<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999 Commission File Number 1-10294
---------------- -------
HIBERNIA CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 72-0724532
- ----------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
313 Carondelet Street, New Orleans, Louisiana 70130
---------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (504) 533-5332
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1999
---------------------------------- -----------------------------
Class A Common Stock, no par value 160,110,532 Shares
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Hibernia Corporation and Subsidiaries March 31 December 31 March 31
Unaudited ($ in thousands) 1999 1998 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks .................................. $ 508,588 $ 567,057 $ 512,150
Short-term investments ................................... 206,930 377,964 266,524
Securities available for sale ............................ 2,751,068 2,761,701 2,767,690
Mortgage loans held for sale ............................. 243,764 281,434 212,754
Loans, net of unearned income ............................ 10,148,816 9,907,194 8,676,303
Reserve for possible loan losses ..................... (150,008) (130,347) (123,574)
- ------------------------------------------------------------------------------------------------------------------------
Loans, net ....................................... 9,998,808 9,776,847 8,552,729
- ------------------------------------------------------------------------------------------------------------------------
Bank premises and equipment .............................. 193,489 194,723 194,986
Customers' acceptance liability .......................... 224 331 248
Other assets ............................................. 380,791 369,827 361,903
- ------------------------------------------------------------------------------------------------------------------------
Total assets ..................................... $ 14,283,662 $ 14,329,884 $ 12,868,984
========================================================================================================================
Liabilities
Deposits:
Noninterest-bearing .................................. $ 1,942,742 $ 2,065,770 $ 1,871,575
Interest-bearing ..................................... 8,886,111 8,826,803 8,403,161
- ------------------------------------------------------------------------------------------------------------------------
Total deposits ................................... 10,828,853 10,892,573 10,274,736
- ------------------------------------------------------------------------------------------------------------------------
Short-term borrowings .................................... 1,137,973 1,134,136 469,341
Liability on acceptances ................................. 224 331 248
Other liabilities ........................................ 161,500 151,905 161,798
Debt ..................................................... 805,480 806,337 707,344
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities ................................ 12,934,030 12,985,282 11,613,467
- ------------------------------------------------------------------------------------------------------------------------
Shareholders' equity Preferred Stock, no par value:
Authorized - 100,000,000 shares; 2,000,000 Series A
issued and outstanding at March 31, 1999, December 31,
1998 and March 31, 1998 .............................. 100,000 100,000 100,000
Class A Common Stock, no par value:
Authorized - 300,000,000 shares; issued and outstanding-
160,097,236, 159,850,398 and 159,122,249 at March 31, 1999,
December 31, 1998 and March 31, 1998, respectively...... 307,387 306,913 305,515
Surplus .................................................. 423,268 416,269 411,553
Retained earnings ........................................ 542,837 531,233 440,668
Accumulated other comprehensive income ................... 13,891 27,938 15,168
Unearned compensation .................................... (37,751) (37,751) (17,387)
- ------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ....................... 1,349,632 1,344,602 1,255,517
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity ....... $ 14,283,662 $ 14,329,884 $ 12,868,984
========================================================================================================================
- -------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Income Statements
Hibernia Corporation and Subsidiaries
Three Months Ended March 31
Unaudited ($ in thousands, except per-share data) 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income
Interest and fees on loans ............................. $ 201,940 $ 183,751
Interest on securities available for sale .............. 41,767 45,424
Interest on short-term investments ..................... 3,669 4,263
Interest and fees on mortgage loans held for sale ...... 3,712 2,844
- ---------------------------------------------------------------------------------------------------------
Total interest income .............................. 251,088 236,282
- ---------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits ................................... 86,031 87,483
Interest on short-term borrowings ...................... 12,845 8,889
Interest on debt ....................................... 11,135 8,602
- ---------------------------------------------------------------------------------------------------------
Total interest expense ............................. 110,011 104,974
- ---------------------------------------------------------------------------------------------------------
Net interest income ........................................ 141,077 131,308
Provision for possible loan losses ..................... 30,000 3,568
- ---------------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses 111,077 127,740
- ---------------------------------------------------------------------------------------------------------
Noninterest income
Service charges on deposits ............................ 22,602 20,089
Trust fees ............................................. 4,536 3,889
Retail investment service fees ......................... 5,448 3,575
Mortgage loan origination and servicing fees ........... 4,502 3,304
Other service, collection and exchange charges ......... 8,026 6,650
Other operating income ................................. 6,062 3,438
Securities gains (losses), net ......................... 41 887
- ---------------------------------------------------------------------------------------------------------
Total noninterest income ........................... 51,217 41,832
- ---------------------------------------------------------------------------------------------------------
Noninterest expense
Salaries and employee benefits ......................... 60,584 51,658
Occupancy expense, net ................................. 7,869 8,211
Equipment expense ...................................... 9,031 7,599
Data processing expense ................................ 8,066 7,032
Advertising and promotional expense .................... 3,630 5,468
Foreclosed property expense, net ....................... (371) (7)
Amortization of intangibles ............................ 4,525 4,043
Other operating expense ................................ 23,003 22,202
- ---------------------------------------------------------------------------------------------------------
Total noninterest expense .......................... 116,337 106,206
- ---------------------------------------------------------------------------------------------------------
Income before income taxes ................................. 45,957 63,366
Income tax expense ......................................... 16,386 22,198
- ---------------------------------------------------------------------------------------------------------
Net income ................................................. $ 29,571 $ 41,168
=========================================================================================================
Net income applicable to common shareholders ............... $ 27,846 $ 39,443
=========================================================================================================
Net income per common share ................................ $ 0.18 $ 0.25
=========================================================================================================
Net income per common share - assuming dilution ............ $ 0.18 $ 0.25
=========================================================================================================
- -------------
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)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other
Preferred Common Retained Comprehensive Comprehensive
Stock Stock Surplus Earnings Income Other Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1998 .......... $100,000 $306,913 $ 416,269 $ 531,233 $ 27,938 $(37,751)
Net income ............................. - - - 29,571 - - $ 29,571
Unrealized gains (losses) on securities,
net of reclassification adjustments . - - - - (14,047) - (14,047)
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income ................... $ 15,524
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock:
Stock Option Plan ................... - 468 1,632 - - -
Restricted stock awards ............. - 6 43 - - -
By pooled companies prior to merger . - - 5,387 - - -
Cash dividends declared:
Common ($.105 per share) ............ - - - (16,115) - -
Preferred ($.8625 per share) ........ - - - (1,725) - -
By pooled companies prior to merger . - - - (127) - -
Other .................................. - - (63) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1999 ............. $100,000 $307,387 $ 423,268 $ 542,837 $ 13,891 $(37,751)
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other
Preferred Common Retained Comprehensive Comprehensive
Stock Stock Surplus Earnings Income Other Income
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1997 .......... $100,000 $304,376 $ 403,250 $ 414,705 $ 15,422 $(17,387)
Net income ............................. - - - 41,168 - - $ 41,168
Unrealized gains (losses) on securitie
net of reclassification adjustments . - - - - (254) - (254)
Comprehensive income ................... $ 40,914
Issuance of common stock:
Stock Option Plan ................... - 254 780 - - -
Restricted stock awards ............. - 847 7,244 - - -
Cash dividends declared:
Common ($.09 per share) ............. - - - (13,147) - -
Preferred ($.8625 per share) ........ - - - (1,725) - -
By pooled companies prior to merger . - - - (333) -
Other .................................. - 38 279 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 1998 ............. $100,000 $305,515 $ 411,553 $ 440,668 $ 15,168 $(17,387)
====================================================================================================================================
- ----------------
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Hibernia Corporation and Subsidiaries
Three Months Ended March 31
Unaudited ($ in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities
Net income ............................................................ $ 29,571 $ 41,168
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses ............................. 30,000 3,568
Amortization of intangibles and deferred charges ............... 4,475 3,926
Depreciation and amortization .................................. 8,146 6,823
Non-cash compensation expense .................................. 4,385 -
Premium amortization, net of discount accretion ................ 1,832 124
Realized securities gains, net ................................. (41) (887)
Gain on sale of assets ......................................... (747) (381)
Provision for losses on foreclosed and other assets ............ 166 267
Decrease (increase) in mortgage loans held for sale ............ 37,670 (142,587)
Decrease (increase) in deferred income tax asset ............... (1,597) 319
Increase in interest receivable and other assets ............... (2,559) (7,695)
Increase in interest payable and other liabilities ............. 9,581 17,043
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities ................. 120,882 (78,312)
- ------------------------------------------------------------------------------------------------------------------------
Investing activities
Purchases of securities available for sale ............................ (153,648) (949,573)
Proceeds from maturities of securities available for sale ............. 119,805 506,133
Proceeds from sales of securities available for sale .................. 21,080 413,634
Net increase in loans ................................................. (224,666) (274,194)
Proceeds from sales of loans .......................................... 1,186 -
Purchases of loans .................................................... (28,733) (22,894)
Purchases of premises, equipment and other assets ..................... (12,298) (10,606)
Proceeds from sales of foreclosed assets and excess bank-owned property 2,371 834
Proceeds from sales of premises, equipment and other assets ........... 123 733
- ------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities ............................ (274,780) (335,933)
- ------------------------------------------------------------------------------------------------------------------------
Financing activities
Net increase (decrease) in deposits ................................... (63,720) 171,728
Net increase (decrease) in short-term borrowings ...................... 3,837 (250,620)
Proceeds from issuance of debt ........................................ - 200,000
Payments on debt ...................................................... (857) (217)
Proceeds from issuance of common stock ................................ 3,102 1,034
Dividends paid ........................................................ (17,967) (15,205)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities ................. (75,605) 106,720
- ------------------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents ................................... (229,503) (307,525)
Cash and cash equivalents at beginning of period ........................ 945,021 1,086,199
- ------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period ....................... $ 715,518 $ 778,674
========================================================================================================================
- ---------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
Hibernia Corporation and Subsidiaries
Unaudited
Note 1 BASIS OF PRESENTATION The accompanying unaudited consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the audited consolidated
financial statements and notes included in Hibernia Corporation's Annual Report
on Form 10-K for the year ended December 31, 1998.
Note 2 MERGER AGREEMENTS On March 8, 1999 Hibernia Corporation (the
Company) consummated a merger with MarTex Bancshares, Inc. (MarTex) accounted
for as a pooling of interests, wherein the Company issued 3,450,000 shares of
Class A Common Stock valued at $55,825,000, based on a per-share market value of
$16.18125.
Hibernia has signed an agreement with Chase Bank of Texas, N.A. (Chase)
to purchase the assets and assume the liabilities of its Beaumont, Texas
operations for $87 million. At March 31, 1999 the Beaumont operations of Chase
had $168 million in loans and $459 million in deposits. This purchase
transaction is expected to be consummated in the second quarter of 1999.
The Company was a party to a definitive merger agreement with First
Guaranty Bank (First Guaranty) which the Company and First Guaranty have agreed
in principle to terminate. The terms of this termination include settling and
dismissing litigation brought by the Company against First Guaranty related to
the merger.
Note 3 EMPLOYEE BENEFIT PLANS The Company's stock option plans provide
incentive and non-qualified options to various key employees and non-employee
directors. Options granted to directors upon inception of service as a director
vest in six months and are granted at the fair market value of the stock at the
date of grant. Until October 1997 those options were granted under the 1987
Stock Option Plan; since October 1997 those options have been granted under the
1993 Directors' Stock Option Plan. 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, and were granted
at the fair market value of the stock at 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. All
options vest immediately upon a change in control of the Company.
The following tables summarize the option activity in the plans during
the first quarter of 1999. During 1997, the 1987 Stock Option Plan was
terminated; therefore, at March 31, 1999 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
Incentive Non-Qualified Total Exercise Price
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1987 Stock Option Plan:
Outstanding, December 31, 1998 .... 50,163 1,179,337 1,229,500 $ 7.00
Canceled .......................... - (86,876) (86,876) 18.80
Exercised ......................... - (7,071) (7,071) 7.54
- --------------------------------------------------------------------------------------------------------
Outstanding, March 31, 1999 ....... 50,163 1,085,390 1,135,553 $ 6.09
- --------------------------------------------------------------------------------------------------------
Exercisable, March 31, 1999 ....... 50,163 1,085,390 1,135,553 $ 6.09
========================================================================================================
Long-Term Incentive Plan:
Outstanding, December 31, 1998 .... 12,598 7,066,149 7,078,747 $ 11.97
Granted ........................... - 2,317,275 2,317,275 16.04
Canceled .......................... - (86,275) (86,275) 15.85
Exercised ......................... - (199,499) (199,499) 8.38
- --------------------------------------------------------------------------------------------------------
Outstanding, March 31, 1999 ....... 12,598 9,097,650 9,110,248 $ 13.04
- --------------------------------------------------------------------------------------------------------
Exercisable, March 31, 1999 ....... 12,598 4,044,302 4,056,900 $ 9.18
- --------------------------------------------------------------------------------------------------------
Available for grant, March 31, 1999 1,116,410
========================================================================================================
1993 Directors' Stock Option Plan:
Outstanding, December 31, 1998 .... - 335,000 335,000 $ 12.21
Granted ........................... - 5,000 5,000 17.00
Exercised ......................... - (40,000) (40,000) 9.79
- --------------------------------------------------------------------------------------------------------
Outstanding, March 31, 1999 ....... - 300,000 300,000 $ 12.61
- --------------------------------------------------------------------------------------------------------
Exercisable, March 31, 1999 ....... - 141,250 141,250 $ 9.22
- --------------------------------------------------------------------------------------------------------
Available for grant, March 31, 1999 572,500
========================================================================================================
</TABLE>
In addition to the above option activity in the plans, 47,242 shares of
restricted stock were awarded under the Long-Term Incentive Plan during the
first quarter of 1999.
Note 4 NET INCOME PER COMMON SHARE 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) Three Months Ended March 31
- -----------------------------------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Numerator:
Net income .................................... $ 29,571 $ 41,168
Preferred stock dividends ..................... 1,725 1,725
- -----------------------------------------------------------------------------------------------------
Numerator for net income per common share ..... 27,846 39,443
Effect of dilutive securities ................. - -
- -----------------------------------------------------------------------------------------------------
Numerator for net income per common
share - assuming dilution ................. $ 27,846 $ 39,443
=====================================================================================================
Denominator:
Denominator for net income per common
share (weighted average shares outstanding) 156,951,925 157,092,534
Effect of dilutive securities:
Stock options ............................. 1,920,105 2,644,681
Purchase warrants ......................... - 183,177
Restricted stock awards ................... 80,000 5,250
- -----------------------------------------------------------------------------------------------------
Denominator for net income per common
share - assuming dilution ................. 158,952,030 159,925,642
- -----------------------------------------------------------------------------------------------------
Net income per common share ....................... $ 0.18 $ 0.25
- -----------------------------------------------------------------------------------------------------
Net income per common share - assuming dilution ... $ 0.18 $ 0.25
=====================================================================================================
</TABLE>
The weighted average shares outstanding exclude average common shares
held by the Company's Employee Stock Ownership Plan which have not been
committed to be released. These shares totaled 3,001,756 and 1,813,456 for the
three months ended March 31, 1999 and 1998, respectively. The common shares
issued in all mergers accounted for as poolings of interests consummated in 1999
and 1998 are considered to be outstanding as of January 1, 1998, 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 periods presented are antidilutive
and, therefore, are not included in the computation of net income per common
share - assuming dilution. During the three months ended March 31, 1999 and 1998
there were 4,105,509 antidilutive options outstanding with exercise prices
ranging from $16.09 to $21.72 per option, and 22,500 antidilutive options
outstanding with an exercise price of $20.25 per option, respectively.
Note 5 SEGMENT INFORMATION The Company's segment information is
presented by line of business. Each line of business is a strategic unit that
serves a particular group of customers, that have certain common
characteristics, through various products and services. The basis of
segmentation and the accounting policies used by each segment are consistent
with that described in the December 31, 1998 annual report. There are no
significant intersegment revenues.
The following table presents selected financial information for each
segment.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Small Investments
Commercial Business Consumer and Public Segment
($ in thousands) Banking Banking Banking Funds Other Total
- ----------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 1999
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average loans ................... $3,888,100 $1,962,500 $4,104,300 $ 2,400 $ 41,000 $ 9,998,300
Average assets .................. $4,066,000 $2,061,700 $6,715,200 $4,127,800 $ 521,500 $17,492,200
Average deposits ................ $ 791,500 $1,365,800 $6,346,400 $1,912,600 $ 54,500 $10,470,800
Net interest income ............. $ 31,889 $ 32,157 $ 62,181 $ 20,701 $ (4,745) $ 142,183
Noninterest income .............. $ 8,329 $ 4,736 $ 39,015 $ 228 $ (422) $ 51,886
Net income ...................... $ 8,861 $ 3,838 $ 5,658 $ 12,178 $ (734) $ 29,801
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 1998
Average loans ................... $3,160,300 $1,392,100 $3,920,400 $ - $ 54,500 $ 8,527,300
Average assets .................. $3,277,900 $1,467,100 $7,018,700 $3,028,900 $ 524,900 $15,317,500
Average deposits ................ $ 668,600 $1,027,000 $6,514,000 $1,539,400 $ 52,300 $ 9,801,300
Net interest income ............. $ 27,374 $ 24,449 $ 66,122 $ 17,372 $ (2,959) $ 132,358
Noninterest income .............. $ 3,379 $ 4,003 $ 33,712 $ 1,073 $ 406 $ 42,573
Net income ...................... $ 11,084 $ 5,338 $ 16,073 $ 10,728 $ (1,962) $ 41,261
==================================================================================================================================
</TABLE>
The following is a reconciliation of segment totals to consolidated totals.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Average Average Average Net Interest Noninterest
($ in thousands) Loans Assets Deposits Income Income Net Income
- ------------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Segment total .................... $9,998,300 $ 17,492,200 $10,470,800 $ 142,183 $ 51,886 $ 29,801
Excess funds invested .......... - (3,513,400) - - - -
Reclassification of cash items
in process of collection ..... - 297,100 297,100 - - -
Taxable-equivalent adjustment on
tax exempt loans ............. - - - (1,106) - (719)
Mortgage servicing rights ...... - (16,700) - - (669) 18
Income tax expense ............. - - - - - 471
- ------------------------------------------------------------------------------------------------------------------------------------
Consolidated total ............... $9,998,300 $ 14,259,200 $10,767,900 $ 141,077 $ 51,217 $ 29,571
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Segment total .................... $8,527,300 $ 15,317,500 $ 9,801,300 $ 132,358 $ 42,573 $ 41,261
Excess funds invested .......... - (2,746,700) - - - -
Reclassification of cash items
in process of collection ..... - 264,400 264,400 - - -
Taxable-equivalent adjustment on
tax exempt loans ............. - - - (1,050) - (682)
Mortgage servicing rights ...... - (15,200) - - (741) (70)
Income tax expense ............. - - - - - 659
- ------------------------------------------------------------------------------------------------------------------------------------
Consolidated total ............... $8,527,300 $ 12,820,000 $10,065,700 $ 131,308 $ 41,832 $ 41,168
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA (1)
Hibernia Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
- ------------------------------------------------------------------------------------------------------------------------------
March 31 December 31 March 31
($ in thousands, except per-share data) 1999 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income ........................................... $ 251,088 $ 251,436 $ 236,282
Interest expense .......................................... 110,011 110,872 104,974
- ------------------------------------------------------------------------------------------------------------------------------
Net interest income ....................................... 141,077 140,564 131,308
Provision for possible loan losses ........................ 30,000 9,988 3,568
- ------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses .............................. 111,077 130,576 127,740
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Noninterest income ..................................... 51,176 47,804 40,945
Securities gains (losses), net ......................... 41 2,201 887
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest income ........................................ 51,217 50,005 41,832
Noninterest expense ....................................... 116,337 106,496 106,206
- ------------------------------------------------------------------------------------------------------------------------------
Income before taxes ....................................... 45,957 74,085 63,366
Income tax expense ........................................ 16,386 26,098 22,198
- ------------------------------------------------------------------------------------------------------------------------------
Net income ................................................ $ 29,571 $ 47,987 $ 41,168
- ------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders .............. $ 27,846 $ 46,262 $ 39,443
==============================================================================================================================
Per common share information:
Net income ............................................. $ 0.18 $ 0.29 $ 0.25
Net income - assuming dilution ......................... $ 0.18 $ 0.29 $ 0.25
Cash dividends declared ................................ $ 0.105 $ 0.105 $ 0.09
Average shares outstanding (000s) ......................... 156,952 156,887 157,093
Average shares outstanding - assuming dilution (000s) ..... 158,952 158,833 159,926
Dividend payout ratio ..................................... 58.33% 36.21% 36.00%
==============================================================================================================================
Selected quarter-end balances (in millions)
Loans ..................................................... $ 10,148.8 $ 9,907.2 $ 8,676.3
Deposits .................................................. 10,828.9 10,892.6 10,274.8
Debt ...................................................... 805.5 806.3 707.3
Equity .................................................... 1,349.6 1,344.6 1,255.5
Total assets .............................................. 14,283.7 14,329.9 12,869.0
==============================================================================================================================
Selected average balances (in millions)
Loans ..................................................... $ 9,998.3 $ 9,714.7 $ 8,527.3
Deposits .................................................. 10,767.9 10,388.2 10,065.7
Debt ...................................................... 806.0 800.0 630.8
Equity .................................................... 1,356.5 1,333.7 1,241.1
Total assets .............................................. 14,259.2 13,816.6 12,820.0
==============================================================================================================================
Selected ratios
Net interest margin (taxable-equivalent) .................. 4.35% 4.42% 4.58%
Return on assets .......................................... 0.83% 1.39% 1.28%
Return on common equity ................................... 8.86% 15.00% 13.83%
Return on total equity .................................... 8.72% 14.39% 13.27%
Efficiency ratio .......................................... 59.64% 55.69% 60.67%
Average equity/average assets ............................. 9.51% 9.65% 9.68%
Tier 1 risk-based capital ratio ........................... 10.82% 10.78% 11.29%
Total risk-based capital ratio ............................ 12.07% 11.98% 12.54%
Leverage ratio ............................................ 8.43% 8.55% 8.54%
==============================================================================================================================
Tax-effected net income and ratios excluding goodwill
and core deposit intangible amortization and balances (2)
Net income applicable to common shareholders .............. $ 30,489 $ 48,974 $ 42,266
Net income per common share ............................... $ 0.19 $ 0.31 $ 0.27
Net income per common share - assuming dilution ........... $ 0.19 $ 0.31 $ 0.26
Return on assets .......................................... 0.91% 1.48% 1.39%
Return on common equity ................................... 10.98% 18.05% 17.17%
Efficiency ratio .......................................... 58.14% 54.12% 58.84%
==============================================================================================================================
- ---------------
(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) 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 subsidiary, Hibernia National Bank "Bank." This discussion should be
read in conjunction with the accompanying tables and consolidated financial
statements.
FIRST-QUARTER 1999 HIGHLIGHTS
o Net income for the first quarter of 1999 totaled $29.6 million ($.18
per common share), down 28% compared to $41.2 million ($.25 per common
share) for the first quarter of 1998. Tangible income per common share
was $.19 in the first quarter of 1999 compared to $.27 in the first
quarter of 1998.
o Net income for the first quarter of 1999, excluding merger-related
expenses, would have been $35.2 million ($.21 per common share), down
16% compared to $41.9 million ($.26 per common share) for the first
quarter of 1998. Merger-related expenses totaled $5.6 million after
income tax and $0.7 million after income tax for the first quarter of
1999 and the first quarter of 1998, respectively.
o Pre-tax, pre-provision earnings were $76.0 million, a 13% increase from
the first quarter 1998 level of $66.9 million. The first quarter of
1999 included a provision for possible loan losses totaling $30.0
million compared to $3.6 million for the first quarter of 1998.
o Total assets grew $1.4 billion (11%) to $14.3 billion at March 31, 1999
compared to March 31, 1998. Shareholder's equity increased $94.1
million (7%) from March 31, 1998 to $1.4 billion at March 31, 1999.
Book value per share increased $.60 (8%) to $7.95 at March 31, 1999
compared to March 31, 1998.
o Total loans grew $1.5 billion (17%) from March 31, 1998 to $10.1
billion at March 31, 1999. Commercial loans grew $698.7 million (21%)
to $4.0 billion, small business loans increased $246.7 million (13%) to
$2.1 billion and consumer loans increased $527.1 million (15%) to $4.0
billion.
o Deposits increased $554.1 million (5%) to $10.8 billion at March 31,
1999 compared to March 31, 1998.
o The tangible efficiency ratio, excluding merger-related expenses, was
53.69% for the first quarter of 1999, a 453 basis point improvement
from 58.22% for the same period of 1998.
o Hibernia and its data processing vendors remain on schedule to ensure
achievement of Year 2000 compliance. As of March 31, 1999 Hibernia had
remediated and unit tested all 37 identified mission critical systems.
o In April 1999, Hibernia's Board of Directors declared a quarterly cash
dividend of 10.5 cents per common share, a 17% increase from 9 cents
per common share declared in April 1998.
MERGER ACTIVITY
On March 8, 1999, the Company consummated a merger with MarTex Bancshares, Inc.
parent of the $312 million asset First Service Bank. This merger was accounted
for as a pooling of interests. In 1998 the Company completed four mergers, three
in Louisiana and one in East Texas which were accounted for as poolings of
interests. All prior-year information has been restated to reflect the effect of
the mergers.
Measures of financial performance subsequent to purchase transactions are
more relevant when comparing "tangible" results (i.e., before amortization of
purchase accounting intangibles), because they are more indicative of cash
flows, and thus the Company's ability to support growth and pay dividends. The
tangible measures of financial performance are presented in the Consolidated
Summary of Income and Selected Financial Data on page 11.
The institutions with which the Company merged are collectively referred to
as the "merged companies." The merged companies in transactions accounted for as
poolings of interests are referred to as the "pooled companies," and the merged
companies in transactions accounted for as purchase transactions are referred to
as the "purchased companies."
During the fourth quarter of 1998, Hibernia announced the signing of an
agreement to purchase the assets and assume the liabilities of the Beaumont
operations of Chase Bank of Texas, N.A. (Chase) for $87 million. At March 31,
1999 the Beaumont operations of Chase had $168 million in loans and $459 million
in deposits.
After this transaction Hibernia would have approximately $14.7 billion in
assets and 252 banking locations in 33 Louisiana parishes and 13 Texas counties.
During the third quarter of 1998, Hibernia announced the signing of a
definitive agreement to merge with the $277 million asset First Guaranty Bank
(First Guaranty). On September 22, 1998, the Company filed a petition to require
First Guaranty to comply with the terms of the agreement, asserting that First
Guaranty has failed to comply with its obligations under the contract. Hibernia
and First Guaranty have agreed in principle to terminate the merger and settle
and dismiss the lawsuit.
FINANCIAL CONDITION:
EARNING ASSETS
Earning assets averaged $13.3 billion in the first quarter of 1999, a $1.5
billion (13%) increase from the first-quarter 1998 average of $11.8 billion. The
increase in average earning assets was due to strong and diversified loan
growth, as a result of offering quality service and innovative lending products
in existing markets as well as in the markets of merger partners. Hibernia has
funded the loan growth through increases in deposits and borrowed funds and the
reinvestment of proceeds from maturing securities.
Loans. Average loans for the first quarter of 1999 of $10.0 billion were up
$283.6 million (3%) from the fourth quarter of 1998 and up $1.5 billion (17%)
compared to the first quarter of 1998. Loan growth appears to have slowed in
comparison to levels experienced in recent periods as a result of economic and
market trends.
Table 1 presents Hibernia's commercial and small business loans classified
by repayment source and consumer loans classified by type at March 31, 1999,
December 31, 1998 and March 31, 1998. Total loans increased $241.6 million (2%)
during the first quarter of 1999 compared to December 31, 1998, as commercial
loans increased $135.4 million (3%), small business loans increased $24.8
million (1%) and consumer loans increased $81.4 million (2%). Compared to March
31, 1998, loans increased $1.5 billion (17%). Commercial loans were up $698.7
million (21%), small business loans grew $246.7 million (13%) and consumer loans
increased $527.1 million (15%). The growth in the commercial portfolio primarily
resulted from increases in the commercial and industrial and services industry
categories. The small business portfolio growth was primarily focused in the
services industry. In consumer lending, growth was spread among residential
mortgage, indirect and revolving credit loans.
Although the economy appears to be strong, the energy industry recently
experienced a decline as a result of a decrease in oil prices worldwide. The
Company's experienced energy/maritime management team reviews the energy
portfolio for potential adverse developments and proactively manages Hibernia's
exposure to risk. The Company's energy portfolio represents 4.6% of total loans
as of March 31, 1999.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
TABLE 1 - COMPOSITION OF LOAN PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
March 31, 1999 December 31, 1998 March 31, 1998
- -------------------------------------------------------------------------------------------------------------------------
($ in millions) Loans Percent Loans Percent Loans Percent
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial:
Commercial and industrial ..... $ 1,431.6 14.1% $ 1,371.2 13.8% $ 1,224.8 14.1%
Services industry ............. 1,064.2 10.5 1,055.6 10.7 722.2 8.3
Real estate ................... 508.0 5.0 457.4 4.6 487.0 5.6
Health care ................... 318.3 3.1 306.5 3.1 275.9 3.2
Transportation, communications
and utilities .............. 210.3 2.1 212.0 2.1 239.8 2.8
Energy ........................ 425.0 4.2 422.0 4.3 298.7 3.4
Other ......................... 57.8 0.6 55.1 0.6 68.1 0.8
- -------------------------------------------------------------------------------------------------------------------------
Total commercial ........... 4,015.2 39.6 3,879.8 39.2 3,316.5 38.2
- -------------------------------------------------------------------------------------------------------------------------
Small Business:
Commercial and industrial ..... 738.4 7.3 770.9 7.8 799.4 9.2
Services industry ............. 473.9 4.6 440.2 4.4 347.4 4.0
Real estate ................... 295.9 2.9 274.6 2.8 234.3 2.7
Health care ................... 115.2 1.1 107.6 1.1 83.7 1.0
Transportation, communications
and utilities .............. 80.7 0.8 82.2 0.8 58.1 0.7
Energy ........................ 37.3 0.4 46.3 0.5 42.4 0.5
Other ......................... 353.2 3.5 348.0 3.5 282.6 3.2
- -------------------------------------------------------------------------------------------------------------------------
Total small business ....... 2,094.6 20.6 2,069.8 20.9 1,847.9 21.3
- -------------------------------------------------------------------------------------------------------------------------
Consumer:
Residential mortgages:
First mortgages ............ 1,997.7 19.7 1,915.5 19.3 1,646.6 19.0
Junior liens ............... 199.2 2.0 190.1 1.9 133.8 1.6
Indirect ...................... 907.5 8.9 850.5 8.6 748.3 8.6
Revolving credit .............. 328.0 3.2 325.8 3.3 296.0 3.4
Other ......................... 606.6 6.0 675.7 6.8 687.2 7.9
- -------------------------------------------------------------------------------------------------------------------------
Total consumer ............. 4,039.0 39.8 3,957.6 39.9 3,511.9 40.5
- -------------------------------------------------------------------------------------------------------------------------
Total loans ...................... $ 10,148.8 100.0% $ 9,907.2 100.0% $ 8,676.3 100.0%
=========================================================================================================================
</TABLE>
Securities. Average securities for the first quarter of 1999 decreased $6.3
million compared to the first quarter of 1998. The decreases were the result of
the reinvestment of maturing securities into higher-yielding loans. Securities
primarily consist of mortgage-backed and U.S. government agency securities. Most
securities held by the Company qualify as securities that may be pledged and are
used to collateralize repurchase agreements and public fund deposits.
Short-Term Investments. Average short-term investments (primarily federal
funds sold and repurchase agreements) for the three months ended March 31, 1999,
totaled $300.6 million, down $1.5 million compared to an average of $302.1
million in the first quarter of 1998.
Mortgage Loans Held For Sale. Average mortgage loans held for sale for the
first quarter of 1999 increased $67.1 million (39%) compared to the first
quarter of 1998. Mortgage loans held for sale, previously included in total
loans, began to be reported as a separate item on the balance sheet as of
January 1, 1999. All prior period information has been reclassified to reflect
this change.
ASSET QUALITY
Nonperforming assets -- which include nonaccrual loans, restructured loans,
foreclosed assets and excess bank-owned property -- totaled $76.3 million at
March 31, 1999.
Nonperforming loans, which totaled $63.5 million at March 31, 1999,
increased $33.9 million (115%) from a year ago, and increased $22.5 million
(55%) from the prior quarter end. The increase in nonperforming loans was
primarily due to a large commercial loan to a customer that filed for bankruptcy
protection during March 1999. Hibernia is a participant in the syndicated,
unsecured credit to this subprime mortgage lender. The Company's exposure to
this customer totals $33.2 million, which includes a $24.3 million portion of an
$850 million syndicated loan and an additional $8.9 million loan to the
customer's employee stock ownership plan.
Hibernia is also a participant in a syndicated, secured credit to an
oil-and-gas company that recently filed for bankruptcy protection. Hibernia's
exposure to this customer, which maintains major Gulf of Mexico operations,
totals $29.4 million. As of March 31, 1999 this loan remains on accrual status.
In both bankruptcy instances, the Company and other members of the bank groups
are working together to protect their interests in bankruptcy court.
Foreclosed assets totaled $9.3 million at March 31, 1999, up $5.7 million
(161%) from a year earlier, and down $1.5 million (14%) from December 31, 1998.
Excess bank-owned property at March 31, 1999 was up $0.9 million (31%) from
March 31, 1998, and up $1.0 million (37%) from December 31, 1998. Table 2
presents a summary of nonperforming assets and selected ratios at the end of the
last five quarters.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
TABLE 2 - NONPERFORMING ASSETS
- -------------------------------------------------------------------------------------------------------------------
March 31 Dec. 31 Sept. 30 June 30 March 31
($ in thousands) 1999 1998 1998 1998 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans ........................ $ 63,454 $ 40,940 $ 32,620 $ 32,133 $ 29,516
Restructured loans ...................... - - - - -
- -------------------------------------------------------------------------------------------------------------------
Total nonperforming loans ........... 63,454 40,940 32,620 32,133 29,516
- -------------------------------------------------------------------------------------------------------------------
Foreclosed assets ....................... 9,268 10,762 6,776 3,450 3,553
Excess bank-owned property .............. 3,622 2,648 2,329 2,388 2,759
- -------------------------------------------------------------------------------------------------------------------
Total nonperforming assets .......... $ 76,344 $ 54,350 $ 41,725 $ 37,971 $ 35,828
- -------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ........ $150,008 $130,347 $129,009 $125,390 $123,574
Nonperforming loans as a percentage
of total loans ...................... 0.63% 0.41% 0.34% 0.35% 0.34%
Nonperforming assets as a percentage
of total loans plus foreclosed assets
and excess bank-owned property ...... 0.75% 0.55% 0.43% 0.42% 0.41%
Reserve for possible loan losses as a
percentage of nonperforming loans ... 236.40% 318.39% 395.49% 390.22% 418.67%
===================================================================================================================
</TABLE>
At March 31, 1999 the recorded investment in loans considered impaired
under Statement of Financial Accounting Standards (SFAS) No. 114 was $59.0
million. The related portion of the reserve for possible loan losses was $24.5
million. The comparable amounts at March 31, 1998 were $25.6 million and $4.2
million, respectively. These loans are included in nonaccrual loans in Table 2.
As illustrated in Table 3, loans totaling $42.4 million were added to
nonperforming loans during the first quarter of 1999. Payments and sales
resulted in an $11.8 million reduction in nonperforming loans and charge-offs
further reduced nonperforming loans in the first quarter of 1999 by $7.7
million. The changes in payments and sales and charge-offs are primarily the
result of a $13.6 million loan to a customer that experienced internal fraud and
was placed on nonaccrual status in the fourth quarter of 1998 and disposed of
completely through sale and charge-off during the first quarter of 1999. In the
event nonaccrual loans that have been charged-off are recovered in subsequent
periods, the recoveries would be reflected in the reserve for possible loan
losses in Table 5 and not as a component of nonperforming loan activity.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
TABLE 3 - SUMMARY OF NONPERFORMING LOAN ACTIVITY
- ------------------------------------------------------------------------
Three Months
Ended March 31
- ------------------------------------------------------------------------
($ in thousands) 1999 1998
- ------------------------------------------------------------------------
<S> <C> <C>
Nonperforming loans
at beginning of period . $ 40,940 $ 23,576
Additions .................. 42,428 9,821
Charge-offs, gross ......... (7,662) (781)
Transfer to OREO ........... (243) -
Returns to performing status (219) (1,026)
Payments and sales ......... (11,790) (2,074)
- ------------------------------------------------------------------------
Nonperforming loans
at end of period ....... $ 63,454 $ 29,516
========================================================================
</TABLE>
In addition to the nonperforming loans discussed above, other commercial
loans that are subject to potential future classification as nonperforming
totaled $96.5 million at March 31, 1999.
Table 4 shows loan delinquencies for each of the last five quarters. The
amount of total delinquencies increased $3.6 million (8%) from March 31, 1998
and decreased $10.7 million (18%) from December 31, 1998. Delinquencies as a
percentage of total loans at March 31, 1999 were .48%, down from .52% a year ago
and down from .60% at December 31, 1998. Accruing loans past due 90 days or more
were $7.1 million at March 31, 1999, virtually unchanged from $6.9 million at
March 31, 1998 and $7.0 million at December 31, 1998.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
TABLE 4 - LOAN DELINQUENCIES (1)
- ----------------------------------------------------------------------------------------------------------------------------
March 31 Dec. 31 Sept. 30 June 30 March 31
($ in millions) 1999 1998 1998 1998 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Days past due:
30 to 89 days ........................... $ 41.8 $ 52.6 $ 54.3 $ 43.8 $ 38.4
90 days or more ......................... 7.1 7.0 6.1 7.2 6.9
- ----------------------------------------------------------------------------------------------------------------------------
Total delinquencies ................. $ 48.9 $ 59.6 $ 60.4 $ 51.0 $ 45.3
- ----------------------------------------------------------------------------------------------------------------------------
Total delinquencies as a percentage of loans:
Commercial .............................. 0.20% 0.27% 0.08% 0.12% 0.07%
Small business .......................... 0.68 0.50 0.72 0.73 0.71
Consumer ................................ 0.66 0.98 1.11 0.90 0.85
Total loans ............................. 0.48 0.60 0.63 0.56 0.52
============================================================================================================================
</TABLE>
Commercial loan delinquencies were .20% of total commercial loans at March
31, 1999 compared to .07% at March 31, 1998 and .27% at December 31, 1998. Small
business loan delinquencies decreased to .68% at March 31, 1999, from .71% at
March 31, 1998 and increased from .50% at December 31, 1998. Consumer loan
delinquencies decreased to .66% from .85% at March 31, 1998 and .98% at December
31, 1998. The improvement in consumer delinquencies from 1998 is primarily due
to adjustments in the underwriting and acceptance criteria and improvements in
the collection process.
RESERVE AND PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses is a charge to earnings to maintain the
reserve for possible loan losses at a level consistent with management's
assessment of the loan portfolio in light of current economic conditions and
market trends. The Company recorded a $30.0 million provision for possible loan
losses in the first quarter of 1999 as compared to $3.6 million in the first
quarter of 1998. The increase was primarily due to the addition to nonperforming
status of a large commercial loan to a customer that filed for bankruptcy
protection during March 1999, as discussed in the Asset Quality section. As a
result of this credit and other identified credits which have shown signs of
weakness the Company recorded a provision for possible loan losses for the first
quarter of 1999 $18.0 million higher than planned. The provision for loan losses
for the first quarter of 1999 exceeded net charge-offs by $19.7 million. Table 5
presents an analysis of the activity in the reserve for possible loan losses for
the first quarter of 1999 and the first quarter of 1998.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TABLE 5 - RESERVE FOR POSSIBLE LOAN LOSSES ACTIVITY
- --------------------------------------------------------------------------------
Three Months
Ended March 31
- --------------------------------------------------------------------------------
($ in thousands) 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of period ... $ 130,347 $ 126,557
Loans charged off ................ (16,333) (10,619)
Recoveries ....................... 5,994 4,068
- --------------------------------------------------------------------------------
Net loans charged off ............ (10,339) (6,551)
Provision for possible loan losses 30,000 3,568
- --------------------------------------------------------------------------------
Balance at end of period ......... $ 150,008 $ 123,574
- --------------------------------------------------------------------------------
Reserve for possible loan losses
as a percentage of loans ..... 1.48% 1.42%
Annualized net charge-offs as a
percentage of average loans .. 0.41% 0.31%
================================================================================
</TABLE>
Net charge-offs totaled $10.3 million in the first quarter of 1999,
compared to $6.6 million in the first quarter of 1998. As a percentage of
average loans, annualized net charge-offs were 0.41% in the first quarter of
1999 compared to 0.31% in the first quarter of 1998. The increase was due to
higher commercial charge-offs which primarily resulted from a customer that
experienced internal fraud, as discussed in the Asset Quality section.
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.
The Company continuously evaluates its 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 charge-offs
considering factors such as risk rating, industry concentration and loan type,
with the most recent charge-off experience weighted more heavily. The
unallocated reserve generally serves to compensate for the uncertainty in
estimating loan losses, including the possibility of improper risk ratings and
specific reserve allocations. The reserve also considers trends in delinquencies
and nonaccrual loans as well as the evolving portfolio mix in terms of
collateral, relative loan size and the degree of seasoning in the various loan
products.
The methodology used to perform the periodic review of reserve adequacy,
which is performed at least quarterly, is designed to be dynamic and responsive
to changes in actual credit losses. These changes are reflected in both the
allocated and the unallocated reserves. The historical loss ratios, which are
one of the key factors in this analysis, are updated quarterly and are weighted
more heavily for recent charge-off experience.
The reserve for possible loan losses totaled $150.0 million, or 1.48% of
total loans at March 31, 1999, compared to $123.6 million, or 1.42% a year
earlier. The reserve for possible loan losses as a percentage of nonperforming
loans was 236% at March 31, 1999, compared to 419% at March 31, 1998 and 318% at
December 31, 1998. The present level of reserve for possible loan losses is
considered to be adequate to absorb future potential loan losses inherent in the
existing portfolio considering the level and mix of the loan portfolio, current
economic conditions and market trends.
FUNDING SOURCES:
DEPOSITS
Average deposits totaled $10.8 billion in the first quarter of 1999, a $702.2
million (7%) increase from the first quarter of 1998. This growth resulted from
Hibernia's emphasis on attracting new deposits and expanding current banking
relationships through outstanding service and the introduction of new products
such as Tower GoldSM Services, which offers liquidity, competitive interest
rates and the security of a bank deposit. Table 6 presents the composition of
average deposits for the first quarter of 1999 and the fourth and first quarters
of 1998.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TABLE 6 - DEPOSIT COMPOSITION
- --------------------------------------------------------------------------------------------------------------------------
First Quarter 1999 Fourth Quarter 1998 First Quarter 1998
- --------------------------------------------------------------------------------------------------------------------------
Average % of Average % of Average % of
($ in millions) Balances Deposits Balances Deposits Balances Deposits
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing ........... $ 1,920.6 17.8 % $ 1,912.6 18.4% $ 1,789.0 17.8%
NOW accounts .................. 299.9 2.8 259.0 2.5 416.8 4.1
Money market deposit accounts . 2,205.6 20.5 2,113.2 20.3 1,978.9 19.7
Savings accounts .............. 1,341.8 12.5 1,173.2 11.3 993.0 9.9
Other consumer time deposits .. 2,954.7 27.4 3,031.8 29.2 3,070.4 30.5
- --------------------------------------------------------------------------------------------------------------------------
Total core deposits ....... 8,722.6 81.0 8,489.8 81.7 8,248.1 82.0
- --------------------------------------------------------------------------------------------------------------------------
Public fund certificates of
deposit of $100,000 or more 1,095.0 10.2 967.5 9.3 1,040.9 10.3
Certificates of deposit of
$100,000 or more .......... 644.9 6.0 636.0 6.1 615.7 6.1
Foreign time deposits ......... 305.4 2.8 294.9 2.9 161.0 1.6
- --------------------------------------------------------------------------------------------------------------------------
Total deposits ............ $ 10,767.9 100.0% $ 10,388.2 100.0% $ 10,065.7 100.0%
==========================================================================================================================
</TABLE>
Average core deposits totaled $8.7 billion in the first quarter of 1999, a
$474.5 million (6%) increase from the first quarter of 1998. Average
noninterest-bearing deposits grew $131.6 million and savings deposits increased
$348.8 million in the first quarter of 1999 compared to the first quarter of
1998. NOW account average balances were down $116.9 million and money market
deposit accounts were up $226.7 million in the first quarter of 1999 compared to
the first quarter of 1998 primarily due to the effect of the application of the
Reserve Money Manager sweep process to deposits acquired through mergers.
Average noncore deposits were up $227.7 million (13%) from the first
quarter of 1998 to $2.0 billion or 19% of total deposits. Large denomination
certificates of deposit increased $83.3 million (5%) compared to the first
quarter of 1998. Foreign time deposits increased $144.4 million (90%) due to
successful efforts to market a treasury management product which moves
commercial customer funds into higher-yielding Eurodollar 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 $605.3 million (46%) to $1.9 billion for the
first quarter of 1999 compared to the first quarter of 1998.
Average debt for the first quarter of 1999 totaled $806.0 million, up from
$630.8 million in the first quarter of 1998. At March 31, 1999 the Company's
debt, which is comprised of advances from the Federal Home Loan Bank of Dallas
(FHLB), totaled $805.5 million. Debt increased $98.1 million from March 31, 1998
as Hibernia locked in attractive fixed rates to fund its growing loan portfolio.
The FHLB may demand payment of $300 million in callable advances at quarterly
intervals, of which $200 million may not be called before June 2003. If called
prior to maturity, replacement funding will be offered by the FHLB at a
then-current rate. 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 risk.
INTEREST RATE SENSITIVITY
The primary objective of asset/liability management is controlling interest rate
risk. On a continuing basis, management monitors the sensitivity of net interest
income to changes in interest rates through methods that include simulation and
gap reports. Using these tools, management attempts to optimize the
asset/liability mix to minimize the impact of significant rate movements within
a broad range of interest rate scenarios. Management may alter the mix of
floating- and fixed-rate assets and liabilities, change pricing schedules and
enter into derivative contracts as a means of minimizing interest rate risk.
On a limited basis, the Company has entered into interest rate and foreign
exchange rate swap, forward and option contracts to hedge interest rate or
foreign exchange risk on specific assets and liabilities. Hibernia held foreign
exchange rate forward contracts totaling $25.3 million at March 31, 1999, which
minimize the Company's exchange rate risk on loans to be repaid in foreign
currencies.
Derivative financial instruments are also held or issued by the Company for
trading purposes to provide customers the ability to manage their own interest
rate and foreign exchange risk. In general, matched trading positions are
established to minimize risk to the Company. The notional value of these
instruments totaled $483.3 million at March 31, 1999. In addition to these
customer-related derivative financial instruments, the Company has entered into
contracts for its own account related to its mortgage origination activity which
total $290.9 million. As of March 31, 1999 Hibernia's credit exposure related to
derivative financial instruments held for trading totaled $3.8 million.
RESULTS OF OPERATIONS:
NET INTEREST INCOME
Taxable-equivalent net interest income for the three months ended March 31, 1999
totaled $143.9 million, a $9.8 million increase from the same period in 1998 and
an increase of $0.5 million from the fourth quarter of 1998.
Factors contributing to the increase in net interest income from the first
quarter of 1998 include overall growth in earning assets and the positive effect
of the change in the mix of earning assets from securities to loans as can be
seen in Table 7. These factors were partially offset by lower yields on loans
and securities as a result of the competitive lending environment and a change
in the mix of the loan portfolio.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
TABLE 7 - INTEREST-EARNING ASSET COMPOSITION
- ----------------------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------
First Fourth Third Second First
(Percentage of average balances) Quarter Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial loans ................ 29.5% 29.1% 29.1% 28.7% 27.3%
Small business loans ............ 15.5 15.7 15.9 15.7 16.3
Consumer loans .................. 30.0 30.4 30.3 29.4 28.7
- ----------------------------------------------------------------------------------------------------------
Total loans ................. 75.0 75.2 75.3 73.8 72.3
- ----------------------------------------------------------------------------------------------------------
Securities available for sale ... 21.0 21.7 20.8 22.4 23.7
Short-term investments .......... 2.2 1.3 2.3 2.2 2.6
Mortgage loans held for sale .... 1.8 1.8 1.6 1.6 1.4
- ----------------------------------------------------------------------------------------------------------
Total interest-earning assets 100.0% 100.0% 100.0% 100.0% 100.0%
==========================================================================================================
</TABLE>
Table 8 details the net interest margin for the most recent five quarters.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
TABLE 8 - NET INTEREST MARGIN (taxable-equivalent)
- ---------------------------------------------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yield on earning assets ............ 7.70% 7.83% 8.00% 8.17% 8.19%
Rate on interest-bearing liabilities 4.14 4.27 4.47 4.44 4.43
- ---------------------------------------------------------------------------------------------------------------
Net interest spread ............ 3.56 3.56 3.53 3.73 3.76
Contribution of
noninterest-bearing funds ...... 0.79 0.86 0.89 0.88 0.82
- ---------------------------------------------------------------------------------------------------------------
Net interest margin ............ 4.35% 4.42% 4.42% 4.61% 4.58%
- ---------------------------------------------------------------------------------------------------------------
Noninterest-bearing funds
supporting earning assets ...... 19.17% 20.22% 19.89% 19.81% 18.66%
===============================================================================================================
</TABLE>
The net interest margin was 4.35% for the first quarter of 1999 compared to
4.58% in the first quarter of 1998 and 4.42% in the fourth quarter of 1998. The
positive effects of the change in the mix of earning assets were offset by the
impact of declining loan yields, as a result of increasing competition, and a
higher-than-expected level of public fund deposits which by virtue of their
collateral requirements have a very thin spread. However these deposits had a
positive impact on net interest income. The net interest margin for the first
quarter of 1999 was also negatively impacted due to the shift in the mix of
funding sources toward market rate funds. In the first quarter of 1999 58.6% of
Hibernia's earning assets were supported by market-rate funds compared to 56.5%
in the same period in 1998. The attractive rates offered on Hibernia's Equity
PrimeLine(R) loan product and Tower GoldSM Services account during 1999
illustrate the pricing strategies necessary to successfully promote products in
the current competitive environment.
In the first quarter of 1998, the net interest margin was negatively
impacted by the funding cost of a transaction which utilized capital losses. The
$0.8 million associated with this transaction was recorded as a securities gain
in noninterest income rather than in net interest income.
Table 9 presents an analysis of changes in taxable-equivalent net interest
income between the first quarter of 1999 and the fourth quarter of 1998 and
between the first quarter of 1999 and the first quarter of 1998.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TABLE 9 - CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME (1)
- --------------------------------------------------------------------------------------------------------------------------
First Quarter 1999 Compared to:
- --------------------------------------------------------------------------------------------------------------------------
Fourth Quarter 1998 First Quarter 1998
- --------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) Due to Change In:
- --------------------------------------------------------------------------------------------------------------------------
($ in thousands) Volume Rate Total Volume Rate Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Taxable-equivalent
interest earned on:
Commercial loans .............. $ 3,324 $(5,058) $(1,734) $ 13,963 $ (6,446) $ 7,517
Small business loans .......... 1,092 (1,716) (624) 3,377 (2,911) 466
Consumer loans ................ 1,417 (1,496) (79) 12,715 (2,453) 10,262
- --------------------------------------------------------------------------------------------------------------------------
Loans ..................... 5,833 (8,270) (2,437) 30,055 (11,810) 18,245
- --------------------------------------------------------------------------------------------------------------------------
Securities available for sale . (116) 1,450 1,334 (106) (3,606) (3,712)
Short-term investments ........ 1,711 (367) 1,344 (22) (572) (594)
Mortgage loans held for sale .. 98 (734) (636) 1,055 (187) 868
- --------------------------------------------------------------------------------------------------------------------------
Total ................... 7,526 (7,921) (395) 30,982 (16,175) 14,807
- --------------------------------------------------------------------------------------------------------------------------
Interest paid on:
NOW accounts .................. 273 (92) 181 (825) (464) (1,289)
Money market
deposit accounts .......... 551 (983) (432) 1,350 (1,244) 106
Savings accounts .............. 1,332 462 1,794 2,788 111 2,899
Other consumer time deposits .. (976) (1,932) (2,908) (1,472) (2,399) (3,871)
Public fund certificates of
deposit of $100,000 or more 1,584 (912) 672 703 (1,450) (747)
Certificates of deposit
of $100,000 or more ....... 116 (465) (349) 368 (143) 225
Foreign deposits .............. 119 (203) (84) 1,622 (397) 1,225
Federal funds purchased ....... 1,265 (551) 714 4,486 (613) 3,873
Repurchase agreements ......... (87) (279) (366) 687 (604) 83
Debt .......................... 84 (167) (83) 2,420 113 2,533
- --------------------------------------------------------------------------------------------------------------------------
Total ................... 4,261 (5,122) (861) 12,127 (7,090) 5,037
- --------------------------------------------------------------------------------------------------------------------------
Taxable-equivalent
net interest income ........... $ 3,265 $(2,799) $ 466 $ 18,855 $ (9,085) $ 9,770
==========================================================================================================================
- ---------------
(1) Change due to mix (both volume and rate) has been allocated to volume and
rate changes in proportion to the relationship of the absolute dollar
amounts to the changes in each.
</TABLE>
The analysis of Consolidated Average Balances, Interest and Rates on pages
22 and 23 of this discussion presents the Company's taxable-equivalent net
interest income and average balances for the three months ended March 31, 1999,
December 31, 1998 and March 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES, INTEREST AND RATES
- -----------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1) First Quarter 1999
- -----------------------------------------------------------------------------------------------------------------------
(Average balances $ in millions, Average
interest $ in thousands) Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Interest-earning assets:
Commercial loans ............................................... $ 3,928.2 $ 75,394 7.78%
Small business loans ........................................... 2,071.8 45,189 8.85
Consumer loans ................................................. 3,998.3 82,463 8.34
- -----------------------------------------------------------------------------------------------------------------------
Total loans (2) ............................................ 9,998.3 203,046 8.23
- -----------------------------------------------------------------------------------------------------------------------
Securities available for sale .................................. 2,795.6 43,473 6.23
Short-term investments ......................................... 300.6 3,669 4.95
Mortgage loans held for sale ................................... 238.3 3,712 6.32
- -----------------------------------------------------------------------------------------------------------------------
Total interest-earning assets .............................. 13,332.8 $253,900 7.70%
- -----------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses (130.9) Noninterest-earning assets:
Cash and due from banks ........................................ 486.0
Other assets ................................................... 571.3
- -----------------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets ........................... 1,057.3
- -----------------------------------------------------------------------------------------------------------------------
Total assets ............................................... $ 14,259.2
=======================================================================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts ............................................... $ 299.9 $ 1,978 2.68%
Money market deposit accounts .............................. 2,205.6 12,536 2.31
Savings accounts ........................................... 1,341.8 10,734 3.24
Other consumer time deposits ............................... 2,954.7 36,106 4.96
Public fund certificates of deposit
of $100,000 or more .................................... 1,095.0 13,263 4.91
Certificates of deposit of $100,000 or more ................ 644.9 8,088 5.09
Foreign time deposits ...................................... 305.4 3,326 4.42
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits ........................ 8,847.3 86,031 3.94
- -----------------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased .................................... 691.9 8,300 4.86
Repurchase agreements ...................................... 431.0 4,545 4.28
Debt ........................................................... 806.0 11,135 5.60
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities ......................... 10,776.2 $110,011 4.14%
- -----------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Noninterest-bearing deposits ................................... 1,920.6
Other liabilities .............................................. 205.8
- -----------------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities ...................... 2,126.4
- -----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ......................................... 1,356.6
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity ................. $ 14,259.2
=======================================================================================================================
SPREAD AND NET YIELD
Interest rate spread ............................................... 3.56%
Cost of funds supporting interest-earning assets ................... 3.35%
Net interest income/margin ......................................... $143,889 4.35%
=======================================================================================================================
- --------------
(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 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1) Fourth Quarter 1998 First Quarter 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(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 .............................. $ 3,761.7 $ 77,128 8.13% $ 3,220.7 $ 67,877 8.55%
Small business loans .......................... 2,022.8 45,813 8.99 1,921.5 44,723 9.44
Consumer loans ................................ 3,930.2 82,542 8.35 3,385.1 72,201 8.62
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans (2) ........................... 9,714.7 205,483 8.40 8,527.3 184,801 8.78
- ------------------------------------------------------------------------------------------------------------------------------------
Securities available for sale ................. 2,803.4 42,139 6.01 2,801.9 47,185 6.75
Short-term investments ........................ 163.7 2,325 5.64 302.1 4,263 5.72
Mortgage loans held for sale .................. 232.9 4,348 7.41 171.2 2,844 6.74
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets ............. 12,914.7 $ 254,295 7.83% 11,802.5 $ 239,093 8.19%
- ------------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses .................. (129.7) (125.3)
Noninterest-earning assets:
Cash and due from banks ....................... 472.0 470.3
Other assets .................................. 559.6 672.5
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets .......... 1,031.6 1,142.8
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets .............................. $ 13,816.6 $ 12,820.0
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts .............................. $ 259.0 $ 1,797 2.75% $ 416.8 $ 3,267 3.18%
Money market deposit accounts ............. 2,113.2 12,968 2.43 1,978.9 12,430 2.55
Savings accounts .......................... 1,173.2 8,940 3.02 993.0 7,835 3.20
Other consumer time deposits .............. 3,031.8 39,014 5.11 3,070.4 39,977 5.28
Public fund certificates of deposi
of $100,000 or more ................... 967.5 12,591 5.16 1,040.9 14,010 5.46
Certificates of deposit of $100,000 or more 636.0 8,437 5.26 615.7 7,863 5.18
Foreign time deposits ..................... 294.9 3,410 4.59 161.0 2,101 5.29
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits ....... 8,475.6 87,157 4.08 8,276.7 87,483 4.29
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased ................... 588.6 7,586 5.11 323.1 4,427 5.56
Repurchase agreements ..................... 439.0 4,911 4.44 369.7 4,462 4.89
Debt .......................................... 800.0 11,218 5.56 630.8 8,602 5.53
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities ........ 10,303.2 $ 110,872 4.27% 9,600.3 $ 104,974 4.43%
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Noninterest-bearing deposits .................. 1,912.6 1,789.0
Other liabilities ............................. 267.1 189.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities ..... 2,179.7 1,978.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ........................ 1,333.7 1,241.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 13,816.6 $ 12,820.0
====================================================================================================================================
SPREAD AND NET YIELD
Interest rate spread .............................. 3.56% 3.76%
Cost of funds supporting interest-earning assets .. 3.41% 3.61%
Net interest income/margin ........................ $ 143,423 4.42% $ 134,119 4.58%
====================================================================================================================================
- ----------------
(1) Based on the statutory income tax rate of 35%. (2) Yield computations
include nonaccrual loans in loans outstanding.
</TABLE>
NONINTEREST INCOME
Noninterest income for the first quarter of 1999 was up $9.4 million (22%) to
$51.2 million compared to the first quarter of 1998. Excluding securities
transactions noninterest income increased $10.2 million (25%) in the first
quarter of 1999 compared to the same period of 1998. The major categories of
noninterest income for the three months ended March 31, 1999 and 1998 are
presented in Table 10.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
TABLE 10 - NONINTEREST INCOME
- -----------------------------------------------------------------------------------------
Three Months Ended
- -----------------------------------------------------------------------------------------
Percentage
March 31 March 31 Increase
($ in thousands) 1999 1998 (Decrease)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service charges on deposits ............ $22,602 $20,089 13%
Trust fees ............................. 4,536 3,889 17
Retail investment service fees ......... 5,448 3,575 52
Mortgage loan origination
and servicing fees ................. 4,502 3,304 36
Other service, collection and
exchange charges:
ATM fees ........................... 2,838 2,449 16
Debit/credit card fees ............. 2,257 1,598 41
Other .............................. 2,931 2,603 13
- -----------------------------------------------------------------------------------------
Total other service, collection
and exchange charges ...... 8,026 6,650 21
- -----------------------------------------------------------------------------------------
Other operating income:
Gain on sales of mortgage loans .... 2,132 1,477 44
Other income ....................... 3,930 1,961 100
- -----------------------------------------------------------------------------------------
Total other operating income .. 6,062 3,438 76
- -----------------------------------------------------------------------------------------
Securities gains (losses), net ......... 41 887 (95)
- -----------------------------------------------------------------------------------------
Total noninterest income ...... $51,217 $41,832 22%
=========================================================================================
</TABLE>
Service charges on deposits increased $2.5 million (13%) for the first
quarter of 1999 over the comparable period in 1998. This change was the result
of growth in transaction-based fees and commercial account analysis fees due to
an increase in the number of accounts.
Retail investment service fees increased $1.9 million (52%) in the first
quarter of 1999 compared to the same period in 1998 primarily due to market
conditions which resulted in an increase in the sale of financial products such
as mutual funds and discount brokerage services.
Trust fees were up $0.6 million (17%) in the first quarter of 1999 compared
to the same period in 1998 primarily due to new business and the impact of
market value increases.
Mortgage loan origination and servicing fees increased $1.2 million (36%)
in the first quarter of 1999 compared to the same period in 1998. An increase in
mortgage origination activity brought about by the Company's continued focus on
mortgage banking and the favorable interest rate environment were the primary
reasons for the increase. In the first three months of 1999, Hibernia processed
more than $0.5 billion in residential first mortgages as compared to $0.3
billion in the first three months of 1998.
Other service, collection and exchange charges were up $1.4 million (21%)
in the first quarter of 1999 compared to the first quarter of 1998. Increases in
fees from ATMs and debit and credit cards were the major factors contributing to
the growth. ATM fees increased $0.4 million due the continued growth of the ATM
network and expansion of ATM services. Debit/credit card fees increased $0.7
million primarily due to fees generated by Hibernia's CheckmateSM debit card and
Capital Access(C) credit card for small businesses.
Other operating income was up $2.6 million (76%) in the first quarter of
1999 compared to the first quarter of 1998. Gains on sales of mortgage loans
were up $0.7 million primarily due to the significant increase in volume in the
mortgage banking operation. Other income increased $2.0 million primarily due to
a $1.7 million gain related to an investment in an energy mezzanine financing by
the parent company.
Securities gains decreased $0.8 million (95%) in the first quarter of 1999
compared to the same period in 1998. The first quarter of 1998 included a gain
on a transaction which utilized capital losses.
NONINTEREST EXPENSE
For the first quarter of 1999 noninterest expense totaled $116.3 million, a
$10.1 million increase from the first quarter of 1998. Excluding merger-related
expenses, noninterest expense would have been $107.7 million, a $2.5 million
(2%) increase from the first quarter of 1998. Merger-related expenses were $8.7
million and $1.1 million in the first quarter of 1999 and the first quarter of
1998, respectively. The major categories contributing to the increase in
noninterest expense were staff costs, data processing and the amortization of
intangibles. Noninterest expense for the three months ended March 31, 1999 and
1998 are presented by major category in Table 11.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
TABLE 11 - NONINTEREST EXPENSE
- ----------------------------------------------------------------------------------------
Three Months Ended
- ----------------------------------------------------------------------------------------
Percentage
March 31 March 31 Increase
($ in thousands) 1999 1998 (Decrease)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Salaries ........................ $ 51,485 $ 43,665 18%
Benefits ........................ 9,099 7,993 14
- ----------------------------------------------------------------------------------------
Total staff costs ........... 60,584 51,658 17
- ----------------------------------------------------------------------------------------
Occupancy, net .................. 7,869 8,211 (4)
Equipment ....................... 9,031 7,599 19
- ----------------------------------------------------------------------------------------
Total occupancy and equipment 16,900 15,810 7
- ----------------------------------------------------------------------------------------
Data processing ................. 8,066 7,032 15
Advertising and promotional
expenses .................... 3,630 5,468 (34)
Foreclosed property expense, net (371) (7) N/M
Amortization of intangibles ..... 4,525 4,043 12
Telecommunications .............. 2,532 3,296 (23)
Postage ......................... 1,868 2,014 (7)
Stationery and supplies ......... 1,480 1,455 2
Professional fees ............... 2,400 1,929 24
State taxes on equity ........... 2,847 2,569 11
Regulatory expense .............. 761 695 9
Loan collection expense ......... 1,005 1,052 (5)
Other ........................... 10,110 9,192 10
- ----------------------------------------------------------------------------------------
Total noninterest expense ... $ 116,337 $ 106,206 10%
- ----------------------------------------------------------------------------------------
Efficiency ratio (1)............. 59.64% 60.67%
Tangible efficiency ratio (2).... 58.14% 58.84%
========================================================================================
- -----------
(1) Noninterest expense as a percentage of taxable-equivalent net interest
income plus noninterest income (excluding securities transactions).
(2) Noninterest expense (excluding amortization of purchase accounting
intangibles) as a percentage of taxable-equivalent net interest income
plus noninterest income (excluding securities transactions).
N/M = Not meaningful
</TABLE>
Staff costs, which represent approximately 50% of noninterest expense,
increased $8.9 million (17%) in the first quarter of 1999 compared to the same
period a year ago. Excluding the effect of merger-related expenses, staff costs
increased $4.1 million (8%). Merger-related expenses included a $4.4 million
stock grant agreement with two key merger employees that was in place several
years prior to negotiation of the merger agreement. Higher accruals for
performance based incentives and bonuses and normal merit increases were major
factors contributing to the increase in staff costs.
Occupancy and equipment expenses increased $1.1 million (7%) in the first
quarter of 1999 compared to the first quarter of 1998. However, after adjusting
for the effect of merger-related expenses, occupancy and equipment expenses
decreased $0.3 million (2%).
Data processing expenses increased $1.0 million (15%) for the first quarter
of 1999 compared to the first quarter of 1998. Excluding the effect of
merger-related expenses, data processing expenses increased $0.5 million (7%).
The increase in data processing expenses is primarily related to continued
improvements in technology, Year 2000 compliance and increased transaction
volume related to growth in the Company's customer base.
Advertising and promotional expenses decreased $1.8 million (34%) in the
first quarter of 1999 compared to the same period of 1998. Excluding
merger-related expenses, advertising and promotional expenses decreased $1.7
million (35%). The decrease in advertising and promotional expenses is primarily
due to higher expenses in the first quarter of 1998 related to advertising,
direct marketing and shareholder communications. Advertising expenses in 1998
were related to the expansion of the franchise into the markets of merged
companies and the promotion of products, such as the Tower Super SavingsSM
account and the Hibernia CheckmateSM debit card.
Amortization of intangibles, a noncash expense, increased $0.5 million to
$4.5 million in the first quarter of 1999 compared to the first quarter of 1998.
This increase is primarily due to an increase in the amortization of mortgage
servicing rights resulting from the growth in mortgage lending activity.
Telecommunications expense decreased $0.8 million (23%) in the first
quarter of 1999 compared to the first quarter of 1998. The first quarter of 1998
included expenses related to the Company's enhanced communications capabilities,
including the operation of its wide area network and enhancements to its ATM
network.
Professional fees increased $0.5 million (24%) compared to the same period
of 1998. Excluding merger-related expenses, professional fees decreased $0.2
million (9%). State taxes on equity expense increased $0.3 million (11%) in the
1999 quarter compared to 1998 due to the increased level of equity.
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 a key measure used to evaluate the
success of efforts to control costs while generating revenue efficiently. The
efficiency ratio at March 31, 1999 was 59.64% compared to 60.67% at March 31,
1998. Excluding the effect of merger-related expenses, the efficiency ratio
would have been 55.18% and 60.04% for the first quarter of 1999 and 1998,
respectively.
The tangible efficiency ratio, which excludes amortization of purchase
accounting intangibles from the calculation, was 58.14% for the first quarter of
1999, a 70 basis point improvement from 58.84% for the same period of 1998.
Excluding the effect of merger-related expenses, the tangible efficiency ratio
would have been 53.69% and 58.22% for the first quarter of 1999 and the first
quarter of 1998, respectively. The improvement in efficiency for the first
quarter of 1999 reflects higher revenue growth rates compared to expense growth
rates. The Company expects this ratio to decline further in future periods. The
declines are expected to result from achievement of cost efficiencies
contemplated in completed and pending business combinations, enhancement of
noninterest revenue sources and increased net interest income.
INCOME TAXES
The Company recorded $16.4 million in income tax expense in the first quarter of
1999, a $5.8 million (26%) decrease from $22.2 million in the first quarter of
1998 as pretax income declined 27%.
Hibernia National Bank is subject to a Louisiana shareholders' tax based
partly on income. The income portion is recorded as state income tax. In
addition, certain subsidiaries of the Company and Hibernia National Bank are
subject to Louisiana state income tax. Effective January 1, 1999 Hibernia
National Bank of Texas was merged with and into Hibernia National Bank resulting
in one bank in all markets. The Texas operations of Hibernia National Bank are
subject to Texas franchise tax.
CAPITAL
Shareholders' equity totaled $1,349.6 million at March 31, 1999 compared to
$1,255.5 million a year earlier. The increase is primarily the result of net
income over the most recent 12 months totaling $169.4 million and the issuance
of $13.6 million of common stock, partially offset by a $20.4 million increase
in unearned compensation, a $1.3 million change in unrealized gains (losses) on
securities available for sale, $60.3 million in dividends declared on common
stock and $6.9 million in dividends declared on preferred stock. The increase in
unearned compensation is related to the purchase of stock by Hibernia's Employee
Stock Ownership Plan (ESOP). During 1998 the ESOP completed its purchase of the
originally authorized $30.0 million of stock and acquired an additional $15.0
million in stock, the purchase of which was authorized in 1998. As a result, the
ESOP acquired approximately 1,443,000 shares of stock during 1998 and holds a
total of approximately 3,874,000 shares at March 31, 1999.
Risk-based capital and leverage ratios exceed the ratios required for
designation as a "well-capitalized" institution under regulatory guidelines.
Table 12 presents Hibernia's ratios along with selected components of the
capital ratio calculations for the most recent five quarters.
A shelf registration statement was filed by the Company in July 1996 with
the Securities and Exchange Commission which allows the Company to issue up to
$250 million of securities, including preferred stock and subordinated debt. The
Company issued $100 million of Fixed/Adjustable Rate Noncumulative Preferred
Stock on September 30, 1996. The remaining $150 million in securities included
in this shelf registration provide Hibernia with the flexibility to quickly
modify its capital structure to meet competitive and market conditions.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TABLE 12 - CAPITAL
- ------------------------------------------------------------------------------------------------------------------------------
March 31 Dec. 31 Sept. 30 June 30 March 31
($ in millions) 1999 1998 1998 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Risk-based capital:
Tier 1 ..................... $ 1,188.1 $ 1,166.0 $ 1,141.1 $ 1,105.6 $ 1,079.1
Total ...................... 1,325.7 1,296.3 1,270.2 1,230.3 1,198.7
Assets:
Quarterly average assets (1) 14,090.2 13,629.9 13,081.8 12,773.3 12,640.5
Net risk-adjusted assets ... 10,985.4 10,819.7 10,341.6 9,976.0 9,558.5
Ratios:
Tier 1 risk-based capital .. 10.82% 10.78% 11.03% 11.08% 11.29%
Total risk-based capital ... 12.07 11.98 12.28 12.33 12.54
Leverage ................... 8.43 8.55 8.72 8.66 8.54
==============================================================================================================================
- ---------------
(1) Excluding SFAS No. 115 adjustment and disallowed intangibles.
</TABLE>
LIQUIDITY
Liquidity is a measure of the 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, converting assets (such
as short-term investments, mortgage loans held for sale, securities available
for sale and loans) to cash and increasing borrowings. To minimize funding
risks, management monitors liquidity through a periodic review of maturity
profiles, yield and rate behaviors, and loan and deposit forecasts.
Attracting and retaining core deposits are the Company's primary sources of
liquidity. Hibernia's extensive banking office network, aided by the promotion
of attractive deposit products, provided $8.8 billion in core deposits at March
31, 1999, up $0.4 billion (4%) from $8.4 billion a year earlier. In addition,
Hibernia has a large base of treasury management-related repurchase agreements
and foreign deposits 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 quarter.
The loan-to-deposit ratio, one measure of liquidity, was 93.7% at March 31,
1999, 91.0% at December 31, 1998 and 84.4% at March 31, 1998. 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, 22.4% of Hibernia's loans and securities were funded by net large
liabilities (total large liabilities less short-term investments) in the first
quarter of 1999, up 292 basis points from the fourth quarter of 1998 and up 34
basis points from the first quarter of 1998. The level of large liability
dependence is within limits established by management to maintain liquidity and
safety.
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. In February 1999 Hibernia National Bank established a $2.0
billion bank note shelf registration program. Notes issued under the program
will mature 30 days or more after its date of issue and bear fixed or floating
interest rates. The Company also has $150 million remaining on its shelf
registration previously discussed in the Capital section, and its membership in
the FHLB further augments liquidity by providing a readily accessible source of
funds at competitive rates. In addition, a substantial portion of the Company's
$2.0 billion residential first mortgage portfolio and $907.5 million indirect
consumer portfolio can be sold or securitized and, therefore, provides an added
source of liquidity, if needed.
YEAR 2000
The Year 2000 issues result from the fact that many computer programs store and
process data using two digits rather than four to define the applicable year.
Any computer programs that have date-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This issue affects not
only Hibernia, but virtually all companies and organizations that use computer
information systems.
A team comprised of Hibernia employees and representatives of the Company's
third party data processor was formed in early 1997 to address Year 2000 issues.
The team's plan is to achieve Year 2000 compliance for all mainframe application
systems, local area network application systems, departmental and vendor
application systems and the Company's infrastructure by the end of the second
quarter of 1999. In addition to testing and making appropriate changes to its
internal systems, the Company continues to discuss Year 2000 issues and their
potential impact on business operations with many of its customers and
suppliers. The status of these activities is provided to Hibernia's Board of
Directors, and the Company's regulators monitor Year 2000 efforts.
Through the performance of a business impact analysis, the Company
identified 37 mission critical systems or systems identified as vital to core
business activities of the Company. As of March 31, 1999 the Company has
remediated and completed unit testing on all 37 mission critical systems. As of
March 31, 1999 approximately 90% of the mission critical systems that have been
remediated and unit tested are in production. The remaining mission critical
systems are scheduled to be in production by the end of the second quarter of
1999. Unit testing and validations began in the third quarter of 1998 and are
scheduled throughout 1999 to continuously reaffirm the Year 2000 compliance of
mission critical systems.
A small number of mission critical systems are provided by third parties on
a service bureau basis, such as small business credit card processing and
services supporting securities brokerage businesses. As of March 31, 1999 all
mission critical systems provided by third parties have been remediated and unit
tested. Non-mission critical systems are expected to be Year 2000 compliant
during the second quarter of 1999. Date-reliant infrastructure components, which
include items such as ATMs; personal computers; and internal phone, vault and
alarm systems, have been verified to be Year 2000 compliant. The Company and its
data processing vendors and service providers will monitor progress and
implement contingency plans in the event that these procedures fail to achieve
their objectives.
The Company expects to continue incurring charges related to Year 2000
compliance. However, the majority of the costs associated with these efforts are
the responsibility of the Company's third party data processor which also
provides many of the Company's software applications. Contract specifications
require the Company's third party data processor to ensure that all systems meet
Year 2000 compliance and other banking regulations. Hibernia estimates that it
will supplement its vendors' efforts with a total of approximately $1.7 million,
much of which has already been expensed, to upgrade ATMs, hardware, software and
other technology. This investment will be funded through operating cash flows
and will be expensed as incurred.
As of March 31, 1999, the Company has incurred expenses amounting to
approximately $1.5 million, of which $0.4 million occurred in the first quarter
of 1999. Year 2000 expenses were spread throughout a number of noninterest
expense categories and do not include computer equipment and software that was
scheduled to be replaced in the normal course of business. The Company does not
separately track the indirect costs incurred for the Year 2000 project which
primarily consists of payroll costs of employees from various departments.
The Company's estimates of Year 2000 costs and time periods by which the
Company expects to substantially complete mission critical system programming,
testing and implementation, are based upon management's best estimates, which
were derived utilizing numerous assumptions about future events. There can be no
guarantee that these estimates will be achieved, and actual results could differ
from those anticipated. Because of the critical nature of the Year 2000 issues
to the Company's business and to all of the financial services industry, if
necessary modifications are not made, the Company's operations could be
materially impacted. Hibernia and its data processing vendors remain on schedule
to ensure achievement of Year 2000 compliance; therefore, an adverse impact on
the Company's operations is not expected.
The discussion above entitled "Year 2000," includes certain "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 ("PSLRA"). This statement is included for the express purpose
of availing Hibernia of the protections of the safe harbor provisions of the
PSLRA. Management's ability to predict results or effects of Year 2000 issues is
inherently uncertain, and is subject to factors that may cause actual results to
differ materially from those projected. Factors that could affect the actual
results include the possibility that remediation efforts and contingency plans
will not operate as intended, the Company's failure to timely or completely
identify all software and hardware applications requiring remediation,
unexpected costs, and the uncertainty associated with the impact of Year 2000
issues on the banking industry and on the Company's customers, vendors, and
others with whom it conducts business. Readers are cautioned not to place undue
reliance on these forward looking statements.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and the Bank are parties to certain pending legal proceedings
arising from matters incidental to their business. In addition, Hibernia
National Bank has signed a settlement agreement with the other parties to
litigation related to the Bank's sale of collateral protection insurance. This
agreement is subject to court approval and, if approved in its current form,
will not have a material effect on the financial condition, results of
operations or liquidity of the Company.
Also, in May 1999, Hibernia and First Guaranty Bank agreed in principle to
terminate the merger agreement between them, dismiss litigation pending that was
designed to enforce the terms of the merger agreement and waive any related
claims against each other.
Item 6. Exhibits and Reports on Form 8-K*
(a) Exhibits
EXHIBIT DESCRIPTION
3.1 Exhibit 3.1 to the Quarterly Report on Form 10-Q (as amended)
for the fiscal quarter ended June 30, 1998, 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, 1998, 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)
10.38 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 Exhibit 10.44 to the Registrant's Annual Report on Form 10-K
(as amended) for the fiscal year ended December 31, 1997 filed
with the Commission (Commission No. 0-7220) is hereby
incorporated by reference (Form of Change of Control
Employment Agreement for Executive and Senior Officers of the
Registrant)
10.45 Exhibit 10.45 to the Registrant's Annual Report on Form 10-K
(as amended) for the fiscal year ended December 31, 1997
filed with the Commission (Commission No. 0-7220) is hereby
incorporated by reference(Employment Agreement between Randall
A. Howard and Hibernia Corporation)
13 Exhibit 13 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 filed with the
Commission (Commission File No. 0-7220) is hereby incorporated
by reference (1998 Annual Report to security holders of
Hibernia Corporation)
21 Exhibit 21 to the Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, filed with the Commission
by the Registrant (Commission File No. 0-7220) is hereby
incorporated by reference (Subsidiaries of the Registrant)
27 Financial Data Schedule
99.1 Exhibit 99.1 to the Annual Report on Form 10-K (as amended)
dated June 24, 1998 is hereby incorporated by reference
(Annual Report of the Retirement Security Plan for the fiscal
year ended December 31, 1997)
99.2 Exhibit 99.1 to the Annual Report on Form 10-K (as amended)
dated June 24, 1998 is hereby incorporated by reference
(Annual Report of the Employee Stock Ownership Plan and Trust
for the fiscal year ended December 31, 1997)
<PAGE>
(b) Reports on Form 8-K
A report on Form 8-K dated March 11, 1999, was filed
by the registrant reporting Item 5 Other Events.
* Exhibits and Reports on Form 8-K have been separately filed with the
Commission.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized to sign on behalf of the registrant.
HIBERNIA CORPORATION
(Registrant)
Date: May 13, 1999 By: /s/ Ron E. Samford, Jr.
---------------------- -----------------------
Ron E. Samford, Jr.
Executive Vice President and Controller
Chief Accounting Officer
(in his capacity as a duly authorized
officer of the Registrant and in his
capacity as Chief Accounting Officer)
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