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 September 30, 1997 Commission File Number 1-10294
HIBERNIA CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 72-0724532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
313 Carondelet Street, New Orleans, Louisiana 70130
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (504) 533-5332
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1997
Class A Common Stock, no par value 130,687,695 Shares
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Hibernia Corporation and Subsidiaries September 30 December 31 September 30
Unaudited ($ in thousands) 1997 1996 1996
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<S> <C> <C> <C>
Assets
Cash and due from banks ......................................... $ 415,518 $ 564,947 $ 453,523
Short-term investments .......................................... 240,555 182,910 280,029
Securities available for sale ................................... 2,010,247 2,219,127 2,087,581
Securities held to maturity ..................................... - - -
Loans, net of unearned income ................................... 7,041,630 6,104,789 5,777,776
Reserve for possible loan losses ............................ (113,796) (128,474) (133,918)
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Loans, net .............................................. 6,927,834 5,976,315 5,643,858
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Bank premises and equipment ..................................... 172,620 174,058 171,302
Customers' acceptance liability ................................. 821 135 568
Other assets .................................................... 313,498 325,635 295,443
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Total assets ............................................ $ 10,081,093 $ 9,443,127 $ 8,932,304
======================================================================================================================
Liabilities
Deposits:
Demand, noninterest-bearing ................................. $ 1,465,049 $ 1,561,793 $ 1,399,594
Interest-bearing ............................................ 6,636,694 6,385,521 6,089,850
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Total deposits .......................................... 8,101,743 7,947,314 7,489,444
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Short-term borrowings ........................................... 718,499 331,796 363,496
Liability on acceptances ........................................ 821 135 568
Other liabilities ............................................... 142,969 165,824 146,606
Debt ............................................................ 106,777 53,881 20,863
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Total liabilities ....................................... 9,070,809 8,498,950 8,020,977
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Shareholders' equity Preferred Stock, no par value:
Authorized - 100,000,000 shares; 2,000,000 Series A
issued and outstanding at September 30, 1997,
December 31, 1996 and September 30, 1996 ..................... 100,000 100,000 100,000
Class A Common Stock, no par value:
Authorized - 200,000,000 shares; issued 130,686,662,
129,966,985, and 129,743,036 at September 30, 1997,
December 31, 1996 and September 30, 1996, respectively ....... 250,919 249,537 249,107
Surplus ......................................................... 381,879 376,802 373,980
Retained earnings ............................................... 285,596 223,473 204,453
Treasury stock at cost: 51,898 and 50,000 shares at September 30,
1997 and December 31, 1996 ................................... (643) (569) -
Unrealized gains (losses) on securities available for sale ...... 10,808 8,252 (1,823)
Unearned compensation ........................................... (18,275) (13,318) (14,390)
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Total shareholders' equity .............................. 1,010,284 944,177 911,327
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Total liabilities and shareholders' equity .............. $ 10,081,093 $ 9,443,127 $ 8,932,304
======================================================================================================================
- ----------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Income Statements
Hibernia Corporation and Subsidiaries
Three Months Ended Nine Months Ended
September 30 September 30
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Unaudited ($ in thousands), except per-share data 1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans ............................. $ 151,799 $ 121,578 $ 428,469 $ 348,196
Interest on securities available for sale .............. 34,271 33,387 106,313 104,309
Interest on securities held to maturity ................ - - - -
Interest on short-term investments ..................... 3,280 2,572 9,651 7,618
- -------------------------------------------------------------------------------------------------------------------------
Total interest income .............................. 189,350 157,537 544,433 460,123
- -------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits ................................... 72,141 61,816 210,770 179,351
Interest on short-term borrowings ...................... 8,694 3,919 18,786 10,939
Interest on debt ....................................... 840 373 1,692 1,248
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Total interest expense ............................. 81,675 66,108 231,248 191,538
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Net interest income ........................................ 107,675 91,429 313,185 268,585
Provision for possible loan losses ..................... 16 (13,540) 64 (12,490)
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Net interest income after provision for possible loan losses 107,659 104,969 313,121 281,075
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Noninterest income
Service charges on deposits ............................ 18,042 14,925 51,828 42,161
Trust fees ............................................. 3,693 3,369 10,878 9,820
Other service, collection and exchange charges ......... 11,252 8,554 31,707 25,048
Other operating income ................................. 2,207 1,746 9,064 7,585
Securities gains (losses), net ......................... 1 (5,584) 372 (5,470)
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Total noninterest income ........................... 35,195 23,010 103,849 79,144
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Noninterest expense
Salaries and employee benefits ......................... 45,006 43,704 130,761 119,694
Occupancy expense, net ................................. 7,681 6,833 22,863 20,163
Equipment expense ...................................... 7,036 10,629 21,098 22,112
Data processing expense ................................ 6,120 5,687 16,270 16,088
Foreclosed property expense, net ....................... 77 (231) (498) (1,901)
Amortization of intangibles ............................ 3,220 1,719 10,261 3,653
Other operating expense ................................ 20,618 21,494 65,828 58,253
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Total noninterest expense .......................... 89,758 89,835 266,583 238,062
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Income before income taxes ................................. 53,096 38,144 150,387 122,157
Income tax expense ......................................... 18,434 13,426 52,564 42,574
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Net income ................................................. $ 34,662 $ 24,718 $ 97,823 $ 79,583
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Net income applicable to common shareholders ............... $ 32,937 $ 24,718 $ 92,648 $ 79,583
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Net income per common share ................................ $ 0.26 $ 0.19 $ 0.72 $ 0.62
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- ---------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
Hibernia Corporation and Subsidiaries
Unaudited ($ in thousands, except per-share data)
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Preferred Common Retained
Stock Stock Surplus Earnings Other Total
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<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996 ..... $100,000 $249,537 $ 376,802 $ 223,473 $(5,635) $ 944,177
Net income ........................ - - - 97,823 - 97,823
Issuance of common stock: ......... -
Dividend Reinvestment Plan ..... - 385 2,295 - - 2,680
Stock Option Plan .............. - 949 2,613 - - 3,562
Restricted stock awards ........ - 4 20 - - 24
Retirement Security Plan ....... - 44 265 - - 309
Director compensation .......... - - 32 - 225 257
Cash dividends declared:
Common ($.24 per share) ........ - - - (30,525) - (30,525)
Preferred ($2.5875 per share) .. - - - (5,175) - (5,175)
Acquisition of treasury stock ..... - - - - (299) (299)
Purchase of common shares by ESOP . - - - - (5,021) (5,021)
Allocation of ESOP shares ......... - - - - 64 64
Change in unrealized gains (losses)
on securities available for sale - - - - 2,556 2,556
Other ............................. - - (148) - - (148)
- -----------------------------------------------------------------------------------------------------------------
Balances at September 30, 1997 .... $100,000 $250,919 $ 381,879 $ 285,596 $(8,110) $ 1,010,284
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
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Preferred Common Retained
Stock Stock Surplus Earnings Other Total
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<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1995 ........ $ - $248,587 $ 371,838 $ 150,920 $ 2,020 $ 773,365
Net income ........................... - - - 79,583 - 79,583
Issuance of common stock:
Dividend Reinvestment Plan ........ - 145 646 - - 791
Stock Option Plan ................. - 141 199 - 483 823
Retirement Security Plan .......... - 229 1,055 - - 1,284
Restricted stock awards ........... - 5 22 - 11 38
By pooled companies prior to merger - - 2,220 - - 2,220
Issuance of preferred stock .......... 100,000 - (2,000) - - 98,000
Cash dividends declared:
Common ($.21 per share) ........... - - - (25,268) - (25,268)
By pooled companies prior to merger - - - (782) - (782)
Acquisition of treasury stock ........ - - - - (311) (311)
Change in unrealized gains (losses)
on securities available for sale .. - - - - (18,416) (18,416)
- -----------------------------------------------------------------------------------------------------------------
Balances at September 30, 1996 ....... $100,000 $249,107 $ 373,980 $ 204,453 $ (16,213) $ 911,327
=================================================================================================================
- --------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Hibernia Corporation and Subsidiaries
Nine Months Ended September 30
Unaudited ($ in thousands) 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities
Net income ......................................................... $ 97,823 $ 79,583
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses .......................... 64 (12,490)
Amortization of intangibles and deferred charges ............ 9,911 3,653
Depreciation and amortization ............................... 19,519 20,649
Premium amortization, net of discount accretion ............. 1,637 4,432
Realized securities (gains) losses, net ..................... (372) 5,470
Gain on sale of assets ...................................... (1,021) (2,292)
Provision for losses on foreclosed and other assets ......... 827 1,070
Decrease in deferred income tax asset ....................... 1,846 1,186
Decrease in interest receivable and other assets ............ 1,163 9,130
Increase (decrease) in interest payable and other liabilities (22,924) 19,227
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Net cash provided by operating activities ..................... 108,473 129,618
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Investing activities
Purchases of securities available for sale ......................... (160,345) (183,576)
Proceeds from sales of securities available for sale ............... 2,078 265,211
Proceeds from maturities of securities available for sale .......... 369,823 403,734
Net increase in loans .............................................. (1,249,397) (870,389)
Proceeds from sales of loans ....................................... 295,186 233,788
Acquisitions, net of cash acquired of $131,985 ..................... - (66,735)
Purchases of premises, equipment and other assets .................. (23,950) (21,871)
Proceeds from sales of foreclosed assets ........................... 6,271 6,902
Proceeds from sales of premises, equipment and other assets ........ 150 1,066
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Net cash used by investing activities ......................... (760,184) (231,870)
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Financing activities
Net increase in domestic deposits .................................. 120,249 209,368
Net increase (decrease) in time deposits - foreign office .......... 34,282 (14,317)
Net increase in short-term borrowings .............................. 386,703 64,295
Proceeds from issuance of debt ..................................... 100,000 75,041
Payments on debt ................................................... (47,104) (91,609)
Proceeds from issuance of preferred stock .......................... - 98,000
Proceeds from issuance of common stock ............................. 6,832 5,156
Purchase of common stock by ESOP ................................... (5,021) -
Dividends paid ..................................................... (35,715) (26,050)
Acquisition of treasury stock ...................................... (299) (311)
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Net cash provided by financing activities ..................... 559,927 319,573
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Increase (decrease) in cash and cash equivalents ..................... (91,784) 217,321
Cash and cash equivalents at beginning of year ....................... 747,857 516,231
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Cash and cash equivalents at end of period .................... $ 656,073 $ 733,552
==========================================================================================================
- -------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
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. 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, 1996.
Note 2 MERGER AGREEMENTS A merger with Executive Bancshares, Inc.
("Executive") was consummated on August 31, 1997 in a transaction accounted for
as a pooling of interests. At August 31, 1997 Executive had total assets of
$135.8 million, total loans of $67.3 million and total deposits of $125.6
million. This transaction was valued at $16.8 million.
Mergers are pending with four institutions, two in Texas and two in
Louisiana: Unicorp Bancshares - Texas, Inc. ("Unicorp"), Northwest Bancshares of
Louisiana, Inc. ("Northwest"), ArgentBank ("Argent") and Firstshares of Texas,
Inc. ("Firstshares"). Certain of these mergers are pending shareholder and/or
regulatory approval. It is anticipated that these transactions will be accounted
for as poolings of interests when consummated. The following table shows
selected balances at September 30, 1997 and the estimated transaction value of
each merger assuming a value of Hibernia Class A Common Stock of $17.8125, the
closing price on October 31, 1997.
<TABLE>
<CAPTION>
Transaction
($ in millions) Assets Loans Deposits Value
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicorp (1) $ 119.3 $ 65.9 $ 106.9 $ 39.4
Northwest . 104.8 36.1 91.1 26.9
Argent .... 758.2 451.4 629.6 237.2
Firstshares 288.8 132.4 243.5 65.7
- ------------------------------------------------------------------
- -----------
(1) Consummated November 7, 1997; actual transaction value.
</TABLE>
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. The options are granted at no less than the fair market value of the
stock at the date of grant. Options granted to directors under the 1987 Stock
Option Plan vest in six months. All other 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 to employees and directors, other than the chief
executive officer, become immediately exercisable if the holder of the option
dies while the option is outstanding. Options granted under the 1993 Directors'
Stock Option Plan become fully vested upon retirement of the holder. 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 generally expire 10 years from the date of grant
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.
The following tables summarize the activity in the plans during the third
quarter of 1997.
<TABLE>
<CAPTION>
Weighted
Average
Incentive Non-Qualified Total Exercise Price
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1987 Stock Option Plan:
Outstanding, June 30, 1997 ............ 141,803 1,330,372 1,472,175 $ 7.51
Exercised ............................. - (17,469) (17,469) 6.83
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Outstanding, September 30, 1997 ....... 141,803 1,312,903 1,454,706 $ 7.52
- ----------------------------------------------------------------------------------------------------------
Exercisable, September 30, 1997 ....... 141,803 1,312,903 1,454,706 $ 7.52
- ----------------------------------------------------------------------------------------------------------
Available for grant, September 30, 1997 154,246
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Long-Term Incentive Plan:
Outstanding, June 30, 1997 ............ 12,598 6,197,184 6,209,782 $ 9.56
Canceled .............................. - (117,240) (117,240) 11.50
Exercised ............................. - (270,102) (270,102) 7.28
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Outstanding, September 30, 1997 ....... 12,598 5,809,842 5,822,440 $ 9.63
- ----------------------------------------------------------------------------------------------------------
Exercisable, September 30, 1997 ....... - 1,986,798 1,986,798 $ 7.55
- ----------------------------------------------------------------------------------------------------------
Available for grant, September 30, 1997 1,209,341
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1993 Directors' Stock Option Plan:
Outstanding, June 30, 1997 ............ - 290,000 290,000 $ 9.70
- ----------------------------------------------------------------------------------------------------------
Outstanding, September 30, 1997 ....... - 290,000 290,000 $ 9.70
- ----------------------------------------------------------------------------------------------------------
Exercisable, September 30, 1997 ....... - 116,250 116,250 $ 7.86
- ----------------------------------------------------------------------------------------------------------
Available for grant, September 30, 1997 642,500
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</TABLE>
During 1995, the Company instituted an employee stock ownership plan
(ESOP) in which substantially all employees participate. The ESOP, with a
guarantee of Hibernia Corporation, borrowed funds from Hibernia National Bank to
purchase Hibernia Class A Common Stock. The ESOP is authorized to acquire up to
$30,000,000 of Hibernia Class A Common Stock in open-market purchases of which
$8,629,000 remains for future purchases. As of September 30, 1997, the ESOP held
2,431,388 shares of Hibernia Class A Common Stock.
Note 4 NET INCOME PER COMMON SHARE Net income per common share is based
on the weighted average number of common shares outstanding of 128,567,548 and
128,458,086 for the three months and nine months ended September 30, 1997 and
127,995,353 and 127,821,487 for the three months and nine months ended September
30, 1996. These weighted averages exclude uncommitted shares held by the ESOP.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings per Share",
which is required to be adopted on December 31, 1997. At that time, the Company
will be required to present both net income per common share and net income per
common share - assuming dilution. The adoption of SFAS No. 128 will not impact
the Company's net income per common share. However, the Company has not
previously been required to present net income per common share - assuming
dilution. If the Company had been required to adopt SFAS No. 128, net income per
common share - assuming dilution would have been $0.25 and $0.70 for the three
months and nine months ended September 30, 1997 and $0.19 and $0.61 for the
three months and nine months ended September 30, 1996.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA (1)
Hibernia Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
- ------------------------------------------------------------------------------------------------------------------------------------
Sept. 30 June 30 Sept. 30 Sept. 30 Sept. 30
($ in thousands, except per-share data) 1997 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income ................................... $ 189,350 $ 181,065 $ 157,537 $ 544,433 $ 460,123
Interest expense .................................. 81,675 76,560 66,108 231,248 191,538
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income ............................... 107,675 104,505 91,429 313,185 268,585
Provision for possible loan losses ................ 16 24 (13,540) 64 (12,490)
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses ...................... 107,659 104,481 104,969 313,121 281,075
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Noninterest income ............................. 35,194 36,105 28,594 103,477 84,614
Securities gains (losses), net ................. 1 356 (5,584) 372 (5,470)
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income ................................ 35,195 36,461 23,010 103,849 79,144
Noninterest expense ............................... 89,758 90,890 89,835 266,583 238,062
- ------------------------------------------------------------------------------------------------------------------------------------
Income before taxes ............................... 53,096 50,052 38,144 150,387 122,157
Income tax expense ................................ 18,434 17,731 13,426 52,564 42,574
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Net income ........................................ $ 34,662 $ 32,321 $ 24,718 $ 97,823 $ 79,583
- ------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders ...... $ 32,937 $ 30,596 $ 24,718 $ 92,648 $ 79,583
- ------------------------------------------------------------------------------------------------------------------------------------
Per common share information: (2)
Net income ..................................... $ 0.26 $ 0.24 $ 0.19 $ 0.72 $ 0.62
Cash dividends declared ........................ $ 0.08 $ 0.08 $ 0.07 $ 0.24 $ 0.21
Average shares outstanding (000s) ................. 128,568 128,371 127,995 128,458 127,821
Dividend payout ratio ............................. 30.77% 33.33% 36.84% 33.33% 33.87%
- ------------------------------------------------------------------------------------------------------------------------------------
Selected quarter-end balances (in millions)
Loans ............................................. $ 7,041.6 $ 6,621.1 $ 5,777.8
Deposits .......................................... 8,101.7 8,095.3 7,489.4
Debt .............................................. 106.8 9.6 20.9
Equity ............................................ 1,010.3 977.4 911.3
Total assets ...................................... 10,081.1 9,811.1 8,932.3
- ------------------------------------------------------------------------------------------------------------------------------------
Selected average balances (in millions)
Loans ............................................. $ 6,855.0 $ 6,451.1 $ 5,415.9 $ 6,489.7 $ 5,152.2
Deposits .......................................... 8,063.4 8,000.0 6,948.3 7,975.0 6,779.0
Debt .............................................. 54.0 9.7 24.3 36.9 27.9
Equity ............................................ 994.4 961.5 795.2 969.3 786.1
Total assets ...................................... 9,910.0 9,556.9 8,256.6 9,624.6 8,039.7
- ------------------------------------------------------------------------------------------------------------------------------------
Selected ratios
Net interest margin (taxable-equivalent) .......... 4.78% 4.85% 4.86% 4.82% 4.87%
Return on assets .................................. 1.40% 1.35% 1.20% 1.36% 1.32%
Return on common equity ........................... 14.73% 14.21% 12.45% 14.21% 13.51%
Return on total equity ............................ 13.94% 13.45% 12.43% 13.46% 13.50%
Efficiency ratio .................................. 61.83% 63.62% 73.91% 62.97% 66.52%
Average equity/average assets ..................... 10.03% 10.06% 9.63% 10.07% 9.78%
Tier 1 risk-based capital ratio ................... 11.33% 11.65% 12.77%
Total risk-based capital ratio .................... 12.58% 12.90% 14.03%
Leverage ratio .................................... 8.78% 8.80% 9.65%
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-effected net income and ratios excluding
goodwill and core deposit intangible amortization
and balances (3)
Net income applicable to common shareholders ...... $ 35,447 $ 33,365 $ 26,095 $ 100,785 $ 82,525
Net income per common share (2) ................... $ 0.28 $ 0.26 $ 0.20 $ 0.78 $ 0.65
Return on assets .................................. 1.52% 1.49% 1.27% 1.49% 1.37%
Return on common equity ........................... 18.77% 18.54% 14.33% 18.47% 14.65%
Efficiency ratio .................................. 59.83% 61.38% 72.66% 60.74% 65.66%
- ------------------------------------------------------------------------------------------------------------------------------------
(1) All financial information has been restated for mergers accounted for as
poolings of interests. The effects of mergers accounted for as purchase
transactions have been included from the date of consummation. Prior periods
have been conformed to current-period presentation.
(2) Income per common share data are based on the weighted average number of
common shares outstanding (net of uncommitted ESOP shares) in the respective
period. Dividends per common share are historical amounts.
(3) Amortization and balances of core deposit intangibles are net of applicable
taxes. Goodwill amortization and balances are not tax effected.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion presents a review of the major factors and trends
affecting the performance of Hibernia Corporation (the "Company" or "Hibernia")
and its subsidiaries, principally Hibernia National Bank and Hibernia National
Bank of Texas, collectively referred to as the "Banks." This discussion should
be read in conjunction with the accompanying tables and consolidated financial
statements.
MERGER ACTIVITY
During the third quarter of 1997, the Company completed its merger with
Executive Bancshares, Inc. in a transaction accounted for as a pooling of
interests. This $136 million Texas bank holding company completed a merger in
the second quarter of 1996 that was accounted for as a purchase. In 1996,
Hibernia completed five mergers, two in Louisiana and one in Texas that were
accounted for as poolings of interests, and two in Louisiana that were accounted
for as purchase transactions. All prior-year information has been restated to
reflect the effect of the mergers accounted for as poolings of interests. For
the mergers accounted for as purchase transactions, the financial information of
those institutions is combined with Hibernia as of and subsequent to
consummation.
Measures of financial performance subsequent to the purchase transactions
are more relevant when comparing "tangible" results (i.e., before amortization
of goodwill and core deposit intangibles), because they are more indicative of
cash flows, and thus the Company's ability to support growth and pay dividends.
The tangible measures of financial performance are presented in the Consolidated
Summary of Income and Selected Financial Data on the preceding page.
The institutions with which the Company merged are collectively referred to
as the "merged companies." The merged companies in transactions accounted for as
poolings of interests are referred to as the "pooled companies," and the merged
companies in transactions accounted for as purchase transactions are referred to
as the "purchased companies."
Mergers are pending with four institutions that would increase assets to
approximately $11.4 billion. Hibernia would then have 234 banking locations in
31 Louisiana parishes and nine Texas counties. Pending merger activity is
summarized below:
<TABLE>
<CAPTION>
Sept. 30, 1997 Anticipated
Assets Accounting Estimated
Bank Holding Company / Bank (millions) Treatment Merger Date
<S> <C> <C> <C>
Unicorp Bancshares-Texas, Inc./ ........ $119 Pooling November 7, 1997*
OrangeBank
Northwest Bancshares of Louisiana, Inc./ $105 Pooling Fourth Quarter 1997 +
First National Bank in Mansfield
ArgentBank (Louisiana) ................. $758 Pooling First Quarter 1998 +
Firstshares of Texas, Inc./ ............ $289 Pooling First Quarter 1998 +
First National Bank
- -----------
* Completed.
+ Pending regulatory and shareholder approval.
</TABLE>
THIRD-QUARTER 1997 HIGHLIGHTS
Hibernia Corporation's third-quarter 1997 results showed continued
improvement in earnings over the third quarter of 1996, strong loan and deposit
increases and growth in noninterest income.
o Net income for the third quarter of 1997 totaled $34.7 million ($.26
per common share), up 40% from $24.7 million ($.19 per common share) in
the third quarter of 1996. Tangible earnings per common share were $.28
in the third quarter of 1997 compared to $.20 in the third quarter of
1996. Net income for the first nine months of 1997 totaled $97.8
million ($.72 per common share), up 23% from $79.6 million ($.62 per
common share) for the first nine months of 1996. Tangible earnings per
common share were $.78 for the first nine months of 1997 compared to
$.65 for the same period in 1996.
o Tangible returns on assets (ROA) and common equity (ROCE) were 1.52%
and 18.77%, respectively, for the third quarter of 1997 compared to
1.27% and 14.33% for the same period a year ago. For the first nine
months of 1997, tangible ROA and ROCE were 1.49% and 18.47%,
respectively, compared to 1.37% and 14.65% for the same period a year
ago.
o Third-quarter 1997 results improved compared to the same period last
year because of a $16.2 million (18%) increase in net interest income
(resulting from higher average earning assets) and a $6.6 million (23%)
improvement in noninterest income (excluding securities transactions).
Noninterest expense for the third quarter of 1997 was unchanged from
the prior year. However, the third quarter of 1996 included $7.3
million in charges related to asset writedowns and increases in
reserves for medical and other expenses. In addition, the third quarter
of 1996 included securities losses totaling $5.6 million and a negative
provision for possible loan losses totaling $13.5 million.
Approximately 25% of the increase in noninterest income and 70% of the
increase in noninterest expense (excluding the $7.3 million third
quarter of 1996 charges mentioned above) was related to the purchased
companies.
o Improved results for the first nine months of 1997 over the first nine
months of 1996 were due to the same factors as the quarterly
improvement. Net interest income increased $44.6 million (17%) and
noninterest income (excluding securities transactions) increased $18.9
million (22%), while noninterest expense (excluding the $7.3 million in
1996 charges) was up $35.8 million (16%). Approximately 35% of the
increase in noninterest income and 55% of the increase in noninterest
expense (including amortization of intangibles) was related to the
purchased companies.
o Total loans grew $1.2 billion (22%) to $7.0 billion at September 30,
1997 compared to September 30, 1996 . Commercial loans grew $617.4
million (28%) to $2.8 billion. Small business banking loans increased
$223.2 million (21%) to $1.3 billion and consumer loans increased
$423.2 million (17%) to $3.0 billion.
o Asset quality remained strong with nonperforming assets as a percentage
of loans plus foreclosed assets and excess bank-owned property at 0.42%
at September 30, 1997, compared to 0.38% at September 30, 1996 and down
from 0.45% at June 30, 1997. The reserve for possible loan losses at
September 30, 1997 was almost five times the level of nonperforming
loans.
o Deposits increased $0.6 billion (8%) to $8.1 billion at September 30,
1997 compared to the third quarter of 1996. Approximately 35% of this
increase was attributable to the purchased companies.
o In October 1997, Hibernia's Board of Directors increased the quarterly
cash dividend to $.09 per common share, a 13% increase from the $.08
quarterly dividend declared in October 1996.
FINANCIAL CONDITION:
EARNING ASSETS
Earning assets averaged $9.2 billion in the third quarter of 1997, a $1.5
billion (20%) increase from the third-quarter 1996 average of $7.6 billion. The
growth in average earning assets was due to the effect of the purchased
companies and new loan growth. Hibernia has funded the loan growth primarily
through increases in deposits and borrowed funds.
Loans. Table 1 presents Hibernia's commercial and small business banking
loans classified by repayment source and consumer loans classified by type at
September 30, 1997, June 30, 1997 and September 30, 1996. Total loans increased
$420.5 million (6%) during the third quarter of 1997 as commercial loans
increased $163.3 million (6%), small business banking loans were up $81.7
million (7%) and consumer loans increased $175.5 million (6%). Compared to
September 30, 1996, loans increased $1.3 billion (22%). Commercial loans were up
$617.4 million (28%), small business banking loans grew $223.2 million (21%) and
consumer loans increased $423.2 million (17%). Increases in loans to the
services industry accounted for the largest portion of the growth in both
commercial lending and small business banking. In consumer lending, growth was
concentrated in residential mortgage loans and revolving credit loans.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TABLE 1 - COMPOSITION OF LOAN PORTFOLIO
- -------------------------------------------------------------------------------------------------------------
September 30, 1997 June 30, 1997 September 30, 1996
- -------------------------------------------------------------------------------------------------------------
($ in millions) Loans Percent Loans Percent Loans Percent
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial:
Commercial and industrial ..... $ 1,011.2 14.4% $ 934.3 14.1% $ 948.1 16.4%
Services industry ............. 575.9 8.2 524.2 7.9 333.6 5.8
Real estate ................... 474.4 6.7 462.6 7.0 373.2 6.5
Health care ................... 212.1 3.0 230.2 3.5 180.5 3.1
Transportation, communications
and utilities .............. 218.1 3.1 191.0 2.9 160.1 2.8
Energy ........................ 235.8 3.3 223.4 3.3 128.1 2.2
Other ......................... 61.0 0.9 59.5 0.9 47.5 0.8
- -------------------------------------------------------------------------------------------------------------
Total commercial ........... 2,788.5 39.6 2,625.2 39.6 2,171.1 37.6
- -------------------------------------------------------------------------------------------------------------
Small Business Banking:
Commercial and industrial ..... 506.7 7.2 501.5 7.6 548.3 9.5
Services industry ............. 284.0 4.0 250.3 3.8 155.8 2.7
Real estate ................... 150.4 2.1 143.0 2.2 121.3 2.1
Health care ................... 67.2 1.0 55.5 0.8 44.0 0.7
Transportation, communications
and utilities .............. 34.2 0.5 29.9 0.5 21.3 0.4
Energy ........................ 13.9 0.2 13.3 0.2 6.1 0.1
Other ......................... 227.4 3.2 208.6 3.1 163.8 2.8
- -------------------------------------------------------------------------------------------------------------
Total small business banking 1,283.8 18.2 1,202.1 18.2 1,060.6 18.3
- -------------------------------------------------------------------------------------------------------------
Consumer:
Residential mortgages:
First mortgages ............ 1,405.1 20.0 1,264.4 19.1 997.9 17.3
Junior liens ............... 123.2 1.7 123.2 1.8 117.4 2.0
Indirect ...................... 704.5 10.0 712.5 10.8 752.3 13.0
Revolving credit .............. 259.7 3.7 232.1 3.5 109.5 1.9
Other ......................... 476.8 6.8 461.6 7.0 569.0 9.9
- -------------------------------------------------------------------------------------------------------------
Total consumer ............. 2,969.3 42.2 2,793.8 42.2 2,546.1 44.1
- -------------------------------------------------------------------------------------------------------------
Total loans ...................... $ 7,041.6 100.0% $ 6,621.1 100.0% $ 5,777.8 100.0%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Average loans for the third quarter of 1997 of $6.9 billion were up $0.4
billion (6%) from the second quarter of 1997 and up $1.4 billion (27%) compared
to the third quarter of 1996. For the first nine months of 1997 average loans
increased $1.3 billion (26%) compared to the first nine months of 1996. The
purchased companies accounted for less than 25% of the increases over the
comparable periods in 1996.
Securities. Average securities increased $52.8 million (3%) in the third
quarter of 1997 compared to the third quarter of 1996 and were almost flat at
$2.1 billion for the first nine months of 1997 compared to the same period in
1996. Increases as a result of the purchased companies and the purchase of new
securities offset decreases due to maturing securities.
Short-Term Investments. For the three months ended September 30, 1997
average short-term investments (primarily federal funds sold) totaled $233.7
million, up $42.2 million (22%) compared to the third quarter of 1996 average of
$191.5 million. Average short-term investments increased $44.7 million (23%) to
$236.1 million for the first nine months of 1997 compared to the same period in
1996.
ASSET QUALITY
Nonperforming assets as a percentage of total loans plus foreclosed assets
and excess bank-owned property at September 30, 1997 was 0.42%, down from 0.45%
at June 30, 1997 and up slightly from 0.38% a year ago. Nonperforming assets --
which include nonaccrual loans, restructured loans, foreclosed assets and excess
bank-owned property -- totaled $29.5 million at September 30, 1997.
Nonperforming assets decreased $0.3 million (1%) from $29.8 million at June 30,
1997 and increased $7.5 million (34%) from $22.0 million at September 30, 1996.
Nonperforming loans, which totaled $22.9 million at September 30, 1997,
increased $0.4 million (2%) from the prior quarter end and $7.8 million (52%)
from a year ago. Foreclosed assets totaled $4.4 million at September 30, 1997,
almost flat compared to June 30, 1997 and down $0.2 million (5%) from September
30, 1996. Excess bank-owned property at September 30, 1997 was down $0.6 million
(22%) from June 30, 1997, and down $0.1 million (4%) compared to a year earlier.
Table 2 presents a summary of nonperforming assets at the end of the last five
quarters.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
TABLE 2 - NONPERFORMING ASSETS
- ------------------------------------------------------------------------------------------------------------
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
($ in thousands) 1997 1997 1997 1996 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans ........................ $ 22,862 $ 22,485 $ 16,685 $ 15,852 $ 15,050
Restructured loans ...................... - - - - -
- ------------------------------------------------------------------------------------------------------------
Total nonperforming loans ........... 22,862 22,485 16,685 15,852 15,050
- ------------------------------------------------------------------------------------------------------------
Foreclosed assets ....................... 4,417 4,464 4,330 5,206 4,635
Excess bank-owned property .............. 2,218 2,840 3,008 3,670 2,307
- ------------------------------------------------------------------------------------------------------------
Total nonperforming assets .......... $ 29,497 $ 29,789 $ 24,023 $ 24,728 $ 21,992
- ------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ........ $113,796 $120,930 $120,605 $128,474 $133,918
Nonperforming loans as a percentage
of total loans ...................... 0.32% 0.34% 0.27% 0.26% 0.26%
Nonperforming assets as a percentage
of total loans plus foreclosed assets
and excess bank-owned property ...... 0.42% 0.45% 0.38% 0.40% 0.38%
Reserve for possible loan losses as a
percentage of nonperforming loans ... 497.75% 537.83% 722.83% 810.46% 889.82%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
TABLE 3 - LOAN DELINQUENCIES (1)
- -------------------------------------------------------------------------------------------------------------------
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
($ in millions) 1997 1997 1997 1996 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Days past due:
30 to 89 days ................................ $ 44.6 $ 44.4 $ 45.8 $ 69.6 $ 48.0
90 days or more .............................. 4.4 3.2 4.8 5.3 3.7
- -----------------------------------------------------------------------------------------------------------
Total delinquencies ...................... $ 49.0 $ 47.6 $ 50.6 $ 74.9 $ 51.7
- -----------------------------------------------------------------------------------------------------------
Total delinquencies as a percentage of loans:
Commercial ................................... 0.13% 0.19% 0.20% 0.84% 0.03%
Small business banking ....................... 1.06 0.93 1.15 1.28 1.25
Consumer ..................................... 1.07 1.12 1.22 1.55 1.48
Total loans .................................. 0.70 0.72 0.81 1.23 0.89
- -----------------------------------------------------------------------------------------------------------
- --------------
(1) Accruing loans past due as to principal and/or interest 30 days or more
</TABLE>
Table 3 shows loan delinquencies for the last five quarters. Both the
amount and percentages of loan delinquencies declined at September 30, 1997
compared to September 30, 1996. Although the amount of total delinquencies
increased $1.4 million (3%) from June 30, 1997, delinquencies as a percentage of
loans declined as the growth in loans outpaced the increase in delinquent loans.
At September 30, 1997 less than 9% of delinquencies were 90 days or more past
due.
At September 30, 1997 the recorded investment in loans considered impaired
under Statement of Financial Accounting Standards (SFAS) No. 114 was $19.6
million. The related portion of the reserve for possible loan losses was $3.1
million. The comparable amounts at September 30, 1996 were $14.8 million and
$2.7 million, respectively. These loans are included in nonaccrual loans in
Table 2.
Table 4 presents a summary of changes in nonperforming loans for the
three-month and nine-month periods ended September 30, 1997 and 1996. Loans
totaling $5.2 million were added to nonperforming loans during the third quarter
of 1997. Payments and sales resulted in a $2.7 million reduction in
nonperforming loans and charge-offs further reduced nonperforming loans in the
third quarter of 1997 by $2.0 million. For the first nine months of 1997 $36.5
million of loans were added to nonperforming loans with payments and sales
reducing nonperforming loans by $20.6 million. In the event that nonaccrual
loans that have been charged-off are recovered in subsequent periods, the
recoveries would be reflected in the reserve for possible loan losses in Table 5
and not as a component of nonperforming loan activity.
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 $17.9 million at September 30, 1997
compared to $30.2 million at September 30, 1996 and $19.3 million at June 30,
1997.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
TABLE 4 - SUMMARY OF NONPERFORMING LOAN ACTIVITY
- ---------------------------------------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
- ---------------------------------------------------------------------------------------
($ in thousands) 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nonperforming loans
at beginning of period . $ 22,485 $ 18,217 $ 15,852 $ 17,692
Additions .................. 5,193 8,168 36,512 18,216
Charge-offs, gross ......... (1,951) (3,934) (7,855) (9,003)
Returns to performing status (202) (671) (1,243) (831)
Payments and sales ......... (2,663) (6,730) (20,404) (11,024)
- ---------------------------------------------------------------------------------------
Nonperforming loans
at end of period ....... $ 22,862 $ 15,050 $ 22,862 $ 15,050
- ---------------------------------------------------------------------------------------
</TABLE>
RESERVE AND PROVISION FOR POSSIBLE LOAN LOSSES
As a result of the low level of nonperforming loans and strong reserve
coverage of nonperforming loans, nominal provisions for possible loan losses
were recorded by one of the pooled companies for the third quarter and first
nine months of 1997 compared to negative provisions recorded in the same periods
of 1996.
Net charge-offs in the third quarter of 1997 totaled $7.2 million compared
to $5.7 million in the same period in 1996. As a percentage of average loans,
annualized net charge-offs were 0.42% in the third quarter of 1997, unchanged
from the third quarter of 1996. For the first nine months of 1997, net
charge-offs totaled $14.7 million compared to $10.0 million for the first nine
months of 1996. Included in net charge-offs for the first nine months of 1997
are $4.2 million in recoveries related to the collection of a large commercial
loan and the sale of a group of consumer loans in bankruptcy. Annualized net
charge-offs for the first nine months of 1997 and 1996 were 0.30% and 0.26%,
respectively. Excluding the $4.2 million in recoveries discussed above,
annualized net charge-offs would have been 0.39% for first nine months of 1997.
The reserve for possible loan losses totaled $113.8 million, or 1.62% of
total loans, at September 30, 1997, compared to $133.9 million, or 2.32%, a year
earlier. In terms of both dollar amount and as a percentage of loans, the
reserve for possible loan losses has been declining since the end of 1993 as a
result of net charge-offs, negative provisions and loan growth. As of September
30, 1997 the reserve for possible loan losses as a percentage of nonperforming
loans was 498%, compared to 890% at September 30, 1996 and 538% at June 30,
1997. Management has deemed the present level to be adequate to absorb future
potential loan losses inherent in the existing portfolio considering the level
and mix of the loan portfolio, current economic conditions and market trends.
Although factors such as loan growth, the future collectibility of loans and the
amounts and timing of future cash flows expected to be received on impaired
loans are uncertain, current projections indicate that provisions for possible
loan losses may be recorded in 1998. Table 5 presents an analysis of the
activity in the reserve for possible loan losses for the third quarter and first
nine months of 1997 and 1996.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
TABLE 5 - RESERVE FOR POSSIBLE LOAN LOSSES ACTIVITY
- ------------------------------------------------------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
- ------------------------------------------------------------------------------------------------------
($ in thousands) 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of period .... $ 120,930 $ 147,859 $ 128,474 $ 151,048
Loans charged off ................. (10,317) (9,863) (32,548) (23,976)
Recoveries ........................ 3,167 4,147 17,806 13,996
- ------------------------------------------------------------------------------------------------------
Net loans charged off ............. (7,150) (5,716) (14,742) (9,980)
Provision for possible loan losses 16 (13,540) 64 (12,490)
Addition due to purchased companies - 5,315 - 5,340
- ------------------------------------------------------------------------------------------------------
Balance at end of period .......... $ 113,796 $ 133,918 $ 113,796 $ 133,918
- ------------------------------------------------------------------------------------------------------
Reserve for possible loan losses
as a percentage of loans ...... 1.62% 2.32% 1.62% 2.32%
Annualized net charge-offs as a
percentage of average loans ... 0.42% 0.42% 0.30% 0.26%
- ------------------------------------------------------------------------------------------------------
</TABLE>
FUNDING SOURCES:
DEPOSITS AND BORROWINGS
Deposits. Average deposits totaled $8.1 billion in the third quarter of
1997, a $1.1 billion (16%) increase from the third quarter of 1996. For the
first nine months of 1997 compared to the same period in 1996, average deposits
increased $1.2 billion (18%) to $8.0 billion. Approximately 60% of the increase
in average deposits in both the quarterly and year-to-date periods was
attributable to the purchased companies. The remainder of the deposit growth
resulted from Hibernia's emphasis on attracting new deposits and expanding
current banking relationships through outstanding service and the introduction
of new products such as the Tower Super SavingsSM account (which offers
liquidity and a rate indexed to the 90-day Treasury bill auction discount rate)
and the 7-day certificate of deposit. Table 6 presents the composition of
average deposits for the third and second quarters of 1997 and the third quarter
of 1996.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
TABLE 6 - DEPOSIT COMPOSITION
- -------------------------------------------------------------------------------------------------------------------
Third Quarter 1997 Second Quarter 1997 Third Quarter 1996
- -------------------------------------------------------------------------------------------------------------------
Average % of Average % of Average % of
($ in millions) Balances Deposits Balances Deposits Balances Deposits
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Demand, noninterest-bearing ... $ 1,402.7 17.4% $ 1,385.7 17.3% $ 1,212.1 17.4%
NOW accounts .................. 323.0 4.0 327.5 4.1 310.4 4.5
Money market deposit accounts . 1,594.1 19.8 1,565.6 19.6 1,435.9 20.7
Savings accounts .............. 714.7 8.8 675.7 8.5 374.1 5.4
Other consumer time deposits .. 2,578.9 32.0 2,579.3 32.2 2,372.6 34.1
- -------------------------------------------------------------------------------------------------------------------
Total core deposits ....... 6,613.4 82.0 6,533.8 81.7 5,705.1 82.1
- -------------------------------------------------------------------------------------------------------------------
Public fund certificates of
deposit of $100,000 or more 937.5 11.6 990.8 12.4 889.9 12.8
Certificates of deposit of
$100,000 or more .......... 415.0 5.2 394.3 4.9 316.9 4.6
Foreign time deposits ......... 97.5 1.2 81.1 1.0 36.4 0.5
- -------------------------------------------------------------------------------------------------------------------
Total deposits ............ $ 8,063.4 100.0% $ 8,000.0 100.0% $ 6,948.3 100.0%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Average core deposits totaled $6.6 billion in the third quarter of 1997, a
$908.3 million (16%) increase from the third quarter of 1996. Average demand
deposits grew $190.6 million, money market deposits grew $158.2 million, savings
deposits increased $340.6 million and other consumer time deposits grew $206.3
million in the third quarter of 1997 compared to the third quarter of 1996. In
addition to the impact of the purchased companies, savings and other consumer
time deposits experienced growth due to the introduction of new products.
Average noncore deposits increased $206.8 million (17%) from the third
quarter of 1996, with the purchased companies accounting for 35% of the
increase. Public fund certificates of deposit increased $47.6 million (5%) and
other large-denomination certificates of deposit increased $98.1 million (31%).
The increase in public fund deposits is due, in part, to greater access in new
markets (through mergers) to public agency funds as well as increases in funds
from previously existing relationships.
Borrowings. Average borrowings -- which include federal funds purchased,
securities sold under agreements to repurchase (repurchase agreements) and debt
- -- increased $353.3 million (100%) to $705.5 million for the third quarter of
1997 compared to the third quarter of 1996. For the first nine months of 1997
compared to the same period in 1996 average borrowings increased $194.2 million
(58%) to $529.4 million.
Average debt for the third quarter of 1997, totaled $54.0 million, up from
$24.3 million in the third quarter of 1996. At September 30, 1997, the Company's
debt, which is comprised of advances from the Federal Home Loan Bank of Dallas,
totaled $106.8 million. Debt increased $85.9 million from September 30, 1996 as
Hibernia locked in attractive fixed rates to fund its growing loan portfolio.
Since September 30, 1997, Hibernia has increased its debt by $100 million and is
committed to borrow an additional $200 million over the next five months in
anticipation of continuing loan growth. The Company's reliance on borrowings,
while higher than a year ago, is still within parameters determined by
management to be prudent in terms of liquidity and interest rate sensitivity.
INTEREST RATE SENSITIVITY
The primary objective of asset/liability management is controlling interest
rate risk. On a continuing 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. To minimize interest rate risk,
management may alter the mix of floating- and fixed-rate assets and liabilities,
change pricing schedules and enter into derivative contracts.
On a limited basis, the Company has entered into interest rate and foreign
exchange rate swap, forward and option contracts to hedge interest rate or
foreign exchange risk on specific assets and liabilities. Derivative financial
instruments were entered into by one of the pooled companies to hedge against
exposure to changes in interest rates on the market value of the securities
available for sale portfolio. At September 30, 1996, the notional value of these
derivatives was $176.0 million. The fair value at that date of $2.6 million is
included in the securities available for sale portfolio. These derivatives were
liquidated during the first quarter of 1997. At September 30, 1997, Hibernia
held foreign exchange rate forward contracts totaling $15.8 million, which
minimize the Company's exchange rate risk on loans to be repaid in foreign
currencies. Hibernia also held an interest rate swap of $115.0 million that is
used to manage interest rate risk on specific deposits.
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 $150.6 million at September 30, 1997. In addition to these
customer-related financial instruments, the Company has entered into contracts
for its own account which total $127.0 million. As of September 30, 1997,
Hibernia's credit exposure related to derivative financial instruments held for
trading totaled $0.7 million.
RESULTS OF OPERATIONS:
NET INTEREST INCOME
Taxable-equivalent net interest income for the third quarter of 1997,
totaled $110.0 million, a $17.0 million increase from the same period in 1996
and up $3.2 million from the second quarter of 1997. Taxable-equivalent net
interest income for the first nine months of 1997 totaled $319.9 million, a
$46.6 million increase over the first nine months of 1996.
Factors contributing to the increase in net interest income for the third
quarter and first nine months of 1997 over the comparable periods in 1996
include: the effect of the purchased companies, overall growth in earning
assets, higher yields on securities and the positive effect of the change in the
mix of earning assets from lower-yielding securities to loans. Loans comprised
74.8% of average earning assets in the third quarter of 1997 compared to 71.0%
in the same period in 1996. These factors were partially offset by lower yields
on loans and rising funding costs as a result of increases in borrowings. The
decline in loan yields in the first nine months of 1997 was partially due to a
$2.2 million increase in 1996 related to income on nonaccrual or previously
charged-off loans.
The analysis of Consolidated Average Balances, Interest and Rates on pages
18 and 19 of this discussion presents the Company's taxable-equivalent net
interest income and average balances for the three months ended September 30,
1997, June 30, 1997 and September 30, 1996, and for the first nine months of
1997 and 1996.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES, INTEREST AND RATES
- -------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1) Third Quarter 1997 Second Quarter 1997
- -------------------------------------------------------------------------------------------------------------------------------
(Average balances $ in millions, Average Average
interest $ in thousands) Balance Interest Rate Balance Interest Rate
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Commercial loans .............................. $ 2,723.2 $ 60,758 8.85% $ 2,573.3 $ 56,569 8.82%
Small business banking loans .................. 1,241.5 29,912 9.56 1,154.0 27,541 9.57
Consumer loans ................................ 2,890.3 62,116 8.54 2,723.8 59,275 8.72
- -------------------------------------------------------------------------------------------------------------------------------
Total loans (2) ........................... 6,855.0 152,786 8.85 6,451.1 143,385 8.91
- -------------------------------------------------------------------------------------------------------------------------------
Securities available for sale ................. 2,070.8 35,589 6.87 2,128.3 36,756 6.91
Short-term investments ........................ 233.7 3,280 5.57 231.9 3,188 5.52
- -------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets ............. 9,159.5 $ 191,655 8.32% 8,811.3 183,329 8.34%
- -------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses .................. (118.8) (120.4)
Noninterest-earning assets:
Cash and due from banks ....................... 380.6 371.2
Other assets .................................. 488.7 494.8
- -------------------------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets .......... 869.3 866.0
- -------------------------------------------------------------------------------------------------------------------------------
Total assets .............................. $ 9,910.0 $ 9,556.9
===============================================================================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts .............................. $ 323.0 $ 2,581 3.17% $ 327.5 $ 2,467 3.02%
Money market deposit accounts ............. 1,594.1 10,270 2.56 1,565.6 9,830 2.52
Savings accounts .......................... 714.7 5,505 3.06 675.7 5,113 3.04
Other consumer time deposits .............. 2,578.9 33,996 5.23 2,579.3 33,579 5.22
Public fund certificates of deposit of
$100,000 or more ................... 937.5 13,075 5.53 990.8 13,631 5.52
Certificates of deposit of $100,000 or more 415.0 5,416 5.18 394.3 5,087 5.18
Foreign time deposits ..................... 97.5 1,298 5.28 81.1 1,080 5.34
- -------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits ....... 6,660.7 72,141 4.30 6,614.3 70,787 4.29
- -------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased ................... 316.2 4,510 5.66 104.3 1,424 5.48
Repurchase agreements ..................... 335.3 4,184 4.95 338.6 4,185 4.96
Debt .......................................... 54.0 840 6.17 9.7 164 6.79
- -------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities ........ 7,366.2 $ 81,675 4.40% 7,066.9 $ 76,560 4.35%
- -------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits ............................... 1,402.7 1,385.7
Other liabilities ............................. 146.7 142.8
- -------------------------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities ..... 1,549.4 1,528.5
- -------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ........................ 994.4 961.5
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 9,910.0 $ 9,556.9
===============================================================================================================================
SPREAD AND NET YIELD
Interest rate spread............................... 3.92% 3.99%
Cost of funds supporting interest-earning assets... 3.54% 3.49%
Net interest income/margin......................... $ 109,980 4.78% $ 106,769 4.85%
===============================================================================================================================
- ---------------
(1) Based on the statutory income tax rate of 35%.
(2) Yield computations include nonaccrual loans in loans outstanding.
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES, INTEREST AND RATES (cont.)
- ------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries Nine Months Ended
Taxable-equivalent basis (1) Third Quarter 1996 September 30, 1997
- ------------------------------------------------------------------------------------------------------------------------------
(Average balances $ in millions, Average Average
interest $ in thousands) Balance Interest Rate Balance Interest Rate
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Commercial loans .............................. $1,948.4 $ 43,992 8.98% $2,556.5 $168,414 8.81%
Small business banking loans .................. 1,046.5 24,621 9.36 1,180.2 84,330 9.55
Consumer loans ................................ 2,421.0 53,900 8.86 2,753.0 178,591 8.67
- ------------------------------------------------------------------------------------------------------------------------------
Total loans (2) ........................... 5,415.9 122,513 9.00 6,489.7 431,335 8.88
- ------------------------------------------------------------------------------------------------------------------------------
Securities available for sale ................. 2,018.0 33,973 6.73 2,146.1 110,167 6.85
Short-term investments ........................ 191.5 2,571 5.33 236.1 9,651 5.46
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets ............. 7,625.4 $ 159,057 8.31% 8,871.9 $551,153 8.30%
- ------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses .................. (147.3) (121.3)
Noninterest-earning assets:
Cash and due from banks ....................... 337.0 382.0
Other assets .................................. 441.5 492.0
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets .......... 778.5 874.0
- ------------------------------------------------------------------------------------------------------------------------------
Total assets .............................. $8,256.6 9,624.6
==============================================================================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts .............................. $ 310.4 $ 2,213 2.84% $ 354.0 $ 8,090 3.05%
Money market deposit accounts ............. 1,435.9 8,486 2.35 1,574.0 29,513 2.51
Savings accounts .......................... 374.1 2,017 2.14 634.8 13,826 2.91
Other consumer time deposits .............. 2,372.6 32,508 5.45 2,579.2 101,104 5.24
Public fund certificates of deposit
of $100,000 or more ................... 889.9 12,066 5.39 964.6 39,710 5.50
Certificates of deposit of $100,000 or more 316.9 4,035 5.06 395.8 15,272 5.16
Foreign time deposits ..................... 36.4 491 5.37 82.2 3,255 5.29
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits ....... 5,736.2 61,816 4.29 6,584.6 210,770 4.28
- ------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased ................... 50.8 652 5.11 155.3 6,488 5.58
Repurchase agreements ..................... 277.1 3,267 4.69 337.2 12,298 4.88
Debt .......................................... 24.3 373 6.10 36.9 1,692 6.14
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities ........ 6,088.4 $ 66,108 4.32% 7,114.0 $231,248 4.35%
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits ............................... 1,212.1 1,390.4
Other liabilities ............................. 160.9 150.9
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities ..... 1,373.0 1,541.3
- ------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ........................ 795.2 969.3
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $8,256.6 $ 9,624.6
==============================================================================================================================
SPREAD AND NET YIELD
Interest rate spread............................... 3.99% 3.95%
Cost of funds supporting interest-earning assets... 3.45% 3.48%
Net interest income/margin......................... $ 92,949 4.86% $319,905 4.82%
===============================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
- ---------------
(1) Based on the statutory income tax rate of 35%.
(2) Yield computations include nonaccrual loans in loans outstanding.
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES, INTEREST AND RATES (cont.)
- --------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries Nine Months Ended
Taxable-equivalent basis (1) September 30, 1996
- --------------------------------------------------------------------------------------------
(Average balances $ in millions, Average
interest $ in thousands) Balance Interest Rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Interest-earning assets:
Commercial loans .............................. $1,896.3 $131,364 9.25%
Small business banking loans .................. 965.6 67,631 9.36
Consumer loans ................................ 2,290.3 152,124 8.87
- --------------------------------------------------------------------------------------------
Total loans (2) ........................... 5,152.2 351,119 9.10
- --------------------------------------------------------------------------------------------
Securities available for sale ................. 2,149.4 106,072 6.58
Short-term investments ........................ 191.4 7,618 5.32
- --------------------------------------------------------------------------------------------
Total interest-earning assets ............. 7,493.0 $464,809 8.28%
- --------------------------------------------------------------------------------------------
Reserve for possible loan losses (148.9)
Noninterest-earning assets:
Cash and due from banks ....................... 326.9
Other assets .................................. 368.7
- --------------------------------------------------------------------------------------------
Total noninterest-earning assets .......... 695.6
- --------------------------------------------------------------------------------------------
Total assets .............................. $8,039.7
============================================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts .............................. $ 294.2 $ 6,144 2.79%
Money market deposit accounts ............. 1,477.9 26,338 2.38
Savings accounts .......................... 373.7 5,928 2.12
Other consumer time deposits .............. 2,284.2 95,144 5.56
Public fund certificates of deposit
of $100,000 or more ................... 847.9 34,118 5.37
Certificates of deposit of $100,000 or more 261.9 10,068 5.13
Foreign time deposits ..................... 39.5 1,611 5.45
- --------------------------------------------------------------------------------------------
Total interest-bearing deposits ....... 5,579.3 179,351 4.29
- --------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased ................... 48.5 1,873 5.16
Repurchase agreements ..................... 258.8 9,066 4.68
Debt .......................................... 27.9 1,248 5.97
- --------------------------------------------------------------------------------------------
Total interest-bearing liabilities ........ 5,914.5 $191,538 4.33%
- --------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits ............................... 1,199.7
Other liabilities ............................. 139.4
- --------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities ..... 1,339.1
- --------------------------------------------------------------------------------------------
Total shareholders' equity ........................ 786.1
- --------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $8,039.7
============================================================================================
SPREAD AND NET YIELD
Interest rate spread............................... 3.95%
Cost of funds supporting interest-earning assets... 3.41%
Net interest income/margin......................... $273,271 4.87%
============================================================================================
- ---------------
(1) Based on the statutory income tax rate of 35%.
(2) Yield computations include nonaccrual loans in loans outstanding.
</TABLE>
Table 7 shows the composition of average earning assets for the five most
recent quarters, revealing the change in the mix of earning assets.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
TABLE 7 - INTEREST-EARNING ASSET COMPOSITION
- -----------------------------------------------------------------------------------------
1997 1996
- -----------------------------------------------------------------------------------------
Third Second First Fourth Third
(Percentage of average balances) Quarter Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial loans ................ 29.7% 29.2% 27.4% 26.0% 25.6%
Small business banking loans .... 13.6 13.1 13.2 14.0 13.7
Consumer loans .................. 31.5 30.9 30.6 30.9 31.7
- -----------------------------------------------------------------------------------------
Total loans ................. 74.8 73.2 71.2 70.9 71.0
- -----------------------------------------------------------------------------------------
Securities available for sale ... 22.6 24.2 26.0 26.5 26.5
Short-term investments .......... 2.6 2.6 2.8 2.6 2.5
- -----------------------------------------------------------------------------------------
Total interest-earning assets 100.0% 100.0% 100.0% 100.0% 100.0%
- -----------------------------------------------------------------------------------------
</TABLE>
The net interest margin was 4.78% for the third quarter of 1997 compared to
4.86% in the same period a year ago and 4.85% in the second quarter of 1997. The
net interest margin for the first nine months of 1997 was 4.82%, unchanged from
the same period in 1996 (after a 5 basis points adjustment for the increased
income on nonaccrual loans). The positive effects of the change in the mix of
earning assets and the increasing yields on securities were offset by the
negative impact of declining loan yields as a result of increasing competition
and the shift in the mix of funding sources toward market rate funds. In the
third quarter of 1997, 55.1% of Hibernia's earning assets were supported by
market-rate funds compared to 52.0% in the same period in 1996. The attractive
introductory rates offered on Hibernia's Equity PrimeLine(R) loan product and
Tower Super SavingsSM account during 1997 illustrate the pricing strategies
necessary to successfully launch new products in the current competitive
environment. Table 8 details the net interest margin for the most recent five
quarters.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
TABLE 8 - NET INTEREST MARGIN (taxable-equivalent)
- ---------------------------------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------------------------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yield on earning assets ............ 8.32% 8.34% 8.24% 8.32% 8.31%
Rate on interest-bearing liabilities 4.40 4.35 4.29 4.29 4.32
- ---------------------------------------------------------------------------------------------
Net interest spread ............ 3.92 3.99 3.95 4.03 3.99
Contribution of
noninterest-bearing funds ...... 0.86 0.86 0.87 0.88 0.87
- ---------------------------------------------------------------------------------------------
Net interest margin ............ 4.78% 4.85% 4.82% 4.91% 4.86%
- ---------------------------------------------------------------------------------------------
Noninterest-bearing funds
supporting earning assets ...... 19.58% 19.80% 20.09% 20.56% 20.16%
- ---------------------------------------------------------------------------------------------
</TABLE>
Table 9 presents an analysis of changes in taxable-equivalent net interest
income between the third quarter of 1997 and the second quarter of 1997 and
between the third quarter of 1997 and the third quarter of 1996.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
TABLE 9 - CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME (1)
- --------------------------------------------------------------------------------------------------------------
Third Quarter 1997 Compared to:
- --------------------------------------------------------------------------------------------------------------
Second Quarter 1997 Third Quarter 1996
- --------------------------------------------------------------------------------------------------------------
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:
Commercial loans .............. $ 3,335 $ 854 $ 4,189 $17,293 $ (527) $16,766
Small business banking loans .. 2,108 263 2,371 4,686 605 5,291
Consumer loans ................ 3,584 (743) 2,841 10,139 (1,923) 8,216
- --------------------------------------------------------------------------------------------------------------
Loans ..................... 9,027 374 9,401 32,118 (1,845) 30,273
- --------------------------------------------------------------------------------------------------------------
Securities available for sale . (991) (176) (1,167) 898 718 1,616
Short-term investments ........ 25 67 92 589 120 709
- --------------------------------------------------------------------------------------------------------------
Total ................... 8,061 265 8,326 33,605 (1,007) 32,598
- --------------------------------------------------------------------------------------------------------------
Interest paid on:
NOW accounts .................. (35) 149 114 92 276 368
Money market
deposit accounts .......... 181 259 440 981 803 1,784
Savings accounts .............. 299 93 392 2,371 1,117 3,488
Other consumer time ........... (5) 422 417 2,751 (1,263) 1,488
Public fund certificates of
deposit of $100,000 or more (741) 185 (556) 659 350 1,009
Certificates of deposit
of $100,000 or more ....... 271 58 329 1,278 103 1,381
Foreign deposits .............. 218 - 218 813 (6) 807
Federal funds purchased ....... 3,020 66 3,086 3,777 81 3,858
Repurchase agreements ......... (41) 40 (1) 718 199 917
Debt .......................... 690 (14) 676 462 5 467
- ---------------------------------------------------------------------------------------------------------------
Total ................... 3,857 1,258 5,115 13,902 1,665 15,567
- ---------------------------------------------------------------------------------------------------------------
Taxable-equivalent
net interest income ........... $ 4,204 $ (993) $ 3,211 $19,703 $(2,672) $17,031
- ---------------------------------------------------------------------------------------------------------------
- -------------
(1) Change due to mix (both volume and rate) has been allocated to volume
and rate changes in proportion to the relationship of the absolute dollar
amounts to the changes in each.
</TABLE>
NONINTEREST INCOME
Noninterest income (excluding securities transactions) for the third
quarter of 1997 was up $6.6 million (23%) to $35.2 million compared to the same
period of 1996. For the first nine months of 1997 compared to the same period in
1996, noninterest income (excluding securities transactions) was up $18.9
million (22%). Excluding nonrecurring items in both the first nine months of
1997 and 1996, noninterest income was up $19.6 million (24%) in the first nine
months of 1997. Nonrecurring items include a $1.2 million gain recognized in the
second quarter of 1997 on the sale of Hibernia's interest in an electronic funds
transfer network; $0.5 million in the second quarter of 1996 to record an
additional gain related to the 1995 sale of the municipal bond administration
business; and a $1.4 million gain on the settlement of an acquired loan in the
first quarter of 1996. Approximately 25% of the increases in the three-month
period and 35% in the nine-month period (excluding nonrecurring items) were due
to the purchased companies. The major categories of noninterest income for the
three months and nine months ended September 30, 1997 and 1996 are presented in
Table 10.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
TABLE 10 - NONINTEREST INCOME
- -------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
- -------------------------------------------------------------------------------------------------------
Percentage Percentage
Sept. 30 Sept. 30 Increase Sept. 30 Sept. 30 Increase
($ in thousands) 1997 1996 (Decrease) 1997 1996 (Decrease)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service charges on deposits ...... $18,042 $ 14,925 21% $ 51,828 $ 42,161 23%
Trust fees ....................... 3,693 3,369 10 10,878 9,820 11
Other service, collection and
exchange charges:
Mortgage loan servicing fees . 2,221 2,009 11 6,265 5,900 6
Retail investment service fees 3,246 2,086 56 9,039 6,609 37
ATM fees ..................... 2,214 1,779 24 6,383 5,051 26
Other fees ................... 3,571 2,680 33 10,020 7,488 34
- -------------------------------------------------------------------------------------------------------
Total other service, collection
and exchange charges ......... 11,252 8,554 32 31,707 25,048 27
- -------------------------------------------------------------------------------------------------------
Other income ..................... 2,207 1,746 26 9,064 7,585 19
Securities gains (losses), net ... 1 (5,584) N/M 372 (5,470) N/M
- -------------------------------------------------------------------------------------------------------
Total noninterest income ..... $35,195 $ 23,010 53% $103,849 $ 79,144 31%
- -------------------------------------------------------------------------------------------------------
- ------------
N/M = Not meaningful
</TABLE>
Service charges on deposits increased $3.1 million (21%) for the third
quarter of 1997 and $9.7 million (23%) for the first nine months of 1997 over
the comparable periods in 1996. The purchased companies accounted for
approximately 50% of the increases. Growth in fee-generating deposit accounts
was the primary reason for the remainder of the increases.
Other service, collection and exchange charges were up $2.7 million (32%)
in the third quarter of 1997 and $6.7 million (27%) for the first nine months of
1997 compared to the same periods in 1996. Increases in fees from retail
investment services, ATMs, debit and credit cards, mortgage processing and
mortgage underwriting were the major factors contributing to the growth. Retail
investment service fees increased $1.2 million in the third quarter and $2.4
million in first nine months of 1997, compared to the same periods in 1996.
These increases were primarily due to Hibernia's attractive product offerings
such as mutual funds, annuities and discount brokerage services to an expanded
customer base resulting from the merged companies. Hibernia's upgraded and
expanded ATM network resulted in a $0.4 million increase in ATM fees for the
third quarter and a $1.3 million increase in the first nine months of 1997 over
the comparable periods in 1996. Fees resulting from the successful introductions
in 1996 of Hibernia's CheckmateSM debit card and Capital Access(C) credit card
for small businesses contributed $0.4 million to the $0.9 million increase in
other fees for the third quarter of 1997 compared to the third quarter of 1996.
A new service introduced in the second quarter of 1997 to process and underwrite
mortgage loans from correspondent banks increased other fees by $0.5 million in
third quarter of 1997. For the first nine months of 1997 compared to the same
period a year earlier, debit and credit card income accounted for $1.6 million
of the $2.5 million increase in other fees, with mortgage processing accounting
for $0.7 million.
Other income was up $0.5 million (26%) for the third quarter of 1997 and,
excluding the nonrecurring items previously mentioned, up $2.2 million for the
first nine months of 1997 (38%) compared to the same periods in 1996. The
increase over the third quarter of 1996 was primarily due to gains recorded on
the sale of originated mortgage loans. The increase for first nine months of
1997 over the same period a year ago was due to gains on the sales of mortgage
loans as well as income from direct holding company investments initiated in the
second quarter of 1996 and income from Hibernia's joint venture with a major
mortgage company that originates, underwrites, closes and services multi-family
housing loans under an FNMA program.
Securities losses totaled $5.6 million and $5.5 million for the third
quarter and first nine months of 1996, respectively, compared to virtually no
gains for the same periods in 1997.
NONINTEREST EXPENSE
For the third quarter of 1997, noninterest expense totaled $89.8 million,
unchanged from the third quarter of 1996. Excluding $7.3 million in 1996 charges
related to asset writedowns and increases in reserves for medical and other
expenses, noninterest expense increased $7.2 million (9%). Amortization of
intangibles and noninterest expense associated with the purchased companies
accounted for over 70% of the increase, with the remainder primarily due to
increases in staff costs, occupancy expenses and advertising and promotional
expenses. A decrease in professional fees partially offset these increases.
Included in noninterest expense are costs 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 revenues and reduce costs. In addition, Vision 2000 is
creating a culture that will facilitate continuous improvement. The Vision 2000
expenses totaled $2.2 million and $2.4 million in the third quarter of 1997 and
1996, respectively, and $4.8 million and $6.0 million in the first nine months
of 1997 and 1996, respectively. Noninterest expense for the three months and
nine months ended September 30, 1997 and 1996 is presented by major category in
Table 11.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
TABLE 11 - NONINTEREST EXPENSE
- ---------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
- ---------------------------------------------------------------------------------------------------------------
Percentage Percentage
Sept. 30 Sept. 30 Increase Sept. 30 Sept. 30 Increase
($ in thousands) 1997 1996 (Decrease) 1997 1996 (Decrease)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salaries ........................ $ 38,590 $ 35,679 8% $ 110,416 $ 98,544 12%
Benefits ........................ 6,416 8,025 (20) 20,345 21,150 (4)
- ---------------------------------------------------------------------------------------------------------------
Total staff costs ........... 45,006 43,704 3 130,761 119,694 9
- ---------------------------------------------------------------------------------------------------------------
Occupancy, net .................. 7,681 6,833 12 22,863 20,163 13
Equipment ....................... 7,036 10,629 (34) 21,098 22,112 (5)
- ---------------------------------------------------------------------------------------------------------------
Total occupancy and equipment 14,717 17,462 (16) 43,961 42,275 4
- ---------------------------------------------------------------------------------------------------------------
Data processing ................. 6,120 5,687 8 16,270 16,088 1
Telecommunications .............. 2,518 2,205 14 7,987 6,548 22
Advertising and promotional
expenses .................... 2,660 2,052 30 9,177 7,276 26
Postage ......................... 2,001 1,752 14 6,270 4,689 34
Stationery and supplies ......... 1,810 1,686 7 5,696 4,885 17
Professional fees ............... 1,165 2,339 (50) 4,001 5,207 (23)
Regulatory expense .............. 627 327 92 1,841 979 88
Loan collection expense ......... 872 624 40 2,647 1,606 65
Foreclosed property expense, net 77 (231) N/M (498) (1,901) 74
Amortization of intangibles ..... 3,220 1,719 87 10,261 3,653 181
Other ........................... 8,965 10,509 (15) 28,209 27,063 4
- ---------------------------------------------------------------------------------------------------------------
Total noninterest expense ... $ 89,758 $ 89,835 -% $ 266,583 $ 238,062 12%
- ---------------------------------------------------------------------------------------------------------------
Efficiency ratio (1)............. 61.83% 73.91% 62.97% 66.52%
Tangible efficiency ratio (2).... 59.83% 72.66% 60.74% 65.66%
- ---------------------------------------------------------------------------------------------------------------
- -------------
(1) Noninterest expense as a percentage of taxable-equivalent net interest
income plus noninterest income (excluding securities transactions).
(2) Noninterest expense (excluding amortization of purchase accounting
intangibles) as a percentage of taxable-equivalent net interest income
plus noninterest income (excluding securities transactions).
N/M = not meaningful
</TABLE>
Staff costs, which represents approximately 50% of noninterest expense,
increased $1.3 million (3%) in the third quarter of 1997 and $11.1 million (9%)
for the first nine months of 1997 compared to the same periods a year ago.
Excluding the effect of the increase in the reserve for medical expenses
recorded in the third quarter of 1996, staff costs were up $2.6 million (6%) and
$12.4 million (10%) for the third quarter and first nine months of 1997,
respectively. The purchased companies accounted for more than 60% of these
increases in both periods, while higher accruals for incentives and bonuses
(based on Hibernia's performance) and normal merit increases were other major
factors contributing to the increases in staff costs.
Occupancy and equipment expenses decreased $2.7 million (16%) in the third
quarter of 1997 and increased $1.7 million (4%) for the first nine months of
1997 compared to the same periods in 1996. After adjusting for the $4.0 million
of asset writedowns in the 1996 periods, occupancy and equipment expenses were
up $1.3 million (9%) and $5.7 million (15%), respectively. Approximately 60% of
these increases were attributable to the purchased companies. Occupancy expenses
increased as a result of depreciation related to new facilities and higher
maintenance, utilities and property tax expenses. Higher equipment expenses as a
result of the ATM upgrades, costs related to Vision 2000 and other technological
enhancements were other factors in the increases.
Data processing expenses increased $0.4 million (8%) for the third quarter
of 1997 and $0.2 million (1%) for the first nine months of 1997 from the
comparable period in 1996. Vision 2000 expenses decreased $0.2 million and $1.3
million for the third quarter and first nine months of 1997, respectively,
compared to the same periods in 1996. These declines were offset by expenses
related to the purchased companies.
Telecommunications expenses increased $0.3 million (14%) for the third
quarter of 1997 and $1.4 million (22%) for the first nine months of 1997,
primarily due to expenses related to the Company's enhanced communications
capabilities, including the operation of its wide area network and enhanced ATM
network.
Advertising and promotional expenses increased $0.6 million (30%) in the
third quarter of 1997 and $1.9 million (26%) for the first nine months of 1997
compared to the same periods in 1996 because of increases in advertising,
product development activity and direct marketing. The increase in advertising
was related to the introduction of new products, such as the Tower Super
SavingsSM account and the Hibernia Equity PrimeLine(R) loan.
Postage increased $0.2 million (14%) in the third quarter of 1997 and $1.6
million (34%) compared to the same periods in 1996, primarily due to increased
direct marketing efforts.
Professional fees were down $1.2 million in the third quarter and the first
nine months of 1997 compared to the same periods a year ago as the 1996 periods
included higher investment banker fees paid by merged companies.
Regulatory expenses increased $0.3 million (92%) in the third quarter of
1997 and $0.9 million (88%) for the first nine months of 1997 compared to the
third quarter and first nine months of 1996, respectively. The lower expense
levels in 1996 are the result of the virtual elimination of FDIC premiums for
well-capitalized, highly-rated banks. Legislation enacted in the third quarter
of 1996 provided for assessments on banks (based on deposit levels) to pay
interest on bonds of the Financing Corporation (FICO). Hibernia's assessments
related to the FICO funding were $0.2 million for the third quarter and $0.7
million for the first nine months of 1997.
Foreclosed asset expense increased $0.3 million and $1.4 million (74%) in
the third quarter and first nine months of 1997 over the comparable periods in
1996 as the 1996 periods included significant gains on the sale of several
properties.
Amortization of intangibles, a noncash expense, increased $1.5 million to
$3.2 million in the third quarter of 1997 compared to the third quarter of 1996,
and increased $6.6 million to $10.3 million for the first nine months of 1997
compared to the first nine months of 1996. Goodwill and core deposit intangibles
created by the purchase transactions in late 1996 were responsible for the
increases. Goodwill that resulted from these transactions, totaling $120.1
million, is being amortized on a straight-line basis over 25 years. Core deposit
intangibles totaling $18.5 million are being amortized on an accelerated basis
over 10 years.
The Company's tangible efficiency ratio, defined as noninterest expense
(excluding amortization of purchase accounting intangibles) as a percentage of
taxable-equivalent net interest income plus noninterest income (excluding
securities transactions), is a key measure that management uses to evaluate the
success of efforts to control costs while generating revenue efficiently. The
tangible efficiency ratios for the third quarter of 1997 and 1996 were 59.83%
and 72.66%, respectively. After adjusting for the $7.3 million in 1996 charges,
the tangible efficiency ratio improved 683 basis points to 59.83% in the third
quarter of 1997 compared to 66.66% for the same period of 1996. The tangible
efficiency ratios for the first nine months of 1997 and 1996 were 60.74% and
65.66%, respectively After adjusting for nonrecurring noninterest income
(previously discussed) and the $7.3 million in 1996 charges, the tangible
efficiency ratio for the first nine months of 1997 was 60.91% compared to 64.35%
for the first nine months of 1996. The improvement in efficiency for both
periods in 1997 reflects increases in net interest income and noninterest income
combined with a lower rate of increases in noninterest expense (excluding
amortization of intangibles).
INCOME TAXES
The Company recorded a $18.4 million income tax expense in the third
quarter of 1997, a $5.0 million (37%) increase from $13.4 million in the third
quarter of 1996 as pretax income rose 39%. For the first nine months of 1997,
income tax expense totaled $52.6 million, up 23% compared to $42.6 million for
the first nine months of 1996.
Hibernia National 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 Hibernia National Bank
are subject to Louisiana state income tax. Hibernia National Bank of Texas is
subject to Texas franchise tax.
CAPITAL
Shareholders' equity totaled $1,010.3 million at September 30, 1997,
compared to $911.3 million a year earlier. The increase is primarily the result
of net income over the most recent 12 months totaling $129.0 million and a $12.6
million change in unrealized gains (losses) on securities available for sale.
These increases were partially offset by $46.1 million in dividends declared on
common stock and $6.9 million in dividends declared on preferred stock. Table 12
presents Hibernia's ratios along with selected components of the capital ratio
calculations for the most recent five quarters.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
TABLE 12 - CAPITAL
- ------------------------------------------------------------------------------------------------------
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
($ in millions) 1997 1997 1997 1996 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Risk-based capital:
Tier 1 .................. $ 857.3 $ 828.7 $ 808.5 $ 784.3 $ 785.1
Total ................... 952.1 918.1 893.0 866.1 862.6
Assets:
Quarterly average (1) ... 9,760.3 9,415.4 9,247.2 8,981.3 8,135.0
Net risk-adjusted ....... 7,569.9 7,115.0 6,728.7 6,494.6 6,148.3
Ratios:
Tier 1 risk-based capital 11.33% 11.65% 12.02% 12.08% 12.77%
Total risk-based capital 12.58 12.90 13.27 13.34 14.03
Leverage ................ 8.78 8.80 8.74 8.73 9.65
- ------------------------------------------------------------------------------------------------------
- ------------
(1) Excluding SFAS No. 115 adjustment and disallowed intangibles.
</TABLE>
The two mergers completed during 1996 that were accounted for as purchase
transactions enabled Hibernia to leverage its capital, acquiring assets (and
earnings capacity) without increasing equity. As a result of these transactions,
the Company's capital ratios have declined from previous levels, but management
considers the current levels to be prudent.
The Fixed/Adjustable Rate Noncumulative Preferred Stock issued on September
30, 1996 is nonconvertible and qualifies as Tier 1 capital. The issuance allowed
Hibernia to maintain its strong capital ratios and enhances its ability to act
when future opportunities arise. A shelf registration statement filed by the
Company in July 1996 with the Securities and Exchange Commission allows the
Company to issue up to $250 million of securities over a two-year period,
including preferred stock and subordinated debt. The remaining $150 million in
securities included in this shelf registration provide Hibernia with the
flexibility to quickly modify its capital structure to meet competitive and
market conditions. As a result of the pending mergers previously discussed, the
Company is expected to issue approximately 20.8 million shares of Hibernia Class
A Common Stock. These mergers are not expected to have a material impact on
Hibernia's capital ratios.
LIQUIDITY
Liquidity is a measure of ability to fund loan commitments and meet deposit
maturities and withdrawals in a timely and cost-effective way. Liquidity needs
can be met by generating profits, attracting new deposits and converting assets
(such as short-term investments and securities available for sale) to cash.
Management monitors liquidity through a periodic review of maturity profiles,
yield and rate behaviors, and loan and deposit forecasts to minimize funding
risks.
The loan-to-deposit ratio, one measure of liquidity, was 86.9% at September
30, 1997, 81.8% at June 30, 1997, and 77.1% at September 30, 1996. Another
indicator of liquidity is the large liability dependence ratio, which measures
reliance on short-term borrowings and other large liabilities (such as
large-denomination and public fund certificates of deposit and foreign
deposits). Based on average balances, 20.93% of Hibernia's loans and investment
securities were funded by net large liabilities (total large liabilities less
short-term investments) in the third quarter of 1997, up 138 basis points from
the second quarter of 1997 and up 237 basis points from the third quarter of
1996. The level of large liability dependence is within limits established by
management to maintain liquidity and safety.
Attracting and retaining core deposits at competitive rates are the
Company's primary sources of liquidity. Hibernia's extensive retail office
network, aided by the introduction of new deposit products, provided $6.8
billion in core deposits at September 30, 1997, up $0.6 billion (9%) from $6.2
billion a year earlier. Large-denomination certificates of deposit, public
funds, and funds that can be purchased through the Banks' memberships in the
Federal Home Loan Bank of Dallas and from correspondent banks were additional
sources of liquidity. The Company can also raise additional funds through the
sale of securities registered on the shelf registration discussed in the Capital
section.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K*
(a) Exhibits
(b) Reports on Form 8-K
A report on Form 8-K dated July 16, 1997, was filed by the
registrant reporting Item 5 Other Events.
A report on Form 8-K dated September 17, 1997, was filed
by the registrant reporting Item 5 Other Events.
A report on Form 8-K dated October 24, 1997, was filed by
the registrant reporting Item 5 Other Events.
* Exhibits and Reports on Form 8-K have been separately filed with the
Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized to sign on behalf of the registrant.
HIBERNIA CORPORATION
(Registrant)
Date: November 13, 1997 By: /s/ Ron E. Samford, Jr.
Ron E. Samford, Jr.
Executive Vice President and Controller
Chief Accounting Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 9-mos 6-mos 3-mos
<FISCAL-YEAR-END> Dec-31-1997 Dec-31-1997 Dec-31-1997
<PERIOD-END> Sep-30-1997 Jun-30-1997 Mar-31-1997
<CASH> 415,518 467,617 465,120
<INT-BEARING-DEPOSITS> 3,155 4,553 4,852
<FED-FUNDS-SOLD> 237,400 233,975 251,155
<TRADING-ASSETS> 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 2,010,247 2,104,184 2,167,771
<INVESTMENTS-CARRYING> 0 0 0
<INVESTMENTS-MARKET> 0 0 0
<LOANS> 7,041,630 6,621,120 6,259,632
<ALLOWANCE> (113,796) (120,930) (120,605)
<TOTAL-ASSETS> 10,081,093 9,811,066 9,521,526
<DEPOSITS> 8,101,743 8,095,277 8,061,030
<SHORT-TERM> 718,499 591,463 357,111
<LIABILITIES-OTHER> 143,790 137,406 144,927
<LONG-TERM> 106,777 9,560 9,923
0 0 0
100,000 100,000 100,000
<COMMON> 250,919 250,242 249,915
<OTHER-SE> 659,365 627,118 598,620
<TOTAL-LIABILITIES-AND-EQUITY> 10,081,093 9,811,066 9,521,526
<INTEREST-LOAN> 428,469 276,670 134,217
<INTEREST-INVEST> 106,313 72,042 36,618
<INTEREST-OTHER> 9,651 6,372 3,183
<INTEREST-TOTAL> 544,433 355,084 174,019
<INTEREST-DEPOSIT> 210,770 138,630 67,843
<INTEREST-EXPENSE> 231,248 149,574 73,013
<INTEREST-INCOME-NET> 313,185 205,510 101,005
<LOAN-LOSSES> 64 48 24
<SECURITIES-GAINS> 372 371 15
<EXPENSE-OTHER> 266,583 176,824 85,934
<INCOME-PRETAX> 150,387 97,291 47,240
<INCOME-PRE-EXTRAORDINARY> 97,823 63,161 30,841
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 97,823 63,161 30,841
<EPS-PRIMARY> 0.72 0.47 0.23
<EPS-DILUTED> 0.72 0.47 0.23
<YIELD-ACTUAL> 4.82 4.84 4.82
<LOANS-NON> 22,862 22,485 16,685
<LOANS-PAST> 4,374 3,197 4,829
<LOANS-TROUBLED> 0 0 0
<LOANS-PROBLEM> 17,901 19,552 12,000
<ALLOWANCE-OPEN> 128,474 128,474 128,474
<CHARGE-OFFS> 32,548 22,230 13,516
<RECOVERIES> 17,806 14,639 5,623
<ALLOWANCE-CLOSE> 113,796 120,930 120,605
<ALLOWANCE-DOMESTIC> 113,796 120,930 120,605
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Dec-31-1996
<CASH> 564,947
<INT-BEARING-DEPOSITS> 3,955
<FED-FUNDS-SOLD> 178,955
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,219,127
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 6,104,789
<ALLOWANCE> (128,474)
<TOTAL-ASSETS> 9,443,127
<DEPOSITS> 7,947,314
<SHORT-TERM> 331,796
<LIABILITIES-OTHER> 165,958
<LONG-TERM> 53,881
0
100,000
<COMMON> 249,537
<OTHER-SE> 594,641
<TOTAL-LIABILITIES-AND-EQUITY> 9,443,127
<INTEREST-LOAN> 482,489
<INTEREST-INVEST> 140,723
<INTEREST-OTHER> 10,550
<INTEREST-TOTAL> 633,761
<INTEREST-DEPOSIT> 246,374
<INTEREST-EXPENSE> 263,435
<INTEREST-INCOME-NET> 370,326
<LOAN-LOSSES> (12,460)
<SECURITIES-GAINS> (5,306)
<EXPENSE-OTHER> 323,254
<INCOME-PRETAX> 170,582
<INCOME-PRE-EXTRAORDINARY> 110,717
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,717
<EPS-PRIMARY> 0.85
<EPS-DILUTED> 0.85
<YIELD-ACTUAL> 4.89
<LOANS-NON> 16,043
<LOANS-PAST> 5,281
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 29,800
<ALLOWANCE-OPEN> 151,048
<CHARGE-OFFS> 34,903
<RECOVERIES> 19,152
<ALLOWANCE-CLOSE> 128,474
<ALLOWANCE-DOMESTIC> 128,474
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 31,700
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 9-mos 6-mos 3-mos
<FISCAL-YEAR-END> Dec-31-1996 Dec-31-1996 Dec-31-1996
<PERIOD-END> Sep-30-1996 Jun-30-1996 Mar-31-1996
<CASH> 453,523 358,055 328,731
<INT-BEARING-DEPOSITS> 2,644 566 583
<FED-FUNDS-SOLD> 277,385 76,215 250,345
<TRADING-ASSETS> 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 2,087,581 2,073,809 2,198,470
<INVESTMENTS-CARRYING> 0 0 0
<INVESTMENTS-MARKET> 0 0 0
<LOANS> 5,777,776 5,264,380 5,011,263
<ALLOWANCE> (133,918) (147,858) (148,418)
<TOTAL-ASSETS> 8,932,304 7,968,311 7,977,672
<DEPOSITS> 7,489,444 6,731,139 6,740,225
<SHORT-TERM> 363,496 296,669 291,798
<LIABILITIES-OTHER> 147,174 121,714 128,054
<LONG-TERM> 20,863 29,824 36,759
0 0 0
100,000 0 0
<COMMON> 249,107 248,668 248,601
<OTHER-SE> 562,220 540,297 532,235
<TOTAL-LIABILITIES-AND-EQUITY> 8,932,304 7,968,311 7,977,672
<INTEREST-LOAN> 348,196 226,618 110,074
<INTEREST-INVEST> 104,310 70,922 36,755
<INTEREST-OTHER> 7,618 5,047 2,708
<INTEREST-TOTAL> 460,123 302,587 149,538
<INTEREST-DEPOSIT> 179,351 117,536 58,483
<INTEREST-EXPENSE> 191,538 125,430 62,331
<INTEREST-INCOME-NET> 268,585 177,156 87,207
<LOAN-LOSSES> (12,490) 1,050 455
<SECURITIES-GAINS> (5,470) 113 67
<EXPENSE-OTHER> 238,061 148,227 73,401
<INCOME-PRETAX> 122,158 84,013 40,945
<INCOME-PRE-EXTRAORDINARY> 79,583 54,866 26,558
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 79,583 54,866 26,558
<EPS-PRIMARY> 0.62 0.43 0.21
<EPS-DILUTED> 0.62 0.43 0.21
<YIELD-ACTUAL> 4.87 4.87 4.82
<LOANS-NON> 15,050 18,217 18,886
<LOANS-PAST> 3,617 4,256 6,085
<LOANS-TROUBLED> 0 0 0
<LOANS-PROBLEM> 30,210 21,100 21,800
<ALLOWANCE-OPEN> 151,048 151,048 151,048
<CHARGE-OFFS> 23,976 14,113 7,109
<RECOVERIES> 13,997 9,849 4,024
<ALLOWANCE-CLOSE> 133,918 147,858 148,418
<ALLOWANCE-DOMESTIC> 133,918 147,858 148,418
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Dec-31-1995
<CASH> 408,246
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 107,985
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,377,320
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 4,778,299
<ALLOWANCE> (151,048)
<TOTAL-ASSETS> 7,855,631
<DEPOSITS> 6,661,868
<SHORT-TERM> 265,126
<LIABILITIES-OTHER> 119,203
<LONG-TERM> 36,069
0
0
<COMMON> 248,587
<OTHER-SE> 524,778
<TOTAL-LIABILITIES-AND-EQUITY> 7,855,631
<INTEREST-LOAN> 394,278
<INTEREST-INVEST> 167,656
<INTEREST-OTHER> 7,603
<INTEREST-TOTAL> 569,537
<INTEREST-DEPOSIT> 229,592
<INTEREST-EXPENSE> 245,228
<INTEREST-INCOME-NET> 324,309
<LOAN-LOSSES> 1,260
<SECURITIES-GAINS> 227
<EXPENSE-OTHER> 286,837
<INCOME-PRETAX> 141,031
<INCOME-PRE-EXTRAORDINARY> 129,698
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129,698
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
<YIELD-ACTUAL> 4.68
<LOANS-NON> 17,692
<LOANS-PAST> 2,922
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 23,100
<ALLOWANCE-OPEN> 156,463
<CHARGE-OFFS> 25,042
<RECOVERIES> 18,367
<ALLOWANCE-CLOSE> 151,048
<ALLOWANCE-DOMESTIC> 151,048
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 45,700
</TABLE>
