As Filed with the Securities and Exchange Commission on October
22, 1996
REGISTRATION NO.________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________________
HIBERNIA CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 6711 72-0724532
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
No.)
incorporation or Classification
organization) Code Number)
313 Carondelet Street
New Orleans, Louisiana 70130
(504) 533-5332
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
_____________________________
Gary L. Ryan
Senior Vice President and Corporate Counsel
Hibernia Corporation
313 Carondelet Street
New Orleans, Louisiana 70130
(504) 533-5560
(Name, address, including zip code, and telephone number, includ
ing area code of agent for service)
COPIES TO:
William T. Luedke IV
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana Street
Suite 2900
Houston, Texas 77002-2781
(713) 223-2900
____________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES
TO THE PUBLIC:
As soon as practicable after this registration statement is
declared effective.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box. ______
/_____/
CALCULATION OF REGISTRATION FEE
_________________________________________________________________
Title of each Amount to be Proposed Proposed Amount of
class of registered maximum maximum registration
securities to offering aggregate fee (1)
be registered price per offering
share (1) price (1)
_________________________________________________________________
Class A
Common Stock,
no par value 6,720,842 $50.51 $38,576,103 $13,302
shares
_________________________________________________________________
1. Based upon a book value of the securities to be exchanged as
of June 30, 1996 of $38,576,103 pursuant to Rule 457(f)(2)
of the Securities Act of 1933 (the "Securities Act").
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
HIBERNIA CORPORATION
Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K
Item of Form S-4 Location or Caption in
Proxy Statement
(Prospectus)
1. Forepart of Registration Statement Introduction
and Outside Front Cover Page of
Proxy Statement-Prospectus
2. Inside Front and Outside Back Table of Contents;
Cover Pages of Proxy Statement- Available Information
Prospectus
3. Risk Factors, Ratio of Earnings Introduction; The
to Fixed Charges and Other Parties to the Merger;
Information Summary;
Certain Regulatory
Considerations
4. Terms of the Transaction Introduction; Summary;
Proposed Merger
5. Pro Forma Financial Pro Forma Financial
Information Information
6. Material Contacts with the Proposed Merger
Company Being Acquired
7. Additional Information Required Not Applicable
for Reoffering by Persons and
Parties Deemed to be Underwriters
8. Interests of Named Experts and Validity of Shares
Counsel No Conflicts; therefore
N/A
9. Disclosure of Commission Position Not Applicable
on Indemnification for Securities
Act Liabilities
10. Information with Respect to Introduction; Available
S-3 Registrants Information; The Parties
to the Merger
11. Incorporation of Certain Available Information
Information by Reference
12. Information with Respect to Not Applicable
S-2 or S-3 Registrants
13. Incorporation of Certain Not Applicable
Information by Reference
14. Information with Respect to Not Applicable
Registrants other than
S-2 or S-3 Registrants
15. Information with Respect to Not Applicable
S-3 Companies
16. Information with Respect to Not Applicable
S-2 or S-3 Companies
17. Information with Respect to Summary; The Parties to
Companies Other Than S-2 or the Merger; Certain
S-3 Companies Information Concerning
Texarkana National
Bancshares, Inc.;
Financial Statements of
Texarkana National
Bancshares, Inc.
18. Information if Proxies, Introduction; Summary;
Consents or Authorizations Meeting Information;
are to be Solicited Proposed Merger; Certain
Information Concerning
Texarkana National
Bancshares, Inc.;
Relationship with
Independent Auditors
19. Information if Proxies, Not Applicable
Consents, or Authorizations are
not to be Solicited, or in an
Exchange Offer
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
Texarkana National Bancshares, Inc.
________ __, 1996
NOTICE IS HEREBY GIVEN that, pursuant to the call of the
Board of Directors of Texarkana National Bancshares, Inc.
("Texarkana"), a Special Meeting of the shareholders of Texarkana
will be held at the main office of Texarkana National Bancshares,
Inc., 2318 Richmond Road, Texarkana, Texas 75501-5644 on ________
__, 1996 at _____ _.m., for the purpose of considering and voting
upon the following matters:
1. A proposal to approve a merger (the "Merger") of
Texarkana with and into Hibernia Corporation
("Hibernia") and the related Agreement and Plan of
Merger between Texarkana and Hibernia dated as of June
26, 1996 (the "Agreement"), a copy of which is attached
as Appendix A to the accompanying Proxy Statement-
Prospectus and incorporated herein by this reference.
2. The transaction of such other business as may
properly come before the Special Meeting and any
adjournments or postponements thereof.
The Board of Directors has fixed the close of business on
November __, 1996 as the record date for determining the
shareholders entitled to receive notice of, and to vote at, the
Special Meeting.
Each share of common stock, par value $10.00 per share, of
Texarkana (the "Texarkana Common Stock") will entitle the holder
thereof to one vote on all matters that come before the Special
Meeting. Approval of the Merger will require the affirmative
vote of two-thirds of the issued and outstanding Texarkana Common
Stock, in person or by proxy, at the Special Meeting.
Whether you intend to attend the Special Meeting, and
regardless of the number of shares you own, your vote is
important. Please take a moment to complete, date and sign the
enclosed proxy card. Your proxy may be revoked by notice to the
Secretary of Texarkana or by executing and delivering a later
dated proxy to the Secretary prior to the Special Meeting.
By Order of the Board of Directors,
Martha Wisdom
Secretary
Texarkana National Bancshares, Inc.
PROXY
This Proxy is Solicited on Behalf of
The Board of Directors of Texarkana National Bancshares, Inc.
The undersigned shareholder of Texarkana National
Bancshares,
Inc. ("Texarkana"), a Texas corporation, hereby constitutes and
appoints James R. Murphy and ___________________, or either of
them, proxies with full power of substitution to vote and act for
the undersigned, as designated below, with respect to the number
of shares of the Common Stock of Texarkana the undersigned would
be entitled to vote if personally present at the Special Meeting
of Shareholders of Texarkana, which will be held at the office of
Texarkana National Bancshares, Inc., 2318 Richmond Road,
Texarkana, Texas 75501-5644 on ________ __, 1996 at _____ _.m.
(the "Special Meeting"), and at any adjournments or postponements
thereof, and, at their discretion, the proxies are authorized to
vote upon such other business as may properly come before the
special meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS SPECIFIED
WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH SHARES WILL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF
DIRECTORS OF TEXARKANA.
The Board of Directors of Texarkana recommends that you vote
FOR approval of the Merger of Texarkana with and into Hibernia
Corporation.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
PLEASE MARK YOUR CHOICE LIKE
THIS ___ IN BLUE OR BLACK INK/
/___/
____________________
Common Stock
Item 1 Approval of Merger of Texarkana with and into Hibernia
Corporation and the related Agreement and Plan of
Merger between Texarkana and Hibernia Corporation dated
as of June 26, 1996
For Against Abstain
___ ___ ___
/___/ /___/ /___/
The undersigned hereby acknowledges receipt of a copy of the
accompanying Notice of Special Meeting of Shareholders and Proxy
Statement and hereby revokes any proxy or proxies heretofore
given.
Date_______________________________
Signature__________________________
Please mark, date and sign as your account name appears and
return in the enclosed envelope. If acting as executor,
administrator, trustee, guardian, or in a similar capacity, you
should so indicate when signing. If the person signing is a
corporation, partnership or other entity, please sign the full
name of the corporation or partnership or other entity by a duly
authorized officer, partner or other person. If the shares are
held jointly, each shareholder named should sign.
PROXY STATEMENT
TEXARKANA NATIONAL BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER __, 1996
PROSPECTUS
HIBERNIA CORPORATION
6,720,842 SHARES OF
CLASS A COMMON STOCK
(NO PAR VALUE)
This Proxy Statement-Prospectus is being furnished to the
holders of common stock, par value $10.00 per share (the
"Texarkana Common Stock") of Texarkana National Bancshares, Inc.,
a Texas corporation ("Texarkana"), in connection with the
solicitation of proxies by the Board of Directors of Texarkana
for use at a special meeting of shareholders (the "Special
Meeting") to be held at _____ _.m., local time, on ________ __,
1996, at the office of Texarkana, 2318 Richmond Road, Texarkana,
Texas 75501-5644, and at any adjournments or postponements
thereof.
At the Special Meeting, the holders of record of Texarkana
Common Stock as of the close of business on _________ __, 1996
(the "Record Date") will consider and vote upon a proposal to
approve the merger (the "Merger") of Texarkana with and into
Hibernia Corporation ("Hibernia"), and the related Agreement and
Plan of Merger dated June 26, 1996 (the "Agreement") between
Texarkana and Hibernia. Upon consummation of the Merger, each
outstanding share of Texarkana Common Stock, except for shares
owned beneficially by Hibernia and its subsidiaries and shares as
to which dissenters' rights have been perfected and not withdrawn
or otherwise forfeited, will be converted into the number of
shares of Hibernia's Class A Common Stock, no par value (the
"Hibernia Common Stock") determined in the manner described below
under the heading "PROPOSED MERGER -- Terms of the Merger," with
cash being paid in lieu of any fractional share interests. For a
description of the Agreement, which is included in its entirety
as Appendix A to this Proxy Statement-Prospectus, see "PROPOSED
MERGER."
This Proxy Statement-Prospectus also constitutes a
prospectus of Hibernia with respect to the shares of Hibernia
Common Stock to be issued pursuant to the Agreement if the Merger
is consummated. The actual number of shares of Hibernia Common
Stock to be issued will be determined in accordance with the
terms of the Agreement. See "PROPOSED MERGER -- Terms of the
Merger."
The outstanding shares of Hibernia Common Stock are listed
on the New York Stock Exchange, Inc. (the "NYSE"). The reported
last sale price of Hibernia Common Stock on the NYSE Composite
Transactions Reporting System on ________ __, 1996 was $______
per share.
This Proxy Statement-Prospectus and the accompanying proxy
card are first being mailed to shareholders of Texarkana on or
about _________ __, 1996.
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 Texarkana. 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 ________ __, 1996.
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . .
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . .
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . .
THE PARTIES TO THE MERGER. . . . . . . . . . . . . . .
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . .
MEETING INFORMATION. . . . . . . . . . . . . . . . . .
Date, Place and Time . . . . . . . . . . . . . .
Record Date; Voting Rights . . . . . . . . . . .
Voting and Revocation of Proxies. . . . . . . . .
Solicitation of Proxies . . . . . . . . . . . . .
PROPOSED MERGER. . . . . . . . . . . . . . . . . . . .
Background of and Reasons for Merger. . . . . . .
Terms of the Merger . . . . . . . . . . . . . . .
Opinion of Financial Advisor . . . . . . . . . .
Surrender and Exchange of Stock Certificates . .
Employee Benefits
Expenses
Representations and Warranties:
Conditions to the Merger; Waiver. . . . . . . .
Regulatory and Other Approvals. . . . . . . . . .
Business Pending the Merger . . . . . . . . . . .
Effective Date of the Merger; Termination . . . .
Management and Operations After the Merger. . . .
Certain Differences in Rights of Shareholders . .
Interests of Certain Persons in the Merger
Material Tax Consequences . . . . . . . . . . . .
Resale of Hibernia Common Stock . . . . . . . . .
Rights of Dissenting Shareholders . . . . . . . .
Dividend Reinvestment Plan. . . . . . . . . . . .
Accounting Treatment. . . . . . . . . . . . . . .
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . .
PRO FORMA FINANCIAL INFORMATION. . . . . . . . . . . .
CERTAIN INFORMATION RELATING TO TEXARKANA NATIONAL
BANCSHARES, INC.. . . . . . . . . . . . . . . . . .
TEXARKANA MD&A
RELATIONSHIP WITH INDEPENDENT AUDITORS . . . . . . . .
VALIDITY OF SHARES . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . .
TEXARKANA CONSOLIDATED FINANCIAL INFORMATION . . . .
APPENDIX A -- AGREEMENT AND PLAN OF MERGER
APPENDIX B -- OPINION OF ALEX. BROWN & SONS INCORPORATED
APPENDIX C -- SELECTED PROVISIONS OF TEXAS LAW RELATING
TO RIGHTS OF DISSENTING SHAREHOLDERS
APPENDIX D -- OPINION OF ERNST & YOUNG LLP REGARDING
CERTAIN TAX MATTERS
INTRODUCTION
This Registration Statement relates to _________ shares of
Class A Common Stock, no par value of Hibernia which will be
issued in connection with the merger of Texarkana with and into
Hibernia. The shares of Hibernia Common Stock offered hereby will
be exchanged, upon consummation of the Merger, for the
outstanding shares of common stock, $10.00 par value, of
Texarkana (the "Texarkana Common Stock").
Shareholders of Texarkana will be asked to approve the
Merger at a Special Meeting to be held on ________ __, 1996. The
proxy statement relating to such Special Meeting is included in
this Proxy Statement-Prospectus.
The terms of the Merger are described in this Proxy
Statement-Prospectus, and a copy of the Agreement and Plan of
Merger between Hibernia and Texarkana 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 7 World Trade Center, Suite 1300, New York,
New York 10007 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. 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. The
Commission maintains a Web Site that contains reports, proxy and
information statements and other information and the address of
that site is http://www.sec.gov. In addition, reports, proxy
statements and other information concerning Hibernia may be
inspected at the offices of the New York Stock Exchange, Inc.
(the "NYSE"), 20 Broad Street, New York, New York 10005, on
which the shares of Common Stock are listed.
Hibernia has filed with the Commission a registration
statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act") with respect to the
Common Stock offered hereby. This Proxy Statement-Prospectus
does not contain all of the information set forth in the
Registration Statement. For further information with respect to
Hibernia and the Hibernia Common Stock offered hereby, reference
is hereby made to the Registration Statement. Statements
contained in this Proxy Statement-Prospectus concerning the
provisions of certain documents are not necessarily complete and,
in each instance, reference is made to the copy of the document
filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
Copies of all or any part of the Registration Statement,
including exhibits thereto, may be obtained, upon payment of the
prescribed fees, at the offices of the Commission and the NYSE,
as set forth above.
All information contained in this Proxy Statement-Prospectus
relating to Hibernia and its subsidiaries has been supplied by
Hibernia, and all information relating to Texarkana and its
subsidiaries has been supplied by Texarkana.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated by reference in this Proxy Statement-Prospectus
are the following documents filed by Hibernia Corporation with
the Commission pursuant to the Exchange Act: Hibernia's (1)
Annual Report on Form 10-K for the year ended December 31, 1995,
(2) definitive Proxy Statement dated March 14, 1996 relating to
its 1996 Annual Meeting of Shareholders held on April 23, 1996
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, 1996 and June 30, 1996, and (4) Current Reports on Form
8-K dated July 8, 1996, August 29, 1996 and September 18, 1996.
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 modifies or
supersedes the statement set forth herein. 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.
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 Secretary, Telephone (504) 533-3411.
THE PARTIES TO THE MERGER
Hibernia. Hibernia is a Louisiana corporation registered
under the Bank Holding Company Act of 1956, as amended ("BHCA").
As of June 30, 1996, Hibernia had total consolidated assets of
approximately $7.5 billion and shareholders' equity of
approximately $744 million. As of June 30, 1996, Hibernia was
ranked, on the basis of total assets, as the second largest bank
holding company headquartered in Louisiana.
As of June 30, 1996 Hibernia had a single banking
subsidiary, Hibernia National Bank ("HNB"), that provides retail
and commercial banking services through approximately 157 banking
offices throughout Louisiana. As of June 30, 1996, HNB was the
largest bank headquartered in Louisiana.
Hibernia consummated two mergers in the first quarter of
1996, both of which were accounted for as poolings of interests.
On August 26, 1996, Hibernia acquired CM Bank Holding Company,
Inc. and its subsidiary bank, Calcasieu Marine National Bank
headquartered in Lake Charles, Louisiana. The stock of CM Bank
Holding Company was exchanged for cash in an aggregate amount
equal to $201.7 million. Pro forma consolidated financial
statements of Hibernia reflecting the impact of this merger were
included in a Current Report on Form 8-K filed with the
Commission on August 29, 1996 and are incorporated herein by
reference.
On October 1, 1996, Hibernia acquired St. Bernard Bank &
Trust Co., headquartered in Arabi, Louisiana, in a transaction
accounted for as a purchase in which the stock of St. Bernard was
exchanged for an aggregate amount equal to $46 million.
On a pro forma basis to reflect the impact of these mergers,
Hibernia's total assets and shareholders' equity as of June 30,
1996 were $8.8 billion and $782 million.
The principal executive offices of Hibernia are located at
313 Carondelet Street, New Orleans, Louisiana 70130, and its
telephone number is (504) 533-5532. For additional information
concerning the business and financial condition of Hibernia,
reference should be made to the Hibernia reports incorporated
herein by reference. See "AVAILABLE INFORMATION."
Selected Financial Data. The closing market price per share
of Hibernia Common Stock on the NYSE on June 25, 1996, the day
prior to the announcement of the proposed Merger was $10.875.
There can be no assurance of the market price of Hibernia Common
Stock on the Closing Date.
SELECTED FINANCIAL INFORMATION ABOUT HIBERNIA
(Unaudited)
The following table sets forth certain consolidated
financial information for Hibernia. The historical
information is based on the historical financial statements
and related notes of Hibernia contained in (i) its Annual
Report on Form 10-K for the year ended December 31, 1995 and
(ii) its quarterly report an Form 10-Q for June 30, 1996.
The restated year-end information gives retroactive effect
to the mergers with FNB Bancshares, Inc. consummated on
January 1, 1996 and Bunkie Bancshares, Inc. consummated on
January 15, 1996, both of which were accounted for as
poolings of interests, as discussed in Note A to the pro
forma combined income statements for the years ended
December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
HISTORICAL HIBERNIA CORPORATION
SELECTED FINANCIAL INFORMATION
Year Ended December 31 6 Months Ended June 30
Unaudited ($ in thousands, except per share amounts) 1995 1994 1993 1992 1991 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $299,760 $283,212 $278,322 $275,682 $295,598 $167,890 $148,806
Income (loss) from continuing operations 123,859 95,020 66,703 7,442 (136,726) 51,315 56,689
Per share:
Income (loss) from continuing operations 1.05 0.80 0.57 0.12 (2.17) 0.43 0.47
Cash dividends 0.25 0.19 0.03 - 0.15 0.14 0.12
Book value 6.10 4.98 4.66 4.00 4.20 6.19 5.50
SELECTED PERIOD-END BALANCES
Debt 8,667 11,846 38,698 39,071 141,339 6,813 9,101
Total Assets 7,196,169 6,779,343 6,653,356 6,519,475 7,732,667 7,454,683 7,164,779
</TABLE>
<TABLE>
RESTATED HIBERNIA CORPORATION *
SELECTED FINANCIAL INFORMATION
Year Ended December 31
Unaudited ($ in thousands, except per share amounts) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net interest income $306,347 $289,086 $284,139 $281,618 $300,411
Income (loss) from continuing operations 125,699 96,906 68,526 9,539 (135,078)
Per share:
Income (loss) from continuing operations 1.04 0.80 0.57 0.14 (2.06)
Cash dividends 0.25 0.19 0.03 - 0.15
Book value 6.09 4.98 4.66 4.01 4.18
SELECTED PERIOD-END BALANCES
Debt 8,667 11,846 38,698 39,071 141,339
Total assets 7,342,535 6,944,648 6,801,177 6,664,043 7,862,015
* Restated to give retroactive effect to mergers with FNB Bancshares, Inc.
consummated on January 1, 1996 and Bunkie Bancshares, Inc. consummated
on January 15, 1996, both of which were accounted for as pooling of
interests. The historical selected financial information for the six
months ended June 30, 1996 and 1995 reflects the impact of the mergers
with FNB Bancshares, Inc. and Bunkie Bancshares, Inc.
</TABLE>
Texarkana. Texarkana is a Texas corporation and a
registered bank holding company under the BHCA which owns all of
the issued and outstanding shares of stock of TNB Holding
Company, a Delaware Corporation which is also a registered bank
holding company under the BHCA. As of June 30, 1996, Texarkana
had total consolidated assets of $401.5 million and shareholders'
equity of $37.1 million. Through TNB Holding Company, Texarkana
owns 100% of the capital stock of the Texarkana National Bank
(the "Bank"), a national banking association having eight (8)
offices; seven (7) offices located in Bowie County, Texas and one
(1) office located in Cass County, Texas. The Bank engages in
retail and commercial banking services, including taking deposits
and extending secured and unsecured credit.
The principal offices of Texarkana are located at 2318
Richmond Road, Texarkana, Texas 75501-5644 and its telephone
number is (903) 838-2000. For additional information concerning
the business of Texarkana and its financial condition, see
"CERTAIN INFORMATION CONCERNING TEXARKANA" and "TEXARKANA
CONSOLIDATED FINANCIAL INFORMATION."
<PAGE>
SELECTED FINANCIAL INFORMATION ABOUT
TEXARKANA NATIONAL BANCSHARES, INC.
(Unaudited)
The following selected financial information of Texarkana
with respect to each year in the five-year period ended
December 31, 1995 and the six-month periods ended June 30, 1996
and 1995 has been derived from the financial statements of
Texarkana. The information set forth below should be read
in conjunction with Texarkana's financial statements, the
notes thereto, and Texarkana's Management's Discussion and
Analysis of Financial Condition and Results of Operations for
the Years Ended December 31, 1995 and 1994 and the six months
ended June 30, 1996 and 1995 appearing elsewhere in this Proxy
Statement-Prospectus.
<PAGE>
<TABLE>
<CAPTION>
TEXARKANA NATIONAL BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION
Year Ended December 31 6 Months Ended June 30
Unaudited ($ in thousands, except per share amounts) 1995 1994 1993 1992 1991 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $14,025 $12,030 $11,851 $11,516 $9,790 $7,062 $6,740
Income from continuing operations 3,185 4,554 4,181 3,211 1,807 3,130 2,638
Per share:
Income from continuing operations $ 4.34 $ 6.21 $ 5.84 $ 4.51 $ 2.54 $4.26 $3.59
Cash dividends 2.00 1.20 1.00 1.00 0.80 0.70 0.60
Book value 47.77 43.52 40.63 35.71 31.45 50.51 48.69
SELECTED PERIOD-END BALANCES
Debt 25,694 9,166 500 - - 20,029 20,788
Total assets 413,382 349,821 317,835 306,903 285,701 401,519 387,846
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEXARKANA NATIONAL BANCSHARES, INC.
QUARTERLY INCOME RESULTS
Unaudited ($ in thousands, except per share amounts)
<S> <C> <C>
1996
I II
Interest income $7,193 $7,046
Net interest income $3,595 $3,468
Net income (loss) $1,590 $1,540
Net income (loss) per share $2.16 $2.10
1995
I II III IV
Interest income $6,275 $6,529 $6,926 $7,447
Net interest income $3,393 $3,347 $3,501 $3,784
Net income $1,410 $1,228 $1,261 ($713)
Net income per share $1.92 $1.67 $1.72 ($0.97)
1994
I II III IV
Interest income $4,776 $4,994 $5,280 $5,872
Net interest income $2,910 $2,898 $2,980 $3,242
Net income $1,131 $999 $1,110 $1,314
Net income per share $1.55 $1.36 $1.51 $1.79
</TABLE>
<PAGE>
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
(Unaudited)
The following table sets forth certain unaudited pro forma
combined financial information for Hibernia, after giving
effect to the merger with FNB Bancshares, Inc. consummated
on January 1, 1996 and the merger with Bunkie Bancshares,
Inc. consummated on January 15, 1996 (as discussed in Note A
to the pro forma combined income statements for the years
ended December 31, 1995, 1994 and 1993) and Texarkana.
The table also gives effect to the acquisition of CM Bank
Holding Company (consummated August 26, 1996) and St.
Bernard Bank and Trust Co. (consummated October 1, 1996),
both of which were accounted for as purchases, assuming these
transactions occurred on January 1, 1995. (See footnotes to
the pro forma combined income statements for the years ended
December 31, 1995, 1994 and 1993 and for the six months ended
June 30, 1996 and 1995.) The pro forma information, which
reflects the Merger using the pooling-of-interests method of
accounting, is presented for informational purposes only and
should not be construed as indicative of the actual operations
that would have occurred had any of the mergers been consummated
at the beginning of the periods indicated or that may be
obtained in the future. See "Pro Forma Financial
Information" contained elsewhere herein.
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA HIBERNIA CORPORATION*
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
Year Ended December 31 6 Months Ended June 30
Unaudited ($ in thousands, except per share amounts) 1995 1994 1993 1996 1995
<S> <C> <C> <C> <C> <C>
Net interest income $320,372 $301,116 $295,990 $174,952 $155,546
Income from continuing operations 128,884 101,460 72,707 54,446 59,327
Per share:
Income from continuing operations 1.01 0.79 0.57 0.43 0.46
Cash dividends 0.25 0.19 0.03 0.14 0.12
Book value 6.06 4.98 4.66 6.16 5.50
SELECTED PERIOD-END BALANCES
Debt 34,361 21,012 39,198 26,842 29,889
Total assets 7,755,917 7,294,469 7,119,012 7,856,202 7,552,625
* Includes restated Hibernia Corporation and Texarkana National Bancshares, Inc.
</TABLE>
<TABLE>
TOTAL PRO FORMA HIBERNIA CORPORATION**
PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
Year Ended December 31 6 Months Ended June 30
Unaudited ($ in thousands, except per share amounts) 1995 1994 1993 1996 1995
<S> <C> <C> <C> <C> <C>
Net interest income $350,234 $301,116 $295,990 $188,524 $170,288
Income from continuing operations 128,172 101,460 72,707 54,086 58,821
Per share:
Income from continuing operations 1.01 0.79 0.57 0.43 0.46
Cash dividends 0.25 0.19 0.03 0.14 0.12
Book value 5.94 4.98 4.66 6.17 5.44
SELECTED PERIOD-END BALANCES
Debt 35,766 21,012 39,198 28,201 39,419
Total assets 8,650,516 7,294,469 7,119,012 8,751,521 8,435,380
** Includes restated Hibernia Corporation, Texarkana National Bancshares,
Inc., CM Bank Holding Company and St. Bernard Bank & Trust Co. As
required by the rules governing pro forma adjustments for purchase
business combinations, CM Bank Holding Company and St. Bernard Bank
& Trust Co. are included in 1995 and 1996 only.
</TABLE>
<PAGE>
COMPARATIVE PER SHARE INFORMATION
(Unaudited)
The following table sets forth for Hibernia Common Stock and
Texarkana Common Stock certain historical, restated,
unaudited pro forma combined and unaudited pro forma
equivalent per share financial information for the six
months ended June 30, 1996 and 1995 and for the years ended
December 31, 1995, 1994 and 1993. Year-end information under
the column titled "Historical Hibernia Corporation" is
derived from the historical financial statements of
Hibernia contained in its Annual Report on Form 10-K for
the year ended December 31, 1995. The historical June 30
information is derived from Hibernia's Quarterly Report
on Form 10-Q for June 30, 1996. Year-end information under
the column titled "Restated Hibernia Corporation" gives
retroactive effect to the mergers with FNB Bancshares, Inc.
consummated on January 1, 1996 and Bunkie Bancshares, Inc.
consummated on January 15, 1996, both of which were accounted
for as poolings of interests, as discussed in Note A to the pro
forma combined income statements for the years ended December
31, 1995, 1994 and 1993. Information under the column
titled "Texarkana National Bancshares, Inc." is based on, and
should be read in conjunction with, the historical financial
statements and related notes and Management's Discussion and
Analysis of Financial Condition and Results of Operations of
Texarkana National Bancshares, Inc. contained elsewhere in
this Proxy Statement - Prospectus.
Information under the column entitled "Pro Forma Hibernia
Corporation (With Texarkana National Bancshares, Inc.)" is
based upon the pro forma financial statements and related
notes contained elsewhere herein. Such pro forma combined
information, which reflects the Merger, 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 or that may be obtained in the future.
The pro forma combined information gives effect to the
issuance, in each of the periods presented, of 8.8 shares of
Hibernia Common Stock for each outstanding share of
Texarkana Common Stock.
The information under the column entitled "Texarkana
National Bancshares, Inc. Pro Forma Equivalent" is derived
by multiplying the numbers contained in the column titled
"Pro Forma Hibernia Corporation (with Texarkana National
Bancshares, Inc.)" by the Exchange Rate of 8.8. See "The
Merger - Consideration to be Received in the Merger."
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION AND TEXARKANA NATIONAL BANCSHARES, INC.
COMPARATIVE PER SHARE INFORMATION
Unaudited
PRO FORMA
HIBERNIA TEXARKANA
CORPORATION NATIONAL
HISTORICAL RESTATED TEXARKANA (WITH TEXARKANA BANCSHARES, INC.
HIBERNIA HIBERNIA NATIONAL NATIONAL PRO FORMA
CORPORATION CORPORATION BANCSHARES, INC. BANCSHARES, INC.) EQUIVALENT
Per Common Share:
Income from continuing operations:
<S> <C> <C> <C> <C> <C>
For the six months ended June 30,
1996 $0.43 $0.43 $4.26 $0.43 $3.78
1995 0.47 0.47 3.59 0.46 4.05
For the year ended December 31,
1995 $1.05 $1.04 $4.34 $1.01 $8.89
1994 0.80 0.80 6.21 0.79 6.95
1993 0.57 0.57 5.84 0.57 5.02
Cash dividends:
For the six months ended June 30,
1996 $0.14 $0.14 $0.70 $0.14 $1.23
1995 0.12 0.12 0.60 0.12 1.06
For the year ended December 31,
1995 $0.25 $0.25 $2.00 $0.25 $2.20
1994 0.19 0.19 1.20 0.19 1.67
1993 0.03 0.03 1.00 0.03 0.26
Book Value:
At June 30, 1996 $6.19 $6.19 $50.51 $6.16 $54.47
At December 31, 1995 6.10 6.09 47.77 6.06 53.33
</TABLE>
From time to time, Hibernia investigates and holds
discussions and negotiations in connection with possible mergers
or similar transactions with other financial institutions. At
the date hereof, Hibernia has not entered into a definitive
merger agreement with any financial institution other than
Texarkana. Hibernia contemplates 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 of the acquired institution.
SUMMARY
This summary is necessarily general and abbreviated and has
been prepared to assist shareholders of Texarkana in their review
of this Proxy Statement-Prospectus. This summary is not intended
to be a complete explanation of the matters covered in this Proxy
Statement-Prospectus and is qualified in its entirety by
reference to the more detailed information contained elsewhere in
this Proxy Statement-Prospectus, the Appendices hereto and the
documents incorporated herein by reference, all of which
shareholders are urged to read carefully prior to the Special
Meeting.
The Proposed Merger
In accordance with the terms of the Agreement, Texarkana
will be merged with and into Hibernia, whereupon the separate
existence of Texarkana will cease. On the Effective Date, each
outstanding share of Texarkana Common Stock, other than shares
held by shareholders who exercise and perfect dissenters' rights
in accordance with Texas law, will be converted into a number of
shares determined by dividing $100.75 by the average closing
price of one share of Hibernia Common Stock for the ten business
days preceding the last trading day immediately prior to the
consummation of the Merger, subject to a maximum exchange rate of
8.8 and a minimum exchange rate of 8.2 shares of Hibernia Common
Stock for each share of Texarkana Common Stock. If the Merger
had been consummated on November __, 1996, each share of
Texarkana Common Stock would have been converted into _____
shares of Hibernia Common Stock, and, assuming that no Texarkana
shareholders exercised and perfected dissenters' rights, a total
of _________ shares of Hibernia Common Stock would have been
issued in exchange for all of the outstanding shares of
Texarkana.
Management and Operations After the Merger
Texarkana will cease to exist after Merger. The Bank will
continue to operate as a wholly-owned subsidiary of Hibernia.
The composition of the Board of Directors of the Bank is not
expected to change substantially after the Merger, although
Hibernia will have the right to change the number of directors of
the Bank and to elect new directors to the Board of Directors of
the Bank in its discretion. Hibernia anticipates changing the
name of the Bank in connection with the Merger.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF TEXARKANA HAS UNANIMOUSLY APPROVED
THE AGREEMENT, BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS
OF THE SHAREHOLDERS OF TEXARKANA AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE MERGER AND THE RELATED AGREEMENT. The
Board of Directors has received from Alex. Brown & Sons
Incorporated ("Alex. Brown") an opinion that the terms of the
Merger are fair, from a financial point of view, to the
shareholders of Texarkana. See "PROPOSED MERGER -- Opinion of
Financial Advisor." Texarkana's Board believes that the Merger
will provide significant value to all Texarkana shareholders and
will enable them to participate in opportunities for growth that
Texarkana's Board believes the Merger makes possible. In
recommending the Merger to the shareholders, Texarkana's Board of
Directors considered, among other factors, the financial terms of
the Merger, the liquidity it will afford Texarkana's shareholders
and the business earnings and potential for future growth of
Texarkana and Hibernia. See "PROPOSED MERGER -- Background of
and Reasons for the Merger."
Basis for the Terms of the Merger
A number of factors were considered by the Board of
Directors of Texarkana in approving the terms of the Merger,
including, without limitation, information concerning the
financial condition, results of operations and prospects of
Hibernia, Texarkana, HNB, and the Bank; the ability of the
combined entity to compete in the relevant banking markets; the
market price of Hibernia Common Stock; the absence of an active
trading market for Texarkana's Common Stock; the consideration to
be received by Texarkana shareholders in relation to Texarkana's
earnings and book value; the anticipated tax-free nature of the
Merger to Texarkana's shareholders for federal income tax
purposes; and the financial terms of other recent business
combinations in the banking industry. See "PROPOSED MERGER --
Background of and Reasons for the Merger."
Advice and Opinion of Financial Advisor
Alex. Brown, Texarkana's financial advisor, has rendered a
written opinion that the terms of the Merger are fair, from a
financial point of view, to Texarkana's shareholders. A copy of
the opinion of Alex. Brown is attached hereto as Appendix B and
should be read in its entirety with respect to the assumptions
made therein and other matters considered. See "PROPOSED MERGER
- -- Opinion of Financial Advisor" for further information
regarding, among other things, the selection of such firm and its
compensation in connection with the Merger.
Votes Required
Approval of the Merger requires the affirmative vote of the
holders of two-thirds of the issued and outstanding shares of
Texarkana Common Stock, in person or by proxy at the Special
Meeting. The Board of Directors has fixed the close of business
on November __, 1996 as the record date (the "Record Date") for
determining the shareholders entitled to receive notice of, and
to vote at, the Special Meeting. Directors and executive
officers of Texarkana and members of their families have voting
power with respect to 149,272 shares of Texarkana Common Stock,
representing 19.55% of the Texarkana Common Stock issued and
outstanding as of the Record Date. See "CERTAIN INFORMATION
RELATING TO TEXARKANA NATIONAL BANCSHARES, INC. -- Ownership of
Texarkana Common Stock." Subject to receipt of certain fairness
opinions from Alex. Brown, the directors of Texarkana have agreed
to vote their stock in favor of approval of the Merger and the
related Agreement at any meeting of Texarkana's shareholders held
before March 31, 1997 at which the Merger is considered, unless
they are legally required to abstain from voting or to vote
against the Merger in the opinion of their counsel. See "MEETING
INFORMATION -- Record Date; Voting Rights" and "CERTAIN
INFORMATION RELATING TO TEXARKANA -- Voting Securities and
Certain Holders Thereof."
Conditions; Abandonment; Amendment
Consummation of the Merger is subject to the satisfaction of
a number of conditions, including approval of the Agreement by
the shareholders of Texarkana and the Board of Governors of the
Federal Reserve System ("Federal Reserve Board"). Applicable law
provides that the Merger may not be consummated until at least
15, but no more than 90, days after approval of the Federal
Reserve Board is obtained, which prohibits the consummation of
the Merger prior to [date], 1996. See "PROPOSED MERGER --
Representations and Warranties; Conditions to the Merger; 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 Texarkana's shareholders may reduce the ratio of
Hibernia Common Stock to Texarkana Common Stock to be issued in
the Merger (the "Exchange Rate"). Any other material change to
the Agreement after the date of the Special Meeting would
require, however, a resolicitation of Texarkana's shareholders
for the purpose of voting on the transaction as amended. In
addition, the Agreement may be terminated, either before or after
shareholder approval, under certain circumstances. See "PROPOSED
MERGER -- Representations and Warranties; Conditions to the
Merger; Waiver" and "-- Effective Date of the Merger;
Termination."
Interests of Certain Persons in the Merger
The executive officers and members of the Texarkana Board
have interests in the Merger that are in addition to their
interests as shareholders of Texarkana. These benefits include,
among others, the continuation of certain employee benefits
generally, provisions in the Agreement relating to the
indemnification of officers, directors and employees of Texarkana
for certain liabilities up to certain aggregate limitations and
payments to be received by executive officers pursuant to
agreements with Texarkana. See "PROPOSED MERGER...Employee
Benefits" and "...Interests of Certain Persons in the Merger."
Employee Benefits
Hibernia has agreed as part of the Agreement that it will
offer to all employees of Texarkana who are employed as of the
Effective Date by TNB Holding Company and/or the Bank the same
employee benefits as those offered by Hibernia and HNB to their
employees, except that employees of Texarkana will not be
required to wait for any period in order to be eligible to
participate in Hibernia's Flex Plan (including its medical and
dental coverage). Hibernia will also give Texarkana employees
full credit for their years of service (for both eligibility and
vesting) with Texarkana for purposes of Hibernia's 401(k) plan,
the Retirement Security Plan. Hibernia has also agreed to pay or
provide certain other benefits. See "PROPOSED MERGER...Employee
Benefits."
Material Tax Consequences
It is a condition to consummation of the Merger that the
parties receive an opinion of counsel or a public accounting firm
to the effect that the Merger when consummated in accordance with
the terms of the Agreement will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and that the exchange of
Texarkana Common Stock for Hibernia Common Stock will not give
rise to the recognition of gain or loss for federal income tax
purposes to Texarkana's shareholders with respect to such
exchange. The parties have received an opinion from Ernst &
Young LLP, certified public accountants, who serve as independent
auditors for both Texarkana and Hibernia, to the effect that the
Merger, when consummated in accordance with the terms of the
Agreement, will constitute a reorganization within the meaning of
Section 368(a) of the Code and, as such, will not give rise to
the recognition of gain or loss for federal income tax purposes
to Texarkana's shareholders. 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 Texarkana consult his or her tax advisor
concerning the federal (and any applicable state, local or other)
tax consequences of the Merger to him, her or it.
Dissenters' Rights
Each holder of Texarkana Common Stock who objects to the
Merger is entitled to the rights and remedies of dissenting
shareholders provided in the Texas Business Corporation Act,
Texas Civil Statutes Articles 5.11, 5.12, and 5.13, a copy of
which is attached hereto as Appendix C. However, if dissenters'
rights are exercised and perfected with respect to 10% or more of
the outstanding shares of Texarkana Common Stock, Hibernia may
abandon the Merger. In addition, dissenting shareholders may
receive value for their shares that is more or less than, or
equal to, the value received by other shareholders in the Merger.
See "PROPOSED MERGER -- Rights of Dissenting Shareholders."
Differences in Shareholders' Rights
Upon completion of the Merger, shareholders of Texarkana, 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 Texarkana.
See "PROPOSED MERGER -- Certain Differences in Rights of
Shareholders."
Accounting Treatment
The parties intend the Merger to be treated as a pooling of
interests for financial accounting purposes. If, among other
things, holders of more than 10% of the outstanding shares of
Texarkana Common Stock exercise and perfect dissenters' rights,
the Merger will not qualify for pooling-of-interests accounting
treatment, and Hibernia will not be obligated to effect the
Merger. See "PROPOSED MERGER -- Accounting Treatment."
MEETING INFORMATION
This Proxy Statement-Prospectus is furnished in connection
with the solicitation of proxies by the Board of Directors of
Texarkana for use at the Special Meeting. Each copy of this
Proxy Statement-Prospectus mailed to holders of Texarkana Common
Stock is accompanied by a proxy card furnished in connection with
the Texarkana Board's solicitation of proxies for use at the
Special Meeting and at any adjournment thereof. The Special
Meeting is scheduled to be held at _____ a.m., Central time, on
_________, November __, 1996, at the main office of Texarkana,
2318 Richmond Road, Texarkana, Texas. Only holders of record of
Texarkana Common Stock at the close of business on the Record
Date are entitled to receive notice of and to vote at the Special
Meeting. At the Special Meeting, shareholders will consider and
vote upon (a) a proposal to approve the Merger and the related
Agreement, and (b) such other matters as may properly be brought
before the Special Meeting or any adjournment thereof.
HOLDERS OF TEXARKANA COMMON STOCK ARE REQUESTED TO COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN
THE ENCLOSED, POSTAGE PAID ENVELOPE.
Solicitation and Revocation of Proxies.
Any holder of Texarkana Common Stock who has delivered a
proxy may revoke it any time before it is voted by attending the
Special Meeting and voting in person, or by giving notice of
revocation in writing to the Secretary of Texarkana prior to the
date of the Special Meeting or submitting a signed proxy card
bearing a later date before the Special Meeting. The shares of
Texarkana Common Stock represented by properly executed proxy
cards received at or prior to the Special Meeting and not
subsequently revoked will be voted as directed by the
shareholders submitting such proxies. If instructions are not
given, executed proxy cards received by Texarkana will be voted
FOR approval of the Merger and the related Agreement. If any
other matters are properly presented at the Special Meeting for
consideration, the persons named in the proxy card enclosed
herewith will have discretionary authority to vote on such
matters in accordance with their best judgment. The Texarkana
Board is unaware of any matter to be presented at the Special
Meeting other than the proposal to approve the Merger and the
related Agreement.
The cost of soliciting proxies from shareholders of
Texarkana, including expenses incurred in preparing, assembling
and mailing this Proxy Statement-Prospectus, will be borne by
Texarkana. Such solicitation will be made by mail but also may
be made by telephone or other means of telecommunications or in
person by the directors, officers and employees of Texarkana (who
will receive no additional compensation for doing so).
TEXARKANA SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK
CERTIFICATES WITH THEIR PROXY CARDS. IF THE MERGER IS APPROVED,
SHAREHOLDERS WILL RECEIVE INSTRUCTIONS REGARDING THE EXCHANGE OF
THEIR STOCK CERTIFICATES AFTER THE MERGER HAS BEEN CONSUMMATED.
Vote Required.
Approval of the Agreement requires the affirmative vote of
the holders of two-thirds of the issued and outstanding shares of
Texarkana Common Stock, in person or by proxy, at the Special
Meeting. The Texarkana Board has fixed the close of business on
November __, 1996, 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 763,732 shares of
Texarkana Common Stock outstanding and entitled to vote at the
Special Meeting, with each share being entitled to one vote.
A majority of the outstanding shares of Texarkana Common
Stock constitutes a quorum for purposes of the Special Meeting.
An abstention will be considered present for quorum purposes, but
will have the same effect as a vote against the proposal to be
considered at the Special Meeting. A broker non-vote will not
count for quorum or voting purposes because brokers will not have
discretionary authority to vote with respect to the proposal and,
therefore, a broker non-vote will have no effect on the vote on
the proposal.
As of the Record Date, the directors and executive officers
of Texarkana have voting power with respect to a total of 149,272
shares, or approximately 19.55% of the outstanding shares of
Texarkana Common Stock. Such directors and executive officers,
as well as other major shareholders, have agreed to vote their
stock, representing an aggregate of approximately ____% of the
Texarkana Common Stock outstanding, in favor of the Merger and
the related Agreement, unless they are legally required to
abstain from voting or to vote against the Merger and the related
Agreement.
Recommendation.
For the reasons described below, the Texarkana Board has
unanimously approved the Agreement, believes the Merger is in the
best interests of Texarkana and its shareholders and recommends
that holders of Texarkana Common Stock vote FOR approval of the
Merger and the related Agreement. In making its recommendation
to shareholders, the Texarkana Board considered, among other
things, the opinion of Texarkana's financial advisor, Alex.
Brown, that the consideration to be received by the holders of
Texarkana Common Stock pursuant to the Merger is fair to such
shareholders from a financial point of view. See "Background of
and Reasons for the Merger" and "Opinion of Financial Advisor"
under "The Merger."
PROPOSED MERGER
This section of the Proxy Statement-Prospectus describes
certain aspects of the Merger. The following description does
not purport to be complete and is qualified in its entirety by
reference to the Agreement, which is attached as Appendix A to
this Proxy Statement-Prospectus and is incorporated herein by
reference. All shareholders are urged to read the Agreement
carefully and in its entirety.
Background of and Reasons for the Merger
Background.
In February of 1996, Texarkana's Chairman met with
representatives of Alex. Brown to discuss a possible sale of
Texarkana due to a change in the banking environment and a change
in the direction of Texarkana made by the Board of Directors.
In April of 1996, Alex. Brown contacted fifteen financial
institutions relating to their interest in evaluating a possible
acquisition of Texarkana. Of those institutions, twelve executed
confidentiality agreements and received confidential information
relating to Texarkana. Nine of those institutions submitted
preliminary indications of value.
Four financial institutions which submitted preliminary
indications of value were extended an invitation to perform due
diligence investigations. These four institutions submitted
final proposals along with drafts of acquisition agreements.
After a series of Board meetings to compare and construct the
economic and non-economic terms of such proposals, Texarkana's
Board decided to negotiate the transaction with Hibernia that is
set forth in the Agreement, which was executed on June 26, 1996.
Reasons for the Merger. The terms of the Agreement,
including the Exchange Rate, are the result of arms-length
negotiations between Hibernia and Texarkana and their respective
representatives. Texarkana's Board of Directors believes that
the Merger is fair and in the best interests of its shareholders.
In reaching that decision, the Texarkana Board consulted with its
financial and other advisors, as well as with Texarkana'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 Texarkana;
(b) the financial terms of the Merger, including the amount
and type of consideration to be received by Texarkana's
shareholders pursuant to the Agreement;
(c) the Hibernia Common Stock to be received by holders of
Texarkana Common Stock pursuant to the Agreement will be listed
for trading on the NYSE and will provide liquidity that is
unavailable to holders of Texarkana Common Stock, for which an
active trading market does not exist;
(d) the Agreement will allow holders of Texarkana Common
Stock to become shareholders of Hibernia, an institution which
was, as of June 30, 1996, the second largest bank holding company
headquartered in Louisiana and the 67th largest bank holding
company in the United States;
(e) the Texarkana Board believes that recent changes in the
regulatory environment will result in Texarkana 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 Texarkana nor the holders of
Texarkana Common Stock (except to the extent that cash is
received in respect of their shares) will recognize any gain in
the transaction (see "Material Tax Consequences"); and
(g) the opinion received from Alex. Brown that the
consideration to be received by the holders of Texarkana Common
Stock pursuant to the Agreement was fair to such shareholders
from a financial point of view as of the date of such opinion
(see "Opinion of Financial Advisor").
The Texarkana Board did not assign any specific or relative
weight to the foregoing factors in its considerations. The
Texarkana Board believes that the Agreement and the Merger will
provide significant value to all Texarkana shareholders and will
enable holders of Texarkana Common Stock to participate in
opportunities for growth that the Texarkana Board believes the
Merger will make possible.
Based on the foregoing, the Texarkana Board has unanimously
approved the Agreement and the Merger, believes that the
Agreement and the Merger are in the best interests of Texarkana's
shareholders, and recommends that all holders of Texarkana Common
Stock vote "FOR" the approval of the Agreement and the Merger.
Terms of the Merger
The number of shares of Hibernia Common Stock into which a share
of Texarkana Common Stock will be converted will be determined by
the following formula (subject to the minimum and maximum
exchange rates discussed below): $100.75 divided by the Average
Market Price of Hibernia Common Stock (as defined below) on the
Closing Date. The Average Market Price for this purpose is the
average of the closing price of one share of Hibernia Common
Stock for the ten business days preceding the last trading day
immediately prior to the Closing Date, as reported in the Wall
Street Journal. The exchange rate is subject to a maximum of 8.8
shares of Hibernia Common Stock for each share of Texarkana
Common Stock, and a minimum of 8.2 shares of Hibernia Common
Stock for each share of Texarkana Common Stock. If the Record
Date had been the closing date of the Merger, the Average Market
Price of Hibernia Common Stock would have been $____ per share,
and the Exchange Rate would have been _____ shares of Hibernia
Common Stock for each share of Texarkana Common Stock. There can
be no assurance as to the actual Exchange Rate at this time, as
the price of Hibernia Common Stock may increase or decrease over
the period from the Record Date to the Closing Date (which is
anticipated to be December 30, 1996).
Upon the effectiveness of the Merger, the conversion of
shares of Texarkana Common Stock to Hibernia Common Stock will be
automatic, and Texarkana shareholders will automatically be
entitled to all of the rights and privileges afforded to Hibernia
shareholders as of such date. However, the exchange of Texarkana
stock certificates for certificates representing Hibernia Common
Stock will occur after the Effective Date of the Merger.
SHAREHOLDERS OF TEXARKANA SHOULD NOT FORWARD THEIR STOCK
CERTIFICATES TO TEXARKANA OR HIBERNIA AT THIS TIME. IF THE
MERGER IS CONSUMMATED, TEXARKANA SHAREHOLDERS WILL RECEIVE
INSTRUCTIONS REGARDING THE EXCHANGE OF THEIR CERTIFICATES FOR
HIBERNIA COMMON STOCK.
For a discussion of the rights of dissenting shareholders,
see "PROPOSED MERGER -- Rights of Dissenting Shareholders."
Opinion of Financial Advisor
Texarkana retained Alex. Brown on February 13, 1996 to
provide certain investment banking advice and services, including
advice with respect to the Merger and related matters. Alex.
Brown was selected to act as Texarkana's financial advisor based
upon its qualifications, expertise and reputation, as well as its
familiarity with Texarkana's business. Alex. Brown regularly
publishes research reports regarding the financial services
industry and the businesses and securities of publicly owned
companies in that industry. In its capacity as Texarkana's
financial advisor, Alex. Brown participated in the negotiation of
the pricing and other terms and conditions of the Merger;
however, the decision to accept the Hibernia proposal was made
exclusively by the Texarkana Board.
Representatives of Alex. Brown attended a meeting of the
Texarkana Board on June 26, 1996 at which the Texarkana Board
approved the Agreement. At such meeting, Alex. Brown made a
presentation to the Texarkana Board and rendered an oral opinion
(the "Opinion") to the Texarkana Board that, as of such date, the
Exchange Rate pursuant to the Agreement was fair, from a
financial point of view, to Texarkana. Alex. Brown relied upon
analyses such as those described below in connection with
rendering the Opinion and providing its written opinion. No
limitations were imposed by the Texarkana Board upon Alex. Brown
with respect to the investigations made or procedures followed by
them in rendering the Opinion or the written confirmation
thereof.
The full texts of the written confirmation of the Opinion,
which set forth, among other things, assumptions made, matters
considered and limitations on the review undertaken, are attached
hereto as Appendix B and is incorporated herein by reference.
Texarkana shareholders are urged to read the written confirmation
of the Opinion in its entirety. The Opinion was directed to the
Texarkana Board, addresses only the fairness, from a financial
point of view, of the Exchange Rate pursuant to the Agreement,
and does not constitute a recommendation to any Texarkana
shareholder as to how such shareholder should vote. The Opinion
was rendered to the Texarkana Board for its consideration in
determining whether to approve the Agreement. The following
summary of the Opinion is qualified in its entirety by reference
to the full text of the written confirmations of the Opinion.
In rendering the Opinion, Alex. Brown reviewed certain
publicly available financial information and other information
concerning Texarkana and Hibernia and certain internal financial
analyses and other information furnished to it by Texarkana.
Alex. Brown also held discussions with members of the senior
managements of Texarkana and Hibernia regarding the business and
prospects of their respective financial institutions and the
joint prospects of a combined company. In addition, Alex. Brown
(i) reviewed the reported price and trading activity for the
common stock of Hibernia, (ii) compared certain financial and
stock market information for Hibernia, with similar information
for certain comparable companies whose securities are publicly
traded (see "---; Analysis of Selected Publicly Traded
Companies"), (iii) reviewed the Agreement, (iv) reviewed and
compared the financial terms of selected recent business
combinations which were deemed relevant to the Merger, in whole
or in part, with those of the Merger (see "---; Analysis of
Selected Acquisition Transactions"), (v) reviewed the potential
pro forma impact of the Merger on Texarkana's and Hibernia's
financial condition, operating results and per share figures (see
"---; Pro Forma Merger Analysis") and (vi) performed such other
studies and analyses and considered such other factors as Alex.
Brown deemed appropriate.
In conducting its review and arriving at its Opinion, Alex.
Brown assumed and relied upon, without independent verification,
the accuracy, completeness and fairness of all of the financial
and other information reviewed by and discussed with it for
purposes of rendering its Opinion. With respect to the financial
forecasts and other information reviewed by Alex. Brown in
rendering its Opinion, Alex. Brown assumed that such financial
forecasts were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the managements of
Texarkana and Hibernia as to the likely future financial
performance of Texarkana and Hibernia. Alex. Brown has not made
or obtained any independent evaluations or appraisals of the
assets or liabilities of either Texarkana or Hibernia, nor has it
reviewed any individual loan files of Texarkana or Hibernia.
Alex. Brown is not an expert in the evaluation of allowances for
loan losses, has not made an independent evaluation of the
adequacy of the allowance for loan losses set forth in the
balance sheets of Texarkana and Hibernia at March 31, 1996, and
has assumed such allowances were adequate and complied fully with
applicable law, regulatory policy and sound banking practice as
of the date of such financial statements. Alex. Brown also
assumed that the Merger in all respects is, and will be
consummated, in compliance with all laws and regulations
applicable to Texarkana and Hibernia.
In connection with rendering its Opinion, Alex. Brown
performed a variety of financial analyses, including those
summarized below. While the following summary describes all
analyses and factors that Alex. Brown deemed material in its
presentation to the Texarkana Board, it is not a comprehensive
description of all analyses and factors considered by Alex.
Brown. The preparation of a fairness opinion is a complex
process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances and,
therefore, such an opinion is not readily susceptible to summary
description. Accordingly, notwithstanding the separate factors
discussed below, Alex. Brown believes that its analyses must be
considered as a whole and that selecting portions of the analyses
and of the factors considered by it, without considering all
analyses and factors, could create an incomplete view of the
evaluation process underlying the Opinion. No one of the
analyses performed by Alex. Brown was assigned a greater
significance than any other. The analyses performed by Alex.
Brown are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than
suggested by such analyses. Accordingly, such analyses and
estimates are inherently subject to substantial uncertainty.
Additionally, analyses relating to the values of businesses do
not purport to be appraisals or to reflect the prices at which
businesses actually may be sold. The Opinion is based on market,
economic and other conditions as they existed and could be
evaluated as of their respective dates. Furthermore, no opinion
is being expressed as to the prices at which shares of Hibernia
may trade at any future time.
Analysis of Selected Publicly Traded Companies. In
preparing its Opinion, Alex. Brown, using publicly available
information, compared selected financial information, including
book value, tangible book value, latest twelve months ("LTM")
earnings, asset quality ratios and loan loss reserve levels, for
Texarkana and a selected group of financial institutions.
The selected group of financial institutions comprised
commercial banks in Oklahoma, Arkansas and Texas with total
assets between $250 million and $1.0 billion. A total of 7
institutions were included (the "Selected Banks"). As of June
24, 1996, the relative multiples implied by the acquisition price
of Texarkana Common Stock and the mean market price of the common
stock of the Selected Banks to such March 31, 1996 financial data
(the "Relative Multiples") for LTM earnings were 12.6x for
Texarkana and 11.5x for the Selected Banks, and for total assets
were 17.8% for Texarkana and 14.0% for the Selected Banks. The
Relative Multiples for stated book value were 199.2% for
Texarkana and 147% for the Selected Banks, and for tangible book
value, 199.2% for Texarkana and 149% for the Selected Banks.
Alex. Brown noted that no company used in the Selected Banks
analysis was identical to Texarkana.
Analysis of Selected Acquisition Transactions. In preparing
its Opinion, Alex. Brown analyzed the financial terms, to the
extent publicly available, of certain selected merger and
acquisition transactions for acquired banks which they deemed
relevant in whole or in part to the Merger. Alex. Brown noted
that no transaction used in the selected acquisition transaction
analysis was identical to the Merger. These transactions were
analyzed based upon both the financial characteristics of the
acquired banks and the acquisition price relative to the acquired
banks stated book value, stated tangible book value, LTM earnings
per share ("EPS") and upon premiums to core deposits. The
analysis included a review and comparison of the mean multiples
represented by a sample of recently effected or pending banks'
acquisitions having transaction values between $50 million and
$150 million that were announced since January 1, 1995 (the
"Selected Transactions"). The average price to stated book
value, price to stated tangible book value, price to LTM EPS and
premium to core deposits implied by the merger consideration for
the Selected Transactions were 191.9 percent, 200.9 percent,
13.0x and 11.7 percent, respectively. The corresponding ratios
implied by the consideration for the Merger are 199.2 percent for
price to book value and price to tangible book value, 12.6x for
price to LTM EPS and 17.8 percent premium to core deposits.
Pro Forma Merger Analysis. Alex. Brown analyzed certain pro
forma effects on Texarkana and Hibernia from the Merger in 1997
assuming the payment of the merger consideration. Based on
certain assumptions, including those with respect to cost savings
and other synergies from the Merger, and the stand alone earnings
projections of Texarkana (provided by Texarkana management) and
Hibernia (provided by the Institutional Broker Estimator System),
the analysis showed that the Merger would be accretive to
Hibernia's earnings per share in 1997 by 1.1 percent. The
analysis also showed that the Merger would be slightly dilutive
to Texarkana's estimated earnings per share in 1997 by 4.4
percent, based on the Texarkana shareholders' share of the
projected 1997 earnings per share of the combined company
determined in accordance with the Exchange Rate pursuant to the
Agreement. Additionally, the analysis showed that the Merger
would be accretive to Texarkana's fully-diluted book value per
share by 11.9 percent as well as to Texarkana's estimated 1996
dividends per share by 23.2 percent.
Upon consummation of the Merger, Texarkana shareholders
would own 5.2 percent of the combined entity while Texarkana
would contribute to the combined entity 5.2 percent of the total
assets of the combined entity, 4.7 percent of the total equity of
the combined entity and 4.8 percent of the tangible equity of the
combined entity.
Compensation of Financial Advisor. Pursuant to the terms of
an engagement letter (the "Engagement Letter") dated February 13,
1996, Texarkana will pay Alex. Brown a fee equal to 1.0% of the
aggregate consideration paid in the Merger as of the Effective
Date where such aggregate consideration is equal to or less than
$75 million for acting as financial advisor in connection with
the Merger, including rendering the Opinion, and an additional
contingent advisory fee of varying percentages of the aggregate
consideration if the aggregate consideration exceeds $75 million.
Of the fee, $100,000 was paid on the delivery of the Opinion,
with the remainder of the fee payable upon consummation of the
Merger. Whether or not the Merger is consummated, Texarkana also
has agreed to reimburse Alex. Brown for its out-of-pocket
expenses incurred in connection with the transaction. Texarkana
has also agreed to indemnify Alex. Brown and certain related
persons against certain liabilities relating to or arising out of
their engagement.
Surrender and Exchange of Stock Certificates
As soon as practicable after the Effective Date, the
transfer agent of Hibernia, in its capacity as Exchange Agent,
will mail all non-dissenting shareholders of Texarkana a letter
of transmittal, together with instructions for the exchange of
their Texarkana Common Stock certificates for certificates
representing Hibernia Common Stock. Until so exchanged, each
certificate representing Texarkana Common Stock outstanding
immediately prior to the Effective Date shall be deemed for all
purposes to evidence ownership of the number of shares of
Hibernia Common Stock into which such shares have been converted
on the Effective Date. Shareholders should not send their
Texarkana Common Stock certificates for surrender until they
receive further instructions from the Exchange Agent.
Texarkana shareholders who cannot locate their Texarkana
stock certificates are encouraged to contact Martha Wisdom,
Secretary, 2318 Richmond Road, Texarkana, Texas 75501-5644,
telephone: (903) 838-2000 prior to the Special Meeting. New
certificates will be issued to Texarkana shareholders who have
misplaced their certificates only if the shareholder executes an
affidavit certifying that the certificate cannot be located and
agreeing to indemnify Texarkana and Hibernia (as its successor),
against any claim that may be made against either of them by the
owner of the lost certificate(s). Texarkana 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 have misplaced their stock
certificates and shareholders who hold certificates in names
other than their own are encouraged to resolve those matters
prior to the Effective Date of the Merger in order to avoid
delays in receiving their Hibernia Common Stock if the Merger is
approved and consummated.
Employee Benefits
Hibernia has agreed as part of the Agreement that it will
offer to all employees of Texarkana who are employed as of the
Effective Date the same employee benefits as those offered by
Hibernia and HNB to their employees, except that employees of
Texarkana will not be required to wait for any period in order to
be eligible to participate in Hibernia's Flex Plan (including its
medical and dental coverage). Hibernia will also give Texarkana
employees full credit for their years of service (for both
eligibility and vesting) with Texarkana for purposes of
Hibernia's 401(k) plan, the Retirement Security Plan and its
Employee Stock Ownership Plan ("ESOP") (to the extent permitted
under the terms of the plan).
Texarkana maintains an employee severance plan to encourage
its employees to continue their employment. Pursuant to such
severance plan, employees will upon termination receive special
severance benefits based on years of service and level of
compensation. Pursuant to the Agreement, Hibernia has agreed to
assume and pay without modification for a period of twelve months
after the effective date of the Merger all obligations of
Texarkana under the severance plan.
Texarkana intends to terminate its existing Employee Stock
Ownership Plan and to distribute the funds in that plan to
participants promptly after receipt of a termination letter from
the Internal Revenue Service. Distributions from this plan may
be rolled over into Hibernia's ESOP by persons eligible to
participate in Hibernia's plan, as long as the legal requirements
of such rollover are met.
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
Texarkana 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 Texarkana to consummate the
Merger are conditioned upon, among other things, approval of the
Agreement by Texarkana's shareholders; the receipt of necessary
regulatory approvals, including the approval of the Federal
Reserve Bank; the receipt of an opinion to the effect that the
Merger, when consummated in accordance with the terms of the
Agreement, will constitute a reorganization within the meaning of
Section 368 of the Code and that, to the extent Texarkana Common
Stock is exchanged for Hibernia Common Stock, Texarkana's
shareholders will recognize no gain or loss for federal income
tax purposes with respect to such exchange; the effectiveness
under the Securities Act of a registration statement relating to
the Hibernia Common Stock to be issued in connection with the
Merger and the absence of a stop order suspending such
effectiveness; the absence of an order, decree or injunction
enjoining or prohibiting the consummation of the Merger; the
receipt of all required state securities law permits or
authorizations; the accuracy of the representations and
warranties set forth in the Agreement as of the Closing Date; the
listing of the Hibernia Common Stock to be issued in the Merger
on the NYSE; the receipt of certain opinions of counsel; in the
case of Texarkana, the receipt of certain fairness opinions of
Alex. Brown 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 Texarkana shareholders holding more than 10% of the
outstanding Texarkana 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 Texarkana's
shareholders may reduce the Exchange Rate. In addition, any
material change in the terms of the Merger after the Special
Meeting would require a resolicitation of votes from Texarkana
shareholders.
Regulatory and Other Approvals
Hibernia is a registered bank holding company and as such is
regulated by the Federal Reserve Board. The approval of the
Federal Reserve Board of the Merger is required in order to
consummate the Merger, and the Merger must be consummated within
90 calendar days after such approval is obtained. Approval of
the Federal Reserve Board for the Merger was obtained on [date],
1996.
Texarkana and Hibernia must wait at least 15 days after the
date of the Federal Reserve Board approval before they may
consummate the Merger. During this 15-day period, the Department
of Justice may object to the Merger on antitrust grounds.
The shares of Hibernia Common Stock offered pursuant to the
Proxy Statement-Prospectus will be registered with the Commission
and the state securities regulators in those states that require
such registration. The shares will also be listed on the NYSE.
The regulatory approvals sought in connection with the
Merger 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, there is a possibility that it will not be
consummated. Failure to receive the requisite regulatory
approvals will result in a termination of the Agreement.
Business Pending the Merger
Under the terms of the Agreement, neither Texarkana nor the
Bank may, without the prior written consent of Hibernia or as
otherwise provided in the Agreement: (i) create or issue any
additional shares of capital stock or any options or other rights
to purchase or acquire shares of capital stock; (ii) enter into
employment contracts with directors, officers or employees or
otherwise agree to increase the compensation of or pay any bonus
to such persons except in accordance with existing agreements,
past practices or as provided for in the Agreement; (iii) enter
into or substantially modify any employee benefits plans, except
that Texarkana may amend its stock option plan to permit vesting
upon a change of control, and Texarkana may take steps to
terminate its Employee Stock Ownership Plan, including, but not
limited to, the appointment of a successor trustee for purposes
of distributing the proceeds of the plan to participants; (iv)
amend their Articles or Bylaws; (v) establish any automatic
teller machines or branch or other banking offices; (vi) make any
capital expenditure(s) in excess of $100,000; (vii) 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, Texarkana may not solicit bids or other transactions
that would result in a merger of Texarkana or the Bank with an
entity other than Hibernia or HNB. Texarkana may pay normal and
customary dividends prior to the Closing Date.
Effective Date of the Merger; Termination
After all conditions to consummation of the Merger have been
satisfied or waived, the effective date of the Merger shall be
the date and time 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 Texarkana's shareholders, for the
following reasons: (i) in the event of a material breach by the
other party of any representation, warranty or covenant which has
not been cured within the period allowed by the Agreement; (ii)
if any of the conditions precedent to the obligations of such
party to consummate the Merger have not been satisfied, fulfilled
or waived as of the Closing Date; (iii) if any application for
any required federal or state regulatory approval has been
denied, and the time for all appeals of such denial has expired;
(iv) if the shareholders of Texarkana fail to approve the Merger
at the Special Meeting; or (v) in the event that the Merger is
not consummated by March 31, 1997. 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 and will survive any such
termination and any such termination does not relieve any
breaching party from liability for any uncured breach of any
covenant or agreement giving rise to such termination.
Management and Operations After the Merger
On the Effective Date, Texarkana will be merged with and
into Hibernia. The Bank will remain a wholly-owned subsidiary of
Hibernia after the Merger. The composition of the Board of
Directors of the Bank is not expected to change substantially
after the Merger, although Hibernia intends to increase the size
of the Board slightly.
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 23, 1996 is contained in documents
incorporated herein by reference. See "AVAILABLE INFORMATION."
Certain Differences in Rights of Shareholders
If the shareholders of Texarkana approve the Merger and the
Merger is subsequently consummated, all shareholders of
Texarkana, other than any shareholders who exercise and perfect
dissenters' rights, will become shareholders of Hibernia. As
shareholders of Hibernia, their rights will be governed by and
subject to Hibernia's Articles of Incorporation and Bylaws,
rather than Texarkana's Articles of Incorporation and Bylaws.
The following is a summary of the principal differences between
the rights of shareholders of Texarkana and Hibernia not
described elsewhere in this Proxy Statement-Prospectus.
Stock. The total number of shares of all classes of stock
which Hibernia shall have authority to issue is three hundred
million, of which two hundred million shares shall be designated
as Class A Common Stock of no par value and one hundred million
shares shall be designated as Preferred Stock, without par value.
The rights, preferences and privileges with respect to shares of
Preferred Stock may be determined by the Hibernia Board of
Directors. Consequently, shares of Preferred Stock could be
issued in circumstances in which it would make an attempted
acquisition of Hibernia more difficult. Texarkana is authorized
to issue one class of shares to be designated "common". The
total number of common shares of which Texarkana is authorized to
issue is two million shares, and the par value of each share is
$10.00.
Liquidity of Stock. There currently is no ready market for
the shares of Texarkana 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 Texarkana or Hibernia. See
"Resale of Hibernia Stock." 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.
Directors' Qualifications. No individual shall be elected
a director of Hibernia unless such individual owns, in his or her
own right, at the time of such election, not less than 100 shares
of Hibernia voting stock. No individual shall be eligible for
election as a director of Hibernia who has attained the age of 71
prior to the date of such election. No individual who is or
becomes a business competitor or who is or becomes affiliated
with, employed by or a representative of any individual,
corporation, association, partnership, firm, business enterprise
or other entity or organization which the Hibernia Board
determines to be in competition with Hibernia shall be eligible
for election as a director of Hibernia. Any financial
institution having branches or affiliates within any state in
which Hibernia or any of its subsidiaries operates or having
(together with its affiliates) total assets or total deposits
exceeding $500 million shall be presumed to be a business
competitor of Hibernia, unless the Hibernia Board determines
otherwise. Texarkana does not have similar qualification
limitations for its directors. However, Texarkana requires
directors to be at least eighteen years of age, and any director
who reaches the age of 70 shall no longer be eligible to serve as
a director
Number of Directors. The number of Hibernia
directors shall be as determined, from time to time, by
resolution of the Board of Directors. The Texarkana Board shall
consist of that number of directors, not less than three nor more
than twenty-five, as may from time to time be prescribed by the
Texarkana Board.
Notice of Shareholders' Meeting. Written notice of the
place, day and hour of a Texarkana meeting, and in the case of a
special meeting, the purpose or purposes for which the meeting is
called shall be given not less than 10 nor more than 50 days
before the date of the meeting, either personally or by mail, to
each shareholder entitled to vote at the meeting. Hibernia has
no similar provision.
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 Texarkana
may be removed, with cause or without cause, by the affirmative
vote of a majority of the shares entitled to vote on the election
of directors present at a meeting expressly called for that
purpose, if notice of intention to act upon such matter shall
have been given in the notice calling such meeting.
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.
Texarkana's Articles of Incorporation may be amended by a vote of
two-thirds of the issued and outstanding shares of Texarkana
Common Stock.
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 Texarkana Bylaws may be
altered, amended, or repealed and new Bylaws may be adopted by
the Board, but Bylaws adopted by the Board shall be subject to
repeal or change by action of the shareholders.
Special Meetings of Shareholders. Special meeting of the
shareholders of Hibernia may be called by the Chairman of the
Board, the President, the Chief Executive Officer, the Treasurer
of Hibernia, or the Board of Directors. 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 Texarkana may be called at any
time by the President, the Board of Directors, the Chairman of
the Board, or the holders of not less than ten percent (10%) of
all shares entitled to vote at such meeting.
Shareholder Proposals. Hibernia's Bylaws contain certain
provisions expressly allowing shareholders to submit shareholder
proposals and to nominate individuals for election as directors,
under certain circumstances and provided the shareholder complies
with all of the conditions set forth in those provisions.
Texarkana's bylaws contain no specific provisions relating to
shareholder proposals.
Inspection Rights. At least ten days before each meeting of
Texarkana shareholders, the officer or agent having charge of the
stock transfer books shall prepare a complete list of Texarkana
shareholders entitled to vote at such meeting or any adjournment
thereof, arranged in alphabetical order, including the address of
each shareholder and the number of voting shares held by each
shareholder. For a period of ten days prior to such meeting,
such list shall be kept on file at the registered office of
Texarkana and shall be subject to inspection by any shareholder
during usual business hours. Such list shall be produced at such
meeting, and at all times during such meeting shall be subject to
inspection by any shareholder. No similar rights exist for
Hibernia shareholders, however, Louisiana law requires that such
a list must be made available to shareholders at the meeting of
shareholders.
Election of Directors. Texarkana's Bylaws state that any
directorship to be filled by reason of an increase in the number
of directors shall be filled by election at an annual meeting of
shareholders or at a special meeting called for that purpose, or
may be filled by the Board of Directors for a term of office
continuing until the next election of one or more Directors by
the shareholders provided, however, that the Board of Directors
may not fill more than two directorships created by an increase
in the Board during the period between any two successive annual
meetings of shareholders.
Interests of Certain Persons in the Merger
The terms of the Agreement include certain provisions that
protect the officers and directors of Texarkana and the Bank from
and against liability for actions arising while they served in
those capacities for Texarkana. The Agreement provides for
indemnification of such persons to the same extent as they would
have been indemnified under the Articles of Incorporation and
Bylaws of Hibernia in effect on June 26, 1996, except that the
Agreement limits Hibernia's aggregate liability for such
indemnification to $10 million and requires each officer and
director eligible for such indemnification to execute a joinder
agreement in which such persons agree to cooperate with Hibernia
in any litigation or proceeding giving rise to a claim of
indemnification.
The Agreement also provides for indemnification of
Texarkana's and the 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 therein or necessary to make the statements
made therein not misleading. This indemnification does not apply
to statements made in reliance on information furnished to
Hibernia by Texarkana for use in the Registration Statement,
including this Proxy Statement-Prospectus.
Texarkana's 1983 Stock Option Plan provides that in the
event of a change of control, including that which will occur
upon consummation of the Merger, each optionee may exercise his
stock options with respect to the full number of shares without
regard to any vesting provisions contained in the optionee's
agreement. As of the date of this Proxy Statement-Prospectus,
all outstanding stock options have been exercised.
Messrs. Murphy, Fuller and Chambers have employment
agreements with Texarkana that provide for certain payments in
the event of a change of control of Texarkana, such as that which
would occur pursuant to the Merger. As a result, Messrs. Murphy,
Fuller and Chambers will be entitled to payments equal to two
years annual base salary under certain circumstances.
Material Tax Consequences
The following summary description of the material income tax
consequences of the Merger 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, her or it.
Consummation of the Merger is conditioned upon the receipt
of an opinion to the effect that the Merger, when consummated in
accordance with the terms of the Agreement will constitute a
reorganization within the meaning of Section 368 of the Code, and
that the exchange of Texarkana Common Stock for Hibernia Common
Stock will not give rise to the recognition of gain or loss for
federal income tax purposes to Texarkana's shareholders with
respect to such exchange. See "PROPOSED MERGER --
Representations and Warranties; Conditions to the Merger;
Waiver."
If the Merger constitutes a reorganization within the
meaning of Section 368 of the Code: (i) no gain or loss will be
recognized by Texarkana, the Bank, Hibernia or HNB by reason of
the Merger; (ii) a shareholder of Texarkana 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
Texarkana Common Stock; (iii) the tax basis in the Hibernia
Common Stock received by a shareholder of Texarkana will be the
same as the tax basis in the Texarkana Common Stock surrendered
in exchange therefor; and (iv) the holding period, for federal
income tax purposes, for Hibernia Common Stock received in
exchange for Texarkana Common Stock will include the period
during which the shareholder held the Texarkana Common Stock
surrendered in the exchange, provided that the Texarkana Common
Stock was held as a capital asset at the Effective Date.
The parties have received the opinion of Ernst & Young LLP,
certified public accountants, to the effect that the Merger, if
consummated in accordance with the terms of the Agreement, will
constitute a reorganization for purposes of Section 368 of the
Code and will have the tax effects described in this section. A
copy of the form of opinion of Ernst & Young LLP in this regard
is attached hereto as Appendix D. As noted in the opinion, the
opinion is based upon certain representations and assumptions
described therein. Shareholders of Texarkana are urged to review
the full text of the opinion of Ernst & Young LLP attached hereto
as Appendix D with regard to the tax consequences of the Merger
to them.
For information regarding the federal income tax
consequences of cash payments received by dissenting
shareholders, see "PROPOSED MERGER -- Rights of Dissenting
Shareholders."
Resale of Hibernia Common Stock
The shares of Hibernia Common Stock issuable to shareholders
of Texarkana 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
Texarkana 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, Texarkana, and for purposes hereof could be deemed to
include all executive officers, directors and 10% shareholders of
Texarkana.
Hibernia Common Stock received and beneficially owned by
those shareholders who are deemed to be affiliates of Texarkana
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, may publicly resell
Hibernia Common Stock received by them in the Merger if they
register the resale of those shares or they comply with the
restrictions of Rule 145. Anyone who is or may be an affiliate
of Texarkana should carefully consider the resale restrictions
imposed by Rule 145, prior to attempting to transfer any shares
of Hibernia Common Stock after the Merger. In addition, shares
of Hibernia Common Stock issued to affiliates of Texarkana in the
Merger will not be transferable until financial statements
pertaining to at least 30 days of post-Merger combined operations
of Hibernia and Texarkana have been published, in order to
satisfy certain requirements of the Commission relating to
pooling-of-interests accounting treatment.
The Agreement requires Texarkana to use its best efforts to
identify those persons who may be deemed to be affiliates of
Texarkana and to cause each person so identified to deliver to
Hibernia a written agreement providing that such person will not
dispose of Texarkana 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 Texarkana.
Rights of Dissenting Shareholders
Holders of shares of Texarkana Common Stock have a statutory
right to dissent from the Merger by following the specific
procedures set forth below. If the Merger is approved and
consummated, holders of shares of Texarkana Common Stock who
properly perfect their dissenters' rights will be entitled to
receive an amount of cash equal to the fair value of their shares
of Texarkana Common Stock rather than being required to accept
the consideration therefore provided in the Agreement. The
following summary is not a complete statement of the statutory
dissenters' rights of appraisal, and such summary is qualified in
its entirety by reference to the applicable provisions of the
Texas Business Corporation Act ("TBCA"), which are reproduced in
full at Appendix C hereto. A Shareholder must follow the exact
procedure required by the TBCA in order to properly exercise his
dissenter's rights of appraisal and avoid waiver of those rights.
Holders of shares of Texarkana Common Stock who desire to
dissent from the Merger must file a written objection to the
Merger with the Secretary of Texarkana, Ms. Martha Wisdom, 2318
Richmond Road, Texarkana, Texas 75501, prior to the Meeting at
which a vote on the Merger shall be taken. The written notice
must state that the Shareholder will exercise his right to
dissent if the Merger is consummated and give the Shareholder's
address to which notice of effectiveness of the Merger shall be
sent. A vote against the Merger is not sufficient to perfect a
Shareholder's statutory right to dissent from the Merger. If the
Merger is consummated, each Shareholder who sent notice to
Texarkana as described above and who did not vote in favor of the
Merger will be deemed to have dissented from the Merger
("Dissenting Shareholder"). Failure to vote against the Merger
will not constitute a waiver of the dissenters' rights of
appraisal; on the other hand, a vote in favor of the Merger will
constitute such a waiver.
Hibernia will be liable for any payments to Dissenting
Shareholders and shall, within ten (10) days of the Effective
Date, notify the Dissenting Shareholders in writing that the
Merger has been effected. Each Dissenting Shareholder so
notified must, within ten (10) days of the delivery or mailing of
such notice, make a written demand on Hibernia at ______________,
Attention:_________________, for payment of the fair value of the
Dissenting Shareholder's shares of Texarkana Common Stock as
estimated by the Dissenting Shareholder. Failure to follow this
procedure will constitute a waiver of his dissenter's rights of
appraisal by such Dissenting Shareholder. The demand shall state
the number of shares of Texarkana Common Stock owned by the
Dissenting Shareholder and the fair value of the shares as
estimated by the Dissenting Shareholder. The fair value of the
shares shall be the value thereof as of the date immediately
preceding the Meeting, excluding any appreciation or depreciation
in anticipation of the Merger. Dissenting Shareholders who fail
to make a written demand within the ten (10) day period will be
bound by the Merger and lose their rights to dissent. Within
twenty (20) days after making a demand, the Dissenting
Shareholder must submit certificates representing his shares of
Texarkana Common Stock to Hibernia for notation thereon that such
demand has been made. Dissenting Shareholders who have made a
demand for payment of their shares shall not thereafter be
entitled to vote or exercise any other rights of a shareholder
except the right to receive payment for their shares pursuant to
the provisions of the TBCA and the right to maintain an
appropriate action to obtain relief on the basis of fraud.
Within twenty (20) days after receipt of a Dissenting
Shareholder's demand letter as described above, Hibernia shall
deliver or mail to the Dissenting Shareholder written notice (i)
stating that Hibernia accepts the amount claimed in the demand
letter and agrees to pay that amount, within ninety (90) days
after the Effective Date, upon surrender of the relevant
certificates of Texarkana Common Stock duly endorsed by the
Dissenting Shareholder, or (ii) containing the Hibernia's written
estimate of the fair value of the shares of Texarkana Common
Stock together with an offer to pay such amount within ninety
(90) days after the Effective Date if Hibernia receives notice,
within sixty (60) days after the Effective Date, stating that the
Dissenting Shareholder agrees to accept that amount and upon
surrender of the relevant certificates of Texarkana Common Stock
duly endorsed by the Dissenting Shareholder. In either case, the
Dissenting Shareholder shall cease to have any ownership interest
in Hibernia or Texarkana following payment of the agreed value.
If the Dissenting Shareholder and Hibernia cannot agree on
the fair value of the shares within sixty (60) days after the
Effective Date, the Dissenting Shareholder or Hibernia may,
within sixty (60) days of the expiration of the initial sixty
(60) day period, file a petition ("Petition") in any court of
competent jurisdiction in Bowie County, Texas, requesting a
finding and determination of the fair value of the Dissenting
Shareholder's shares. Each Dissenting Shareholder is not
required to file a separate Petition. If one Dissenting
Shareholder files a Petition, Hibernia must file, with the clerk
of the court in which the Petition was filed, a list containing
the names and addresses of the Dissenting Shareholders with whom
agreements as to the value of their shares have not been reached.
The court will give notice of the time and place of the hearing
on the Petition to the Dissenting Shareholders named on the list.
Dissenting Shareholders so notified by the court will be bound by
the final judgment of the court regarding fair value of the
shares. If no petition is filed within the appropriate time
period, then all Dissenting Shareholders who have not reached an
agreement with Hibernia on the value of their shares shall be
bound by the Merger and lose their right to dissent.
After a hearing concerning the petition, the court shall
determine which Dissenting Shareholders have complied with the
provisions of the TBCA and have become entitled to the valuation
of, and payment for, their shares, and shall appoint one or more
qualified appraisers to determine the value of the shares of
Texarkana Common Stock in question. The appraisers shall
determine such value and file a report with the court. The court
shall then in its judgment determine the fair value of the shares
of Texarkana Common Stock, which judgment shall be binding on
Hibernia and on all Dissenting Shareholders receiving notice of
the hearing. The court shall direct Hibernia to pay such amount,
together with interest thereon, beginning 91 days after the
Effective Date of the Merger to the date of judgement, to the
Dissenting Shareholders entitled thereto. The judgment shall be
payable upon the surrender to Hibernia of certificates
representing shares of Texarkana Common Stock duly endorsed by
the Dissenting Shareholder. Upon payment of the judgement, the
Dissenting Shareholders shall cease to have any interest in
Hibernia.
Any Dissenting Shareholder who has made a written demand on
Hibernia for payment of the value of his Texarkana Common Stock
may withdraw such demand at any time before payment for his
shares has been made or before a petition has been filed with an
appropriate court for determination of the fair value of such
shares. If a Dissenting Shareholder withdraws his demand, or if
he is otherwise unsuccessful in asserting his dissenters' rights
of appraisal, such Dissenting Shareholder shall be bound by the
Merger and his status as a former shareholder of Texarkana shall
be restored without prejudice to any corporate proceedings,
dividends, or distributions which may have occurred during the
interim.
In the absence of fraud in the transaction, a Dissenting
Shareholder's statutory right of appraisal is the exclusive
remedy for the recovery of the value of his shares or money
damages to the shareholder with respect to the Merger.
Cash received by a dissenting shareholder of Texarkana in
exchange for his or her Texarkana Common Stock will generally be
subject to state and federal income tax and should be treated as
having been received by such shareholder as a distribution in
redemption of his or her stock, subject to the provisions and
limitations of Section 302 of the Code. If, as a result of such
distribution, a shareholder owns no stock either directly or
through the application of Section 318(a) of the Code, the
redemption should be a complete termination of interest within
the meaning of Section 302(b)(3) of the Code and such cash will
be treated as a distribution in full payment in exchange for his
or her stock, as provided by Section 302(a) of the Code. In that
case, the shareholder would recognize ordinary income, or capital
gain, as the case may be, in an amount equal to the difference
between the amount of cash received in redemption of his shares
and his basis in his Texarkana Common Stock.
Dividend Reinvestment Plan
Hibernia maintains a Dividend Reinvestment Plan through
which shareholders of Hibernia who participate in the plan may
reinvest dividends in Hibernia Common Stock. Shares are
purchased for participants in the plan at their market value as
determined by the market price of the stock as listed on the
NYSE. The plan also permits participants to purchase additional
shares with cash at the then-current market price. All shares
purchased through the plan are held in a separate account for
each participant maintained by Hibernia's transfer agent.
Shareholders who participate in the Dividend Reinvestment Plan
purchase shares through the plan without paying brokerage
commissions or other costs ordinarily associated with open market
purchases of stock. It is anticipated that the Dividend
Reinvestment Plan will continue after the Effective Date and that
shareholders of Texarkana 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. In order for the Merger to qualify for
pooling-of-interests accounting treatment, 90% or more of the
outstanding Texarkana Common Stock must be exchanged for Hibernia
Common Stock. If holders of more than 10% of the outstanding
Texarkana Common Stock exercise and perfect dissenters' rights,
the Merger will not qualify as a pooling of interests. Also, in
order for the pooling-of-interests accounting method to apply,
"affiliates" of Texarkana 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 Texarkana and Hibernia. Persons believed by
Texarkana to be "affiliates" have agreed to comply with these
restrictions.
Texarkana 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 Federal Reserve Board. Under
the BHCA, bank holding companies may not directly or indirectly
acquire the ownership or control of more than 5% of the voting
shares or substantially all of the assets of any company,
including a bank, without the prior approval of the Federal
Reserve Board. In addition, bank holding companies are generally
prohibited from engaging under the BHCA in nonbanking activities,
subject to certain exceptions.
Hibernia's banking subsidiary, 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 Comptroller of the
Currency (the "Comptroller"). HNB is also subject to various
requirements and restrictions under federal and state law,
including requirements to maintain reserves against deposits,
restrictions on the types and amounts of loans that may be
granted and the interest that may be charged thereon and
limitations on the types of investments that may be made and the
types of services that may be offered. Various consumer laws and
regulations also affect the operations of HNB. In addition to
the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve Board as it
attempts to control the money supply and credit availability in
order to influence the economy.
Payment of Dividends
Hibernia generally depends upon payment of dividends by HNB
in order to pay dividends to its shareholders and to meet its
other needs for cash to pay expenses. Hibernia derives
substantially all of its income from the payment of dividends by
HNB, and its ability to pay dividends is affected by the ability
of HNB to pay dividends. HNB is subject to various statutory
restrictions on its ability to pay dividends to Hibernia. Under
such restrictions, the amount available for payment of dividends
to Hibernia by HNB was approximately $___ million at _______ 1,
1996. In addition, the OCC has the authority to prohibit any
national bank from engaging in an unsafe or unsound practice, and
the OCC has indicated its view that it generally would be an
unsafe and unsound practice to pay dividends except out of
current operating earnings. The ability of HNB to pay dividends
in the future is presently, and could be further, influenced by
bank regulatory policies or agreements and by capital guidelines.
Additional information in this regard is contained in documents
incorporated by reference herein. See "AVAILABLE INFORMATION."
In addition, consistent with its policy regarding bank
holding companies serving as a source of strength for their
subsidiary banks, the Federal Reserve Board has stated that, as a
matter of prudent banking, a bank holding company generally
should not maintain a rate of cash dividends unless its net
income available to common stockholders has been sufficient to
fully fund the dividends, and the prospective rate of earnings
retention appears to be consistent with the holding company's
capital needs, asset quality and overall financial conditions.
Restrictions on Extensions of Credit
HNB is subject to restrictions imposed by federal law on the
ability of any national bank to extend credit to affiliates,
including Hibernia, to purchase the assets thereof, to issue a
guarantee, acceptance or letter of credit on their behalf
(including an endorsement or standby letter of credit) or to
purchase or invest in the stock or securities thereof or to take
such stock or securities as collateral for loans to any borrower.
Such extensions of credit and issuances generally must be secured
by eligible collateral and are generally limited to 15% of HNB's
capital and surplus.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined balance sheet of
Hibernia as of June 30, 1996 and income statement of Hibernia for
the six-month period ended June 30, 1996 give effect to (1) the
then pending acquisition of Calcasieu Marine National Bank
("Calcasieu") consummated on August 26, 1996 and the then-pending
acquisition of St. Bernard Bank & Trust Co. ("St. Bernard"),
which was consummated on October 1, 1996, which were accounted
for under the purchase method of accounting, and (2) the pending
merger of Texarkana, assuming that merger is accounted for using
the pooling-of-interests method of accounting, as if the
Calcasieu and St. Bernard acquisitions had been consummated on
January 1, 1995 and the Texarkana merger had been consummated on
January 1, 1993.
The information at June 30, 1996 and for the six-month
periods ended June 30, 1996 and 1995 in the column titled
"Hibernia Corporation" is summarized from the unaudited
consolidated financial statements of Hibernia filed in Hibernia's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996
and reflect the impact of two mergers accounting for as poolings
of interests that were completed in the first quarter of 1996.
The information contained in the column titled "Texarkana
National Bancshares, Inc." is based on December 31, 1995, 1994,
and 1993 audited financial statements and unaudited financial
statements as of June 30, 1996 and for the six-month periods
ended June 30, 1996 and 1995.
The information included in the "Total Pro Forma Hibernia
Corporation" includes adjustments reflecting the impact of the
Calcasieu and St. Bernard mergers, which were accounted for as
purchases.
The Pro Forma Financial Statements are presented for
information purposes only and are not necessarily indicative of
the combined financial position or results of operations which
would actually have occurred if the transactions had been
consummated in the past or which may be obtained in the future.
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
The following unaudited pro forma combined balance sheet
combines the historical balance sheet of Hibernia and the
historical balance sheet of Texarkana National Bancshares,
Inc. as if the Merger had been effective on June 30, 1996.
This unaudited pro forma combined balance sheet should be
read in conjunction with the historical financial statements
and related notes of Hibernia contained in Hibernia's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996 incorporated by reference into this Proxy Statement -
Prospectus, and the historical financial statements for the
six-month period ended June 30, 1996 and the related notes
of Texarkana contained elsewhere herein. The pro forma
combined balance sheet also gives effect to the acquisition
of CM Bank Holding Company (consummated August 26, 1996)
and St. Bernard Bank & Trust Co. (consummated October 1,
1996), both of which were accounted for as purchases,
assuming these transactions occurred on June 30, 1996.
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET
June 30, 1996
(A)
TEXARKANA TEXARKANA
HISTORICAL NATIONAL NATIONAL PRO FORMA CM BANK
HIBERNIA BANCSHARES, BANCSHARES, INC. HIBERNIA HOLDING
Unaudited ($ in thousands) CORPORATION INC. ADJUSTMENTS CORPORATION COMPANY
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $340,241 $15,251 $355,492 $43,554
Short-term investments 61,484 5,000 66,484 5,200
Securities available for sale 1,880,789 112,220 1,993,009 299,729
Securities held to maturity - 41,359 41,359 8,650
Loans, net of unearned income 4,989,682 214,833 5,204,515 361,592
Reserve for possible loan losses (143,999) (3,223) (147,222) (2,563)
Loans, net 4,845,683 211,610 - 5,057,293 359,029
Bank premises and equipment 119,875 8,124 127,999 51,961
Customers' acceptance liability 440 - 440 -
Goodwill 17,542 - 17,542 -
Other intangible assets 5,317 - 5,317 77
Other assets 183,312 7,955 191,267 10,619
TOTAL ASSETS $7,454,683 $401,519 - $7,856,202 $778,819
LIABILITIES
Deposits:
Demand, noninterest-bearing $1,119,969 $44,956 $1,164,925 $165,300
Interest-bearing 5,173,305 290,618 5,463,923 452,596
Total Deposits 6,293,274 335,574 - 6,628,848 617,896
Short-term borrowings 290,862 5,808 296,670 35,318
Liability on acceptances 440 - 440 -
Other liabilities 118,853 2,951 121,804 12,705
Debt 6,813 20,029 26,842 1,378
TOTAL LIABILITIES 6,710,242 364,362 - 7,074,604 667,297
SHAREHOLDERS' EQUITY
Preferred Stock - - - -
Common Stock 234,463 7,356 5,073 246,892 10,500
Surplus 375,632 2,654 (5,073) 373,213 10,500
Retained earnings 155,277 27,823 183,100 93,097
Treasury stock (65) - (65) (8)
Unrealized gains (losses) on securities
available for sale (6,476) (676) (7,152) (2,567)
Unearned compensation (14,390) - (14,390) -
TOTAL SHAREHOLDERS' EQUITY 744,441 37,157 - 781,598 111,522
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $7,454,683 $401,519 - $7,856,202 $778,819
See notes to Pro Forma Combined Balance Sheet.
</TABLE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED BALANCE SHEET (cont.)
June 30, 1996
(B) (C)
CM BANK ST. BERNARD TOTAL
HOLDING ST. BERNARD BANK & PRO FORMA
COMPANY BANK & TRUST CO. HIBERNIA
Unaudited ($ in thousands) ADJUSTMENTS TRUST CO. ADJUSTMENTS CORPORATION
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $10,984 $410,030
Short-term investments 12,400 84,084
Securities available for sale ($201,700)(1) 135 ($46,000)(1)
8,650 (2) 190,707 (2)
(69)(3) (184)(3) 2,244,277
Securities held to maturity (8,650)(2) 190,707 (190,707)(2) 41,359
Loans, net of unearned income (4,213)(3) 29,519 5,591,413
Reserve for possible loan losses (290) (150,075)
Loans, net (4,213) 29,229 - 5,441,338
Bank premises and equipment (5,800)(3) 2,400 176,560
Customers' acceptance liability - 440
Goodwill 85,886 (3) - 19,513 (3) 122,941
Other intangible assets 17,235 (3) 22 7,142 (3)
(77)(3) (22)(3) 29,694
Other assets (2,311)(3) 3,651 (2,428)(3) 200,798
TOTAL ASSETS ($111,049) $249,528 ($21,979) $8,751,521
LIABILITIES
Deposits:
Demand, noninterest-bearing $24,511 $1,354,736
Interest-bearing $492 (3) 202,057 6,119,068
Total Deposits 492 226,568 - 7,473,804
Short-term borrowings - 331,988
Liability on acceptances - 440
Other liabilities 981 135,490
Debt (19)(3) - 28,201
TOTAL LIABILITIES 473 227,549 - 7,969,923
SHAREHOLDERS' EQUITY
Preferred Stock - -
Common Stock (10,500) 375 ($375) 246,892
Surplus (10,500) 1,625 (1,625) 373,213
Retained earnings (93,097) 19,979 (19,979) 183,100
Treasury stock 8 - (65)
Unrealized gains (losses) on securities
available for sale 2,567 - (7,152)
Unearned compensation - (14,390)
TOTAL SHAREHOLDERS' EQUITY (111,522)(1) 21,979 (21,979)(1) 781,598
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY ($111,049) $249,528 ($21,979) $8,751,521
See notes to Pro Forma Combined Balance Sheet.
</TABLE>
<PAGE>
HIBERNIA CORPORATION
NOTES TO PRO FORMA COMBINED BALANCE SHEET
A. Texarkana National Bancshares, Inc. Pro Forma Adjustments
Hibernia Corporation plans to issue approximately 6,720,841
shares of Hibernia Common Stock, with an aggregate market
value at the date of the merger of $75,609,461 based upon an
assumed market value of $11.25 per share, in exchange for
735,600 shares of Texarkana Common Stock outstanding at
June 30, 1996 to effect the merger with Texarkana National
Bancshares, Inc. ("Texarkana"). The exchange rate shall be the
number that is obtained by dividing $100.75 by the average closing
price of Hibernia Common Stock for the ten business days
preceding the last trading day prior to the closing date;
provided, however, that if the exchange rate as calculated
above is greater than 8.8, then the exchange rate for the
purposes of this transaction shall be 8.8, and if the
exchange rate as calculated above is less than 8.2, then
the exchange rate for this transaction shall be 8.2.
Based upon an assumed market value of $11.25 per share for
Hibernia Common Stock, the exchange rate in the merger
will be 8.8. The stated value of the Hibernia Common Stock
is $1.92 per share.
In addition, at June 30, 1996 existing stock options were
outstanding to purchase 28,132 shares of Texarkana Common
Stock. Subsequent to June 30, 1996 these options were exercised
and will result in the issuance of an additional 247,561 shares
of Hibernia Common Stock (assuming an 8.8 exchange ratio) with an
aggregate market value of $2,785,000 based upon an assumed market
value of $11.25 per share.
In accordance with the pooling of interests method of
accounting, the historical equities of the merged companies
are combined for the purposes of this pro forma combined
balance sheet.
B. CM Bank Holding Company Pro Forma Adjustments
On August 26, 1996, Hibernia Corporation acquired CM Bank
Holding Company ("Calcasieu") in a transaction accounted for
as a purchase. Calcasieu shareholders received approximately
$201,700,000 in cash in connection with the transaction.
Under the purchase method of accounting, the assets and
liabilities of Calcasieu are adjusted to their estimated
fair value. Applicable income tax effects of such
adjustments are included as a component of Hibernia's net
deferred tax asset with a corresponding offset to goodwill
(assuming an effective tax rate of 35%). For purposes of
these pro forma combined financial statements, estimates
have been made of the fair value of Calcasieu's assets and
liabilities as of June 30, 1996. These fair value
adjustments were based on the best information available to
Hibernia and are subject to update as additional information
becomes available.
In addition to the $201,700,000 in cash exchanged in the
transaction, the total purchase price included other direct
acquisition costs such as investment banking, legal,
accounting and other professional fees, printing and mailing
costs, and other miscellaneous expenses. These costs, which
were not material to the transaction, are not included as
adjustments to the unaudited pro forma combined financial
statements.
<TABLE>
<CAPTION>
(1) Allocation of purchase price:
(in thousands)
<S> <C> <C>
Net assets applicable to Calcasieu's
common stock at June 30, 1996 $111,522
Net decrease to net asset
value at June 30, 1996, net of tax
(see footnote 3) $(6,861)
Core deposit intangibles, net of tax
(see footnote 3) 11,203
Total estimated fair value adjustments 4,342
Elimination of Calcasieu's existing identifiable
intangibles, net of tax (see footnote 3) (50)
Total allocation of purchase price 115,814
Goodwill due to the acquisition (see footnote 3) 85,886
$201,700
</TABLE>
The purchase of Calcasieu was primarily funded by the sale
of securities available for sale.
(2) Securities of $8,650,000 classified as held to maturity
by Calcasieu were reclassified by Hibernia as securities
available for sale upon consummation of the transaction.
<TABLE>
<CAPTION>
(3) Purchase accounting adjustments:
Applicable Net
Gross income tax of tax
(in thousands)
Debit (Credit)
<S> <C> <C> <C>
Estimated fair value adjustments:
Securities $ (69) $ 24 $ (45)
Loans, net (4,213) 1,475 (2,738)
Bank premises and equipment (5,800) 2,030 (3,770)
Interest bearing deposits (492) 172 (320)
Debt 19 (7) 12
Estimated fair value
adjustments (excluding
identifiable intangibles) (10,555) 3,694 (6,861)
Elimination of Calcasieu's
existing identifiable
intangibles (77) 27 (50)
Core deposit intangibles due
to the acquisition 17,235 (6,032) 11,203
Goodwill due to the acquisition 85,886 - 85,886
$92,489 $(2,311) $90,178
</TABLE>
C. St. Bernard Bank & Trust Co. Pro Forma Adjustments
On October 1, 1996, Hibernia National Bank acquired St.
Bernard in a transaction accounted for as a purchase.
St. Bernard shareholders received approximately $46,000,000
in cash in connection with the transaction. Under
the purchase method of accounting, the assets and
liabilities of St. Bernard are adjusted to their estimated
fair value. Applicable income tax effects of such adjustments
are included as a component of Hibernia's net deferred tax asset
with a corresponding offset to goodwill (assuming an effective
tax rate of 35%). For purposes of these pro forma combined
financial statements, estimates have been made of the fair value of
St. Bernard's assets and liabilities as of June 30, 1996.
These fair value adjustments were based on the best
information available to Hibernia and are subject to update
as additional information becomes available.
In addition to the $46,000,000 in cash exchanged in the
transaction, the total purchase price included other direct
acquisition costs such as investment banking, legal,
accounting and other professional fees, printing and mailing
costs, and other miscellaneous expenses. These costs, which
were not material to the transaction, are not included as
adjustments to the unaudited pro forma combined financial
statements.
<TABLE>
<CAPTION>
(1) Allocation of purchase price:
(in thousands)
<S> <C> <C>
Net assets applicable to St. Bernard's
common stock at June 30, 1996 $21,979
Net decrease to net asset
value at June 30, 1996, net of tax
(see footnote 3) $ (120)
Core deposit intangibles, net of tax
(see footnote 3) 4,642
Total estimated fair value adjustments 4,522
Elimination of St. Bernard's existing identifiable
intangibles, net of tax (see footnote 3) (14)
Total allocation of purchase price 26,487
Goodwill due to the acquisition (see footnote 3) 19,513
$46,000
</TABLE>
The purchase of St. Bernard was primarily funded by the sale
of securities available for sale.
(2) Securities of $190,707,000 classified as held to
maturity by St. Bernard were reclassified by Hibernia as
securities available for sale upon consummation of the
transaction.
[/TABLE]
<TABLE>
<CAPTION>
(3) Purchase accounting adjustments:
Applicable Net
Gross income tax of tax
(in thousands)
Debit (Credit)
<S> <C> <C> <C>
Estimated fair value adjustments:
Securities $ (184) $ 64 $ (120)
Elimination of St. Bernard's
existing identifiable
intangibles (22) 8 (14)
Core deposit intangibles due
to the acquisition 7,142 (2,500) 4,642
Goodwill due to the acquisition 19,513 - 19,513
$26,449 $ (2,428) $24,021
</TABLE>
<PAGE>
PRO FORMA COMBINED INCOME STATEMENTS
(Unaudited)
The following unaudited pro forma combined income statements
for the six months ended June 30, 1996 and 1995 and the
years ended December 31, 1995, 1994, and 1993 combine the
historical and restated income statements of Hibernia and
the historical income statements of Texarkana as if the
Merger had been effective on January 1, 1993. The unaudited
pro forma combined income statements should be read in
conjunction with the consolidated financial statements
and notes of Hibernia contained in Hibernia's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996 and
its Annual Report on Form 10-K for the year ended
December 31, 1995, each incorporated by reference into
this Proxy Statement-Prospectus, and the historical financial
statements and notes for the year ended December 31, 1995 and
the six-month period ended June 30, 1996 of Texarkana National Bancshares,
Inc. contained elsewhere herein. The restated income
statements of Hibernia Corporation for the years ended
December 31, 1995, 1994 and 1993 reflect the impact of the
two mergers that were consummated in January 1996, as
discussed in Note A to the pro forma combined income
statements for the years ended December 31, 1995, 1994 and
1993. The cost associated with the Merger, estimated to be
approximately $958,000, will be accounted for as a
current period expense when incurred. The pro forma
combined income statements also give effect to the
acquisition of Calcasieu (consummated August 26, 1996) and St.
Bernard (consummated October 1, 1996), both of which were
accounted for as purchases, assuming these transactions occurred
on January 1, 1995, as required by the rules governing pro forma
adjustments for purchase business combinations.
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Six months ended June 30, 1996
TEXARKANA PRO FORMA CM BANK
HIBERNIA NATIONAL HIBERNIA HOLDING
Unaudited ($ in thousands, except per share data) CORPORATION BANCSHARES, INC CORPORATION COMPANY
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $214,552 $9,307 $223,859 $16,280
Interest on securities available for sale 65,065 3,735 68,800 9,434
Interest on securities held to maturity - 1,122 1,122 282
Interest on short-term investments 4,739 74 4,813 586
Total interest income 284,356 14,238 298,594 26,582
Interest expense
Interest on deposits 109,418 6,426 115,844 9,171
Interest on short-term borrowings 6,832 187 7,019 883
Interest on debt 216 563 779 46
Total interest expense 116,466 7,176 123,642 10,100
Net interest income 167,890 7,062 174,952 16,482
Provision for possible loan losses - 975 975 475
Net interest income after provision
for possible loan losses 167,890 6,087 173,977 16,007
Noninterest income
Service charges on deposits 25,184 1,929 27,113 3,258
Trust fees 6,047 405 6,452 376
Other service, collection and exchange charges 15,927 887 16,814 934
Gain on sale of business lines 517 - 517 -
Other operating income 4,856 251 5,107 177
Securities gains (losses), net - 113 113 1,157
Total noninterest income 52,531 3,585 56,116 5,902
Noninterest expense
Salaries and employee benefits 72,172 3,032 75,204 6,145
Occupancy expense, net 12,830 371 13,201 1,423
Equipment expense 10,868 442 11,310 1,289
Data processing expense 10,208 87 10,295 158
Foreclosed property expense, net (1,822) 18 (1,804) (100)
Amortization of intangibles 1,923 - 1,923 12
Other operating expense 35,132 1,426 36,558 3,606
Total noninterest expense 141,311 5,376 146,687 12,533
Income before income taxes 79,110 4,296 83,406 9,376
Income tax expense 27,795 1,165 28,960 3,241
Income from continuing operations $51,315 $3,131 $54,446 $6,135
Pro forma weighted average common shares 120,335,297 6,473,280 126,808,577
Pro forma income per common share from
continuing operations (C) $0.43 $0.43
See notes to Pro Forma Combined Income Statement.
</TABLE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT (cont.)
Six months ended June 30, 1996
(A) (B)
CM BANK ST. BERNARD TOTAL
HOLDING ST. BERNARD BANK & PRO FORMA
COMPANY BANK & TRUST CO. HIBERNIA
Unaudited ($ in thousands, except per share data) ADJUSTMENTS TRUST CO. ADJUSTMENTS CORPORATION
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $702 (1) $1,407 $242,248
Interest on securities available for sale 5 (1) - $5,952 (2)
282 (2) (1,438)(3)
(6,303)(3) 76,732
Interest on securities held to maturity (282)(2) 5,952 (5,952)(2) 1,122
Interest on short-term investments 507 5,906
Total interest income (5,596) 7,866 (1,438) 326,008
Interest expense
Interest on deposits 3,741 128,756
Interest on short-term borrowings - 7,902
Interest on debt 1 (1) - 826
Total interest expense 1 3,741 - 137,484
Net interest income (5,597) 4,125 (1,438) 188,524
Provision for possible loan losses (7) 1,443
Net interest income after provision
for possible loan losses (5,597) 4,132 (1,438) 187,081
Noninterest income
Service charges on deposits 530 30,901
Trust fees 0 6,828
Other service, collection and exchange charges 69 17,817
Gain on sale of business lines 0 517
Other operating income 54 5,338
Securities gains (losses), net 0 1,270
Total noninterest income - 653 - 62,671
Noninterest expense
Salaries and employee benefits 1,887 83,236
Occupancy expense, net (328)(1) 359 14,655
Equipment expense (284)(1) 207 12,522
Data processing expense 21 10,474
Foreclosed property expense, net - (1,904)
Amortization of intangibles 1,847 (1) 1 765 (1)
1,718 (1) 390 (1)
(12)(1) (1)(1) 6,643
Other operating expense 599 40,763
Total noninterest expense 2,941 3,074 1,154 166,389
Income before income taxes (8,538) 1,711 (2,592) 83,363
Income tax expense (358)(1) 566 (268)(1)
(2,332)(3) (532)(3) 29,277
Income from continuing operations ($5,848) $1,145 ($1,792) $54,086
Pro forma weighted average common shares 126,808,577
Pro forma income per common share from
continuing operations (C) $0.43
See notes to Pro Forma Combined Income Statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Six months ended June 30, 1995
TEXARKANA PRO FORMA CM BANK
HIBERNIA NATIONAL HIBERNIA HOLDING
Unaudited ($ in thousands, except per share data) CORPORATION BANCSHARES, INC CORPORATION COMPANY
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $177,150 $6,849 $183,999 $14,944
Interest on securities available for sale 19,361 4,441 23,802 11,506
Interest on securities held to maturity 60,841 1,367 62,208 1,103
Interest on short-term investments 3,446 147 3,593 84
Total interest income 260,798 12,804 273,602 27,637
Interest expense
Interest on deposits 105,838 5,365 111,203 7,323
Interest on short-term borrowings 5,826 298 6,124 1,332
Interest on debt 328 401 729 1,596
Total interest expense 111,992 6,064 118,056 10,251
Net interest income 148,806 6,740 155,546 17,386
Provision for possible loan losses (140) 300 160 -
Net interest income after provision
for possible loan losses 148,946 6,440 155,386 17,386
Noninterest income
Service charges on deposits 21,865 1,242 23,107 3,198
Trust fees 5,703 377 6,080 355
Other service, collection and exchange charges 12,768 706 13,474 919
Gain on divestiture of banking offices 2,361 - 2,361 -
Gain on sale of business lines 3,064 - 3,064 -
Other operating income 3,718 353 4,071 106
Securities gains (losses), net (44) 63 19 1,911
Total noninterest income 49,435 2,741 52,176 6,489
Noninterest expense
Salaries and employee benefits 63,932 2,999 66,931 6,012
Occupancy expense, net 12,825 301 13,126 1,502
Equipment expense 9,520 409 9,929 1,098
Data processing expense 10,315 75 10,390 172
Foreclosed property expense, net (558) (41) (599) 108
Amortization of intangibles 1,853 - 1,853 -
Other operating expense 38,994 1,880 40,874 5,686
Total noninterest expense 136,881 5,623 142,504 14,578
Income before income taxes 61,500 3,558 65,058 9,297
Income tax expense 4,811 920 5,731 3,178
Income from continuing operations $56,689 $2,638 $59,327 $6,119
Pro forma weighted average common shares 121,169,411 6,473,280 127,642,691
Pro forma income per common share from
continuing operations (C) $0.47 $0.46
See notes to Pro Forma Combined Income Statement.
</TABLE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT (cont.)
Six months ended June 30, 1995
(A) (B)
CM BANK ST. BERNARD TOTAL
HOLDING ST. BERNARD BANK & PRO FORMA
COMPANY BANK & TRUST CO. HIBERNIA
Unaudited ($ in thousands, except per share data) ADJUSTMENTS TRUST CO. ADJUSTMENTS CORPORATION
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $702 (1) $1,277 $200,922
Interest on securities available for sale 5 (1) 1 $92 (1)
1,103 (2) 6,169 (2)
(6,303)(3) (1,438)(3) 34,937
Interest on securities held to maturity (1,103)(2) 6,169 (6,169)(2) 62,208
Interest on short-term investments 323 4,000
Total interest income (5,596) 7,770 (1,346) 302,067
Interest expense
Interest on deposits (246)(1) 3,717 121,997
Interest on short-term borrowings - 7,456
Interest on debt 1 (1) - 2,326
Total interest expense (245) 3,717 - 131,779
Net interest income (5,351) 4,053 (1,346) 170,288
Provision for possible loan losses - 160
Net interest income after provision
for possible loan losses (5,351) 4,053 (1,346) 170,128
Noninterest income
Service charges on deposits 497 26,802
Trust fees - 6,435
Other service, collection and exchange charges 51 14,444
Gain on divestiture of banking offices - 2,361
Gain on sale of business lines - 3,064
Other operating income 28 4,205
Securities gains (losses), net - 1,930
Total noninterest income - 576 - 59,241
Noninterest expense
Salaries and employee benefits 1,676 74,619
Occupancy expense, net (328)(1) 332 14,632
Equipment expense (284)(1) 192 10,935
Data processing expense 43 10,605
Foreclosed property expense, net - (491)
Amortization of intangibles 2,154 (1) - 893 (1)
1,718 (1) 390 (1) 7,008
Other operating expense 740 47,300
Total noninterest expense 3,260 2,983 1,283 164,608
Income before income taxes (8,611) 1,646 (2,629) 64,761
Income tax expense (379)(1) 555 (281)(1)
(2,332)(3) (532)(3) 5,940
Income from continuing operations ($5,900) $1,091 ($1,816) $58,821
Pro forma weighted average common shares 127,642,691
Pro forma income per common share from
continuing operations (C) $0.46
See notes to Pro Forma Combined Income Statement.
</TABLE>
<PAGE>
HIBERNIA CORPORATION
NOTES TO PRO FORMA COMBINED INCOME STATEMENT
Six months ended June 30, 1996 and 1995
A. Calcasieu Pro Forma Adjustments
(1) In accordance with the purchase method of accounting,
the assets and liabilities of Calcasieu were adjusted to
fair value with the applicable income tax effects of such
adjustments included as a component of Hibernia's net
deferred tax asset. The related increase (decrease) to net
income for the first six months of 1996 and 1995 resulting
from the amortization of such purchase accounting
adjustments assuming the transaction occurred on January 1,
1995 is as follows:
<TABLE>
<CAPTION>
Six months ended
June 30, 1996 June 30, 1995
(in thousands)
Debit(Credit)
<S> <C> <C> <C> <C>
Securities $ (5) $ (5)
Loans (702) (702)
Bank premises (328) (328)
Furniture & equipment (284) (284)
Interest-bearing deposits - (246)
Debt 1 1
Core deposit intangibles 1,847 2,154
Goodwill 1,718 1,718
Deferred federal tax asset
resulting from:
Securities $ 2 $ 2
Loans 246 246
Bank premises & equipment 41 41
Interest-bearing deposits - 86
Core deposit intangibles (647) (754)
Total deferred federal
tax asset (358) (379)
</TABLE>
In addition, amortization of Calcasieu's existing
identifiable intangibles was reversed.
Goodwill due to the transaction is amortized on a straight-
line basis over 25 years. Core deposit intangibles due to
the transaction are amortized on an accelerated basis over 7
years.
(2) Interest income on securities previously classified as
held to maturity was reclassified to interest income on
securities available for sale.
(3) Interest income was reduced to reflect the sale of
$201,700,000 in securities available for sale (with an
assumed yield of 6.25%) to fund the purchase of Calcasieu.
Income tax expense was adjusted accordingly to reflect the
impact of the reduction in interest income.
B. St. Bernard Pro Forma Adjustments
(1) In accordance with the purchase method of accounting,
the assets and liabilities of St. Bernard were adjusted to
fair value with the applicable income tax effects of such
adjustments included as a component of Hibernia's net
deferred tax asset. The related increase (decrease) to net
income for the first six months of 1996 and 1995 resulting
from the amortization of such purchase accounting
adjustments assuming the transaction occurred on January 1,
1995 is as follows:
<TABLE>
<CAPTION>
Six months ended
June 30, 1996 June 30, 1995
(in thousands)
Debit(Credit)
<S> <C> <C> <C> <C>
Securities $ - $ (92)
Core deposit intangibles 765 893
Goodwill 390 390
Deferred federal tax asset
resulting from:
Securities $ - $ 32
Core deposit intangibles (268) (313)
Total deferred federal
tax asset (268) (281)
</TABLE>
In addition, amortization of St. Bernard's existing
identifiable intangibles was reversed.
Goodwill due to the transaction is amortized on a straight-
line basis over 25 years. Core deposit intangibles due to
the transaction are amortized on an accelerated basis over 7
years.
(2) Interest income on securities previously classified as
held to maturity was reclassified to interest income on
securities available for sale.
(3) Interest income was reduced to reflect the sale of
$46,000,000 in securities available for sale (with an
assumed yield of 6.25%) to fund the purchase of St. Bernard.
Income tax expense was adjusted accordingly to reflect the
impact of the reduction of interest income.
C. Anticipated Savings
Hibernia expects to achieve savings through reductions in
operating costs in connection with the proposed
transactions. The savings vary depending on Hibernia's
operations in the respective geographic area. The majority
of savings will be achieved through consolidation of certain
operations. The extent to which the savings will be
achieved depends, among other things, on the regulatory
environment and economic conditions, and may be affected by
unanticipated changes in business activities, inflation and
certain external factors. Therefore, there can be no
assurance that such savings will be realized. No adjustment
has been included in the unaudited pro forma financial
statements for the anticipated savings.
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Year ended December 31, 1995
(A)
HISTORICAL RESTATED TEXARKANA PRO FORMA
HIBERNIA HIBERNIA NATIONAL HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION BANCSHARES, INC CORPORATION
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $366,716 $373,738 $15,485 $389,223
Interest on securities available for sale 37,549 38,248 8,781 47,029
Interest on securities held to maturity 112,204 116,237 2,609 118,846
Interest on short-term investments 6,706 7,061 302 7,363
Total interest income 523,175 535,284 27,177 562,461
Interest expense
Interest on deposits 209,512 215,134 11,534 226,668
Interest on short-term borrowings 13,309 13,208 583 13,791
Interest on debt 594 595 1,035 1,630
Total interest expense 223,415 228,937 13,152 242,089
Net interest income 299,760 306,347 14,025 320,372
Provision for possible loan losses - (135) 1,275 1,140
Net interest income after provision
for possible loan losses 299,760 306,482 12,750 319,232
Noninterest income
Service charges on deposits 45,009 45,957 2,848 48,805
Trust fees 11,705 11,705 792 12,497
Other service, collection and exchange charges 27,719 27,719 2,176 29,895
Gain on divestiture of banking offices 2,361 2,361 - 2,361
Gain on sale of business lines 3,402 3,402 - 3,402
Other operating income 7,362 7,516 - 7,516
Securities gains (losses), net (13) (1) 250 249
Total noninterest income 97,545 98,659 6,066 104,725
Noninterest expense
Salaries and employee benefits 128,022 130,498 5,983 136,481
Occupancy expense, net 25,379 25,888 937 26,825
Equipment expense 20,541 20,717 883 21,600
Data processing expense 18,824 19,212 154 19,366
Foreclosed property expense, net (950) (780) (11) (791)
Amortization of intangibles 3,709 3,709 - 3,709
Other operating expense 68,508 70,086 6,930 77,016
Total noninterest expense 264,033 269,330 14,876 284,206
Income before income taxes 133,272 135,811 3,940 139,751
Income tax expense 9,413 10,112 755 10,867
Income from continuing operations $123,859 $125,699 $3,185 $128,884
Pro forma weighted average common shares 117,879,746 120,644,146 6,473,280 127,117,426
Pro forma income per common share from
continuing operations (D) $1.05 $1.04 $1.01
See notes to Pro Forma Combined Income Statement.
</TABLE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT (cont.)
Year ended December 31, 1995
(B) (C)
CM BANK ST. BERNARD TOTAL
CM BANK HOLDING ST. BERNARD BANK & PRO FORMA
HOLDING COMPANY BANK & TRUST CO. HIBERNIA
Unaudited ($ in thousands, except per share data) COMPANY ADJUSTMENTS TRUST CO. ADJUSTMENTS CORPORATION
<S> <C> <C> <C> <C> <C>
Interest income
Interest and fees on loans $31,523 $1,404 (1) $2,666 $424,816
Interest on securities available for sale 20,546 10 (1) - $184 (1)
2,129 (2) 12,311 (2)
(12,606)(3) (2,875)(3) 66,728
Interest on securities held to maturity 2,129 (2,129)(2) 12,311 (12,311)(2) 118,846
Interest on short-term investments 294 753 8,410
Total interest income 54,492 (11,192) 15,730 (2,691) 618,800
Interest expense
Interest on deposits 15,423 (492)(1) 7,607 249,206
Interest on short-term borrowings 2,276 - 16,067
Interest on debt 1,661 2 (1) - 3,293
Total interest expense 19,360 (490) 7,607 - 268,566
Net interest income 35,132 (10,702) 8,123 (2,691) 350,234
Provision for possible loan losses 200 (95) 1,245
Net interest income after provision
for possible loan losses 34,932 (10,702) 8,218 (2,691) 348,989
Noninterest income
Service charges on deposits 6,642 1,017 56,464
Trust fees 740 - 13,237
Other service, collection and exchange charges 1,330 101 31,326
Gain on divestiture of banking offices - - 2,361
Gain on sale of business lines - - 3,402
Other operating income 290 59 7,865
Securities gains (losses), net 2,080 - 2,329
Total noninterest income 11,082 - 1,177 - 116,984
Noninterest expense
Salaries and employee benefits 13,058 3,447 152,986
Occupancy expense, net 2,538 (656)(1) 717 29,424
Equipment expense 2,453 (568)(1) 397 23,882
Data processing expense 349 85 19,800
Foreclosed property expense, net (59) - (850)
Amortization of intangibles 23 4,309 (1) 2 1,786 (1)
3,435 (1) 781 (1)
(23)(1) (2)(1) 14,020
Other operating expense 9,453 1,059 87,528
Total noninterest expense 27,815 6,497 5,707 2,565 326,790
Income before income taxes 18,199 (17,199) 3,688 (5,256) 139,183
Income tax expense 6,026 (761)(1) 1,168 (561)(1)
(4,664)(3) (1,064)(3) 11,011
Income from continuing operations $12,173 ($11,774) $2,520 ($3,631) $128,172
Pro forma weighted average common shares 127,117,426
Pro forma income per common share from
continuing operations (D) $1.01
See notes to Pro Forma Combined Income Statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Year ended December 31, 1994
(A) TOTAL
HISTORICAL RESTATED TEXARKANA PRO FORMA
HIBERNIA HIBERNIA NATIONAL HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION BANCSHARES, INC. CORPORATION
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $290,504 $296,233 $11,312 $307,545
Interest on securities available for sale 43,112 47,317 6,408 53,725
Interest on securities held to maturity 107,830 107,830 2,882 110,712
Interest on short-term investments 7,279 7,642 321 7,963
Total interest income 448,725 459,022 20,923 479,945
Interest expense
Interest on deposits 157,106 161,516 8,118 169,634
Interest on short-term borrowings 5,812 5,823 402 6,225
Interest on debt 2,595 2,597 373 2,970
Total interest expense 165,513 169,936 8,893 178,829
Net interest income 283,212 289,086 12,030 301,116
Provision for possible loan losses (18,069) (18,169) 300 (17,869)
Net interest income after provision
for possible loan losses 301,281 307,255 11,730 318,985
Noninterest income
Service charges on deposits 44,515 12,420 1,820 14,240
Trust fees 12,420 45,319 672 45,991
Other service, collection and exchange charges 21,067 21,126 1,798 22,924
Other operating income 11,389 11,692 0 11,692
Securities gains (losses), net (2,451) (2,364) 695 (1,669)
Total noninterest income 86,940 88,193 4,985 93,178
Noninterest expense
Salaries and employee benefits 125,426 127,703 5,299 133,002
Occupancy expense, net 27,060 27,420 918 28,338
Equipment expense 16,894 17,069 802 17,871
Data processing expense 21,092 21,167 92 21,259
Foreclosed property expense, net (7,120) (7,112) 48 (7,064)
Amortization of intangibles 23,231 23,231 0 23,231
Other operating expense 81,060 82,789 3,492 86,281
Total noninterest expense 287,643 292,267 10,651 302,918
Income before income taxes 100,578 103,181 6,064 109,245
Income tax expense 5,558 6,275 1,510 7,785
Income from continuing operations $95,020 $96,906 $4,554 $101,460
Pro forma weighted average common shares 118,594,923 121,359,323 6,473,280 127,832,603
Pro forma income per common share from
continuing operations (D) $0.80 $0.80 $0.79
See notes to Pro Forma Combined Income Statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIBERNIA CORPORATION
PRO FORMA COMBINED INCOME STATEMENT
Year ended December 31, 1993
(A) TOTAL
HISTORICAL RESTATED TEXARKANA PRO FORMA
HIBERNIA HIBERNIA NATIONAL HIBERNIA
Unaudited ($ in thousands, except per share data) CORPORATION CORPORATION BANCSHARES, INC. CORPORATION
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $265,169 $270,339 $10,542 $280,881
Interest on securities available for sale 48,294 52,516 - 52,516
Interest on securities held to maturity 104,546 104,546 8,582 113,128
Interest on short-term investments 10,739 11,144 464 11,608
Total interest income 428,748 438,545 19,588 458,133
Interest expense
Interest on deposits 141,976 145,937 7,372 153,309
Interest on short-term borrowings 4,043 4,060 351 4,411
Interest on debt 4,407 4,409 14 4,423
Total interest expense 150,426 154,406 7,737 162,143
Net interest income 278,322 284,139 11,851 295,990
Provision for possible loan losses (3,246) (3,236) 450 (2,786)
Net interest income after provision
for possible loan losses 281,568 287,375 11,401 298,776
Noninterest income
Service charges on deposits 41,211 41,911 1,365 43,276
Trust fees 13,314 13,314 634 13,948
Other service, collection and exchange charges 20,495 20,547 2,149 22,696
Other operating income 10,501 10,718 - 10,718
Securities gains (losses), net 285 378 441 819
Total noninterest income 85,806 86,868 4,589 91,457
Noninterest expense
Salaries and employee benefits 114,301 116,508 5,133 121,641
Occupancy expense, net 25,973 26,203 938 27,141
Equipment expense 14,369 14,671 813 15,484
Data processing expense 18,352 18,422 63 18,485
Foreclosed property expense, net 9,163 9,171 166 9,337
Amortization of intangibles 8,446 8,446 - 8,446
Provision for data processing enhancements 11,991 11,991 - 11,991
Other operating expense 86,810 88,418 3,291 91,709
Total noninterest expense 289,405 293,830 10,404 304,234
Income before income taxes 77,969 80,413 5,586 85,999
Income tax expense 11,266 11,887 1,405 13,292
Income from continuing operations $66,703 $68,526 $4,181 $72,707
Pro forma weighted average common shares 118,023,185 120,787,585 6,473,280 127,260,865
Pro forma income per common share from
continuing operations (D) $0.57 $0.57 $0.57
See notes to Pro Forma Combined Income Statement.
</TABLE>
<PAGE>
HIBERNIA CORPORATION
NOTES TO PRO FORMA COMBINED INCOME STATEMENT
Years ended December 31, 1995, 1994 and 1993
A. Restated Hibernia Corporation
On January 1, 1996, Hibernia Corporation merged with FNB
Bancshares, Inc. ("FNB") in a transaction accounted for as a
pooling of interests. Hibernia issued 889,640 shares of
Hibernia Common Stock, with an aggregate market value at the
date of the merger of $9,307,859 based on a market value of
$10.4625 per share, to effect the merger. Based upon the
9,670 shares of FNB Common Stock outstanding on the record
date, the exchange rate in the merger was 92.0. The stated
value of Hibernia Common Stock is $1.92 per share. In
accordance with the pooling of interests method of
accounting, the historical results of operations of the
merged companies are combined.
On January 15, 1996, Hibernia Corporation merged with Bunkie
Bancshares, Inc. ("Bunkie") in a transaction accounted for
as a pooling of interests. Hibernia issued 1,874,760 shares
of Hibernia Common Stock, with an aggregate market value at
the date of the merger of $19,145,987 based on a market
value of $10.2125 per share, to effect the merger. Based
upon the 11,006 shares of Bunkie Common Stock outstanding on
the record date, the exchange rate in the merger was
170.3398. The stated value of Hibernia Common Stock is
$1.92 per share. In accordance with the pooling of
interests method of accounting, the historical results of
operations of the merged companies are combined.
B. Calcasieu Pro Forma Adjustments
(1) In accordance with the purchase method of accounting,
the assets and liabilities of Calcasieu were adjusted to
fair value with the applicable income tax effects of such
adjustments included as a component of Hibernia's net
deferred tax asset. The related increase (decrease) to net
income for the first year after the merger resulting from
the amortization of such purchase accounting adjustments
assuming the transaction occurred on January 1, 1995 is as
follows:
<TABLE>
<CAPTION>
Year ended
December 31, 1995
(in thousands)
Debit(Credit)
<S> <C> <C>
Securities $ (10)
Loans (1,404)
Bank premises (656)
Furniture & equipment (568)
Interest-bearing deposits (492)
Debt 2
Core deposit intangibles 4,309
Goodwill 3,435
Deferred federal tax asset
resulting from:
Securities $ 3
Loans 492
Bank premises & equipment 81
Interest-bearing deposits 172
Debt (1)
Core deposit intangibles (1,508)
Total deferred federal
tax asset (761)
</TABLE>
In addition, amortization of Calcasieu's existing
identifiable intangibles was reversed.
Goodwill due to the transaction is amortized on a straight-
line basis over 25 years. Core deposit intangibles due to
the transaction are amortized on an accelerated basis over 7
years.
(2) Interest income on securities previously classified as
held to maturity was reclassified to interest income on
securities available for sale.
(3) Interest income was reduced to reflect the sale of
$201,700,000 in investment securities (with an assumed yield
of 6.25%) to fund the purchase of Calcasieu. Income tax
expense was adjusted accordingly to reflect the impact of
the reduction in interest income.
C. St. Bernard Pro Forma Adjustments
(1) In accordance with the purchase method of accounting,
the assets and liabilities of St. Bernard were adjusted to
fair value with the applicable income tax effects of such
adjustments included as a component of Hibernia's net
deferred tax asset. The related increase (decrease) to net
income for the first year after the merger resulting from
the amortization of such purchase accounting adjustments
assuming the transaction occurred on January 1, 1995 is as
follows:
<TABLE>
<CAPTION>
Year ended
December 31, 1995
(in thousands)
Debit(Credit)
<S> <C> <C>
Securities $ (184)
Core deposit intangibles 1,786
Goodwill 781
Deferred federal tax asset
resulting from:
Securities $ 64
Core deposit intangibles (625)
Total deferred federal
tax asset (561)
</TABLE>
In addition, amortization of St. Bernard's existing
identifiable intangibles was reversed.
Goodwill due to the transaction is amortized on a straight-
line basis over 25 years. Core deposit intangibles due to
the transaction are amortized on an accelerated basis over 7
years.
(2) Interest income on securities previously classified as
held to maturity will be reclassified to interest income on
securities available for sale.
(3) Interest income was reduced to reflect the sale of
$46,000,000 in investment securities (with an assumed yield
of 6.25%) to fund the purchase of St. Bernard. Income tax
expense will be adjusted accordingly to reflect the impact
of the reduction in interest income.
D. Anticipated Savings
Hibernia expects to achieve savings through reductions in
operating costs in connection with the proposed
transactions. The savings vary depending on Hibernia's
operations in the respective geographic area. The majority
of savings will be achieved through consolidation of certain
operations. The extent to which the savings will be
achieved depends, among other things, on the regulatory
environment and economic conditions, and may be affected by
unanticipated changes in business activities, inflation and
certain external factors. 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.
CERTAIN INFORMATION CONCERNING TEXARKANA
Description of Business
Texarkana is a bank holding company organized in April of
1974 as a business corporation under the laws of the State of
Texas for the purpose of acquiring 100% of the stock of the Bank.
Texarkana is a registered bank holding company subject to
regulation under the BHCA. In February of 1995, Texarkana
organized TNB Holding Company, a Delaware Corporation, and
contributed to it 100% of the stock of the Bank in exchange for
100% ownership of this intermediate bank holding company, which
is also registered and subject to regulation under the BHCA. At
June 30, 1996, Texarkana had total consolidated assets of $401.5
million, deposits of $335.6 million and shareholders' equity of
$37.1 million. Texarkana derives all of its consolidated revenue
and income from the banking and banking-related operations of the
Bank. Texarkana's executive offices are located at 2318 Richmond
Road, Texarkana, Texas 75503.
The Bank, a national banking association originated in 1887,
conducts a full service commercial banking and trust business
serving businesses, individuals, industry, public and
governmental organizations in the Texarkana community and
surrounding area from nine locations in Bowie County, Texas and
one in Cass County, Texas. The Bank offers an array of banking
services to individuals and businesses, including demand
accounts, NOW accounts, certificates of deposit, money market
accounts, savings, and individual retirement accounts, and
provides trust services, safe deposit boxes, night depository,
automated teller machines, and drive-in banking services. The
Bank's lending activities consist principally of real estate,
consumer and commercial loans. The Bank also provides depository
and related financial services to commercial, industrial,
financial and governmental customers. The Bank's deposits
represent a cross-section of the area's economy and there is no
material concentration of deposits from any single customer or
group of customers. No significant portion of the Bank's loans
is concentrated within a single industry or group of related
industries. There are no material seasonal factors that would
have an adverse effect on Texarkana or the Bank. Residential
mortgage loans are originated and serviced through the Bank's
wholly owned subsidiary Texarkana National Mortgage Co., Inc.
(TNMC), a Texas Corporation. TNMC originates, sells to and
services for permanent investors, FHA, VA and conventional home
mortgage loans in Northeast Texas and Southwest Arkansas.
Supervision and Regulation
As a bank holding company, Texarkana is subject to the
supervision of and regulations adopted by the Federal Reserve
Board pursuant to the BHCA. Texarkana is required under the BHCA
to file quarterly and annual reports with the Federal Reserve
Board and such additional information as the Federal Reserve
Board may require. The Federal Reserve Board may also make
examinations of Texarkana and the Bank. Under the BHCA,
Texarkana also is generally prohibited, with certain exceptions,
from engaging in or acquiring control of any company that is
engaged in non-banking activities or from engaging in certain tie-
in arrangements in connection with any extension of credit or
provision of any property or services.
The Bank is chartered under the National Bank Act and is
subject to the supervision and regulation of, and is examined by,
the Office of the Comptroller of the Currency ("OCC"). The Bank
is a member of the Federal Reserve System and the Federal Deposit
Insurance Corporation. Both of those agencies further regulate
and examine their respective member banks. The supervision and
regulation of the Bank by all these authorities is intended to
protect the interests of depositors rather than shareholders.
The Bank's deposits are insured by the Bank Insurance Fund
("BIF") of the FDIC, which insures up to $100,000 per each
insured deposit account. The Bank is currently paying the
minimum annual insurance premium of $2,000. As of January 1,
1993 the FDIC implemented a traditional risk-related insurance
assessment system whereby the FDIC places each insured bank in
one of nine risk categories based on its level of capital and
other relevant information. Under the system, there is a twenty
seven basis point spread between the highest and lowest
assessment, with the strongest banks (including the Bank) paying
an insurance premium equal to .00% of deposits and the weakest
banks paying a premium of .27% of deposits. The FDIC Board of
Directors has the flexibility to adjust the entire BIF assessment
rate schedule twice a year without seeking public comment first,
but only within a range of five cents per $100 above or below the
premium schedule adopted. Changes in the rate schedule outside
the five cent range above or below the current schedule will be
made by the FDIC Board of Directors only after a full rule making
with opportunity for public comment. Congress recently adopted,
and the President signed into law, an act requiring BIF-insured
institutions, such as the Bank, to pay a portion of the interest
due on bonds that were issued by the Financing Corporation
("FICO") to help shore up the ailing Federal Savings and Loan
Insurance Corporation in 1987. The amount of FICO debt service
to be paid by all BIF-insured institutions is approximately
$233,000,000 per year, or .0129 per $100.00 of domestic deposits
from 1997 until the year 2000 when the obligation of BIF-insured
institutions increases to approximately $604,000,000, or $.0243
per $100.00 of domestic deposits per year through the year 2025.
The operations of the Bank, and therefore Texarkana, are
affected significantly by the actions of the Federal Reserve
Board intended to control the money supply and credit
availability in order to influence the national economy.
Competition
The Bank's general market area is the Texarkana
Metropolitan Statistical Area (MSA) which includes Bowie and Cass
Counties in Texas and Miller County in Arkansas. This area
covers approximately 2,450 square miles of land area and had an
estimated 1992 population of 152,205 people encompassing 57,082
households. There are approximately nine banks, three savings
and loans associations and several credit unions within the
market area. The Bank competes with these local institutions
and, especially as to larger accounts, with banks and bank
holding companies located outside the MSA.
Under Texas law, state banks are permitted to open branches
throughout the State of Texas and, as a result, all national
banks domiciled in Texas are permitted to establish branches on a
statewide basis. Under the Riegle-Neal Interstate Banking and
Branching Act of 1994, which expanded the authority of bank
holding companies and banks to engage in interstate bank
acquisitions and interstate branching each state has the option
of "opting out" of the interstate branching (but not banking)
scheme, which the Texas Legislature did during the 1995 session.
Interstate banking was effective September 29, 1995, and
interstate branching would have become effective in Texas in June
of 1997, if Texas had not "opted out". The Texas legislature's
"opt out" legislation prohibiting interstate branching is
effective until September 2, 1999.
A number of holding companies with greater resources than
those of Texarkana have acquired banks or holding companies or
established branches that operate in the Bank's primary market
area and this process of consolidation is continuing.
Texarkana's Board believes that the size of these institutions
allows certain economies of scale that permit their operation on
a narrower profit margin than that of the Bank. Competition
among banks for loan customers is generally governed by such
factors as loan terms, including interest charges, restrictions
on borrowers and compensating balances, and other services
offered by such banks. The Bank competes with numerous other
commercial banks, savings and loan associations and credit
unions for customer deposits, as well as with a broad range of
financial institutions in consumer and commercial lending
activities. In addition to thrift institutions, other businesses
in the financial service industry compete with the Bank for
retail and commercial deposit funds and for retail and commercial
loan business. Competition for loans and deposits is intense
among financial institutions in the Bank's market area.
Employees
Texarkana has in the aggregate, approximately 211 full and
part time employees. None of such employees are subject to a
collective bargaining agreement. Management of Texarkana
considers its relationship with such employees to be good.
Properties
Central Mall Branch
The executive offices of Texarkana are located in the
Central Mall Branch which is located at the intersection of
Richmond Road and Interstate Highway 30 in northwest Texarkana,
adjacent to the Central Mall Shopping Center. The first floor
contains 10,000 square feet and is occupied by full service
banking facilities and TNMC. The second floor contains 8,000
square feet which is occupied by executive offices and support
personnel. Six drive-in banking lanes, one drive-up automatic
teller machine and parking for approximately 75 cars are provided
at this location. This building is sited on approximately three
acres. The Bank also owns one acre located adjacent to the
Central Mall branch, fronting Mall Drive. This property is used
for additional parking. This location is owned by the Bank, free
of any mortgage.
Downtown Office
The Bank's legal home office is located as 100 Broad Street
in downtown Texarkana, Texas. It consists of an eight story
building originally constructed in 1913. Its size was more than
doubled in 1924 by the addition of an eight-story annex next to
the building. In 1968 an adjacent three-story building was
leased and remodeled as part of the banking facility with the
addition of two stories on the leased building. The entire bank
building facility contains approximately 52,000 square feet of
floor space. The Bank occupies the first and fourth floors, the
mezzanine and a portion of the second, third and fifth floors
with the remainder of the building being leased to various
tenants. The portion of the building originally leased by the
Bank was subsequently purchased by the Bank at the expiration of
the lease.
Located on the same downtown block is a two-story building
that is used for storage, an adjacent multi-level parking garage
and parking lot. These properties are owned by the Bank and not
subject to any mortgage.
Downtown Drive-In
The facility, located on the northeast corner of Fifth and
Main Streets in downtown Texarkana, Texas is a one story, 1,250
square foot, brick and concrete structure with six drive-in
banking lanes. The Downtown Drive-In was completed in April of
1978. All of the property occupied by the Bank is owned by it
free of any mortgage.
Texas Boulevard Branch
The Texas Boulevard branch is a one story structure
completed in March of 1974. The building is constructed of brick
and contains approximately 5,300 square feet of floor space.
Four drive-in banking lanes are incorporated into the building
and two parking lots for approximately 16 cars each are located
adjacent to the building. The parking lot is also the site of a
drive-in automated teller machine. The bank building and
improvements owned by the Bank are located on a lot of
approximately one acre, and are not subject to any mortgage.
Liberty Eylau Branch
The Liberty Eylau branch offices are located at the
intersection of U.S. Highway 59 South and Loop 151 in Texarkana,
Texas. This facility was completed in September, 1978. This one-
story brick and concrete structure contains 4,200 square feet and
has three drive-in banking lanes. This location is owned by the
Bank, and is free of any mortgages.
Nash Branch
The offices of the Nash branch are located at the
intersection of U.S. Highway 82 and Kings Highway in Nash, Texas.
In December of 1987, construction of the one story building was
completed. The structure contains approximately 2,740 square
feet of floor space, and has two drive-in banking lanes. The
building is located on approximately one-half acre of land. The
paved parking area will accommodate 15 cars. This location is
owned by the Bank free of any mortgages.
Wake Village Branch
The offices of the Wake Village branch are located on
Redwater Road in Wake Village, Texas. In March of 1988,
construction of the one-story brick building was completed. The
structure contains approximately 2,740 square feet of floor
space, and has two drive-in banking lanes. The building is
located on approximately one-half acre of land. The Bank owns
this location free of any mortgages.
Atlanta Branch
The offices of the Atlanta, Texas branch in Cass County are
located at 107 Loop 59. This office opened in July of 1996 in a
leased modular building with one drive-in lane. The building is
located on one and one-half acres owned by the Bank free of any
mortgages.
Super Wal-Mart Branch
Opened in June of 1995, The Super Wal-Mart branch is located
within the Super Wal-Mart at the intersection of New Boston Road
and Loop 151. This branch, containing approximately 500 square
feet, is leased from Wal-Mart, with the Bank owning the leasehold
improvements.
Central Mall Kiosk Branch
Lending, teller service, new account services and an ATM are
provided from approximately 200 square feet leased inside Central
Mall. The Bank owns the leasehold improvements.
ATMs
The Bank operates fifteen 24-hour automated teller machines
(ATMs). Eight ATM's are located at branch locations while seven
ATM's are off-premise locations occupying leased premises.
Legal Proceedings
Texarkana and the Bank normally are parties to and have
pending routine litigation arising from their regular activities
of furnishing financial services, including providing credit and
collecting secured and unsecured indebtedness. In some
instances, such litigation involves claims or counterclaims
against Texarkana and the Bank or either of them. As of
September 30, 1996, neither Texarkana nor the Bank had any
litigation pending, other than ordinary routine litigation
incidental to their business that was not material in amount with
respect to Texarkana assets on a consolidated basis.
Market Prices and Dividends
Market Prices. Texarkana's 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 Texarkana's Common
Stock.
At September 30, 1996, there were 253 shareholders of record
of Texarkana's Common Stock.
Cash Dividends. Texarkana declared dividends of $2.00 per
share and $1.20 per share in 1995 and 1994 respectively.
Texarkana has declared dividends of $1.05 per share as of
September 30, 1996. Pursuant to the Agreement, the aggregate of
all dividends for 1996 shall not exceed $2.00 per share. The
payment of dividends by the Bank, which will be the source of
any dividends paid by Texarkana on its shares, is subject to
certain legal restrictions applicable to all national banks. The
National Bank Act requires approval of the OCC for the payment of
any dividend by the Bank if the total of all dividends,
including any proposed dividend, declared by the Board of
Directors of the Bank in any calendar year exceeds the sum of the
net profits and retained net profits, as defined by the OCC, for
the current year plus the preceding two years, less any required
transfers to surplus. Federal bank regulatory authorities also
have the power under the Financial Institutions Supervisory Act
to prohibit a bank from engaging in an unsafe or unsound
practice. The payment of a dividend by a bank could, depending
on the financial condition of the bank and other factors, be
deemed an unsafe or unsound practice.
Security Ownership of Principal Shareholders and Management
Ownership of Principal Shareholders
The following table sets forth information concerning all
persons known to Texarkana to be beneficial owners, directly or
indirectly, of more than 5% of the outstanding shares of
Texarkana Common Stock, Texarkana's only class of voting
securities, as of the Record Date. Unless otherwise indicated,
the named persons have direct beneficial ownership of the shares
with sole voting and investment power.
Name and Address Amount and Percent
of Beneficial Owner Nature of of Class
Beneficial
Ownership
Texarkana National 133,857 17.53%
Bancshares Employee
Stock Ownership
Plan
P. O. Box 451
Texarkana, TX 75505
Cede and Company 99,739 (1) 13.06%
Box #20
Bowling Green Street
New York, New York 10274
OFC - A Partnership 56,622 7.41%
P. O. Box 5608
Texarkana, TX 75505
James R. Murphy 53,673 (2) 7.03%
P. O. Box 451
Texarkana, TX 75504
Joann Little 44,402 (3) 5.81%
1615 South Park Road
Texarkana, TX 75503
(1) Management of Texarkana believes that the majority of
these shares are owned by an individual shareholder who is not an
executive officer or a member of the Board of Directors of
Texarkana or the Bank.
(2) Includes 3,588 shares allocated to stock account within
Texarkana National Bancshares Employee Stock Ownership Plan.
(3) Includes 7,768 shares in the name of her spouse, Porter
Little, Jr.
Ownership of Management.
The following table sets forth information concerning the
shares of Texarkana Common Stock beneficially owned, directly or
indirectly, by each director and executive officer of Texarkana,
and all directors and executive officers as a group as of
September 30, 1996. Unless otherwise indicated, the named
persons have direct beneficial ownership of the shares with sole
voting and investment power.
Name and Address Amount and Percent
of Beneficial Owner Nature of of Class
Beneficial
Ownership
Borden E. Bell, Jr. 15,200 1.99%
Shirley M. Brooks 1,676 (1) .22%
Guy Dickert, Jr. 14,610 (2) 1.91%
Haydon T. Fuller 7,060 (3) .92%
Robert G. Fuller 32,573 (4) 4.26%
H. Whitmarsh Holman 2,812 (5) .37%
James R. Murphy 53,673 (6) 7.03%
Eddie E. Robbins 7,876 1.03%
Keith E. Chambers 11,322 (7) 1.48%
Martha Wisdom 2,470 (8) .32%
All directors and 149,272 19.55%
officers as a
group (10 persons)
(1) Includes 532 shares in name of spouse.
(2) Includes 206 shares in name of spouse and 8,942 shares
allocated to stock account within Texarkana National Bancshares
Employee Stock Ownership Plan.
(3) Includes 5,734 shares allocated to stock account within
Texarkana National Bancshares Employee Stock Ownership Plan.
(4) Includes 600 shares as custodian for minor children and
5,893 shares allocated to stock account within the Texarkana
National Bancshares Employee Stock Ownership Plan.
(5) Includes 876 shares in name of spouse.
(6) Includes 3,588 shares allocated to stock account within
Texarkana National Bancshares Employee Stock Ownership Plan.
(7) Includes 5,958 shares allocated to stock account within
Texarkana National Bancshares Employee Stock Ownership Plan.
(8) Includes 1,470 shares allocated to stock account within
Texarkana National Bancshares Employee Stock Ownership Plan.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
TEXARKANA FOR THE YEARS ENDED
DECEMBER 31, 1995 AND DECEMBER 31, 1994
The following discussion provides certain information concerning
the financial condition and results of operations of Texarkana
for the two years ended December 31, 1995 and 1994. The
financial position and results of operations of Texarkana
resulted primarily from operations at its banking subsidiary, the
Bank. Management's discussion should be read in conjunction with
the Texarkana financial statements and accompanying notes
presented elsewhere in this Proxy Statement-Prospectus.
OVERVIEW
Texarkana reported net income for 1995 of $3,185,672, a decrease
of 30.1% from net income of $4,554,220 for 1994. Returns on
average assets and average equity for 1995 were .86% and 9.05%
compared with 1.38% and 14.57% for 1994. The decrease in net
income for 1995 is due to expenses associated with a legal
judgment rendered against the Bank concerning the administration
of a trust account. These expenses increased $3,319,076 from
1994 to 1995.
Texarkana's total assets at December 31, 1995 were $413,382,063,
an increase of 18.19% from December 31, 1994. Loans increased
$58,119,808 from December 31, 1994 to December 31, 1995 due
principally to growth in consumer and commercial loans. Total
deposits at December 31, 1995 of $340,014,358 were up 16.0%
compared with December 31, 1994. This increase is attributed to
the growth of consumer time deposits.
RESULTS OF OPERATIONS
Net Interest Income. Tax equivalent net interest income for 1995
was $15,070,000, a $2,051,000 or 15.75% increase from 1994. This
increase was due to an increase in earning assets and a higher
net interest margin. Table 1 below presents the average balance
sheets, interest income and expense, and average yields or rates
for 1995 and 1994. Table 2 below presents an analysis of the
changes in tax-equivalent net interest income between 1994 and
1995.
The following table sets forth certain information concerning the
average balances, interest income (on a fully tax equivalent
basis), interest expense, and average rates on Texarkana's
interest-earning assets and interest-bearing liabilities for the
years indicated (Dollars in Thousands).
<TABLE>
Table 1
December 31,
1995 1994
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
<S> <C> <C> <C> <C> <C> <C>
Earnings assets:
Loans (before
allowance for
loan losses) $160,516 $15,508 9.66% $128,170 $11,340 8.85%
Investment
securities:
Taxable securities 142,658 9,401 6.59% 134,043 7,421 5.54%
Tax-exempt
securities 38,588 3,004 7.78% 35,621 2,824 7.93%
Total investment
securities 181,246 12,405 6.84% 169,664 10,245 6.04%
Federal funds sold
and securities
purchased under
agreement to resell 5,249 309 5.89% 8,500 326 3.84%
Total earnings
assets $347,011 28,222 8.13% $306,334 21,191 7.15%
Interest bearing
liabilities:
Deposits $265,683 11,534 4.34% $241,289 8,118 3.36%
Federal funds sold
and securities sold
under agreement to
repurchase 10,179 583 5.73% 9,537 402 4.22%
Notes payable 16,905 1.035 6.12% 8,137 372 4.57%
Total interest
bearing liabilities $292,767 13,512 4.49% $258,963 8,892 3.43%
Net interest income $15,070 $13,019
Net yield on
earnings assets 4.34% 4.25%
</TABLE>
The following table sets forth for the periods indicated changes
in tax equivalent net interest income between 1994 and 1995 for
each major category of interest-earning assets and interest-
bearing liabilities attributable to changes in average volumes
and rates.
Table 2
<TABLE>
CHANGES IN TAX EQUIVALENT NET INTEREST INCOME
(Dollars in Thousands)
1995 Compared with 1994)
Increase (Decrease) Due to Change In:
Volume Rate Total
Income earned on:
<S> <C> <C> <C>
Loans $ 2,863 $ 1,305 $ 4,168
Taxable securities 477 1,503 1,980
Tax-exempt securities 235 (55) 180
Short term investments (125) 108 (17)
Total 3,450 2,861 6,311
Interest paid on:
Deposits 820 2,596 3,416
Federal funds purchased and
securities sold under
agreement to repurchase 27 154 181
Notes payable 401 262 663
Total 1,248 3,012 4,260
Net interest income $ 2,202 $ (151) $ 2,051
</TABLE>
Changes not solely due to volume or rate changes are allocated to
rate.
Interest Rate Sensitivity. Interest rate risk is the potential
impact on net interest income due to changes in interest rates in
any given time frame and the opportunity to reprice interest-
earning assets and interest-bearing liabilities. Management uses
simulation models to estimate the effect of significant interest
rate changes on net interest income and the fair market value of
securities available for sale. Management may alter the mix of
floating and fixed-rate assets and liabilities, change loan and
deposit pricing schedules and adjust maturities through sales and
purchases of securities available for sale as a means of limiting
interest rate risk to an acceptable level. Management also has
entered into, with the assistance of a fee based investment
advisor, a combination of derivative financial instruments,
including interest rate swaps, caps and floor agreements to hedge
against exposures to changes in interest rates on the market
value volatility of the available for sale debt securities
portfolio.
Provision for Loan Losses. The provision for possible loan
losses is the amount that is added to Texarkana's allowance for
loan losses, by a charge against earnings, in order to maintain a
balance in the allowance for loan losses that is deemed by
management to be adequate to absorb the inherent risk of future
loan losses in Texarkana's loan portfolio. The amount of the
provision is dependent upon many factors, including management's
evaluation of historical loan loss experience in relation to
outstanding loans, the existing level of the allowance, reviews
of loan quality, loan growth, changes in the composition of the
loan portfolio, general economic factors, the financial condition
of the borrowers, their ability to repay the loan and the value
and liquidity of collateral.
Texarkana's 1995 provision for loan losses of $1,275,000 was
increased $975,000 from 1994. The allowance for loan losses of
$2,838,043 was 1.50% of net loans outstanding at December 31,
1995. The allowance for loan losses at December 31, 1994 was
$2,048,564 or 1.53% of net loans outstanding.
Non-Interest Income. Texarkana's non-interest income for 1995
increased 21.7% from 1994 due to increases in service charges on
deposit accounts from increased account activity. Increases in
mortgage loan activities during 1995 also contributed to the
increase.
Non-Interest Expense. Total non-interest expense for 1995
increased $4,224,782 or 39.7% from 1994. Approximately 75% of
this increase is attributed to the charge to earnings as a result
of a jury verdict rendered against the Bank in a very complex
litigation matter initiated in 1994. This legal dispute involved
a trust account that was administered by the Bank since 1955 and
was invested entirely in U. S. Government bonds in accordance
with the trust agreement. The litigation centered on a claim by
the beneficiaries of the trust that the Bank should have invested
in long term U. S. Government bonds during the early 1980's when
interest rates and inflation reached their highest level in
history. The presumed loss of income alleged by the
beneficiaries resulted in a verdict against the Bank.
Income Taxes. Texarkana's ratio of taxable income to total
income before income taxes declined from 1995 to 1994, resulting
in a decrease in the effective tax rate from 24.9% in 1994 to
19.2% in 1995.
FINANCIAL CONDITION
Total Assets. At December 31, 1995 total consolidated assets
were $413,382,063 an increase of $63,560,692 or 18.2% from
December 31, 1994. This increase in total assets is due to
continued growth in total deposits and an increase in the use of
borrowed funds to fund a larger portfolio of securities available
for sale.
Investment Securities. Texarkana adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
and Debt Securities" ("SFAS 115"), as of January 1, 1994. SFAS
115 addresses the accounting and reporting for investments in
equity securities that have readily determinable fair value and
for all investments in debt securities and requires
classification of securities as trading, available for sale or
held to maturity. Management determines the classification of
securities when they are purchased. Securities which Texarkana
has the intent and ability to hold to maturity are classified as
held to maturity and are stated at cost, adjusted for
amortization of premiums and accretion of discounts. Securities
which may be sold in response to interest rates, liquidity needs
or other factors are classified as available for sale. These
securities are reflected at fair value, and net unrealized gains
or losses are reflected as a separate component of shareholders'
equity, net of income tax effects.
The composition of Texarkana's investment portfolio directly
reflects Texarkana's investment strategy of maximizing portfolio
yields subject to risk and liquidity considerations. The
composition, amortized cost and estimated fair value of
investment securities at December 31, 1995 and 1994 were as
follows: (Dollars in Thousands)
Amortized Estimated
Cost Fair Value
At December 31, 1995:
Available-for-Sale
State and political subdivisions $ 1,392 $ 1,338
Federal agencies 1,999 2,022
Mortgage-backed securities 124,190 125,932
Other debt securities 1,326 1,341
Total debt securities 128,907 130,633
Equity securities 12,775 12,732
Derivative financial instruments 1,945 103
$143,627 $143,468
Held-to-Maturity
U. S. Government $ 6,525 $ 6,563
State and political subdivisions 36,109 37,414
Federal agencies 1,004 1,003
$ 43,638 $ 44,980
Amortized Estimated
Cost Fair Value
At December 31, 1994
Available-for-Sale
Federal agencies 22,363 21,803
Mortgage-backed securities 96,139 90,860
Other debt securities 4,703 4,488
Total debt securities 123,205 117,151
Equity securities 12,176 12,174
Derivative financial instruments 1,331 5,096
$136,712 $134,421
Held-to-Maturity
U. S. Government $ 9,538 $ 9,243
State and political subdivisions 36,571 34,817
Federal agencies 3,500 3,380
Mortgage-backed securities 358 351
Other debt securities 1,300 1,403
$ 51,267 $ 49,194
The amortized cost and estimated fair value of debt securities at
December 31, 1995, by contractual maturities, are shown below.
Actual maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with
or without call or prepayment penalties. (Dollars in Thousands)
Available-for- Held-to
Sale Securities Maturity Securities
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
Due in one year
or less $ - $ - $ 4,241 $ 4,247
Due after one year
through five
years 1,326 1,341 8,448 8,663
Due after five
years through
ten years 1,999 2,022 23,757 24,807
Due after ten
years 1,392 1,338 7,192 7,262
4,717 4,701 43,638 44,979
Mortgage-backed
securities 124,190 125,932 - -
$128,907 $130,633 $ 43,638 $ 44,979
Loans. Texarkana engages in real estate lending through real
estate mortgage and construction lending, and commercial and
consumer lending. The specific underwriting criteria for each
major loan category is outlined in detail in the formal written
loan policy and is approved by the Board of Directors. In
general, each loan is evaluated based on, among other things,
character and leverage capacity of the borrower, capital and
investment in a particular property, if applicable, cash flow,
collateral, market conditions for the borrower's business or
project and prevailing economic trends and conditions. The loan
policies of the Bank, including the underwriting criteria for
major loan categories, are adjusted periodically with each change
approved by the Bank's Board of Directors. New criteria and new
policies are the result of regulatory changes, the experience of
the existing portfolio, financial and market conditions and
competition in the Bank's primary market. The Bank's Board of
Directors weighs each new criteria after considering the
foregoing factors and in light of the overall financial condition
and performance of the Bank. The Bank's underwriting criteria
are routinely reviewed by management and external examiners
consistent with Bank policy and banking regulations.
The table below sets forth the type and amount of Texarkana's
loans, net of unearned discount, at December 31, 1995 and 1994:
(Dollars in Thousands)
December 31,
1995 1994
Commercial, financial and agricultural
loans, not secured by real estate $ 56,270 $ 30,836
Real estate construction loans 14,333 8,476
Real estate mortgage loans 67,406 57,864
Installment loans to consumers,
not secured by real estate 55,713 38,203
Other loans 1,987 2,210
$195,709 $137,589
As of December 31, 1995, the Bank had no major concentrations of
its loan portfolio to any one customer or in any one business or
industry classification. Loans have increased $58,120,000 or 42%
from December 31, 1994 to December 31, 1995. This loan growth
was primarily in commercial and consumer loans with some increase
in real estate lending also.
The percentage of loans in each category to total loans for each
of the periods indicated is shown below:
December 31,
1995 1994
Real estate loans:
Construction 7.32% 6.16%
Mortgage 34.44 42.05
Total real estate loans 41.76 48.21
Commercial, financial and agricultural 28.75 22.41
Installment 28.47 27.77
Other 1.02 1.61
100.00% 100.00%
The maturity schedule and rate structure of Texarkana's loan
portfolio has an impact on Texarkana's ability to meet its
liquidity demands and respond favorably to changes in interest
rates. At December 31, 1995, 18% of Texarkana's total loans were
scheduled to mature within one year or less and 27% of
Texarkana's total loans had floating or adjustable interest
rates. The following table provides information concerning loan
portfolio maturity, based on remaining scheduled repayments of
principal, by type of loan. Real estate loans are included in
either the commercial or installment classification depending
upon the use of the real estate pledged as collateral and are
aged accordingly. (Dollars in Thousands)
At December 31, 1995:
Maturity or Earliest Reporting
Over One
One Year Through Five Over Five
or Less Years Years Total
Commercial, financial
and agricultural
loans:
Fixed rate $14,398 $22,287 $ 53 $ 36,738
Variable rate 19,349 - - 19,349
Real estate loans:
Fixed rate 12,047 28,830 7,445 48,322
Variable rate 33,340 - - 33,340
Installment loans:
Fixed rate 6,189 47,962 804 54,955
Variable rate 645 - - 645
Other loans:
Fixed rate 1,839 81 - 1,920
Variable rate 67 - - 67
Total loans
(excluding non-
accrual loans) 87,874 99,160 8,302 195,336
Non-accrual loans 373 - - 373
Total loans $88,247 $99,160 $ 8,302 $195,709
Normally borrowers are expected to meet contractual terms. In
some cases, however, borrowers are permitted to roll over
obligations after appropriate review of the credit quality and
determination of the borrower's ability and willingness to repay.
The data shown above is in a format which conforms with reports
to the bank regulatory agencies and has not been restated to
reflect anticipated rollovers, which management does not believe
would materially affect the data presented.
In addition, the Bank is currently a member of the Federal Home
Loan Bank of Dallas, Texas, which also allows the Bank to borrow
funds to support its liquidity on a daily basis, as necessary.
Nonaccrual, Past Due and Modified Loans. Non-performing assets
include non-performing loans and foreclosed real estate held for
sale. Non-performing loans include loans classified as non-
accrual or renegotiated to provide a reduction or deferral of
interest or principal and those past due 90 days or more on which
interest is still being accrued. It is the general policy of
Texarkana to place loans on non-accrual status when, in the
opinion of management, there exists sufficient uncertainty as to
the collectibility of the contractual interest or principal or if
the loan becomes 90 days delinquent, whichever comes first.
Placing a loan on a non-accrual status causes an immediate charge
against earnings for the interest which has been accrued but not
yet collected on the loan and eliminates future interest earnings
with respect to that loan. Interest on such loans is not
recognized until all of the principal is collected or until the
loan is returned to a performing status. Interest income
recognized on non-accrual loans during 1995 and 1994 was not
significant.
As of December 31, 1995, Texarkana had non-performing assets
totaling $2,026,000 or approximately .10% of total loans and
foreclosed property at such date compared with $1,266,000 and
.91% at December 31, 1994.
Texarkana's non-performing loans at December 31, 1995, and 1994
are shown below. (Dollars in Thousands)
December 31,
1995 1994
Loans accounted for on a
non-accrual basis $ 373 $ 603
Loans which are contractually
past due 90 or more days 128 58
Loans, the terms of which have
been renegotiated - -
Total non-performing loans $ 501 $ 661
Texarkana's management is not aware of any loans classified for
regulatory purposes and excluded from the above table which
represent or result from trends or uncertainties that will
materially impact future operating results, liquidity, or capital
resources, or represent material credits about which management
is aware of any information which causes doubts as to the ability
of such borrowers to comply with the loan repayment terms.
In May of 1993, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," which was
amended by Statement of Financial Accounting Standards No. 118,
Accounting by Creditors for Impairment of a loan - Income
Recognition and Disclosure," issued in October of 1994. These
statements require that impaired loans be measured at the present
value of expected cash flows discounted at the loan's effective
interest rate, or, as a practical expedient, at the loans
observable market price or the fair value of the collateral if
the loan is collateral dependent. Texarkana's adoption of these
new standards on January 1, 1995, did not have a significant
effect on the allowance for loan losses or Texarkana's method of
income recognition for impaired loans.
Allowance for Loan Losses. Texarkana charges to operating
expense an amount necessary to maintain the balance in the
allowance for possible loan losses at a level that is deemed to
be adequate to absorb all expected loan losses. Management
determines the adequacy of its reserve and the amount of any
additional provision or negative provision for possible loan
losses based on many factors, including an evaluation of
historical loan loss experience in relation to outstanding loans,
the existing level of the allowance reviews of loan quality,
loan growth, changes in the composition of the loan portfolio,
general economic factors, the financial condition of the
borrowers and their ability to repay the loan and the value and
liquidity of collateral. The amount in the allowance for
possible loan losses is reviewed by management on a monthly basis
to determine whether additional provisions should be made or
whether transfers from the allowance to earnings are justified.
Texarkana's board of directors reviews the adequacy of the
reserve on a quarterly basis.
The following table summarizes averages of loan balances, changes
in the allowance for possible loan losses arising from loans
charged off and recoveries on loans previously charged off, by
loan category, and the provision for possible loan losses charged
to operating expense as of the dates and the periods indicated.
(Dollars in Thousands):
December 31,
1995 1994
Average total loans net of discounts $160,516 $128,170
Beginning balance $ 2,049 $ 2,276
Loans charged off:
Real estate:
Construction 3 -
Mortgage 13 385
Commercial, financial and agricultural 65 29
Installment 608 281
Total charged off 689 695
Recoveries:
Real estate:
Construction - -
Mortgage 15 40
Commercial, financial and agricultural 19 15
Installment 169 113
Total recoveries 203 168
Net loans charged off 486 527
Provision for loan losses 1,275 300
Ending balance $ 2,838 $ 2,049
Ratio of net charge-offs during period
to average loans outstanding 0.30% 0.41%
Texarkana's allowance for possible loan losses at December 31,
1995 was $2,838,000, which, in management's opinion, is adequate
to cover possible losses in its current loan portfolio. However,
no assurance can be given that future changes in economic
conditions that might adversely affect Texarkana's principal
market area, borrowers or collateral values, and other
circumstances will not result in increased losses in Texarkana's
loan portfolio in the future.
Deposits and Other Liabilities. Texarkana's average total
deposits increased from $279,193,000 in 1994 to $306,475,000 in
1995. The growth in deposits is primarily attributable to new
customer deposits and additional deposits from existing customers
as a result of consistent and constant marketing and advertising
programs. Texarkana does not rely on any brokered deposits. The
following table summarizes the amounts of average deposits and
average rates for the period indicated: (Dollars in Thousands):
December 31,
1995 1994
Amount Rate Amount Rate
Non-interest
bearing demand
deposits $ 40,792 0.00% $ 37,904 0.00%
Interest-
bearing
money market/
NOW deposits 96,045 2.58% 93,392 2.34%
Savings deposits 17,429 2.21% 17,915 2.22%
Time deposits 152,209 5.70% 129,982 4.26%
Total average
deposits $306,475 3.76% $279,193 2.91%
Texarkana also has liabilities in the form of borrowed funds,
which generally consist of federal funds purchased, securities
sold under agreements to repurchase, short-term borrowings from
the Federal Home Loan Bank of Dallas, Texas ("FHLB") and other
short term borrowings. The Bank is a member of the FHLB which
enables members to borrow both short-term and long-term to
facilitate various liquidity and funding needs. At December 31,
1995, Texarkana had $24,000,000 in notes payable to the FHLB
that were secured primarily by a floating lien on all one-to-four
family first mortgage loans. These notes require monthly
interest payments at the 3-month LIBOR rate in effect at each
quarterly reset date. The remaining $10,000,000 was a short-term
advance which matured January 3, 1996. In addition to these
borrowings from FHLB, Texarkana had federal funds purchased and
security repurchase agreements totaling $6,594,544 at December
31, 1995.
Liquidity and Interest Rate Sensitivity Management. The primary
functions of asset and liability management are to assure
adequate liquidity and to maintain an appropriate balance between
interest-earning and interest-bearing liabilities. Liquidity
represents the Bank's ability to meet the daily demand for funds
from its customers to pay maturing deposits, honor checks and
drafts, extend credit and meet other commitments. Management
monitors liquidity requirements as warranted by interest rate
trends, changes in the economy, changes in the scheduled
maturities, and interest rate sensitivity of the investment and
loan portfolios as well as deposits. The Bank attempts to match
rate-sensitive assets and liabilities in order to minimize
exposure from fluctuations in interest rates and to enhance
consistent growth of net interest income through periods of
changing interest rates.
The asset portion of the balance sheet provides liquidity
primarily through cash and due from banks, loan principal
repayments, and cash flows from investment securities, federal
funds sold and investment securities available for sale.
The liability portion of the balance sheet provides liquidity
through various interest and non interest-bearing deposit
accounts, federal funds purchased, securities sold under
agreements to repurchase, and other short-term borrowings. Long-
standing relationships with many institutions have provided the
Bank with the opportunity to buy and sell federal funds on a
daily basis.
The Bank's liquidity, which is monitored by an Asset-Liability
Committee, is deemed by management to be adequate to meet all
forseen business demands.
Capital Resources. Texarkana and the Bank are subject to
regulatory risk-based capital guidelines. In the risk-based
capital computation, all assets are weighted based upon assigned
risk factors, and certain off-balance sheet items are included,
such as loan commitments and standby letters of credit. Capital
is separated into two categories, Tier 1 and Tier 2, which
combine for Total Capital. Tier 1 consists of common
shareholder' equity and perpetual preferred stock, subject to
certain limitations. Tier 2 capital consists of the reserve for
loan losses and subordinated debt, subject to certain
limitations. In order to be considered adequately capitalized,
the guidelines provide for minimum Total Risk-Based Capital of 8
percent, half of which must be Tier 1 capital.
In conjunction with the risk-based capital guidelines, the
regulators have also issued leverage capital guidelines. The
leverage ratio consists of Tier 1 capital as a percent of average
total assets. In order to be considered adequately capitalized,
the minimum leverage ratio for banks and bank holding companies
must equal at least 4 percent.
Using year end financial data, the following table indicates the
capital adequacy of Texarkana as of the dates indicated compared
to the regulatory requirements that were in effect at such dates
(Dollars in Thousands):
December 31,
1995 1994
Capital:
Tier 1 capital $ 34,599 $ 34,177
Tier II capital:
Allowance for loan losses 2,838 2,049
Total risk-based capital $ 37,437 $ 36,226
Net risk-weighted assets $231,798 $171,233
Adjusted total assets $400,248 $349,194
Capital Ratios:
Leverage ratio 8.64% 9.79%
(Regulatory minimum) (4.00%) (4.00%)
Tier 1 risk-based capital ratio 14.93% 19.96%
(Regulatory minimum) (4.00%) (4.00%)
Total risk-based capital ratio 16.15% 21.16%
(Regulatory minimum) (8.00%) (8.00%)
<TABLE>
TEXARKANA NATIONAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30:
Cash flows from operating activities: 1996 1995
<S> <C> <C>
Net income $ 3 ,130,425 $ 2,637,827
Adjustments to reconcile net income to
net cash provided by operating
activities:
Provision for loan losses 975,000 300,000
Depreciation and amortization 466,063 419,910
Amortization of investment security
premiums, net of discounts 856,008 429,849
Security and derivative financial
instrument gains (1,089,043) (838,295)
Security and derivative financial
instrument losses 975,981 775,139
(Gain) loss on sale or retirement
of premises and equipment 605 (5,713)
Decrease in interest earned
not collected 97,929 127,488
Increase (decrease) in accrued
interest payable (30,839) 341,695
Decrease in other assets 1,255,524 370,932
Increase (decrease) in other
liabilities (3,007,859) 392,176
Net cash provided by operating
activities 3,629,794 4,951,008
Cash flows from investing activities:
Proceeds from sales and maturities
of securities:
Held to maturity 2,742,500 2,554,480
Available for sale 62,048,713 73,152,010
Purchase of securities:
Held to maturity (500,488) (1,542,500)
Available for sale (35,140,276) (74,376,558)
Net increase in loans (26,037,297) (29,365,637)
Purchase of premises and equipment (557,036) (553,579)
Proceeds from sale of premises and equipment 1,395 10,050
Net cash provided by (used in)
investing activities 2,557,511 (30,121,734)
Cash flows from financing activities:
Net decrease in demand deposits,
NOW accounts, money market deposit
accounts, and savings accounts (13,751,409) (669,372)
Net increase in certificates of deposit 9,310,488 15,042,450
Net increase (decrease) in short-term
borrowings (787,123) 7,297,673
Increase (decrease) in notes payable (5,664,718) 11,622,393
Proceeds from exercise of stock options 24,200 -
Cash dividends paid (514,920) (440,700)
Net cash provided by (used in)
financing activities (11,383,482) 32,852,444
Net increase (decrease) in cash
and cash equivalents (5,196,177) 7,681,718
Cash and cash equivalents at January 1 25,446,694 19,709,587
Cash and cash equivalents at June 30 $20,250,517 $27,391,305
Supplemental disclosures:
Interest paid $ 7,207,128 $ 5,722,470
Income taxes paid 700,000 815,000
See accompanying notes.
</TABLE>
<TABLE>
TEXARKANA NATIONAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30,
1996 1995
<S> <C> <C>
ASSETS
Cash due and from banks $ 15,250,517 $ 18,309,587
Federal funds sold 5,000,00 8,400,00
Securities:
Available for sale 114,988,774 139,022,855
Held to maturity 41,358,669 48,938,775
Loans 222,013,410 168,549,803
Less: Unearned interest 7,179,88 5,457,70
Allowance for loan losses 3,223,07 2,181,87
Net loans 211,610,454 160,910,221
Bank premises and equipment 8,124,27 7,898,86
Accrued interest receivable 2,685,81 2,746,00
Other assets 2,500,43 1,619,19
Total assets $ 401,518,940 $ 387,845,508
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest bearing deposits $ 44,955,046 $ 49,834,709
Interest bearing deposits 290,618,391 257,497,575
Total deposits 335,573,437 307,332,284
Federal funds purchased and security repurchase agreements 5,807,44 20,742,862
Notes payable 20,028,985 20,788,027
Other liabilities 2,952,33 3,218,12
Total liabilities 364,362,198 352,081,299
Stockholders' equity
Capital stock, $10 par value; 2,000,000
shares authorized; 735,600 and 734,500 shares outstanding 7,356,00 7,345,00
Capital surplus 2,654,40 2,641,20
Retained earnings 27,822,470 25,687,420
Unrealized gain, (loss) on securities available for sale, net o (676,1 90,
Total stockholders' equity 37,156,742 35,764,209
Total liabilities and stockholders' equity $ 401,518,940 $ 387,845,508
</TABLE>
See accompanying notes.
<TABLE>
TEXARKANA NATIONAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six months ended June 30:
<S> <C> <C>
Interest income: 1996 1995
Loans, including fees $ 9,307,812 $ 6,849,256
Securities:
U. S. government 159,3 273,51
States and political subdivisions 981,7 985,58
Federal agencies and other 3,715,94 4,548,571
Federal funds sold 73, 146,86
Total interest income 14,238,845 12,803,795
Interest expense:
Deposits 6,426,26 5,364,711
Federal funds purchased and security repurchase agre 187,1 297,52
Notes payable 562,8 401,92
Total interest expense 7,176,28 6,064,165
Net interest income 7,062,55 6,739,630
Provision for loan losses 975,0 300,00
Net interest income after provision for loan losses 6,087,55 6,439,630
Noninterest income:
Trust department 404,4 376,93
Service charges on deposit accounts 1,929,40 1,241,868
Mortgage servicing fees and other 1,137,29 1,009,292
Security and financial instrument gains, net 113,0 63,1
Total noninterest income 3,584,21 2,691,249
Noninterest expense:
Salaries and employee benefits 2,919,70 2,832,463
Net occupancy of bank premises 484,0 467,96
Furniture and equipment expense 441,6 408,93
Other 1,530,98 1,863,690
Total noninterest expense 5,376,34 5,573,052
Income before income taxes 4,295,42 3,557,827
Provision for income taxes 1,165,00 920,00
Net income $ 3,130,425 $ 2,637,827
Per share information:
Net income $4.26 $3.59
Cash dividends $0.70 $0.60
Weighted average number of shares outstanding 735,600 734,500
</TABLE>
See accompanying notes.
<TABLE>
TEXARKANA NATIONAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six months ended June 30:
1996 1995
<S> <C> <C>
Interest Income:
Loans, including fees $ 9,307,812 $ 6,849,256
Securities:
U. S. government 159,3 273,51
States and political subdivisions 981,7 985,58
Federal agencies and other 3,715,94 4,548,571
Federal funds sold 73, 146,86
Total interest income 14,238,845 12,803,795
Interest expense:
Deposits 6,426,26 5,364,711
Federal funds purchased and security repurchase agre 187,1 297,52
Notes payable 562,8 401,92
Total interest expense 7,176,28 6,064,165
Net interest income 7,062,55 6,739,630
Provision for loan losses 975,0 300,00
Net interest income after provision for loan losses 6,087,55 6,439,630
Noninterest income:
Trust department 404,4 376,93
Service charges on deposit accounts 1,929,40 1,241,868
Mortgage servicing fees and other 1,137,29 1,009,292
Security and financial instrument gains, net 113,0 63,1
Total noninterest income 3,584,21 2,691,249
Noninterest expense:
Salaries and employee benefits 2,919,70 2,832,463
Net occupancy of bank premises 484,0 467,96
Furniture and equipment expense 441,6 408,93
Other 1,530,98 1,863,690
Total noninterest expense 5,376,34 5,573,052
Income before income taxes 4,295,42 3,557,827
Provision for income taxes 1,165,00 920,00
Net income $ 3,130,425 $ 2,637,827
Per share information:
Net income $4.26 $3.59
Cash dividends $0.70 $0.60
Weighted average number of shares outstanding 735,600 734,500
</TABLE>
See accompanying notes.
TEXARKANA NATIONAL BANCSHARES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements for
Texarkana have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the six-month period ended June 30, 1996
are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and
footnotes thereto included in Texarkana annual report for the
year ended December 31, 1995, contained elsewhere in this Proxy
Statement - Prospectus.
Note B - Merger Agreement
On June 26, 1996, Texarkana and Hibernia entered into an
Agreement and Plan of Merger pursuant to which Texarkana would
merge with and into Hibernia. This merger, to be accounted for
as a pooling of interests, will be affected with the exchange of
approximately $77 million in Hibernia Class A Common Stock for
all of the outstanding common stock of Texarkana. Each
outstanding share of Texarkana common stock would be exchanged
for Hibernia Class A common stock with a market value of $100.75.
The exchange rate will be based upon the average closing price
for one share of Hibernia's common stock for the ten day period
prior to closing subject to a minimum exchange rate of 8.2 shares
of Hibernia common stock and a maximum exchange rate of 8.8
shares of Hibernia common stock for each share of Texarkana's
common stock. The merger is subject, among other things, to
receipt of regulatory and shareholder approval. It is
anticipated that this merger will be consummated during the
fourth quarter of 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
TEXARKANA FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND JUNE 30, 1995
The following discussion provides certain information concerning
the financial condition and results of operations of Texarkana
for the six months ended June 30, 1996 and 1995. The financial
position and results of operations of Texarkana resulted
primarily from operations at its banking subsidiary, the Bank.
Management's discussion should be read in conjunction with the
Texarkana financial statements and accompanying notes presented
elsewhere in this Proxy Statement-Prospectus.
OVERVIEW
Texarkana reported net income for the six month ended June 30,
1996 of $3,130,425, an increase of 18.7% from the same period
during 1995. Annualized returns on average assets and average
equity for the six months ended June 30, 1996 were 1.57% and
17.38% respectively compared with 1.50% and 15.72% for the same
period in 1995. The increase in net income is principally
attributed to the out of court settlement in 1996 of a legal
judgement rendered against Texarkana in 1995 for less than the
amount charged against 1995 earnings and the virtual elimination
of FDIC insurance premiums for 1996.
Texarkana's total assets at June 30, 1996 were $401,518,940, an
increase of 3.5% from June 30, 1995. Loans increased
$53,463,607 from June 30, 1995 to June 30, 1996 due to continued
growth in consumer and commercial loans. Total deposits at June
30, 1996 of $335,573,437 were up 9.2% compared with June 30, 1995
due primarily to increases in retail deposits.
RESULTS OF OPERATIONS
Net Interest Income. Tax equivalent net interest income for the
six months ended June 30, 1996 was $7,584,000, a $321,000 or 4.4%
increase from the same period in 1995. This increase was due to
an increase in earning assets. Table 1 below presents the
average balance sheets, interest income and expense, and average
yields or rates. Table 2 below presents an analysis of the
changes in tax-equivalent net interest income between the six
month periods ended June 30, 1996 and June 30, 1995.
The following table sets forth certain information concerning the
average balances, interest income (on a fully tax equivalent
basis), interest expense, and average rates on Texarkana's
interest-earning assets and interest-bearing liabilities for the
periods indicated (Dollars in Thousands).
<TABLE>
Table 1
June 30,
1996 1995
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance
Expense Paid
<S> <C> <C> <C> <C> <C> <C>
Earnings assets:
Loans (before
allowance for
loan losses) $200,365 $ 9,323 9.36% $144,306 $6,865 9.59%
Investment
securities:
Taxable securities 136,446 3,875 5.71% 144,349 4,822 6.74%
Tax-exempt
securities 36,551 1,488 8.19% 36,674 1,493 8.21%
Total investment
securities 172,997 5,363 6.23% 181,023 6,315 7.03%
Federal funds sold
and securities
purchased under
agreement to resell 2,834 74 5.25% 4,942 147 6.00%
Total earnings
assets $376,196 14,760 7.89% $330,271 13,327 8.14%
Interest bearing
liabilities:
Deposits $290,400 6,426 4.45% $255,795 5,365 4.23%
Federal funds sold
and securities sold
under agreement to
repurchase 6,966 187 5.40% 10,453 298 5.75%
Notes payable 20,283 563 5.58% 12,912 401 6.26%
Total interest
bearing liabilities $317,649 7,176 4.54% $279,160 6,064 4.38%
Net interest income $ 7,584
Net yield on
earnings assets 4.06%
</TABLE>
Table 2
CHANGES IN TAX EQUIVALENT NET INTEREST INCOME
(Dollars in Thousands)
Six Months Ended June 30, 1996 Compared with Six Months Ended
June 30, 1995
Increase (Decrease) Due to Change In:
Volume Rate Total
Income earned on:
Loans $ 2,673 $ (215) $ 2,458
Taxable securities (265) (682) (947)
Tax-exempt securities (3) (2) (5)
Short term investments (63) (10) (73)
Total 2,342 (909) 1,433
Interest paid on:
Deposits 728 333 1,061
Federal funds purchased and
securities sold under
agreement to repurchase (100) (11) (111)
Notes payable 229 (67) 162
Total 857 255 1,112
Net interest income $ 1,485 $ (1,164) $ 321
Changes not solely due to volume or rate changes are allocated to
rate.
Interest Rate Sensitivity. Interest rate risk is the potential
impact on net interest income due to changes in interest rates in
any given time frame and the opportunity to reprice interest
earning assets and interest bearing liabilities. Management uses
simulation models to estimate the effect of significant interest
rate changes on net interest income and the fair market value of
securities available for sale. Management may alter the mix of
floating and fixed-rate assets and liabilities, change loan and
deposit pricing schedules and adjust maturities through sales and
purchases of securities available for sale as a means of limiting
interest rate risk to an acceptable level. Management also has
entered into, with the assistance of a fee based investment
advisor, a combination of derivative financial instruments,
including interest rate swaps, caps and floor agreements to hedge
against exposures to changes in interest rates on the market
value volatility of the available for sale debt securities
portfolio.
Provision for Loan Losses. The provision for possible loan
losses is the amount that is added to Texarkana's allowance for
loan losses, by a charge against earnings, in order to maintain a
balance in the allowance for loan losses that is deemed by
management to be adequate to absorb the inherent risk of future
loan losses in Texarkana's loan portfolio. The amount of the
provision is dependent upon many factors, including management's
evaluation of historical loan loss experience in relation to
outstanding loans, the existing level of the allowance, reviews
of loan quality, loan growth, changes in the composition of the
loan portfolio, general economic factors, the financial condition
of the borrowers, their ability to repay the loan and the value
and liquidity of collateral.
Texarkana's provision for loan losses for the six months ended
June 30, 1996 of $975,000 was increased $675,000 from the same
period of 1995 due to increased consumer loan losses and
continued growth of the loan portfolio. The allowance for loan
losses at June 30, 1996 was 1.50% of net loans outstanding
compared to 1.34% at June 30, 1995.
Non-Interest Income. Texarkana's non-interest income for the six
months ended June 30, 1996 increased 33.2% from the same period
in 1995 due to increases in service charges on deposit accounts
from increased account activity. Increases in mortgage loan
activities during 1996 also contributed to the increase.
Non-Interest Expense. Total non-interest expense for the six
months ended June 30, 1996 decreased $196,707 or 3.5% from the
same period of 1995. This decrease is principally attributed to
the virtual elimination of FDIC insurance premiums in 1996, and
to the out of court settlement reached in 1996 for an amount less
than had been charged against earnings in 1995. These favorable
expense reductions were offset somewhat by increases in
personnel, occupancy and equipment costs.
Income Taxes. Texarkana's effective tax rate for the six months
ended June 30, 1996 increased slightly from the same period of
1995 due to an increase in taxable income.
ANALYSIS OF FINANCIAL CONDITION
Investment Securities. For the period ended June 30, 1996
average investment securities decreased $8,026,000 or 4.4% from
June 30, 1995. This decrease is attributed to a relative decline
of attractive market yields during 1996 and a need to fund
continued loan growth.
The composition, amortized cost and estimated fair value of
investment securities at the dates indicated are as follows:
(Dollars in Thousands)
Amortized Estimated
Cost Fair Value
At June 30, 1996:
Available-for-Sale
State and political subdivisions $ 953 $ 880
Federal agencies 1,999 1,906
Mortgage-backed securities 92,123 90,943
Other debt securities 5,676 5,685
Total debt securities 100,751 99,414
Equity securities 12,850 12,807
Derivative financial instruments 2,412 2,768
$116,013 $114,989
Held-to-Maturity
U. S. Government $ 5,522 $ 5,498
State and political subdivisions 35,837 36,473
$ 41,359 $ 41,971
Amortized Estimated
Cost Fair Value
At June 30, 1995:
Available-for-Sale
Federal agencies $ 9,017 $ 9,031
Mortgage-backed securities 110,534 110,731
Other debt securities 6,193 6,352
Total debt securities 125,744 126,114
Equity securities 12,246 12,248
Derivative financial instruments 896 661
$138,886 $139,023
Held-to-Maturity
U. S. Government $ 7,529 $ 7,496
State and political subdivisions 36,911 37,664
Federal agencies 4,499 4,481
$ 48,939 $ 49,641
Loans. Average loans outstanding for the six months ended June
30, 1996 of $200,365,000 were up $56,059,000 or 38.9% from the
same period in 1995. In general, all segments of the loan
portfolio have experienced growth with the larger increases
centered in the consumer and commercial loan areas.
The following table sets forth the type and amount of Texarkana's
loans, net of unearned discount at June 30, 1996 and 1995:
(Dollars in Thousands)
June 30,
1996 1995
Commercial, financial
and agricultural $ 66,072 29.76% $ 46,499 27.59%
Real estate:
Construction 14,115 6.36 9,609 5.70
Mortgage 75,648 34.07 62,021 36.80
Installment 64,289 28.96 48,762 28.93
Other 1,889 0.85 1,660 0.98
$222,013 100.00% $168,551 100.00%
The following table summarizes changes in the allowance for loan
losses for the periods indicated: (Dollars in thousands)
1996 1995
Balance at beginning of year $ 2,838 $ 2,049
Provisions for loan losses
charged to expense 975 300
Loans charged to the allowance (760) (270)
Recoveries on charged off loans 170 103
Balance at June 30 $ 3,223 $ 2,182
The following table summarizes non-performing assets
for the periods indicated. (Dollars in Thousands)
June 30,
1996 1995
Non-performing loans
Non-accrual loans $ 782 $ 399
90-day and over past due loans 465 75
Total non-performing loans 1,247 474
Real estate acquired through
foreclosure 777 792
Total non-performing assets $2,024 $1,266
Deposits. Total average deposits for the six months ended June
30, 1996 were $333,378,000 an increase of 13.1% over the same
period of 1995. The following table summarizes the average daily
balance of various deposit categories for the periods indicated
(Dollars in Thousands).
June 30,
1996 1995
Average daily deposits:
Non-interest bearing demand $ 42,978 $ 38,882
Interest-bearing demand 101,080 93,944
Savings 17,570 17,559
Time deposits 171,750 144.292
$333,378 $294,677
Capital. Texarkana's leverage ratio at June 30, 1996 was 9.25%
compared to 9.22% at June 30, 1995. Texarkana and the Bank are
both considered to be well capitalized according to standards
established by various regulatory agencies as defined by both
leverage ratios and risk-based capital ratios.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP, Certified Public Accountants, has continuously
served as the independent auditor for Texarkana from 1974 through
the present. A representative of Ernst & Young is expected to be
present at the Special Meeting of Texarkana's shareholders, will
have an opportunity to make a statement if he desires and will be
available to respond to appropriate questions.
VALIDITY OF SHARES
The validity of the shares of Common Stock offered hereby has
been passed upon for Hibernia by Patricia C. Meringer, Corporate
Counsel and Secretary of Hibernia. As of the date of this
prospectus, Ms. Meringer owned 3,113 shares of Hibernia Common
Stock and held options to purchase shares of Hibernia
Common Stock, of which 9,858 options are currently exercisable.
EXPERTS
The consolidated financial statements of Hibernia
Corporation incorporated by reference in Hibernia's Corporation's
Annual Report (Form 10-K) for the year ended December 31, 1995
have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon incorporated by reference
therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
The consolidated financial statements of Texarkana National
Bancshares, Inc. at December 31, 1995 and 1994, and for each of
the two years in the period ended December 31, 1995, included in
the Proxy Statement of Texarkana National Bancshares, Inc., which
is referred to and made a part of this Prospectus and
Registration Statement, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report appearing
elsewhere herein, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting
and auditing.
