "American Bank
Financial Statements"): American Bank's Balance Sheets as of June
30, 1994 and 1993 (unaudited) and December 31, 1993, 1992 and 1991
(audited); Statements of Income and Changes in Stockholders' Equity
and Statements of Cash Flows for the years ended December 31, 1993,
1992 and 1991 (audited), and Statements of Income for the three-
month periods ended June 30, 1994 and 1993 (unaudited). Each of
the American Bank Financial Statements (including the related
notes) fairly presents the results of operations of American Bank
for the respective periods covered thereby and the financial
condition of American 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 American Bank Financial Statements, including the
notes thereto, or Schedule 7.6 hereto, and except as otherwise
required by this Agreement, there are no restrictions in any note,
indenture, agreement, statute or otherwise (except for statutes or
regulations applicable to Louisiana corporations or state banks
generally) precluding American Bank from paying dividends, in each
case when, as and if declared by its Board of Directors.
7.7. No Material Adverse Change. Since June 30, 1994,
there has been no event or condition of any character (whether
actual, or to the knowledge of American Bank's executive officers,
threatened or contemplated) that has had or can reasonably be
anticipated to have, or that, if concluded or sustained adversely
to American Bank, would reasonably be anticipated to have, a
material adverse effect on the financial condition, results of
operations or business of American Bank, excluding changes in laws
or regulations that affect banking institutions generally.
<PAGE>
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 American
Bank that in the opinion of its executive officers is likely to
have a material adverse effect on the business, results of
operations or financial condition of American Bank, and, to the
knowledge of its executive officers, no such litigation, proceeding
or controversy has been threatened or is contemplated. Except as
disclosed on Schedule 7.8 hereto, American Bank is not 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, American Bank is not bound by any material
contract to be performed after the date hereof that is not
terminable by American 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 American 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 American Bank 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 American Bank has engaged Montgomery
Securities is attached hereto as Exhibit 7.10 and contains all
agreements between American Bank and Montgomery Securities relating
to services in connection with the Merger and compensation
therefor.
7.11. Contingent Liabilities. Except as disclosed on
Schedule 7.11 hereto or as reflected in the American Bank Financial
Statements and except for unfunded loan commitments made in the
ordinary course of business consistent with past practices, as of
June 30, 1994, American Bank had no obligation or liability
(contingent or otherwise) that was material, or that when combined
with all similar obligations or liabilities would have been
material, to American Bank, and there does not exist a set of
circumstances resulting from transactions effected or events
occurring prior to, on, or after June 30, 1994, or from any action
omitted to be taken during such period that, to the knowledge of
American Bank's executive officers, 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 American Bank Financial Statements are sufficient
for the payment of all respective taxes (including, without
limitation, federal, state, local, and foreign excise, franchise,
<PAGE>
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 June 30, 1994,
American Bank has not incurred or paid any obligation or liability
that would be material to American Bank, 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 American Bank have been timely filed or
requests for extensions have been timely filed and granted and have
not expired for periods ending on or before December 31, 1992, and
all returns filed are complete and accurate to the best information
and belief of its executive officers; 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 American Bank except as
reserved against in the American Bank Financial Statements. All
taxes, interest, additions and penalties due with respect to
completed and settled examinations or concluded litigation have
been paid, and American Bank'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 of
Section 585 of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code").
7.15. Loans. To the knowledge of its executive
officers, each loan reflected as an asset of American Bank in the
American Bank Financial Statements, as of June 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 American 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 sheet of American Bank as
of June 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 June 30,
1994, and each such allowance has been established in accordance
with GAAP.
<PAGE>
7.17. Title to Assets; Adequate Insurance Coverage.
(a) As of June 30, 1994, American 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
American Bank 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 American Bank 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 June 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. American Bank owns, or has 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 American Bank are
held under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use
made of such property on the date hereof.
(b) With respect to each lease of any real property or
a material amount of personal property to which American Bank is a
party, except for financing leases in which American 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; (iii) 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) the Merger will not constitute a default
or a cause for termination or modification of such lease.
(c) American Bank has no 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 of its executive officers, the
policies of fire, theft, liability and other insurance maintained
<PAGE>
with respect to the assets or business of American Bank provide
adequate coverage against loss.
7.18. Employee Plans. To the knowledge of American
Bank's executive officers, American 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 American 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 adverse effect on such business; and
(ii) has received no notification from any agency
or department of federal, state or local government or the staff
thereof asserting that any such entity is not in compliance with
any of the statutes, regulations or ordinances that such
governmental authority enforces, or threatening to revoke any
license, franchise, permit or governmental authorization, and is
subject to no agreement with any such governmental authority with
respect to its assets or business.
7.19. Copies of Employee Plans. Within ten days after
the date hereof, American Bank will provide to Hibernia 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 for its 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,
American Bank has no 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. American Bank is not 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.
<PAGE>
7.22. Minutes. Prior to the date hereof, American Bank
has made available to Hibernia for inspection, the minutes of
meetings of American Bank's Board of Directors and all committees
thereof held prior to the date hereof, which minutes are complete
and correct in all respects and fully and fairly present the
deliberations and actions of such Board 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 American Bank at the date hereof. Except as
disclosed on Schedule 7.23 hereto, American Bank has not 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, American Bank has not been refused any insurance coverage
sought or applied for, and it has no reason to believe that
existing insurance coverage cannot be renewed as and when the same
shall expire, upon terms and conditions as favorable as those
presently in effect, other than possible increases in premiums or
unavailability of coverage that do not result from any
extraordinary loss experience of American Bank.
7.24. Investments. Except for pledges to secure public
or trust deposits, none of the investments reflected in the
American Bank Financial Statements under the heading "Investment
Securities," and none of the investments made by American Bank
since June 30, 1994, and none of the assets reflected in the
American Bank 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 American Bank
freely to dispose of such investment at any time. With respect to
all repurchase agreements to which American Bank is a party,
American Bank 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 American Bank nor,
to the knowledge of its executive officers, 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 American
Bank or used by American Bank in its business ("American Bank
Properties") used, generated, treated, stored, or disposed of any
hazardous waste, toxic substance, or similar materials on, under,
or about American Bank 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"). American Bank has not received any notice
of noncompliance with Environmental Laws, orders, or regulations of
<PAGE>
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 American Bank Properties. American Bank has obtained
all material permits, licenses and other authorizations that are
required to be obtained by it under any applicable Environmental
Law in connection with the operation of its business and ownership
of American Bank Properties, and except as disclosed on Schedule
7.25 hereto, is in compliance in all material respects with all
terms and conditions of such permits, licenses, and authorizations.
8. Representations and Warranties of Hibernia. Hibernia
hereby represents and warrants as follows:
8.1. Recitals. The facts set forth in the preamble to
this Agreement with respect to it are true and correct.
8.2. Organization and Qualification. Hibernia is a
corporation, and HNB is a national banking association, duly
organized, validly existing and in good standing under the laws of
the State of Louisiana and the United States of America,
respectively. Each of Hibernia and HNB 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
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 and HNB are validly
issued and outstanding, fully paid and nonassessable (subject, in
the case of HNB, to 12 U.S.C. Section 55) and all of such shares of
HNB are owned directly or indirectly by Hibernia free and clear of
all liens, claims, and encumbrances. The shares of Hibernia Common
Stock to be issued in connection with the Merger pursuant to this
Agreement will have been duly authorized and, when issued in
accordance with the terms of this Agreement, will be validly
issued, fully paid, and nonassessable.
8.4. Due Authorization. The execution, delivery and
performance of this Agreement have been authorized by Hibernia's
and HNB's respective Boards 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 and
HNB 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 and
HNB enforceable against Hibernia and HNB, as the case may be, 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
<PAGE>
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
and HNB 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 HNB or by which
Hibernia or HNB is subject, which breach, violation or default
would have a material adverse effect on the financial condition,
properties, businesses, or results of operations of Hibernia and
HNB taken as a whole or on the transactions contemplated hereby,
(ii) to the knowledge of Hibernia's executive officers, 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 HNB or to which
Hibernia or HNB 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 HNB, 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, 1994 and June 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 quarterly report to shareholders for
the periods ended March 31, 1994 and June 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 or results
of operations of Hibernia and HNB, 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
<PAGE>
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 American Bank on or before the date hereof.
8.7. No Material Adverse Change. Since June 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 or business of
Hibernia or HNB, excluding changes in laws or regulations that
affect banking institutions generally.
8.8. Loans. To the best knowledge of Hibernia's
executive officers and the executive officers 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 June 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 sheet of Hibernia as of
June 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 June 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 Hibernia's
executive officers is likely to have a material adverse effect on
the business, results of operations or financial condition of
Hibernia and its subsidiaries taken as a whole, and, to the best
knowledge of its executive officers, 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
<PAGE>
bank holding company regulatory authority that materially restricts
its operations or requires any material actions.
8.11. Environmental Matters. Hibernia and HNB are in
material compliance with all environmental laws and regulations
applicable to them as to which failure to comply could be
reasonably anticipated to result in a material adverse change in
the financial condition of Hibernia or a material loss to Hibernia
or HNB.
8.12. Community Reinvestment Act Performance Evaluation.
Attached hereto as Schedule 8.12 is copy of the Community
Reinvestment Act Performance Evaluation presently in effect with
respect to HNB.
8.13. Restrictions on Operations or Dividends. There
are no regulatory orders or agreements (except for statutes or
regulations applicable to Louisiana corporations or national banks
generally) restricting the operations of, or precluding the payment
of dividends by, Hibernia or HNB.
9. Agreements and Covenants. Hibernia, HNB and American
Bank each hereby agrees and covenants to the other that:
9.1. Shareholder Approvals. If required by applicable
law, this Agreement shall be submitted to its respective
shareholders at a special meeting called and held in accordance
with applicable provisions of law (to be scheduled to the extent
possible for the date of the shareholders' meeting for the other
party hereto, if any) at which its shareholders shall be asked to
consider and vote upon this Agreement and the transactions
contemplated hereby.
9.2. Actions Necessary to Complete Merger. It shall use
its best efforts in good faith to take or cause to be taken all
action necessary or desirable under this Agreement on its part as
promptly as practicable so as to permit the consummation of this
Agreement at the earliest possible date (including obtaining the
consent or approval of each governmental authority and individual,
partnership, corporation, association, or any other form of
business or professional entity whose consent or approval is
required for the consummation of the transactions contemplated
hereby, requesting the delivery of appropriate opinions and letters
from its counsel and recommending that this Agreement be approved
by its shareholders) and cooperate fully with the other party
hereto to that end; provided, however, that neither party shall be
obligated to take or cause to be taken any action which is or
creates a material burden on such party, except to the extent such
actions are reasonably anticipated to be required in order to
effect the Merger.
<PAGE>
9.3. Preparation of Registration Statement and Proxy
Statement. It shall prepare as promptly as practicable jointly
with the other party hereto a proxy statement to be mailed to the
shareholders of each party the shareholders of which are to vote
upon this Agreement in connection with the transactions
contemplated hereby and to be part of a registration statement (the
"Registration Statement") to be filed by Hibernia with the SEC
pursuant to the Securities Act of 1933, as amended (the "1933 Act")
with respect to the shares to be issued in the Merger. When the
Registration Statement or any post-effective amendment thereto
shall become effective, and at all times subsequent to such
effectiveness, up to and including the time of the last shareholder
meeting with respect to the transactions contemplated hereby, such
Registration Statement and all amendments or supplements thereto,
with respect to all information set forth therein furnished or to
be furnished by Hibernia relating to Hibernia and by American Bank
relating to American Bank, (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 American
Bank promptly after it receives notice thereof of the time when the
Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the
suspension of the qualification of the Hibernia Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional
information.
9.4. Press Releases and Public Statements. Unless
approved by Hibernia in advance, American Bank will not issue any
press release, marketing or advertising material or other written
statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by law. The
parties will cooperate in any public announcements directly related
to the Merger; provided, however, that, in the event Hibernia
determines to file a current report on Form 8-K that discloses only
the substantive facts of a previously released press release, such
filing may be made without prior consultation with American Bank so
long as American Bank is furnished with a copy of such report
within a reasonable time after its filing.
9.5. Material Developments; Access to Information.
(i) In order to afford American Bank access to such
information as it may reasonably deem necessary to perform its due
diligence review with respect to Hibernia and HNB and its assets in
connection with the Merger, Hibernia shall (and shall cause HNB
to), (A) upon reasonable notice, afford American Bank and its
<PAGE>
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 American Bank and such representatives with
such financial and operating data and other information of any kind
respecting its business and properties as American Bank shall from
time to time reasonably request to perform such review, (B)
furnish American Bank with copies of all reports filed by Hibernia
with the Securities and Exchange Commission ("SEC") throughout the
period after the date hereof prior to the Effective Date promptly
after such reports are so filed, and (C) promptly advise American
Bank 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 or business 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 American Bank to be
acquired as a result of the Merger, American Bank shall, 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 the Bank's properties, books, contracts,
commitments, loan files, litigation files, and records (including,
but not limited to, the minutes of the Boards of Directors of
American Bank and all committees thereof), and it shall, 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, American Bank shall not 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, American Bank or
any business combination with American Bank other than as
contemplated by this Agreement. American Bank shall instruct each
officer, director, agent, or affiliate of it to refrain from doing
any of the above, and American Bank will notify Hibernia promptly
if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or
<PAGE>
discussions are sought to be initiated with, American Bank;
provided, however, that nothing contained in this section shall be
deemed to prohibit any officer or director of American Bank from
taking any action that, in the opinion of counsel to American Bank,
is required by applicable law. In the event such opinion is
rendered in writing, American Bank 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), American Bank shall deliver to Hibernia a
letter identifying all persons whom it believes to be "affiliates"
of American Bank for purposes of Rule 145(c) or Rule 144 (as
applicable) under the 1933 Act ("Affiliates"). American Bank shall
use its best efforts to cause each person so identified to deliver
to Hibernia prior to the Effective Date a written agreement in
substantially the form of Exhibit 9.7 hereto providing, among other
things,that such person will not dispose of Hibernia Common Stock
received in the Merger except in compliance with the 1933 Act and
the rules and regulations thereunder and except in accordance with
Section 201.01 of the SEC's Codification of Financial Reporting
Policies; provided, however, that American Bank shall have no such
obligation to use its best efforts to cause any such identified
person to deliver to Hibernia such agreement if such person may not
lawfully execute such agreement.
9.8. Adjustment for Changes in Outstanding Shares. In
the event that prior to the Effective Date the outstanding shares
of Hibernia Common Stock shall have been increased, decreased, or
changed into or exchanged for a different number or kind of shares
or securities by reorganization, recapitalization,
reclassification, stock dividend, stock split, or other like
changes in the Hibernia's capitalization, then an appropriate and
proportionate adjustment shall be made in the number and kind of
shares of Hibernia Common Stock to be thereafter delivered pursuant
to Section 3.1 hereof. It is expressly understood and agreed,
however, that any change in the outstanding shares of Hibernia
resulting from (i) the consummation of a merger of an institution
with and into Hibernia or HNB, whether or not such merger was
pending on the date hereof, (ii) the exercise of stock options
granted to employees or directors of Hibernia or HNB, or (iii) the
exercise of any warrant or other right to receive Hibernia Common
Stock described in the recitals to this Agreement, shall not result
in the adjustment of the number of shares of Hibernia Common Stock
to be issued in the Merger pursuant to this Section 9.8.
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. Adoption of Accounting Policies. As soon as
practicable after the satisfaction or waiver of all conditions to
<PAGE>
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), American Bank shall 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 American Bank at
the request of Hibernia or HNB pursuant to this Section shall be
deemed to be, or be deemed to cause, a breach of any representation
or warranty made by American Bank herein.
9.11. Indemnification of Directors and Officers of
American Bank.
(a) From and after the Effective Date of the Merger, HNB
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 American Bank and their respective heirs and estates
(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 American Bank, to the same extent as he would have been
indemnified under the Articles of Association and/or Bylaws of HNB,
as such documents were in effect on the date of this Agreement as
if he were an officer or director of HNB at all relevant times
(regardless 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 knew of the existence
of the claim and failed to make a good faith effort to require
American Bank to notify its director and officer liability
insurance carrier, if any, 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
Section 9.11 are subject to the following limitations: (i) the
total aggregate indemnification to be provided by HNB pursuant to
subsection 9.11(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 Section
9.11 shall not be entitled to the benefits hereof unless such
director or officer has executed a Joinder Agreement (the "Joinder
<PAGE>
Agreement") in the form of Exhibit 9.11 hereto; and (iii) amounts
otherwise required to be paid by HNB to an Indemnified Person
pursuant to this Section 9.11 shall be reduced by any amounts that
such Indemnified Person recovers by virtue of the claim for which
indemnification is sought.
(d) HNB and Hibernia agree that the $5 million
indemnification limit set forth in paragraph (c) of this Section
9.11 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 (i) they
arise out of or are based upon the matters for which
indemnification is provided in Section 11.2 hereof, or (ii) they
arise out of or are based upon actions or inaction of one or more
Hibernia or HNB officers, directors or employees (other than the
Indemnified Person) after the Effective Date.
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 Conduct of Business in Ordinary Course. American
Bank shall conduct its business in the ordinary course as conducted
on the date hereof, consistent with past practices, from the date
hereof through the Closing Date, and shall use its best efforts to
preserve its existing relationships with clients, customers,
vendors and employees.
9.14. 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 American Bank under those certain
retention agreements and severance policies identified on Schedule
9.14 hereto; provided, however, that Hibernia shall not be
obligated to pay severance to any individual (except R. Preston
Wailes, with respect to whom this proviso shall not apply so long
as his severance payment from American Bank does not exceed in the
aggregate $125,400) to whom Hibernia paid severance in connection
with its merger with First Continental Bancshares, Inc. and,
provided further, however, that the parties hereto expressly
acknowledge and agree that Hibernia may require employees of
American Bank who are recipients of severance to execute a
severance agreement, providing for confidentiality, release of
liability, cooperation in litigation and related matters as a
condition to such severance without breaching this provision or the
terms of American Bank's severance policies and agreements.
9.15. Voting of American Bank Shares. Hibernia and HNB
agree that, in the event either of them owns any shares of American
<PAGE>
Bank Common Stock as of the date of the American Bank shareholders'
meeting, Hibernia or HNB, as the case may be, 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
Comptroller of the Currency (the "Comptroller") for approval of the
transactions contemplated hereby in accordance with the provisions
of the Bank Merger Act;
(b) American Bank shall endeavor to have its Affiliates
execute a written agreement in substantially the form of Exhibit
9.7 hereto; provided, however, that American Bank shall have no
such obligation prior to the receipt by the Board of Directors of
American Bank of the Fairness Opinion described in Section 12.13
hereof; and
(c) American Bank shall endeavor to have each of the
directors of American Bank execute an Agreement in substantially
the form of Exhibit 10(d) hereto; provided, however, that American
Bank shall have no such obligation prior to the receipt by the
Board of Directors of American Bank of the Fairness Opinion.
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 American Bank agree, on
behalf of themselves, their respective officers, directors,
employees, representatives and agents, that they will not use any
information obtained pursuant to due diligence investigations for
any purpose unrelated to the consummation of the transactions
contemplated by this Agreement, and, if the Merger is not
consummated, will hold all such information and documents in
confidence unless and until such time as such information or
documents otherwise become publicly available or as it is advised
by counsel that any such information or document is required by law
to be disclosed, in which event the party required to make such
disclosure shall advise and consult with the other party reasonably
in advance of such disclosure regarding the information proposed to
be disclosed. In the event of the termination of this Agreement,
Hibernia and American Bank shall, promptly upon request by the
other party, either destroy or return any documents so obtained.
<PAGE>
11.2. Hold Harmless. Hibernia will indemnify and hold
harmless American Bank, each of its directors and officers and each
person, if any who controls American Bank within the meaning of the
1933 Act and their respective heirs and estates 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 American 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, except in the event of a conflict of interest and
with Hibernia's consent, which consent will not be unreasonably
withheld, or any other expenses subsequently incurred by such
indemnified party.
12. Conditions. The consummation of the Merger is
conditioned upon:
12.1. Shareholder Approval; Dissenters. Approval of
this Agreement by the required vote of shareholders of American
Bank and exercise and perfection of dissenters' rights pursuant to
the Bank Merger Act by holders of American Bank Common Stock
holding in the aggregate no more than 10% of the American Bank
Common Stock outstanding on the Closing Date.
<PAGE>
12.2. OCC Approval. Procurement by Hibernia of the
approval of the Comptroller of the Merger and any and all other
transactions contemplated hereby.
12.3. Other Approvals. Procurement of all other
consents and approvals and satisfaction of all other requirements
prescribed by law that are necessary to the consummation of the
transactions contemplated by this Agreement.
12.4. No Restraining Action. No litigation or
proceeding initiated by any governmental authority shall be pending
before any court or agency that shall present a claim to restrain,
prohibit or invalidate the transactions contemplated hereby and
neither Hibernia nor American Bank 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. American Bank and
its directors shall have received an opinion, dated the Closing
Date, of counsel for Hibernia, in substantially the form of Exhibit
12.5 hereto.
12.6. Opinion of American Bank 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, for American Bank, in
substantially the form of Exhibit 12.6 hereto.
12.7. Representations, Warranties and Agreements of
American Bank. Each of the representations, warranties, and
agreements of American Bank contained herein in all material
respects shall be true on, or complied with by, the Closing Date as
if made on such date (or on the date when made in the case of any
representation or warranty which specifically relates to an earlier
date) and Hibernia shall have received a certificate signed by the
Chairman of the Board and the President of American Bank, dated the
Closing Date, to such effect; American Bank 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. American Bank 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
American Bank shall have received a certificate signed by the Chief
<PAGE>
Executive Officer of Hibernia, dated the Closing Date, to such
effect; Hibernia shall have furnished to American Bank such other
certificates as American Bank 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 American Bank with such further documents or
other materials as American Bank 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 American Bank
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, or
qualified for or perfected exemptions therefrom, necessary to
consummate the transactions contemplated hereby.
12.11. Tax Opinion. Hibernia shall have engaged, and
Hibernia and American Bank shall have received an opinion of, a
nationally recognized public accounting firm, which opinion shall
be satisfactory in form and substance to Hibernia and American
Bank, 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, and that
the exchange of American Bank Common Stock to the extent exchanged
for Hibernia Common Stock will not give rise to gain or loss to the
shareholders of American Bank with respect to such exchange and
that the Louisiana income tax treatment to the shareholders of
American Bank will be substantially the same as the federal income
tax treatment to the shareholders of American Bank.
12.12. Listing on New York Stock Exchange. The shares
of Hibernia Common Stock issuable to the holders of American Bank
Common Stock in the Merger shall have been approved for listing on
the New York Stock Exchange, Inc. on or before the Closing Date,
subject to official notice of issuance.
12.13. Fairness Opinion. American Bank shall have
received a letter from Montgomery Securities dated prior to the
scheduled date of mailing of the Proxy Statement to its
shareholders, which has not been withdrawn prior to the Closing
Date, to the effect that the terms of the Merger are fair to its
shareholders from a financial point of view.
<PAGE>
12.14. Assertion of Conditions. A failure to satisfy
any of the requirements set forth in Section 12.5, 12.8, 12.12 or
12.13 shall only constitute conditions to consummation of the
Merger if asserted by American Bank and a failure to satisfy any of
the requirements set forth in Section 12.6, 12.7 or 12.10 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.
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 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 of the non-breaching party's performance of this
Agreement.
13.3. Passage of Time; Inability to Satisfy Conditions.
By either party hereto, in the event that (i) the Merger is not
consummated by April 30, 1995, or (ii) any condition to Closing
cannot be satisfied by April 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 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 American Bank.
13.6. Dissenters. By Hibernia, if holders of more than
10 percent of the outstanding American Bank Common Stock exercise
statutory rights of dissent and appraisal pursuant to the Bank
Merger Act.
<PAGE>
13.7. Material Adverse Change. By American Bank, if a
material adverse change as described in Section 8.7 of this
Agreement occurs, and by Hibernia, if a material adverse change as
described in Section 7.7 hereof occurs, after the date hereof and
prior to the Closing.
13.8. Use of Pooling-of-Interests Accounting Treatment.
By Hibernia, in the event it shall determine that the facts and
circumstances surrounding the Merger prohibit or materially
jeopardize the treatment of the Merger as a pooling-of-interests
for accounting purposes.
13.9. Fairness Opinion. By American Bank, if it shall
not have received a letter from Montgomery Securities dated within
five days of the scheduled date of mailing of its proxy statement
to its shareholders to the effect that the terms of the Merger are
fair to its shareholders from a financial point of view.
13.10. Price of Hibernia Common Stock. By American
Bank, if both (a) the quotient of the Average Market Price of
Hibernia Common Stock on the business day immediately preceding 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
business day immediately preceding the Closing Date divided by the
average closing value of the Standard & Poors Regional Bank Index
for the ten business days preceding the date of this Agreement (the
"S&P Quotient") exceeds the Hibernia Quotient by more than 0.1.
14. Closing and Effective Date. The closing of the
Merger (the "Closing") shall take place at the office of Hibernia
at 313 Carondelet Street, New Orleans, Louisiana, at 11:00 a.m.
local time, or at such other place or time as shall be mutually
agreeable to the parties hereto, on the first business day
occurring after the last to occur of: (i) the date that falls 30
days after the date of the order of the Comptroller approving the
Merger of American Bank with and into HNB pursuant to the Bank
Merger Act, or such later date within 60 days of such date as may
be agreed upon between the parties hereto; (ii) the date that falls
5 days after the date on which the last meeting of shareholders
called to approve this Agreement is held; or (iii) such other date
chosen by the parties (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 Office of the
Comptroller for filing pursuant to and in accordance with the
provisions of the Bank Merger Act and to the Louisiana Office of
Financial Institutions. The Merger shall become effective as of
<PAGE>
the date and time set forth in the Merger Agreement (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, 9.11, 9.12, 9.14, 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 American Bank who are the intended beneficiaries of such
provisions.
15.3. The provisions of Section 11 and liabilities for
a breach of the provisions of Sections 9.2 or 9.12 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. 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 the Bank Merger
Act. 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 American Bank) extend the time for the performance of any of the
<PAGE>
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 American Bank shall change the number of shares of
Hibernia Common Stock into which shares of American Bank Common
Stock will be converted by the Merger.
17. Execution in Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed to
constitute an original. Each such counterpart shall become
effective when one counterpart has been signed by each party
hereto.
18. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Louisiana
applicable to agreements made and entirely to be performed within
such State, except as federal law may be applicable.
19. Expenses. Except as otherwise provided in this
Agreement, 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 party hereto, including any transfer or assignment by
operation of law.
21. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient
if delivered personally or sent by registered or certified mail,
postage prepaid, to the Chief Executive Officer of each party
hereto at the address of such party set forth in the preamble to
this Agreement and shall be deemed to have been given as of the
date so personally delivered or mailed. A copy of all notices or
other communications directed to Hibernia or HNB shall be sent to:
Hibernia National Bank
313 Carondelet Street
New Orleans, Louisiana 70130
Attention: Patricia C. Meringer, Corporate Law
<PAGE>
and a copy of all notices or other communications directed to
American Bank 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.
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.
<PAGE>
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
Hibernia National Bank
Stephen A. Hansel
President and Chief Executive
Officer
Attest:
Patricia C. Meringer
Secretary
American Bank
By:
Darryl J. Chauvin
President and Chief Executive
Officer
Attest:
Sharon B. Kell
Assistant Secretary
<PAGE>
APPENDIX B
FORM OF OPINION OF MONTGOMERY SECURITIES
September 19, 1994
Members of the Board of Directors
American Bank
22 Apple Street
Norco, LA 70079
Gentlemen:
We understand that American Bank, a Louisiana banking
association (the "Company"), Hibernia Corporation, a Louisiana
corporation ("Acquiror") and Hibernia National Bank, a wholly-owned
subsidiary of Acquiror ("Acquisition Sub"), have entered into a
Merged Agreement dated September 19, 1994 (the "Merger Agreement"),
pursuant to which the Company will be merged with and into
Acquisition Sub, which will be the surviving entity (the "Merger").
Pursuant to the Merger, as more fully described in the Merger
Agreement, we understand that each outstanding share of the common
stock, $1.00 par value per share, of the Company (the "Common
Stock") will be converted into and exchangeable for that number of
shares of the common stock, no par value per share, of Acquiror
obtained by dividing 2,250,000 by the total number of issued and
outstanding shares of Common Stock (subject to certain adjustments
(the "Consideration").
You have asked for our opinion as to whether the Consideration
to be received by the shareholders of the Company pursuant to the
Merger is fair to the shareholders of the Company 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 date 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 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, 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 operation,
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 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 the Consideration to be received by the shareholders of the
Company 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 April 15, 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 the Company,
or quoted or disclosed to any person in any manner without our
prior written consent. In furnished 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 and regulations
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
<PAGE>
APPENDIX C
SELECTED PROVISIONS OF FEDERAL AND STATE LAW
RELATING TO THE RIGHTS OF
DISSENTING SHAREHOLDERS
Federal Law (12 U.S.C. Section 215a)
(b) Dissenting Shareholders
If a merger shall be voted for at the called meetings by the
necessary majorities of the shareholders of each association or
State bank participating in the plan of merger, and thereafter the
merger shall be approved by the Comptroller, any shareholder of any
association or State bank to be merged into the receiving
association who has voted against such merger at the meeting of the
association or bank of which he is a stockholder, or has given
notice in writing at or prior to such meeting to the presiding
officer that he dissents from the plan of merger, shall be entitled
to receive the value of the shares so help by him when such merger
shall be approved by the Comptroller....
(d) State Appraisal and Merger Law
. . .The appraisal of such shares of stock in any State bank
shall be determined in the manner prescribed by the law of the
State in such cases, rather than as provided in this section, if
such provision is made in the State law; and no such merger shall
be in contravention of the law of the State under which such bank
is incorporated. The provisions of this subsection shall apply
only to shareholders of (and stock owned by them in) a bank or
association being merged into the receiving association.
State Law (La. Rev. Stat. 6: 376)
A. If a state bank has, by vote of its stockholders, become
a party to a merger...,then, ...a stockholder who voted against
such action shall have the right to dissent.
C. (1) Except as provided in the last sentence of this
Subsection, any stockholder electing to exercise such right of
dissent shall file with the bank, prior to or at the meeting of
stockholders at which such proposed action is submitted to vote, a
written objection to such proposed action and shall vote his shares
against such action.
(2) If such proposed action be taken by the required
vote...,and the merger...authorized thereby be effected, the bank
shall promptly thereafter give written notice thereof, by
registered mail, to each stockholder who filed such written
objection to and voted his shares against such action at such
stockholder's last address on the bank's records.
<PAGE>
(3) Each such stockholder may, within twenty days after
the mailing of such notice to him but not thereafter, file with the
bank a demand in writing for the fair cash value of his shares as
of the day before such vote was taken, provided that he state in
such demand the value demanded and a post office address to which
the reply of the bank may be sent and at the same time deposit in
escrow in a bank or trust company located in the parish of the
domicile of the bank the certificates representing his shares, duly
endorsed and transferred to the escrow bank upon the sole condition
that said certificates shall be delivered to the bank upon payment
of the value of the shares determined in accordance with the
provisions of this Section. With his demand, the stockholder shall
deliver to the bank the written acknowledgment of such escrow bank
or trust company with which such certificates have been deposited
that it so holds his certificates of stock.
(4) Unless the objection, demand, and acknowledgment
aforesaid be made and delivered by the stockholder within the
period described in this Subsection, he shall conclusively be
presumed to have acquiesced in the action proposed or taken.
D. If the bank does not agree to the value so stated and
demanded...it shall, within twenty days after the receipt of such
demand and acknowledgment, notify in writing the stockholder at the
designated post office address of its disagreement and shall state
in such notice the value it will agree to pay if any payment should
be held to be due; otherwise, it shall be liable for and shall pay
the dissatisfied stockholder the value demanded by him for his
shares.
E. (1) In case of disagreement as to such fair cash value or
as to whether any payment is due after compliance by the parties
with the provisions of Subsections C and D of this Section, the
dissatisfied stockholder within sixty days after receipt of notice
in writing of the bank's disagreement but not thereafter may file
suite against the bank or the merged or consolidated bank, as the
case may be, in the district court of the parish in which the bank
or the merged or consolidated bank, as the case may be, is
domiciled prayed the court to fix and decree the fair cash value of
the dissatisfied stockholder's shares as of the day before the
action complained of was taken, and the court shall, on such
evidence as may be adduced in relation thereto, determine summarily
whether any payment is due and, if so, such cash value, and render
judgment accordingly.
(2) Any stockholder entitled to file such a suit may,
within such sixty-day period but not thereafter, intervene as a
plaintiff in such a suit filed by another stockholder and recover
therein judgment against the bank for the fair cash value of his
shares. No order or decree shall be made by the court staying the
proposed action, and any such action may be carried to completion
notwithstanding any such suit.
<PAGE>
(3) Failure of the stockholder to bring suit or to
intervene in such a suit within sixty days after receipt of notice
of disagreement by the bank shall conclusively bind the
stockholder:
(a) By the bank's statement that no payment is due;
or
(b) If the bank does not contend that no payment is
due, to accept the value of his shares as fixed by the bank in its
notice of disagreement.
F. When the fair value of the shares has been agreed upon
between the stockholder and the bank, or when the bank has become
liable for the value demanded by the stockholder because of failure
to give notice of disagreement and of the value it will pay, or
when the stockholder has become bound to accept the value the bank
agrees is due because of his failure to bring suit within sixty
days after receipt of notice of the bank's disagreement, the action
of the stockholder to recover such value must be brought within
five years from the date the value was agreed upon or the liability
of the bank became fixed.
G. If the bank or the merged or consolidated bank, as the
case may be, shall, in its notice of disagreement, have offered to
pay the dissatisfied stockholder on demand an amount in cash deemed
by it to be fair cash value of his shares, and if, on the
institution of a suit by the dissatisfied stockholder claiming an
amount in excess of the amount offered, the bank or the merged or
consolidated bank, as the case may be, shall deposit in the
registry of the court, there to remain until the final
determination of the cause, the amount so offered; then, if the
amount finally awarded such stockholder, exclusive of interest and
costs, be more than the amount offered and deposited as aforesaid,
the costs of the proceeding shall be taxed against the bank or the
merged or consolidated bank, as the case may be, and judicial
interest may be awarded against such bank only on the amount of the
award in excess of the amount deposited in the registry of the
court; otherwise, the costs of the proceeding shall be taxed
against such stockholder.
H. Upon filing a demand for the value of his shares, the
stockholder shall cease to have any of the rights of a stockholder
except the rights accorded by this Section. Such a demand may be
withdrawn by the stockholder at any time before the bank gives
notice of disagreement as provided in Subsection D of this Section.
After such notice of disagreement is given, withdrawal of a notice
of election shall require the written consent of the bank. If a
notice of election is withdrawn, or the proposed corporate action
is abandoned or rescinded, or a court should determine that the
stockholder is not entitled to receive payment for his shares, or
the stockholder should otherwise lose his dissenters' rights:
<PAGE>
(1) He shall not have the right to receive payment for
his shares;
(2) His share certificates shall be returned to him and,
on his request, new certificates shall be issued to him in exchange
for the old ones endorsed to the bank; and
(3) He shall be reinstated to all his rights as a
stockholder as of the filing of his demand for value, including any
intervening preemptive rights and the right to payment of any
intervening dividend or other distribution, or, if any rights have
expired or any such dividend or distribution other than in cash has
been completed, in lieu thereof, at the election of the bank he
shall receive the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without
prejudice otherwise to any proceeding that may have been taken in
the interim.
<PAGE>
APPENDIX D
FORM OF OPINION OF ERNST & YOUNG LLP
REGARDING CERTAIN TAX MATTERS
December 31, 1994
Hibernia Corporation
313 Carondelet
P.O. Box 61540
New Orleans, Louisiana 70161
American Bank
22 Apple Street
Norco, Louisiana 70079-2214
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 American Bank ("Bank") with and into
Hibernia National Bank ("HNB"), a wholly-owned subsidiary of
Hibernia Corporation ("Hibernia"). (Hereinafter, referred to
as the "Merger.")
In rendering this opinion, we have relied upon the facts,
summarized below, as they have been presented to us orally by
the management of Hibernia and verified, in the Statements of
Facts and Representations dated December 31, 1994 provided by
the respective managements of Bank, Hibernia, and HNB; in the
Agreement and Plan of Merger made and entered into by and
between Bank and Hibernia as of September 19, 1994 (the "Plan
of Merger"); and in the Registration Statement (Form S-4),
dated December 23, 1994, filed with the Securities and
Exchange Commission, as declared effective on December 29,
1994 and containing the Proxy Statement-Prospectus of Bank and
Hibernia dated January 13, 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 Merger. 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 the form
of our opinion is described in the Prospectus relating to the
issuance of Hibernia Common Stock in connection with the
proposed Merger and the special meeting of the Bank
shareholders with respect thereto. We consent to such
reference in the Prospectus under the captions, "Summary",
"Conditions to Consummation of the Merger," and "Proposed
Merger--Material Tax Consequences." We also understand that
the form of this letter is included as an appendix to the Form
S-4 Registration Statement. We consent to such inclusion.
<PAGE>
STATEMENT OF FACTS
Bank is a state banking association organized under the laws
of the State of Louisiana, engaged principally in the banking
business. The presently authorized capital stock of Bank is
1,000,000 shares of common stock, par value $1.00 per share
("Bank Common Stock") and 500 shares of preferred stock, par
value $1,000 per share ("Bank Preferred Stock"). As of the
date hereof, 483,686 shares of Bank Common Stock were issued
and outstanding and held by approximately 508 shareholders.
No shares of Bank Preferred Stock were issued and outstanding
as of the date hereof. 314 shares of Bank Common Stock were
held in Bank's treasury as of the date hereof. There are no
options, warrants, subordinated rights or other rights to
purchase Bank Common Stock.
Hibernia is a bank holding company organized and existing
under the laws of the State of Louisiana with shares
registered under the Securities Act of 1933. The presently
authorized capital stock of Hibernia is 300,000,000 shares,
consisting of 100,000,000 shares of preferred stock, no par
value, and 200,000,000 shares of Class A voting common stock,
no par value (the Class A voting common stock being referred
to hereinafter as "Hibernia Common Stock"). As of September
30, 1994, no shares of Hibernia's preferred stock were
outstanding, 96,924,803 shares of Hibernia Common Stock were
outstanding, and 192,700 shares of Hibernia Common Stock were
held in Hibernia's treasury. There are no existing options,
warrants, calls or commitments of any kind obligating Hibernia
to issue any share of its capital stock or any other security
of which it is or will be the issuer, except that Hibernia has
issued warrants to purchase shares of Hibernia Common Stock
pursuant to the terms of the Senior Secured Restructuring
Agreement dated as of May 27, 1992, of which warrants to
purchase 660,845 shares of Hibernia Common Stock were
outstanding as of September 30, 1994. Additionally, 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; 3,852,787 (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 as of
September 30, 1994; and 523,783 shares of Hibernia Common
Stock are available for issuance pursuant to Hibernia's
Dividend Reinvestment and Stock Purchase Plan. Pending
mergers with Pioneer Bancshares Corporation, First State Bank
and Trust Company of Bogalusa, STABA Bancshares, Inc. and
Progressive Bancorporation, Inc. will result in the additional
issuance of approximately 16 million shares of Hibernia Common
Stock. Hibernia Common Stock is traded on the New York Stock
Exchange.
HNB is a nationally chartered commercial bank engaged
principally in the banking business. HNB is a wholly owned
subsidiary of Hibernia.
<PAGE>
BUSINESS PURPOSE
The management of Hibernia has represented to us that Hibernia
desires to consummate the Merger 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 Bank Board of Directors believes 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 Merger.
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 a merger (i.e., the
Merger) of 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").
2. In the Merger, HNB will acquire all of the assets and
assume all of the liabilities of Bank in exchange for
Hibernia Common Stock. As a result of the Merger, each
share of the issued and outstanding Bank 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 2,250,000 by the total number
of issued and outstanding shares of Bank Common Stock on
the closing date. In the event the Average Market Price
(defined below) is less than $7.75 per share, the exchange
rate shall be calculated as follows: ($17,437,500 divided
by the Average Market Price of Hibernia Common Stock)
divided by the number of issued and outstanding shares of
Bank Common Stock. In the event that the Average Market
Price of Hibernia Common Stock is greater than $8.875 per
share, the exchange rate shall be calculated as follows:
($19,968,750 divided by the Average Market Price of
Hibernia Common Stock) divided by the number of issued and
outstanding shares of Bank Common Stock.
In the event that, among other things, either (i) Hibernia
executes, prior to the effective date of the Merger, an
agreement to merge with an unaffiliated third party in a
transaction in which Hibernia will not be the surviving
holding company; or (ii) if an unaffiliated third party
has acquired or commenced a public offer that has not been
withdrawn or otherwise terminated within ten days prior to
the closing date, to acquire control of Hibernia through
share ownership or otherwise, then the exchange rate shall
be calculated as the number that is obtained by dividing
2,250,000 by the total number of issued and outstanding
shares of Bank Common Stock.
<PAGE>
If the aggregate professional fees, including fees of
counsel and accountants, including expense reimbursements
to such professionals, but excluding fees of Montgomery
Securities, incurred by Bank in connection with the Merger
exceeds $175,000, then the number of shares of Hibernia
Common Stock to be issued in the Merger will be reduced by
the number of shares resulting from application of the
following formula: (x - $175,000) divided by the Average
Market Price of Hibernia Common Stock, where x = the
actual aggregate professional fees and expenses incurred
by Bank. If the Average Market Price of Hibernia Common
Stock is less than $7.75 per share or greater than $8.875
per share, then the aggregate dollar amount of
consideration to be paid in the form of Hibernia Common
Stock will be reduced by the amount by which the actual
aggregate professional fees and expenses incurred by Bank
in connection with the Merger exceeds $175,000.
The Average Market Price is defined as the average of the
high and low sales prices of one share of Hibernia Common
Stock for the five business days preceding the last
trading day immediately prior to the closing date as
reported in the Wall Street Journal. Holders of shares of
Bank Common Stock outstanding immediately prior to the
effective date of the Merger shall cease to be, and shall
have no rights as, shareholders of Bank after the Merger.
3. As a result of the Merger, each share of the issued and
outstanding Bank Common Stock shall cease to be
outstanding and will be canceled.
4. No fractional shares will be issued. Each holder of Bank
Common Stock who would otherwise have been entitled to
receive a fraction of a share of Hibernia Common Stock
shall receive in lieu thereof, cash (without interest) in
an amount equal to such fractional part of a share
multiplied by the Average Market Price of Hibernia Common
Stock.
5. By following certain statutory procedures, shareholders of
Bank may exercise dissenter's rights entitling them to
receive in cash the value of their respective Bank Common
Stock in lieu of receiving Hibernia Common Stock in the
Merger.
REPRESENTATIONS
For purposes of our evaluation, we have received from the
respective managements of Bank, Hibernia, and HNB, Statements
of Facts and Representations, dated December 31, 1994, as set
forth below. References to the "Code" are to the Internal
Revenue Code of 1986, as amended.
<PAGE>
The following representations have been made in connection
with the Merger:
(a) The fair market value of the Hibernia Common Stock to be
received by each Bank Common Stock shareholder will be
approximately equal to the fair market value of the Bank
Common stock surrendered in the exchange.
(b) There is no plan or intention by the shareholders of Bank
who own five percent or more of the Bank Common Stock and
to the best knowledge of management of Bank, there is no
intention on the part of the remaining shareholders of
Bank, to sell, exchange, or otherwise dispose of a number
of shares of Hibernia Common Stock received in the
transaction that would reduce the Bank shareholders'
ownership of Hibernia Common Stock to a number of shares
having a value, as of the date of the transaction, of
less than 50 percent of the value of all the formerly
outstanding Common Stock of Bank as of the same date.
For purposes of this representation, any shares of Bank
Common Stock surrendered by dissenters, or exchanged for
cash in lieu of fractional shares of Hibernia 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
former Bank shareholders and otherwise sold, redeemed, or
disposed of prior to September 19, 1994 or subsequent to
the transaction will be considered in making this
representation.
(c) 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
Bank shareholders instead of issuing fractional shares of
Hibernia will not exceed one percent of the total
consideration that will be issued in the transaction to
the Bank shareholders in exchange for their shares of
Bank Common Stock. The fractional share interests of
each Bank shareholder will be aggregated, and no Bank
shareholder will receive cash in an amount equal to or
greater than the value of one full share of Hibernia
Common Stock.
(d) 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 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.
<PAGE>
(e) 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.
(f) 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.
(g) Hibernia has no plan or intention to reacquire any of its
Common Stock issued in the 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).
(h) Hibernia has no plan or intention to liquidate HNB; to
merge HNB into another corporation; to sell or otherwise
dispose of the Common Stock of HNB; or to cause HNB to
sell or otherwise dispose of any of the assets of Bank
acquired in the transaction, except for dispositions made
in the ordinary course of business. As Hibernia makes
other acquisitions, it is likely that some or all of the
acquired banks will be merged with and into HNB. At this
time, the discussion provided under the caption "Parties
to the Merger" in the Prospectus provides a complete list
of all pending acquisitions that are covered by
definitive agreements. However, no Common Stock of HNB
will be issued as consideration in any of the pending
acquisitions.
(i) Following the transaction, Hibernia will continue,
substantially unchanged, the banking business of Bank,
which will be merged with and into HNB.
(j) 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.
(k) 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.
(l) 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 Merger in accordance with the
guidelines established in Revenue Ruling 73-54, 1973-1
C.B. 187, Hibernia, Bank, and the shareholders of Bank
will pay their respective expenses, if any, incurred in
connection with the transaction.
<PAGE>
(m) There is no intercorporate indebtedness existing between
Bank and its affiliates on the one hand and Hibernia and
its affiliates on the other hand which was issued,
acquired, or will be settled at a discount.
(n) No two parties to the transaction are investment
companies as defined in Section 368(a)(2)(F)(iii) and
(iv) of the Code.
(o) 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.
(p) The basis and fair market value of the assets of Bank to
be transferred to HNB will 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.
(q) No HNB common stock will be issued or exchanged in the
Merger.
(r) None of the compensation received by any shareholder-
employees of Bank will be separate consideration for, or
allocable to, any of their shares of Bank Common Stock;
none of the shares of Hibernia Common Stock received by
any shareholder-employees will be separate consideration
for, or allocable to, any employment agreement; and the
compensation paid to any shareholder-employees will be
for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's-
length for similar services.
(s) The shareholders of Bank (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.
(t) The merger of Bank into HNB will qualify as a statutory
merger under the Bank Merger Act.
(u) There is no larger integrated transaction to which the
proposed transaction constitutes only one step.
Management of Hibernia knows of no plan or intention by
an unaffiliated third party to acquire or commence a
public offer for Hibernia Common Stock.
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
<PAGE>
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
Bank with and into HNB, wherein Hibernia Common Stock is to be
exchanged for Bank Common Stock, is to occur as a statutory
merger under applicable law.
Section 368(a)(2)(D) of the Code provides that the acquisition
by one corporation in exchange for stock of a corporation
which is in control of the acquiring corporation, of
substantially all of the properties of another corporation,
shall not disqualify a transaction under Section 368(a)(1)(A)
if (i) no stock of the acquiring corporation is used in the
transaction and (ii) the transaction would have otherwise
qualified as a Type A reorganization had the merger been into
the controlling corporation. It has been represented by the
management of Hibernia and HNB that the merger of Bank with
and into HNB, wherein Hibernia Common Stock is to be exchanged
for Bank Common Stock, is to occur as a statutory merger under
applicable law.
Revenue Procedure 77-37, 1977-2 C.B. 568 (Section 3.01) provides
that, for advance ruling purposes, the "substantially all"
requirement of Section 368(a)(2)(D) is satisfied if there is
a transfer of assets representing at least 90 percent of the
fair market value of the net assets and at least 70 percent of
the fair market value of the gross assets held by the
transferor corporation immediately prior to the transfer. Any
payments to dissenters and any redemptions and distributions
(except for regular dividend distributions) made by the
corporation immediately preceding the transfer and which are
a part of the Agreement will be considered as assets held by
the corporation immediately prior to the transfer.
Additionally, the payment of expenses if any, by Bank,
incurred in connection with the Merger is taken into
consideration in applying the "substantially all" test.
In the proposed 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 Merger, before payment to any
dissenters to the 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 Merger.
<PAGE>
Additional Requirements
Sections 1.368-1(b) and 1.368-2(g) of the Income Tax
Regulations (the "Regulations") provide that the following
additional requirements must be met for a transaction to
qualify as a reorganization within the meaning of Section 368
of the Code:
(i) "continuity of interest" must be present,
(ii) "continuity of business enterprise" must exist, and
(iii) the transaction must be undertaken for reasons
pertaining to the continuance of the business of a corporation
which is a party to the transaction.
Continuity of Interest
In general, the continuity of interest test requires the
owners of the reorganized entity to receive and retain a
meaningful equity in the surviving entity. See e.g., Pinellas
Ice & Cold Storage Co. v. Comm'r, 287 U.S. 462 (1933);
Cortland Specialty Company v. Comm'r, 60 F.2d 937 (2d Cir.
1932), cert. denied, 288 U.S. 599 (1932); Helvering v.
Minnesota Tea Co., 296 U.S. 378 (1935).
Revenue Procedure 77-37, 1977-2 C.B. 568 (Section 3.02)
provides that, for advance ruling purposes, the continuity of
interest requirement is satisfied if there is a continuing
interest through stock ownership in the acquiring or
transferee corporation (or a corporation in "control" thereof
within the meaning of Section 368(c) of the Code) on the part
of the former shareholders of the acquired or transferor
corporation which is equal in value as of the effective date
of the reorganization, to at least 50 percent of the value of
all of the formerly outstanding stock of the acquired or
transferor corporation as of that date. Sales, redemptions,
and other dispositions of stock occurring prior or subsequent
to the exchange which are part of the plan of reorganization
will be considered in determining whether there is a 50
percent continuing interest through stock ownership as of the
effective date of the reorganization.
Based upon our understanding of the facts presented to us
orally and as set forth in the Statements of Facts and
Representations dated December 31, 1994, the 50 percent
continuity of interest test of Revenue Procedure 77-37, supra,
will be met in the Merger. It has been represented by the
management of Bank that the shareholders of Bank have no plan
or intention to sell, exchange or otherwise dispose of a
number of Hibernia Common Stock 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 Merger there will be a
continuing interest through Common Stock ownership in Hibernia
on the part of the former shareholders of Bank.
<PAGE>
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 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.
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 Merger. Accordingly, the
Merger satisfies the business purpose requirement as set
forth in the Regulations.
Other Statutory Provisions
Section 368(b) of the Code defines the term "a party to a
reorganization" to include a corporation resulting from a
reorganization, and both corporations, in the case of a
reorganization resulting from the acquisition by one
corporation of stock or properties of another.
Section 361(a) of the Code provides that no gain or loss shall
be recognized to a transferor corporation which is a party to
a reorganization on any exchange pursuant to the plan of
reorganization solely for stock or securities in another
corporation which is a party to the reorganization.
Section 1032 of the Code provides that no gain or loss shall
be recognized to a corporation on the receipt of money or
other property in exchange for stock of such corporation.
Revenue Ruling 57-278, 1957-1 C.B. 124, provides that a
subsidiary will not recognize gain upon the exchange of its
parent's stock for property in connection with a tax-free
reorganization.
Section 354(a)(1) of the Code provides that no gain or loss
shall be recognized if stock or securities in a corporation
which is a party to a reorganization are, in pursuance of the
plan of reorganization, exchanged solely for stock or
securities in such corporation or in another corporation which
is a party to the reorganization.
<PAGE>
Section 362(b) of the Code generally provides that if property
is acquired by a corporation in connection with the
reorganization, then the basis shall be the same as it would
be in the hands of the transferor, increased by the amount of
gain recognized to the transferor on such transfer.
Section 1223(2) of the Code provides that in determining a
taxpayer's holding period for property, there shall be
included the period for which such property was held by
another person, if such property has, for the purpose of
determining gain or loss from a sale or exchange, the same
basis in whole or in part in such taxpayer's hands as it would
have had in the hands of such other person.
Section 381 of the Code applies to certain transactions,
including those transactions to which Section 361 of the Code
applies, where there is a transfer in connection with a
reorganization described in Section 368(a)(1)(A) or in Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Code.
FEDERAL INCOME TAX CONSEQUENCES
Based solely upon the Statements of Facts and Representations,
the Agreement, and the Plan of Merger, it is our opinion that
the following federal income tax consequences will result:
In the merger of Bank with and into HNB:
(1) 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 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.
(2) No gain or loss will be recognized by Bank upon the
transfer of substantially all of its assets to HNB in
exchange for Hibernia Common Stock, cash for dissenters,
if any, and the assumption of Bank's liabilities by HNB,
since any cash for dissenters will be distributed to the
Bank shareholders (Sections 361 and 357(a) of the Code).
(3) 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 exchange for Hibernia Common Stock,
cash for dissenters, if any, and the assumption of Bank's
liabilities (Section 1032(a) of the Code). (Rev. Rul.
57-278, 1957-1 C.B. 124.)
<PAGE>
(4) 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).
(5) The basis of the HNB Common Stock in the hands of
Hibernia will be increased by an amount equal to the
basis of the Bank assets in the hands of HNB and
decreased by the sum of the amount of the liabilities of
Bank assumed by HNB and the amount of liabilities to
which the assets of Bank are subject (Section 1.358-6 of
Proposed Regulations).
(6) 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).
(7) No gain or loss will be recognized by the shareholders of
Bank upon the receipt of solely Hibernia Common Stock in
exchange for their shares of Bank Common Stock (Section
354(a)(1) of the Code).
(8) The basis of Hibernia Common Stock to be received by the
shareholders of Bank will be, in each instance, the same
as the basis of the Common Stock of Bank surrendered in
exchange therefor (Section 358(a)(1) of the Code).
(9) The holding period of the Hibernia Common Stock to be
received by the shareholders of Bank in the transaction
will include in each instance, the period during which
the Bank Common Stock surrendered in exchange therefor is
held as a capital asset on the date of the surrender
(Section 1223(l) of the Code).
(10) HNB will succeed to and take into account those tax
attributes of Bank 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 HNB subject to the conditions and limitations
specified in Sections 381, 382, 383, and 384 of the Code
and the Regulations thereunder.
(11) 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.
(12) Cash received by a dissenting shareholder of Bank in
exchange for his or her Bank 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
<PAGE>
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, as provided in
Section 302(a) of the Code. (Rev. Rul. 66-365, 1966-2
C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574)
(14) Bank will close its taxable year as of the date of the
distribution or transfer. HNB will not close its taxable
year merely because of the Merger. (Section 381(b) of
the Code.)
STATE INCOME TAX CONSEQUENCES
(1) The Louisiana income tax treatment to the shareholders of
Bank will be substantially the same as the federal income
tax treatment to the shareholders of Bank.
SCOPE OF OPINION
The scope of this opinion is expressly limited to the federal
income tax issues specifically addressed in (1) through (14)
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 Merger, 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 Merger. We
have made no determination nor expressed any opinion as to the
fair market value of any of the assets being transferred in
the Merger nor the common shares being exchanged in the
Merger. 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 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
<PAGE>
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.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
