SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 Commission file No. 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 No.)
313 CARONDELET STREET, NEW ORLEANS, LOUISIANA 70130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 533-5332
Securities registered pursuant to Section 12 (b) of the Act:
CLASS A COMMON STOCK, NO PAR VALUE
(Title of class)
NEW YORK STOCK EXCHANGE
(Name of each exchange on which registered)
Securities registered pursuant to Section 12 (g) of the Act: NONE
Indicated 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock
held by non-affiliates of the Registrant as of
February 28, 1998.
Class A Common Stock, no par value $2,828,875,480
State the aggregate number of shares outstanding of
each of the Registrant's classes of common stock as of
February 28, 1998.
Class A Common Stock, no par value - 148,282,810
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's annual report to shareholders for the year ended
December 31, 1997 are incorporated by reference into Parts I and II of this
Report.
Portions of the Registrant's definitive proxy statement, which was filed on
March 20, 1998, are incorporated by reference into Part III of this Report.
INDEX TO FORM 10-K
Certain information required by Form 10-K is incorporated by reference
from the Annual Report as indicated below. Only that information expressly
incorporated by reference is deemed filed with the Commission.
PART I
Item 1 Business *
Item 2 Properties *
Item 3 Legal Proceedings *
Item 4 Submission of Matters to a Vote of Security Holders None
Item X Identification of Executive Officers *
PART II
Item 5 Market of the Registrant's Common Equity and Related
Stockholder Matters ***
Item 6 Selected Financial Data ***
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations ***
Item 8 Financial Statements and Supplementary Data ***
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure None
PART III (1)
Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements
Report of Independent Auditors' ***
Hibernia Corporation and Subsidiaries:
Consolidated Balance Sheets - December 31,
1997 and 1996 ***
Consolidated Income Statements - Years
Ended December 31, 1997, 1996 and 1995 ***
Consolidated Statements of Changes in
Shareholders' Equity - Years Ended
December 31, 1997, 1996 and 1995 ***
Consolidated Statements of Cash Flows -
Years Ended December 31, 1997, 1996 and 1995 ***
Notes to Consolidated Financial Statements
(b) Reports on Form 8-K **
Item 5 Other Event September 22, 1997
Item 5 Other Event October 28, 1997
Item 5 Other Event January 12, 1998
Item 5 Other Event March 4, 1998
(c) Exhibits **
* This information is included in the Form 10-K and is not incorporated by
reference to the Annual Report.
** Reports on Form 8-K and Exhibits have been separately filed with the
Commission.
*** This information is included in Ex-13.
(1) The material required by Items 10 through 13 is incorporated by reference to
the Company's definitive Proxy Statement filed with the Commission on March 20,
1998, however, the "Report of Executive Compensation Committee" and the
"Performance Graph" contained therein are not incorporated herein by reference.
PART I
ITEM 1. BUSINESS
Hibernia Corporation (Company) is a bank holding company organized in
1972 and, as of December 31, 1997, was the largest bank holding company
headquartered in Louisiana with assets of $11.0 billion and deposits of $8.6
billion. The Company operates two wholly-owned bank subsidiaries. Hibernia
National Bank was chartered in Louisiana in 1933 and Hibernia National Bank of
Texas, formerly The Texarkana National Bank, was chartered in 1887 (Banks). On
December 31, 1996, the Company reentered the Texas market by acquiring Texarkana
National Bancshares, Inc., the holding company of The Texarkana National Bank.
In addition to the bank subsidiaries, the Company also owns two nonbank
subsidiaries, Hibernia Capital Corporation (HCC) and Zachary Taylor Life
Insurance Company (Zachary Taylor). HCC is a licensed Small Business Investment
Company formed in 1995 to provide equity capital and long-term loans to small
businesses. Zachary Taylor is currently inactive, and the Company has an
agreement with the Federal Reserve Bank whereby the Company will not actively
operate this subsidiary as an insurance company without Federal Reserve Board
approval.
As of December 31, 1997 the Company operated 202 banking locations in
29 Louisiana parishes and five Texas counties. In February 1997, the Company
established a mortgage loan introduction and brokerage services office in
Southwestern Mississippi. During 1997, the Company completed mergers with two
East Texas institutions with combined assets of $254 million and seven offices.
Since the beginning of 1994, 17 mergers have been completed involving 19 banks
with combined assets of $3.7 billion and 121 offices. Two mergers completed in
1997, three mergers in 1996 and all mergers completed in 1995 and 1994 were
accounted for as poolings of interests. Two additional mergers completed in 1996
were accounted for as purchase transactions.
The Company offers a broad array of financial products and services,
including consumer, small business, commercial, international, mortgage and
private banking; leasing; corporate finance; treasury management; trust and
investment management; brokerage; and insurance.
The Company also provides financial risk management products and
advisory services to customers. These products are designed to assist customers
in managing their exposure in the areas of interest rate, currency and commodity
risks. The Company offers repurchase agreements, bankers acceptances, eurodollar
deposits, safekeeping of securities, U.S. Government and Government agency
obligations, tax-free municipal obligations, reverse repurchase agreements,
letters of credit, and collection and foreign exchange transactions. At December
31, 1997, the Company performed mortgage servicing, which includes acceptance
and application of mortgage loan and escrow payments, for over 42,000
residential loans.
In addition, the Company offers a variety of agency, fiduciary,
investment advisory, employee benefit and custodial services. Hibernia National
Bank through Hibernia Insurance Agency, L.L.C. sells fixed annuities and life
and health insurance in retail markets. The Company also provides retail and
discount brokerage services through a wholly-owned subsidiary of Hibernia
National Bank, Hibernia Investment Securities, Inc. (HISI). HISI is a registered
broker-dealer and member of the National Association of Securities Dealers, Inc.
COMPETITION
The financial services industry in which the Company operates is highly
competitive. The Banks compete with national and state banks for deposits,
loans, and trust accounts and with savings and loan associations and credit
unions for loans and deposits. In addition, the Banks compete with other
providers of financial services, from both inside and outside Louisiana and
Texas, including finance companies, institutional buyers of commercial paper,
money market funds, brokerage firms, investment companies, insurance companies,
insurance agencies and brokers, and governmental agencies. These competitors are
actively engaged in marketing various types of loans, commercial paper,
short-term obligations, investments and other services.
SUPERVISION AND REGULATION
The banking industry is extensively regulated under both federal and
state law. The Company is subject to regulation under the Bank Holding Company
Act of 1956 (BHCA) and to supervision by the Board of Governors of the Federal
Reserve System (FRB). The BHCA requires the Company to obtain the prior approval
of the FRB for bank acquisitions, limits the acquisition of shares of
out-of-state banking organizations unless permitted by state law and prescribes
limitations on the nonbanking activities of the Company. The Banks are subject
to regulation and examination by the Office of the Comptroller of the Currency
(OCC).
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) further expanded the regulatory and enforcement powers of bank
regulatory agencies. Among the significant provisions of FDICIA is the
requirement that bank regulatory agencies prescribe standards relating to
internal controls, information systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, compensation, fees and benefits. FDICIA
mandates annual examinations of banks by their primary regulators.
The banking industry is affected by the monetary and fiscal policies of
the FRB. An important function of the FRB is to regulate the national supply of
bank credit to moderate recessions and to curb inflation. Among the instruments
of monetary policy used by the FRB to implement its objectives are: open-market
operations in U.S. Government securities, changes in the discount rate and the
federal funds rate (which is the rate banks charge each other for overnight
borrowings) and changes in reserve requirements on bank deposits.
HISI is regulated by the Securities and Exchange Commission, the
National Association of Securities Dealers, Inc., and the Louisiana Office of
Financial Institutions through the Deputy Commissioner of Securities. HCC is
regulated by the Small Business Administration. Zachary Taylor is regulated by
the Louisiana Commissioner of Insurance. The Louisiana Commissioner of Insurance
also regulates the licensing of Hibernia Insurance Agency, L.L.C. and those
persons engaged in the sale of insurance products. The Texas Commissioner of
Insurance performs a similar function in Texas, although Hibernia National Bank
of Texas is not currently engaged in the types of activities regulated by the
Texas Commissioner of Insurance other than the sale of credit life insurance.
LOAN PORTFOLIO
The amounts and percentages of loans outstanding by type are as
follows:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) 1997 1996 1995 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------------
% of % of % of % of % of
Amount Total Amount Total Amount Total Amount Total Amount Total
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural ....... $2,370,670 31% $1,735,112 28% $1,294,622 27% $ 954,207 24% $ 809,338 23%
Real estate - construction 94,483 1 70,657 1 38,572 1 55,886 1 51,418 1
Real estate - mortgage ... 3,410,521 45 2,756,842 45 2,211,691 46 1,905,617 49 1,856,467 54
Consumer ................. 1,354,715 18 1,375,971 22 1,166,142 24 887,751 23 652,302 19
Lease financing .......... 31,031 1 16,162 - - - - - - -
All other ................ 318,831 4 211,159 4 108,528 2 102,465 3 100,969 3
- - ------------------------------------------------------------------------------------------------------------------------------------
$7,580,251 100% $6,165,903 100% $4,819,555 100% $3,905,926 100% $3,470,494 100%
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SELECTED LOAN MATURITIES
The following table shows selected categories of loans outstanding as
of December 31, 1997, which, based on remaining scheduled repayments of
principal, are due in the periods indicated. In addition, the amounts
contractually due after one year are summarized according to their interest
sensitivity.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------
Maturing
- - ------------------------------------------------------------------------------------------
After One
Within But Within After
($ in thousands) One Year Five Years Five Years Total
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural ........... $ 741,720 $1,159,220 $ 469,730 $2,370,670
Real estate - construction 61,812 28,666 4,005 94,483
- - ------------------------------------------------------------------------------------------
$ 803,532 $1,187,886 $ 473,735 $2,465,153
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------
Interest Sensitivity
- - -----------------------------------------------------------------------
Fixed Variable
Rate Rate
- - -----------------------------------------------------------------------
<S> <C> <C>
Due after one but within five years $ 251,500 $ 936,386
Due after five years .............. 108,481 365,254
- - -----------------------------------------------------------------------
$ 359,981 $1,301,640
=======================================================================
</TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE
The following is a summary of activity in the reserve for possible loan
losses:
<TABLE>
<CAPTION>
Year Ended December 31
- - ----------------------------------------------------------------------------------------------------------------
($ in thousands) 1997 1996 1995 1994 1993
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance of reserve for
possible loan losses
at beginning of period ..... $ 129,039 $ 151,367 $ 156,896 $ 187,368 $ 212,674
Addition due to purchased
companies .................. - 5,856 - - 359
Loans charged off:
Commercial, financial,
and agricultural ......... (10,924) (5,958) (6,036) (7,659) (12,515)
Real estate - construction . (50) (76) (14) (54) (417)
Real estate - mortgage ..... (5,135) (2,639) (5,035) (11,765) (11,866)
Consumer ................... (27,715) (26,231) (14,327) (12,168) (18,215)
All other .................. (118) (243) (4) (1) -
- - ----------------------------------------------------------------------------------------------------------------
Total loans charged
off .................... (43,942) (35,147) (25,416) (31,647) (43,013)
Recoveries of loans
previously charged off:
Commercial, financial,
and agricultural ......... 3,642 6,785 7,884 7,536 7,157
Real estate - construction . 103 138 235 97 181
Real estate - mortgage ..... 8,218 4,604 5,480 7,148 7,700
Consumer ................... 9,670 7,450 4,972 4,083 4,903
All other .................. 190 403 98 70 64
- - ----------------------------------------------------------------------------------------------------------------
Total recoveries ......... 21,823 19,380 18,669 18,934 20,005
- - ----------------------------------------------------------------------------------------------------------------
Net loans charged off ........ (22,119) (15,767) (6,747) (12,713) (23,008)
Additions to reserve
charged to operating
expense * .................. 620 (12,417) 1,218 (17,759) (2,657)
- - ----------------------------------------------------------------------------------------------------------------
Balance at end of period ..... $ 107,540 $ 129,039 $ 151,367 $ 156,896 $ 187,368
================================================================================================================
Ratio of net charge-offs
to average loans outstanding 0.33% 0.29% 0.16% 0.35% 0.69%
================================================================================================================
- - ----------
* The Company recorded negative provisions in 1996, 1994 and 1993 of
$15,000,000, $17,500,000 and $6,200,000, respectively. All other provisions are
the result of merger activity.
</TABLE>
ALLOCATION OF RESERVE FOR LOAN LOSSES
The reserve for possible loan losses has been allocated according to
the amount deemed to be reasonably necessary to provide for the possibility of
losses being incurred within the categories of loans set forth in the table
below. See "Reserve and Provision for Possible Loan Losses" in Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Registrant's Annual Report to Shareholders for a discussion of the factors which
influence management's judgment in determining the adequacy of the reserve for
possible loan losses.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------
($ in thousands) 1997 1996 1995 1994 1993
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve at end of period:
Commercial, financial and
agricultural .......... $ 17,935 $ 17,721 $ 31,763 $ 42,040 $ 57,129
Real estate - construction 553 535 505 1,123 1,274
Real estate - mortgage ... 15,878 19,239 38,680 55,574 75,848
Consumer ................. 49,774 59,590 34,550 21,280 19,155
Not allocated ............ 23,400 31,954 45,869 36,879 33,962
- - -------------------------------------------------------------------------------------
$107,540 $129,039 $151,367 $156,896 $187,368
=====================================================================================
</TABLE>
MATURITIES OF LARGE-DENOMINATION CERTIFICATES OF DEPOSIT
The following table shows large-denomination certificates of deposit as
of December 31, 1997 by remaining maturity.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------
($ in thousands) Domestic Foreign
- - ------------------------------------------------------------------
<S> <C> <C>
3 months or less .............. $ 817,146 $187,517
Over 3 months through 6 months 314,874 -
Over 6 months through 12 months 202,559 -
Over 12 months through 5 years 114,104 -
Over 5 years .................. 21,101 -
- - ------------------------------------------------------------------
Total .................... $1,469,784 $187,517
==================================================================
</TABLE>
ITEM 2. PROPERTIES
The Company's executive offices are located in downtown New Orleans,
Louisiana, in the downtown branch office of Hibernia National Bank. The Company
leases its main office building and operations center under the terms of
sale/leaseback agreements. The Company and the Banks consider all properties
owned or leased to be suitable and adequate for their intended purposes and
consider the terms of existing leases to be fair and reasonable.
On December 31, 1997 the Banks reported miscellaneous property with a
net book value of $4,812,000. These properties include $2,452,000 of properties
acquired from borrowers either as a result of foreclosures or voluntarily in
full or partial satisfaction of indebtedness previously contracted and
$2,360,000 of duplicate or excess bank-owned premises. See "Asset Quality" in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Registrant's Annual Report for a further discussion of these
properties.
ITEM 3. LEGAL PROCEEDINGS
The Company and the Banks are parties to certain pending legal
proceedings arising from matters incidental to their business. Management is of
the opinion that these actions will not have a material effect on the financial
condition, results of operations, or liquidity of the Company.
<PAGE>
ITEM X. IDENTIFICATION OF EXECUTIVE OFFICERS
Each executive officer of the Company holds his or her position until
the earlier of (a) their removal or resignation from office, (b) their successor
is appointed by the Board of Directors, or (c) such time that the Board no
longer deems their position to be that of an executive officer.
J. HERBERT BOYDSTUN, 52, Chairman of the Southwest Region of the
Company and Hibernia National Bank, assumed those responsibilities in 1996. Mr.
Boydstun is also responsible for the Company's operations in Southeast Texas.
Mr. Boydstun served as Southcentral/Northeast Regional Chairman from 1995 to
1996 and as Northeast Regional Chairman from August 1994 until 1995. Mr.
Boydstun joined the Company in August 1994 following the merger of First Bancorp
of Louisiana, Inc., a bank holding company headquartered in West Monroe,
Louisiana, with and into the Company, where he served as President of First
Bancorp and as Chairman and Chief Executive Officer of First National Bank of
West Monroe, the primary national banking subsidiary of First Bancorp, from 1982
to 1994. Mr. Boydstun also serves on the Boards of Directors of the Company and
Hibernia National Bank.
E.R. "BO" CAMPBELL, 56, is Vice Chairman of the Board of Directors of
the Company and Hibernia National Bank. Mr. Campbell also serves on the Board of
Directors of Hibernia National Bank of Texas. Mr. Campbell served as Northern
Regional Chairman of the Company and Hibernia National Bank from January 1995
until 1997. Mr. Campbell joined Hibernia in that position following the merger
of Pioneer Bancshares Corporation, a bank holding company headquartered in
Shreveport, Louisiana, with and into the Company. Mr. Campbell served from 1992
to 1994 as Chairman of the Board of Pioneer Bancshares and its Louisiana banking
subsidiary, Pioneer Bank & Trust Company, and served as President of Pioneer
Bancshares from 1977 to 1992.
K. KIRK DOMINGOS III, 56, Senior Executive Vice President/Retail Arena
and Technology of the Company and Hibernia National Bank, assumed those
responsibilities in September 1997. Mr. Domingos is responsible for various
retail lines of business and the overall administrative functions of the
Company. Mr. Domingos has been employed by the Company and/or its subsidiaries
since August 1975 and assumed the position of Senior Executive Vice President
responsible for Support Services in August 1994 and the position of Executive
Vice President and Administrative Executive of Hibernia National Bank in August
1991.
B.D. FLURRY, 56, serves as Chairman of the Northern Region for the
Company and Hibernia National Bank, a position he assumed in 1997 and which
includes responsibility for the Company's operations in Northeast Texas. Mr.
Flurry also serves on the Board of Directors of Hibernia National Bank of Texas.
From January 1995 until 1997, Mr. Flurry served as the president of the Northern
Region for the Company and Hibernia National Bank. Prior to joining Hibernia,
Mr. Flurry served as President (from 1991 through 1994) of Pioneer Bank & Trust
Company, a subsidiary of Pioneer Bancshares Corporation, a bank holding company
headquartered in Shreveport, Louisiana that merged with and into Hibernia in
January 1995. Mr. Flurry assumed primary responsibility for oversight of the
Northeast Texas market at year-end 1996.
MARSHA M. GASSAN, 45, serves as Senior Executive Vice President and
Chief Financial Officer of the Company and Hibernia National Bank, positions
which she assumed in April 1996. Prior to that time, Ms. Gassan served as
Executive Vice President, General Auditor and manager of Credit Risk Management
of the Company and Hibernia National Bank (from 1994 to 1996), and as Senior
Vice President and manager of Credit Risk Management (from 1992 to 1994).
STEPHEN A. HANSEL, 50, serves as President and Chief Executive Officer
of the Company and Hibernia National Bank, positions which he assumed in March
1992. Mr. Hansel also serves on the Boards of Directors of the Company and
Hibernia National Bank.
RUSSELL S. HOADLEY, 53, serves as Executive Vice President/Employee and
Public Relations for the Company and Hibernia National Bank, a position he
assumed in 1994. From the time he joined the Company in July 1993 until his
promotion in 1994, Mr. Hoadley served as Senior Vice President/Public Affairs
and Marketing for the Company. Prior to joining the Company, Mr. Hoadley served
as Vice President/Director of Corporate Communications for Barnett Banks, Inc.,
a bank holding company based in Jacksonville, Florida, which position he held
from 1988 to June 1993.
RANDALL E. HOWARD, 50, serves as Chairman of the Southeast Region for
the Company and Hibernia National Bank. Mr. Howard has served in that position
since February 1998. Prior to that time, from 1987 to February 1998, Mr. Howard
served as President and Chief Executive Officer of ArgentBank, a Louisiana
banking association headquartered in Thibodaux, Louisiana, which was merged with
and into the Company in early 1998.
SCOTT P. HOWARD, 50, serves as Senior Executive Vice
President/Commercial Arena for the Company and Hibernia National Bank and has
served in that position since March 1996. From May 1992 until that time, Mr.
Howard served as Executive Vice President/Corporate and International Banking
for Hibernia National Bank.
RONALD E. SAMFORD, JR., 45, serves as Executive Vice President and
Controller of the Company and Hibernia National Bank and Chief Accounting
Officer of the Company, which positions he has held since November 1992. Prior
to joining Hibernia, Mr. Samford served as Senior Vice President and Chief
Accounting Officer of TeamBank, a bank headquartered in Forth Worth, Texas from
August 1990 to November 1992.
RICHARD G. WRIGHT, 48, serves as Senior Executive Vice President and
Chief Credit Officer of the Company, a position which he assumed in March 1996.
From August 1994 until that time, Mr. Wright served as Executive Vice
President/Credit Policy and Analysis of Hibernia National Bank, and from the
time he joined the Company in May 1992 until August 1994, he served as Senior
Vice President in the Credit and Asset Quality area of Hibernia National Bank
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HIBERNIA CORPORATION
(Registrant)
/s/ Stephen A. Hansel
Stephen A. Hansel, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on March 24, 1998, by the following persons on
behalf of the Registrant and in the capacities indicated.
/s/ Marsha M. Gassan /s/ Ronald E. Samford, Jr.
Marsha M. Gassan Ronald E. Samford, Jr.
Senior Executive Vice President Executive Vice President & Controller
Chief Financial Officer Chief Accounting Officer
Robert H. Boh*, Director Laura A. Leach*, Director
J. Herbert Boydstun*, Director James R. Murphey*, Director
J. Terrell Brown*, Director Donald J. Nalty*, Director
E.R. "Bo" Campbell*, Director William C. O'Malley*, Director
Richard W. Freeman, Jr.*, Director James R. Peltier*, Director
Stephen A. Hansel*, Director Robert T. Ratcliff*, Director
Dick H. Hearin*, Director Duke Shackelford*, Director
Robert T. Holleman*, Director Janee M. Tucker*, Director
Elton R. King*, Director Virginia E. Weinmann*, Director
Sidney W. Lassen*, Director Robert E. Zetzmann*, Director
*By: /s/ Patricia C. Meringer
Patricia C. Meringer
Attorney-in-fact
EX-99 EXHIBIT INDEX
EXHIBIT
3.1 Exhibit 3.1 to the Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed with the Commission by the Registrant
(Commission File No. 0-7220) is hereby incorporated by reference
(Articles of Incorporation of the Registrant, as amended to date)
3.2 Exhibit 3.2 to the Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed with the Commission by the Registrant
(Commission File No. 0-7220) is hereby incorporated by reference
(By-Laws of the Registrant, as amended to date)
10.13 Exhibit 10.13 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, filed with the Commission by the Registrant
(Commission File No. 0-7220) is hereby incorporated by reference
(Deferred Compensation Plan for Outside Directors of Hibernia
Corporation and its Subsidiaries, as amended to date)
10.14 Exhibit 10.14 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, filed with the Commission by the Registrant
(Commission File No. 0-7220) is hereby incorporated by reference
(Hibernia Corporation Executive Life Insurance Plan)
10.16 Exhibit 4.7 to the Registration Statement on Form S-8 filed with the
Commission by the Registrant (Registration No. 33-26871) is hereby
incorporated by reference (Hibernia Corporation 1987 Stock Option Plan,
as amended to date)
10.34 Exhibit C to the Registrant's definitive proxy statement dated August
17, 1992 relating to its 1992 Annual Meeting of Shareholders filed by
the Registrant with the Commission is hereby incorporated by reference
(Long-Term Incentive Plan of Hibernia Corporation)
10.35 Exhibit A to the Registrant's definitive proxy statement dated March
23, 1993 relating to its 1993 Annual Meeting of Shareholders filed by
the Registrant with the Commission is hereby incorporated by reference
(1993 Director Stock Option Plan of Hibernia Corporation)
10.36 Exhibit 10.36 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 filed with the Commission
(Commission file no. 0-7220) is hereby incorporated by reference
(Employment agreement between Stephen A. Hansel and Hibernia
Corporation)
10.37 Exhibit 10.37 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 filed with the Commission
(Commission File No. 0-7220) is hereby incorporated by reference
(Employment Agreement between J. Herbert Boydstun and Hibernia
Corporation)
10.38 Exhibit 10.38 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 filed with the Commission
(Commission File No. 0-7220) is hereby incorporated by reference
(Employment Agreement between E.R. "Bo" Campbell and Hibernia
Corporation)
10.39 Exhibit 10.39 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 filed with the Commission
(Commission File No. 0-7220) is hereby incorporated by reference
(Employment Agreement between B.D. Flurry and Hibernia Corporation)
10.40 Exhibit 10.40 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 filed with the Commission
(Commission File No. 0-7220) is hereby incorporated by reference
(Split-Dollar Life Insurance Plan of Hibernia Corporation effective as
of July 1996)
10.41 Exhibit 10.41 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 filed with the Commission
(Commission File No. 0-7220) is hereby incorporated by reference
(Nonqualified Deferred Compensation Plan for Key Management Employees
of Hibernia Corporation effective as of July 1996)
10.42 Exhibit 10.42 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 filed with the Commission
(Commission File No. 0-7220) is hereby incorporated by reference
(Supplemental Stock Compensation Plan for Key Management Employees
effective as of July 1996)
10.43 Exhibit 10.43 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 filed with the Commission
(Commission No. 0-7220) is hereby incorporated by reference
(Nonqualified Target Benefit (Deferred Award) Plan of Hibernia
Corporation effective as of July 1996))
10.44 Form of Change of Control Employment Agreement for Executive Officers
of the Registrant
13 Exhibit 13 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 filed with the Commission
(Commission File No. 0-7220) is hereby incorporated by reference (1996
Annual Report to security holders of Hibernia Corporation).
21 Exhibit 21 to the Annual Report on Form 10-K of the Registrant for the
fiscal year ended December 31, 1996 filed with the Commission
(Commission File No. 0-7220) is hereby incorporated by reference
(Subsidiaries of the Registrant)
23 Consent of Independnt Auditors
24 Powers of Attorney
27 Financial Data Schedule
99.1 Exhibit 99.1 to the Annual Report on Form 10-K dated June 26, 1997
filed with the Commission is hereby incorporated by reference (Annual
Report of the Retirement Security Plan for the fiscal year ended
December 31, 1996)
99.2 Exhibit 99.2 to the Annual Report on Form 10-K dated June 26, 1997
filed with the Commission is hereby incorporated by reference (Annual
Report of the Employee Stock Ownership Plan and Trust for the fiscal
year ended December 31, 1996)
EXHIBIT 10.44
FORM OF
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, which shall only become effective as an employment
agreement upon satisfaction of the conditions described in Section 1 hereof, is
made as of the __ day of _________, 199_ between and among Hibernia Corporation,
a Louisiana corporation (the "Company"), Hibernia National Bank, a national
banking association (the "Bank") (collectively, with their direct and indirect
subsidiaries, ("Hibernia") and _____________ ("Executive").
W I T N E S S E T H:
WHEREAS, Hibernia and/or the Bank employs Executive in a position of
significant authority and responsibility;
WHEREAS, Hibernia on behalf of itself and its shareholders, wishes to
attract and retain well-qualified executives and key personnel and to assure
itself of the continuity of its management;
WHEREAS, Hibernia recognizes that Executive is a valuable resource and,
in the event of a change of control of the Company or the Bank, Hibernia desires
to assure itself of Executive's continued loyalty and services or, in the event
Executive is terminated or adversely modified as a result thereof, to assure
Executive of adequate severance; and
WHEREAS, in the event of a change of control of Hibernia, Hibernia
desires to assure, as much as possible, that its management team remains intact
for a period of time after the change of control in order to assure a smooth
transition and to increase the value of its franchise to its shareholders.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Employment.
In the event of a change of control of Hibernia or the Bank, as defined
herein below, Hibernia hereby agrees to continue Executive in its employ, and
Executive hereby agrees to remain in the employ of Hibernia, for the period
commencing on the Effective Date of the change in control, as defined herein
below, and ending on the last day of the month that is two years after the
Effective Date (the "Employment Period"). It is hereby acknowledged and agreed
that this Agreement shall not operate to ensure employment, and shall not
constitute an employment agreement, until and unless a change of control, as
defined herein, occurs, and, in the event of a change of control, only for the
Employment Period, as defined above.
2. Position and Duties.
(a) During the Employment Period, Executive shall hold such position
and exercise such authority and perform such duties as are commensurate with the
position held and authority being exercised and duties being performed by
Executive immediately prior to the Effective Date, which services shall be
performed at the location where Executive was employed immediately prior to the
Effective Date or at such other location as Hibernia may reasonably require
within a 20-mile radius of the location at which Executive was employed
immediately prior to the Effective Date. The position, authority and duties of
Executive shall be deemed to be not commensurate with Executive's previous
position, authority or duties if (i) Hibernia becomes a direct or indirect
subsidiary of another corporation or corporations or becomes controlled,
directly or indirectly, by one or more unincorporated entities ("parent
company") or (ii) all or substantially all of the assets of Hibernia are
acquired by another corporation or unincorporated entity or group of
corporations or unincorporated entities owned or controlled, directly or
indirectly, by another corporation or unincorporated entity ("successor"),
unless, in either case, Executive's position, authority and duties with such
parent company or successor are at least commensurate in all material respects
with those held, exercised and assigned with Hibernia immediately prior to the
Effective Date.
(b) Excluding periods of vacation and sick leave to which Executive is
entitled, Executive agrees that during the Employment Period Executive shall
devote his or her full business time and attention to Executive's
responsibilities as described herein and shall perform such duties and
responsibilities faithfully and efficiently. Notwithstanding the foregoing,
Executive may engage in such outside professional, civic, charitable and
personal activities as are permitted by Hibernia's Code of Ethics and which do
not materially interfere with the performance of Executive's duties and
responsibilities.
3. Compensation and Benefits.
During the Employment Period, Executive shall receive the following
compensation and benefits:
(a) An annual base salary which is not less than his or her annual base
salary immediately prior to the Effective Date. During the Employment Period,
Executive's annual base salary shall be reviewed at least annually and shall be
increased from time to time consistent with increases in annual base salary
awarded in the ordinary course of business to other executives and key
employees. Any increase in annual base salary shall not limit or reduce any
other obligation to Executive under this Agreement. Hibernia shall not reduce
Executive's annual base salary during the Employment Period without Executive's
consent.
(b) A bonus (either pursuant to a bonus or incentive plan or program of
Hibernia or otherwise) in cash at least equal to the product of the average of
the bonus payout ratio1 for the three years (or such shorter period as Executive
has been employed by Hibernia) prior to the Effective Date (expressed as a
fraction) times the target bonus for the year in question (such bonus is
hereinafter sometimes referred to as the "Employment Period Bonus"). For
purposes of this paragraph (b), the parties acknowledge and agree that the bonus
payout ratio is the percentage of Executive's target bonus for the year(s) in
question which was actually awarded to Executive in the year(s) in question. The
annual bonus shall be payable within 60 days after the end of each fiscal year.
(c) Notwithstanding anything in paragraph (b) above to the contrary,
however, Executive shall not be entitled to an Employment Period Bonus with
respect to any year for which no bonuses have been or will be paid to any
officer eligible to receive a bonus from Hibernia. It is expressly understood
and agreed by the parties hereto that any bonus, regardless when paid, that is
paid to any officer of Hibernia that relates to a year to which an Employment
Period Bonus is otherwise required to be paid, shall require the payment of an
Employment Period Bonus to Executive.
(d) Executive shall be eligible to participate and to continue existing
participation in any and all incentive compensation plans of Hibernia which
provide opportunities to receive compensation in addition to annual base salary
and cash bonus on the same terms and conditions as other executives and key
employees of Hibernia.
(e) Executive shall be entitled to participate in salaried employee
benefit plans of Hibernia and receive perquisites on the same terms and
conditions as other executives and key employees of Hibernia.
(f) Executive shall be entitled to continue to accrue credited service
for retirement benefits and receive retirement benefits under and pursuant to
the terms of any qualified retirement plan of Hibernia or supplemental executive
retirement plan of Hibernia in effect on the Effective Date, on the same terms
and conditions as other executives and key employees of Hibernia.
4. Termination.
(a) Executive acknowledges and agrees that his or her employment is at
the pleasure of the Board of Directors (or, to the extent so delegated by such
Board, the Chief Executive Officer) of the Bank and/or the Company and that he
or she may be removed at any time by the Board of Directors (or, to the extent
so delegated by such Board, the Chief Executive Officer). Hibernia acknowledges
and agrees that Executive may resign his or her employment with Hibernia at any
time with or without Good Reason as hereinafter defined. If, at any time after
the Effective Date of a change in control and prior to the expiration of the
Employment Period, Executive is removed from the position which Executive held
prior to the Effective Date of a change in control, as hereinafter defined,
other than for cause or as a result of Executive's disability, or if Executive
resigns his or her position for Good Reason, the Bank shall pay to Executive a
lump sum severance amount equal to the aggregate salary remaining unpaid during
the unexpired portion of the Employment Period, plus an amount equal to the
product of the bonus, if any, that would be payable to Executive pursuant to
Section 3 hereof times the fraction, the numerator of which is the number of
months remaining in the unexpired portion of the Employment Period and the
denominator of which is twenty-four.
(b) In order to ensure a smooth transition of management in the event
of a change of control, Executive may also resign his or her employment
voluntarily, with or without Good Reason, during the thirty-day period following
the date that is twelve months after the Effective Date of a change of control,
and, if Executive so terminates his employment, Executive shall be entitled to a
lump sum severance amount equal to the aggregate salary remaining unpaid during
the unexpired portion of the Employment Period, plus an amount equal to one-half
of his or her Employment Period Bonus.
(c) In the event of termination pursuant to this Section 4(a) or
Section 4(b), the Company shall provide career counseling services for the
benefit of Executive for a period of six months following termination of
employment, including, but not limited to, the use of a telephone, photocopying
and fax equipment and counseling services relating to availability of other job
opportunities, all at no charge or cost to Executive.
(d) In the event Executive remains in the employ of the Bank for the
entire Employment Period (commencing on the Effective Date), and this Agreement
is not terminated by Employee and the Bank or by its terms, then this Agreement
shall terminate on the date that falls two years after the Effective Date.
(e) Notwithstanding anything in this Section 4 to the contrary,
Executive and Hibernia hereby acknowledge and agree that the parties hereto may,
upon the mutual consent of all parties hereto, modify or amend the provisions
hereof or terminate this Agreement at any time before or after the Effective
Date and that, upon such termination, the provisions hereof shall have no
further force or effect.
5. Confidential and Proprietary Information.
Executive acknowledges and agrees that any and all non public
information regarding Hibernia and its customers is confidential and the
unauthorized disclosure of such information will result in irreparable harm to
Hibernia. An Executive shall not, during his employment by Hibernia and for a
period of five years thereafter, disclose or permit the disclosure of any such
information to any person other than an employee of Hibernia or an individual
engaged by Hibernia to render professional services to Hibernia under
circumstances that require such person to maintain the confidentiality of such
information, except as such disclosure may be required by law. The provisions of
this Section 5 shall survive any termination of this Agreement. For purposes of
this Section 5, the term "confidential information" shall not include
information that (i) was or becomes generally available to the public other than
as a result of disclosure by Executive, (ii) was or becomes available to
Executive on a non confidential basis from a source other than Hibernia.
6. Definitions.
For purposes of this Agreement, the following terms shall have the
meanings given them in this Section 6.
(a) "Cause" shall mean a material breach by Executive of his
obligations under Section 2 of this Agreement or any failure or refusal to
perform the material duties associated with his position.
(b) "Good Reason" shall mean (i) the assignment to Executive of duties
that are materially inconsistent with Executive's position, authority, duties or
responsibilities immediately prior to the change in control, or any other action
by Hibernia which results in a material diminution in such position, authority,
duties or responsibilities; or (ii) requiring Executive, without his consent, to
be based at any office or location other than the office or location at which
Executive was employed immediately prior to the change in control; provided,
however, that any such relocation requests shall not be grounds for resignation
with Good Reason if such relocation is within a twenty-mile radius of the
location at which Executive was based prior to the Effective Date of a change in
control.
(c) "Disability" shall mean circumstances that qualify Executive for
long-term disability benefits under Hibernia's Long-Term Disability Plan as in
effect immediately prior to the change in control.
(d) "Change of control" shall be deemed to occur if (i) a person,
including a "group" as defined in Section 13(d)(3) of the Securities and
Exchange Act of 1934 and the rules and regulations promulgated there under,
becomes the beneficial owner of shares of Hibernia having 50% or more of the
voting power of Hibernia, (ii) Hibernia shall have sold or disposed of all or
substantially all of its assets or substantially all of the assets of the Bank,
or (iii) during any period of two consecutive calendar years, the individuals
who, at the beginning of such period, constitute the Board of Directors of the
Company cease for any reason to constitute at least a majority thereof, unless
the election or the nomination for election by the Company shareholders of each
new director was approved by a vote of at least a majority of the directors then
still in office who were directors at the beginning of the period or persons
nominated or elected by such directors. The Effective Date of a change in
control for purposes of this Agreement shall be (A) the date on which Hibernia
receives a copy of a Schedule 13D disclosing beneficial ownership of shares in
accordance with (d)(i) above; (B) the closing date of a sale of assets by
Hibernia in accordance with (d)(ii) above; or (C) the date of the annual or
special meeting of shareholders at which the last director necessary to meet the
requirements of (d)(iii) above is elected.
7. Liability of the Company; Regulatory Restrictions.
The parties recognize that the enforceability of employment contracts
with national banks are subject to some uncertainty and that national banks and
their bank holding companies are subject to regulatory restrictions that change
from time to time. As a result, Executive may be prevented from obtaining or
enforcing any or all of his rights here under from the Bank or the Company. The
Company agrees that if, for any reason, the Bank is prevented from performing
its obligations here under, the Company will perform each and every obligation
as if it were the sole party to the Agreement and without regard to whether the
Agreement specifies certain obligations to be those of the Bank rather than the
Company; provided, however, nothing herein shall require the Company to perform
any obligation if such performance is prohibited or limited by applicable law or
regulation, as determined in a proceeding or adjudication by a court, tribunal,
or regulatory agency having authority to so determine, which determination is
final and subject to no further appeals. The parties further acknowledge and
agree that it is the intent of this Agreement that it be enforced to the fullest
degree permitted by law and regulation.
8. Notices.
All notices and other communications provided for by this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
in person or mailed by United States Certified Mail, return receipt requested,
postage prepaid, addressed as follows:
If to Executive:
If to Hibernia:
Hibernia Corporation (or Hibernia National Bank)
313 Carondelet Street
New Orleans, Louisiana 70130
Attention: Director, Human Resources
or to such other addresses any party may have furnished to the other in writing
in accordance with this Agreement.
9. Governing Law.
The provisions of this Agreement shall be interpreted and construed in
accordance with, and enforcement may be made under, the law of the State of
Louisiana.
10. Successors and Assigns.
Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
11. Severability.
If any provision or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by applicable law.
12. Entire Agreement; Amendment.
This Agreement sets forth the entire Agreement of the parties hereto
and supersedes all prior agreements, understandings and covenants with respect
to the subject matter hereof. This Agreement may be amended or terminated only
by mutual agreement of the parties in writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HIBERNIA NATIONAL BANK HIBERNIA CORPORATION
By: _______________________ By:_______________________
Title: ____________________ Title: ___________________
EXECUTIVE
--------------------------
1 The bonus payout ratio shall be the percentage of the target bonus for
Executive, which target bonus is expressed as a percentage of annual base salary
and which is established in advance of each fiscal year by Hibernia, which is
actually awarded in that year. For example, if the target bonus is 50% of base
salary, and the award is 25% of the target, then the bonus payout ratio is 25%.
For purposes of this provision, the bonus payout ratios for the three years in
question would be aggregated and divided by three, and the resulting average
would be applied to the target bonus for the Executive in the year in which the
Employment Period Bonus would be paid.
<PAGE>
HIBERNIA CORPORATION
Corporate Offices Mailing Address
313 Carondelet Street P.O. Box 61540
New Orleans, LA 70130 New Orleans, LA 70161
504-533-3333 Internet:
http://www.hiberniabank.com
Stock Listing
The common stock of Hibernia Corporation is listed on the New York Stock
Exchange under the ticker symbol "HIB." Price and volume information are listed
under "Hibernia" and "HIB" in The Wall Street Journal and under similar
designations in other daily newspapers. At December 31, 1997, Hibernia
Corporation had 13,700 shareholders of record and 4,429 full-time equivalent
employees.
<TABLE>
<CAPTION>
Hibernia Stock Price and Dividend Information
1997 1996
- - --------------------------------------------------------------------------------
Market Price (1) Dividend Market Price (1) Dividend
High Low Declared High Low Declared
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First quarter ..... $14.75 $12.75 $ 0.08 $10.88 $10.00 $ 0.07
- - --------------------------------------------------------------------------------
Second quarter .... $14.50 $12.38 $ 0.08 $11.88 $10.00 $ 0.07
- - --------------------------------------------------------------------------------
Third quarter ..... $17.19 $13.81 $ 0.08 $11.75 $10.00 $ 0.07
- - --------------------------------------------------------------------------------
Fourth quarter .... $19.38 $16.63 $ 0.09 $13.50 $11.13 $ 0.08
- - --------------------------------------------------------------------------------
- - ----------
(1) NYSE closing price
</TABLE>
Shareholder Assistance
Shareholders requesting a change of address, records or information about lost
certificates or wanting to have dividends deposited directly into checking or
savings accounts should contact:
Chase Mellon Shareholder Services
Security Relations Department
85 Challenger Road, Overpeck Centre
Ridgefield, NJ 07660
Toll free: 800-814-0305
Dividend Reinvestment and Stock Purchase Plan
Hibernia's Dividend Reinvestment and Stock Purchase Plan is an economical,
convenient way for shareholders to increase their holdings of the Company's
stock. Once enrolled in the plan, shareholders may purchase new shares directly
from the Company by reinvesting cash dividends, making optional cash purchases
or both.
Direct Deposit of Dividends
By depositing dividends directly to checking or savings accounts, shareholders
can receive their funds faster. To sign up or receive information, call
toll-free 800-814-0305.
For Information
Shareholders, media representatives and other individuals seeking copies of the
annual report, Form 10-K and Form 10-Q, as well as general information, should
contact Jim Lestelle, Senior Vice President and Manager of Corporate
Communications, at 504-533-5482 or toll free at 800-245-4388. Analysts and
others seeking financial data or a prospectus on the Dividend Reinvestment and
Stock Purchase Plan should contact Trisha Voltz, Vice President and Manager of
Investor Relations, at 504-533-2180 or toll free at 800-245-4388.
For fax access to news releases, quarterly reports, analyst reports and
dividend reinvestment details, call toll free 800-207-9063.
Duplicate Meetings
The Company is required to mail information to each name on its shareholder
list, even if it means sending duplicates. Shareholders wishing to eliminate
duplicate mailings should write to Chase Mellon Shareholder Services at the
address on this page indicating which names should be removed. This will not
affect dividend or proxy mailings.
<PAGE>
<TABLE>
<CAPTION>
Five-Year Consolidated Summary of Income and Selected Financial Data (1)
Hibernia Corporation and Subsidiaries
- - ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
($ in thousands, except per-share data) 1997 1996 1995 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income ................................... $ 750,082 $ 641,440 $ 575,302 $ 490,792 $ 468,508
Interest expense .................................. 322,325 265,807 246,986 182,767 165,961
- - ------------------------------------------------------------------------------------------------------------------------------------
Net interest income ............................... 427,757 375,633 328,316 308,025 302,547
Provision for possible loan losses ................ 620 (12,417) 1,218 (17,759) (2,658)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses ...................... 427,137 388,050 327,098 325,784 305,205
- - ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Noninterest income ............................. 142,713 117,850 105,703 96,386 92,029
Securities gains (losses), net ................. 2,718 (5,306) 227 (1,678) 819
- - ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income ................................ 145,431 112,544 105,930 94,708 92,848
Noninterest expense ............................... 361,944 326,920 289,482 307,988 309,041
- - ------------------------------------------------------------------------------------------------------------------------------------
Income before taxes ............................... 210,624 173,674 143,546 112,504 89,012
Income tax expense ................................ 73,235 60,856 12,134 8,846 14,191
- - ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations ................. 137,389 112,818 131,412 103,658 74,821
Cumulative effect of change in accounting for
income taxes ................................... - - - - 3,556
- - ------------------------------------------------------------------------------------------------------------------------------------
Net income ........................................ $ 137,389 $ 112,818 $ 131,412 $ 103,658 $ 78,377
- - ------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders ...... $ 130,489 $ 111,078 $ 131,412 $ 103,658 $ 78,377
- - ------------------------------------------------------------------------------------------------------------------------------------
Per common share information: (2)
Income from continuing operations .............. $ 1.00 $ 0.85 $ 1.01 $ 0.79 $ 0.57
Net income ..................................... $ 1.00 $ 0.85 $ 1.01 $ 0.79 $ 0.60
Net income - assuming dilution ................. $ 0.98 $ 0.84 $ 1.00 $ 0.78 $ 0.60
Tax-effected net income (3) .................... $ 1.00 $ 0.85 $ 0.72 $ 0.56 $ 0.47
Cash dividends declared ........................ $ 0.33 $ 0.29 $ 0.25 $ 0.19 $ 0.03
Average shares outstanding (000s) ................. 130,795 130,161 130,276 130,991 130,419
Dividend payout ratio ............................. 33.00% 34.12% 24.75% 24.05% 5.00%
- - ------------------------------------------------------------------------------------------------------------------------------------
Selected year-end balances (in millions)
Loans ............................................. $ 7,580.2 $ 6,165.9 $ 4,819.6 $ 3,905.9 $ 3,470.5
Deposits .......................................... 8,633.3 8,052.7 6,733.0 6,500.8 6,281.3
Debt .............................................. 506.5 57.2 36.1 23.5 42.0
Equity ............................................ 1,050.3 951.9 779.9 647.6 604.1
Total assets ...................................... 11,023.0 9,560.3 7,933.8 7,464.2 7,279.0
- - ------------------------------------------------------------------------------------------------------------------------------------
Selected average balances (in millions)
Loans ............................................. $ 6,751.3 $ 5,407.4 $ 4,343.9 $ 3,644.2 $ 3,349.6
Deposits .......................................... 8,138.5 7,089.5 6,528.9 6,345.0 6,121.8
Debt .............................................. 94.1 31.8 28.9 35.5 41.4
Equity ............................................ 991.7 828.8 705.8 626.1 556.0
Total assets ...................................... 9,969.4 8,417.7 7,650.3 7,345.7 7,038.7
- - ------------------------------------------------------------------------------------------------------------------------------------
Selected ratios
Net interest margin (taxable-equivalent) .......... 4.75% 4.89% 4.69% 4.59% 4.69%
Return on assets .................................. 1.38% 1.34% 1.72% 1.41% 1.11%
Return on common equity ........................... 14.63% 13.83% 18.62% 16.56% 14.10%
Return on total equity ............................ 13.85% 13.61% 18.62% 16.56% 14.10%
Efficiency ratio .................................. 62.45% 65.40% 65.66% 74.90% 76.98%
Average equity/average assets ..................... 9.95% 9.85% 9.23% 8.52% 7.90%
Tier 1 risk-based capital ratio ................... 10.77% 12.03% 14.62% 15.48% 14.82%
Total risk-based capital ratio .................... 12.02% 13.29% 15.89% 16.76% 16.12%
Leverage ratio .................................... 8.54% 8.68% 9.64% 8.87% 7.73%
- - ------------------------------------------------------------------------------------------------------------------------------------
Tax-effected net income and ratios excluding
goodwill and core deposit intangible amortization
and balances (3) (4)
Net income applicable to common shareholders ...... $ 141,259 $ 117,080 $ 96,413 $ 95,450 $ 66,602
Net income per common share (2) ................... $ 1.08 $ 0.90 $ 0.74 $ 0.73 $ 0.51
Return on assets .................................. 1.51% 1.44% 1.26% 1.31% 0.95%
Return on common equity ........................... 18.87% 17.88% 14.07% 16.23% 13.06%
Efficiency ratio .................................. 60.31% 64.07% 64.95% 69.47% 75.68%
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ----------------
(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) Dividends per common share are historical amounts. For a discussion of net
income per common share computations refer to Note 13 of the consolidated
financial statements - "Net Income Per Common Share Data."
(3) Adjusted to reflect a 35% effective tax rate for years prior to 1996.
(4) 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." To make certain
comparisons more meaningful, net income and earnings per common share for 1995
and prior years are adjusted on a pro forma, tax-effected basis. Tax expense is
assumed at an effective tax rate of 35% rather than the lower-than-normal
federal income tax rate actually incurred as the Company recognized deferred tax
benefits. This discussion should be read in conjunction with the accompanying
tables and consolidated financial statements.
1997 Highlights
Net income for 1997 totaled $137.4 million, a 22% increase compared to
$112.8 million for 1996. Net income per common share for 1997 of $1.00
increased 18% compared to $.85 for 1996, and net income per common share -
assuming dilution was $.98 for 1997, an increase of 17% compared to $.84
for 1996.
Profitability, loans and deposits continued to increase; asset quality
remained strong; and the Company's franchise was further enhanced by the
expansion of its market through two completed mergers during 1997 and three
pending mergers at December 31, 1997.
Tangible returns on assets (ROA) and common equity (ROCE) were 1.51% and
18.87%, respectively, in 1997 compared to 1.44% and 17.88% in 1996.
Loans grew 23% to $7.6 billion at December 31, 1997, with commercial loans
up 32%, small business loans up 15% and consumer loans up 18% from a year
earlier.
Asset quality remained strong with nonperforming assets as a percent of
loans plus foreclosed assets and excess bank-owned property of 0.33% at
December 31, 1997 compared to 0.40% a year earlier. The year-end 1997
reserve coverage of nonperforming loans was 528% compared to 802% at the
end of 1996.
Net interest income increased $52.1 million in 1997 compared to 1996,
primarily due to a $1.3 billion increase in average loans. The increase in
average loans and the shift in the mix of earning assets to loans from
lower-yielding securities were more than offset by the negative impact of
declining loan yields, the shift in the mix of funding sources toward
market rate funds and the decline in the percentage of noninterest bearing
funds supporting earning assets, resulting in a 14-basis-point decline in
the net interest margin to 4.75% for 1997 from 4.89% in 1996.
Operating efficiency continued to improve. In 1997 the efficiency ratio was
62.45% compared to 65.40% in 1996 and 65.66% in 1995. The tangible
efficiency ratio, which excludes the impact of amortization of goodwill and
core deposit intangibles, was 60.31% in 1997 compared to 64.07% in 1996 and
64.95% in 1995.
Cash dividends per common share for 1997 increased to $.33, 14% higher than
the 1996 cash dividend of $.29 per common share and 32% higher than the
1995 cash dividend of $.25 per common share. The dividend payout ratios for
1997, 1996 and 1995 were 33%, 34% and 25% (35% on a tax-effected basis),
respectively.
Hibernia completed mergers in 1997 with two institutions that had combined
assets of $254 million and a total of seven offices. Since the beginning of
1994, Hibernia has completed mergers with 17 institutions (comprising 19
banks) with combined assets of $3.7 billion and 121 offices. At December
31, 1997 mergers were pending with three institutions with combined assets
of $1.2 billion and 28 offices.
Merger Activity
In 1997 the Company completed two mergers with East Texas financial
institutions which were accounted for as poolings of interests. The Company
completed five mergers in 1996: two in Louisiana and one in East Texas which
were accounted for as poolings of interests, and two in Louisiana which were
accounted for as purchase transactions. The Company completed four mergers with
Louisiana financial institutions in 1995, all of which were accounted for as
poolings of interests.
The institutions with which the Company merged are collectively referred to
as the "merged companies." The merged companies that were acquired in
transactions accounted for as poolings of interests are referred to as the
"pooled companies," and institutions that were acquired in transactions
accounted for as purchases are referred to as the "purchased companies."
All prior-year information has been restated to reflect the effect of
mergers accounted for as poolings of interests. For all purchase transactions,
the financial information of those institutions is combined with Hibernia as of
and subsequent to consummation; therefore, certain items contained in this
discussion are only comparable after excluding the effect of the purchased
companies.
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 Five-Year
and Quarterly Consolidated Summary of Income and Selected Financial Data on
pages 26 and 47.
Financial Condition
Earning Assets
Interest income from earning assets (including loans, securities and
short-term investments) is the Company's main source of income. Average earning
assets totaled $9.2 billion in 1997, compared to $7.8 billion in 1996 and $7.1
billion in 1995. Average earning assets increased $1.4 billion in 1997 and
$667.2 million in 1996 due primarily to growth in the loan portfolio (including
growth in the pooled companies' portfolios) and the effect of the purchased
companies.
Loan demand, which has been strong since the second half of 1993, continued
to improve throughout 1997. Loans as a percentage of average earning assets
increased to 73.4% in 1997, compared to 69.2% in 1996 and 60.8% in 1995. Total
securities decreased to 23.9% of average earning assets in 1997 from 28.1% in
1996 and 37.3% in 1995. The Company funded the 1997 increase in earning assets
through the growth in interest-bearing deposits of $873.0 million, other
interest-bearing liabilities of $328.8 million and noninterest-bearing
liabilities of $187.0 million.
Total earning assets at December 31, 1997 were $10.1 billion, up $1.5
billion from a year earlier due to a $1.4 billion (23%) increase in loans.
LOANS. The Company's lending activities are subject to both prudent
underwriting standards and liquidity considerations. Loans allow Hibernia to
meet customer credit needs, while at the same time achieving yields that are
generally higher than those available on alternative earning assets. Lending
relationships are one way Hibernia meets its goal of providing for all the
financial needs of its customers.
Hibernia engages in commercial, small business and consumer lending. The
specific underwriting criteria for each major loan category are outlined in a
formal credit policy that is approved by the Board of Directors. In general,
commercial loans are evaluated based on cash flow, collateral, market
conditions, prevailing economic trends, character and leverage capacity of the
borrower, and capital and investment in a particular property, if applicable.
Most small business and consumer loans are underwritten using credit scoring
models which evaluate such factors as payment capacity, credit history and
collateral. In addition, market conditions, economic trends and the character of
the borrower are considered. The credit policy, including the underwriting
criteria for major loan categories, is reviewed on a regular basis and adjusted
when warranted.
Average loans increased $1.3 billion in 1997 and $1.1 billion in 1996 as
all segments experienced significant growth. The growth from new and existing
customers accounted for approximately $1.1 billion (82%) of the overall growth
in average loans in 1997, with the remainder of the growth resulting from the
effect of the purchased companies. The Company's efforts to achieve its goal of
becoming the best financial services provider in each of its markets by building
the most comprehensive and convenient banking network, and delivering
top-quality service across a broad range of financial products and services
enabled Hibernia to increase loans.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
TABLE 1 - COMPOSITION OF LOAN PORTFOLIO
- - --------------------------------------------------------------------------------------------------------------
December 31 ($ in millions) 1997 1996
- - --------------------------------------------------------------------------------------------------------------
Loans Percent Loans Percent
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial:
Commercial and industrial ......................... $ 1,089.2 14.4% $ 865.9 14.0%
Services industry ................................. 719.6 9.5 455.3 7.4
Real estate ....................................... 444.2 5.9 419.1 6.8
Health care ....................................... 251.7 3.3 227.3 3.7
Transportation, communications and utilities ...... 253.6 3.3 182.4 3.0
Energy ............................................ 279.0 3.7 143.2 2.3
Other ............................................. 54.2 0.7 46.0 0.7
- - --------------------------------------------------------------------------------------------------------------
Total commercial ............................ 3,091.5 40.8 2,339.2 37.9
- - --------------------------------------------------------------------------------------------------------------
Small Business:
Commercial and industrial ......................... 495.7 6.5 681.0 11.0
Services industry ................................. 309.9 4.1 183.2 3.0
Real estate ....................................... 179.0 2.4 118.9 1.9
Health care ....................................... 74.1 1.0 54.7 0.9
Transportation, communications and utilities ...... 38.0 0.5 24.3 0.4
Energy ............................................ 17.3 0.2 6.8 0.1
Other ............................................. 259.5 3.4 120.9 2.0
- - --------------------------------------------------------------------------------------------------------------
Total small business ........................ 1,373.5 18.1 1,189.8 19.3
- - --------------------------------------------------------------------------------------------------------------
Consumer:
Residential mortgages:
First mortgages ............................... 1,485.1 19.6 1,113.7 18.1
Junior liens .................................. 129.4 1.7 121.2 2.0
Indirect .......................................... 708.5 9.4 749.9 12.2
Revolving credit .................................. 282.9 3.7 144.4 2.3
Other ............................................. 509.3 6.7 507.7 8.2
- - --------------------------------------------------------------------------------------------------------------
Total consumer .............................. 3,115.2 41.1 2,636.9 42.8
- - --------------------------------------------------------------------------------------------------------------
Total loans ........................................... $ 7,580.2 100.0% $ 6,165.9 100.0%
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
Table 1 details Hibernia's commercial and small business loans classified
by repayment source and consumer loans classified by type. In 1997 commercial
loans grew $752.3 million (32%), small business loans were up $183.7 million
(15%) and consumer loans increased $478.3 million (18%). The portfolio mix was
41.1% consumer, 40.8% commercial and 18.1% small business at year-end 1997
compared to 42.8%, 37.9% and 19.3%, respectively, at year-end 1996. Hibernia's
lending strategy is to maintain an appropriately balanced portfolio.
Commercial Loans. The growth in the commercial portfolio was distributed
among the services industry, up $264.3 million (58%); commercial and industrial,
up $223.3 million (26%); energy, up $135.8 million (95%); transportation,
communications and utilities, up $71.2 million (39%); commercial real estate, up
$25.1 million (6%); and health care, up $24.4 million (11%). Even with
significant growth in several industries, Hibernia's loan portfolio is still
well diversified as evidenced by the portfolio percentages presented in Table 1.
Expertise in specialized industries, including energy, maritime, health
care and commercial real estate, allowed Hibernia's experienced team of lenders
to increase the commercial portfolio. Part of that increase is a result of the
identification of niches such as asset-based lending and equipment leasing,
where Hibernia offered new products and services and is meeting customer needs
efficiently and profitably. In addition, the skills and market knowledge of
lenders who have joined the Company through mergers enabled Hibernia to
capitalize on opportunities in the new markets it serves.
Small Business Loans. Hibernia generally categorizes companies with
revenues of less than $10 million as small businesses. The small business
portfolio showed increases in the services industry, up $126.7 million (69%);
real estate, up $60.1 million (51%); health care, up $19.4 million (35%);
transportation, communications and utilities, up $13.7 million (56%); energy, up
$10.5 million (154%); and other, up $138.6 million (115%). These increases were
partially offset by a decrease in the commercial and industrial category of
$185.3 million (27%). This decrease and the increase in the "other" category
primarily resulted from the reclassification of merger bank loans to their
appropriate category after converting to Hibernia's loan system.
Centralized underwriting, utilization of sophisticated credit scoring
models and Hibernia's shortened application form, QuickApp, have made the
underwriting process more efficient while maintaining credit quality. This
allows the experienced business bankers located in each market to concentrate on
serving the credit and other financial needs of small- and medium-sized business
customers.
Consumer Loans. The increase in consumer loans to $3.1 billion at December
31, 1997, from $2.6 billion at December 31, 1996, resulted primarily from growth
in the residential mortgage and revolving credit portfolios. Increased marketing
efforts, new product development, shortened application and approval processes,
and extended service hours designed to maximize the effectiveness of the
Company's extensive banking office network were the major factors in this
growth.
Loans secured by mortgages on residential property and indirect lending
(primarily through automobile dealerships) are the two largest components of the
consumer portfolio.
Residential mortgage loans increased $379.6 million (31%) in 1997 and now
comprise approximately half of the consumer loan portfolio. It is Hibernia's
practice to retain adjustable-rate mortgages originated and to securitize and
sell fixed-rate mortgage loans originated, while generally retaining the
associated servicing rights. At December 31, 1997 Hibernia serviced
approximately $2.6 billion in residential mortgage loans.
Technology-driven enhancements helped streamline the mortgage application,
approval and closing processes, thereby improving customer service. This
improvement as well as Hibernia's increased focus on mortgage lending resulted
in over $1.0 billion in loan originations during 1997, a 112% increase from
1996.
In addition to loans for the purchase of homes, Hibernia offers customers a
broad assortment of loans secured by residential mortgages, including the Equity
PrimeLine(R), an attractively priced line of credit secured by a homeowner's
residence.
Although still a significant part of the consumer portfolio, Hibernia's
indirect lending portfolio declined during 1997 by $41.4 million (6%). This
decline was primarily the result of management's decision to decrease emphasis
on indirect lending because of competitive market factors resulting in
unacceptable profitability in portions of the portfolio.
SECURITIES. At the end of 1997, securities totaled $2.1 billion, a decrease
of $103.6 million, or 4.6%, from the end of 1996. The decrease is primarily due
to a reduction in mortgage-backed securities of $211.1 million as a result of
contractual payments and prepayments of principal. The proceeds from these
principal reductions were used to fund loans as the mix of earning assets
continued to change. Of total securities at December 31, 1997, 88% are debt
securities of the U.S. government or its agencies. Most securities held by the
Company qualify as pledgable securities and are used to collateralize repurchase
agreements and public fund deposits. The composition of the securities portfolio
is shown in Table 2.
During 1996 Hibernia restructured its portfolio of securities available for
sale to enhance future interest income and improve its net interest margin. This
restructuring resulted in the sale of almost $200 million of adjustable-rate
mortgage-backed securities and the purchase of a similar amount of obligations
of states and political subdivisions and mortgage-backed securities.
On December 29, 1995, in accordance with the Financial Accounting Standards
Board Special Report "A Guide to Implementation of Statement 115 on Accounting
for Certain Investments in Debt and Equity Securities," the Company chose to
reclassify all of its securities held to maturity to the available for sale
portfolio. This reclassification gives the Company greater flexibility in
managing the portfolio for income, interest-rate risk and liquidity. Although
net unrealized gains or losses in the available for sale portfolio are reflected
as a separate component of equity, these gains or losses are not included in
regulatory capital for purposes of computing capital adequacy ratios. It is
anticipated that future purchases of securities will be classified as available
for sale.
The Company held $35.9 million in securities as trading account assets at
December 31, 1997. These trading account assets, purchased in late 1997, related
to a single transaction associated with a tax planning strategy and were sold in
early 1998 for slightly more than their carrying value at year-end 1997. The
Company held no trading account assets at December 31, 1996, and there was no
significant trading activity during 1996 or 1995. Hibernia classifies its
trading account assets as short-term investments.
Average securities available for sale in 1997 of $2.2 billion were
virtually unchanged from 1996. Average securities available for sale increased
$1.4 billion in 1996 reflecting the transfer of securities from held to maturity
and the addition of the securities available for sale attributable to the
purchased companies, partially offset by the decrease in mortgage-backed
securities previously described. Average securities held to maturity decreased
$1.9 billion from 1995 to 1996 due to the transfer of securities to the
available for sale portfolio.
Maturities and yields of securities at year-end 1997 are detailed in Table
3. Mortgage-backed securities are classified according to contractual maturity
without consideration of principal amortization or projected prepayments.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------
TABLE 2 - COMPOSITION OF SECURITIES AVAILABLE FOR SALE
- - --------------------------------------------------------------------------------------------------
December 31 ($ in millions) 1997 1996 1995
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasuries ...................................... $ 330.4 $ 391.7 $ 377.2
U.S. government agencies:
Mortgage-backed securities ...................... 1,110.3 1,321.4 1,610.2
Other ........................................... 456.6 347.9 266.2
States and political subdivisions .................... 192.5 139.7 90.9
Other ................................................ 57.6 48.5 56.7
Derivative financial instruments ..................... -- 1.8 0.1
- - --------------------------------------------------------------------------------------------------
Total ...................................... $ 2,147.4 $ 2,251.0 $ 2,401.3
- - --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
TABLE 3 - MATURITIES AND YIELDS OF SECURITIES AVAILABLE FOR SALE(1)
- - ----------------------------------------------------------------------------------------------------------------------------------
Due after 1 Due after 5
Due in 1 year year through years through Due after
December 31, 1997 ($ in millions) or less 5 years 10 years 10 years Total
- - ----------------------------------------------------------------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasuries .................. $ 275.1 7.06% $ 55.3 6.14% $ -- -- % $ -- -- % $ 330.4 6.59%
- - ----------------------------------------------------------------------------------------------------------------------------------
U.S. government agencies:
Mortgage-backed securities (2) 16.1 6.27 54.9 7.00 241.8 7.25 797.5 6.77 1,110.3 7.20
- - ----------------------------------------------------------------------------------------------------------------------------------
Other ........................ 168.9 5.71 73.5 6.53 179.7 6.96 34.5 6.12 456.6 5.04
- - ----------------------------------------------------------------------------------------------------------------------------------
States and political subdivisions 3.7 5.33 32.8 5.15 36.7 5.09 119.3 5.36 192.5 5.19
- - ----------------------------------------------------------------------------------------------------------------------------------
Other ............................ 56.6 5.28 1.0 6.85 -- -- -- -- 57.6 5.31
- - ----------------------------------------------------------------------------------------------------------------------------------
Total ..................... $ 520.4 6.39% $ 217.5 6.34% $ 458.2 6.97% $ 951.3 6.57% $2,147.4 6.42%
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------
(1) Yield computations are based on market values.
(2) Mortgage-backed securities are classified according to contractual maturity
without consideration of principal amortization or projected prepayments.
</TABLE>
At December 31, 1997 the available for sale portfolio included $430.8
million of adjustable-rate securities, primarily mortgage-backed securities
whose yields are tied to a cost-of-funds index. In much the same manner as
Hibernia's cost of funds adjusts to new market rates over a period of time, the
rates on these securities may not fully reflect a change in market interest
rates for more than a year.
The average repricing period of total securities at December 31, 1997 was
3.9 years, compared to 2.7 years at December 31, 1996. The repricing period
increased due to an increased level of investment in bonds of states and
political subdivisions, which have longer maturities, and movement toward longer
maturity agency bonds which have call features. These call features are not
considered in the calculation of the average repricing period. Carrying
securities available for sale at market value has the effect of recognizing a
yield on the securities equal to the current market yield.
Asset Quality
Nonperforming assets consist of nonaccrual loans (loans on which interest
income is not currently recognized), restructured loans (loans with below-market
interest rates or other concessions due to the deteriorated financial condition
of the borrower), foreclosed assets (assets to which title has been assumed in
satisfaction of debt) and excess bank-owned property. Interest payments received
on nonperforming loans are applied to reduce principal if there is doubt as to
the collectibility of the principal; otherwise, these receipts are recorded as
interest income. Certain nonperforming loans are current as to principal and
interest payments but are classified as nonperforming because there is a doubt
concerning full collectibility of both principal and interest.
Nonperforming assets totaled $25.2 million at year-end 1997, a $0.2 million
(1%) increase from the prior year. Nonperforming assets totaling $25.0 million
at December 31, 1996 were down $1.9 million (7%) from December 31, 1995. The
composition of nonperforming assets and certain key asset quality ratios for the
past five years are illustrated in Table 4.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------
TABLE 4 - NONPERFORMING ASSETS
- - -----------------------------------------------------------------------------------------------------
December 31 ($ in thousands) 1997 1996 1995 1994 1993
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans ...................... $ 20,356 $ 16,080 $ 17,717 $ 22,379 $ 93,097
Restructured loans .................... -- -- -- 6,024 3,348
Nonperforming loans ............... 20,356 16,080 17,717 28,403 96,445
Foreclosed assets ..................... 2,452 5,209 6,155 10,480 19,048
Excess bank-owned property ............ 2,360 3,670 2,946 -- --
- - -----------------------------------------------------------------------------------------------------
Total nonperforming assets ........ $ 25,168 $ 24,959 $ 26,818 $ 38,883 $115,493
- - -----------------------------------------------------------------------------------------------------
Accruing loans past due 90 days or more $ 4,839 $ 5,538 $ 2,926 $ 4,409 $ 5,032
Reserve for possible loan losses ...... $107,540 $129,039 $151,367 $156,896 $187,368
Nonperforming assets/loans plus
foreclosed assets and excess
bank-owned property ............... 0.33% 0.40% 0.56% 0.99% 3.31%
Reserve for possible loan losses/loans 1.42% 2.09% 3.14% 4.02% 5.40%
Reserve for possible loan losses/
nonperforming loans ............... 528.3% 802.5% 854.4% 552.4% 194.3%
Net loans charged off/average loans ... 0.33% 0.29% 0.16% 0.35% 0.69%
- - -----------------------------------------------------------------------------------------------------
</TABLE>
Table 5 details nonperforming loan activity during 1997 by loan type
(commercial real estate, other commercial, small business and consumer).
Payments and loans returned to performing status accounted for a $27.4 million
reduction in nonperforming loans. Charge-offs of nonperforming loans and
transfers to foreclosed assets totaled $9.0 million, while $40.7 million in
loans were transferred to nonperforming status in 1997.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
TABLE 5 - SUMMARY OF NONPERFORMING LOAN ACTIVITY
- - -------------------------------------------------------------------------------------------------------
Commercial Other Small
($ in thousands) Real Estate Commercial Business Consumer Total
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans at December 31, 1996 $ 2,310 $ 1,841 $ 9,390 $ 2,539 $ 16,080
Additions .............................. 598 22,992 12,924 4,189 40,703
Charge-offs - gross .................... (283) (3,264) (1,905) (221) (5,673)
Transfers to foreclosed assets ......... (700) -- (374) (2,240) (3,314)
Returned to performing status .......... -- (810) (1,030) -- (1,840)
Payments ............................... (1,726) (15,676) (7,833) (365) (25,600)
- - -------------------------------------------------------------------------------------------------------
Nonperforming loans at December 31, 1997 $ 199 $ 5,083 $ 11,172 $ 3,902 $ 20,356
- - -------------------------------------------------------------------------------------------------------
</TABLE>
In addition to the nonperforming loans discussed above, there are $19.4
million of loans which, in management's opinion, are subject to potential future
classification as nonperforming.
Foreclosed assets and excess bank-owned property, which are recorded at
fair value less estimated selling cost, totaled $4.8 million at year-end 1997,
$8.9 million at year-end 1996 and $9.1 million at year-end 1995. Improvements in
commercial real estate and general economic conditions, which allowed for
favorable dispositions, were the primary factors in the declines.
As of January 1, 1995, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 114, "Accounting for Impairment of a Loan,"
which, as it relates to in-substance foreclosures, requires that a creditor
continue to follow loan classification on the balance sheet unless the creditor
receives physical possession of the collateral. At December 31, 1997 and 1996,
the recorded investment in loans that were considered to be impaired under SFAS
No. 114 was $17.0 million and $14.5 million, respectively, with a related
reserve for possible loan losses of $2.6 million and $1.5 million, respectively.
These loans are included in nonaccrual loans in Table 4.
Nonperforming assets compared to total loans plus foreclosed assets and
excess bank-owned property (nonperforming asset ratio) is one measure of asset
quality. At December 31, 1997 the Company's nonperforming asset ratio was 0.33%,
compared to 0.40% at year-end 1996 and 0.56% at year-end 1995. Another measure
of asset quality is the amount of net charge-offs during the year compared to
average loans. As illustrated in Table 6, net charge-offs in 1997 totaled $22.1
million, a $6.4 million increase from $15.8 million in 1996. Net charge-offs as
a percentage of average loans were 0.33% in 1997, 0.29% in 1996 and 0.16% in
1995.
The level of accruing, delinquent loans (over 30 days past due) as a
percentage of total loans was 0.8% at December 31, 1997 compared to 1.2% at
year-end 1996 and 1.1% at year-end 1995. The commercial loan delinquency ratio
decreased in 1997 to 0.2% from 0.8% at the end of 1996. Delinquencies in 1996
included one large loan which was subsequently collected without significant
loss to the Company. The small business loan delinquency ratio declined in 1997
to 1.0% from 1.3% at the end of 1996, and the consumer loan delinquency ratio
decreased to 1.3% from 1.6%.
Reserve and Provision for Possible Loan Losses
The reserve for possible loan losses is comprised of specific reserves
(assessed for each loan that is impaired or for which a probable loss has been
identified), general reserves and an unallocated reserve.
Management continuously evaluates the reserve for possible loan losses to
ensure the level is adequate to absorb loan losses inherent in the loan
portfolio. Reserves on impaired loans are based on discounted cash flows using
the loan's initial effective interest rate or the fair value of the collateral
for certain collateral-dependent loans. Factors contributing to the
determination of specific reserves include the financial condition of the
borrower, changes in the value of pledged collateral and general economic
conditions. General reserves are established based on historical loss experience
and trends in delinquencies and nonaccrual loans. The unallocated reserve serves
to compensate generally for the uncertainty in estimating loan losses, including
the possibility of changes in risk ratings of loans and in specific reserve
allocations.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------
TABLE 6 - LOAN LOSS RESERVE ACTIVITY
- - -----------------------------------------------------------------
Year Ended December 31
($ in thousands) 1997 1996 1995
- - -----------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning
of year ............ $ 129,039 $ 151,367 $ 156,896
Loans charged off .. (43,942) (35,147) (25,416)
Recoveries ......... 21,823 19,380 18,669
- - -----------------------------------------------------------------
Net loans
charged off ........ (22,119) (15,767) (6,747)
- - -----------------------------------------------------------------
Provision for possible
loan losses ........ 620 (12,417) 1,218
Addition due to
purchased
companies .......... -- 5,856 --
- - -----------------------------------------------------------------
Balance at end
of year ............ $ 107,540 $ 129,039 $ 151,367
- - -----------------------------------------------------------------
</TABLE>
The provision for possible loan losses (a component of earnings) is the
means by which the reserve for possible loan losses is adjusted to establish a
reserve level considered adequate by management to absorb future potential loan
losses.
The Board of Directors reviews the adequacy of the reserve each quarter. As
a result of the low level of nonperforming loans and strong reserve coverage of
nonperforming loans, Hibernia recorded no provision in 1997. However, a nominal
provision for possible loan losses was recorded by certain of the pooled
companies, compared to a $12.4 million negative provision recorded in 1996 and a
$1.2 million provision recorded by certain of the pooled companies in 1995.
The year-end 1997 reserve of $107.5 million provided 528% coverage of
nonperforming loans compared to $129.0 million with 802% coverage at year-end
1996 and $151.4 million with 854% coverage at year-end 1995. As a percentage of
total loans, the reserve for possible loan losses amounted to 1.42% at December
31, 1997 compared to 2.09% and 3.14% at year-end 1996 and 1995, respectively.
Even though the reserve for possible loan losses has declined over the last five
years in total and as a percentage of loans, the present level is considered
adequate to absorb future potential loan losses.
During 1998 the Company expects to begin recording a provision for possible
loan losses to maintain an adequate reserve level. Factors such as loan growth,
the future collectibility of loans and the amounts and timing of future cash
flows expected to be received on impaired loans will be considered and will
impact the estimate of the required provision.
The allocation of the December 31, 1997 reserve for possible loan losses is
presented in Table 7.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------
TABLE 7 - ALLOCATION OF RESERVE
FOR POSSIBLE LOAN LOSSES
- - -----------------------------------------------------------------
Reserve for % of
December 31, 1997 Possible Total
($ in millions) Loan Losses Reserve
- - -----------------------------------------------------------------
<S> <C> <C>
Commercial real estate loans $ 2.9 2.7%
Other commercial loans ..... 18.9 17.6
Small business loans ....... 10.1 9.4
Consumer loans ............. 52.2 48.5
Unallocated reserve ........ 23.4 21.8
- - -----------------------------------------------------------------
Total .................. $ 107.5 100.0%
- - -----------------------------------------------------------------
</TABLE>
Funding Sources
Deposits
Deposits are the Company's primary source of funding for its earning
assets. Hibernia offers a variety of products designed to attract and retain
customers, with the primary focus on core deposits. Summaries of Hibernia's
average deposit rates and deposit composition are presented in Table 8 and Table
9, respectively.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------
TABLE 8 - AVERAGE DEPOSIT RATES
- - -----------------------------------------------------------------
1997 1996 1995
- - -----------------------------------------------------------------
<S> <C> <C> <C>
NOW accounts ............. 3.05% 2.80% 2.21%
Money market
deposit accounts ....... 2.51 2.37 2.65
Savings accounts ......... 2.98 2.12 2.20
Other consumer
time deposits .......... 5.24 5.51 5.63
Public fund certificates
of deposit of
$100,000 or more ....... 5.51 5.40 5.90
Certificates of deposit
of $100,000 or more .... 5.19 5.14 4.89
Foreign time deposits .... 5.30 5.41 5.76
- - -----------------------------------------------------------------
Total interest-bearing
deposits ........... 4.28% 4.27% 4.32%
- - -----------------------------------------------------------------
</TABLE>
Average deposits totaled $8.1 billion in 1997, a $1.0 billion (15%)
increase from 1996. Approximately half of this increase was due to the effect of
the purchased companies, with the remainder resulting from Hibernia's emphasis
on attracting new deposits and expanding current banking relationships through
outstanding service and the success of new products such as the Tower Super
SavingsSM account (which offers liquidity and a rate indexed to the 90-day
Treasury bill auction discount rate) and the 7-day certificate of deposit.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
TABLE 9 - DEPOSIT COMPOSITION
- - ------------------------------------------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------
Average % of Average % of Average % of
($ in millions) Balances Deposits Balances Deposits Balances Deposits
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Demand, noninterest-bearing ... $ 1,449.7 17.8% $ 1,273.7 18.0% $ 1,174.4 18.0%
NOW accounts .................. 356.9 4.4 339.0 4.8 663.4 10.1
Money market deposit accounts . 1,583.5 19.4 1,484.2 20.9 1,156.2 17.7
Savings accounts .............. 681.3 8.4 410.9 5.8 389.6 6.0
Other consumer time deposits .. 2,601.1 32.0 2,374.6 33.5 2,174.4 33.3
- - ------------------------------------------------------------------------------------------------------------
Total core deposits ... 6,672.5 82.0 5,882.4 83.0 5,558.0 85.1
- - ------------------------------------------------------------------------------------------------------------
Public fund certificates of
deposit of $100,000 or more 957.2 11.8 870.7 12.3 717.9 11.0
Certificates of deposit of
$100,000 or more .......... 410.6 5.0 294.6 4.1 217.9 3.4
Foreign time deposits ......... 98.2 1.2 41.8 0.6 35.1 0.5
- - ------------------------------------------------------------------------------------------------------------
Total deposits ........ $ 8,138.5 100.0% $ 7,089.5 100.0% $ 6,528.9 100.0%
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
Average core deposits were up $790.1 million to $6.7 billion or 82.0% of
total deposits. Approximately 60% of the growth in core deposits was due to the
effect of the purchased companies. All core deposit types showed strong growth
during 1997 with demand deposit accounts up $176.0 million (14%), NOW accounts
up $17.9 million (5%), money market deposit accounts up $99.3 million (7%),
savings accounts up $270.4 million (66%) and other consumer time deposits up
$226.5 million (10%). The significant growth in savings accounts was the result
of the successful introduction of the Tower Super SavingsSM account in the first
quarter of 1997.
In addition, average noncore deposits increased $258.9 million (21%), of
which approximately 26% was due to the effect of the purchased companies. Public
fund certificates of deposit of $100,000 or more increased $86.5 million (10%),
other large-denomination certificates of deposit increased $116.0 million (39%)
and foreign deposits increased $56.4 million (135%). The increase in public fund
deposits was due, in part, to greater access in new markets (through mergers) to
public agency funds, as well as increases in funds from existing relationships.
The growth in other large-denomination certificates of deposit was primarily the
result of competitive pricing and increased marketing efforts as the Company
funded its growing loan portfolio. Foreign deposits were positively impacted by
a treasury management sweep product which moves commercial customer funds into
higher-yielding Eurodollar deposits. Because of the nature of these commercial
customer funds, they are considered stable and not subject to the same
volatility as other sources of foreign deposits.
At December 31, 1997 total deposits were $8.6 billion, up $580.6 million
(7%) from December 31, 1996. This increase in deposits was not impacted by the
effect of the purchased companies because the purchase trans-actions were
completed prior to December 31, 1996.
Average deposits for 1996 increased $560.6 million compared to 1995, with
approximately half of the increase due to the effect of the purchased companies.
NOW account average balances for 1996 were down $324.4 million compared to 1995,
and money market average deposits were up $328.0 million in 1996 compared to
1995. During the fourth quarter of 1995, Hibernia instituted a new product, the
Reserve Money Manager account, in which each NOW account is joined with a money
market account. As needed, funds are moved from the money market account to
cover items presented for payment to the customer's NOW account up to a maximum
of six transfers per statement cycle. The effect of the Reserve Money Manager
account on average balances was $533.5 million in 1996 and $103.5 million in
1995 (reducing NOW account average balances and increasing money market deposit
account average balances).
Net of this effect, NOW account average balances were up $105.6 million
(14%) in 1996 compared to 1995, and money market deposit account average
balances were down $102.0 million (10%). Approximately half of the increase in
average NOW accounts was due to the effect of the purchased companies. Other
consumer time deposits increased $200.2 million (9%), with less than a third of
the increase resulting from the effect of the purchased companies. New deposit
products successfully introduced during 1996, such as the 7-day CD, with an
attractive rate and short maturity, and the Celebration CD were the major
factors in the increase in other consumer time deposits.
Borrowings
Average borrowings - which include federal funds purchased; securities sold
under agreements to repurchase (repurchase agreements); treasury, tax and loan
account; and debt - increased $328.8 million (93%) to $681.3 million in 1997
compared to 1996.
Average federal funds purchased were $246.7 million during 1997, an
increase of $197.2 million from 1996. Fluctuations in short-term borrowings stem
from differences in the timing of the expansion of lending opportunities and the
growth of other funding sources (deposits and proceeds from maturing
securities). Average repurchase agreements increased $69.3 million in 1997
compared to 1996. This increase resulted primarily from treasury management
products which "sweep" funds from commercial customers' deposit accounts.
The Company's debt at December 31, 1997, which totaled $506.5 million, is
comprised primarily of advances from the Federal Home Loan Bank of Dallas. The
average rate on debt during 1997 was 5.94% compared to 6.06% during 1996. Debt
increased $449.4 million from December 31, 1996 as Hibernia locked in attractive
fixed rates to fund its growing loan portfolio. At December 31, 1997 the Company
is committed to borrow an additional $200 million over the next two months in
anticipation of continuing loan growth. When borrowed, the rate on this
additional three-year debt will range from 6.19% to 6.21%. 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
Interest rate risk represents the potential impact of interest rate changes
on net income and capital, resulting from mismatches in repricing opportunities
of assets and liabilities over a period of time. A number of tools are used to
monitor and manage interest rate risk, including simulation models and interest
sensitivity (Gap) analyses. Management uses simulation models to estimate the
effects of changing interest rates and various balance sheet strategies on the
level of the Company's net income and capital. As a means of limiting interest
rate risk to an acceptable level, management may alter the mix of floating- and
fixed-rate assets and liabilities, change pricing schedules, adjust maturities
through sales and purchases of securities available for sale, and enter into
derivative contracts.
The simulation models incorporate management's assumptions regarding the
level of interest rates or balance changes for indeterminate maturity deposits
(demand, NOW, savings and money market deposits) for a given level of market
rate changes. These assumptions have been developed through a combination of
historical analysis and future expected pricing behavior. Key assumptions in the
simulation models include prepayment speeds on mortgage-related assets and cash
flows and maturities of derivative and other financial instruments held for
purposes other than trading. In addition, the impact of planned growth and
anticipated new business is factored into the simulation models. These
assumptions are inherently uncertain and, as a result, the models cannot
precisely estimate net interest income or precisely predict the impact of a
change in interest rates on net income or capital. Actual results will differ
from simulated results due to the timing, magnitude and frequency of interest
rate changes and changes in market conditions and management strategies, among
other factors.
Hibernia's policy objective is to limit the change from an immediate and
sustained change in interest rates of 200 basis points to 20% of projected
12-month net income. Based on the results of the simulation models at December
31, 1997, the Company would expect an increase in net income of $14.8 million in
the event of an immediate 200-basis-point increase in interest rates and a
decrease in net income of $20.0 million in the event of an immediate
200-basis-point decrease in interest rates. In addition, the Company projects an
increase in net income of $11.4 million and a decrease in net income of $15.3
million if interest rates gradually increase or decrease, respectively, by 150
basis points over the next year.
Table 10 presents Hibernia's interest rate sensitivity position at December
31, 1997. This Gap analysis is based on a point in time and may not be
meaningful because assets and liabilities must be categorized according to
contractual maturities and repricing periods rather than estimating more
realistic behaviors, as is done in the simulation models. Also, the Gap analysis
does not consider subsequent changes in interest rate levels or spreads between
asset and liability categories.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
TABLE 10 - INTEREST RATE SENSITIVITY AND GAP ANALYSIS
- - ------------------------------------------------------------------------------------------------------------------------------------
Over 5 Years
December 31, 1997 1-30 31-60 61-90 91-365 1 Year - and Non-
($ in thousands) Days Days Days Days 5 Years Sensitive Total
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans ......................... $ 2,945,357 $ 131,052 $ 129,478 $ 896,338 $ 2,765,228 $ 712,798 $ 7,580,251
Securities available for sale . 2,147,405 -- -- -- -- -- 2,147,405
Other earning assets .......... 393,915 -- -- -- -- -- 393,915
- - ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets ...... 5,486,677 131,052 129,478 896,338 2,765,228 712,798 10,121,571
- - ------------------------------------------------------------------------------------------------------------------------------------
Funding sources:
NOW accounts .................. 413,953 -- -- -- -- -- 413,953
Money market deposit accounts . 1,621,628 -- -- -- -- -- 1,621,628
Savings accounts .............. 778,149 -- -- -- -- -- 778,149
Other interest-bearing deposits 1,639,363 303,450 269,490 1,203,750 623,153 159,680 4,198,886
Short-term borrowings ......... 700,247 -- -- -- -- -- 700,247
Debt .......................... 73 73 73 300,642 203,448 2,239 506,548
Noninterest-bearing sources ... -- -- -- -- -- 1,902,160 1,902,160
- - ------------------------------------------------------------------------------------------------------------------------------------
Total funding sources ..... 5,153,413 303,523 269,563 1,504,392 826,601 2,064,079 10,121,571
- - ------------------------------------------------------------------------------------------------------------------------------------
Repricing/maturity gap:
Period ........................ $ 333,264 $(172,471) $(140,085) $ (608,054) $ 1,938,627 $(1,351,281)
Cumulative .................... $ 333,264 $ 160,793 $ 20,708 $ (587,346) $ 1,351,281 $ --
- - ------------------------------------------------------------------------------------------------------------------------------------
Gap/total earning assets:
Period ........................ 3.3% (1.7)% (1.4)% (6.0)% 19.2% (13.4)%
Cumulative .................... 3.3% 1.6 % 0.2 % (5.8)% 13.4%
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Although the Gap analysis indicates that the Company is liability-sensitive
(interest-bearing liabilities exceed interest-earning assets) up to one year,
this may not be true in practice. The 1-30 days deposit category includes NOW,
money market and savings deposits which have indeterminate maturities. The rates
paid on these core deposits, which account for 34% of interest-bearing
liabilities, do not necessarily reprice in a direct relationship to changes in
market interest rates. In addition, one of Hibernia's deposit products is the
consumer One Way CDSM, which gives the customer a one-time opportunity to adjust
the rate on a certificate of deposit during its two-year term. As of December
31, 1997 these deposits totaled $663.1 million, of which approximately $166.9
million had been repriced. Of the remaining $496.2 million, approximately $470.9
million are included in the 1-30 days deposit category because they may reprice
at any time. However, these deposits adjust to market rates over a much longer
period as individual depositors choose when to exercise the option to adjust the
rate on their deposits.
In addition to core deposits, which serve to lessen the volatility of net
interest income in changing rate conditions, the Company's loan portfolio
contains mortgage loans that have actual maturities and cash flows that vary
with the level of interest rates. Depending on market interest rates, actual
cash flows from these earning assets will vary from the contractual maturities
due to payoffs and refinancing activity.
On a limited basis, Hibernia uses derivative financial instruments to
manage interest rate exposure. These instruments involve the risk of dealing
with counterparties and their ability to meet contractual terms. These
counterparties must receive appropriate credit approval before the Company
enters into an interest rate contract. Notional principal amounts express the
volume of these transactions, although the amounts potentially subject to credit
and market risk are much smaller. Deposit-related interest rate swaps may be
entered into as hedges against deposits of the same maturity. The differential
to be paid or received is accrued as interest rates change and is recognized as
an adjustment to interest expense on deposits. The notional amount of
deposit-related interest rate swaps totaled $100.0 million at the end of 1997.
There were no deposit-related interest rate swaps at the end of 1996.
Derivative financial instruments, including interest rate swaps, caps,
floors and options, 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 December 31, 1996 the notional
amount of these derivatives was $176.0 million compared to $478.5 million at
December 31, 1995. The fair value of these derivatives of $1.8 million and $0.1
million at December 31, 1996 and 1995, respectively, was included in the
securities available for sale portfolio. These derivative financial instruments
were liquidated during the first quarter of 1997 with no material impact on the
financial condition or operating results of the Company.
Derivative financial instruments are also held or issued by the Company for
trading purposes to provide Hibernia customers the ability to manage their own
interest rate sensitivity. In general, matched positions are established to
minimize risk to the Company. The notional value of derivative financial
instruments held for trading totaled $224.3 million at year-end 1997, $209.9
million at year-end 1996 and $318.9 million at year-end 1995. Hibernia's credit
exposure to derivative financial instruments held for trading totaled $0.9
million at December 31, 1997, $0.9 million at December 31, 1996 and $0.1 million
at December 31, 1995.
Net Interest Margin
The net interest margin is taxable-equivalent net interest income as a
percentage of average earning assets. Net interest income is the difference
between total interest and fee income generated by earning assets and total
interest expense incurred on interest-bearing liabilities and is affected by
the:
o volume, yield and mix of earning assets;
o level of nonperforming loans;
o volume, yield and mix of interest-bearing liabilities;
o amount of noninterest-bearing funds supporting
earning assets; and
o interest rate environment.
The net interest margin is comprised of the net interest spread, which
measures the difference between the average yield on earning assets and the
average rate paid on interest-bearing liabilities, and the contribution of
noninterest-bearing funds, which measures the effect of noninterest-bearing
funds (primarily demand deposits and shareholders' equity) on net interest
income. In general, the higher the ratio of noninterest-bearing funds supporting
earning assets, the higher the net interest margin. Hibernia's
noninterest-bearing funds ratio was 19.88% in 1997, compared to 21.02% in 1996
and 21.00% in 1995. Table 11 details the components of the net interest margin
for the past five years.
The net interest margin of 4.75% in 1997 compares to 4.89% in 1996 and
4.69% in 1995. The decline in the net interest margin in 1997 was the result of
a decline in loan yields to 8.87% from 9.09% in 1996, a shift in the mix of
funding sources toward market rate funds and the decline in the level of
noninterest-bearing funds supporting earning assets. The change in the mix of
funding sources and the decline in the level of noninterest-bearing funds are
evidenced by the increase in the cost of funds supporting earning assets to
3.50% in 1997 from 3.40% in 1996. These negative impacts were partially offset
by the change in the mix of earning assets to proportionately more loans, with
comparatively higher yields than other earning assets. In 1997 loans amounted to
73.4% of average earning assets compared to 69.2% in 1996.
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------
TABLE 11 - NET INTEREST MARGIN (taxable-equivalent)
- - ----------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yield on earning assets ........................... 8.25% 8.29% 8.15% 7.25% 7.21%
Rate on interest-bearing liabilities .............. 4.37 4.31 4.38 3.37 3.15
- - ----------------------------------------------------------------------------------------------------------------
Net interest spread ........................... 3.88 3.98 3.77 3.88 4.06
Contribution of noninterest-bearing funds ......... 0.87 0.91 0.92 0.71 0.63
- - ----------------------------------------------------------------------------------------------------------------
Net interest margin ........................... 4.75% 4.89% 4.69% 4.59% 4.69%
- - ----------------------------------------------------------------------------------------------------------------
Noninterest-bearing funds supporting earning assets 19.88% 21.02% 21.00% 21.06% 20.11%
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
The 20-basis-point increase in the margin from 1995 to 1996 was primarily
the result of a change in the mix of earning assets, as loans comprised 69.2% of
all earning assets in 1996 compared to 60.8% in 1995, and a seven-basis-point
decline in total funding costs, as deposit costs decreased five basis points and
the cost of other interest-bearing liabilities decreased 53 basis points.
Results of Operations
The Company earned $137.4 million, or $1.00 per common share, in 1997. In
1996 net income was $112.8 million, or $.85 per common share. Fully tax-effected
net income in 1995 was $93.3 million, or $.72 per common share. Net income per
common share - assuming dilution was $.98, $.84 and $.71 (tax-effected) for
1997, 1996 and 1995, respectively.
Operating results improved in 1997 because of a $54.9 million increase in
taxable-equivalent net interest income resulting from a higher level of earning
assets, a $24.9 million increase in noninterest income (excluding securities
transactions) and $2.7 million in securities gains in 1997 compared to $5.3
million in securities losses in 1996. These favorable effects were partially
offset by a $0.6 million provision for possible loan losses taken by certain of
the pooled companies in 1997 compared to a $12.4 million negative provision in
1996, and a $35.0 million increase in noninterest expense. In addition, income
tax expense increased $12.4 million in 1997 compared to 1996.
The improvement in 1996 from 1995 was due to a $46.8 million increase in
taxable-equivalent net interest income, a $12.1 million improvement in
noninterest income (excluding securities transactions) and a $12.4 million
negative provision for possible loan losses in 1996 compared to a $1.2 million
provision in 1995. Partially offsetting these favorable effects, 1996 results
included $5.3 million in securities losses, an increase in noninterest expense
of $37.4 million and a $48.7 million higher income tax expense due primarily to
1995 benefiting from a lower-than-normal effective tax rate due to previously
unrecognized deferred tax benefits.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
TABLE 12 - INTEREST-EARNING ASSET COMPOSITION
- - --------------------------------------------------------------------------------------------
(Percentage of average balances) 1997 1996 1995 1994 1993
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans .......................... 73.4% 69.2% 60.8% 53.1% 50.8%
Securities available for sale .. 23.9 28.1 11.3 14.3 14.3
Securities held to maturity .... -- -- 26.0 29.6 29.2
- - --------------------------------------------------------------------------------------------
Total securities ............ 23.9 28.1 37.3 43.9 43.5
- - --------------------------------------------------------------------------------------------
Short-term investments ......... 2.7 2.7 1.9 3.0 5.7
- - --------------------------------------------------------------------------------------------
Total interest-earning assets 100.0% 100.0% 100.0% 100.0% 100.0%
- - --------------------------------------------------------------------------------------------
</TABLE>
Net Interest Income
Net interest income on a taxable-equivalent basis increased $54.9 million,
or 14.4%, to $436.9 million in 1997 from $382.0 million in 1996.
Taxable-equivalent net interest income in 1995 was $335.2 million.
Taxable-equivalent net interest income increased in 1997 over 1996 and in 1996
over 1995 primarily as the result of the change in the mix and the growth of
earning assets.
As indicated in Table 13, the change in volumes increased
taxable-equivalent net interest income in 1997 by $67.9 million compared to
1996. A $119.4 million increase in taxable-equivalent interest income due to the
growth in loans was partially offset by a $54.0 million increase in interest
expense due to growth in interest-bearing liabilities. The change in interest
rates caused a decline in taxable-equivalent net interest income of $13.1
million. Taxable-equivalent interest income on loans declined $12.6 million due
to changes in rates caused by the competitive lending environment, and interest
expense increased $2.5 million due to an increase in the rates paid on
interest-bearing deposits and a change in the mix of funding sources toward
market rate funds.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------
TABLE 13 - CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME (1)
- - --------------------------------------------------------------------------------------------------------------------
1997 Compared to 1996 1996 Compared to 1995
- - --------------------------------------------------------------------------------------------------------------------
Increase (Decrease) Due to Change In:
- - --------------------------------------------------------------------------------------------------------------------
($ in thousands) Volume Rate Total Volume Rate Total
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Taxable-equivalent interest earned on:
Loans ............................ $ 119,438 $ (12,587) $ 106,851 $ 96,843 $ (7,456) $ 89,387
Securities available for sale .... 49 1,624 1,673 91,559 33 91,592
Securities held to maturity ...... - - - (118,561) - (118,561)
Short-term investments ........... 2,441 410 2,851 3,968 (752) 3,216
- - --------------------------------------------------------------------------------------------------------------------
Total ........................ 121,928 (10,553) 111,375 73,809 (8,175) 65,634
- - --------------------------------------------------------------------------------------------------------------------
Interest paid on:
NOW accounts ..................... 519 875 1,394 (8,401) 3,264 (5,137)
Money market deposit accounts .... 2,426 2,071 4,497 8,018 (3,435) 4,583
Savings accounts ................. 7,177 4,398 11,575 457 (295) 162
Other consumer time deposits ..... 12,069 (6,589) 5,480 11,076 (2,839) 8,237
Public fund certificates of
deposit of $100,000 or more .. 4,749 959 5,708 8,467 (3,799) 4,668
Certificates of deposit
of $100,000 or more .......... 6,016 132 6,148 3,918 570 4,488
Foreign deposits ................. 2,989 (46) 2,943 370 (127) 243
Federal funds purchased .......... 10,988 237 11,225 (290) (319) (609)
Repurchase agreements ............ 3,366 523 3,889 3,179 (1,092) 2,087
Long-term debt ................... 3,698 (39) 3,659 180 (81) 99
- - --------------------------------------------------------------------------------------------------------------------
Total ........................ 53,997 2,521 56,518 26,974 (8,153) 18,821
- - --------------------------------------------------------------------------------------------------------------------
Taxable-equivalent
net interest income .............. $ 67,931 $ (13,074) $ 54,857 $ 46,835 $ (22) $ 46,813
- - --------------------------------------------------------------------------------------------------------------------
- - ----------
(1) Change due to mix (both rate and volume) has been allocated to volume and
rate changes in proportion to the relationship of the absolute dollar
amounts to the changes in each.
</TABLE>
In addition, net interest income for 1997 was negatively impacted by the
funding cost of a transaction designed to utilize an expiring capital loss
carryforward. The $2.2 million in income associated with this transaction is
recorded as a securities gain in noninterest income rather than in net interest
income.
For 1996 compared to 1995, the change in net volumes increased
taxable-equivalent net interest income by $46.8 million. This increase was
primarily the result of growth in loans adding $96.8 million to
taxable-equivalent interest income, partially offset by a decline in securities
reducing taxable-equivalent interest income by $27.0 million, and an increase in
interest-bearing funds increasing interest expense by $27.0 million. There was
virtually no change in taxable-equivalent net interest income attributable to
interest rates as the decrease in yields on earning assets (primarily loans) was
offset by lower rates paid on interest-bearing liabilities.
Noninterest Income
Noninterest income totaled $145.4 million in 1997 compared to $112.5
million in 1996 and $105.9 million in 1995. Excluding securities transactions,
noninterest income was up $24.9 million (21%) in 1997 compared to 1996.
Nonrecurring items in both 1997 and 1996 impact comparisons from year to
year. In 1997, nonrecurring items included a $1.2 million gain recognized on the
sale of Hibernia's interest in an electronic funds transfer network and $1.2
million in trading account income resulting from a single transaction related to
a tax planning strategy. In 1996, nonrecurring items included a $1.4 million
gain on the settlement of an acquired loan and a $0.5 million gain related to
the sale of Hibernia's municipal bond administration business.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------
TABLE 14 - NONINTEREST INCOME
- - --------------------------------------------------------------------------------------------------------------------
Percent Increase (Decrease)
- - --------------------------------------------------------------------------------------------------------------------
1997 1996
($ in thousands) 1997 1996 1995 over 1996 over 1995
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Service charges on deposits ............. $ 71,798 $ 59,488 $ 50,074 20.7% 18.8%
Trust fees .............................. 14,757 13,404 12,506 10.1 7.2
Other service, collection and
exchange charges:
Mortgage loan servicing fees ........ 8,540 7,969 8,127 7.2 (1.9)
Retail investment service fees ...... 12,070 8,659 6,197 39.4 39.7
ATM fees ............................ 8,670 6,952 5,535 24.7 25.6
Other ............................... 13,728 11,067 8,998 24.0 23.0
- - --------------------------------------------------------------------------------------------------------------------
Total other service, collection
and exchange charges ...... 43,008 34,647 28,857 24.1 20.1
- - --------------------------------------------------------------------------------------------------------------------
Other income:
Gain on divestiture of
banking offices ................. -- -- 2,361 -- (100.0)
Gain on sales of business lines ..... -- 517 3,402 (100.0) (84.8)
Other income ........................ 13,150 9,794 8,503 34.3 15.2
- - --------------------------------------------------------------------------------------------------------------------
Total other income ............ 13,150 10,311 14,266 27.5 (27.7)
- - --------------------------------------------------------------------------------------------------------------------
Securities gains (losses), net .......... 2,718 (5,306) 227 N/M N/M
- - --------------------------------------------------------------------------------------------------------------------
Total noninterest income ...... $ 145,431 $ 112,544 $ 105,930 29.2% 6.2%
- - --------------------------------------------------------------------------------------------------------------------
- - --------------
N/M = Not meaningful
</TABLE>
Net of the nonrecurring items and securities transactions, noninterest
income was up $24.4 million (21%), with approximately 25% of the increase
resulting from income related to the purchased companies. The major categories
contributing to the increase in noninterest income were services charges on
deposits, up $12.3 million; retail investment service fees, up $3.4 million;
debit/credit card fees, up $2.1 million; ATM fees, up $1.7 million; trust fees,
up $1.4 million; and gains on the sale of mortgage loans, up $1.3 million.
Service charges on deposits increased $12.3 million (21%) to $71.8 million
in 1997 compared to 1996. The purchased companies accounted for approximately
40% of this increase. The remainder of the growth was primarily the result of
increases in fee-generating deposit balances.
Trust fees were $14.8 million in 1997, up $1.4 million (10%) compared to
1996; and retail investment service fees were $12.1 million, up $3.4 million
(39%) due to the expanded availability of investment and brokerage services
throughout the Hibernia banking office network. Approximately 30% of the growth
in trust fees was due to the effect of the purchased companies. The purchased
companies had virtually no retail investment service operations.
ATM fees increased $1.7 million (25%) to $8.7 million in 1997 compared to
1996 due to the continued growth of the ATM network and expansion of services
offered by Hibernia through ATMs. Hibernia's CheckMateSM debit card and Capital
Access(C) credit card were introduced in 1996 and contributed $4.6 million of
income in 1997, an increase of $2.1 million (87%) compared to 1996.
Gains on sales of mortgage loans were up $1.3 million in 1997 compared to
1996 due to the significant increase in volume in mortgage loans originated and
sold.
In 1997 Hibernia recorded $2.7 million in securities gains compared to $5.3
million in securities losses in 1996. The gains recognized in 1997 were
primarily the result of the completion of a transaction designed to utilize an
expiring capital loss carryforward. The losses in 1996 were the result of the
restructuring of the securities available for sale portfolio which was designed
to enhance future earnings and improve the net interest margin.
Excluding securities transactions and nonrecurring items in both years,
noninterest income in 1996 increased $16.6 million (17%) compared to 1995. The
nonrecurring items in 1995 included a $2.4 million gain related to the
divestiture of three banking offices in Northwest Louisiana in connection with
Hibernia's merger with Pioneer Bancshares Corporation, a $0.6 million fee to
amend the terms of a large commercial credit and gains from the sales of the
Company's student loan portfolio and municipal bond administration business
totaling $1.8 million and $1.6 million, respectively. The increase in 1996
noninterest income was primarily the result of growth in service charges on
deposits, retail investment service fees and ATM fees.
Noninterest Expense
Noninterest expense totaled $361.9 million in 1997 compared to $326.9
million in 1996 and $289.5 million in 1995. Excluding certain merger-related
expenses for both years and nonrecurring items in 1996, noninterest expense in
1997 would have been $358.6 million, a $43.3 million (14%) increase over 1996.
Merger-related expenses were $3.3 million and $4.3 million in 1997 and 1996,
respectively. The nonrecurring items in 1996 included $4.0 million in asset
write-downs related to technology enhancements and a $3.3 million addition to
reserves for health care benefits and other expenses. Approximately 45% of the
$43.3 million increase in noninterest expense in 1997 was due to expenses
related to the purchased companies. The major categories contributing to the
increase in noninterest income were staff costs, up $16.3 million; amortization
of intangibles, up $6.3 million; advertising and promotional expenses, up $3.3
million; and data processing, up $2.2 million.
Staff costs, which represent approximately 50% of noninterest expense,
increased $16.3 million (10%) in 1997 compared to 1996. However, after adjusting
for the effect of the purchased companies, merger-related expenses and the
addition to the reserve for health care benefits during 1996, staff costs
increased $11.6 million (7%). Higher accruals for performance based incentives
and bonuses and normal merit increases were other major factors contributing to
the increase in staff costs.
Occupancy and equipment expense increased $1.9 million (3%) in 1997, or
$2.6 million (5%) excluding the effect of the purchased companies, the $4.0
million asset write-down and merger-related expenses. The increase in occupancy
and equipment is primarily due to depreciation and maintenance expenses related
to the Company's investment in new technology designed to improve customer
service and enhance employee efficiency.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------
TABLE 15 - NONINTEREST EXPENSE
- - -----------------------------------------------------------------------------------------------------------
Percent Increase (Decrease)
- - -----------------------------------------------------------------------------------------------------------
1997 1996
($ in thousands) 1997 1996 1995 over 1996 over 1995
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Salaries ........................... $ 153,017 $ 136,498 $ 118,286 12.1% 15.4%
Benefits ........................... 28,080 28,276 21,179 (0.7) 33.5
- - -----------------------------------------------------------------------------------------------------------
Total staff costs .............. 181,097 164,774 139,465 9.9 18.1
- - -----------------------------------------------------------------------------------------------------------
Occupancy, net ..................... 30,823 27,531 26,955 12.0 2.1
Equipment .......................... 27,815 29,178 22,058 (4.7) 32.3
- - -----------------------------------------------------------------------------------------------------------
Total occupancy and equipment .. 58,638 56,709 49,013 3.4 15.7
- - -----------------------------------------------------------------------------------------------------------
Data processing .................... 22,952 20,711 19,731 10.8 5.0
Telecommunications ................. 10,593 8,975 7,123 18.0 26.0
Advertising and promotional expenses 13,144 9,815 7,506 33.9 30.8
Postage ............................ 7,576 6,378 5,433 18.8 17.4
Stationery and supplies ............ 7,333 6,827 6,554 7.4 4.2
Professional fees .................. 5,852 7,636 7,876 (23.4) (3.0)
State taxes on equity .............. 6,100 6,000 4,491 1.7 33.6
Regulatory expense ................. 2,455 1,323 8,762 85.6 (84.9)
Loan collection expense ............ 4,037 2,494 2,149 61.9 16.1
Foreclosed property expense, net ... (3,219) (1,735) (693) 85.5 150.4
Amortization of intangibles ........ 13,747 7,441 3,709 84.7 100.6
Other .............................. 31,639 29,572 28,363 7.0 4.3
- - -----------------------------------------------------------------------------------------------------------
Total noninterest expense ...... $ 361,944 $ 326,920 $ 289,482 10.7% 12.9%
- - -----------------------------------------------------------------------------------------------------------
Efficiency ratio (1) ............... 62.45% 65.40% 65.66%
- - -----------------------------------------------------------------------------------------------------------
Tangible efficiency ratio (2) ...... 60.31% 64.07% 64.95%
- - -----------------------------------------------------------------------------------------------------------
- - -------------
(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).
</TABLE>
Data processing expenses increased $2.2 million (11%) in 1997, or $1.4
million (7%) excluding the effect of the purchased companies and merger-related
expenses. The increase in data processing expenses is primarily due to continued
improvements in technology and increased transaction volume related to growth in
the Company's customer base. Telecommunications expenses increased $1.6 million
(18%) in 1997 compared to 1996 as Hibernia continued to enhance its
communication capability to better serve customers. Data line expenses related
to the Company's growing banking office and ATM networks increased
telecommunications expenses.
Advertising and promotional expenses totaled $13.1 million in 1997, a $3.3
million (34%) increase compared to 1996. Excluding the effects of the purchased
companies and merger-related expenses, advertising and promotional expenses
increased $2.6 million (27%). This increase is primarily related to the
introduction of new products, such as the Tower Super SavingsSM account, the
Capital Access(C) credit card and the Hibernia Equity PrimeLine(R) loan.
Professional fees in 1997 decreased $1.8 million (23%) compared to 1996, or
$1.1 million (18%) excluding the effect of the purchased companies and
merger-related expenses. Regulatory expenses increased $1.1 million (86%) in
1997 compared to 1996. The higher regulatory expenses are the result of $1.0
million in assessments to fund interest on bonds of the Financing Corporation
(FICO bonds).
Amortization of intangibles, a noncash expense, was $13.7 million in 1997,
an increase of $6.3 million (85%) compared to 1996. This increase is due to the
goodwill and core deposit intangibles created by the 1996 acquisition of the
purchased companies. These two mergers resulted in goodwill of $120.1 million
and core deposit intangibles of $18.5 million. The goodwill will be amortized on
a straight-line basis over 25 years, while the core deposit intangibles will be
amortized on an accelerated basis over 10 years. Excluding the effect of the
increased amortization associated with these purchase transactions, amortization
of intangibles increased $0.2 million in 1997.
Loan collection expense in 1997 totaled $4.0 million, a $1.5 million (62%)
increase compared to 1996. This increase reflects growth in the loan portfolio
and continued efforts to collect problem loans. Foreclosed property expense
decreased $1.5 million in 1997 compared to 1996, primarily as a result of gains
recorded n the sale of several significant properties in 1997.
Noninterest expense in 1997 included charges incurred in connection with
the Company's efforts to ensure that its systems are year 2000 compliant. The
Company expects to continue incurring charges related to this project; however,
these costs have not been material to date and are not expected to have a
material impact on the Company's earnings in the future. The majority of the
costs associated with these efforts is the responsibility of the Company's third
party data processor which also provides many of the Company's software
applications. In addition, a portion of the Company's costs is likely to
constitute a reassignment of existing internal resources and, therefore, is not
expected to be incremental.
A team comprised of Hibernia employees and representatives of the Company's
third party data processor was formed in early 1997 to address all year 2000
issues. The team's plan is to achieve year 2000 compliance for all mainframe
application systems, local area network application systems and departmental and
vendor application systems by the end of 1998. In addition, the Company is
discussing year 2000 issues and their potential impact on business operations
with many of its customers and suppliers.
Noninterest expense increased $37.4 million (13%) in 1996 compared to 1995.
Excluding the effect of the purchased companies, merger-related expenses of $4.3
million in 1996 and $7.0 million in 1995, and nonrecurring items totaling $7.3
million in 1996 previously discussed, noninterest expense increased $32.8
million (12%) in 1996. Other significant increases in noninterest expense
included staff costs, up $20.4 million; occupancy and equipment, up $1.9
million; and advertising and promotional expenses, up $2.8 million. These
increases were partially offset by a decrease in regulatory expense of $7.4
million resulting from the virtual elimination of FDIC premiums for
well-capitalized banks in 1996.
The Company's efficiency ratio, defined as noninterest expense as a
percentage of taxable-equivalent net interest income plus noninterest income
(excluding securities transactions), is one measure of the success of its
efforts to control costs and generate income efficiently. The efficiency ratio
of 62.45% in 1997 compares favorably to 65.40% in 1996 and 65.66% in 1995. The
tangible efficiency ratio, which excludes the impact of amortization of goodwill
and core deposit intangibles, was 60.31% in 1997, down 376 basis points from
64.07% in 1996 and down 464 basis points from 64.95% in 1995.
Income Taxes
The Company recorded a $73.2 million provision for income taxes in 1997
compared to $60.9 million in 1996 and $12.1 million in 1995. During 1995 the
Company recorded federal income taxes at a lower-than-normal effective tax rate
due to previously unrecognized deferred tax benefits.
Hibernia National Bank is subject to a Louisiana shareholders' tax based
partly on income. The income portion is reported 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.
Net future deductible temporary differences at December 31, 1997 were $87.4
million. The reserve for possible loan losses represents $107.5 million of the
future deductible temporary differences. The provisions for possible loan losses
which contributed to the reserve have been recognized as expense for financial
reporting purposes but are not deductible for federal income tax purposes until
the loans are charged off. Valued at the 35% federal statutory tax rate, the net
future deductible amounts, if ultimately recognized, would generate tax benefits
of $30.6 million. These benefits are recorded as a deferred tax asset at
December 31, 1997.
Capital
Capital represents shareholder ownership in the Company - the book value of
assets in excess of liabilities. It provides a base for asset growth while
serving, together with the reserve for possible loan losses, as a cushion
against potential losses. Support for future asset expansion could come from
utilization of existing capital, issuance of debt or new capital and retention
of earnings. Hibernia's common dividend payout ratio (common dividends declared
per share divided by net income per common share) was 33% in 1997, 34% in 1996
and 25 % (35% on a tax-effected basis) in 1995, as the Company seeks a balance
between shareholder return and earnings retention requirements.
Shareholders' equity totaled $1,050.3 million at the end of 1997 compared
to $951.9 million at the end of 1996 and $779.9 million at the end of 1995. The
$98.4 million (10%) increase in 1997 was primarily due to current-year earnings
totaling $137.4 million and a $4.2 million increase in unrealized gains on
securities available for sale, partially offset by $42.7 million in dividends on
common stock, $6.9 million in dividends on preferred stock and a $4.1 million
increase in unearned compensation related to the Company's employee stock
ownership plan. The $172.0 million (22%) increase in 1996 reflected the
Company's $112.8 million in earnings and the issuance of $100 million of
preferred stock on September 30, 1996. These increases were partially offset by
common dividends totaling $37.3 million, preferred dividends totaling $1.7
million and an $8.3 million decrease due to the change in unrealized gains
(losses) on securities available for sale.
Regulations applicable to national banks and their holding companies
prescribe minimum capital levels. These levels are based on established
guidelines which relate required capital standards to both risk-weighted assets
(risk-based capital ratios) and total assets (leverage ratio). In accordance
with risk-based guidelines, assets and off-balance-sheet financial instruments
are assigned a weight to measure their level of risk. The total risk-based
capital ratio for the Company was 12.02% at year-end 1997 compared to 13.29% at
year-end 1996. Leverage ratios were 8.54% and 8.68% at year-end 1997 and 1996,
respectively.
The two mergers completed during 1996 that were accounted for as purchase
transactions enabled Hibernia to leverage its capital, acquiring assets (and
earnings capacity) without increasing equity. As a result, leverage and
risk-based capital ratios declined in 1996 but still significantly exceeded the
standards required for designation of an institution as well capitalized by
regulators. Table 16 shows the calculation of capital ratios for the Company for
the past five years.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
TABLE 16 - CAPITAL
- - --------------------------------------------------------------------------------------------------------------
($ in millions) 1997 1996 1995 1994 1993
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Risk-based capital:
Tier 1 .................... $ 895.4 $ 789.2 $ 744.0 $ 652.0 $ 546.0
Total ..................... 999.4 871.8 808.7 705.9 593.8
Assets:
Quarterly average assets(1) 10,487.2 9,096.1 7,714.4 7,350.6 7,067.1
Net risk-adjusted assets .. 8,315.1 6,559.4 5,088.7 4,211.0 3,683.4
Ratios:
Tier 1 risk-based capital . 10.77% 12.03% 14.62% 15.48% 14.82%
Total risk-based capital .. 12.02% 13.29% 15.89% 16.76% 16.12%
Leverage .................. 8.54% 8.68% 9.64% 8.87% 7.73%
- - --------------------------------------------------------------------------------------------------------------
- - -------------
(1)Excluding SFAS No. 115 adjustment and disallowed intangibles.
</TABLE>
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 enhanced 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 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.
Liquidity
Liquidity is a measure of ability to fund loan commitments and meet deposit
maturities and withdrawals in a timely and cost-effective way. These 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. To
minimize funding risks, management monitors liquidity through a periodic review
of maturity profiles, yield and rate behaviors, and loan and deposit forecasts.
Core deposits that are maintained at competitive rates are the Company's
primary source of liquidity. Hibernia's extensive banking office network, aided
by the introduction of new deposit products, provided $7.0 billion in core
deposits at year-end 1997, up $345.7 million (5%) from $6.7 billion a year
earlier. As previously mentioned in the discussion of borrowings, Hibernia has a
large base of treasury management-related repurchase agreements as part of total
customer relationships. Because of the nature of the relationships, these funds
are considered stable and not subject to the same volatility as other sources of
noncore funds. Large-denomination certificates of deposit and public funds were
additional sources of liquidity during the year.
Hibernia's loan-to-deposit ratio at year-end 1997 increased to 87.8%
compared to 76.6% at year-end 1996 and 71.6% at year-end 1995. These increases
resulted primarily from significant growth in loans, which outpaced increases in
the deposit base. 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, 21.9% of Hibernia's
loans and securities were funded by net large liabilities (total liabilities
less short-term investments) at year-end 1997, up 382 basis points from the
prior year level of 18.1%.
Management believes that the current level of short-term investments and
securities available for sale is adequate to meet the Company's current
liquidity needs. The Company also has $150 million remaining on its shelf
registration previously discussed, and its membership in the Federal Home Loan
Bank further augments liquidity by providing a readily accessible source of
funds at competitive rates. In addition, a substantial portion of the Company's
$1.5 billion residential first mortgage portfolio and $708.5 million indirect
consumer portfolio can be sold or securitized and, therefore, provides an added
source of liquidity, if needed.
Hibernia Corporation (the "Parent Company") requires liquidity to fund
operating expenses and investments and to pay dividends. At December 31, 1997
the Parent Company had $141.8 million in available funds. During 1997 the Parent
Company received $47.2 million in dividends from its bank subsidiaries. The
Parent Company paid $42.7 million in dividends to its common shareholders and
$6.9 million in dividends to its preferred shareholders and increased its
investment in two of its subsidiaries by a total of $28.0 million.
The Consolidated Statements of Cash Flows can be used to assess the
Company's ability to generate positive future net cash flows from operations and
its ability to meet future obligations. The Company had a net increase in cash
and cash equivalents in 1997 of $157.0 million. Net cash provided by financing
activities totaled $1,353.5 million, as total deposits increased $580.7 million,
short-term borrowings increased $368.5 million and debt totaling $500.0 million
was issued. Net cash provided by operating activities totaled $153.9 million
after adjusting 1997 net income for noncash items. These increases to cash were
partially offset by net cash used in investing activities of $1,350.3 million,
as loans (net of sales) increased $1.4 billion and purchases of securities
available for sale totaled $617.1 million, partially offset by $727.8 million
from the sales and maturities of securities available for sale.
Cash and cash equivalents increased $239.2 million in 1996. Cash provided
by financing activities totaled $522.6 million, as total deposits increased
$433.7 million, excluding the impact of the purchased companies, and the
issuance of preferred stock provided net cash of $98.0 million. Net cash
provided by operating activities totaled $181.4 million after adjusting 1996 net
income for noncash items. These increases to cash were partially offset by net
cash used in investing activities of $494.8 million, as loans (net of sales)
increased $0.9 billion, excluding the impact of the purchased companies,
partially offset by $532.4 million in net cash provided from activity in
securities available for sale, excluding the impact of the purchased companies.
Cash and cash equivalents decreased $108.7 million in 1995. This decrease
was the result of cash used in investing activities of $572.2 million, as loans
(net of sales) increased $1.1 billion, partially offset by a net decrease in
securities of $396.2 million. Both operating and financing activities provided
cash during 1995, with operations providing $134.5 million and financing
activities providing $328.9 million, primarily from an increase in deposits.
<PAGE>
<TABLE>
<CAPTION>
Quarterly Consolidated Summary of Income and Selected Financial Data (1)
Hibernia Corporation and Subsidiaries 1997 1996
- - ------------------------------------------------------------------------------------------------------------------------------------
($ in thousands, except per-share data) Fourth Third Second First Fourth Third Second First
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income ............................ $ 198,946 $ 191,606 $ 183,304 $ 176,226 $ 175,843 $ 159,748 $ 154,794 $ 151,055
Interest expense ........................... 88,930 82,403 77,267 73,725 72,596 66,799 63,631 62,781
- - ------------------------------------------------------------------------------------------------------------------------------------
Net interest income ........................ 110,016 109,203 106,037 102,501 103,247 92,949 91,163 88,274
Provision for possible loan losses ......... 451 51 59 59 (19) (13,495) 622 475
- - ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses ............... 109,565 109,152 105,978 102,442 103,266 106,444 90,541 87,799
- - ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Noninterest income ...................... 37,979 35,610 36,526 32,598 32,198 29,039 28,828 27,785
Securities gains (losses), net .......... 2,346 1 356 15 165 (5,584) 46 67
- - ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income ......................... 40,325 35,611 36,882 32,613 32,363 23,455 28,874 27,852
Noninterest expense ........................ 91,405 91,392 92,067 87,080 86,237 90,897 75,686 74,100
- - ------------------------------------------------------------------------------------------------------------------------------------
Income before taxes ........................ 58,485 53,371 50,793 47,975 49,392 39,002 43,729 41,551
Income tax expense ......................... 20,137 18,495 17,970 16,633 17,601 13,692 14,980 14,583
- - ------------------------------------------------------------------------------------------------------------------------------------
Net income ................................. $ 38,348 $ 34,876 $ 32,823 $ 31,342 $ 31,791 $ 25,310 $ 28,749 $ 26,968
- - ------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders $ 36,623 $ 33,151 $ 31,098 $ 29,617 $ 30,051 $ 25,310 $ 28,749 $ 26,968
- - ------------------------------------------------------------------------------------------------------------------------------------
Per common share information: (2)
Net income .............................. $ 0.28 $ 0.25 $ 0.24 $ 0.23 $ 0.23 $ 0.19 $ 0.22 $ 0.21
Net income - assuming dilution .......... $ 0.27 $ 0.25 $ 0.23 $ 0.22 $ 0.23 $ 0.19 $ 0.22 $ 0.21
Cash dividends declared ................. $ 0.09 $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.07 $ 0.07 $ 0.07
Average shares outstanding (000s) .......... 131,103 130,801 130,604 130,668 130,475 130,229 130,015 129,919
Dividend payout ratio ...................... 32.14% 32.00% 33.33% 34.78% 34.78% 36.84% 31.82% 33.33%
- - ------------------------------------------------------------------------------------------------------------------------------------
Selected quarter-end balances (in millions)
Loans ...................................... $ 7,580.2 $ 7,107.8 $ 6,685.9 $ 6,321.8 $6,165.9 $5,840.0 $ 5,327.0 $ 5,052.9
Deposits ................................... 8,633.3 8,208.4 8,198.2 8,169.3 8,052.7 7,592.7 6,837.2 6,812.0
Debt ....................................... 506.5 109.8 12.7 13.1 57.2 24.3 33.3 36.8
Equity ..................................... 1,050.3 1,018.6 985.7 956.4 951.9 918.5 795.8 787.5
Total assets ............................... 11,023.0 10,200.4 9,926.2 9,641.8 9,560.3 9,046.8 8,085.3 8,056.7
- - ------------------------------------------------------------------------------------------------------------------------------------
Selected average balances (in millions)
Loans ...................................... $ 7,337.5 $ 6,920.7 $ 6,515.0 $ 6,217.7 $ 6,015.3 $ 5,478.5 $ 5,192.0 $ 4,936.5
Deposits ................................... 8,309.2 8,168.0 8,106.2 7,966.6 7,754.6 7,052.7 6,803.2 6,740.7
Debt ....................................... 254.4 57.1 12.9 50.1 37.6 27.8 32.6 29.2
Equity ..................................... 1,033.2 1,003.0 969.7 959.8 936.6 802.5 786.9 788.4
Total assets ............................... 10,641.7 10,027.2 9,675.2 9,520.7 9,256.7 8,372.4 8,060.4 7,972.6
- - ------------------------------------------------------------------------------------------------------------------------------------
Selected ratios
Net interest margin (taxable-equivalent) ... 4.53% 4.79% 4.87% 4.83% 4.92% 4.88% 4.93% 4.83%
Annualized return on assets ................ 1.44% 1.39% 1.36% 1.32% 1.37% 1.21% 1.43% 1.35%
Annualized return on common equity ......... 15.70% 14.68% 14.30% 13.78% 14.37% 12.63% 14.61% 13.68%
Annualized return on total equity .......... 14.85% 13.91% 13.54% 13.06% 13.58% 12.62% 14.61% 13.68%
Efficiency ratio ........................... 60.81% 62.11% 63.56% 63.43% 62.92% 73.58% 62.27% 62.95%
Average equity/average assets .............. 9.71% 10.00% 10.02% 10.08% 10.12% 9.59% 9.76% 9.89%
Tier 1 risk-based capital ratio ............ 10.77% 11.33% 11.69% 12.05% 12.03% 12.70% 13.87% 14.30%
Total risk-based capital ratio ............. 12.02% 12.58% 12.94% 13.31% 13.29% 13.96% 15.13% 15.57%
Leverage ratio ............................. 8.54% 8.74% 8.75% 8.69% 8.68% 9.57% 9.72% 9.61%
- - ------------------------------------------------------------------------------------------------------------------------------------
Tax-effected net income and ratios excluding
goodwill and core deposit intangible
amortization and balances (3)
Net income applicable to common shareholders $ 39,121 $ 35,706 $ 33,911 $ 32,521 $ 33,049 $ 26,733 $ 29,553 $ 27,745
Net income per common share (2) ............ $ 0.30 $ 0.27 $ 0.26 $ 0.25 $ 0.25 $ 0.21 $ 0.23 $ 0.21
Annualized return on assets ................ 1.56% 1.51% 1.50% 1.46% 1.53% 1.29% 1.47% 1.40%
Annualized return on common equity ......... 19.71% 18.76% 18.70% 18.25% 19.26% 14.59% 15.40% 14.42%
Efficiency ratio ........................... 58.91% 60.11% 61.32% 60.98% 60.35% 72.31% 61.61% 62.29%
- - ------------------------------------------------------------------------------------------------------------------------------------
(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)Dividends per common share are historical amounts. For a discussion of net
income per common share computations refer to Note 13 of the consolidated
financial statements - "Net Income Per Common Share Data."
(3)Amortization and balances of core deposit intangibles are net of applicable
taxes. Goodwill amortization and balances are not tax effected.
</TABLE>
<PAGE>
Fourth Quarter Results
Hibernia reported net income of $38.3 million in the fourth quarter of
1997, a 21% increase from $31.8 million in the fourth quarter of 1996 and a 10%
increase from $34.9 million in the third quarter of 1997. Net income per common
share of $.28 for the fourth quarter of 1997 increased $.05 from $.23 in the
fourth quarter of 1996 and $.03 from the third-quarter 1997 amount of $.25. Net
income per common share - assuming dilution was $.27 in the fourth quarter of
1997 compared to $.23 and $.25 for the fourth quarter of 1996 and the third
quarter of 1997, respectively.
Net interest income, on a taxable-equivalent basis, totaled $112.3 million
in the fourth quarter of 1997 compared to $104.9 million in the fourth quarter
of 1996 and $111.5 million in the third quarter of 1997. Net interest income for
the fourth quarter of 1997 was negatively impacted by the funding cost of a
transaction designed to utilize an expiring capital loss carryforward. The $2.2
million in income associated with this transaction is recorded as a securities
gain in noninterest income rather than in net interest income.
The fourth-quarter 1997 increase in net interest income over the fourth
quarter of 1996 was primarily the result of the growth in loans both in total
and as a percentage of average earning assets. Average loans increased $1.3
billion over the fourth quarter of 1996 to $7.3 billion, or 74.4% of average
earning assets compared to 70.8% of average earning assets in the fourth quarter
of 1996. Loans increased $416.8 million in the fourth quarter of 1997 compared
to the third quarter of 1997. The net interest spread of 3.65% in the fourth
quarter of 1997 was down 38 basis points from the fourth quarter of 1996 and was
down 27 basis points from the third quarter of 1997. The average yield on
earning assets was 8.11%, down 20 basis points compared to the fourth quarter of
1996 and the third quarter of 1997. The average rate paid on interest-bearing
liabilities increased by 18 basis points from the fourth quarter of 1996 and
seven basis points from the third quarter of 1997 to 4.46% in the fourth quarter
of 1997.
The net interest margin decreased 39 basis points from the fourth quarter
of 1996 to 4.53% for the fourth quarter of 1997. A 26-basis-point decline in
loan yields and a 49-basis-point decline in securities yields led to the
20-basis-point decrease in the yield on earning assets. At the same time, an
increase in market rate funds, such as short-term borrowings, the Tower Super
SavingsSM account and foreign deposits, led to an 18-basis-point increase in the
cost of interest-bearing funds. In addition, the percentage of
noninterest-bearing funds (primarily demand deposits and shareholders' equity)
supporting earning assets in the fourth quarter of 1997 decreased 86 basis
points compared to the fourth quarter of 1996.
Compared to the third quarter of 1997 the net interest margin was down 26
basis points. A seven-basis-point decrease in loan yields and a 66-basis-point
decrease in securities yields resulted in a 20-basis-point decrease in the yield
on earning assets, and an increase in market rate funds resulted in a
seven-basis-point increase in the cost of funds. Table 17 illustrates the
components of the net interest margin on a quarterly basis for 1997 and 1996.
Average earning assets increased $1.4 billion (16%) to $9.9 billion in the
fourth quarter of 1997 from $8.5 billion in the fourth quarter of 1996. Average
earning assets were up $597.8 million (6%) compared to the third quarter of
1997. Average loans increased $1.3 billion (22%) over the fourth quarter of 1996
and increased $416.8 million (6%) over the third quarter of 1997. Period-end
loans grew $472.4 million, 27% on an annualized basis, during the fourth quarter
of 1997. Average securities for the fourth quarter of 1997 totaled $2.2 billion,
virtually unchanged from the fourth quarter of 1996 and up $133.0 million (6%)
from the third quarter of 1997.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------
TABLE 17 - NET INTEREST MARGIN (taxable-equivalent)
- - --------------------------------------------------------------------------------------------------------------------------
1997 1996
- - --------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Yield on earning assets .... 8.11% 8.31% 8.34% 8.25% 8.31% 8.31% 8.32% 8.22%
Rate on interest-bearing
liabilities ............ 4.46 4.39 4.34 4.28 4.28 4.31 4.30 4.34
- - --------------------------------------------------------------------------------------------------------------------------
Net interest spread 3.65 3.92 4.00 3.97 4.03 4.00 4.02 3.88
Contribution of noninterest-
bearing funds .......... 0.88 0.87 0.87 0.86 0.89 0.88 0.91 0.95
- - --------------------------------------------------------------------------------------------------------------------------
Net interest margin 4.53% 4.79% 4.87% 4.83% 4.92% 4.88% 4.93% 4.83%
- - --------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing funds/
earning assets ......... 19.81% 19.68% 19.90% 20.18% 20.67% 20.25% 21.14% 22.13%
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Average deposits increased $554.6 million (7%) to $8.3 billion in the
fourth quarter of 1997 from $7.8 billion in the fourth quarter of 1996. Average
deposits were up $141.2 million (2%) from the third quarter of 1997.
Noninterest income, excluding securities transactions, was $38.0 million,
up $5.8 million (18%) from the fourth quarter of 1996 and up $2.4 million (7%)
from the third quarter of 1997. Service charges on deposits, income from retail
investment services and securities trading income were the major categories of
noninterest income that increased in the fourth quarter of 1997 compared to the
fourth quarter of 1996. The securities trading income resulted from a single
transaction related to a tax planning strategy. Service charges on deposits and
securities trading income were the major categories of noninterest income that
increased in the fourth quarter of 1997 compared to the third quarter of 1997.
Securities gains totaling $2.3 million were recognized during the fourth quarter
of 1997 primarily as a result of the Company's completion of a transaction
designed to utilize an expiring capital loss carryforward.
Noninterest expense of $91.4 million in the fourth quarter of 1997 was $5.2
million (6%) higher than $86.2 million reported in the fourth quarter of 1996
and virtually unchanged from the third quarter of 1997. The increase compared to
the fourth quarter of 1996 was primarily due to an increase in staff costs
resulting from higher accruals for performance based incentives and bonuses and
normal merit increases.
The Company's efficiency ratio was 60.81% in the fourth quarter of 1997
compared to 62.92% and 62.11% in the fourth quarter of 1996 and the third
quarter of 1997, respectively. The tangible efficiency ratio, which excludes the
impact of amortization of goodwill and core deposit intangibles, was 58.91% in
the fourth quarter of 1997 compared to 60.35% in the fourth quarter of 1996 and
60.11% in the third quarter of 1997.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balances, Interest and Rates
- - ------------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1) 1997 1996
(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 ........................... $ 2,687.3 $ 237,691 8.84 % $ 1,971.9 $ 181,092 9.18%
Small business loans ....................... 1,226.8 116,114 9.46 1,058.0 99,811 9.43
Consumer loans ............................. 2,837.2 244,827 8.63 2,377.5 210,878 8.87
- - ------------------------------------------------------------------------------------------------------------------------------------
Total loans (2)......................... 6,751.3 598,632 8.87 5,407.4 491,78 9.09
- - ------------------------------------------------------------------------------------------------------------------------------------
Securities available for sale .............. 2,195.9 146,646 6.68 2,195.2 144,973 6.60
Securities held to maturity ................ - - - - - -
- - ------------------------------------------------------------------------------------------------------------------------------------
Total securities ....................... 2,195.9 146,646 6.68 2,195.2 144,973 6.60
- - ------------------------------------------------------------------------------------------------------------------------------------
Short-term investments ..................... 252.2 13,916 5.52 207.7 11,065 5.33
- - ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets .......... 9,199.4 $ 759,194 8.25 % 7,810.3 $ 647,819 8.29%
- - ------------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ............... (119.4) (145.2)
Noninterest-earning assets:
Cash and due from banks .................... 392.7 347.3
Other assets ............................... 496.7 405.3
- - ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets ....... 889.4 752.6
- - ------------------------------------------------------------------------------------------------------------------------------------
Total assets ........................... $ 9,969.4 $ 8,417.7
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts ........................... $ 356.9 $ 10,892 3.05 % $ 339.0 $ 9,498 2.80%
Money market deposit accounts .......... 1,583.5 39,680 2.51 1,484.2 35,183 2.37
Savings accounts ....................... 681.3 20,297 2.98 410.9 8,722 2.12
Other consumer time deposits ........... 2,601.1 136,236 5.24 2,374.6 130,756 5.51
Public fund certificates of deposit
of $100,000 or more ................ 957.2 52,734 5.51 870.7 47,026 5.40
Certificates of deposit
of $100,000 or more ................ 410.6 21,295 5.19 294.6 15,147 5.14
Foreign time deposits .................. 98.2 5,204 5.30 41.8 2,261 5.41
- - ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits .... 6,688.8 286,338 4.28 5,815.8 248,593 4.27
- - ------------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased ................ 246.7 13,771 5.58 49.5 2,546 5.14
Repurchase agreements .................. 340.5 16,631 4.88 271.2 12,742 4.70
Debt ....................................... 94.1 5,585 5.94 31.8 1,926 6.06
- - ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities ..... 7,370.1 $ 322,325 4.37 % 6,168.3 $ 265,807 4.31%
- - ------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits ............................ 1,449.7 1,273.7
Other liabilities .......................... 157.9 146.9
- - ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities .. 1,607.6 1,420.6
- - ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ..................... 991.7 828.8
- - ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity ........... $ 9,969.4 $ 8,417.7
====================================================================================================================================
SPREAD AND NET YIELD
Interest rate spread ........................... 3.88 % 3.98%
Cost of funds supporting interest-earning assets 3.50 % 3.40%
Net interest income/margin ..................... $ 436,869 4.75 % $ 382,012 4.89%
====================================================================================================================================
- - ----------------
(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
Taxable-equivalent basis (1) 1995 1994
(Average balances $ in millions, Average Average
interest $ in thousands) Balance Interest Rate Balance Interest Rate
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Interest-earning assets:
Commercial loans ........................... $ 1,630.9 $ 158,003 9.69 %
Small business loans ....................... 868.2 84,400 9.72
Consumer loans ............................. 1,844.8 159,991 8.67
- - ------------------------------------------------------------------------------------------------------------------------------
Total loans (2)......................... 4,343.9 402,394 9.26 $ 3,644.2 $318,614 8.74 %
- - ------------------------------------------------------------------------------------------------------------------------------
Securities available for sale .............. 808.8 53,381 6.60 980.0 56,553 5.77
Securities held to maturity ................ 1,856.1 118,561 6.39 2,032.0 114,162 5.62
- - ------------------------------------------------------------------------------------------------------------------------------
Total securities ....................... 2,664.9 171,942 6.45 3,012.0 170,715 5.67
- - ------------------------------------------------------------------------------------------------------------------------------
Short-term investments ..................... 134.3 7,849 5.85 205.1 8,267 4.03
- - ------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets .......... 7,143.1 $ 582,185 8.15 % 6,861.3 $497,596 7.25 %
- - ------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ............... (155.9) (182.3)
Noninterest-earning assets:
Cash and due from banks .................... 330.8 326.5
Other assets ............................... 332.3 340.2
- - ------------------------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets ....... 663.1 666.7
- - ------------------------------------------------------------------------------------------------------------------------------
Total assets ........................... $ 7,650.3 $ 7,345.7
==============================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts ........................... $ 663.4 $ 14,635 2.21 % $ 743.8 $ 13,345 1.79 %
Money market deposit accounts .......... 1,156.2 30,600 2.65 1,214.0 30,346 2.50
Savings accounts ....................... 389.6 8,560 2.20 421.2 9,001 2.14
Other consumer time deposits ........... 2,174.4 122,519 5.63 1,935.4 84,118 4.35
Public fund certificates of deposit
of $100,000 or more ................ 717.9 42,358 5.90 652.1 27,324 4.19
Certificates of deposit
of $100,000 or more ................ 217.9 10,659 4.89 221.7 8,446 3.81
Foreign time deposits .................. 35.1 2,018 5.76 17.1 794 4.65
- - ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits .... 5,354.5 231,349 4.32 5,205.3 173,374 3.33
- - ------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased ................ 54.8 3,155 5.76 39.2 1,566 4.00
Repurchase agreements .................. 205.2 10,655 5.19 136.4 4,667 3.42
Debt ....................................... 28.9 1,827 6.33 35.5 3,161 8.90
- - ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities ..... 5,643.4 $ 246,986 4.38 % 5,416.4 $182,768 3.37 %
- - ------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits ............................ 1,174.4 1,139.7
Other liabilities .......................... 126.7 163.5
- - ------------------------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities .. 1,301.1 1,303.2
- - ------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ..................... 705.8 626.1
- - ------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity ........... $ 7,650.3 $ 7,345.7
==============================================================================================================================
SPREAD AND NET YIELD
Interest rate spread ........................... 3.77 % 3.88 %
Cost of funds supporting interest-earning assets 3.46 % 2.66 %
Net interest income/margin ..................... $ 335,199 4.69 % $314,828 4.59 %
==============================================================================================================================
- - ----------------
(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.)
- - --------------------------------------------------------------------------------------------------------------
5-Year
Hibernia Corporation and Subsidiaries Compound
Taxable-equivalent basis (1) 1993 Growth Rate
(Average balances $ in millions, Average For Average
interest $ in thousands) Balance Interest Rate Balances
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Commercial loans
Small business loans
Consumer loans
- - --------------------------------------------------------------------------------------------------------------
Total loans (2)......................... $ 3,349.6 $ 291,889 8.71% 11.0 %
- - --------------------------------------------------------------------------------------------------------------
Securities available for sale .............. 944.4 60,081 6.36 20.5
Securities held to maturity ................ 1,920.0 111,703 5.82 (100.0)
- - --------------------------------------------------------------------------------------------------------------
Total securities ....................... 2,864.4 171,784 6.00 (0.6)
- - --------------------------------------------------------------------------------------------------------------
Short-term investments ..................... 377.8 11,732 3.11 (14.1)
- - --------------------------------------------------------------------------------------------------------------
Total interest-earning assets .......... 6,591.8 $ 475,405 7.21% 6.2
- - --------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ............... (209.7) (12.9)
Noninterest-earning assets:
Cash and due from banks .................... 297.9 4.5
Other assets ............................... 358.7 (0.9)
- - --------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets ....... 656.6 1.3
- - --------------------------------------------------------------------------------------------------------------
Total assets ........................... $ 7,038.7 6.1 %
==============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts ........................... $ 688.8 $ 12,072 1.75% (12.5)%
Money market deposit accounts .......... 1,204.0 29,742 2.47 3.1
Savings accounts ....................... 401.2 8,952 2.23 12.2
Other consumer time deposits ........... 1,906.3 77,112 4.05 3.9
Public fund certificates of deposit
of $100,000 or more ................ 634.9 20,921 3.30 7.7
Certificates of deposit
of $100,000 or more ................ 233.5 7,961 3.41 10.6
Foreign time deposits .................. 5.0 149 2.98 113.8
- - --------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits .... 5,073.7 156,909 3.09 4.0
- - --------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased ................ 35.8 1,063 2.97 17.9
Repurchase agreements .................. 115.6 3,356 2.90 24.4
Debt ....................................... 41.4 4,631 11.18 (6.5)
- - --------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities ..... 5,266.5 $ 165,959 3.15% 4.8
- - --------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits ............................ 1,048.1 7.6
Other liabilities .......................... 168.1 (5.4)
- - --------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities .. 1,216.2 5.8
- - --------------------------------------------------------------------------------------------------------------
Total shareholders' equity ..................... 556.0 22.9
- - --------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity ........... $ 7,038.7 6.1 %
==============================================================================================================
SPREAD AND NET YIELD
Interest rate spread ........................... 4.06%
Cost of funds supporting interest-earning assets 2.52%
Net interest income/margin ..................... $ 309,446 4.69%
==============================================================================================================
- - -------------
(1)Based on the statutory income tax rate of 35%.
(2)Yield computations include nonaccrual loans in loans outstanding.
</TABLE>
<PAGE>
GRAPHIC MATERIAL INDEX
GRAPHIC DESCRIPTION CROSS REFERENCE
Average Earning Asset Mix Pie Chart See Consolidated Average Balances,
Interest and Rates
Total Loans Bar Graph See Five-Year Consolidated Summary of
Income and Selected Financial Data
Nonperforming Asset Ratio Bar Graph See MD&A Table 4
Net Interest Income Bar Graph See Consolidated Average Balances,
Interest and Rates
Annual Common Dividends Bar Graph See Five-Year Consolidated Summary of
Income and Selected Financial Data
Total Shareholders' Equity Bar Graph See Five-Year Consolidated Summary of
Income and Selected Financial Data
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Shareholders
Hibernia Corporation
We have audited the accompanying consolidated balance sheets of Hibernia
Corporation and Subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Hibernia
Corporation and Subsidiaries at December 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young, LLP
New Orleans, Louisiana
January 13, 1998
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Hibernia Corporation and Subsidiaries
December 31 ($ in thousands) 1997 1996
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks .................................. $ 529,724 $ 572,182
Short-term investments ................................... 393,915 194,410
Securities available for sale ............................ 2,147,405 2,250,952
Securities held to maturity .............................. - -
Loans, net of unearned income ............................ 7,580,251 6,165,903
Reserve for possible loan losses ..................... (107,540) (129,039)
- - ----------------------------------------------------------------------------------------------------
Loans, net ....................................... 7,472,711 6,036,864
- - ----------------------------------------------------------------------------------------------------
Bank premises and equipment .............................. 173,906 176,649
Customers' acceptance liability .......................... 144 135
Other assets ............................................. 305,233 329,128
- - ----------------------------------------------------------------------------------------------------
Total assets ..................................... $ 11,023,038 $ 9,560,320
- - ----------------------------------------------------------------------------------------------------
Liabilities
Deposits:
Demand, noninterest-bearing .......................... $ 1,620,713 $ 1,596,170
Interest-bearing ..................................... 7,012,616 6,456,576
- - ----------------------------------------------------------------------------------------------------
Total deposits ................................... 8,633,329 8,052,746
- - ----------------------------------------------------------------------------------------------------
Short-term borrowings .................................... 700,247 331,796
Liability on acceptances ................................. 144 135
Other liabilities ........................................ 132,456 166,510
Debt ..................................................... 506,548 57,192
- - ----------------------------------------------------------------------------------------------------
Total liabilities ................................ 9,972,724 8,608,379
- - ----------------------------------------------------------------------------------------------------
Shareholders' equity Preferred Stock, no par value:
Authorized - 100,000,000 shares; 2,000,000 Series A
issued and outstanding at December 31, 1997 and 1996,
respectively .......................................... 100,000 100,000
Class A Common Stock, no par value:
Authorized - 200,000,000 shares; issued 133,000,857 and
132,200,373 at December 31, 1997 and 1996, respectively 255,362 253,825
Surplus .................................................. 385,095 376,683
Retained earnings ........................................ 314,600 226,848
Treasury stock at cost: 50,000 shares at December 31, 1996 - (569)
Unrealized gains on securities available for sale ........ 12,644 8,472
Unearned compensation .................................... (17,387) (13,318)
- - ----------------------------------------------------------------------------------------------------
Total shareholders' equity ....................... 1,050,314 951,941
- - ----------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity ....... $ 11,023,038 $ 9,560,320
- - ----------------------------------------------------------------------------------------------------
- - ------------
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Income Statements
Hibernia Corporation and Subsidiaries
Year Ended December 31 ($ in thousands, except per-share data) 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans ............................. $ 594,775 $ 487,918 $ 398,117
Interest on securities available for sale .............. 141,391 142,457 52,226
Interest on securities held to maturity ................ - - 117,110
Interest on short-term investments ..................... 13,916 11,065 7,849
- - ------------------------------------------------------------------------------------------------------------
Total interest income .............................. 750,082 641,440 575,302
- - ------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits ................................... 286,338 248,593 231,349
Interest on short-term borrowings ...................... 30,402 15,288 13,810
Interest on debt ....................................... 5,585 1,926 1,827
- - ------------------------------------------------------------------------------------------------------------
Total interest expense ............................. 322,325 265,807 246,986
- - ------------------------------------------------------------------------------------------------------------
Net interest income ........................................ 427,757 375,633 328,316
Provision for possible loan losses ..................... 620 (12,417) 1,218
- - ------------------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses 427,137 388,050 327,098
- - ------------------------------------------------------------------------------------------------------------
Noninterest income
Service charges on deposits ............................ 71,798 59,488 50,074
Trust fees ............................................. 14,757 13,404 12,506
Other service, collection and exchange charges ......... 43,008 34,647 28,857
Gain on divestiture of banking offices ................. - - 2,361
Gain on sale of business lines ......................... - 517 3,402
Other operating income ................................. 13,150 9,794 8,503
Securities gains (losses), net ......................... 2,718 (5,306) 227
- - ------------------------------------------------------------------------------------------------------------
Total noninterest income ........................... 145,431 112,544 105,930
- - ------------------------------------------------------------------------------------------------------------
Noninterest expense
Salaries and employee benefits ......................... 181,097 164,774 139,465
Occupancy expense, net ................................. 30,823 27,531 26,955
Equipment expense ...................................... 27,815 29,178 22,058
Data processing expense ................................ 22,952 20,711 19,731
Foreclosed property expense, net ....................... (3,219) (1,735) (693)
Amortization of intangibles ............................ 13,747 7,441 3,709
Other operating expense ................................ 88,729 79,020 78,257
- - ------------------------------------------------------------------------------------------------------------
Total noninterest expense .......................... 361,944 326,920 289,482
- - ------------------------------------------------------------------------------------------------------------
Income before income taxes ................................. 210,624 173,674 143,546
Income tax expense ......................................... 73,235 60,856 12,134
- - ------------------------------------------------------------------------------------------------------------
Net income ................................................. $ 137,389 $ 112,818 $ 131,412
- - ------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders ............... $ 130,489 $ 111,078 $ 131,412
- - ------------------------------------------------------------------------------------------------------------
Net income per common share ................................ $ 1.00 $ 0.85 $ 1.01
- - ------------------------------------------------------------------------------------------------------------
Net income per common share - assuming dilution ............ $ 0.98 $ 0.84 $ 1.00
- - ------------------------------------------------------------------------------------------------------------
- - -------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
Hibernia Corporation and Subsidiaries
($ in thousands, except per-share data)
- - ---------------------------------------------------------------------------------------------------------------------------------
Preferred Common Retained
Stock Stock Surplus Earnings Other Total
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1994 ........ $ - $ 252,572 $ 371,057 $ 53,008 $ (29,041) $ 647,596
Net income for 1995 .................. - - - 131,412 - 131,412
Issuance of common stock:
Dividend Reinvestment Plan ........ - 170 477 - - 647
Stock Option Plan ................. - 81 214 - 94 389
Retirement Security Plan .......... - - (32) - 798 766
Restricted stock awards ........... - 52 (122) - 1,902 1,832
Cash dividends declared:
Common ($.25 per share) ........... - - - (28,343) - (28,343)
By pooled companies prior to merger - - - (3,609) - (3,609)
Acquisition of treasury stock ........ - - - - (563) (563)
Purchase of common shares by ESOP .... - - - - (16,044) (16,044)
Allocation of ESOP shares ............ - - 338 - 1,654 1,992
Change in unrealized gains (losses)
on securities available for sale .. - - - - 43,438 43,438
Other ................................ - - (212) 564 - 352
- - ---------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1995 ........ - 252,875 371,720 153,032 2,238 779,865
- - ---------------------------------------------------------------------------------------------------------------------------------
Net income for 1996 .................. - - - 112,818 - 112,818
Issuance of common stock:
Dividend Reinvestment Plan ........ - 276 1,310 - - 1,586
Stock Option Plan ................. - 282 844 - 483 1,609
Retirement Security Plan .......... - 383 1,862 - - 2,245
Restricted stock awards ........... - 9 44 - 11 64
By pooled companies prior to merger - - 2,138 - - 2,138
Issuance of preferred stock .......... 100,000 - (2,000) - - 98,000
Cash dividends declared:
Common ($.29 per share) ........... - - - (34,916) - (34,916)
Preferred ($.87 per share) ........ - - - (1,740) - (1,740)
By pooled companies prior to merger - - - (2,346) - (2,346)
Acquisition of treasury stock ........ - - - - (880) (880)
Purchase of common shares by ESOP .... - - - - (306) (306)
Allocation of ESOP shares ............ - - 774 - 1,378 2,152
Change in unrealized gains (losses)
on securities available for sale .. - - - - (8,339) (8,339)
Other ................................ - - (9) - - (9)
- - ---------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1996 ........ 100,000 253,825 376,683 226,848 (5,415) 951,941
- - ---------------------------------------------------------------------------------------------------------------------------------
Net income for 1997 .................. - - - 137,389 - 137,389
Issuance of common stock:
Dividend Reinvestment Plan ........ - 418 2,693 - 477 3,588
Stock Option Plan ................. - 1,068 4,457 - 166 5,691
Retirement Security Plan .......... - 44 265 - - 309
Restricted stock awards ........... - 7 45 - - 52
Director compensation ............. - - 32 - 225 257
Cash dividends declared:
Common ($.33 per share) ........... - - - (42,109) - (42,109)
Preferred ($3.45 per share) ....... - - - (6,900) - (6,900)
By pooled companies prior to merger - - - (628) - (628)
Acquisition of treasury stock ........ - - - - (299) (299)
Purchase of common shares by ESOP .... - - - - (5,021) (5,021)
Allocation of ESOP shares ............ - - 920 - 952 1,872
Change in unrealized gains (losses)
on securities available for sale .. - - - - 4,172 4,172
- - ---------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1997 ........ $ 100,000 $ 255,362 $ 385,095 $ 314,600 $ (4,743) $ 1,050,314
- - ---------------------------------------------------------------------------------------------------------------------------------
- - ----------------
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Hibernia Corporation and Subsidiaries
Year Ended December 31 ($ in thousands) 1997 1996 1995
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income ............................................................ $ 137,389 $ 112,818 $ 131,412
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses ............................. 620 (12,417) 1,218
Amortization of intangibles and deferred charges ............... 13,280 7,449 3,709
Depreciation and amortization .................................. 26,458 27,148 19,857
Premium amortization, net of discount accretion ................ 2,023 4,870 8,443
Realized securities (gains) losses, net ........................ (2,718) 5,306 (227)
Gains on sales of assets ....................................... (4,027) (2,714) (8,892)
Provision for losses on foreclosed and other assets ............ 1,313 1,263 1,705
Decrease (increase) in deferred income tax asset ............... 14,520 7,253 (23,434)
Increase in interest receivable and other assets ............... (2,796) (5,374) (5,960)
(Decrease) increase in interest payable and other liabilities .. (32,167) 35,753 6,710
- - -------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities ........................ 153,895 181,355 134,541
- - -------------------------------------------------------------------------------------------------------------------------
Investing activities
Purchases of securities held to maturity .............................. - - (160,123)
Purchases of securities available for sale ............................ (617,089) (314,964) (142,881)
Proceeds from maturities of securities held to maturity ............... - - 435,511
Proceeds from maturities of securities available for sale ............. 523,254 561,156 142,770
Proceeds from sales of securities available for sale .................. 204,511 286,193 120,967
Net increase in loans ######### ....................................... (1,601,042) (1,232,593) (1,142,620)
Proceeds from sales of loans .......................................... 508,495 310,896 195,619
Purchases of loans .................................................... (347,229) (15,205) (104,345)
Acquisitions, net of cash acquired of $181,913 ........................ - (68,779) -
Purchases of premises, equipment and other assets ..................... (35,656) (30,528) (26,409)
Proceeds from sales of foreclosed assets and excess bank-owned property 14,147 7,831 6,675
Proceeds from divestiture of banking offices, net of $1,069 cash sold . - - (13,709)
Proceeds from sales of business lines ................................. - 517 115,647
Proceeds from sales of premises, equipment and other assets ........... 310 707 726
- - -------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities ............................ (1,350,299) (494,769) (572,172)
- - -------------------------------------------------------------------------------------------------------------------------
Financing activities
Net increase in domestic deposits ..................................... 464,217 408,149 256,656
Net increase in foreign time deposits ................................. 116,502 25,549 11,462
Net increase in short-term borrowings ................................. 368,451 31,965 93,120
Proceeds from issuance of debt ........................................ 500,000 120,743 55,970
Payments on debt ...................................................... (50,644) (100,982) (43,362)
Proceeds from issuance of preferred stock ............................. - 98,000 -
Proceeds from issuance of common stock ................................ 9,897 7,642 3,634
Purchase of common stock by ESOP ...................................... (5,021) (306) (16,044)
Dividends paid ........................................................ (49,652) (37,262) (31,952)
Acquisition of treasury stock ......................................... (299) (880) (563)
- - -------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities ........................ 1,353,451 552,618 328,921
- - -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents ........................ 157,047 239,204 (108,710)
Cash and cash equivalents at beginning of year ........................ 766,592 527,388 636,098
- - -------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year ......................... $ 923,639 $ 766,592 $ 527,388
- - -------------------------------------------------------------------------------------------------------------------------
Supplemental disclosures Cash paid during the year for:
Interest expense ..................................................... $ 325,591 $ 260,381 $ 240,968
Income taxes ......................................................... $ 55,695 $ 49,539 $ 30,788
Non-cash investing and financing activities:
Loans and bank premises and equipment transferred to foreclosed
assets and excess bank-owned property ............................. $ 7,338 $ 4,761 $ 5,052
Acquisitions:
Cash paid for acquisitions (including transaction costs) ......... $ - $ 250,692 $ -
Fair value of assets acquired .................................... $ - $ 1,1353,451 $ -
Fair value of liabilities assumed ................................ $ - $ 932,143 $ -
- - -------------------------------------------------------------------------------------------------------------------------
- - ---------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
Hibernia Corporation and Subsidiaries
Note 1
Summary of Significant Accounting Policies
Hibernia Corporation (the Parent Company), through its wholly owned
subsidiaries, Hibernia National Bank and Hibernia National Bank of Texas (the
Banks), provides a broad array of financial products and services throughout
Louisiana and East Texas. The principal products and services offered include
retail, small business, commercial, international, mortgage and private banking;
leasing; venture capital; corporate finance; treasury management and trust. The
Banks, through wholly owned subsidiaries, also provide insurance products,
retail brokerage and alternative investments, including mutual funds and
annuities.
The accounting principles followed by Hibernia Corporation and
Subsidiaries (the Company or Hibernia) and the methods of applying those
principles conform with generally accepted accounting principles and those
generally practiced within the banking industry.
Consolidation
The consolidated financial statements include the accounts of the
Parent Company and its wholly owned subsidiaries: Hibernia National Bank,
Hibernia National Bank of Texas, Hibernia Capital Corporation (HCC) and Zachary
Taylor Life Insurance Company (Zachary Taylor). HCC is a licensed Small Business
Investment Company formed in 1995 to provide equity capital and long-term loans
to small businesses. Zachary Taylor is currently inactive, and the Parent
Company has an agreement with the Federal Reserve Bank whereby Zachary Taylor
will not be actively operated as an insurance company without Federal Reserve
Board approval.
These consolidated financial statements give retroactive effect to
mergers accounted for as poolings of interests. In addition, the effects of
mergers accounted for as purchase transactions have been included from the date
of consummation (see Note 2).
All significant intercompany transactions and balances have been
eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks,
interest-bearing time deposits in domestic banks, federal funds sold and
securities purchased under agreements to resell and trading account assets.
Securities
Management determines the appropriate classification of debt securities
(trading, available for sale, or held to maturity) at the time of purchase and
re-evaluates this classification periodically. Securities classified as trading
account assets are held for sale in anticipation of short-term market movements.
Debt securities are classified as held to maturity when the Company has the
positive intent and ability to hold the securities to maturity. Securities not
classified as held to maturity or trading are classified as available for sale.
Securities classified as trading account assets are carried at market
value and are included in short-term investments. Gains and losses, both
realized and unrealized, are reflected in earnings as other operating income.
Securities classified as held to maturity are stated at amortized cost.
Securities classified as available for sale are stated at fair value, with
unrealized gains and losses, net of tax, reported in a separate component of
shareholders' equity.
The amortized cost of debt securities classified as held to maturity or
available for sale is adjusted for amortization of premiums and accretion of
discounts to maturity or, in the case of mortgage-backed securities, over the
estimated life of the security. Amortization, accretion and accruing interest
are included in interest income on securities using the level-yield method.
Realized gains and losses, and declines in value judged to be other than
temporary, are included in net securities gains (losses). The cost of securities
sold is determined based on the specific identification method.
Loans
Loans are stated at the principal amounts outstanding, less unearned
income and the reserve for possible loan losses. Interest on loans and accretion
of unearned income are computed by methods which approximate a level rate of
return on recorded principal. Loan origination and commitment fees and certain
direct loan origination costs are deferred, and the net amount is amortized as
an adjustment of the related loan's yield over the life of the loan.
Commercial and small business loans are placed in nonaccrual status
when, in management's opinion, there is doubt concerning full collectibility of
both principal and interest. All commercial and small business nonaccrual loans
are considered to be impaired in accordance with Statement of Financial
Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of
a Loan." Consumer loans are generally charged off when any payment of principal
or interest is more than 120 days delinquent. Interest payments received on
nonaccrual loans are applied to principal if there is doubt as to the
collectibility of the principal; otherwise, these receipts are recorded as
interest income. A loan remains in nonaccrual status until it is current as to
principal and interest and the borrower demonstrates the ability to fulfill the
contractual obligation.
Reserve for Possible Loan Losses
The reserve for possible loan losses is maintained to provide for
possible losses inherent in the loan portfolio. The reserve related to loans
that are identified as impaired is based on discounted cash flows, using the
loan's initial effective interest rate, or the fair value of the collateral for
certain collateral dependent loans.
The reserve is based on management's estimate of future losses; actual
losses may vary from the current estimate. The estimate is reviewed
periodically, taking into consideration the risk characteristics of the loan
portfolio, past loss experience, general economic conditions and other factors
which warrant current recognition. As adjustments to the estimate of future
losses become necessary, they are reflected as a provision for possible loan
losses in current-period earnings. Actual loan losses are deducted from and
subsequent recoveries are added to the reserve.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are computed
primarily using the straight-line method over the estimated useful lives of the
assets, which generally are 10 to 30 years for buildings and 3 to 15 years for
equipment, and over the shorter of the lease terms or the estimated lives of
leasehold improvements.
Foreclosed Assets and Excess Bank-Owned Property
Foreclosed assets include real estate and other collateral acquired
upon the default of loans and loans classified as in-substance foreclosures. In
accordance with SFAS No. 114, a loan is classified as in-substance foreclosure
when the Company has taken possession of the collateral regardless of whether
formal foreclosure proceedings have taken place. Foreclosed assets and excess
bank-owned property are recorded at the fair value of the assets less estimated
selling costs. Losses arising from the initial reduction of an outstanding loan
amount to fair value are deducted from the reserve for possible loan losses.
Losses arising from the transfer of bank premises and equipment to excess
bank-owned property are charged to expense. A valuation reserve for foreclosed
assets and excess bank-owned property is maintained for subsequent valuation
adjustments on a specific-property basis. Income and expenses associated with
foreclosed assets and excess bank-owned property prior to sale are included in
current earnings.
Excess of Cost Over Fair Value of Net Assets Acquired
The excess of cost over the fair value of net assets acquired
(goodwill) is being amortized using the straight-line method over the estimated
periods benefited, generally 25 years.
As events or changes in circumstances warrant, the Company evaluates
the realizability of goodwill by geographic region based on a comparison of the
recorded balance of goodwill to the applicable discounted cumulative net income,
before goodwill amortization expense, over the remaining amortization period of
the associated goodwill. To the extent that impairment exists, write-downs to
realizable value are recorded.
Income Taxes
The Parent Company and its subsidiaries file a consolidated federal
income tax return. The Company accounts for income taxes using the liability
method. Temporary differences occur between the financial reporting and tax
bases of assets and liabilities. Deferred tax assets and liabilities are
recorded for these differences based on enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
Hibernia National Bank is subject to a Louisiana shareholders' tax
which is based partly on income. The income portion is reported as state income
tax. In addition, certain subsidiaries of the Parent Company and Hibernia
National Bank are subject to Louisiana state income tax. Hibernia National Bank
of Texas is subject to Texas franchise tax.
Net Income Per Common Share
In February 1997, the Financial Accounting Standards Board (FASB)
issued SFAS No. 128, "Earnings per Share," which requires the presentation of
both net income per common share and net income per common share - assuming
dilution. The Company adopted the provisions of SFAS No. 128 effective December
31, 1997. The adoption did not impact the Company's net income per common share.
However, the Company had not previously been required to present net income per
common share - assuming dilution, which is now presented for all periods.
Derivative Financial Instruments
The Company may enter into derivative financial instruments for
purposes other than trading to assist in the management of its exposure to
interest rate risk. Derivative financial instruments used for asset and
liability hedges are recorded using the accrual method of accounting. Under this
method the expected differential to be paid or received is accrued in the
appropriate income or expense caption on the income statement (i.e., hedge of a
loan in interest income, hedge of a deposit or debt in interest expense). The
fair value of these instruments and the changes in the fair value are not
recognized in the financial statements. In addition, the Company may enter into
derivative financial instruments to manage its exposure to changes in interest
rates on the market value of its securities available for sale portfolio. These
instruments are recorded using the fair value method of accounting. Under this
method, gains and losses are recognized, net of tax, in a separate component of
shareholders' equity.
In addition, the Company may enter into derivative financial
instruments for trading purposes. These instruments are recorded using the fair
value method of accounting. Changes in the fair value of these instruments are
recorded in noninterest income.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
Reclassification
Certain items included in the consolidated financial statements for
1996 and 1995 have been reclassified to conform with the 1997 presentation.
Recent Accounting Pronouncements
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," which
requires an entity to recognize the financial and servicing assets it controls
and the liabilities it has incurred and to cease to recognize them as financial
assets when control has been surrendered in accordance with the criteria
provided in SFAS No. 125. Subsequently, the FASB issued SFAS No. 127, "Deferral
of the Effective Date of Certain Provisions of SFAS No. 125," which deferred
until January 1, 1998, the implementation of certain aspects of the original
statement. The adoption of SFAS No. 125 is not expected to have a material
impact on the financial condition or operating results of the Company. The
Company will apply the new rules prospectively to transactions when required.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which requires the presentation of comprehensive income and establishes
standards for reporting its components (revenue, expenses, gains and losses) in
a full set of general-purpose financial statements. The adoption of SFAS No. 130
will not have an impact on the financial condition or operating results of the
Company. The Company will adopt the provisions of SFAS No. 130 in 1998.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," which establishes standards for the
reporting of financial information from operating segments in annual and interim
financial statements. SFAS No. 131 requires that financial information be
reported on the same basis that it is reported internally for evaluating segment
performance and allocating resources to segments. Because SFAS No. 131 addresses
how supplemental financial information is disclosed in annual and interim
reports, its adoption will not have an impact on the financial condition or
operating results of the Company. The Company will adopt the provisions of SFAS
No. 131 in 1998.
Note 2
Mergers
The Company completed mergers with four Louisiana financial
institutions in 1995, all of which were accounted for as poolings of interests.
In 1996, the Company completed mergers with five financial institutions, two in
Louisiana and one in East Texas which were accounted for as poolings of
interests, and two in Louisiana which were accounted for as purchase
transactions. In 1997, the Company completed mergers with two East Texas
financial institutions which were accounted for as poolings of interests. The
Company completed mergers with American Bank (American), STABA Bancshares, Inc.
(STABA), Progressive Bancorporation, Inc. (Progressive) and Bank of St. John
(St. John) in 1995; FNB Bancshares, Inc. (FNB), Bunkie Bancshares, Inc.
(Bunkie), CM Bank Holding Company, Inc. (Calcasieu), St. Bernard Bank & Trust
Co. (St. Bernard) and Texarkana National Bancshares, Inc. (Texarkana) in 1996;
and Executive Bancshares, Inc. (Executive) and Unicorp Bancshares - Texas, Inc.
(Unicorp) in 1997. It should be noted that the merger with Texarkana was a
holding company only merger, and Hibernia National Bank of Texas (formerly
Texarkana National Bank) is a wholly-owned subsidiary of the Parent Company.
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 institutions in transactions accounted for as purchases are
referred to as the "purchased companies."
The following table shows the merger date, consideration issued,
exchange ratio and accounting method for each merger.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
Exchange
Merger Date Consideration(1) Ratio Accounting Method
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American .. March 1, 1995 2,098,968 shares 4.82:1 Pooling of interests
STABA ..... May 1, 1995 2,180,133 shares 18.33:1 Pooling of interests
Progressive July 1, 1995 2,488,249 shares 4.05:1 Pooling of interests
St. John .. July 1, 1995 3,338,700 shares 11.13:1 Pooling of interests
FNB ....... January 1, 1996 889,640 shares 92.00:1 Pooling of interests
Bunkie .... January 15, 1996 1,874,760 shares 170.34:1 Pooling of interests
Calcasieu . August 26, 1996 $ 201,700,000 N/A Purchase
St. Bernard October 1, 1996 $ 46,600,000 N/A Purchase
Texarkana . December 31, 1996 6,236,621 shares 8.20:1 Pooling of interests
Executive . August 31, 1997 1,161,680 shares 15.85:1 Pooling of interests
Unicorp ... November 7, 1997 2,233,388 shares 1.60:1 Pooling of interests
- - ------------------------------------------------------------------------------------------------
- - ------------
(1)All shares issued were Hibernia Class A Common Stock.
</TABLE>
The following table shows the key components of the results of
operations of the merged companies accounted for as poolings of interests for
the years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------
Hibernia 1996
(originally Pooled 1997 Pooled Companies
($ in thousands) reported) Companies(1) Executive Unicorp Total
- - --------------------------------------------------------------------------------------------------
Year ended December 31, 1996
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net interest income ........ $366,217 $ - $ 4,109 $ 5,307 $375,633
Net income ................. $109,950 $ - $ 767 $ 2,101 $112,818
- - --------------------------------------------------------------------------------------------------
--------
- - --------------------------------------------------------------------------------------------------
Year ended December 31, 1995
- - --------------------------------------------------------------------------------------------------
Net interest income ........ $299,760 $ 20,996 $ 3,553 $ 4,007 $328,316
Net income ................. $123,859 $ 5,026 $ 813 $ 1,714 $131,412
- - --------------------------------------------------------------------------------------------------
- - ------------
(1)Results of operations for the year ended December 31, 1996 are included in
Hibernia's results.
</TABLE>
Under the purchase method of accounting, the assets and liabilities of
Calcasieu and St. Bernard were adjusted to their estimated fair values as of
each purchase date. The excess of cost over the fair value of net assets
acquired was $120,126,000 and is being amortized on a straight-line basis over
25 years. In addition, a core deposit intangible of $18,457,000 was recorded and
is being amortized on an accelerated basis over 10 years. The following table
presents unaudited pro forma information giving effect to the purchases of
Calcasieu and St. Bernard as if the transactions had occurred at the beginning
of each period presented. The effect of anticipated savings resulting from the
mergers has not been included in the pro forma information. Unaudited pro forma
information is not necessarily indicative of future results.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
($ in thousands, except per-share data) Year Ended December 31
- - --------------------------------------------------------------------------------
1996 1995
- - --------------------------------------------------------------------------------
<S> <C> <C>
Interest and noninterest income ............... $ 799,413 $ 748,195
Net income .................................... $ 102,033 $ 128,532
Net income per common share ................... $ 0.78 $ 0.99
Net income per common share - assuming dilution $ 0.77 $ 0.98
- - --------------------------------------------------------------------------------
</TABLE>
In January 1998 Hibernia consummated a merger with Northwest Bancshares
of Louisiana, Inc. (Northwest) accounted for as a pooling of interests, wherein
Hibernia issued 1,508,019 shares of Class A Common Stock valued at $28,464,000,
based on a per-share market value of $18.875. At December 31, 1997, Northwest
had five branches with total assets of $101,152,000.
Hibernia is a party to definitive merger agreements with two additional
financial institutions, one in Louisiana and one in East Texas, which are
pending certain regulatory and shareholder approval. These mergers are expected
to be consummated in the first quarter of 1998 and are expected to be accounted
for as poolings of interests. The following table contains information regarding
institutions with which Hibernia has entered into definitive merger agreements.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
($ in thousands) December 31, 1997 Estimated Consideration
- - ------------------------------------------------------------------------------------------------
Number Total Hibernia Shares Value of Shares
Institution of Offices Assets to Be Issued to Be Issued*
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ArgentBank ............... 18 $ 805,410 13,317,236 $ 251,363
Firstshares of Texas, Inc. 5 283,652 3,690,616 69,660
- - ------------------------------------------------------------------------------------------------
Total ....... 23 $1,089,062 17,007,852 $ 321,023
- - ------------------------------------------------------------------------------------------------
- - ------------
*Based on the December 31, 1997 market value of $18.875 per share.
</TABLE>
Note 3
Short-Term Investments
The following is a summary of short-term investments.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------
($ in thousands) December 31
- - -------------------------------------------------------------------------------
1997 1996
- - -------------------------------------------------------------------------------
<S> <C> <C>
Federal funds sold and securities purchased
under agreements to resell ................. $355,498 $190,455
Interest-bearing time deposits in domestic banks 2,474 3,955
Trading account assets ......................... 35,943 -
- - -------------------------------------------------------------------------------
Total short-term investments ................. $393,915 $194,410
- - -------------------------------------------------------------------------------
</TABLE>
Note 4
Securities
The Company adopted SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," effective December 31, 1993. On November 15,
1995, the FASB issued a Special Report, "A Guide to Implementation of Statement
115 on Accounting for Certain Investments in Debt and Equity Securities"
(Guide). In accordance with the Guide, Hibernia chose to reclassify securities
from held to maturity to available for sale. At December 31, 1995, the date of
transfer, the amortized cost of those securities was $1,665,664,000 and net
unrealized gains included in shareholders' equity were $21,522,000.
A summary of securities classified as available for sale follows.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
($ in thousands) December 31, 1997
- - --------------------------------------------------------------------------------------------------------------
Amortized Fair Unrealized Unrealized
Type Cost Value Gains Losses
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasuries .................... $ 328,189 $ 330,344 $ 2,158 $ 3
U.S. government agencies:
Mortgage-backed securities ...... 1,101,306 1,110,343 16,778 7,741
Other ........................... 454,762 456,641 2,440 561
States and political subdivisions . 186,326 192,521 6,555 360
Other ............................. 57,369 57,556 188 1
- - --------------------------------------------------------------------------------------------------------------
Total securities available for sale $2,127,952 $2,147,405 $ 28,119 $ 8,666
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------
($ in thousands) December 31, 1996
- - ------------------------------------------------------------------------------------------------------
Amortized Fair Unrealized Unrealized
Type Cost Value Gains Losses
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasuries .................... $ 386,078 $ 391,642 $ 5,609 $ 45
U.S. government agencies:
Mortgage-backed securities ...... 1,316,686 1,321,419 16,085 11,352
Other ........................... 347,411 347,934 1,942 1,419
States and political subdivisions . 137,670 139,636 2,511 545
Other ............................. 48,323 48,506 188 5
Derivative financial instruments .. 1,765 1,815 967 917
- - ------------------------------------------------------------------------------------------------------
Total securities available for sale $2,237,933 $2,250,952 $ 27,302 $ 14,283
- - ------------------------------------------------------------------------------------------------------
</TABLE>
The following is a summary of realized gains and losses from the sale
of securities available for sale for the years ended December 31, 1997, 1996 and
1995.
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------
($ in thousands) Year Ended December 31
- - ----------------------------------------------------------------------
1997 1996 1995
- - ----------------------------------------------------------------------
<S> <C> <C> <C>
Realized gains ................. $ 2,718 $ 307 $ 1,790
Realized losses ................ - (5,613) (1,563)
- - ----------------------------------------------------------------------
Net realized gains (losses) $ 2,718 $(5,306) $ 227
- - ----------------------------------------------------------------------
</TABLE>
Securities with carrying values of $2,050,120,000 and $2,014,885,000 at
December 31, 1997 and 1996, respectively, were either pledged to secure public
and trust deposits or sold under repurchase agreements.
<TABLE>
<CAPTION>
($ in thousands) December 31
- - -------------------------------------------------------------------
1997 1996
- - -------------------------------------------------------------------
<S> <C> <C>
U.S. Treasuries ................. $ 322,811 $ 371,559
U.S. government agencies:
Mortgage-backed securities ... 1,101,837 1,261,158
Other ........................ 448,178 323,894
States and political subdivisions 172,766 58,274
Other ........................... 4,528 -
- - -------------------------------------------------------------------
Total pledged securities ... $2,050,120 $2,014,885
===================================================================
</TABLE>
The amortized cost and estimated fair value by maturity of securities
available for sale are shown in the following table. Securities are classified
according to their contractual maturities without consideration of principal
amortization, potential prepayments or call options. Accordingly, actual
maturities may differ from contractual maturities.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------
($ in thousands) December 31, 1997
- - -------------------------------------------------------------------
Amortized Fair
Cost Value
- - -------------------------------------------------------------------
<S> <C> <C>
Due in 1 year or less ............ $ 518,631 $ 520,422
Due after 1 year through 5 years . 214,780 217,499
Due after 5 years through 10 years 451,761 458,163
Due after 10 years ............... 942,780 951,321
- - -------------------------------------------------------------------
Total ........................ $2,127,952 $2,147,405
- - -------------------------------------------------------------------
</TABLE>
One of the pooled companies entered into various derivative financial
instruments to hedge against exposure to changes in interest rates on the market
value of its securities available for sale portfolio. Notional principal amounts
are used to express the volume of the various derivative financial instruments,
but the amounts subject to credit risk are much smaller. These derivative
financial instruments were liquidated during the first quarter of 1997 with no
material impact on the financial condition or operating results of the Company.
The following table summarizes the notional amounts, amortized cost and
estimated fair value of the derivative financial instruments held to hedge the
available for sale portfolio at December 31, 1996. The Company has included
deferred gains and losses relating to sold, settled or terminated derivative
financial instruments in amortized cost. The fair value of these instruments is
included in the available for sale portfolio.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
($ in thousands) December 31, 1996
- - --------------------------------------------------------------------------------
Notional Amount Amortized Cost Fair Value
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest rate swaps, caps and floors $176,000 $ 2,322 $ 1,815
U.S. Treasury put and call options . - $ (206) -
Treasury note short positions ...... - $ (351) -
- - --------------------------------------------------------------------------------
</TABLE>
Note 5
Loans
The following is a summary of commercial and small business loans
classified by repayment source and consumer loans classified by type.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------
($ in thousands) December 31
- - ------------------------------------------------------------------
1997 1996
- - ------------------------------------------------------------------
<S> <C> <C>
Commercial:
Commercial and industrial .... $1,089,199 $ 865,855
Services industry ............ 719,648 455,323
Real estate .................. 444,188 419,081
Health care .................. 251,724 227,315
Transportation, communications
and utilities ............ 253,617 182,417
Energy ....................... 278,988 143,214
Other ........................ 54,170 45,959
- - ------------------------------------------------------------------
Total commercial ......... 3,091,534 2,339,164
==================================================================
Small Business:
Commercial and industrial .... 495,646 681,012
Services industry ............ 309,916 183,192
Real estate .................. 178,980 118,898
Health care .................. 74,134 54,697
Transportation, communications
and utilities ............ 38,048 24,300
Energy ....................... 17,314 6,834
Other ........................ 259,487 120,915
- - ------------------------------------------------------------------
Total small business ..... 1,373,525 1,189,848
- - ------------------------------------------------------------------
Consumer:
Residential mortgages:
First mortgages .......... 1,485,109 1,113,744
Junior liens ............. 129,357 121,200
Indirect ..................... 708,549 749,861
Revolving credit ............. 282,876 144,435
Other ........................ 509,301 507,651
- - ------------------------------------------------------------------
Total consumer ........... 3,115,192 2,636,891
- - ------------------------------------------------------------------
Total loans .............. $7,580,251 $6,165,903
==================================================================
</TABLE>
The following is a summary of nonperforming loans, foreclosed assets
and excess bank-owned property.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------
($ in thousands) December 31
- - -----------------------------------------------------------
1997 1996
- - -----------------------------------------------------------
<S> <C> <C>
Nonaccrual loans ............. $20,356 $16,080
Restructured loans ........... - -
- - -----------------------------------------------------------
Nonperforming loans ....... 20,356 16,080
- - -----------------------------------------------------------
Foreclosed assets ............ 2,452 5,209
Excess bank-owned property ... 2,360 3,670
- - -----------------------------------------------------------
Total nonperforming assets $25,168 $24,959
- - -----------------------------------------------------------
</TABLE>
At December 31, 1997 and 1996 the recorded investment in loans that
were considered to be impaired under SFAS No. 114 was $17,034,000 and
$14,476,000, respectively. Included in the 1997 and 1996 amounts were
$15,111,000 and $10,334,000, respectively, of impaired loans for which the
related reserve for possible loan losses was $2,560,000 and $1,453,000,
respectively. At December 31, 1997 and 1996 impaired loans that did not have a
reserve for possible loan losses amounted to $1,923,000 and $4,142,000,
respectively. The average recorded investment in impaired loans during the years
ended December 31, 1997, 1996 and 1995 was approximately $16,464,000,
$15,818,000 and $18,827,000, respectively. Interest payments received on
impaired loans are applied to principal if there is doubt as to the
collectibility of the principal; otherwise, these receipts are recorded as
interest income. For the years ended December 31, 1997, 1996 and 1995, the
Company recognized interest income on impaired loans of $1,199,000, $2,296,000
and $2,126,000, respectively.
Interest income in the amount of $1,898,000 for 1997, $3,151,000 for
1996 and $3,897,000 for 1995 would have been recorded on nonperforming loans if
they had been classified as performing. The Company recorded $1,199,000,
$2,296,000 and $2,126,000 of interest income on nonperforming loans during 1997,
1996 and 1995, respectively.
The following is a summary of activity in the reserve for possible loan
losses.
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- - ----------------------------------------------------------------------------------------
1997 1996 1995
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year .......... $ 129,039 $ 151,367 $ 156,896
Loans charged off ................. (43,942) (35,147) (25,416)
Recoveries ........................ 21,823 19,380 18,669
- - ----------------------------------------------------------------------------------------
Net loans charged off ........... (22,119) (15,767) (6,747)
- - ----------------------------------------------------------------------------------------
Provision for possible loan losses 620 (12,417) 1,218
Addition due to purchased companies - 5,856 -
- - ----------------------------------------------------------------------------------------
Balance at end of year ................ $ 107,540 $ 129,039 $ 151,367
- - ----------------------------------------------------------------------------------------
</TABLE>
Note 6
Related-Party Transactions
Certain directors and officers of the Company, members of their
immediate families and entities in which they or members of their immediate
families have principal ownership interests are customers of and have other
transactions with the Company in the ordinary course of business. Loans to these
parties are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable third-party
transactions and do not involve more than normal risks of collectibility or
present other unfavorable features.
Loans outstanding to related parties were $45,325,000 and $72,778,000
at December 31, 1997 and 1996, respectively. The change during 1997 reflects
$199,372,000 in loan advances and $226,825,000 in loan payments. These amounts
do not include loans made in the ordinary course of business to other entities
with which the Company has no relationship, other than a director of the Company
being a director of the other entity, unless the director had the ability to
significantly influence the other entity.
Securities sold to related parties under repurchase agreements amounted
to $7,290,000 and $3,004,000 at December 31, 1997 and 1996, respectively.
Note 7
Bank Premises and Equipment
The following tables detail bank premises and equipment and related
depreciation and amortization expense.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------
($ in thousands) December 31
- - -----------------------------------------------------------------------------
1997 1996
- - -----------------------------------------------------------------------------
<S> <C> <C>
Land ......................................... $ 34,089 $ 34,422
Bank premises ................................ 151,226 139,634
Leasehold improvements ....................... 29,265 36,001
Furniture and equipment ...................... 141,552 137,147
- - -----------------------------------------------------------------------------
356,132 347,204
Less accumulated depreciation and amortization (182,226) (170,555)
- - -----------------------------------------------------------------------------
Total ........................................ $ 173,906 $ 176,649
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- - -------------------------------------------------------------------------------------------------
1997 1996 1995
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provisions for depreciation and amortization included in:
Occupancy expense ............................... $ 8,418 $ 6,880 $ 5,869
Equipment expense ............................... 16,204 19,233 12,344
- - -------------------------------------------------------------------------------------------------
Total ................................................... $24,622 $26,113 $18,213
=================================================================================================
</TABLE>
In March 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
which requires impairment losses to be recorded on long-lived assets used in
operations, including related goodwill, when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amounts. SFAS No. 121 also addresses
the accounting for long-lived assets that are expected to be disposed of. The
adoption of SFAS No. 121 in the first quarter of 1996 did not have a material
effect on the financial condition or operating results of the Company.
Note 8
Deposits
At December 31, 1997 time deposits with a remaining maturity of one
year or more amounted to $918,581,000. Maturities of all time deposits are as
follows: 1998 - $3,092,656,000; 1999 - $687,981,000; 2000 - $80,717,000; 2001 -
$13,701,000; 2002 - $49,376,000; and thereafter $86,806,000.
Domestic certificates of deposit of $100,000 or more amounted to
$1,469,784,000 and $1,349,185,000 at December 31, 1997 and 1996, respectively.
Interest on these certificates amounted to $74,029,000, $62,173,000 and
$53,017,000 in 1997, 1996 and 1995, respectively.
Foreign deposits, which are deposit liabilities of the Cayman Island
office of Hibernia National Bank, amounted to $187,517,000 and $71,015,000 at
December 31, 1997 and 1996, respectively. Interest expense on foreign deposits
amounted to $5,204,000, $2,261,000 and $2,018,000 for 1997, 1996 and 1995,
respectively.
Note 9
Short-Term Borrowings
The following is a summary of short-term borrowings.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
($ in thousands) December 31
- - ------------------------------------------------------------------------------
1997 1996
- - ------------------------------------------------------------------------------
<S> <C> <C>
Federal funds purchased ...................... $310,640 $ 31,909
Securities sold under agreements to repurchase 331,866 299,887
Federal Reserve Bank treasury, tax and
loan account ............................... 57,741 -
- - ------------------------------------------------------------------------------
Total ...................................... $700,247 $331,796
- - ------------------------------------------------------------------------------
</TABLE>
Federal funds purchased and securities sold under agreements to
repurchase generally mature within one to 14 days from the transaction date. The
Federal Reserve Bank treasury, tax and loan account is an open-ended note option
with the Federal Reserve Bank of Atlanta. The following is a summary of
pertinent data related to short-term borrowings for 1997, 1996 and 1995.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
($ in thousands) December 31
- - ------------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at December 31 ... $700,247 $331,796 $265,126
Maximum month-end outstandings $929,048 $363,496 $359,582
Average daily outstandings ... $587,207 $320,654 $259,647
Average rate during the year . 5.2% 4.8% 5.3%
Average rate at year end ..... 5.7% 5.0% 4.8%
- - ------------------------------------------------------------------------------
</TABLE>
Note 10
Debt
The following is a summary of outstanding debt.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
($ in thousands) December 31
- - ------------------------------------------------------------------------------
1997 1996
- - ------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank callable advances $300,000 $ -
Federal Home Loan Bank long-term advances 206,548 7,654
Federal Home Loan Bank short-term advance - 42,202
Other ................................... - 7,336
- - ------------------------------------------------------------------------------
Total ................................. $506,548 $ 57,192
==============================================================================
</TABLE>
The Federal Home Loan Bank (FHLB) advances are secured by the Company's
investment in FHLB stock, which totaled $31,920,000 and $28,863,000 at December
31, 1997 and 1996, respectively, and also by a blanket floating lien on portions
of the Company's residential loan portfolio.
The FHLB callable advances require monthly interest payments and mature
in 2007. Callable advances of $100,000,000 accrue interest at a rate of 4.72%
and $200,000,000 accrue interest at a rate of 4.82%. The FHLB may demand payment
on the callable advances at quarterly intervals beginning in June 1998. If
called prior to maturity, replacement funding will be offered by the FHLB at a
then-current floating rate. The FHLB long-term advances accrue interest at
contractual rates of 4.64% to 8.36%, are due in monthly installments of
approximately $1,125,000, including interest, and are scheduled to amortize
through various dates between 1998 and 2015. However, should the loans for which
the long-term advances were obtained repay at a faster rate than anticipated,
the advances are to be repaid at a correspondingly faster rate. The FHLB
short-term advance accrued interest at 5.77%, was secured by two commercial real
estate notes receivable and required monthly interest payments. This short-term
advance matured in March 1997.
At December 31, 1997 the Company had committed to borrow an additional
$200,000,000 from the FHLB at rates that range from 6.19% to 6.21%. These
borrowings will be drawn in the first quarter of 1998 and mature in 2001.
Maturities of debt are as follows: 1998 - $859,000; 1999 -
$100,840,000; 2000 - $100,853,000; 2001 - $1,014,000; 2002 - $741,000; and
thereafter - $302,241,000.
Note 11
Other Assets and Other Liabilities
The following are summaries of other assets and other liabilities.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
($ in thousands) December 31
- - ------------------------------------------------------------------------------
1997 1996
- - ------------------------------------------------------------------------------
<S> <C> <C>
Other assets:
Accrued interest receivable ............... $ 70,820 $ 64,802
Deferred income taxes ..................... 30,593 47,328
Foreclosed assets and excess
bank-owned property ..................... 4,812 8,879
Mortgage servicing rights ................. 12,030 6,214
Goodwill .................................. 130,405 137,644
Core deposit intangibles .................. 11,878 16,580
Other ..................................... 44,695 47,681
- - ------------------------------------------------------------------------------
Total other assets ...................... $305,233 $329,128
==============================================================================
Other liabilities:
Accrued interest payable .................. $ 32,254 $ 35,520
Trade accounts payable and
accrued liabilities ..................... 68,531 73,100
Trade date securities purchases not settled - 17,416
Reserve for future rental payments
under sale/leaseback .................... 20,505 20,667
Other ..................................... 11,166 19,807
- - ------------------------------------------------------------------------------
Total other liabilities ................. $132,456 $166,510
==============================================================================
</TABLE>
Amortization expense relating to goodwill totaled $7,714,000,
$4,783,000 and $3,107,000 for the years ended December 31, 1997, 1996 and 1995,
respectively. Accumulated amortization relating to goodwill at December 31, 1997
and 1996 totaled $48,792,000 and $41,078,000, respectively. Amortization expense
relating to core deposit intangibles totaled $4,702,000 and $1,877,000 in 1997
and 1996, respectively. Accumulated amortization relating to core deposit
intangibles totaled $6,579,000 and $1,877,000 at December 31, 1997 and 1996,
respectively.
Note 12
Preferred and Common Stock
The Company has authorized 100,000,000 shares of no par value preferred
stock. At December 31, 1997 and 1996, 2,000,000 shares of Series A
Fixed/Adjustable Rate Noncumulative Preferred Stock (Series A Preferred Stock)
were issued and outstanding. The Series A Preferred Stock is nonconvertible,
with a $50 per share liquidation preference and a 6.9% annual dividend through
October 1, 2001, payable on the first business day of each calendar quarter.
Beginning October 1, 2001 the dividend rate is adjustable but will not be less
than 7.4% nor greater than 13.4% per annum. Proceeds from the September 30, 1996
issuance totaled $98,000,000, which is net of $2,000,000 in issuance costs. The
Series A Preferred Stock qualifies as Tier 1 capital for regulatory purposes and
is redeemable at Hibernia's option (with prior Federal Reserve Board approval)
at any time after October 1, 2001.
The Company has authorized 200,000,000 shares of no par value Class A
Common Stock. At December 31, 1997, 133,000,857 shares were issued and
outstanding. At December 31, 1996, 132,200,373 shares were issued and
132,150,373 shares were outstanding. The Company held 50,000 shares of Class A
Common Stock in treasury at December 31, 1996.
Note 13
Net Income Per Common Share Data
The following sets forth the computation of net income per common share
and net income per common share - assuming dilution.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
($ in thousands, except per-share data) Year Ended December 31
- - ------------------------------------------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Numerator:
Net income .................................... $ 137,389 $ 112,818 $ 131,412
Preferred stock dividends ..................... 6,900 1,740 -
- - ------------------------------------------------------------------------------------------------------------
Numerator for net income per common share ..... 130,489 111,078 131,412
Effect of dilutive securities ................. - - -
- - ------------------------------------------------------------------------------------------------------------
Numerator for net income per common
share - assuming dilution ................. $ 130,489 $ 111,078 $ 131,412
- - ------------------------------------------------------------------------------------------------------------
Denominator:
Denominator for net income per common
share (weighted average shares outstanding) 130,795,276 130,160,581 130,275,835
Effect of dilutive securities:
Stock options ............................. 2,204,500 1,337,904 777,431
Purchase warrants ......................... 174,376 160,200 148,075
Restricted stock awards ................... 151,255 - -
- - ------------------------------------------------------------------------------------------------------------
Denominator for net income per common
share - assuming dilution ................. 133,325,407 131,658,685 131,201,341
- - ------------------------------------------------------------------------------------------------------------
Net income per common share ....................... $ 1.00 $ 0.85 $ 1.01
- - ------------------------------------------------------------------------------------------------------------
Net income per common share - assuming dilution ... $ 0.98 $ 0.84 $ 1.00
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
The weighted average shares outstanding exclude 1,782,937, 1,681,835
and 1,358,201 average common shares in 1997, 1996 and 1995, respectively, held
by the Hibernia Employee Stock Ownership Plan (discussed in Note 15) which have
not been committed to be released. The common shares issued in all mergers
accounted for as poolings of interests consummated in 1997, 1996 and 1995 are
considered to be outstanding as of January 1, 1995, the beginning of the
earliest period presented.
Options with an exercise price greater than the average market price of
the Company's Class A Common Stock for the year are antidilutive and, therefore,
are not included in the computation of net income per common share - assuming
dilution. During 1997 there were 129,501 antidilutive options outstanding with
exercise prices ranging from $16.30 to $18.80, during 1996 there were 203,131
antidilutive options outstanding with exercise prices ranging from $11.56 to
$18.80 and during 1995 there were 208,131 antidilutive options outstanding with
exercise prices ranging from $10.63 to $18.80.
Note 14
Employee Benefit Plans
The Company maintains a defined-contribution benefit plan under Section
401(k) of the Internal Revenue Code, the Retirement Security Plan (RSP).
Substantially all employees who have completed one year of service are eligible
to participate in the RSP. Under the RSP, employees contribute a portion of
their compensation, with the Company matching a certain portion of employee
contributions. The matching contributions are invested in Hibernia Class A
Common Stock and are charged to employee benefits expense. At December 31, 1997,
the RSP owned approximately 2,167,000 shares of Hibernia Class A Common Stock.
The Company's contributions to the RSP totaled $4,729,000 in 1997, $4,942,000 in
1996 and $2,955,000 in 1995.
The Company maintains incentive pay and bonus programs for certain
employees. Costs of these programs were $20,422,000, $17,166,000 and $10,727,000
for the years ended December 31, 1997, 1996 and 1995, respectively.
During 1995, the Company established a plan (1995-1997 Plan) for the
grant of performance share awards under its Long-Term Incentive Plan for certain
members of management. Under the 1995-1997 Plan, if the Company achieves certain
predetermined performance goals during the three-year period from January 1,
1995 through December 31, 1997, the Company will award Hibernia Class A Common
Stock to certain members of management who contributed to that achievement. The
number of shares to be issued under the 1995-1997 Plan will be determined in
early 1998. Compensation expense of $6,390,000, $3,148,000 and $1,619,000 was
recorded in 1997, 1996 and 1995, respectively, relating to the 1995-1997 Plan.
The Company is currently developing a new performance share awards plan for the
three-year period from January 1, 1998 through December 31, 2000. This new plan
is expected to be similar to the 1995-1997 Plan.
Certain of the pooled companies had adopted retention agreements to
encourage certain officers and other key employees of the pooled companies to
continue their employment through the consummation of a merger. These agreements
were executed primarily to maintain stability within the organization and reduce
the risk of loss of key employees prior to legal merger. Compensation expense
related to these agreements totaled $34,000, $997,000 and $1,195,000 in 1997,
1996 and 1995, respectively.
Note 15
Employee Stock Ownership Plan
During 1995, the Company instituted an employee stock ownership plan
(ESOP) in which substantially all employees participate. The ESOP, with a
guarantee of the Parent Company, borrowed funds from Hibernia National Bank to
purchase Hibernia Class A Common Stock. The ESOP is expected 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 at December 31, 1997. At December 31,
1997 and 1996, the ESOP owned approximately 2,431,000 and 2,036,000 shares of
Hibernia Class A Common Stock and had an outstanding debt obligation of
$17,387,000 and $13,318,000, respectively. The Banks make annual contributions
to the ESOP in an amount determined by their Boards of Directors, but at least
equal to the ESOP's minimum debt service less dividends received by the ESOP.
Dividends received by the ESOP in 1997, 1996 and 1995 were used to pay debt
service, and it is anticipated that this practice will continue in the future.
The ESOP shares initially were pledged as collateral for its debt. As the debt
is repaid, shares are released from collateral and allocated to active
employees.
The Company accounts for the ESOP in accordance with Statement of
Position 93-6, "Employers' Accounting for Employee Stock Ownership Plans."
Accordingly, the debt of the ESOP is recorded as debt of the Parent Company and
the shares pledged as collateral are reported as unearned compensation in
equity. Hibernia National Bank's loan asset and the Parent Company's debt
liability eliminate in consolidation. As shares are committed to be released,
the Company reports compensation expense equal to the current market price of
the shares, and the shares become outstanding for net income per share
computations. Dividends on allocated ESOP shares are recorded as a reduction of
retained earnings; dividends on unallocated ESOP shares are recorded as a
reduction of debt and accrued interest by the Parent Company.
Compensation expense of $3,014,000, $2,882,000 and $2,395,000 relating
to the ESOP was recorded during 1997, 1996 and 1995, respectively. The ESOP held
618,000 and 440,000 allocated shares and 1,813,000 and 1,596,000 suspense shares
at December 31, 1997 and 1996, respectively. The fair value of the suspense
shares at December 31, 1997 and 1996 was $34,237,000 and $21,145,000,
respectively.
Note 16
Stock Options
SFAS No. 123, "Accounting for Stock-Based Compensation," which became
effective January 1, 1996, established financial accounting and reporting
standards for stock-based compensation plans. Those plans include all
arrangements by which employees and directors receive shares of stock or other
equity instruments of the company, or the company incurs liabilities to
employees or directors in amounts based on the price of the stock. SFAS No. 123
defines a fair-value-based method of accounting for stock-based compensation.
However, SFAS No. 123 also allows an entity to continue to measure stock-based
compensation cost using the intrinsic value method of Accounting Principles
Board Opinion No. 25 (APB No. 25), "Accounting for Stock Issued to Employees."
Entities electing to retain the accounting prescribed in APB No. 25 must make
pro forma disclosures of net income, net income per common share and net income
per common share - assuming dilution as if the fair-value-based method of
accounting defined in SFAS No. 123 had been applied. The Company retained the
provisions of APB No. 25 for expense recognition purposes. Under APB No. 25,
because the exercise price of the Company's stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.
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 upon inception of service as a director vest in six
months. Until October 1997 those options were granted under the 1987 Stock
Option Plan; after October 1997 those options are granted under the 1993
Directors' Stock Option Plan. 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 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.
The following summarizes the option activity in the plans during 1997,
1996 and 1995. During 1997 the 1987 Stock Option Plan was terminated; therefore,
at December 31, 1997 there are no shares available for grant under this plan.
The termination did not impact options outstanding under the 1987 Stock Option
Plan.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------
Weighted-
Average
Exercise
Incentive Non-Qualified Total Price
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1987 Stock Option Plan:
Outstanding, December 31, 1994 ...................... 175,553 1,374,882 1,550,435 $ 7.32
Granted (weighted-average fair value $2.41 per share) - 10,000 10,000 8.31
Canceled ............................................ (7,500) (1,474) (8,974) 5.25
Exercised ........................................... (5,625) (22,422) (28,047) 4.82
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1995 ...................... 162,428 1,360,986 1,523,414 7.40
Granted (weighted-average fair value $3.47 per share) - 5,000 5,000 11.56
Canceled ............................................ (1,875) - (1,875) 4.38
Exercised ........................................... - (22,398) (22,398) 4.94
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1996 ...................... 160,553 1,343,588 1,504,141 7.45
Canceled ............................................ - (67,104) (67,104) 16.37
Exercised ........................................... (18,750) (34,745) (53,495) 5.47
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 ...................... 141,803 1,241,739 1,383,542 $ 7.10
- - ------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1997 ...................... 141,803 1,241,739 1,383,542 $ 7.10
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------
Weighted-
Average
Exercise
Incentive Non-Qualified Total Price
- - ------------------------------------------------------------------------------------------------------------------------
Long-Term Incentive Plan:
<S> <C> <C> <C> <C>
Outstanding, December 31, 1994 ...................... 12,598 2,518,548 2,531,146 $ 7.71
Granted (weighted-average fair value $2.09 per share) - 1,458,200 1,458,200 6.98
Canceled ............................................ - (208,150) (208,150) 7.43
Exercised ........................................... - (22,150) (22,150) 7.23
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1995 ...................... 12,598 3,746,448 3,759,046 7.45
Granted (weighted-average fair value $2.76 per share) - 1,527,800 1,527,800 10.20
Canceled ............................................ - (282,718) (282,718) 8.10
Exercised ........................................... - (149,558) (149,558) 7.53
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1996 ...................... 12,598 4,841,972 4,854,570 8.27
Granted (weighted-average fair value $3.99 per share) - 1,540,300 1,540,300 13.43
Canceled ............................................ - (172,488) (172,488) 10.92
Exercised ........................................... - (473,772) (473,772) 7.31
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 ...................... 12,598 5,736,012 5,748,610 $ 9.65
- - ------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1997 ...................... - 1,918,393 1,918,393 $ 7.55
- - ------------------------------------------------------------------------------------------------------------------------
Available for Grant, December 31, 1997 .............. 1,205,891
- - ------------------------------------------------------------------------------------------------------------------------
1993 Directors' Stock Option Plan:
Outstanding, December 31, 1994 ...................... - 155,000 155,000 $ 7.60
Granted (weighted-average fair value $2.41 per share) - 80,000 80,000 8.13
Exercised ........................................... - (2,500) (2,500) 7.31
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1995 ...................... - 232,500 232,500 7.79
Granted (weighted-average fair value $2.89 per share) - 75,000 75,000 10.44
Canceled ............................................ - (22,500) (22,500) 7.56
Exercised ........................................... - (21,250) (21,250) 7.70
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1996 ...................... - 263,750 263,750 8.57
Granted (weighted-average fair value $3.90 per share) - 70,000 70,000 13.00
Exercised ........................................... - (43,750) (43,750) 8.11
- - ------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 ...................... - 290,000 290,000 $ 9.70
- - ------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1997 ...................... - 116,250 116,250 $ 7.86
- - ------------------------------------------------------------------------------------------------------------------------
Available for Grant, December 31, 1997 .............. 642,500
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
In addition to the above option activity in the plans, 7,900, 5,755 and
264,347 shares of restricted stock were awarded under the Long-Term Incentive
Plan during the years ended December 31, 1997, 1996 and 1995, respectively.
The following table presents the weighted-average remaining life as of
December 31, 1997 for options outstanding for the 1987 Stock Option Plan,
Long-Term Incentive Plan and the 1993 Directors' Stock Option Plan within the
stated exercise price ranges.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------
Outstanding Exercisable
- - --------------------------------------------------------------------------------------------------------
Exercise Weighted- Weighted- Weighted-
Price Range Number Average Average Number Average
Per Share of Options Exercise Remaining of Options Exercise
Price Life Price
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1987 Stock Option Plan:
$4.19 to $5.31 ................. 578,375 $ 4.45 4.24 years 578,375 $ 4.45
$7.19 to $8.75 ................. 672,666 $ 7.24 5.30 years 672,666 $ 7.24
$14.94 to $18.80 ............... 132,501 $17.96 0.90 years 132,501 $17.96
- - --------------------------------------------------------------------------------------------------------
Long-Term Incentive Plan:
$6.63 to $8.81 ................. 2,895,995 $ 7.47 6.41 years 1,913,393 $ 7.54
$10.19 to $10.63 ............... 1,378,300 $10.20 8.22 years 5,000 $10.63
$12.63 to $14.38 ............... 1,474,315 $13.43 9.08 years - -
- - --------------------------------------------------------------------------------------------------------
1993 Directors' Stock Option Plan:
$7.31 to $8.13 ................. 150,000 $ 7.83 6.45 years 111,250 $ 7.75
$10.44 to $13.00 ............... 140,000 $11.72 8.83 years 5,000 $10.44
- - --------------------------------------------------------------------------------------------------------
</TABLE>
The following pro forma information was determined as if the Company
had accounted for stock options issued in 1997, 1996 and 1995 using the
fair-value-based method as defined in SFAS No. 123. The fair value of the
options was estimated using a Black-Scholes option valuation model with the
following weighted average assumptions for 1997, 1996 and 1995, respectively:
risk-free interest rates of 6.67%, 6.44% and 7.74%; expected dividend yields of
2.39%, 2.74% and 3.41%; expected volatility factors of the market price of the
Hibernia Class A Common Stock of 23%, 23% and 29%; and an expected life of the
options of 10 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion the existing models do not necessarily provide a reliable
single measure of the fair value of its employee and director stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options granted in 1997, 1996 and 1995 is amortized to expense over the options'
vesting period. Since the Company's options generally vest over a four-year
period, the pro forma disclosures are not indicative of future amounts until
SFAS No. 123 is applied to all outstanding, nonvested options.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
($ in thousands, except per-share data) December 31
- - -----------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- - -----------------------------------------------------------------------------------------------------------------------
As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income ........ $ 137,389 $ 135,326 $ 112,818 $ 111,690 $ 131,412 $ 130,887
Net income per
common share .... $ 1.00 $ 0.98 $ 0.85 $ 0.84 $ 1.01 $ 1.00
Net income per
common share -
assuming dilution $ 0.98 $ 0.96 $ 0.84 $ 0.84 $ 1.00 $ 1.00
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 17
Income Taxes
Income tax expense includes amounts currently payable and amounts
deferred to or from other years as a result of differences in the timing of
recognition of income and expense for financial reporting and federal tax
purposes. The components of income tax expense are as follows.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- - -------------------------------------------------------------------------------------------
1997 1996 1995
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense:
Federal income tax ..................... $ 54,880 $ 52,456 $ 30,339
State income tax ....................... 3,882 3,648 3,710
- - -------------------------------------------------------------------------------------------
Total current tax expense ................... 58,762 56,104 34,049
- - -------------------------------------------------------------------------------------------
Deferred tax expense (benefit):
Federal income tax ..................... 17,790 1,435 14,636
Change in deferred tax valuation reserve (3,317) 3,317 (36,551)
- - -------------------------------------------------------------------------------------------
Total deferred tax expense (benefit) ........ 14,473 4,752 (21,915)
- - -------------------------------------------------------------------------------------------
Income tax expense .......................... $ 73,235 $ 60,856 $ 12,134
- - -------------------------------------------------------------------------------------------
Shareholders' equity:
Change in unrealized gains (losses)
on securities available for sale .... $ 2,262 $ (4,397) $ 18,526
Change in deferred tax valuation reserve - - (8,380)
- - -------------------------------------------------------------------------------------------
Total shareholders' equity .................. $ 2,262 $ (4,397) $ 10,146
===========================================================================================
</TABLE>
The reconciliation of the federal statutory income tax rate to the Company's
effective rate is as follows.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- - ------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------
Amount Rate Amount Rate Amount Rate
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax expense based on federal statutory rate $ 73,718 35.0 % $ 60,786 35.0 % $ 50,241 35.0 %
Tax-exempt interest ....................... (5,404) (2.6) (3,859) (2.2) (4,286) (3.0)
State income tax, net of federal benefit .. 2,523 1.2 2,371 1.4 2,411 1.7
Goodwill .................................. 2,681 1.3 1,657 0.9 1,088 0.8
Benefit from change in deferred tax
valuation reserve ....................... - - - - (36,551) (25.5)
Other ..................................... (283) (0.1) (99) (0.1) (769) (0.5)
- - ------------------------------------------------------------------------------------------------------------------------
Income tax expense ........................ $ 73,235 34.8 % $ 60,856 35.0 % $ 12,134 8.5 %
========================================================================================================================
</TABLE>
Deferred income taxes are based on differences between the bases of
assets and liabilities for financial statement purposes and tax reporting
purposes and capital loss and net operating loss carryforwards. The tax effects
of the cumulative temporary differences and loss carryforwards which create
deferred tax assets and liabilities at December 31, 1997 and 1996, are detailed
in the following table.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------
($ in thousands) December 31
- - --------------------------------------------------------------------
1997 1996
- - --------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Reserve for possible loan losses . $ 37,639 $ 44,994
Sale/leaseback ................... 7,409 7,527
Loan fees ........................ 2,934 1,596
Foreclosed assets ................ 62 2,528
Capital loss carryforward ........ 97 3,317
Other ............................ 17,830 19,911
- - --------------------------------------------------------------------
Total deferred tax assets ............ 65,971 79,873
- - --------------------------------------------------------------------
Deferred tax liabilities:
Net unrealized gains on securities
available for sale ............ 6,809 4,547
Depreciation ..................... 10,463 10,326
Core deposit intangibles ......... 3,905 5,489
Discounts on securities .......... 1,316 71
Other ............................ 12,885 8,795
- - --------------------------------------------------------------------
Total deferred tax liabilities ....... 35,378 29,228
- - --------------------------------------------------------------------
Deferred tax assets, net of
deferred tax liabilities ........... 30,593 50,645
Deferred tax valuation reserve ....... - (3,317)
- - --------------------------------------------------------------------
Total net deferred tax asset ......... $ 30,593 $ 47,328
====================================================================
</TABLE>
Management assesses realizability of the net deferred tax asset based
on the Company's ability to: first, recover taxes previously paid and, second,
generate taxable income and capital gains in the future. A deferred tax
valuation reserve is established, if needed, to limit the net deferred tax asset
to its realizable value.
Note 18
Leases
The Company leases its headquarters, operations center and certain
other bank premises and equipment under non-cancelable operating leases which
expire at various dates through 2035. Certain of the leases have escalation
clauses and renewal options ranging from one to 30 years.
Total rental expense (none of which represents contingent rentals)
included in occupancy and equipment expense was $12,171,000, $10,975,000 and
$10,529,000 in 1997, 1996 and 1995, respectively.
The future minimum rental commitments at December 31, 1997, for all
long-term operating leases are as follows: 1998 - $10,305,000; 1999 -
$9,619,000; 2000 - $8,932,000; 2001 - $8,740,000; 2002 - $8,551,000; and
thereafter - $47,337,000.
Note 19
Other Operating Expense
The following is a summary of other operating expense.
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- - ----------------------------------------------------------------------------
1997 1996 1995
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
Advertising and promotional expenses $13,144 $ 9,815 $ 7,506
Telecommunications ................. 10,593 8,975 7,123
Postage ............................ 7,576 6,378 5,433
Stationery and supplies ............ 7,333 6,827 6,554
State taxes on equity .............. 6,100 6,000 4,491
Professional fees .................. 5,852 7,636 7,876
Loan collection expense ............ 4,037 2,494 2,149
Regulatory expense ................. 2,455 1,323 8,762
Other .............................. 31,639 29,572 28,363
- - ----------------------------------------------------------------------------
Total other operating expense .. $88,729 $79,020 $78,257
============================================================================
</TABLE>
Note 20
Hibernia Corporation
The following Balance Sheets, Income Statements and Statements of Cash
Flows reflect the financial position and results of operations for the Parent
Company only.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------
Balance Sheets
- - ------------------------------------------------------------------
($ in thousands) December 31
- - ------------------------------------------------------------------
1997 1996
- - ------------------------------------------------------------------
<S> <C> <C>
Investment in bank subsidiaries $ 912,232 $ 801,169
Other assets .................. 156,504 183,907
- - ------------------------------------------------------------------
Total assets .............. $1,068,736 $ 985,076
==================================================================
Other liabilities ............. $ 1,035 $ 13,973
Debt .......................... 17,387 19,162
Shareholders' equity .......... 1,050,314 951,941
- - ------------------------------------------------------------------
Total liabilities and
shareholders' equity .... $1,068,736 $ 985,076
==================================================================
</TABLE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Income Statements
- - --------------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- - --------------------------------------------------------------------------------
1997 1996 1995
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity in undistributed net income
of subsidiaries .............. $ 81,945 $ 75,345 $ 57,144
Dividends from bank subsidiaries . 47,183 35,215 70,201
Other income ..................... 12,054 6,037 3,685
- - --------------------------------------------------------------------------------
Total income ................. 141,182 116,597 131,030
- - --------------------------------------------------------------------------------
Interest expense ................. 351 375 405
Other expense .................... 651 2,249 3,471
- - --------------------------------------------------------------------------------
Total expense ................ 1,002 2,624 3,876
- - --------------------------------------------------------------------------------
Income before taxes .............. 140,180 113,973 127,154
Income tax expense (benefit) ..... 2,791 1,155 (4,258)
- - --------------------------------------------------------------------------------
Net income ....................... $ 137,389 $ 112,818 $ 131,412
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------
Statements of Cash Flows
- - ------------------------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- - ------------------------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income ............................ $ 137,389 $ 112,818 $ 131,412
Equity in undistributed
net income of subsidiaries .......... (81,945) (75,345) (57,144)
Realized securities (gains) losses, net (1,305) - -
Other adjustments ..................... (8,146) 1,826 (10,856)
- - ------------------------------------------------------------------------------------------
Net cash provided by
operating activities .............. 45,993 39,299 63,412
- - ------------------------------------------------------------------------------------------
Investing activities
Investment in subsidiaries ............ (28,000) (11,747) (100)
Purchases of securities available
for sale ........................... (120,000) - (484)
Proceeds from sales of securities
available for sale ................. 121,305 - 453
Maturities of securities
available for sale ................. - - 1,600
Net decrease (increase) in loans ...... 834 2,206 (10,867)
- - ------------------------------------------------------------------------------------------
Net cash used by investing activities ..... (25,861) (9,541) (9,398)
- - ------------------------------------------------------------------------------------------
Financing activities
Issuance of debt ...................... - 4,776 -
Payments on debt ...................... (5,843) (1,903) (4,247)
Purchase of treasury stock ............ (299) (880) (563)
Dividends paid ........................ (49,652) (37,262) (31,952)
Issuance of preferred stock ........... - 98,000 -
Issuance of common stock .............. 9,897 7,642 3,634
- - ------------------------------------------------------------------------------------------
Net cash provided (used) by
financing activities ............. (45,897) 70,373 (33,128)
- - ------------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents ................ (25,765) 100,131 20,886
Cash and cash equivalents
at beginning of year .................... 167,614 67,483 46,597
- - ------------------------------------------------------------------------------------------
Cash and cash equivalents
at end of year .......................... $ 141,849 $ 167,614 $ 67,483
- - ------------------------------------------------------------------------------------------
</TABLE>
Note 21
Financial Instruments and Derivative Financial Instruments
Generally accepted accounting principles require disclosure of fair
value information about financial instruments for which it is practicable to
estimate fair value, whether or not the financial instruments are recognized in
the financial statements. When quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. The derived fair value
estimates cannot be substantiated through comparison to independent markets and,
in many cases, could not be realized in immediate settlement of the instrument.
Certain financial instruments and all non-financial instruments are excluded
from these disclosure requirements. Further, the disclosures do not include
estimated fair values for items which are not financial instruments but which
represent significant value to the Company, among them, core deposit
intangibles, loan servicing rights, trust operations and other fee-generating
businesses. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The carrying amount of cash and short-term investments, demand deposits
and short-term borrowings approximates the estimated fair value of these
financial instruments. The estimated fair value of securities, interest rate
agreements and other off-balance-sheet instruments is based on quoted market
prices, dealer quotes and prices obtained from independent pricing services. The
estimated fair value of loans, interest-bearing deposits and debt is based on
present values using applicable risk-adjusted spreads to the appropriate yield
curve to approximate current interest rates applicable to each category of these
financial instruments.
Interest rates are not adjusted for changes in credit risk of
performing commercial and small business loans for which there are no known
credit concerns. Management segregates loans in appropriate risk categories and
believes the risk factor embedded in the interest rates results in a fair
valuation of these loans on an entry-value basis.
Variances between the carrying amount and the estimated fair value of
loans reflect both credit risk and interest rate risk. The Company is protected
against changes in credit risk by the reserve for possible loan losses which
totaled $107,540,000 and $129,039,000 at December 31, 1997 and 1996,
respectively.
The fair value estimates presented are based on information available
to management as of December 31, 1997 and 1996. Although management is not aware
of any factors that would significantly affect the estimated fair value amounts,
these amounts have not been revalued for purposes of these financial statements
since those dates. Therefore, current estimates of fair value may differ
significantly from the amounts presented. At December 31, 1997, $35,943,000 of
short-term investments included in the following table are held for trading
purposes.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
($ in thousands) December 31
- - ------------------------------------------------------------------------------------------------
1997 1996
- - ------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Cash and short-term investments $ 923,639 $ 923,639 $ 766,592 $ 766,592
Securities available for sale . $2,147,405 $2,147,405 $2,250,952 $2,250,952
Commercial loans .............. $3,091,534 $3,103,489 $2,339,164 $2,349,641
Small business loans .......... $1,373,525 $1,379,149 $1,189,848 $1,196,386
Consumer loans ................ $3,115,192 $3,117,221 $2,636,891 $2,599,659
Liabilities
Demand deposits ............... $1,620,713 $1,620,713 $1,596,170 $1,596,170
Interest-bearing deposits ..... $7,012,616 $7,029,864 $6,456,576 $6,483,111
Short-term borrowings ......... $ 700,247 $ 700,247 $ 331,796 $ 331,796
Debt .......................... $ 506,548 $ 505,302 $ 57,192 $ 58,292
- - ------------------------------------------------------------------------------------------------
</TABLE>
The Company issues financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers and
to reduce exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit, letters of credit, standby
letters of credit and interest rate contracts and involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized on
the balance sheet.
Commitments to extend credit are legally binding, conditional
agreements generally having fixed expiration or termination dates and specified
interest rates and purposes. These commitments generally require customers to
maintain certain credit standards. Collateral requirements and loan-to-value
ratios are the same as those for funded transactions and are established based
on management's credit assessment of the customer. Commitments may expire
without being drawn upon. Therefore, the total commitment amount does not
necessarily represent future requirements.
The Company issues letters of credit and financial guarantees (standby
letters of credit) whereby it agrees to honor certain financial commitments in
the event its customers are unable to perform. The majority of the standby
letters of credit consist of performance guarantees. Management conducts regular
reviews of all outstanding standby letters of credit, and the results of these
reviews are considered in assessing the adequacy of the Company's reserve for
possible loan losses. Management does not anticipate any material losses related
to these instruments.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------
($ in thousands) December 31
- - -------------------------------------------------------------------------------------
1997 1996
- - -------------------------------------------------------------------------------------
Contract Fair Contract Fair
Amount Value Amount Value
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commitments
to extend credit ... $2,996,993 $ (27,193) $1,803,997 $ (16,908)
- - -------------------------------------------------------------------------------------
Letters of credit and
financial guarantees $ 187,239 $ (1,386) $ 132,413 $ (969)
- - -------------------------------------------------------------------------------------
</TABLE>
The Company maintains trading positions in a variety of derivative
financial instruments. These trading activities are customer-oriented and,
generally, matched trading positions are established to minimize risk to the
Company. However, to meet the needs of customers, the Company also serves as the
counterparty for certain transactions.
The credit exposure that results from interest rate contracts held for
trading purposes is limited to the current fair value of asset derivative
positions, which at December 31, 1997 and 1996 was $884,000 and $913,000,
respectively. The Company manages the potential credit exposure through
evaluation of the counterparty credit standing, collateral agreements and other
contract provisions. The potential credit exposure from future market movements
is estimated by using a statistical model that takes into consideration possible
changes in interest rates over time.
The amounts disclosed in the following table represent the
end-of-period notional and fair value of derivative financial instruments held
or issued for trading purposes and the average aggregate fair value of those
instruments during the year. Net trading gains recognized in earnings on
interest rate contracts outstanding were immaterial for all years presented.
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------
($ in thousands) Notional Amount Fair Value Average Fair Value
- - ----------------------------------------------------------------------------------------------------------------------
December 31 December 31 Year Ended December 31
- - ----------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest rate swaps
Assets ..................... $124,700 $ 56,099 $ 880 $ 881 $ 796 $ 993
Liabilities ................ $ 56,178 $ 46,099 $ (398) $ (515) $ (434) $ (726)
Options, caps and floors held .. $ 21,700 $ 53,687 $ 5 $ 32 $ 19 $ (35)
Options, caps and floors written $ 21,700 $ 54,062 $ (6) $ (36) $ (22) $ 30
- - ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company also enters into interest rate contracts in order to manage
interest rate exposure. Interest rate contracts involve the risk of dealing with
counterparties and their ability to meet contractual terms. These counterparties
must receive appropriate credit approval before the Company enters into a rate
contract. Notional principal amounts express the volume of these transactions,
although the amounts potentially subject to credit and market risk are much
smaller.
One interest rate swap with a notional amount of $100,000,000 at
December 31, 1997 was entered into during 1997 as a hedge against a deposit
relationship of the same maturity. The differential to be paid or received is
accrued as interest rates change and is recognized as an adjustment to interest
expense on deposits. The related amount payable or receivable is included in
other assets or other liabilities. This interest rate swap matured on January 2,
1998.
At December 31, 1996, the Company was party to several contracts to
manage the interest rate risk of securities available for sale, as discussed in
Note 4.
Note 22
Regulatory Matters and Dividend Restrictions
The Company and the Banks are subject to various regulatory capital
requirements administered by the Federal Reserve Bank (FRB) and the Office of
the Comptroller of the Currency (OCC), respectively. Failure to meet minimum
capital requirements can initiate certain mandatory - and possibly additional
discretionary - actions by the FRB and OCC that, if undertaken, could have a
direct material effect on the Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and the Banks must meet specific capital guidelines that involve
quantitative measures of assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Company's and the
Banks' capital amounts and classifications are also subject to qualitative
judgments by the FRB and OCC about components, risk weightings and other
factors.
As of December 31, 1997 and 1996, the most recent notifications from
the OCC categorized the Banks as well capitalized under the regulatory framework
for prompt corrective action. For a bank to be designated as well capitalized,
it must have Tier 1 and total risk-based capital ratios of at least 6.0% and
10.0%, respectively, and a leverage ratio of at least 5.0%. There are no
conditions or events since those notifications that management believes have
changed the Banks' categories.
The Company's and the Banks' actual capital amounts and ratios are
presented in the following table.
<TABLE>
<CAPTION>
($ in thousands) Tier 1 Total
Risk-Based Capital Risk-Based Capital Leverage
- - ----------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997
Hibernia Corporation . $895,387 10.77% $999,370 12.02% $895,387 8.54%
Hibernia National Bank $699,974 8.77% $799,875 10.01% $699,974 7.12%
Hibernia National Bank
of Texas ........... $ 58,657 18.71% $ 61,341 19.57% $ 58,657 9.21%
December 31, 1996
Hibernia Corporation . $789,244 12.03% $871,817 13.29% $789,244 8.68%
Hibernia National Bank $583,784 9.41% $661,952 10.67% $583,784 6.91%
Hibernia National Bank
of Texas ........... $ 55,039 15.20% $ 59,154 16.34% $ 55,039 8.50%
- - ----------------------------------------------------------------------------------------------------
</TABLE>
Under current FRB regulations, each of the Banks may lend the Parent
Company up to 10% of their capital and surplus.
The payment of dividends by the Banks to the Parent Company is
restricted by various regulatory and statutory limitations. In 1998, the Banks
will have available to pay dividends to the Parent Company, without approval of
the OCC, approximately $157,059,000, plus net retained profits earned in 1998
prior to the dividend declaration date.
Banks are required to maintain cash on hand or noninterest-bearing
balances with the FRB to meet reserve requirements. Average noninterest-bearing
balances with the FRB were $15,863,000 in 1997 and $19,929,000 in 1996.
Note 23
Contingencies
The Company is a party to certain legal proceedings arising from
matters incidental to its business. Management and counsel are of the opinion
that these actions will not have a material effect on the financial condition or
operating results of the Company.
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Hibernia Corporation of our report dated January 13, 1998, included in the
1997 Annual Report to shareholders of Hibernia Corporation.
We also consent to the incorporation by reference in the following Hibernia
Corporation REgistration statements.
Form S-3 No. 33-26553 (dated February 21,1989)
Form S-8 No. 2-81353 (dated February 23, 1989)
Form S-8 No. 33-26871 (dated February 23,1989)
Form S-3 No. 33-37701 (dated January 31, 1991)
Form S-8 No. 2-96194 (dated April 8, 1991)
Form S-3 No. 33-53108 (dated December 28, 1992)
Form S-3 No. 33-55844 (dated December 28, 1992)
Form S-8 No. 33-59743 (dated JUne 1, 1995)
Form S-3 No. 333-8133 (dated September 19, 1996)
Form S-8 No. 333-07761 (dated July 8, 1996)
Of our report dated January 13, 1998 with respect to the consolidated financial
statements of Hibernia Corporation incorporated by reference in this Annual
Report (Form 10-K) for the year ended December 31, 1997.
/s/ Ernst & Young LLP
New Orleans, Louisiana
March 26, 1998
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Chairman and
director of Hibernia Corporation, a Louisiana corporation (the "Corporation"),
does hereby name, constitute and appoint Robert H. Boh, Patricia C. Meringer,
Gary L. Ryan, and each of them (with full power to each of them to act alone),
his true and lawful agents and attorneys-in-fact, for him and on his behalf and
in his name, place and stead, in any and all capacities, to sign, execute,
acknowledge, deliver, and file with the Securities and Exchange Commission (or
any other governmental or regulatory authority), the Annual Report of the
Corporation on Form 10-K (or other appropriate form) for the fiscal year ended
December 31, 1997, and any and all amendments thereto, with any and all exhibits
and any and all other documents required to be filed with respect thereto or in
connection therewith, granting unto said agents and attorneys, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as the undersigned
might or could do if personally present, and the undersigned hereby ratifies and
confirms all that said agents and attorneys-in-fact, or any of them may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Robert H. Boh
-----------------------------------
Robert H. Boh
Chairman and Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/J. Herbert Boydstun
-----------------------------------
J. Herbert Boydstun
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/J. Terrell Brown
-----------------------------------
J. Terrell Brown
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/E. R. "Bo" Campbell
-----------------------------------
E. R. "Bo" Campbell
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Richard W. Freeman, Jr.
-----------------------------------
Richard W. Freeman, Jr.
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned President, Chief
Executive Officer and director of Hibernia Corporation, a Louisiana corporation
(the "Corporation"), does hereby name, constitute and appoint Robert H. Boh,
Patricia C. Meringer, Gary L. Ryan, and each of them (with full power to each of
them to act alone), his true and lawful agents and attorneys-in-fact, for him
and on his behalf and in his name, place and stead, in any and all capacities,
to sign, execute, acknowledge, deliver, and file with the Securities and
Exchange Commission (or any other governmental or regulatory authority), the
Annual Report of the Corporation on Form 10-K (or other appropriate form) for
the fiscal year ended December 31, 1997, and any and all amendments thereto,
with any and all exhibits and any and all other documents required to be filed
with respect thereto or in connection therewith, granting unto said agents and
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as the
undersigned might or could do if personally present, and the undersigned hereby
ratifies and confirms all that said agents and attorneys-in-fact, or any of them
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Stephen A. Hansel
-----------------------------------
Stephen A. Hansel
President, Chief Executive Officer
and Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Dick H. Hearin
-----------------------------------
Dick H. Hearin
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Robert T. Holleman
-----------------------------------
Robert T. Holleman
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Elton R. King
-----------------------------------
Elton R. King
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Sidney W. Lassen
-----------------------------------
Sidney W. Lassen
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/James R. Murphy
-----------------------------------
James R. Murphy
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Donald J. Nalty
-----------------------------------
Donald J. Nalty
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/William C. O'Malley
-----------------------------------
William C. O'Malley
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Robert T. Ratcliff
-----------------------------------
Robert T. Ratcliff
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/H. Duke Shackelford
-----------------------------------
H. Duke Shackelford
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Robert E. Zetzmann
-----------------------------------
Robert E. Zetzmann
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), his true and
lawful agents and attorneys-in-fact, for him and on his behalf and in his name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
1st day of February, 1998.
/s/James R. Peltier
-----------------------------------
James R. Peltier
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Controller and
Chief Accounting Officer of Hibernia Corporation, a Louisiana corporation (the
"Corporation"), does hereby name, constitute and appoint Robert H. Boh, Patricia
C. Meringer, Gary L. Ryan, and each of them (with full power to each of them to
act alone), his true and lawful agents and attorneys-in-fact, for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute, acknowledge, deliver, and file with the Securities and Exchange
Commission (or any other governmental or regulatory authority), the Annual
Report of the Corporation on Form 10-K (or other appropriate form) for the
fiscal year ended December 31, 1997, and any and all amendments thereto, with
any and all exhibits and any and all other documents required to be filed with
respect thereto or in connection therewith, granting unto said agents and
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as the
undersigned might or could do if personally present, and the undersigned hereby
ratifies and confirms all that said agents and attorneys-in-fact, or any of them
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this
17th day of December, 1997.
/s/Ron E. Samford, Jr.
-----------------------------------
Ron E. Samford, Jr.
Controller and Chief Accounting Officer
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), her true and
lawful agents and attorneys-in-fact, for her and on her behalf and in her name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on this
17th day of December, 1997.
/s/Laura A. Leach
-----------------------------------
Laura A. Leach
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), her true and
lawful agents and attorneys-in-fact, for her and on her behalf and in her name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on this
17th day of December, 1997.
/s/Janee M. "Gee" Tucker
-----------------------------------
Janee M. "Gee" Tucker
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Hibernia Corporation, a Louisiana corporation (the "Corporation"), does hereby
name, constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan,
and each of them (with full power to each of them to act alone), her true and
lawful agents and attorneys-in-fact, for her and on her behalf and in her name,
place and stead, in any and all capacities, to sign, execute, acknowledge,
deliver, and file with the Securities and Exchange Commission (or any other
governmental or regulatory authority), the Annual Report of the Corporation on
Form 10-K (or other appropriate form) for the fiscal year ended December 31,
1997, and any and all amendments thereto, with any and all exhibits and any and
all other documents required to be filed with respect thereto or in connection
therewith, granting unto said agents and attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as the undersigned might or could do if
personally present, and the undersigned hereby ratifies and confirms all that
said agents and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on this
17th day of December, 1997.
/s/Virginia E. Weinmann
-----------------------------------
Virginia E. Weinmann
Director
HIBERNIA CORPORATION
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Chief Financial
Officer of Hibernia Corporation, a Louisiana corporation (the "Corporation"),
does hereby name, constitute and appoint Robert H. Boh, Patricia C. Meringer,
Gary L. Ryan, and each of them (with full power to each of them to act alone),
her true and lawful agents and attorneys-in-fact, for her and on her behalf and
in her name, place and stead, in any and all capacities, to sign, execute,
acknowledge, deliver, and file with the Securities and Exchange Commission (or
any other governmental or regulatory authority), the Annual Report of the
Corporation on Form 10-K (or other appropriate form) for the fiscal year ended
December 31, 1997, and any and all amendments thereto, with any and all exhibits
and any and all other documents required to be filed with respect thereto or in
connection therewith, granting unto said agents and attorneys, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as the undersigned
might or could do if personally present, and the undersigned hereby ratifies and
confirms all that said agents and attorneys-in-fact, or any of them may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on this
17th day of December, 1997.
/s/Marsha M. Gassan
-----------------------------------
Marsha M. Gassan
Director
HIBERNIA CORPORATION
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<FED-FUNDS-SOLD> 355,498
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<EPS-DILUTED> 0.98
<YIELD-ACTUAL> 4.75
<LOANS-NON> 20,356
<LOANS-PAST> 4,839
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 19,366
<ALLOWANCE-OPEN> 129,039
<CHARGE-OFFS> 43,942
<RECOVERIES> 21,823
<ALLOWANCE-CLOSE> 107,540
<ALLOWANCE-DOMESTIC> 107,540
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 23,400
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<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
<EXCHANGE-RATE> 1 1 1
<CASH> 425,403 475,967 474,198
<INT-BEARING-DEPOSITS> 3,155 4,553 4,852
<FED-FUNDS-SOLD> 241,900 234,525 253,405
<TRADING-ASSETS> 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 2,042,993 2,139,541 2,208,774
<INVESTMENTS-CARRYING> 0 0 0
<INVESTMENTS-MARKET> 0 0 0
<LOANS> 7,107,816 6,685,893 6,321,790
<ALLOWANCE> (114,311) (121,501) (121,176)
<TOTAL-ASSETS> 10,200,367 9,926,215 9,641,786
<DEPOSITS> 8,208,368 8,198,203 8,169,257
<SHORT-TERM> 718,499 591,463 357,111
<LIABILITIES-OTHER> 145,081 138,223 145,839
<LONG-TERM> 109,793 12,675 13,135
0 0 0
100,000 100,000 100,000
<COMMON> 255,206 254,530 254,203
<OTHER-SE> 663,420 631,121 602,241
<TOTAL-LIABILITIES-AND-EQUITY> 10,200,367 9,926,215 9,641,786
<INTEREST-LOAN> 433,268 279,805 135,753
<INTEREST-INVEST> 108,018 73,206 37,184
<INTEREST-OTHER> 9,850 6,519 3,289
<INTEREST-TOTAL> 551,136 359,530 176,226
<INTEREST-DEPOSIT> 212,732 139,924 68,492
<INTEREST-EXPENSE> 233,395 150,992 73,725
<INTEREST-INCOME-NET> 317,741 208,538 102,501
<LOAN-LOSSES> 169 118 59
<SECURITIES-GAINS> 372 371 15
<EXPENSE-OTHER> 270,539 179,147 87,080
<INCOME-PRETAX> 152,139 98,768 47,975
<INCOME-PRE-EXTRAORDINARY> 99,041 64,165 31,342
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 99,041 64,165 31,342
<EPS-PRIMARY> 0.72 0.47 0.23
<EPS-DILUTED> 0.70 0.45 0.22
<YIELD-ACTUAL> 4.83 4.85 4.83
<LOANS-NON> 23,037 22,673 16,914
<LOANS-PAST> 4,519 3,245 4,947
<LOANS-TROUBLED> 0 0 0
<LOANS-PROBLEM> 17,900 19,300 18,900
<ALLOWANCE-OPEN> 129,039 129,039 129,039
<CHARGE-OFFS> 32,750 22,329 13,561
<RECOVERIES> 17,853 14,673 5,640
<ALLOWANCE-CLOSE> 114,311 121,501 121,176
<ALLOWANCE-DOMESTIC> 114,311 121,501 121,176
<ALLOWANCE-FOREIGN> 0 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 572,182
<INT-BEARING-DEPOSITS> 3,955
<FED-FUNDS-SOLD> 190,455
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,250,952
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 6,165,903
<ALLOWANCE> (129,039)
<TOTAL-ASSETS> 9,560,320
<DEPOSITS> 8,052,746
<SHORT-TERM> 331,796
<LIABILITIES-OTHER> 166,645
<LONG-TERM> 57,192
0
100,000
<COMMON> 253,825
<OTHER-SE> 598,116
<TOTAL-LIABILITIES-AND-EQUITY> 9,560,320
<INTEREST-LOAN> 487,918
<INTEREST-INVEST> 142,457
<INTEREST-OTHER> 11,065
<INTEREST-TOTAL> 641,440
<INTEREST-DEPOSIT> 248,593
<INTEREST-EXPENSE> 265,807
<INTEREST-INCOME-NET> 375,633
<LOAN-LOSSES> (12,417)
<SECURITIES-GAINS> (5,306)
<EXPENSE-OTHER> 326,920
<INCOME-PRETAX> 173,674
<INCOME-PRE-EXTRAORDINARY> 112,818
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,818
<EPS-PRIMARY> 0.85
<EPS-DILUTED> 0.84
<YIELD-ACTUAL> 4.89
<LOANS-NON> 16,080
<LOANS-PAST> 5,538
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 29,800
<ALLOWANCE-OPEN> 151,367
<CHARGE-OFFS> 35,147
<RECOVERIES> 19,380
<ALLOWANCE-CLOSE> 129,039
<ALLOWANCE-DOMESTIC> 129,039
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 31,955
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<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
<EXCHANGE-RATE> 1 1 1
<CASH> 462,108 365,054 333,862
<INT-BEARING-DEPOSITS> 2,743 665 583
<FED-FUNDS-SOLD> 284,885 86,540 257,070
<TRADING-ASSETS> 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 2,117,908 2,104,862 2,222,269
<INVESTMENTS-CARRYING> 0 0 0
<INVESTMENTS-MARKET> 0 0 0
<LOANS> 5,840,045 5,326,989 5,052,882
<ALLOWANCE> (134,497) (148,453) (148,770)
<TOTAL-ASSETS> 9,046,845 8,085,312 8,056,688
<DEPOSITS> 7,592,671 6,837,239 6,811,986
<SHORT-TERM> 363,496 296,669 291,798
<LIABILITIES-OTHER> 147,878 122,326 128,666
<LONG-TERM> 24,269 33,324 36,759
0 0 0
100,000 0 0
<COMMON> 253,395 252,956 252,889
<OTHER-SE> 565,136 542,798 534,590
<TOTAL-LIABILITIES-AND-EQUITY> 9,046,845 8,085,312 8,056,688
<INTEREST-LOAN> 352,068 228,884 111,124
<INTEREST-INVEST> 105,553 71,697 37,126
<INTEREST-OTHER> 7,976 5,268 2,805
<INTEREST-TOTAL> 465,597 305,849 151,055
<INTEREST-DEPOSIT> 180,934 118,495 58,933
<INTEREST-EXPENSE> 193,211 126,412 62,781
<INTEREST-INCOME-NET> 272,386 179,437 88,274
<LOAN-LOSSES> (12,398) 1,097 475
<SECURITIES-GAINS> (5,471) 113 67
<EXPENSE-OTHER> 240,683 149,786 74,100
<INCOME-PRETAX> 124,282 85,280 41,551
<INCOME-PRE-EXTRAORDINARY> 81,027 55,717 26,968
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 81,027 55,717 26,968
<EPS-PRIMARY> 0.62 0.43 0.21
<EPS-DILUTED> 0.62 0.43 0.21
<YIELD-ACTUAL> 4.88 4.88 4.83
<LOANS-NON> 15,120 18,297 18,910
<LOANS-PAST> 3,843 4,264 6,102
<LOANS-TROUBLED> 0 0 0
<LOANS-PROBLEM> 30,200 21,100 21,800
<ALLOWANCE-OPEN> 151,367 151,367 151,367
<CHARGE-OFFS> 24,121 14,160 7,122
<RECOVERIES> 14,090 9,905 4,050
<ALLOWANCE-CLOSE> 134,497 148,453 148,770
<ALLOWANCE-DOMESTIC> 134,497 148,453 148,770
<ALLOWANCE-FOREIGN> 0 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 413,903
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 113,485
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,401,260
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 4,819,555
<ALLOWANCE> (151,367)
<TOTAL-ASSETS> 7,933,816
<DEPOSITS> 6,732,999
<SHORT-TERM> 265,126
<LIABILITIES-OTHER> 119,757
<LONG-TERM> 36,069
0
0
<COMMON> 252,875
<OTHER-SE> 526,990
<TOTAL-LIABILITIES-AND-EQUITY> 7,933,816
<INTEREST-LOAN> 398,117
<INTEREST-INVEST> 169,336
<INTEREST-OTHER> 7,849
<INTEREST-TOTAL> 575,302
<INTEREST-DEPOSIT> 231,349
<INTEREST-EXPENSE> 246,986
<INTEREST-INCOME-NET> 328,316
<LOAN-LOSSES> 1,218
<SECURITIES-GAINS> 227
<EXPENSE-OTHER> 289,482
<INCOME-PRETAX> 143,546
<INCOME-PRE-EXTRAORDINARY> 131,412
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 131,412
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.00
<YIELD-ACTUAL> 4.69
<LOANS-NON> 17,717
<LOANS-PAST> 2,926
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 23,100
<ALLOWANCE-OPEN> 156,896
<CHARGE-OFFS> 25,416
<RECOVERIES> 18,669
<ALLOWANCE-CLOSE> 151,367
<ALLOWANCE-DOMESTIC> 151,367
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 45,869
</TABLE>
