<PAGE>
HIBERNIA CORPORATION
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996 Commission File Number 1-10294
HIBERNIA CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 72-0724532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
313 Carondelet Street, New Orleans, Louisiana 70130
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (504) 533-5332
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at April 30, 1996
Class A Common Stock, no par value 122,103,079 Shares
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Hibernia Corporation and Subsidiaries March 31 December 31 March 31
Unaudited ($ in thousands) 1996 1995 1995
<S> <C> <C> <C>
Assets
Cash and due from banks $304,674 $384,307 $298,126
Short-term investments 242,484 91,003 111,513
Securities available for sale 1,996,905 2,163,123 611,049
Securities held to maturity (estimated fair value
at March 31, 1995 was $1,968,280) - - 1,998,660
Loans, net of unearned income 4,754,917 4,533,822 3,852,738
Reserve for possible loan losses (144,913) (147,678) (153,777)
Loans, net 4,610,004 4,386,144 3,698,961
Bank premises and equipment 118,772 120,339 121,410
Customers' acceptance liability 202 - 2,850
Other assets 201,567 197,619 184,736
Total assets $7,474,608 $7,342,535 $7,027,305
Liabilities
Deposits:
Demand, noninterest-bearing $1,118,755 $1,187,993 $1,082,011
Interest-bearing 5,202,369 5,041,682 4,990,333
Total deposits 6,321,124 6,229,675 6,072,344
Short-term borrowings 285,562 258,532 193,123
Liability on acceptances 202 - 2,850
Other liabilities 121,675 112,942 105,415
Debt 7,063 8,667 10,871
Total liabilities 6,735,626 6,609,816 6,384,603
Shareholders' equity
Preferred Stock, no par value:
Authorized - 100,000,000 shares; issued and
outstanding - none - - -
Class A Common Stock, no par value:
Authorized - 200,000,000 shares; issued 122,081,581,
122,074,527 and 122,020,147 at March 31,
1996, December 31, 1995 and March 31,
1995, respectively 234,396 234,383 234,279
Surplus 375,513 375,544 374,980
Retained earnings 137,096 120,803 42,930
Treasury stock at cost, 17,407 shares at December 31, 1995 - (183) -
Unrealized gains (losses) on securities available for sale 6,367 16,562 (9,487)
Unearned compensation (14,390) (14,390) -
Total shareholders' equity 738,982 732,719 642,702
Total liabilities and shareholders' equity $7,474,608 $7,342,535 $7,027,305
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Income Statements
Hibernia Corporation and Subsidiaries
Three Months Ended March 31
Unaudited ($ in thousands, except per share data) 1996 1995
<S> <C> <C>
Interest income
Interest and fees on loans $104,209 $85,838
Interest on securities available for sale 33,672 9,716
Interest on securities held to maturity - 29,495
Interest on short-term investments 2,569 2,716
Total interest income 140,450 127,765
Interest expense
Interest on deposits 54,462 51,613
Interest on short-term borrowings 3,314 2,092
Interest on debt 111 169
Total interest expense 57,887 53,874
Net interest income 82,563 73,891
Provision for possible loan losses - 5
Net interest income after provision
for possible loan losses 82,563 73,886
Noninterest income
Service charges on deposits 12,169 11,010
Trust fees 3,034 2,821
Other service, collection and exchange charges 7,468 5,826
Gain on divestiture of banking offices - 2,361
Other operating income 3,129 2,084
Securities gains (losses), net - 3
Total noninterest income 25,800 24,105
Noninterest expense
Salaries and employee benefits 35,749 32,424
Occupancy expense, net 6,145 6,301
Equipment expense 5,265 4,685
Data processing expense 5,249 5,688
Foreclosed property expense, net (791) (42)
Other operating expense 18,342 20,501
Total noninterest expense 69,959 69,557
Income before income taxes 38,404 28,434
Income tax expense 13,692 2,495
Net income $24,712 $25,939
Net income per share $0.21 $0.21
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Hibernia Corporation and Subsidiaries
Unaudited ($ in thousands, except per-share data)
Shares of Gains (Losses)
Common on Securities
Stock Common Retained Treasury Available Unearned
Three months ended March 31, 1996 Outstanding Stock Surplus Earnings Stock for Sale Compensation Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1995 122,057,120 $234,383 $375,544 $120,803 ($183) $16,562 ($14,390) $732,719
Net income - - - 24,712 - - - 24,712
Issuance of common stock:
Stock Option Plan 23,461 13 (31) - 172 - - 154
Restricted stock awards 1,000 - - - 11 - - 11
Cash dividends declared:
Common ($.07 per share) - - - (8,419) - - - (8,419)
Change in unrealized gains (losses)
on securities available for sale - - - - - (10,195) - (10,195)
Balances at March 31, 1996 122,081,581 $234,396 $375,513 $137,096 $- $6,367 ($14,390) $738,982
Shares of Gains (Losses)
Common on Securities
Stock Common Retained Treasury Available Unearned
Three months ended March 31, 1995 Outstanding Stock Surplus Earnings Stock for Sale Compensation Total
Balances at December 31, 1994 121,616,747 $234,080 $374,744 $23,851 ($2,414) ($24,494) $- $605,767
Net income - - - 25,939 - - - 25,939
Issuance of common stock:
Dividend Reinvestment Plan 80,589 155 428 - - - - 583
Stock Option Plan 419 1 1 - - - - 2
Retirement Security Plan 62,845 - (32) - 512 - - 480
Restricted stock awards 259,547 43 (160) - 1,902 - - 1,785
Cash dividends declared:
Common ($.06 per share) - - - (6,545) - - - (6,545)
By pooled companies prior
to merger - - - (315) - - - (315)
Change in unrealized gains (losses)
on securities available for sale - - - - - 15,007 - 15,007
Other - - (1) - - - - (1)
Balances at March 31, 1995 122,020,147 $234,279 $374,980 $42,930 $- ($9,487) $- $642,702
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Hibernia Corporation and Subsidiaries
Three Months Ended March 31
Unaudited ($ in thousands) 1996 1995
<S> <C> <C>
Operating activities
Net income $24,712 $25,939
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses - 5
Amortization of intangibles and deferred charges 961 919
Depreciation and amortization 4,684 4,232
Premium amortization, net of discount accretion 1,422 1,891
Realized securities gains, net - (3)
Gain on sale of assets (654) (2,273)
Provision for losses on foreclosed and other assets 597 89
Decrease (increase) in deferred income tax asset (98) 412
Decrease (increase) in interest receivable and other assets 1,561 (3,299)
Increase (decrease) in interest payable and other liabilities 8,733 (5,321)
Net cash provided by operating activities 41,918 22,591
Investing activities
Purchases of securities held to maturity - (158,046)
Purchases of securities available for sale (2,484) (15,549)
Proceeds from sales of securities available for sale 24 1,963
Maturities of securities held to maturity - 61,087
Maturities of securities available for sale 151,672 15,750
Net increase in loans (284,229) (216,268)
Proceeds from sales of loans 59,884 27,429
Purchases of premises, equipment and other assets (5,236) (5,962)
Proceeds from sales of foreclosed assets 1,517 939
Proceeds from divestiture of banking offices, net of $1,069 cash sold - (13,708)
Proceeds from sales of premises, equipment and other assets 161 212
Net cash used by investing activities (78,691) (302,153)
Financing activities
Net increase in domestic deposits 93,306 54,696
Net increase (decrease) in time deposits - foreign office (1,857) 2,214
Net increase in short-term borrowings 27,030 34,388
Payments on debt (1,604) (975)
Issuance of common stock 165 2,850
Dividends paid (8,419) (6,860)
Net cash provided by financing activities 108,621 86,313
Increase (decrease) in cash and cash equivalents 71,848 (193,249)
Cash and cash equivalents at beginning of year 475,310 602,888
Cash and cash equivalents at end of period $547,158 $409,639
See notes to consolidated financial statements.
</TABLE>
<PAGE>
HIBERNIA CORPORATION
Notes to Consolidated Financial Statements
Hibernia Corporation and Subsidiaries
Unaudited
Note 1 BASIS OF PRESENTATION The accompanying unaudited
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended
March 31, 1996, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. For
further information, refer to the audited consolidated financial
statements and notes included in Hibernia Corporation's Annual
Report on Form 10-K for the year ended December 31, 1995.
Note 2 MERGER AGREEMENTS On January 1, 1996, Hibernia
Corporation (the Company) merged with FNB Bancshares, Inc. ($40
million in assets) and on January 15, 1996 with Bunkie
Bancshares, Inc. ($106 million in assets) in transactions
accounted for as poolings of interests.
Mergers with St. Bernard Bank and Trust Co. and CM Bank
Holding Company are pending regulatory and shareholder approval.
St. Bernard Bank and Trust Co. has $260 million in assets, $29
million in loans and $234 million in deposits and will be
purchased for $46 million in cash. CM Bank Holding Company has
$774 million in assets, $347 million in loans and $608 million in
deposits and will be purchased for $202 million in cash. These
pending mergers will be accounted for as purchases when
consummated which is expected in the later half of 1996.
Note 3 EMPLOYEE BENEFIT PLANS The Company's stock option
plans provide incentive and non-qualified options to various key
employees and non-employee directors to purchase shares of Class
A Common Stock at no less than the fair market value of the stock
at the date of grant. All options granted prior to 1992 became
exercisable six months from the date of grant. The remaining
options granted under the 1987 Stock Option Plan, the Long-Term
Incentive Plan and the 1993 Directors' Stock Option Plan become
exercisable in the following increments: 50% after the
expiration of two years from the date of grant, an additional 25%
three years from the date of grant and the remaining 25% four
years from the date of grant.
Options granted under the 1987 Stock Option Plan generally
expire 10 years from the date granted. Options granted under the
Long-Term Incentive Plan and the 1993 Directors' Stock Option
Plan do not expire unless the holder dies, retires, becomes
permanently disabled or leaves the employ of the Company, at
which time the options expire at various times ranging from 30 to
365 days. All options vest immediately upon a change in control
of the Company.
At March 31, 1996, the number of shares available for grant
under the 1987 Stock Option Plan, the Long-Term Incentive Plan
and the 1993 Directors' Stock Option Plan totaled 157,772;
498,809; and 787,500, respectively.
The table below summarizes the activity in the plans during
the first quarter of 1996:
Incentive Non-Qualified
1987 STOCK OPTION PLAN
Outstanding, December 31, 1995 162,428 1,360,986
Canceled (1,875) -
Exercised - (6,561)
Outstanding, March 31, 1996 160,553 1,354,425
Exercisable, March 31, 1996 127,890 1,207,671
LONG-TERM INCENTIVE PLAN
Outstanding, December 31, 1995 12,598 3,746,448
Granted ($10.1875 to $10.625) - 1,477,075
Canceled - (75,054)
Exercised - (16,900)
Issuances of restricted stock - (3,775)
Outstanding, March 31, 1996 12,598 5,127,794
Exercisable, March 31, 1996 - 1,328,658
1993 DIRECTORS' STOCK OPTION PLAN
Outstanding, December 31, 1995 - 232,500
Canceled - (22,500)
Outstanding, March 31, 1996 - 210,000
Exercisable, March 31, 1996 - 30,000
Effective April 1, 1995, the Company instituted an employee
stock ownership plan (ESOP) in which substantially all employees
can participate. The ESOP is authorized to acquire up to $30
million of Hibernia Corporation Class A Common Stock in open-
market purchases. At March 31, 1996, $16 million of stock
(2,008,588 shares) had been acquired.
Note 4 PER SHARE DATA Income per common share is based on
the weighted average number of shares outstanding of 120,287,084
for the three months ended March 31, 1996, and 121,901,365 for
the three months ended March 31, 1995. These weighted averages
exclude uncommitted shares held by the ESOP.
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY CONSOLIDATED SUMMARY OF INCOME
AND SELECTED FINANCIAL DATA (1)
Hibernia Corporation and Subsidiaries
Three Months Ended
March 31 Dec 31 March 31
($ in thousands, except per-share data) 1996 1995 1995
<S> <C> <C> <C>
Interest income $140,450 $138,076 $127,765
Interest expense 57,887 58,034 53,874
Net interest income 82,563 80,042 73,891
Provision for possible loan losses - - 5
Net interest income after provision for possible
loan losses 82,563 80,042 73,886
Noninterest income:
Noninterest income 25,800 24,839 24,102
Securities gains (losses), net - 52 3
Noninterest income 25,800 24,891 24,105
Noninterest expense 69,959 67,843 69,557
Income before taxes 38,404 37,090 28,434
Income tax expense 13,692 2,270 2,495
Net Income $24,712 $34,820 $25,939
Income per share (2) $0.21 $0.29 $0.21
Income per share (tax effected) (3) $0.21 $0.19 $0.15
Cash dividends declared per share (2) $0.07 $0.07 $0.06
Average shares outstanding (000s) (2) 120,287 120,173 121,901
Selected Quarter-End Balances (in millions)
Loans $4,754.9 $4,533.8 $3,852.7
Deposits 6,321.1 6,229.7 6,072.3
Debt 7.1 8.7 10.9
Equity 739.0 732.7 642.7
Total assets 7,474.6 7,342.5 7,027.3
Selected Average Balances (in millions)
Loans $4,645.8 $4,410.0 $3,800.0
Deposits 6,243.6 6,062.6 6,085.6
Debt 7.3 8.7 11.1
Equity 740.2 700.0 622.8
Total assets 7,391.7 7,163.4 7,020.7
Selected Ratios (%)
Return on average assets 1.34 1.94 1.48
Return on average assets (tax effected) (3) 1.34 1.30 1.02
Return on average equity 13.35 19.90 16.66
Return on average equity (tax effected) (3) 13.35 13.35 11.50
Net interest margin (taxable-equivalent) 4.87 4.84 4.64
Efficiency (4) 63.76 63.86 69.93
Tier 1 risk-based capital 14.25 14.49 15.45
Total risk-based capital 15.52 15.76 16.73
Leverage 9.71 9.75 8.99
(1) All financial information has been restated for mergers accounted for
as poolings of interests. Prior periods have been conformed to current
year presentation.
(2) Income per share is based on the weighted average number of common shares
outstanding (net of uncommitted ESOP shares) in the respective
period. Dividends per share are historical amounts.
(3) The effective tax rate in 1995 was significantly less than the
Company's statutory tax rate due to the recognition of deferred tax
benefits. Previously reported operating results are adjusted to
reflect a 37% effective tax rate for 1995 to improve the comparability
of these amounts to 1996 results.
(4) Noninterest expense as a percentage of taxable-equivalent net interest
income plus noninterest income (excluding securities transactions).
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis presents a review of the major
factors and trends affecting the performance of Hibernia Corporation
(the "Company" or "Hibernia") and its bank subsidiary (the "Bank") and
should be read in conjunction with the accompanying consolidated
financial statements, notes and tables. Financial data for all
periods presented have been restated for mergers accounted for as
poolings of interests.
FIRST-QUARTER 1996 HIGHLIGHTS
Hibernia Corporation's first-quarter 1996 results showed a 40%
improvement in earnings per share on a comparable basis over the first
quarter of 1995, strong loan growth, and improving efficiency. Last
year's first-quarter results reflected a lower-than-normal effective
federal income tax rate as the Company recognized deferred tax
benefits. To make comparisons to 1996 results more meaningful, 1995
net income and earnings per share results are adjusted on a proforma,
fully tax-effected basis, whereby tax expense is assumed at a "normal"
effective tax rate of 37%.
- Net income totaled $24.7 million ($.21 per share),
compared to $25.9 million ($.21 per share) in the first
quarter of 1995. On a fully tax-effected basis, net income
for the first three months of 1995 would have been $17.9
million ($.15 per share). Therefore, on a comparable basis,
first-quarter net income improved 38% and earnings per share
rose 40% in 1996 over the first quarter of 1995.
- Return on assets (ROA), compared to the first quarter of
1995 on a fully tax-effected basis, increased 32 basis
points to 1.34% for the first quarter of 1996 while the
return on equity (ROE) was 13.35% for the first quarter of
1996 compared to 11.50% for the first quarter of 1995 on a
fully tax-effected basis.
- First-quarter 1996 results improved compared to the same
period last year because of an $8.7 million (12%) increase
in net interest income (resulting from higher earning assets
and a change in the mix of earning assets to higher-yielding
loans) and a $1.7 million (7%) improvement in noninterest
income, while noninterest expense was nearly flat, up just
$.4 million (1%).
- Loans grew $902.2 million (23%) from a year ago to $4.8
billion at March 31, 1996. Consumer loans increased $514.9
million (28%) to $2.3 billion and commercial loans grew
$387.3 million (19%) to $2.4 billion. Compared to December
31, 1995, loans increased at an annual rate of almost 20% as
consumer loans grew 18% and commercial loans grew 21%.
- Asset quality remained strong with reserve coverage of
nonperforming assets at almost 784% at March 31, 1996
compared to 705% at March 31, 1995. Total nonperforming
assets declined to $27.1 million, down 11% from a year ago.
Nonperforming assets as a percentage of loans plus
foreclosed assets were reduced to .57%, compared to .79% at
March 31, 1995.
- In January 1996, Hibernia completed mergers with FNB
Bancshares, Inc., parent company of the $55 million asset
First National Bank of Lake Providence, and Bunkie
Bancshares, Inc., a bank holding company with total assets
of approximately $106 million.
- Recently announced mergers would add over $1.0 billion in
assets and 22 banking offices. Pending regulatory and
shareholder approval, mergers with the $260-million-asset
St. Bernard Bank and Trust in suburban New Orleans and CM
Holding Company, parent company of the $774-million-asset
Calcasieu Marine National Bank in southwest Louisiana would
increase assets to approximately $8.5 million. Hibernia
would then have 187 locations in 29 parishes. It is
anticipated that these transactions will be consummated in
1996 and accounted for as purchases.
- In April 1996, Hibernia's board of directors declared a
quarterly cash dividend of $.07 per share.
FINANCIAL CONDITION:
EARNING ASSETS
Earning assets averaged $6.9 billion in the first quarter of 1996, a
$376.6 million (6%) increase from the first-quarter 1995 average of
$6.5 billion. Compared to the first quarter of 1995, average loans
increased $845.8 million (22%), while total average securities
decreased $471.1 million (18%). Hibernia has increased its loan
portfolio by offering quality service and innovative lending products,
especially in the markets of merger partners where such sophisticated
products were not readily available. The sources of funding for the
increase in loans have been reinvestment of proceeds from maturing
securities and increases in deposits and borrowed funds.
Loans. Average loans for the first quarter of 1996 of $4.6 billion
were up $235.8 million (5%) from the fourth quarter of 1995 and up
$845.8 million (22%) compared to the first quarter of 1995.
Table 1 presents the Company's loan portfolio classified according
to industry concentration at March 31, 1996, December 31, 1995 and
March 31, 1995. Total loans increased $221.1 million (5%) during the
first quarter of 1996. Commercial loans increased $121.5 million
(5%), while consumer loans increased $99.6 million (4%). Compared to
March 31, 1995, loans increased $902.2 million (23%). Consumer loans
were up $514.9 million (28%), and commercial loans increased $387.3
million (19%). The increase in consumer lending compared to December
31, 1995 was primarily due to increases in adjustable-rate residential
mortgage loans, indirect lending and direct consumer loans. The
increases in these categories compared to March 31, 1995 levels were
partially offset by a decrease in student loans as Hibernia
substantially completed the sale of its student loan portfolio.
Hibernia management determined that student lending was not profitable
and began liquidating its student loan portfolio in the second quarter
of 1996. Consumer loans comprised 49.0% of the loan portfolio at
March 31, 1996 compared to 47.1% at March 31, 1995 as Hibernia's
lending strategy is to increase consumer lending while maintaining
preeminence in Louisiana commercial lending.
Securities. Average securities decreased $471.1 million (18%) in
the first quarter of 1996 compared to the first quarter of 1995. The
decrease is the result of the reinvestment of principal received from
matured securities into higher-yielding loans.
Average securities available for sale increased $1.5 billion (243%)
from the first quarter of 1995 to $2.1 billion. In December 1995, in
accordance with the Financial Accounting Standards Board Special
Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities" (Guide), the
Company chose to reclassify all of its securities held to maturity to
the available for sale portfolio. The amortized cost of the
transferred securities was $1.6 billion and net unrealized gains were
$20.2 million. This reclassification gives the Company greater
flexibility in managing the portfolio for income, interest-rate risk
and liquidity. Although net unrealized gains or losses in the
available for sale portfolio are reflected as a separate component of
equity, these gains or losses are not included in regulatory capital
for purposes of computing capital adequacy ratios. In the current
interest rate environment it is anticipated that future purchases of
securities will be classified as available for sale.
As a result of this reclassification, Hibernia had no securities
held to maturity for the first quarter of 1996 compared to $1.9
billion in the same period a year ago.
Short-Term Investments. Average short-term investments (primarily
federal funds sold) for the three months ended March 31, 1996, of
$193.0 million were relatively unchanged from an average of $191.1
million in the first quarter of 1995. Average short-term investments
were up $104.4 million (118%) from the fourth-quarter 1995 average of
$88.6 million, primarily due to higher deposit levels.
ASSET QUALITY
Table 2 presents a summary of nonperforming assets at the end of the
past five quarters. Table 3 presents a summary of changes in
nonperforming loans for the three-month periods ended March 31, 1996
and 1995.
Nonperforming assets -- which include nonaccrual loans, restructured
loans and foreclosed assets -- totaled $27.1 million at March 31,
1996, down 11% compared to $30.6 million at March 31, 1995.
Nonperforming loans, which totaled $18.5 million at March 31, 1996,
declined $3.3 million (15%) from a year ago, while foreclosed assets
which totaled $8.6 million at March 31, 1996, were down $.2 million
(2%) from a year earlier. Nonperforming assets were up slightly
compared to $25.6 million at December 31, 1995.
At March 31, 1996, the recorded investment in loans that were
considered to be impaired under SFAS No. 114 was $17.3 million. The
related reserve for possible loan losses was $2.7 million. The
comparable amounts at March 31, 1995 were $20.1 million and $1.9
million, respectively. These loans are included in nonaccrual loans
in Table 2.
As illustrated in Table 3, loans totaling $5.4 million were added to
nonperforming loans during the first quarter of 1996. Payments and
sales resulted in a $1.5 million reduction in nonperforming loans and
charge-offs further reduced nonperforming loans in 1996 by $2.6
million. As a percentage of total loans plus foreclosed assets,
nonperforming assets at March 31, 1996, improved to .57% from .79% a
year ago and were substantially unchanged from year-end 1995.
In addition to the nonperforming assets discussed above, other
commercial loans for which payments are current that are subject to
potential future classification as nonperforming totaled $21.8 million
as of March 31, 1996.
RESERVE AND PROVISION FOR POSSIBLE LOAN LOSSES
No provision for possible loan losses was recorded for the first
quarter of 1996. A nominal provision was recorded in the first
quarter of 1995 at one of the merged banks. The absence of a
provision thus far in 1996 is a reflection of continued strong reserve
coverage. The reserve for possible loan losses as a percentage of
nonperforming loans was 784% at March 31, 1996, compared to 705% a
year ago, and 853% at December 31, 1995.
Net charge-offs totaled $2.8 million in the first quarter of 1996,
compared to $.2 million in the first quarter of 1995. As a percentage
of average loans, annualized net charge-offs were .24% for the first
quarter of 1996 and .02% for the same period in 1995.
The reserve for possible loan losses totaled $144.9 million, or
3.05% of total loans, at March 31, 1996, compared to $153.8 million,
or 3.99%, a year earlier. In terms of both dollar amount and as a
percentage of loans, the reserve for possible loan losses has been
declining over the last ten quarters. Management has deemed the
present level to be adequate to absorb future potential loan losses,
considering the level and mix of the loan portfolio, current economic
conditions and market trends. Because factors such as loan growth and
the future collectibility of loans are uncertain, the level of future
provisions (positive or negative), if any, cannot be predicted. Table
4 presents an analysis of the activity in the reserve for possible
loan losses for the first quarter of 1996 and 1995.
FUNDING SOURCES:
DEPOSITS AND BORROWINGS
Deposits. Average deposits totaled $6.2 billion in the first
quarter of 1996, a $158.0 million (3%) increase from the first quarter
of 1995. Average core deposits were up $69.8 million (1%) due to
increases in consumer time deposits and demand deposits.
NOW account average balances were down $489.3 million and money
market deposit accounts were up $405.1 million in the first quarter of
1996 compared to the first quarter of 1995. During the fourth quarter
of 1995, Hibernia instituted a new product, the Reserve Money Manager
account, in which each NOW account is joined with a money market
account. As needed, funds are moved from the money market account to
cover items presented for payment to the customer's NOW account up to
a maximum of six such transfers per statement cycle. Excluding the
$535.7 million effect on average balances (reducing 1996 NOW account
average balances and increasing money market deposit account average
balances) NOW account average balances were up $46.4 million (7%).
Money market deposit account average balances (net of the effect of
the Reserve Money Manager accounts) were down $130.6 million (12%), as
the rate paid on these accounts was less attractive than those of
other investment products.
Noncore deposits increased $88.2 million (10%) from the first
quarter of 1995 as public fund certificates of deposit increased
$105.5 million (16%) in part due to greater access in new markets
(through mergers) to public agency funds as well as increases in funds
from existing relationships.
Table 5 presents the composition of average deposits for the first
quarter of 1996 and the fourth and first quarters of 1995.
Borrowings. Average borrowings (which include federal funds
purchased, securities sold under agreements to repurchase and debt)
increased $107.6 million (59%) to $288.6 million for the first quarter
of 1996 compared to the first quarter of 1995.
Average short-term borrowings in the first quarter of 1996 increased
$111.4 million (66%) over the comparable period in 1995. The
increase was primarily due to growth in cash management products
(primarily repurchase agreements which "sweep" funds from deposit
accounts) as a result of continued marketing efforts. These products
allow Hibernia customers to earn interest on idle deposits.
Fluctuations in short-term borrowings can also stem from differences
in the timing of the expansion of lending opportunities and the growth
of other funding sources (deposits and proceeds from maturing
securities). The Company's reliance on these funds, while higher than
a year ago, is still within parameters determined by management to be
prudent in terms of liquidity and interest rate sensitivity.
The increases in short-term borrowings were partially offset by
decreases in long-term debt totaling $3.8 million for the first
quarter of 1996 compared to the same period in 1995. The Company's
long-term debt at March 31, 1996, is comprised of advances from the
Federal Home Loan Bank of Dallas.
INTEREST RATE SENSITIVITY
The primary objective of asset/liability management is controlling
interest rate risk. On a monthly basis, management monitors the
sensitivity of net interest income to changes in interest rates
through methods that include simulation and gap reports. Using these
tools, management attempts to optimize the asset/liability mix to
minimize the impact of significant rate movements within a broad range
of interest rate scenarios. Management may alter the mix of floating-
and fixed-rate assets and liabilities, change pricing schedules and
enter into derivative contracts as a means of limiting interest rate
risk.
On a limited basis, the Company has entered into interest rate swap,
forward and option contracts to hedge interest rate risk on specific
assets and liabilities. At March 31, 1996 no such contracts were in
effect.
Derivative financial instruments are also held or issued by the
Company for trading purposes to provide customers the ability to
manage their own interest rate and foreign exchange risk. In general,
matched trading positions are established to minimize risk to the
Company. The notional value of these instruments totaled $271.7
million at March 31, 1996. In addition to these customer-related
derivative financial instruments, the Company has entered into trading
contracts for its own account which total $36.3 million. As of March
31, 1996, Hibernia's risk of loss due to interest rate fluctuations on
trading derivatives was approximately $.3 million.
RESULTS OF OPERATIONS:
NET INTEREST INCOME
Taxable-equivalent net interest income for the three months ended
March 31, 1996, totaled $83.9 million, an $8.6 million increase from
the same period in 1995 and a $2.5 million increase from the fourth
quarter of 1995. Factors contributing to the increase from the the
first quarter of 1995 include: the positive effect of the change in
the mix of earning assets from lower-yielding investments to loans
(67.1% of average earning assets in the first quarter of 1996 compared
to 58.1% in the first quarter of 1995); the growing contribution of
Hibernia's net noninterest bearing funds (demand deposits, other
liabilities and equity, net of nonearning assets) as these funds
increased as a proportion of earning assets; overall growth in earning
assets; and higher yields on securities. These factors were partially
offset by lower yields on loans (market rates in the first quarter of
1996 were down approximately 50 basis points from the first quarter of
1995), and higher rates paid on deposits as a result of the lag in
repricing of CDs and the shift of funds from lower rate money market
deposits into certificates of deposit.
The increase in net interest income in the first quarter of 1996
compared to the fourth quarter of 1995 was due to the same factors
discussed above except that securities yields were down slightly and
deposit rates decreased.
The net interest margin was 4.87% for the first quarter of 1996, up
23 basis points from the first quarter of 1995, and up 3 basis points
from the fourth quarter of 1995. The net interest margin has improved
from the first quarter of 1995 primarily due to the positive effect of
the change in the mix in earning assets to higher yielding loans--the
major factor in the 25-basis-point increase in the overall yield on
interest earning assets. The growth of Hibernia's noninterest-bearing
funds also contributed to the increase in the net interest margin.
Table 6 details the net interest margin for the most recent five
quarters.
Table 7 presents an analysis of the Company's taxable-equivalent net
interest income and average balance sheets for the three months ended
March 31, 1996, December 31, 1995 and March 31, 1995. Although the
rate paid on NOW accounts shows an increase of 88 basis points for the
first quarter of 1996 compared to the first quarter of 1995 this
increase is due to the reclassification of the Reserve Money Manager
funds from NOW's into money market balances. Excluding this
reclassification, the NOW rate would have been 2.18%, unchanged from
the first quarter of 1995.
Table 8 presents an analysis of changes in taxable-equivalent net
interest income between the first quarter of 1996 and the fourth
quarter of 1995 and between the first quarter of 1996 and the first
quarter of 1995.
NONINTEREST INCOME
Noninterest income for the first quarter of 1996 was up $1.7 million
(7%) to $25.8 million compared to the same period of 1995 primarily
due to increases in service charges on deposits ($1.2 million), a gain
on the settlement of an acquired loan ($1.4 million), and an increase
in gains on sales of mortgage loans ($.9 million). These increases
were partially offset by a $2.4 million gain recorded in 1995 related
to the divestiture of three banking offices in Northwest Louisiana in
connection with Hibernia's merger with Pioneer Bancshares Corporation,
and by a $.6 million fee earned in 1995 to amend the terms of a large
commercial credit.
The gain on the settlement of an acquired loan, the divestiture of
three banking offices and the fee earned to amend the terms of a large
commercial credit are nonrecurring items. Excluding these items,
noninterest income increased $3.2 million (15%) in the first quarter
of 1996 over the first quarter of 1995. The major categories of
noninterest income for the three months ended March 31, 1996, and the
comparable period in 1995 are presented in Table 9.
Service charges on deposits increased $1.2 million (11%) primarily
due to increases in the price for certain deposit activities, the
number of accounts and commercial account analysis fees.
Trust fees were up $.2 million (8%) for the first quarter of 1996
compared to the same period in 1995 primarily due to new business,
partially offset by lower income due to the sale of the Bank's
municipal bond administration business, which occurred in the second
quarter of 1995.
Other service, collection and exchange fees were up $1.6 million
(28%) in the first quarter of 1996 compared to the first quarter of
1995. The major factors in this increase were significant growth in
fees generated by the Bank's upgraded and expanded ATM network, an
increase in commissions from the sale of credit insurance products and
growth in fees from retail investment services.
Other income decreased $1.3 million (30%) in the first quarter of
1996 compared to the same period in 1995. Excluding the $1.4 million
gain and the $.6 million fee previously mentioned, other income
increased $.2 million (17%).
NONINTEREST EXPENSE
For the first quarter of 1996, noninterest expense totaled $70.0
million, a $.4 million (1%) increase from the first quarter of 1995.
Included in noninterest expense is $2.1 million related to Hibernia's
strategic improvement process -- Vision 2000. Through customer-
focused business process redesign and technology enhancements, this
corporate-wide effort will provide opportunities to increase revenue
and reduce costs. In addition, Vision 2000 will create a culture
which will facilitate continuous improvement. Noninterest expense for
the three months ended March 31, 1996 and 1995, is presented by major
category in Table 10.
Staff costs, the largest component of noninterest expense, increased
$3.3 million (10%) in the first quarter of 1996 compared to the same
period a year ago. Costs related to the Hibernia employee stock
ownership plan (ESOP) which was instituted in the second quarter of
1995, an increase in Hibernia's contributions to the 401(k) plan,
higher accruals for incentives and bonuses, and increases in various
medical and insurance benefits were the major factors contributing to
the increase.
Occupancy and equipment expenses increased $.4 million (4%) in the
first quarter of 1996 compared to the first quarter of 1995 as
equipment expenses were up $.6 million (12%). This increase was
primarily due to higher depreciation expenses related to the purchase
of computer equipment to facilitate system conversions for merged
banks and to upgrade the Company's teller systems, ATMs and wide area
network.
Data processing expenses decreased $.4 million (8%). Before Vision
2000 expenses of $1.3 million, data processing expenses were down $1.7
million. The 1995 quarter included duplicate expenses to outside
vendors as Hibernia completed its conversion to a new data processor
in the first quarter of 1995. Increased efficiencies derived from
combining the separate operations of merger partners also contributed
to the decrease.
Income from foreclosed property, net of expenses, totaled $.8
million in the first quarter of 1996, compared to less than $.1
million for the same period a year ago as the first quarter of 1996
included significant gains on the sale of several properties.
Regulatory expenses decreased $3.5 million (93%) in the 1996 quarter
compared to 1995 due to the virtual elimination of FDIC premiums for
well-capitalized, highly-rated banks.
Telecommunications expenses increased $.6 million (36%), primarily
due to a change in the manner in which these expenses are incurred.
During 1995, Hibernia built and outsourced the operation of its own
wide area network to replace the network of its prior data processing
provider. Expenses that were previously included in data processing
are currently classified as telecommunications. In addition, data
line expenses related to the Bank's enhanced ATM network also
increased telecommunications expenses. Professional fees decreased
$.9 million (38%) as the decreases in legal and professional fees
related to mergers more than offset Vision 2000 consultant fees.
State taxes on equity increased $.4 million (38%) in the 1996
quarter compared to 1995 due to the increased level of equity.
Advertising and promotional expenses increased in the first quarter of
1996 compared to the same period of 1995 because of merger-related
marketing efforts and a general increase in advertising and product
development.
The Company's efficiency ratio, defined as noninterest expense as a
percentage of taxable-equivalent net interest income plus noninterest
income (excluding securities transactions), was 63.76% for the first
quarter of 1996 compared to 69.93% for the same period in 1995. The
improvement in efficiency reflects increases in net interest income
and noninterest income without a corresponding increase in overhead.
INCOME TAXES
The Company recorded $13.7 million in income taxes in the first
quarter of 1996 and $2.5 million in the first quarter of 1995. During
1995, the Company recorded federal income taxes at a lower-than-normal
effective tax rate due to previously unrecognized deferred tax
benefits.
The Bank is subject to a Louisiana shareholder tax based partly on
income. The income portion of this tax is recorded as state income
tax. In addition, certain subsidiaries of the Company and the Bank
are subject to Louisiana state income tax.
CAPITAL
Shareholders' equity totaled $739.0 million at March 31, 1996,
compared to $642.7 million at March 31, 1995. The increase is
primarily the result of net income over the most recent 12 months
totaling $124.5 million, and a $15.9 million net increase due to
changes in unrealized gains and losses on securities available for
sale, partially offset by $30.2 million in dividends and a $14.4
million increase in unearned compensation related to the ESOP
instituted on April 1, 1995. Risk-based capital and leverage ratios
exceed the ratios required for designation as a "well-capitalized"
institution under regulatory guidelines. Table 11 presents these
ratios for the most recent five quarters.
The Company's strong capital position allowed Hibernia to take
advantage of two attractive merger opportunities. The anticipated
purchase transactions with CM Bank Holding Company and St. Bernard
Bank and Trust, expected to close later this year, will enable
Hibernia to better leverage its capital by adding assets without
increasing equity. Although Hibernia's capital ratios will decline as
a result of these mergers, they would still exceed the minimum ratios
required for an institution to be designated by banking regulators as
"well capitalized."
LIQUIDITY
The loan-to-deposit ratio, one measure of liquidity, was 75.2% at
March 31, 1996, 72.8% at December 31, 1995, and 63.4% at March 31,
1995. This increase indicates that loans are growing faster than
deposits, necessitating greater reliance on other sources of funds.
Although short-term borrowings have increased in the past year, a
significant portion of the purchased funds is part of a total customer
relationship, and thus is not subject to the same volatility as other
sources of noncore funds. A measure of reliance on short-term
borrowings and other large liabilities (such as large-denomination and
public fund CD's and foreign deposits) is the large liability
dependence ratio. For the first quarter of 1996, 16.16% of Hibernia's
loans and investment securities were funded by net large liabilities
(total large liabilities less short-term investments) compared to
14.00% for the same period in 1995.
Liquidity needs can be met by the conversion of assets and by
raising additional funds. Reductions in short-term investments, sales
of securities available for sale and securitization of portions of the
loan portfolio are some of the ways to meet liquidity needs through
the conversion of assets. Hibernia attempts to meet the need for
additonal funding primarily through the generation of deposits by its
extensive retail office network. In addition, the Company's strong
financial condition and profitability provide ample access to large-
denomination liabilities as a source of liquidity. These include
certificates of deposit greater than $100,000 and public fund
deposits, as well as funds which can be purchased through the Bank's
membership in the Federal Home Loan Bank of Dallas and from
correspondent banks.
<TABLE>
<CAPTION>
TABLE 1 - COMPOSITION OF LOAN PORTFOLIO
March 31, 1996 December 31, 1995 March 31, 1995
($ in millions) Loans % Loans % Loans %
<S> <C> <C> <C> <C> <C> <C>
Commercial:
Commercial and
industrial $ 993.4 20.9 % $ 919.9 20.3 % $ 703.8 18.3 %
Commercial real estate 440.0 9.2 440.4 9.7 483.6 12.5
Services 394.1 8.3 362.1 8.0 294.7 7.6
Health care 208.2 4.4 191.6 4.2 218.2 5.7
Transportation, utilities
and communications 182.1 3.8 192.5 4.2 148.5 3.9
Individual 103.1 2.2 102.2 2.3 96.5 2.5
Energy 102.6 2.2 93.3 2.1 90.9 2.4
Total commercial 2,423.5 51.0 2,302.0 50.8 2,036.2 52.9
Consumer:
Residential mortgages:
First mortgages 1,047.2 22.0 1,005.6 22.2 793.0 20.5
Junior liens 92.0 1.9 91.0 2.0 83.3 2.2
Indirect 703.4 14.8 660.7 14.6 535.1 13.9
Revolving credit 97.6 2.1 91.9 2.0 76.5 2.0
Student - - 0.7 - 100.4 2.6
Other 391.2 8.2 381.9 8.4 228.2 5.9
Total consumer 2,331.4 49.0 2,231.8 49.2 1,816.5 47.1
Total loans $ 4,754.9 100.0 % $ 4,533.8 100.0 % $ 3,852.7 100.0 %
</TABLE>
<TABLE>
<CAPTION>
TABLE 2 - NONPERFORMING ASSETS
March 31 Dec. 31 Sept. 30 June 30 March 31
($ in thousands) 1996 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $ 18,492 $ 17,318 $ 19,611 $ 20,858 $ 21,801
Restructured loans - - - - -
Total nonperforming loans 18,492 17,318 19,611 20,858 21,801
Foreclosed assets 8,601 8,290 8,550 8,297 8,766
Total nonperforming assets $ 27,093 $ 25,608 $ 28,161 $ 29,155 $ 30,567
Accruing loans past due
90 days or more $ 5,795 $ 2,794 $ 2,843 $ 5,311 $ 4,303
Reserve for possible loan losses $ 144,913 $ 147,678 $ 152,053 $ 152,235 $ 153,777
Nonperforming loans as a percentage
of total loans 0.39 % 0.38 % 0.46 % 0.51 % 0.57 %
Nonperforming assets as a percentage
of total loans plus foreclosed assets 0.57 % 0.56 % 0.66 % 0.72 % 0.79 %
Reserve for possible loan losses as a
percentage of nonperforming loans 783.65 % 852.74 % 775.35 % 729.86 % 705.37 %
</TABLE>
<TABLE>
<CAPTION>
TABLE 3 - SUMMARY OF NONPERFORMING LOAN ACTIVITY
Three Months
Ended March 31
($ in thousands) 1996 1995
<S> <C> <C>
Nonperforming loans
at beginning of period $ 17,318 $ 27,631
Additions 5,358 5,000
Charge-offs, gross (2,642) (2,537)
Returns to performing status (28) (4,362)
Payments / sales / other (1,514) (3,931)
Nonperforming loans
at end of period $ 18,492 $ 21,801
</TABLE>
<TABLE>
<CAPTION>
TABLE 4 - RESERVE FOR POSSIBLE LOAN LOSSES ACTIVITY
Three Months
Ended March 31
<S> <C> <C>
($ in thousands) 1996 1995
Balance at beginning of period $ 147,678 $ 153,957
Loans charged off (6,684) (5,686)
Recoveries 3,919 5,501
Net loans charged off (2,765) (185)
Provision for possible loan losses - 5
Balance at end of period $ 144,913 $ 153,777
Reserve for possible loan losses
as a percentage of loans 3.05 % 3.99 %
Annualized net charge-offs as a
percentage of average loans 0.24 % 0.02 %
</TABLE>
<TABLE>
<CAPTION>
TABLE 5 - DEPOSIT COMPOSITION
First Quarter 1996 Fourth Quarter 1995 First Quarter 1995
Average % of Average % of Average % of
($ in millions) Balances Deposits Balances Deposits Balances Deposits
<S> <C> <C> <C> <C> <C> <C>
Demand, noninterest-bearing $1,164.3 18.7 % $1,119.3 18.5 % $1,085.2 17.8 %
NOW accounts 219.4 3.5 286.2 4.7 708.7 11.6
Money market deposit accounts 1,466.4 23.5 1,359.9 22.4 1,061.3 17.4
Savings accounts 352.3 5.6 348.6 5.8 356.9 5.9
Other consumer time deposits 2,041.9 32.7 2,035.6 33.6 1,962.4 32.3
Total core deposits 5,244.3 84.0 5,149.6 85.0 5,174.5 85.0
Public fund certificates of
deposit of $100,000 or more 776.0 12.4 689.3 11.4 670.5 11.0
Certificates of deposit of
$100,000 or more 184.8 3.0 190.6 3.1 205.1 3.4
Foreign time deposits 38.5 0.6 33.1 0.5 35.5 0.6
Total deposits $6,243.6 100.0 % $6,062.6 100.0 % $6,085.6 100.0 %
</TABLE>
<TABLE>
<CAPTION>
TABLE 6 - NET INTEREST MARGIN (taxable-equivalent)
1996 1995
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Yield on earning assets 8.23 % 8.27 % 8.20 % 8.14 % 7.98 %
Rate on interest-bearing liabilities 4.34 4.41 4.43 4.45 4.22
Net interest spread 3.89 3.86 3.77 3.69 3.76
Contribution of
noninterest-bearing funds 0.98 0.98 0.93 0.93 0.88
Net interest margin 4.87 % 4.84 % 4.70 % 4.62 % 4.64 %
Noninterest-bearing funds
supporting earning assets 22.46 % 22.12 % 21.10 % 20.86 % 20.84 %
</TABLE>
<TABLE>
<CAPTION>
TABLE 7 - CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (1)
Taxable-equivalent basis (2) First Quarter 1996 Fourth Quarter 1995 First Quarter 1995
(Average balances $ in millions, Average Average Average
interest $ in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans (3) $4,645.8 $105,240 9.11 % $4,410.0 $101,870 9.16 % $3,800.0 $ 86,920 9.28 %
Securities available for sale (4) 2,083.6 34,003 6.53 585.7 9,816 6.70 607.9 9,716 6.39
Securities held to maturity - - - 1,617.3 26,422 6.52 1,946.8 29,889 6.16
Total securities 2,083.6 34,003 6.53 2,203.0 36,238 6.57 2,554.7 39,605 6.22
Short-term investments 193.0 2,569 5.35 88.6 1,316 5.89 191.1 2,716 5.77
Total interest-earning assets 6,922.4 $141,812 8.23 % 6,701.6 $139,424 8.27 % 6,545.8 $129,241 7.98 %
Reserve for possible loan losses (147.0) (151.2) (153.4)
Noninterest-earning assets:
Cash and due from banks 305.3 296.1 310.8
Other assets 311.0 316.9 317.5
Total noninterest-earning assets 616.3 613.0 628.3
Total assets $7,391.7 $7,163.4 $7,020.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 219.4 $ 1,667 3.06 % $ 286.2 $ 1,830 2.54 % $ 708.7 $ 3,807 2.18 %
Money market deposit accounts 1,466.4 8,747 2.40 1,359.9 8,216 2.40 1,061.3 7,444 2.84
Savings accounts 352.3 1,830 2.09 348.6 1,882 2.14 356.9 1,995 2.27
Other consumer time deposits 2,041.9 28,840 5.68 2,035.6 29,584 5.77 1,962.4 25,733 5.32
Public fund certificates of deposits
of $100,000 or more 776.0 10,515 5.45 689.3 9,987 5.75 670.5 9,717 5.88
Certificates of deposits of $100,000 or more 184.8 2,319 5.05 190.6 2,359 4.91 205.1 2,432 4.81
Foreign time deposits 38.5 544 5.68 33.1 464 5.56 35.5 485 5.54
Total interest-bearing deposits 5,079.3 54,462 4.31 4,943.3 54,322 4.36 5,000.4 51,613 4.19
Short-term borrowings 281.3 3,314 4.74 266.9 3,581 5.32 169.9 2,092 4.99
Debt 7.3 111 6.13 8.7 131 5.99 11.1 169 6.20
Total interest-bearing liabilities 5,367.9 $ 57,887 4.34 % 5,218.9 $ 58,034 4.41 % 5,181.4 $ 53,874 4.22 %
Noninterest-bearing liabilities:
Demand deposits 1,164.3 1,119.3 1,085.2
Other liabilities 119.3 125.2 131.3
Total noninterest-bearing liabilities 1,283.6 1,244.5 1,216.5
Total shareholders' equity 740.2 700.0 622.8
Total liabilities and shareholders' equity $7,391.7 $7,163.4 $7,020.7
SPREAD AND NET YIELD
Interest rate spread 3.89 % 3.86 % 3.76 %
Cost of funds supporting interest-earning assets 3.36 % 3.43 % 3.34 %
Net interest income/margin $ 83,925 4.87 % $ 81,390 4.84 % $ 75,367 4.64 %
(1) All financial information has been restated for mergers accounted for as
poolings of interests.
(2) Based on the statutory income tax rate of 35%.
(3) Excludes unearned income. Yield computations include nonaccrual loans
in loans outstanding.
(4) Yield computations are based on book values of securities available for
sale.
</TABLE>
<TABLE>
<CAPTION>
TABLE 8 - CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME (1)
First Quarter 1996 compared to:
Fourth Quarter 1995 First Quarter 1995
Increase (Decrease) Due to Change In:
($ in thousands) Volume Rate Total Volume Rate Total
<S> <C> <C> <C> <C> <C> <C>
Taxable-equivalent
interest earned on:
Loans $ 5,369 $ (1,999) $ 3,370 $ 19,167 $ (847) $ 18,320
Securities available for sale 24,451 (264) 24,187 24,078 209 24,287
Securities held to maturity (26,422) - (26,422) (29,889) - (29,889)
Short-term investments 1,403 (150) 1,253 27 (174) (147)
Total 4,801 (2,413) 2,388 13,383 (812) 12,571
Interest paid on:
NOW accounts (471) 308 (163) (3,309) 1,169 (2,140)
Money market
deposit accounts 636 (105) 531 2,536 (1,233) 1,303
Savings accounts 20 (72) (52) (25) (140) (165)
Other consumer time 91 (835) (744) 1,070 2,037 3,107
Public fund certificates of
deposit of $100,000 or more 1,203 (675) 528 1,459 (661) 798
Certificates of deposit
of $100,000 or more (72) 32 (40) (249) 136 (113)
Foreign deposits 76 4 80 43 16 59
Short-term borrowings 187 (454) (267) 1,315 (93) 1,222
Long-term debt (21) 1 (20) (58) - (58)
Total 1,649 (1,796) (147) 2,782 1,231 4,013
Taxable-equivalent
net interest income $ 3,152 $ (617) $ 2,535 $ 10,601 $ (2,043) $ 8,558
(1)Change due to mix (both rate and volume) has been allocated to volume and rate changes in proportion to the relationship
of the absolute dollar amounts to the changes in each.
</TABLE>
<TABLE>
<CAPTION>
TABLE 9 - NONINTEREST INCOME
Three Months Ended
Percentage
March 31 March 31 Increase
($ in thousands) 1996 1995 (Decrease)
<S> <C> <C> <C>
Service charges on deposits $ 12,169 $ 11,010 11 %
Trust fees 3,034 2,821 8
Other service, collection and
exchange charges:
Retail investment service income 1,834 1,551 18
Mortgage loan servicing income 1,799 1,843 (2)
ATM fees 1,544 1,022 51
Other 2,291 1,410 62
Total other service, collection
and exchange charges 7,468 5,826 28
Other income:
Gain on divestiture
of banking offices - 2,361 (100)
Other income 3,129 2,084 50
Total other income 3,129 4,445 (30)
Securities gains (losses), net - 3 (100)
Total Noninterest Income $ 25,800 $ 24,105 7 %
</TABLE>
<TABLE>
<CAPTION>
TABLE 10 - NONINTEREST EXPENSE
Three Months Ended
Percentage
March 31 March 31 Increase
($ in thousands) 1996 1995 (Decrease)
<S> <C> <C> <C>
Salaries $ 29,087 $ 27,243 7 %
Benefits 6,662 5,181 29
Total staff costs 35,749 32,424 10
Occupancy, net 6,145 6,301 (2)
Equipment 5,265 4,685 12
Total occupancy and equipment 11,410 10,986 4
Data processing 5,249 5,688 (8)
Foreclosed property expense, net (791) (42) N/M
Regulatory expense 272 3,761 (93)
Postage 1,463 1,254 17
Stationery and supplies 1,543 1,658 (7)
Telecommunications 2,186 1,606 36
Professional fees 1,388 2,256 (38)
State taxes on equity 1,500 1,089 38
Advertising and promotional expenses 2,305 1,526 51
Amortization of intangibles 960 927 4
Other 6,725 6,424 5
Total Noninterest Expense $ 69,959 $ 69,557 1 %
Efficiency ratio (1) 63.76 % 69.93 %
(1) Noninterest expense as a percentage of taxable-equivalent net
interest income plus noninterest income (excluding securities transactions).
N/M = not meaningful
</TABLE>
<TABLE>
<CAPTION>
TABLE 11 - QUARTERLY SELECTED CAPITAL RATIOS
March 31 Dec. 31 Sept. 30 June 30 March 31
1996 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Risk-based capital:
Tier 1 risk-based capital ratio 14.25% 14.49% 14.79% 14.78% 15.45%
Total risk-based capital ratio 15.52% 15.76% 16.07% 16.05% 16.73%
Leverage ratio 9.71% 9.76% 9.34% 9.05% 8.99%
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and the Bank are parties to certain pending
legal proceedings arising from matters incidental to their
business and other matters discussed below. Management believes
that the aggregate unreserved liability or loss, if any, of legal
proceedings will not have a significant effect on the
consolidated financial condition or results of operations of the
Company.
Except for such proceedings incidental to the business of
the Company and its subsidiary, there are no pending material
legal proceedings except as described below:
On January 5, 1996, suit was filed in the United States
District Court for the Southern District of Mississippi under the
name Ronald K. Humphrey v. Hibernia National Bank. Plaintiff
brought this action on behalf of all plaintiffs who were
borrowers of the Bank for whom the bank alleged extended
unauthorized credit for the forced placement of collateral
protection insurance. Plaintiff alleges that all plaintiffs
received no benefit from the insurance, the insurance included
endorsements and coverages that were unauthorized by the loan
documents, worthless, excluded or routinely dishonored.
Plaintiff further alleges that the cost of the insurance was
excessive. Plaintiff alleges violations of a number of laws by
the Bank, including, but not limited to, RICO, fraud, negligence,
breach of fiduciary duty and breach of contract. The Bank has
entered into an order with the plaintiffs' counsel which
temporarily certifies this matter as a class action for the
limited purpose of discussing a possible settlement. This order
will remain in effect until July 23, 1996. Plaintiff has not
alleged a specific amount of damages. A class action alleging
the same facts was filed in Louisiana in April of 1996, and a
single claim based on similar facts is pending in Louisiana as
well.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
A report on Form 8-K dated April 17, 1996,
was filed by the registrant reporting Item 5 Other
Events.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized to sign
on behalf of the registrant.
HIBERNIA CORPORATION
(Registrant)
Date: May 14, 1996 By: /s/ Ron E. Samford, Jr.
Ron E. Samford, Jr.
Executive Vice President and
Controller (principal accounting
officer)
<TABLE> <S> <C>
<ARTICLE> 9
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 304,674
<INT-BEARING-DEPOSITS> 484
<FED-FUNDS-SOLD> 242,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,996,905
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 4,754,917
<ALLOWANCE> 144,913
<TOTAL-ASSETS> 7,474,608
<DEPOSITS> 6,321,124
<SHORT-TERM> 285,562
<LIABILITIES-OTHER> 121,675
<LONG-TERM> 7,063
0
0
<COMMON> 234,396
<OTHER-SE> 504,586
<TOTAL-LIABILITIES-AND-EQUITY> 7,474,608
<INTEREST-LOAN> 104,209
<INTEREST-INVEST> 33,672
<INTEREST-OTHER> 2,569
<INTEREST-TOTAL> 140,450
<INTEREST-DEPOSIT> 54,462
<INTEREST-EXPENSE> 57,887
<INTEREST-INCOME-NET> 82,563
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 69,959
<INCOME-PRETAX> 38,404
<INCOME-PRE-EXTRAORDINARY> 24,712
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,712
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
<YIELD-ACTUAL> 4.87
<LOANS-NON> 18,492
<LOANS-PAST> 5,795
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 21,800
<ALLOWANCE-OPEN> 147,678
<CHARGE-OFFS> 6,684
<RECOVERIES> 3,919
<ALLOWANCE-CLOSE> 144,913
<ALLOWANCE-DOMESTIC> 144,913
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 46,900
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-31-1995 SEP-30-1995 JUN-30-1995 MAR-31-1995
<EXCHANGE-RATE> 1 1 1 1
<CASH> 384,307 315,957 363,218 298,126
<INT-BEARING-DEPOSITS> 682 880 20,985 9,864
<FED-FUNDS-SOLD> 90,321 94,530 46,110 101,649
<TRADING-ASSETS> 0 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 2,163,123 544,322 563,796 611,049
<INVESTMENTS-CARRYING> 0 1,721,166 1,939,334 1,998,660
<INVESTMENTS-MARKET> 0 1,725,833 1,940,827 1,968,280
<LOANS> 4,533,822 4,279,128 4,063,207 3,852,738
<ALLOWANCE> 147,678 152,053 152,235 153,777
<TOTAL-ASSETS> 7,342,535 7,118,321 7,164,779 7,027,305
<DEPOSITS> 6,229,675 6,063,160 6,121,770 6,072,344
<SHORT-TERM> 258,532 238,668 260,682 193,123
<LIABILITIES-OTHER> 112,942 118,976 113,501 108,265
<LONG-TERM> 8,667 8,837 9,101 10,871
0 0 0 0
0 0 0 0
<COMMON> 234,383 234,359 234,305 234,279
<OTHER-SE> 498,336 454,321 425,418 408,423
<TOTAL-LIABILITIES-AND-EQUITY> 7,342,535 7,118,321 7,164,779 7,027,305
<INTEREST-LOAN> 373,738 272,876 117,151 85,838
<INTEREST-INVEST> 154,486 118,588 80,202 39,211
<INTEREST-OTHER> 7,060 5,744 3,445 2,716
<INTEREST-TOTAL> 535,284 397,208 260,798 127,765
<INTEREST-DEPOSIT> 215,135 160,813 105,838 51,613
<INTEREST-EXPENSE> 228,937 170,903 111,992 53,874
<INTEREST-INCOME-NET> 306,347 226,305 148,806 73,891
<LOAN-LOSSES> (135) (135) (140) 5
<SECURITIES-GAINS> (2) (53) (44) 3
<EXPENSE-OTHER> 269,329 201,486 136,880 69,557
<INCOME-PRETAX> 135,811 98,721 61,500 28,434
<INCOME-PRE-EXTRAORDINARY> 125,699 90,879 56,690 25,939
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 125,699 90,879 56,690 25,939
<EPS-PRIMARY> 1.04 .75 .47 .21
<EPS-DILUTED> 1.04 .75 .47 .21
<YIELD-ACTUAL> 4.70 4.65 4.63 4.64
<LOANS-NON> 17,318 19,611 20,858 21,801
<LOANS-PAST> 2,794 2,843 5,311 4,303
<LOANS-TROUBLED> 0 0 0 0
<LOANS-PROBLEM> 23,100 4,400 6,400 6,800
<ALLOWANCE-OPEN> 152,053 152,235 153,777 153,957
<CHARGE-OFFS> 24,297 16,007 10,804 5,686
<RECOVERIES> 18,153 14,239 9,222 5,501
<ALLOWANCE-CLOSE> 147,678 152,053 152,235 153,777
<ALLOWANCE-DOMESTIC> 147,678 152,053 152,235 153,777
<ALLOWANCE-FOREIGN> 0 0 0 0
<ALLOWANCE-UNALLOCATED> 45,700 69,900 67,300 58,600
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 388,372
<INT-BEARING-DEPOSITS> 8,157
<FED-FUNDS-SOLD> 206,359
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 597,406
<INVESTMENTS-CARRYING> 1,904,278
<INVESTMENTS-MARKET> 1,831,666
<LOANS> 3,685,027
<ALLOWANCE> 153,957
<TOTAL-ASSETS> 6,944,648
<DEPOSITS> 6,051,378
<SHORT-TERM> 160,218
<LIABILITIES-OTHER> 115,439
<LONG-TERM> 11,846
0
0
<COMMON> 234,080
<OTHER-SE> 371,687
<TOTAL-LIABILITIES-AND-EQUITY> 6,944,648
<INTEREST-LOAN> 296,234
<INTEREST-INVEST> 155,234
<INTEREST-OTHER> 7,554
<INTEREST-TOTAL> 459,022
<INTEREST-DEPOSIT> 161,516
<INTEREST-EXPENSE> 169,936
<INTEREST-INCOME-NET> 289,086
<LOAN-LOSSES> (18,169)
<SECURITIES-GAINS> (2,364)
<EXPENSE-OTHER> 292,267
<INCOME-PRETAX> 103,181
<INCOME-PRE-EXTRAORDINARY> 96,906
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96,906
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
<YIELD-ACTUAL> 4.61
<LOANS-NON> 21,607
<LOANS-PAST> 4,345
<LOANS-TROUBLED> 6,024
<LOANS-PROBLEM> 12,000
<ALLOWANCE-OPEN> 189,286
<CHARGE-OFFS> 24,898
<RECOVERIES> 18,654
<ALLOWANCE-CLOSE> 153,957
<ALLOWANCE-DOMESTIC> 153,957
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 36,700
</TABLE>
