SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999 Commission file No. 1-10294
HIBERNIA CORPORATION
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0724532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
313 CARONDELET STREET, NEW ORLEANS, LOUISIANA 70130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 533-5332
Securities registered pursuant to Section 12 (b) of the Act:
CLASS A COMMON STOCK, NO PAR VALUE
(Title of class)
NEW YORK STOCK EXCHANGE
(Name of each exchange on which registered)
Securities registered pursuant to Section 12 (g) of the Act: NONE
Indicated by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant as of February 29, 2000.
Class A Common Stock, no par value $1,387,577,899
State the aggregate number of shares outstanding of each of
the Registrant's classes of common stock as of February 29, 2000.
Class A Common Stock, no par value - 160,163,628
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's annual report to shareholders for the year ended
December 31, 1999 are incorporated by reference into Parts I and II of this
Report.
Portions of the Registrant's definitive proxy statement, which will be filed
within 120 days of December 31, 1999, are incorporated by reference into Part
III of this Report.
<PAGE>
INDEX TO FORM 10-K
Certain information required by Form 10-K is incorporated by reference
to the Annual Report as indicated below. Only that information expressly
incorporated by reference is deemed filed with the Commission.
PART I
Item 1 Business *
Item 2 Properties *
Item 3 Legal Proceedings *
Item 4 Submission of Matters to a Vote of Security Holders None
Item X Identification of Executive Officers *
PART II
Item 5 Market of the Registrant's Common Equity and Related
Stockholder Matters ***
Item 6 Selected Financial Data ***
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations ***
Item 7a Qualitative and Quantitative Disclosures About Market Risk ***
Item 8 Financial Statements and Supplementary Data ***
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure None
PART III (1)
Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements
Report of Independent Auditors ***
Hibernia Corporation and Subsidiaries:
Consolidated Balance Sheets - December 31,
1999 and 1998 ***
Consolidated Income Statements - Years
Ended December 31, 1999, 1998 and 1997 ***
Consolidated Statements of Changes in
Shareholders' Equity - Years Ended
December 31, 1999, 1998 and 1997 ***
Consolidated Statements of Cash Flows - Years
Ended December 31, 1999, 1998 and 1997 ***
Notes to Consolidated Financial Statements ***
(b) Reports on Form 8-K **
Item 5 Other Event January 26, 2000
(c) Exhibits **
* This information is included in the Form 10-K and is not incorporated by
reference to the Annual Report.
** Reports on Form 8-K and Exhibits have been separately filed with the
Commission.
*** This information is included in EX-13.
(1) The material required by Items 10 through 13 is incorporated by
reference to the Company's definitive Proxy Statement which will be filed with
the Commission within 120 days of December 31, 1999; however, the "Report of
Executive Compensation Committee" and the "Performance Graph" contained therein
are not incorporated herein by reference.
<PAGE>
PART I
ITEM 1. BUSINESS
Hibernia Corporation (Company) is a Louisiana business corporation
organized in 1972. The Company became a bank holding company in 1973, and, as of
December 31, 1999, was the largest publicly traded bank holding company
headquartered in Louisiana with assets of $15.3 billion and deposits of $11.9
billion. Hibernia National Bank (Bank), the Company's sole depository
institution subsidiary, was chartered as a national banking association in 1933
and can trace its origins back to 1870. Effective January 1, 1999, Hibernia
National Bank of Texas (formerly Texarkana National Bank which was chartered as
a national banking association in 1887 and acquired by the Company in 1996) was
merged with and into the Bank resulting in the Company operating a single
depository institution in all of its markets. In addition to the Bank, the
Company also owns three nonbank subsidiaries: Hibernia Capital Corporation
(HCC), Zachary Taylor Life Insurance Company (Zachary Taylor) and First National
Company of Marshall, Inc. (First National). HCC is a Louisiana business
corporation organized in 1995 and licensed as a small business investment
company to provide private equity investments to small businesses. Zachary
Taylor is a Louisiana business corporation organized in 1952 and licensed as a
life insurance company. Zachary Taylor is currently inactive, and the Company
has an agreement with the Federal Reserve Bank of Atlanta that it will not
permit Zachary Taylor to engage in any business without prior regulatory
approval. First National is an inactive subsidiary and holds no assets.
As of December 31, 1999 the Company operated 250 banking locations in 33
Louisiana parishes and 13 Texas counties and a mortgage loan production and
retail brokerage services office in the southwestern part of Mississippi. During
1999 the Company completed a merger with MarTex Bancshares, Inc. in East Texas
which was accounted for as a pooling of interests. Additionally in 1999 the
Company purchased the assets and assumed the liabilities of the Beaumont
branches of Chase Bank of Texas, N.A. These transactions resulted in the
addition of $785 million in assets and 13 banking offices. In 1998 the Company
completed four mergers, three in Louisiana and one in East Texas, which were
accounted for as poolings of interests. The Company completed two mergers with
East Texas financial institutions in 1997 which were accounted for as poolings
of interests.
The Company offers a broad array of financial products and services,
including retail, small business, commercial, international, mortgage and
private banking; leasing; factoring; private equity investments; corporate
finance; treasury management; trust and investment management; insurance
products; retail brokerage; and alternative investments, including mutual funds
and annuities. The Company also performs mortgage servicing, which includes
acceptance and application of mortgage loan and escrow payments.
The Company provides financial risk management products and advisory
services to customers. These products are designed to assist customers in
managing their exposure in the areas of interest rate and currency risks. The
Company offers repurchase agreements, bankers acceptances, Eurodollar deposits,
safekeeping of securities, U.S. Government and Government agency obligations,
tax-free municipal obligations, reverse repurchase agreements, letters of
credit, and collection and foreign exchange transactions.
The Bank, through its wholly-owned subsidiary, Hibernia Insurance Agency,
L.L.C. (HIA), sells, as agent, fixed annuities and life, health, disability,
automobile, homeowner, and commercial property and casualty insurance. Through
another wholly-owned subsidiary, Hibernia Insurance Agency of Texas, Inc., the
Bank also sells, as agent, fixed annuities in Texas. Hibernia Investments,
L.L.C. (formerly Hibernia Investment Securities, Inc.), another wholly-owned
subsidiary of the Bank, provides retail and discount securities brokerage
services. Hibernia Investments, L.L.C. is a registered broker-dealer and member
of the National Association of Securities Dealers, Inc.
Information on the Company's various segments is presented by line of
business. Each line of business is a strategic unit that provides various
products and services to groups of customers that have certain common
characteristics. The reportable operating segments are Commercial Banking, Small
Business Banking, Consumer Banking, and Investments and Public Funds. Further
segment information is included in Note 24 of Notes to Consolidated Financial
Statements in the Company's Annual Report.
The reserve for loan losses is comprised of specific reserves (assessed for
each loan that is reviewed for impairment or for which a probable loss has been
identified), general reserves (based on historical loss factors), and an
unallocated reserve.
The Company continuously evaluates its reserve for loan losses to maintain
an adequate level to absorb probable losses inherent in the loan portfolio.
Reserves on impaired loans are based on discounted cash flows using the loan's
initial effective interest rate, the observable market value of the loan 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 which include risk rating, industry
concentration and loan type, with the most recent charge-off experience weighted
more heavily. The unallocated reserve, which is judgementally determined,
generally serves to compensate for the uncertainty in estimating loan losses,
including the possibility of changes in risk ratings and specific reserve
allocations. It also considers the lagging impact of historical charge-off
ratios in periods where future charge-offs are expected to increase or decrease
significantly. In addition, the reserve considers trends in delinquencies and
nonaccrual loans, industry concentration, the volatility of risk ratings and the
evolving portfolio mix in terms of collateral, relative loan size, the degree of
seasoning in the various loan products and loans recently acquired through
mergers. The results of reviews performed by internal and external examiners are
also considered.
The methodology used in 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 general
and unallocated reserves. The historical loss ratios, which are key factors in
this analysis, are updated quarterly and are weighted more heavily for recent
charge-off experience. The review of reserve adequacy is performed by executive
management and presented to the Board of Directors for its review,
consideration, and ratification. See "Reserve and Provision for Loan Losses" in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's Annual Report for a further discussion of the
reserve for loan losses.
COMPETITION
The financial services industry in which the Company operates is highly
competitive. The Bank competes with national and state banks for deposits,
loans, and trust accounts and with savings and loan associations and credit
unions for loans and deposits. In addition, the Bank competes with other
providers of financial services, from both inside and outside Louisiana and
Texas, including finance companies, institutional buyers of commercial paper,
money market funds, brokerage firms, investment companies, insurance companies,
insurance agencies and governmental agencies. These competitors are actively
engaged in marketing various types of loans, commercial paper, short-term
obligations, investments, insurance and other products and services.
The Company anticipates that the intensity of competition among financial
institutions will be increased when the provisions of the Gramm-Leach-Bliley Act
(GLBA) become fully effective and the regulations implementing the GLBA are
issued by the Board of Governors of the Federal Reserve System (FRB). The GLBA
permits banks, securities firms, and insurance companies to affiliate under an
entity to be known as a "financial holding company" which could then serve its
customers' varied financial needs through a single corporate structure. The
Company expects to become a financial holding company at such time as the
provisions pertaining to such entities become effective in order to take
advantage of the opportunities afforded under the GLBA.
SUPERVISION AND REGULATION
The financial services industry is extensively regulated under both federal
and state law. The Company is subject to regulation and examination by the FRB.
The Bank is subject to regulation and examination by the Office of the
Comptroller of the Currency (OCC). HCC is regulated by the Small Business
Administration. Zachary Taylor and HIA are regulated by the Louisiana Department
of Insurance. The Texas Department of Insurance performs a similar function with
respect to Hibernia Insurance Agency of Texas, Inc., whose activities are
currently limited to the sale, as agent, of credit life insurance and fixed
annuities in Texas. Hibernia Investments, L.L.C. is regulated by the Securities
and Exchange Commission (SEC), the National Association of Securities Dealers,
Inc., and the Louisiana Office of Financial Institutions, through the Deputy
Commissioner of Securities.
The Company is subject to the Bank Holding Company Act (BHCA), which
requires the Company to obtain the prior approval of the FRB to acquire a
significant equity interest in any additional banks or bank holding companies.
At such time as the provisions of the GLBA become fully effective and the
Company becomes a financial holding company, the Company anticipates that it
would be eligible to engage in nonbanking activities which are financial in
nature by notifying, or in certain cases obtaining the prior approval of, the
FRB. Under the GLBA, subsidiaries of financial holding companies engaged in
nonbank activities would be supervised and regulated by the federal and state
agencies which normally supervise and regulate such functions outside of the
financial holding company context. Although the FRB would continue to be the
primary "umbrella" regulator of financial holding companies, the GLBA would
limit the ability of the FRB to order a financial holding company subsidiary
which is regulated by the SEC or a state insurance authority to provide funds or
assets to an affiliated depository institution under the FRB's "source of
strength" doctrine.
The Bank is subject to a number of laws regulating depository institutions,
including the Federal Deposit Insurance Corporation Improvement Act of 1991
which expanded the regulatory and enforcement powers of the federal bank
regulatory agencies, required that these agencies prescribe standards relating
to internal controls, information systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, compensation, fees and
benefits, and mandated annual examinations of banks by their primary regulators.
The Bank is also subject to a number of consumer protection laws and regulations
of general applicability.
The banking industry is affected by the monetary and fiscal policies of the
FRB. An important function of the FRB is to regulate the national supply of bank
credit to moderate recessions and to curb inflation. Among the instruments of
monetary policy used by the FRB to implement its objectives are: open-market
operations in U. S. government securities, changes in the discount rate and the
federal funds rate (which is the rate banks charge each other for overnight
borrowings), and changes in reserve requirements on bank deposits.
<PAGE>
LOAN PORTFOLIO
The amounts and percentages of loans outstanding by type are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31
- ------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
% of % of % of % of % of
Amount Total Amount Total Amount Total Amount Total Amount Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural ........... $ 3,213,764 30% $ 3,219,516 33% $ 2,526,628 30% $ 1,864,371 27% $ 1,394,465 26%
Real estate - construction ... 155,200 1 178,389 2 119,110 2 91,390 2 51,085 1
Real estate - mortgage ....... 4,979,180 46 4,328,788 44 3,880,342 46 3,190,662 46 2,560,770 48
Consumer ..................... 1,978,303 18 1,628,714 16 1,506,594 18 1,517,046 22 1,272,250 23
Lease financing .............. 102,677 1 32,869 - 31,031 - 16,162 - - -
All other .................... 427,552 4 518,918 5 323,524 4 214,849 3 110,857 2
- ------------------------------------------------------------------------------------------------------------------------------------
$10,856,676 100% $ 9,907,194 100% $ 8,387,229 100% $ 6,894,480 100% $ 5,389,427 100%
====================================================================================================================================
</TABLE>
SELECTED LOAN MATURITIES
The following table shows selected categories of loans outstanding as of
December 31, 1999, which, based on remaining scheduled repayments of principal,
are due in the periods indicated. In addition, the amounts contractually due
after one year are summarized according to their interest sensitivity.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Maturing
- ----------------------------------------------------------------------------------------------------------------
After One
Within But Within After
($ in thousands) One Year Five Years Five Years Total
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural ............................ $1,293,919 $1,626,466 $ 293,379 $3,213,764
Real estate - construction ................ 96,085 46,822 12,293 155,200
- ----------------------------------------------------------------------------------------------------------------
$1,390,004 $1,673,288 $ 305,672 $3,368,964
================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Interest Sensitivity
- -----------------------------------------------------------------------------------------------
Fixed Variable
Rate Rate
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Due after one but within five years ........... $ 360,821 $1,312,467
Due after five years .......................... 117,214 188,458
- -----------------------------------------------------------------------------------------------
$ 478,035 $1,500,925
===============================================================================================
</TABLE>
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE
The following is a summary of activity in the reserve for loan losses:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
- ------------------------------------------------------------------------------------------------------------------------------
($ in thousands) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance of reserve for
loan losses
at beginning of period .................. $ 130,347 $ 126,557 $ 146,097 $ 167,505 $ 172,958
Addition due to purchase
transactions ............................ 3,035 - 479 6,413 726
Transfer due to securitizations ........... (182) - - - -
Loans charged off:
Commercial, financial,
and agricultural ...................... (53,427) (11,262) (11,420) (6,137) (6,287)
Real estate - construction .............. (7) (151) (50) (76) (14)
Real estate - mortgage .................. (3,995) (4,404) (5,392) (2,697) (5,229)
Consumer ................................ (22,988) (24,917) (29,294) (27,411) (14,775)
Lease financings ........................ (172) - - - -
All other ............................... (2,777) (154) (261) (339) (72)
- ------------------------------------------------------------------------------------------------------------------------------
Total loans charged off ............... (83,366) (40,888) (46,417) (36,660) (26,377)
Recoveries of loans
previously charged off:
Commercial, financial,
and agricultural ...................... 4,154 3,031 3,854 6,915 7,991
Real estate - construction .............. 292 470 103 138 235
Real estate - mortgage .................. 6,618 6,542 8,647 5,357 5,873
Consumer ................................ 7,326 7,120 10,118 7,890 5,252
All other ............................... 48 289 243 426 114
- ------------------------------------------------------------------------------------------------------------------------------
Total recoveries ...................... 18,438 17,452 22,965 20,726 19,465
- ------------------------------------------------------------------------------------------------------------------------------
Net loans charged off ..................... (64,928) (23,436) (23,452) (15,934) (6,912)
Additions to reserve
charged to operating
expense ................................. 87,800 27,226 3,433 (11,887) 733
- ------------------------------------------------------------------------------------------------------------------------------
Balance at end of period .................. $ 156,072 $ 130,347 $ 126,557 $ 146,097 $ 167,505
==============================================================================================================================
Ratio of net charge-offs
to average loans outstanding ............ 0.62% 0.26% 0.31% 0.26% 0.14%
==============================================================================================================================
</TABLE>
<PAGE>
ALLOCATION OF RESERVE FOR LOAN LOSSES
The reserve for loan losses has been allocated according to the amount
deemed to be reasonably necessary to provide for probable credit losses inherent
in the loan portfolio within the categories of loans set forth in the table
below. See "Reserve and Provision for Loan Losses" in Management's Discussion
and Analysis of Financial Condition and Results of Operations in the Company's
Annual Report for a discussion of the factors which influence management's
judgment in determining the adequacy of the reserve for loan losses.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
($ in thousands) .............. 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve at end of period:
Commercial, financial and
agricultural (1) ........ $ 46,136 $ 27,797 $ 19,024 $ 18,823 $ 33,135
Real estate - construction.. 1,419 952 718 698 675
Real estate - mortgage ..... 21,783 13,709 18,511 22,280 43,506
Consumer ................... 47,234 50,215 53,464 63,646 36,681
Unallocated ................ 39,500 37,674 34,840 40,650 53,508
- ------------------------------------------------------------------------------------------------------
$156,072 $130,347 $126,557 $146,097 $167,505
======================================================================================================
- ----------------
(1) Includes lease financings
</TABLE>
MATURITIES OF LARGE-DENOMINATION CERTIFICATES OF DEPOSIT
The following table shows large-denomination certificates of deposit as of
December 31, 1999 by remaining maturity.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
($ in thousands) Domestic Foreign
- --------------------------------------------------------------------------
<S> <C> <C>
3 months or less .................. $ 985,727 $ 362,723
Over 3 months through 6 months..... 393,643 -
Over 6 months through 12 months.... 512,819 -
Over 12 months through 5 years..... 181,266 -
Over 5 years ...................... 12,517 -
- --------------------------------------------------------------------------
Total ........................ $2,085,972 $ 362,723
==========================================================================
</TABLE>
FORWARD-LOOKING STATEMENTS
Statements in this Report Form 10-K that are not historical facts should be
considered forward-looking statements with respect to the Company.
Forward-looking statements of this type speak only as of the date of this 10-K.
By nature, forward-looking statements involve inherent risk and uncertainties.
Various factors, including, but not limited to, economic conditions, asset
quality, interest rates, loan demand and changes in the assumptions used in
making the forward-looking statements, could cause actual results to differ
materially from those contemplated by the forward-looking statements.
<PAGE>
ITEM 2. PROPERTIES
The Company's executive offices are located in downtown New Orleans,
Louisiana, in the downtown branch office of Hibernia National Bank. The Company
leases its main office building and operations center under the terms of
sale/leaseback agreements. The Company and the Bank consider all properties
owned or leased to be suitable and adequate for their intended purposes and
consider the terms of existing leases to be fair and reasonable.
On December 31, 1999 the Company reported miscellaneous property with a net
book value of $11,907,000. These properties include $7,710,000 of properties
acquired from borrowers either as a result of foreclosures or voluntarily in
full or partial satisfaction of indebtedness previously contracted and
$4,197,000 of duplicate or excess bank-owned premises. See "Asset Quality" in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Registrant's Annual Report for a further discussion of these
properties.
ITEM 3. LEGAL PROCEEDINGS
The Company and the Bank are parties to certain pending legal proceedings
arising from matters incidental to their business. Management is of the opinion
that these actions will not have a material effect on the financial condition,
results of operations, or liquidity of the Company.
<PAGE>
ITEM X. IDENTIFICATION OF EXECUTIVE OFFICERS
Each executive officer of the Company holds his or her position until the
earlier of (a) their removal or resignation from office, (b) their successor is
appointed by the Board of Directors, or (c) such time that the Board no longer
deems their position to be that of an executive officer.
J. HERBERT BOYDSTUN, 54, Chairman of the Southwest Region of the Company
and Hibernia National Bank, assumed those responsibilities in 1996. Mr. Boydstun
is also responsible for the Company's operations in Southeast Texas. Mr.
Boydstun served as Southcentral/Northeast Regional Chairman from 1995 to 1996
and as Northeast Regional Chairman from August 1994 until 1995. Mr. Boydstun
also serves on the Boards of Directors of the Company and Hibernia National
Bank.
E.R. "BO" CAMPBELL, 58, is Vice Chairman of the Board of Directors of the
Company and Hibernia National Bank. Mr. Campbell also served on the Board of
Directors of Hibernia National Bank of Texas, and as its Chairman during a
portion of 1998, until that bank was merged into Hibernia National Bank. Mr.
Campbell served as Northern Regional Chairman of the Company and Hibernia
National Bank from January 1995 until 1997.
K. KIRK DOMINGOS III, 58, Senior Executive Vice President/Retail Arena and
Technology of the Company and Hibernia National Bank, assumed those
responsibilities in September 1997. Mr. Domingos is responsible for the consumer
and business banking product lines and various business lines, primarily
consumer related. He also has responsibility for certain administrative
functions of the Company. Mr. Domingos has been employed by the Company and/or
its subsidiaries since August 1975 and assumed the position of Senior Executive
Vice President responsible for Support Services in August 1994 and the position
of Executive Vice President and Administrative Executive of Hibernia National
Bank in August 1991.
B.D. FLURRY, 58, serves as Chairman of the Northern Region for the Company
and Hibernia National Bank, a position he assumed in 1997 and which includes
responsibility for the Company's operations in Northeast Texas. Mr. Flurry also
served on the Board of Directors of Hibernia National Bank of Texas until that
bank was merged into Hibernia National Bank. From January 1995 until 1997, Mr.
Flurry served as the president of the Northern Region for the Company and
Hibernia National Bank. Mr. Flurry assumed primary responsibility for oversight
of the Northeast Texas market at year-end 1996.
MARSHA M. GASSAN, 47, serves as Senior Executive Vice President and Chief
Financial Officer of the Company and Hibernia National Bank, positions which she
assumed in April 1996. During 1998 and a portion of 1999, Ms. Gassan also served
as Treasurer of the Company and Hibernia National Bank. Prior to April 1996, Ms.
Gassan served as Executive Vice President, General Auditor and manager of Credit
Risk Management of the Company and Hibernia National Bank (from 1994 to 1996),
and as Senior Vice President and manager of Credit Risk Management (from 1992 to
1994).
STEPHEN A. HANSEL, 52, serves as President and Chief Executive Officer of
the Company and Hibernia National Bank, positions which he assumed in March
1992. Mr. Hansel also serves on the Boards of Directors of the Company and
Hibernia National Bank.
RUSSELL S. HOADLEY, 55, serves as Executive Vice President/Employee and
Public Relations for the Company and Hibernia National Bank, a position he
assumed in 1994. From the time he joined the Company in July 1993 until his
promotion in 1994, Mr. Hoadley served as Senior Vice President/Public Affairs
and Marketing for the Company.
RANDALL E. HOWARD, 52, serves as Chairman of the Southeast Region for the
Company and Hibernia National Bank. Mr. Howard has served in that position since
February 1998. Prior to that time, from 1987 to February 1998, Mr. Howard served
as President and Chief Executive Officer of ArgentBank, a Louisiana banking
association headquartered in Thibodaux, Louisiana, which was merged with and
into the Company in early 1998.
SCOTT P. HOWARD, 52, serves as Senior Executive Vice President/Commercial
Arena for the Company and Hibernia National Bank and has served in that position
since March 1996. From May 1992 until March 1996, Mr. Howard served as Executive
Vice President/Corporate and International Banking for Hibernia National Bank.
RONALD E. SAMFORD, JR., 47, serves as Executive Vice President and
Controller of the Company and Hibernia National Bank and Chief Accounting
Officer of the Company, which positions he has held since November 1992.
RICHARD G. WRIGHT, 50, serves as Senior Executive Vice President and Chief
Credit Officer of the Company, a position which he assumed in March 1996. Mr.
Wright is also responsible for credit services, which includes loan operations.
From August 1994 until March 1996, Mr. Wright served as Executive Vice
President/Credit Policy and Analysis of Hibernia National Bank, and from the
time he joined the Company in May 1992 until August 1994, he served as Senior
Vice President in the Credit and Asset Quality area of Hibernia National Bank.
Part IV
ITEM 14. 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 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 Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1999 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, as amended to date)
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, 1999 (1999 Annual Report to security
holders of Hibernia Corporation).
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
27 Financial Data Schedule
99.1 Exhibit 99.1 to the Annual Report on Form 10-K dated May 28, 1999
filed with the Commission is hereby incorporated by reference (Annual
Report of the Retirement Security Plan for the fiscal year ended
December 31, 1998)
99.2 Exhibit 99.2 to the Annual Report on Form 10-K dated May 28, 1999
filed with the Commission is hereby incorporated by reference (Annual
Report of the Employee Stock Ownership Plan and Trust for the fiscal
year ended December 31, 1998)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HIBERNIA CORPORATION
(Registrant)
/s/ Stephen A. Hansel
Stephen A. Hansel, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on March 13, 2000, by the following persons on behalf of
the Registrant and in the capacities indicated.
/s/ Marsha M. Gassan /s/ Ronald E. Samford, Jr.
Marsha M. Gassan Ronald E. Samford, Jr.
Senior Executive Vice President Executive Vice President & Controller
Chief Financial Officer Chief Accounting Officer
Robert H. Boh*, Director Donald J. Nalty*, Director
J. Herbert Boydstun*, Director Ray B. Nesbitt*, Director
E.R. "Bo" Campbell*, Director William C. O'Malley*, Director
Richard W. Freeman, Jr.*, Director James R. Peltier*, Director
Stephen A. Hansel*, Director Robert T. Ratcliff*, Director
Dick H. Hearin*, Director Janee M. Tucker*, Director
Robert T. Holleman*, Director Virginia E. Weinmann*, Director
Elton R. King*, Director Robert E. Zetzmann*, Director
Sidney W. Lassen*, Director
*By: /s/ Gary L. Ryan
Gary L. Ryan
Attorney-in-fact
EXHIBIT 10.38
AGREEMENT
THIS AGREEMENT is entered into as of the 31st day of December, 1999, by and
between E.R. "Bo" Campbell. ("Executive"), and Hibernia National Bank a
national banking association ("Hibernia").
W I T N E S S E T H:
WHEREAS, Hibernia and Executive desire to continue their relationship as
employer and employee which began in 1994 under terms that differ from
those previously in effect;
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants hereinafter set forth, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Hibernia agrees to employ Executive and Executive agrees
to remain in the employ of Hibernia, upon the terms and subject to the
conditions provided herein.
2. POSITION AND TITLE. During the period of his employment hereunder,
Executive shall report directly to the Chief Executive Officer and shall
hold such title as may be mutually agreed by the parties, and shall perform
services when and as directed by Hibernia or its parent company, Hibernia
Corporation (the "Company"), as more fully described in Section 3 hereof.
3. DUTIES. Executive's duties shall include business development and such
duties as may be delegated to him by the Chief Executive Officer or the
Board of Directors. During the period of his employment hereunder,
Executive shall devote such business time, attention, skill and efforts
to the faithful performance of his duties hereunder as may be mutually
agreed by Executive and the Chief Executive Officer. During the term of his
employment under this Agreement, Executive may not serve, or continue to
serve, on the board of directors or hold any other office or position with
any other financial institution.
4. COMPENSATION.
(a) Salary. Hibernia will pay Executive $___________.00 per year to
compensate Executive for the duties and responsibilities performed
for Hibernia described in Section 3 above. During the term
of his employment, Executive's salary will be paid currently
in equal installments twice monthly, on the 15th and the last
business day of each month, or at such other times as Hibernia
may regularly pay its Executives.
(b) Bonus. Executive will not be entitled to a bonus.
(c) Benefits. Executive during the term of his employment shall also be
entitled to receive such benefits as Hibernia may provide for its
Executives pursuant to any policy of Hibernia authorized by its
Board of Directors.
5. TERM. The term of this Agreement shall be three years; provided,
however, that the term of this Agreement shall be automatically extended
for an additional year upon each anniversary of the date of this
Agreement, unless this Agreement is otherwise terminated by notice given
by Hibernia or Executive on or before any anniversary of the date of
this Agreement.
6. TERMINATION.
(a) Death or Disability.
(i) Employment shall terminate upon Executive's death.
(ii) If Executive becomes, in the good faith judgment of Hibernia's
Board of Directors, physically or mentally disabled so as to be
eligible to receive benefits pursuant to the disability insurance
policy provided to Executive pursuant to this Agreement, Hibernia
may, at its option, terminate employment upon not fewer than 15
days' written notice.
If employment is terminated pursuant to this Subsection 6(a),
Executive or his heirs, estate, executor and administrator shall
be entitled to receive, and Hibernia shall pay to Executive or
his heirs, estate, executor or administrator unpaid salary
through the Termination Date, and any benefits to which Executive
or his estate may then be entitled under benefits insurance plans
or their equivalent provided by Hibernia pursuant to Section 4
hereof.
(b) Termination for Cause. This Agreement may be immediately terminated
by Hibernia if:
(i) Executive knowingly and intentionally commits, or is otherwise
officially charged with, a felony or a crime involving moral
turpitude or any other criminal activity or unethical conduct
that, in the good faith opinion of the Board of Directors of
Hibernia, would seriously impair Executive's ability to perform
his duties hereunder or would impair the business reputation of
Hibernia, either in the market for which Executive is responsible
or otherwise,
(ii) in the good faith opinion of the Board of Directors of Hibernia
or the Company, Executive fails to substantially perform the
duties assigned to him hereunder if such failure has continued
for a period of 30 days after notice of such failure and a demand
for performance has been given by the Company, or
(iii) in the good faith opinion of the Board of Directors of Hibernia
or the Company, Executive has violated any statute, rule, or
regulation under the federal securities or banking laws or the
securities or banking laws of any state which impairs the
business of Hibernia.
(c) Termination of Agreement Without Cause. Hibernia may terminate this
Agreement without cause at any time after the Effective Date by
paying to Executive the full amount of unpaid salary to which he
would have been entitled through the Termination Date in a lump sum
and any benefits to which Executive or his estate may then be
entitled under benefits insurance plans or their equivalent provided
by Hibernia pursuant to Section 4 hereof.
7. PREVIOUS AGREEMENT(S). Executive and Hibernia agree that this Agreement
supersedes any and all employment agreements or ther agreements relating to
benefits to be paid upon a change of control or a termination of employment
between the Bank, its parents, subsidiaries, or their predecessors and/or
assigns and Executive, and that any and all such prior agreements are
hereby terminated and of no further force and effect.
8. HEADINGS. Section and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9. INTEGRATED AGREEMENT. This Agreement, and all other documents and
instruments delivered in accordanc ewith the terms hereof, constitutes the
entire understanding and agreement among the parties hereto with respect to
the subject matter hereof, and there are no other agreements,
understandings, restrictions, representations or warranties among the
parties other than those set forth herein or herein provided for.
10. AMENDMENTS. This Agreement may be amended or modified at any time in
any or all respects, but only by an instrument in writing executed by the
parties hereto.
11. CHOICE OF LAW. The validity of the Agreement, the construction of its
terms, and the determination of the rights and duties of the parties hereto
shall be governed by and construed in accordance with the internal laws of
the State of Louisiana applicable to contracts made to be performed wholly
within such State.
12. ASSIGNMENT. The rights and obligations of Hibernia pursuant to this
Agreement shall be binding upon and inure to the benefit of Hibernia's
successors and assigns. This Agreement may not be assigned or transferred
by Executive.
13. SEVERABILITY. Each provision of the Agreement is intended to be
severable. In the event that any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable, the same shall not affect the validity or enforceability of
any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provisions had never
been contained therein. Notwithstanding the foregoing, however, no
provision shall be severed if it is clearly apparent under the
circumstances that the parties would not have entered into the Agreement
without such provision.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE
____________________________________
HIBERNIA NATIONAL BANK
By: ____________________________________
Stephen A. Hansel
President and Chief Executive Officer
<PAGE>
HIBERNIA COPRPORATION
Corporate Offices
313 Carondelet St.
New Orleans, LA 70130
504-533-3333
Mailing Address
P.O. Box 61540
New Orleans, LA 70161
Electronic Adress
Internet: www.hibernia.com
E-mail: [email protected]
Shareholder, Employee Data
(at December 31, 1999)
Shareholder's of record: 17,243
Full-time equivalent employees: 5,211
Stock Listing
Common Stock
Exchange: NYSE
Symbol: HIB
Price and volume
Listed as "Hibernia" or "HIB" in the Wall Street Journal and under similar
designations in other daily newspapers.
Sharholder Assistance
For change of address, records, transfer of stock from one name to another,
assistance with lost certificates, direct deposits of dividends or a Dividend
Reinvestment and Stock Purchase Plan prospectus:
ChaseMellon Shareholder Services
Securityholder Relations Department
85 Challenger Road, Overpeck Centre
Ridgfield Park, NJ 07660
Toll free: 800-814-0305
www.chasemellon.com
Dividend Reinvestment and Stock Purchase Plan
Once enrolled, shareholders may purchase new shares directly form the Company
through reinvested dividends, optional cash purchases or both-an economical,
convenient way to increase Hibernia holdings. For more information call, 800-
245-4388, Option 3.
Direct Deposit of Dividends
Obtain dividends faster through direct deposit. To sign up or receive
information, call 800-814-0305.
For Information
Shareholders, media and other individuals requesting the annual report, Forms
10-K or 10-Q and general information: Jim Lestelle, Senior Vice President and
Manager of Corporate Communications, 504-533-5482 or 800-245-4388, Option 4.
Analysts and others requesting financial data: Trisha Voltz, Vice President
and Manager of Investor Relations, 504-533-2180 or 800-245-4388, Option 2.
For fax access to news releases, quarterly reports, analyst reports, and
dividend reinvestment details, call 800-207-9063.
Duplicate Mailings
Hibernia is required to mail information to each shareholder on its list, even
when there is duplication. To eliminate duplicates, write to ChaseMellon Share-
holder Serevices at the address above and indicate names to be removed. This
does not affect dividend or proxy mailings.
<TABLE>
<CAPTION>
Hibernia Stock Price And Dividend Information
1999 1998
- --------------------------------------------------------------------------------
Cash Cash
Market Price(1) Dividends Market Price(1) Dividends
High Low Declared High Low Declared
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st quarter $17.25 $13.19 $.105 $21.63 $17.25 $.09
2nd quarter $16.19 $11.44 $.105 $21.94 $19.56 $.09
3rd quarter $16.19 $11.63 $.105 $20.31 $13.50 $.09
4th quarter $14.19 $10.38 $.12 $17.75 $13.06 $.105
- --------------------------------------------------------------------------------
- ----------
(1) NYSE closing price.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Five-Year Consolidated Summary of Income and Selected Financial Data (1)
Hibernia Corporation and Subsidiaries
====================================================================================================================================
Year Ended December 31
($ in thousands, except per-share data) 1999 1998 1997 1996 1995
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Interest income ..................................... $ 1,055,325 $ 977,728 $ 864,704 $ 736,718 $ 660,988
Interest expense .................................... 470,520 434,934 370,624 305,859 281,657
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income ................................. 584,805 542,794 494,080 430,859 379,331
Provision for loan losses ........................... 87,800 27,226 3,433 (11,887) 733
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses ......................... 497,005 515,568 490,647 442,746 378,598
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Noninterest income ................................ 214,271 181,530 153,677 127,292 113,973
Securities gains (losses), net .................... 432 5,899 2,739 (5,200) 1,081
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income .................................. 214,703 187,429 156,416 122,092 115,054
Noninterest expense ................................. 440,921 426,155 418,879 366,294 325,950
- ------------------------------------------------------------------------------------------------------------------------------------
Income before taxes ................................. 270,787 276,842 228,184 198,544 167,702
Income tax expense .................................. 95,684 95,886 80,289 68,465 19,298
- ------------------------------------------------------------------------------------------------------------------------------------
Net income .......................................... $ 175,103 $ 180,956 $ 147,895 $ 130,079 $ 148,404
- ------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders ........ $ 168,203 $ 174,056 $ 140,995 $ 128,339 $ 148,404
====================================================================================================================================
Per common share information: (2)
Net income ........................................ $ 1.07 $ 1.11 $ 0.90 $ 0.82 $ 0.95
Net income - assuming dilution .................... $ 1.06 $ 1.09 $ 0.89 $ 0.82 $ 0.95
Tax-effected net income (3) ....................... $ 1.07 $ 1.11 $ 0.90 $ 0.82 $ 0.70
Cash dividends declared ........................... $ 0.435 $ 0.375 $ 0.33 $ 0.29 $ 0.25
Average shares outstanding (000s) ................... 157,253 157,169 156,324 155,689 155,804
Average shares outstanding - assuming dilution (000s) 158,902 159,615 158,854 157,187 156,730
Dividend payout ratio ............................... 40.65% 33.78% 36.67% 35.37% 26.32%
====================================================================================================================================
Selected year-end balances (in millions)
Loans ............................................... $ 10,856.7 $ 9,907.2 $ 8,387.2 $ 6,894.5 $ 5,389.4
Deposits ............................................ 11,855.9 10,892.6 10,103.0 9,331.4 7,812.5
Debt ................................................ 844.8 806.3 507.6 59.8 36.7
Equity .............................................. 1,375.5 1,344.6 1,220.4 1,100.0 915.1
Total assets ........................................ 15,314.2 14,329.9 12,704.0 11,015.2 9,176.4
====================================================================================================================================
Selected average balances (in millions)
Loans ............................................... $ 10,455.8 $ 9,121.6 $ 7,496.9 $ 6,036.3 $ 4,865.7
Deposits ............................................ 11,177.2 10,218.2 9,507.5 8,242.5 7,580.4
Debt ................................................ 840.5 711.6 96.0 32.2 30.6
Equity .............................................. 1,359.7 1,286.4 1,154.9 966.0 830.3
Total assets ........................................ 14,637.0 13,212.8 11,537.6 9,736.7 8,849.9
====================================================================================================================================
Selected ratios
Net interest margin (taxable-equivalent) ............ 4.38% 4.51% 4.73% 4.84% 4.68%
Return on assets .................................... 1.20% 1.37% 1.28% 1.34% 1.68%
Return on common equity ............................. 13.35% 14.67% 13.37% 13.65% 17.87%
Return on total equity .............................. 12.88% 14.07% 12.81% 13.47% 17.87%
Efficiency ratio .................................... 54.40% 57.93% 63.61% 64.74% 65.01%
Average equity/average assets ....................... 9.29% 9.74% 10.01% 9.92% 9.38%
Tier 1 risk-based capital ratio ..................... 10.21% 10.78% 11.26% 12.64% 15.19%
Total risk-based capital ratio ...................... 11.46% 11.98% 12.51% 13.90% 16.46%
Leverage ratio ...................................... 8.11% 8.55% 8.61% 8.92% 9.77%
====================================================================================================================================
Cash-basis financial data (3) (4)
Net income applicable to common shareholders ........ $ 182,144 $ 185,146 $ 152,972 $ 135,600 $ 112,469
Net income per common share (2) ..................... $ 1.16 $ 1.18 $ 0.98 $ 0.87 $ 0.72
Net income per common share - assuming dilution (2) . $ 1.15 $ 1.16 $ 0.96 $ 0.86 $ 0.72
Return on assets .................................... 1.31% 1.47% 1.40% 1.43% 1.27%
Return on common equity ............................. 16.82% 17.91% 17.01% 17.24% 13.94%
Efficiency ratio .................................... 52.29% 56.24% 61.53% 63.45% 64.32%
Average equity/average assets ....................... 8.18% 8.68% 8.78% 8.47% 9.14%
====================================================================================================================================
- ----------------
(1)All financial information has been restated for mergers accounted for as
poolings of interests. The effects of mergers accounted for as purchase
transactions have been included from the date of consummation. Prior periods
have been conformed to current-period presentation.
(2)Dividends per common share are historical amounts. For a discussion of net
income per common share computations refer to Note 18 of the consolidated
financial statements - "Net Income Per Common Share Data."
(3)Adjusted to reflect a 35% effective tax rate for 1995.
(4)Excluding amortization and balances of purchase accounting intangibles net
of applicable taxes.
</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Management's Discussion presents a review of the major factors and trends
affecting the performance of Hibernia Corporation (the "Company" or "Hibernia")
and its subsidiaries, principally Hibernia National Bank (the "Bank"). This
discussion should be read in conjunction with the accompanying tables and
consolidated financial statements.
1999 Highlights
- -- Cash-basis net income in 1999, excluding merger-related expenses, was
$194.9 million ($1.20 per common share) compared to $194.1 million ($1.19
per common share in 1998). Cash-basis net income excludes the effect of
the amortization of purchase accounting intangibles.
- -- Net income for 1999 totaled $175.1 million, a 3% decrease compared to
$181.0 million for 1998. Net income per common share for 1999 of $1.07
decreased 4% compared to $1.11 for 1998, and net income per common share -
assuming dilution was $1.06 for 1999, a decrease of 3% compared to $1.09
for 1998.
- -- Pre-tax, pre-provision earnings in 1999 were $358.6 million, an 18%
increase compared to $304.1 million in 1998 and a 55% increase compared to
$231.6 million in 1997. The provision for loan losses in 1999 totaled
$87.8 million compared to $27.2 million in 1998. The 1999 provision
exceeded net charge-offs by $22.9 million.
- -- Total assets increased $1.0 billion (7%) to $15.3 billion at December 31,
1999 compared to December 31, 1998.
- -- Loans grew 10% to $10.9 billion at December 31, 1999 compared to December
31, 1998. Consumer loans grew $843.9 million (21%) to $4.8 billion, small
business loans increased $292.1 million (14%) to $2.4 billion and
commercial loans decreased $186.5 million (5%) to $3.7 billion. Commercial
loans decreased as management implemented new policies designed to better
manage and diversify the risk of the portfolio.
- -- Delinquencies as a percentage of total loans at December 31, 1999 were
0.46%, down from 0.60% at December 31, 1998. Commercial, small business
and consumer loan delinquencies were 0.15%, 0.34% and 0.75%, respectively,
at year-end 1999, compared to 0.27%, 0.50% and 0.98%, respectively, at
year-end 1998.
- -- Deposits increased to $11.9 billion at December 31, 1999, a $963.3 million
(9%) increase from December 31, 1998.
- -- Net interest income increased $42.0 million (8%) to $584.8 million in 1999
from $542.8 million in 1998. The net interest margin was 4.38% for 1999,
compared to 4.51% for 1998. The decline in the margin was primarily the
result of lower yields on earning assets, the increased use of market-rate
funds and the decline in the percentage of noninterest-bearing funds
supporting earning assets.
- -- On a taxable-equivalent basis, excluding securities transactions, revenues
for 1999 totaled $810.6 million, a $74.9 million (10%) increase from the
1998 level of $735.6 million. Noninterest income, excluding securities
transactions, increased $32.7 million (18%) to $214.3 million compared to
1998. Noninterest expense for 1999 totaled $440.9 million, an increase
of $14.8 million (3%) from 1998.
- -- Operating efficiency and productivity continued to improve. In 1999
the efficiency ratio was 54.40% compared to 57.93% in 1998 and 63.61% in
1997. The cash-basis efficiency ratio, which excludes the impact of
amortization of purchase accounting intangibles, was 52.29% in 1999
compared to 56.24% in 1998 and 61.53% in 1997. Revenue per full-time
equivalent employee, another efficiency measure, increased 9% to
approximately $155,000 in 1999 from approximately $142,000 in 1998.
- -- Cash dividends per common share for 1999 increased to $.435, or 16%
higher than the 1998 cash dividend of $.375 per common share and 32% higher
than the 1997 cash dividend of $.33 per common share. The dividend payout
ratios for 1999, 1998 and 1997 were 40.7%, 33.8% and 36.7%, respectively.
- -- In 1999 Hibernia completed a merger with one East Texas financial
institution and purchased the assets and assumed the liabilities of the
Beaumont branches of Chase Bank of Texas, N.A. These mergers added $785
million in assets and 13 banking offices.
Merger Activity
In 1999 the Company completed a merger with MarTex Bancshares, Inc. in
East Texas which was accounted for as a pooling of interests. Additionally
in 1999, the Company purchased the assets and assumed the liabilities of the
Beaumont branches ofChase Bank of Texas, N.A. (the "Beaumont transaction").
In 1998 the Company completed four mergers, three in Louisiana and one in East
Texas, which were accounted for as poolings of interests. The Company completed
two mergers with East Texas financial institutions in 1997 which were accounted
for as poolings of interests.
The institutions with which the Company merged are collectively referred
to as the "merged companies." The merged companies that were acquired in
transactions accounted for as poolings of interests are referred to as the
"pooled companies," and institutions that were acquired in transactions
accounted for as purchases are referred to as the "purchased companies."
All prior-year information has been restated to reflect the effect of
mergers accounted for as poolings of interests. For purchase transactions, the
financial information of those institutions is combined with Hibernia as of and
subsequent to consummation; therefore, certain items contained in this
discussion are only comparable after excluding the effect of the purchased
companies.
Measures of financial performance subsequent to the purchase transactions
are more relevant when comparing "cash-basis" 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
cash-basis measures of financial performance are presented in the Five-Year and
Quarterly Consolidated Summary of Income and Selected Financial Data on pages 20
and 43.
Financial Condition
Earning Assets
Interest income from earning assets (including loans, securities, short-
term investments and mortgage loans held for sale) is the Company's main source
of income. Average earning assets totaled $13.6 billion in 1999, compared to
$12.3 billion in 1998 and $10.7 billion in 1997. The increase in average earning
assets of $1.3 billion in 1999 and $1.6 billion in 1998 was primarily due to
growth in the loan portfolio.
Loan demand remained strong throughout 1999. Average loans as a percentage
of average earning assets increased to 76.7% in 1999 compared to 74.2% in 1998
and 70.3% in 1997. Average securities decreased to 20.3% of average earning
assets in 1999 from 22.1% in 1998 and 26.1% in 1997. The Company funded the 1999
increase in earning assets through growth in interest-bearing deposits of $787.5
million, other interest-bearing liabilities of $424.5 million, noninterest-
bearing liabilities of $138.9 million and shareholders' equity of $73.3 million.
Total earning assets at December 31, 1999 were $14.2 billion, up $838.6
million (6%) from a year earlier primarily due to a $949.5 million (10%)
increase in loans.
LOANS. The Company's lending activities are subject to both prudent
underwriting standards and liquidity considerations. Loans allow Hibernia to
meet customer credit needs and at the same time achieve yields that are
generally higher than those available on other earning assets. Lending
relationships are one way Hibernia meets its goal of providing for all of the
financial needs of its customers.
Hibernia engages in commercial, small business and consumer lending. The
specific underwriting criteria for each major loan category are outlined in a
credit policy approved by the Board of Directors. In general, commercial loans
are evaluated based on cash flow, collateral, market conditions, prevailing
economic trends, character and leverage capacity of the borrower, and capital
and investment in a particular property, if applicable. Most small business
and consumer loans are underwritten using credit scoring models which consider
factors including payment capacity, credit history and collateral. In addition,
market conditions, economic trends and the character of the borrower are
considered. The credit policy, including the underwriting criteria for major
loan categories, is reviewed on a regular basis and adjusted when warranted.
Average loans increased $1.3 billion (15%) in 1999 and $1.6 billion (22%)
in 1998. Excluding the effect of the Beaumont transaction, average loans
increased approxi-mately 14% from 1998 to 1999. Hibernia's efforts to achieve
its goal of being recognized as the integrated financial services leader in the
Gulf South by building the most comprehensive and convenient banking network,
and delivering top-quality service across a broad range of financial products
and services, enabled the Company to increase loans by deepening relationships
with existing customers and by attracting new customers from competitors.
Table 1 details Hibernia's commercial and small business loans classified
by repayment source and consumer loans classified by type. In 1999 consumer
loans grew $843.9 million (21%), small business loans increased $292.1 million
(14%) and commercial loans decreased $186.5 million (5%). The portfolio mix was
44% consumer, 22% small business and 34% commercial at year-end 1999 compared
to 40%, 21% and 39%, respectively, at year-end 1998. Hibernia's lending strategy
includes maintaining an appropriately balanced portfolio.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
TABLE 1 - COMPOSITION OF LOAN PORTFOLIO
=====================================================================================================================
December 31 ($ in millions) 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
Balance Percent Balance Percent
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial:
Commercial and industrial .................. $ 1,501.0 13.8% $ 1,371.2 13.8%
Services industry .......................... 955.4 8.8 1,055.6 10.7
Real estate ................................ 434.2 4.0 457.4 4.6
Health care ................................ 298.1 2.7 306.5 3.1
Transportation, communications and utilities 228.6 2.1 212.0 2.1
Energy ..................................... 192.6 1.8 422.0 4.3
Other ...................................... 83.4 0.8 55.1 0.6
- ---------------------------------------------------------------------------------------------------------------------
Total commercial ..................... 3,693.3 34.0 3,879.8 39.2
- ---------------------------------------------------------------------------------------------------------------------
Small Business:
Commercial and industrial .................. 823.4 7.6 770.8 7.8
Services industry .......................... 539.6 5.0 440.2 4.4
Real estate ................................ 340.2 3.1 274.7 2.8
Health care ................................ 150.8 1.4 107.6 1.1
Transportation, communications and utilities 91.9 0.9 82.2 0.8
Energy ..................................... 43.7 0.4 46.3 0.5
Other ...................................... 372.3 3.4 348.0 3.5
- ---------------------------------------------------------------------------------------------------------------------
Total small business ................. 2,361.9 21.8 2,069.8 20.9
- ---------------------------------------------------------------------------------------------------------------------
Consumer:
Residential mortgages:
First mortgages ........................ 2,263.4 20.8 1,915.5 19.3
Junior liens ........................... 282.1 2.6 190.1 1.9
Indirect ................................... 1,277.3 11.8 850.5 8.6
Revolving credit ........................... 374.2 3.4 325.8 3.3
Other ...................................... 604.5 5.6 675.7 6.8
- ---------------------------------------------------------------------------------------------------------------------
Total consumer ....................... 4,801.5 44.2 3,957.6 39.9
- ---------------------------------------------------------------------------------------------------------------------
Total loans .................................... $ 10,856.7 100.0% $ 9,907.2 100.0%
=====================================================================================================================
</TABLE>
Commercial Loans. The change in the commercial portfolio was primarily due
to decreases in energy, down $229.4 million (54%), and the services industry,
down $100.2 million (9%), partially offset by an increase of $129.8 million (9%)
in commercial and industrial. Hibernia's loan portfolio remains well
diversified, as evidenced by the portfolio percentages presented in Table 1. The
decrease in commercial loans is the result of the implementation of new policies
designed to better manage and diversify the risk of the portfolio.
Although the overall economy continues to expand, the energy industry
experienced a decline in 1998 and early 1999 as oil prices decreased 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. As a result of these efforts, the Company's energy portfolio
has been reduced. However, the Company remains active in the energy industry on
a selective basis, and the energy portion of the loan portfolio represents 2.2%
of total loans as of December 31, 1999.
Hibernia's commercial loan portfolio does not contain significant exposure
to foreign countries.
Small Business Loans. Hibernia generally categorizes companies with
revenues of less than $10 million as small businesses. The small business
portfolio showed increases primarily in the services industry, up $99.4 million
(23%); real estate, up $65.5 million (24%); commercial and industrial, up $52.6
million (7%); and health care, up $43.2 million (40%).
Centralized underwriting, utilization of sophisticated credit scoring
models and Hibernia's shortened application form, "No Financials Application,"
have made the underwriting process more efficient while maintaining credit
quality. This allows Hibernia's experienced business bankers located in each
market to concentrate on serving the credit and other financial needs of small
business customers.
Consumer Loans. The increase in the consumer portfolio was spread among
residential mortgages, up $439.9 million (21%); indirect, up $426.8 million
(50%); and revolving credit, up $48.4 million (15%). These increases were
partially offset by a decrease of $71.2 million (11%) in the "other" category.
Residential mortgage loans comprise more than half of the consumer loan
portfolio. Increased marketing efforts, new products, shortened application and
approval processes, extended service hours and an increase in the percentage of
adjustable-rate mortgages funded and retained were the major factors
contributing to the growth from 1998. Hibernia's increased focus on mortgage
lending resulted in approximately $2.3 billion in mortgage loan originations
during 1999.
The level of adjustable-rate mortgages increased in 1999 as a result of
changes in the interest rate environment. Generally, Hibernia retains
adjustable-rate mortgage loans and sells fixed-rate mortgage loans, while
retaining the associated servicing rights. At December 31, 1999 Hibernia
serviced approximately $5.4 billion in residential mortgage loans.
In addition to loans for the purchase of homes, Hibernia offers customers a
broad assortment of loans secured by residential mortgages, including the Equity
PrimeLine(R), an attractively priced line of credit secured by the customer's
residence.
An additional factor contributing to the change in the consumer portfolio
during 1999 was the increase in indirect loans. This growth was fueled primarily
by a strategic expansion into the Texas market and the introduction of a new
automobile lease product. When new markets are entered and new products are
introduced, outstanding loans grow rapidly for the first few years until
maturing loans and pay-offs begin to offset current production.
During 1999, Hibernia securitized $512.6 million of its residential first
mortgages through the Federal National Mortgage Association (FNMA), of which
$210.0 million was securitized during the second quarter of 1999 and $302.6
million was securitized during the fourth quarter of 1999. These portions of the
consumer portfolio were securitized with recourse provisions, and reserves have
been established to cover estimated losses. These transactions affect the
categorization of individual line items on the balance sheet by reducing
mortgage loans and increasing securities.
<TABLE>
<CAPTION>
==========================================================================================
TABLE 2 - COMPOSITION OF SECURITIES
- ------------------------------------------------------------------------------------------
December 31 ($ in millions) 1999 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Available for sale:
U.S. Treasuries .................. $ 277.0 $ 257.6 $ 437.8
U.S. government agencies:
Mortgage-backed securities .. 997.8 1,019.7 1,349.2
Bonds ....................... 1,065.3 1,153.2 626.4
States and political subdivisions 224.4 255.8 260.8
Other ............................ 95.8 75.4 66.6
- ------------------------------------------------------------------------------------------
Total available for sale 2,660.3 2,761.7 2,740.8
- ------------------------------------------------------------------------------------------
Held to maturity:
U.S. government agencies:
Mortgage-backed securities .. 300.5 - -
- ------------------------------------------------------------------------------------------
Total held to maturity . 300.5 - -
- ------------------------------------------------------------------------------------------
Total securities ................. $ 2,960.8 $ 2,761.7 $ 2,740.8
==========================================================================================
</TABLE>
SECURITIES. At the end of 1999, securities totaled $3.0 billion, an
increase of $199.1 million, or 7%, from the end of 1998. Of total securities at
December 31, 1999, 89% are debt securities of the U.S. government or its
agencies. Most securities held by the Company qualify as pledgeable securities
and are used to collateralize repurchase agreements and public fund deposits.
The composition of the securities portfolio is shown in Table 2.
During 1998, as a result of the interest rate environment, Hibernia
restructured a portion of its securities portfolio, resulting in the sale of
$30.0 million of U.S. Treasuries and the purchase of a similar amount of U. S.
government agencies. In connection with these transactions, the Company
recognized a gain on the sale of securities of $1.3 million, while enhancing
future interest income.
Trading Account Assets. The Company held no trading account assets at
December 31, 1999 or December 31, 1998. The Company held $35.9 million in
securities as trading account assets at December 31, 1997. These securities,
purchased in late 1997, related to a single transaction associated with a tax
planning strategy and were sold in early 1998 for slightly more than their
carrying value at year-end 1997. Hibernia classifies its trading account assets
as short-term investments.
<TABLE>
<CAPTION>
====================================================================================================================================
TABLE 3 - MATURITIES AND YIELDS OF SECURITIES(1)
====================================================================================================================================
Due after 1 Due after 5
Due in 1 year year through years through Due after
December 31, 1999 ($ in millions) or less 5 years 10 years 10 Years Total
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
====================================================================================================================================
Available for sale:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasuries .................. $ 47.0 5.74% $ 230.0 5.67% $ - -% $ - -% $ 277.0 5.69%
U.S. government agencies:
Mortgage-backed securities (2) 13.3 6.50 36.1 6.62 174.9 7.46 773.5 6.47 997.8 6.65
Bonds ........................ 107.6 5.72 127.2 5.92 716.3 6.76 114.2 6.93 1,065.3 6.57
States and political subdivisions 10.0 7.51 51.9 7.82 45.8 7.85 116.7 8.61 224.4 8.19
Other ............................ 90.7 4.11 2.4 5.03 1.3 5.03 1.4 5.69 95.8 4.16
- ------------------------------------------------------------------------------------------------------------------------------------
Total available for sale .. $ 268.6 5.28% $ 447.6 6.06% $ 938.3 6.94% $1,005.8 6.77% $2,660.3 6.56%
- ------------------------------------------------------------------------------------------------------------------------------------
Held to Maturity:
U.S. government agencies:
Mortgage-backed securities (2) $ - -% $ - -% $ 6.3 5.09% $ 294.2 6.15% $ 300.5 6.13%
- ------------------------------------------------------------------------------------------------------------------------------------
Total held to maturity .... $ - -% $ - -% $ 6.3 5.09% $ 294.2 6.15% $ 300.5 6.13%
====================================================================================================================================
- ----------
(1)Yield computations are presented on a taxable-equivalent basis using market
values for securities available for sale, amortized cost for securities held
to maturity and a statutory income tax rate of 35%.
(2)Mortgage-backed securities are classified according to contractual maturity
without consideration of principal amortization, projected prepayments or
call options.
</TABLE>
Securities Available For Sale. Average securities available for sale
increased $21.1 million (1%) to $2.7 billion in 1999. Average securities
available for sale decreased $68.6 million from 1997 to 1998.
At December 31, 1999 the securities available for sale portfolio included
$350.2 million of adjustable-rate securities, primarily mortgage-backed
securities, which are tied to a cost-of-funds index. In much the same manner as
Hibernia's cost of funds adjusts to new market rates over a period of time, the
rates on these securities may not fully reflect a change in market interest
rates for more than a year.
The average repricing period of securities available for sale at December
31, 1999 was 5.5 years, unchanged from December 31, 1998. Carrying securities
available for sale at market value has the effect of recognizing a yield on the
securities equal to the current market yield.
Securities Held To Maturity. Average securities held to maturity totaled
$31.5 million in 1999. The increase was a result of the securitization of $302.6
million of residential first mortgages in the fourth quarter of 1999.
At December 31, 1999 the securities held to maturity portfolio included
$238.2 million of adjustable-rate mortgage-backed securities, which are tied to
a cost-of-funds index. The average repricing period of securities held to
maturity at December 31, 1999 was 4.5 years.
Maturities and yields of securities at year-end 1999 are detailed in Table
3. Mortgage-backed securities are classified according to contractual maturity
without consideration of principal amortization, projected prepayments or call
options.
SHORT-TERM INVESTMENTS. Average short-term investments, primarily federal
funds sold and securities purchased under agreements to resell (reverse
repurchase agreements) decreased $24.6 million (10%) in 1999 to $232.5 million.
This decrease is the result of the securitization of residential first mortgages
previously discussed which generated collateral required for certain deposits,
thus reducing the need for short-term investments. Average short-term
investments decreased $60.6 million (19%) in 1998 compared to 1997.
MORTGAGE LOANS HELD FOR SALE. Mortgage loans held for sale are loans that
have been originated and are pending securitization or sale in the secondary
market. Average mortgage loans held for sale were $167.2 million in 1999, a
$32.3 million (16%) decrease from $199.5 million in 1998. Average mortgage
loans held for sale in 1998 increased $135.7 million (213%) from $63.8 million.
Since mortgage warehouse loans are generally held in inventory for a short
period of time (30 to 60 days), there may be significant differences between
average and period-end balances. At year-end 1999, mortgage loans held for sale
totaled $92.7 million compared to $281.4 million and $69.6 million in 1998 and
1997, respectively.
Mortgage loans held for sale, previously included in total loans, began to
be reported as a separate line item on the balance sheet as of January 1, 1999.
Prior-period information has been reclassified to reflect this change.
Asset Quality
Several key measures are used to evaluate and monitor the Company's asset
quality. These measures include the level of loan delinquencies; nonaccrual
loans; restructured loans; and foreclosed assets and excess bank-owned property,
in addition to their related ratios.
Table 4 details loan delinquencies and delinquencies as a percentage of
their related portfolio segment and in total for each of the past five years.
The level of accruing, delinquent loans past due 30 days or more was $49.6
million, or 0.46% of loans at December 31, 1999, down from $59.6 million, or
0.60% of total loans at December 31, 1998 and $70.4 million, or 0.84% of loans
at year-end 1997. The decline in 1999 reflects lower levels of delinquent loans
in each of the three loan portfolio segments - commercial, small business and
consumer. Commercial delinquencies improved to 0.15% at year-end 1999, down from
0.27% a year ago and down slightly from 0.18% at year-end 1997. The small
business loan delinquency ratio improved to 0.34% in 1999 from 0.50% in 1998 and
0.80% in 1997, and the consumer loan delinquency ratio improved to 0.75% in
1999, from 0.98% and 1.47% in 1998 and 1997, respectively. The improvement in
small business delinquencies in 1999 is the result of continued enhancements in
the underwriting, portfolio management and collection processes. The improvement
in consumer delinquencies for 1999 is primarily due to ongoing adjustments in
the underwriting criteria and enhancements in the collection process. The
reduction in consumer delinquencies from 1997 to 1998 is primarily due to a
change in the reporting methodology for mortgage loans from number of days past
due to payment cycle date, a methodology utilized in the banking industry.
<TABLE>
<CAPTION>
===================================================================================================================
TABLE 4 - LOAN DELINQUENCIES (1)
===================================================================================================================
December 31 ($ in millions) 1999 1998 1997 1996 1995(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Days past due:
30 to 89 days ............................... $ 43.6 $ 52.6 $ 64.6 $ 80.6 $ 56.1
90 days or more ............................. 6.0 7.0 5.8 6.0 3.5
- -------------------------------------------------------------------------------------------------------------------
Total delinquencies ...................... $ 49.6 $ 59.6 $ 70.4 $ 86.6 $ 59.6
===================================================================================================================
Total delinquencies as a percentage of loans:
Commercial .................................. 0.15% 0.27% 0.18% 0.84% 0.45%
Small business .............................. 0.34% 0.50% 0.80% 1.00% -
Consumer .................................... 0.75% 0.98% 1.47% 1.75% 2.01%
Total loans ................................. 0.46% 0.60% 0.84% 1.26% 1.11%
===================================================================================================================
- ----------------
(1) Accruing loans past due as to principal and/or interest 30 days or more.
(2) Small business loans are included in commercial loans in 1995.
</TABLE>
Nonperforming loans consist of nonaccrual loans (loans on which interest
income is not currently recognized) and restructured loans (loans with below-
market interest rates or other concessions due to the deteriorated financial
condition of the borrower). Nonperforming loans totaled $76.5 million at
December 31, 1999, up from $40.9 million a year ago and $23.6 million in 1997.
The change from 1998 was primarily driven by nonaccrual loans in the commercial
loan portfolio, which increased to $51.6 million from $19.2 million as a result
of the deterioration of two large credits in the health care and death care
industries during the latter part of 1999. The majority of nonperforming
consumer loans are residential mortgage loans on which no significant losses
are expected. The composition of nonperforming loans, foreclosed assets (assets
to which title has been assumed in satisfaction of debt) and excess bank-owned
property as well as certain asset quality ratios for the past five years are set
forth in Table 5.
Interest payments received on nonperforming loans are applied to reduce
principal if there is doubt as to the collectibility of the principal;
otherwise, these receipts are recorded as interest income. Certain nonperforming
loans are current as to principal and interest payments but are classified as
nonperforming because there is doubt concerning full collectibility.
Loans are considered to be impaired when it is probable that all amounts
due in accordance with the contractual terms will not be collected. Included in
nonaccrual loans are loans that are considered to be impaired under Statement
of Financial Accounting Standards No. 114 totaling $70.0 million at December
31, 1999 and $37.2 million at December 31, 1998. Included in the 1999 and 1998
amounts were $65.9 million and $33.2 million, respectively, of impaired loans
for which the related reserve for loan losses was $17.2 million and $9.8
million, respectively.
<TABLE>
<CAPTION>
====================================================================================================================
TABLE 5 - NONPERFORMING ASSETS
====================================================================================================================
($ in thousands) 1999 1998 1997 1996 1995(1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans:
Commercial ...................... $ 51,620 $ 19,215 $ 5,282 $ 4,230 $ 14,569
Small business .................. 18,329 17,694 11,762 9,335 -
Consumer ........................ 6,512 4,031 6,532 4,053 4,255
- --------------------------------------------------------------------------------------------------------------------
Total nonperforming loans ....... 76,461 40,940 23,576 17,618 18,824
- --------------------------------------------------------------------------------------------------------------------
Foreclosed assets ............... 7,710 10,762 3,056 5,828 7,136
Excess bank-owned property ...... 4,197 2,648 2,360 3,670 2,946
- --------------------------------------------------------------------------------------------------------------------
Total nonperforming assets ...... $ 88,368 $ 54,350 $ 28,992 $ 27,116 $ 28,906
====================================================================================================================
Reserve for loan losses ......... $ 156,072 $ 130,347 $ 126,557 $ 146,097 $ 167,505
Nonperforming loan ratio:
Commercial ...................... 1.40% 0.50% 0.17% 0.18% 0.47%
Small business .................. 0.78% 0.85% 0.61% 0.55% -
Consumer ........................ 0.14% 0.10% 0.19% 0.14% 0.19%
Total loans ..................... 0.70% 0.41% 0.28% 0.26% 0.35%
Nonperforming asset ratio ....... 0.81% 0.55% 0.35% 0.39% 0.54%
Reserve for loan losses as a
percentage of nonperforming loans 204.12% 318.39% 536.80% 829.25% 889.85%
====================================================================================================================
- ----------------
(1) Small business loans are included in commercial loans in 1995.
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================================================
TABLE 6 - SUMMARY OF NONPERFORMING LOAN ACTIVITY
==========================================================================================================================
Commercial Other Small
($ in thousands) Real Estate Commercial Business Consumer Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans at December 31, 1998 $ 81 $ 19,134 $ 17,694 $ 4,031 $ 40,940
Additions .............................. 414 114,685 18,438 9,300 142,837
Gross charge-offs ...................... (16) (40,779) (2,695) (688) (44,178)
Transfers to foreclosed assets ......... (65) (1,676) (951) (2,464) (5,156)
Returned to performing status .......... - (4,948) (591) (1,122) (6,661)
Payments and sales ..................... (300) (34,910) (13,566) (2,545) (51,321)
==========================================================================================================================
Nonperforming loans at December 31, 1999 $ 114 $ 51,506 $ 18,329 $ 6,512 $ 76,461
==========================================================================================================================
</TABLE>
In addition to the nonperforming loans discussed earlier, there are $62.7
million of loans which, in management's opinion, are currently subject
to potential future classification as nonperforming.
Table 6 presents a summary of changes in nonperforming loans for 1999
by loan type (commercial real estate, other commercial, small business and
consumer). Loans totaling $142.8 million were added during the year, primarily
in the commercial loan portfolio. Sales and payments resulted in a $51.3
million reduction in nonperforming loans. Charge-offs of $44.2 million further
reduced nonperforming loans during 1999. A significant portion of these
charge-offs related to the sales of a number of large credit relationships in
the secondary market. In addition, $6.7 million in loans were returned to
performing status. Recoveries experienced on previously charged-off loans are
reflected in the reserve for loan losses in Table 7 and are not a component of
nonperforming loan activity.
Foreclosed assets and excess bank-owned property, which are recorded atfair
value less estimated selling costs, totaled $11.9 million at December 31, 1999,
$13.4 million at December 31, 1998 and $5.4 million at December 31, 1997.
Nonperforming assets as a percentage of total loans plus foreclosed assets
and excess bank-owned property (nonperforming asset ratio) is one measure
of asset quality. At December 31, 1999 the Company's nonperforming asset ratio
was 0.81% compared to 0.55% at year-end 1998 and 0.35% at year-end 1997.
Another measure of asset quality is the amount of net charge-offs during
the year compared to average loans. As illustrated in Table 7, net charge-offs
totaled $64.9 million in 1999 compared to $23.4 million in 1998 and $23.5
million in 1997. Net charge-offs as a percentage of average loans were 0.62%
in 1999 compared to 0.26% in 1998 and 0.31% in 1997. The increase in net
charge-offs primarily occurred in the commercial loan portfolio, while net
charge-offs in the small business and consumer portfolios declined from levels
experienced in the previous two years.
Reserve and Provision for Loan Losses
The provision for loan losses is a charge to earnings to maintain the
reserve for 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 an $87.8 million provision for loan losses in 1999 compared
to $27.2 million in 1998 and $3.4 million in 1997. The increase in the provision
was made primarily to address credit quality issues within the commercial loan
portfolio, as indicated by higher levels of charge-offs and nonperforming loans.
The provision for loan losses for 1999 exceeded net charge-offs by $22.9
million. Table 7 presents an analysis of the activity in the reserve for loan
losses for the past three years.
The reserve for loan losses is composed of specific reserves (assessed for
each loan that is reviewed for impairment or for which a probable loss has been
identified), general reserves (based on historical loss factors) and an
unallocated reserve.
The Company continuously evaluates its reserve for loan losses to maintain
an adequate level 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, the observable market value of the loan 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 which include risk rating, industry
concentration and loan type, with the most recent charge-off experience weighted
more heavily. The unallocated reserve, which is judgmentally determined,
generally serves to compensate for the uncertainty in estimating loan losses,
including the possibility of changes in risk ratings and specific reserve
allocations. It also considers the lagging impact of historical charge-off
ratios in periods where future charge-offs are expected to increase or
decrease significantly. In addition, the reserve considers trends in
delinquencies and nonaccrual loans, industry concentration, the volatility of
risk ratings and the evolving portfolio mix in terms of collateral, relative
loan size, the degree of seasoning in the various loan products and loans
recently acquired through mergers. The results of reviews performed by internal
and external examiners are also considered.
<TABLE>
<CAPTION>
====================================================================================================================================
TABLE 7 - RESERVE FOR LOAN LOSSES ACTIVITY
====================================================================================================================================
Year Ended December 31
($ in thousands) 1999 1998 1997
====================================================================================================================================
<S> <C> <C> <C>
Balance at beginning of year $ 130,347 $ 126,557 $ 146,097
Loans charged off:
Commercial (46,195) (1,751) (4,695)
Small business (12,134) (12,485) (11,329)
Consumer (25,037) (26,652) (30,393)
Recoveries:
Commercial 5,303 6,090 9,135
Small business 4,835 2,680 2,445
Consumer 8,300 8,682 11,385
- ------------------------------------------------------------------------------------------------------------------------------------
Net loans charged off (64,928) (23,436) (23,452)
Provision for loan losses 87,800 27,226 3,433
Addition due to purchase transactions 3,035 - 479
Transfer due to securitizations (182) - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 156,072 $ 130,347 $ 126,557
====================================================================================================================================
Reserve for loan losses
as a percentage of loans 1.44% 1.32% 1.51%
Net charge-offs as a percentage
of average loans:
Commercial 1.06% (0.12)% (0.17)%
Small business 0.33% 0.50% 0.51%
Consumer 0.38% 0.49% 0.62%
Total loans 0.62% 0.26% 0.31%
====================================================================================================================================
</TABLE>
The methodology used in 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 general
and unallocated reserves. The historical loss ratios, which are key factors in
this analysis, are updated quarterly and are weighted more heavily for recent
charge-off experience. The review of reserve adequacy is performed by executive
management and presented to the Board of Directors for its review, consideration
and ratification.
There were no significant changes in the composition of the loan portfolio
during 1999, except for the previously discussed decreases in the commercial
portfolio and the growth in indirect lending. The Company proactively managed
its problem loan exposure primarily through the sales of certain large
commercial credits at a discount. Reserve levels increased during 1999 in view
of the risk profile of the portfolio as indicated by the Company's internal risk
rating system and based upon consistent application of the Company's reserve
methodology.
The reserve coverage of net charge-offs declined during 1999 to 240% from
556% in 1998 and 540% in 1997. This decline was primarily due to the higher
level of commercial net charge-offs experienced during 1999. The reserve for
loan losses is established to provide for losses which are inherent in the
portfolio. Therefore, a comparison of historical charge-offs to the reserve
is not necessarily an appropriate measure of reserve adequacy, since the timing
of charge-offs and recoveries impacts these ratios. This is particularly true
with respect to 1999, since a significant portion of charge-offs relates to the
complete disposition through sale of several large commercial credits.
The year-end 1999 reserve of $156.1 million provided 204% coverage of
nonperforming loans compared to $130.3 million with 318% coverage at year-end
1998 and $126.6 million with 537% coverage at year-end 1997. As a percentage of
total loans, the reserve for loan losses was 1.44% at December 31, 1999 compared
to 1.32% and 1.51% at December 31, 1998 and 1997, respectively. While the
reserve for loan losses as a percentage of loans has generally declined over the
past five years, the present leve is considered adequate to absorb probable
loan losses inherent in the portfolio considering the level and mix of the loan
portfolio, current economic conditions and market trends.
During 2000 the Company expects to provide less for loan losses than in
1999. Loan growth, the level of nonperforming loans, the risk profile of the
portfolio, and the amounts and timing of future cash flows expected to be
received on impaired loans, will be considered and will impact the estimate of
the reserve for loan losses, and thus the level of the required provision.
The allocation of the December 31, 1999 reserve for loan losses is
presented in Table 8.
<TABLE>
<CAPTION>
=============================================================
TABLE 8 - ALLOCATION OF RESERVE
FOR LOAN LOSSES
=============================================================
December 31, 1999 Reserve for % of Total
($ in millions) Loan Losses Reserve
- ---------------------------------------------------------------
<S> <C> <C>
Commercial real estate loans $ 3.6 2.3%
Other commercial loans ..... 43.7 28.0
Small business loans ....... 21.7 13.9
Consumer loans ............. 47.6 30.5
Unallocated reserve ........ 39.5 25.3
- -------------------------------------------------------------
Total ...................... $ 156.1 100.0%
=============================================================
</TABLE>
The assumptions and methodologies used in allocating the reserve for
loan losses were unchanged during the year. Allocations to the commercial
portfolio increased as a result of the higher levels of losses experienced in
1999. The allocation to the small business portfolio increased, while the
allocation to the consumer portfolio declined as a result of improving loss
experience in recent years. The unallocated reserve declined from 29% in
1998 to 25% in 1999 as more reserves were allocated to the commercial portfolio.
This reallocation is consistent with management's expectations and the loan loss
methodology which weights recent history more heavily and reflects the current
risk profile of the portfolio.
Funding Sources
Deposits
Deposits are the Company's primary source of funding for earning assets.
Hibernia offers a variety of products designed to attract and retain customers,
with the primary focus on core deposits. Summaries of average deposit rates and
deposit composition are presented in Table 9 and Table 10, respectively.
Average deposits totaled $11.2 billion in 1999, a $959.0 million (9%)
increase from 1998. Excluding the effect of the Beaumont transaction,
average deposits increased approxi-mately 7%. Average core deposits were up
$696.4 million (8%) to $9.1 billion or 81% of total average deposits.
Approximately one-third of this increase was due to the effect of the Beaumont
transaction. Average noninterest-bearing deposits increased $171.5 million and
average savings grew $570.6 million as a result of the promotion of products,
including Tower GoldSM Services, which offers liquidity, competitive interest
rates and the security of a bank deposit.
NOW account average balances for 1999 increased $13.6 million compared to
1998 and money market average deposits were up $41.5 million in 1999 compared to
1998. NOW account average balances for 1998 were down $176.1 million compared to
1997, and money market average deposits were up $227.5 million in 1998 compared
to 1997. During the fourth quarter of 1995, Hibernia instituted a new product,
the Reserve Money Manager account, in which each NOW account is joined with a
money market deposit account. As needed, funds are moved from the money market
deposit account to cover items presented for payment to the customer's NOW
account up to a maximum of six transfers per statement cycle. As a result of
additional analysis, the Reserve Money Manager account was enhanced in the first
quarter of 1998 to create a more efficient sweep process. The effect of the
Reserve Money Manager account on average balances was $1,389.1 million in
1999, $1,097.0 million in 1998 and $743.9 million in 1997 (reducing NOW account
average balances and increasing money market deposit account average balances).
Net of this effect, NOW account average balances were up $305.7 million (21%)
in 1999 compared to 1998 and up $177.0 million (14%) in 1998 compared to 1997,
and money market deposit account average balances were down $250.6 million (27%)
in 1999 compared to 1998 and down $125.6 million (12%) in 1998 compared to 1997.
<TABLE>
<CAPTION>
=================================================================
TABLE 9 - AVERAGE DEPOSIT RATES
=================================================================
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
NOW accounts ........... 2.63% 3.32% 2.77%
Money market
deposit accounts ....... 2.42 2.54 2.58
Savings accounts ....... 3.69 3.21 2.89
Other consumer
time deposits .......... 4.90 5.20 5.23
Public fund certificates
of deposit of
$100,000 or more ....... 4.92 5.35 5.50
Certificates of deposit
of $100,000 or more .... 5.21 5.30 5.23
Foreign time deposits .. 4.62 5.04 5.30
=================================================================
Total interest-bearing
deposits ............... 4.05% 4.24% 4.26%
=================================================================
</TABLE>
Average noncore deposits increased $262.6 million (14%) to $2.1 billion
in 1999 compared to 1998. Approximately one-third of the increase was due to
the effect of the Beaumont transaction. Public fund certificates of deposit of
$100,000 or more increased $46.8 million (5%). Other large-denomination
certificates of deposit increased $134.0 million (22%) and foreign deposits
increased $81.8 million (36%). The growth in other large-denomination
certificates of deposit was primarily the result of competitive pricing and
increased marketing efforts. Foreign deposits were positively impacted by a
treasury management sweep product which moves commercial customer funds into
higher-yielding Eurodollar deposits. Because of the nature of these funds, they
are considered stable and not subject to the same volatility as other sources
of foreign deposits.
Total deposits at December 31, 1999 were $11.9 billion, up $963.3 million
(9%) from December 31, 1998. The effect of the Beaumont transaction accounted
for approximately half of the growth in total deposits.
<TABLE>
<CAPTION>
======================================================================================================================
TABLE 10 - DEPOSIT COMPOSITION
======================================================================================================================
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
Average % of Average % of Average % of
($ in millions) Balances Deposits Balances Deposits Balances Deposits
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing ............. $ 2,012.4 18.0% $ 1,840.9 18.0% $ 1,666.9 17.5%
NOW accounts .................... 349.2 3.1 335.6 3.3 511.7 5.4
Money market deposit accounts.... 2,073.3 18.5 2,031.8 19.9 1,804.3 19.0
Savings accounts ................ 1,688.0 15.1 1,117.4 10.9 806.4 8.5
Other consumer time deposits..... 2,948.3 26.4 3,049.1 29.9 3,061.2 32.2
- ----------------------------------------------------------------------------------------------------------------------
Total core deposits ......... 9,071.2 81.1 8,374.8 82.0 7,850.5 82.6
- ----------------------------------------------------------------------------------------------------------------------
Public fund certificates of
deposit of $100,000 or more ... 1,051.8 9.4 1,005.0 9.8 1,027.2 10.8
Certificates of deposit of
$100,000 or more .............. 745.7 6.7 611.7 6.0 531.6 5.6
Foreign time deposits ........... 308.5 2.8 226.7 2.2 98.2 1.0
======================================================================================================================
Total deposits ............. $ 11,177.2 100.0% $ 10,218.2 100.0% $ 9,507.5 100.0%
======================================================================================================================
</TABLE>
Borrowings
Average borrowings - which include federal funds purchased; securities sold
under agreements to repurchase (repurchase agreements); treasury, tax and loan
account; and debt-increased $424.5 million (28%) to $1.9 billion in 1999
compared to 1998.
Average federal funds purchased and treasury, tax and loan borrowings were
$628.8 million during 1999, an increase of $233.6 million from 1998.
Fluctuations in short-term borrowings stem from differences in the timing of
growth in the loan portfolio and growth of other funding sources (deposits,
proceeds from maturing securities and debt). Average repurchase agreements
increased $62.0 million in 1999 compared to 1998. This increase primarily
resulted from treasury management products which sweep funds from commercial
customers' deposit accounts.
The Company's debt at December 31, 1999, which totaled $844.8 million, is
composed of advances from the Federal Home Loan Bank of Dallas (FHLB). The
average rate on debt during 1999 was 5.58% compared to 5.60% during 1998. Debt
increased $38.5 million from December 31, 1998 as Hibernia locked in attractive
fixed rates. During 1999, the FHLB exercised its right to call a $100 million
advance, and a $100 million advance reached maturity. Replacement funding
consisted of a $200 million advance bearing a fixed rate of 5.65% and a $40
million advance bearing a monthly adjustable rate. The FHLB may demand payment
of $400 million in callable advances at quarterly intervals, of which $200
million is not callable before September 2001 and $200 million is not callable
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, continues to be within parameters
determined by management to be prudent in terms of liquidity and interest rate
sensitivity.
Interest Rate Sensitivity
Interest rate risk represents the potential impact of interest rate changes
on net income and capital resulting from mismatches in repricing opportunities
of assets and liabilities over a period of time. A number of tools are used to
monitor and manage interest rate risk, including simulation models and interest
sensitivity (Gap) analyses. Management uses simulation models to estimate the
effects of changing interest rates and various balance sheet strategies on the
level of the Company's net income and capital. As a means of limiting interest
rate risk to an acceptable level, management may alter the mix of floating- and
fixed-rate assets and liabilities, change pricing schedules, adjust maturities
through the sale and purchase of securities available for sale, and enter into
derivative contracts.
The simulation models incorporate management's assumptions regarding the
level of interest rates or balance changes for indeterminate maturity deposits
(demand, NOW, savings and money market deposits) for a given level of market
rate changes. These assumptions have been developed through a combination of
historical analysis and future expected pricing behavior. Key assumptions in the
simulation models include anticipated prepayments on mortgage-related
instruments, loans and investments; contractual cash flows and maturities of all
financial instruments; deposit sensitivity; and changes in market conditions. In
addition, the impact of planned growth and anticipated new business is factored
into the simulation models. These assumptions are inherently uncertain, and as a
result, the models cannot precisely estimate net interest income or precisely
predict the impact of a change in interest rates on net income or capital.
Actual results will differ from simulated results due to the timing, magnitude
and frequency of interest rate changes and changes in market conditions and
management strategies, among other factors.
Hibernia's policy objective is to limit the impact on net interest income,
from an immediate and sustained change in interest rates of 200 basis points, to
20% of projected 12-month net income. Based on the results of the simulation
models at December 31, 1999, the Company would expect an increase in net
interest income of $3.5 million in the event of an immediate and sustained 200-
basis-point parallel interest rate increase and a decrease in net interest
income of $11.9 million in the event of an immediate and sustained 200-basis-
point parallel interest rate decrease. In addition, the Company projects an
increase in net interest income of $2.4 million and a decrease of $3.0 million
if interest rates gradually increase or decrease in parallel movement,
respectively, by 200 basis points over the next year.
Table 11 presents Hibernia's interest rate sensitivity position at December
31, 1999. This Gap analysis is based on a point in time and may not be
meaningful because assets and liabilities must be categorized according to
contractual maturities and repricing periods rather than estimating more
realistic behaviors, as is done in the simulation models. Also, the Gap
analysis does not consider subsequent changes in interest rate levels or
spreads between asset and liability categories.
Although the Gap analysis indicates the Company is liability-sensitive
(interest-bearing liabilities exceed interest-earning assets) up to one year,
this may not be true in practice. The 1-30 days deposit category includes NOW,
money market and savings deposits which have indeterminate maturities.
The rates paid on these core deposits, which account for 39% of interest-bearing
liabilities, do not necessarily reprice in direct relationship to changes in
market interest rates. In addition, one of Hibernia's deposit products is the
consumer One Way CDSM, which gives the customer a one-time opportunity to
adjust the rate on a certificate of deposit during its two-year term. As of
December 31, 1999 these deposits totaled $490.5 million, of which approximately
$113.1 million had been repriced. Of the remaining $377.4 million, approximately
$361.9 million are included in the 1-30 days other interest-bearing deposits
category because they may reprice at any time. However, these deposits
adjust to market rates over a much longer period as depositors choose when to
exercise the option to adjust the rate on their deposits.
In addition to core deposits, which serve to lessen the volatility of net
interest income in changing rate conditions, the Company's loan portfolio
contains mortgage loans that have actual cash flows and maturities that vary
with the level of interest rates. Depending on market interest rates, actual
cash flows from these earning assets will vary from the contractual maturities
due to payoffs and refinancing activity.
On a limited basis, Hibernia uses derivative financial instruments to
manage interest rate exposure. These instruments involve the risk of dealing
with counterparties and their ability to meet contractual terms. These
counterparties must receive a ppropriate credit approval before the Company
enters into an interest rate contract. Notional principal amounts express the
volume of these transactions, although the amounts potentially subject to credit
and market risk are much smaller. Deposit-related interest rate swaps may
be entered into as hedges against deposits of the same maturity. The
differential to be paid or received is accrued as interest rates change and is
recognized as an adjustment to interest expens on deposits. There were no
deposit-related interest rate swaps at the end of 1999. The notional amount of
deposit-related interest rate swaps at the end of 1998 and 1997 totaled $125.0
million and $100.0 million, respectively.
<TABLE>
<CAPTION>
====================================================================================================================================
TABLE 11 - INTEREST RATE SENSITIVITY AND GAP ANALYSIS
====================================================================================================================================
Over 5 Years
December 31, 1999 1-30 31-60 61-90 91-365 1 Year - and Non-
($ in thousands) Days Days Days Days 5 Years Sensitive Total
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans.......................... $ 4,517,054 $ 171,251 $ 170,247 $ 1,439,606 $ 3,906,770 $ 651,748 $10,856,676
Securities available for sale.. 2,660,322 - - - - - 2,660,322
Securities held to maturity.... 9,393 8,794 10,290 80,505 165,064 26,479 300,525
Mortgage loans held for sale... 92,704 - - - - - 92,704
Other earning assets........... 256,648 - - - - - 256,648
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets....... 7,536,121 180,045 180,537 1,520,111 4,071,834 678,227 14,166,875
- ------------------------------------------------------------------------------------------------------------------------------------
Funding sources:
NOW accounts................... 340,194 - - - - - 340,194
Money market deposit accounts.. 2,214,916 - - - - - 2,214,916
Savings accounts............... 1,959,181 - - - - - 1,959,181
Foreign deposits............... 362,723 - - - - - 362,723
Other interest-bearing deposits 1,348,770 459,081 410,363 1,830,992 784,036 60,325 4,893,567
Short-term borrowings.......... 1,102,690 - - - - - 1,102,690
Debt........................... 70 71 71 100,641 742,553 1,443 844,849
Noninterest-bearing sources.... - - - - - 2,448,755 2,448,755
- ------------------------------------------------------------------------------------------------------------------------------------
Total funding sources...... 7,328,544 459,152 410,434 1,931,633 1,526,589 2,510,523 14,166,875
- ------------------------------------------------------------------------------------------------------------------------------------
Repricing/maturity gap:
Period......................... $ 207,577 $(279,107) $ (229,897) $ (411,522) $ 2,545,245 $(1,832,296)
Cumulative..................... $ 207,577 $ (71,530) $ (301,427) $ (712,949) $ 1,832,296 $ -
====================================================================================================================================
Gap/total earning assets:
Period......................... 1.5% (2.0)% (1.6)% (2.9)% 17.9% (12.9)%
Cumulative..................... 1.5% (0.5)% (2.1)% (5.0)% 12.9%
====================================================================================================================================
</TABLE>
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 sensitivity. Matched positions are ordinarily established to
minimize risk to the Company. The notional value of d erivative financial
instruments held for trading totaled $500.3 million at year-end 1999, $405.0
million at year-end 1998 and $224.3 million at year-end 1997. 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 totaled $132.5 million, $333.2 million and $129.6 million at year-and
1999, 1998 and 1997, respectively. Hibernia's credit exposure to derivative
financial instruments held for trading totaled $5.4 million at December 31,
1999, $4.0 million at December 31, 1998 and $0.9 million at December 31, 1997.
Net Interest Margin
The net interest margin is taxable-equivalent net interest income as a
percentage of average earning assets. Net interest income is the difference
between total interest and fee income generated by earning assets and total
interest expense incurred on interest-bearing liabilities and is affected by
the:
o volume, yield and mix of earning assets;
o level of nonperforming loans;
o volume, yield and mix of interest-bearing liabilities;
o amount of noninterest-bearing funds supporting earning assets; and
o interest rate environment.
The net interest margin is composed of the net interest spread, which
measures the difference between the average yield on earning assets and the
average rate paid on interest-bearing liabilities, and the contribution of
noninterest-bearing funds, which measures the effect of noninterest-bearing
funds (primarily demand deposits and shareholders' equity) on net interest
income. In general, the higher the ratio of noninterest-bearing funds supporting
earning assets, the higher the net interest margin. Hibernia's noninterest-
bearing funds ratio was 18.61% in 1999 compared to 19.67% in 1998 and 19.92% in
1997. Table 12 details the components of the net interest margin for the past
five years.
<TABLE>
<CAPTION>
===================================================================================================================
TABLE 12 - NET INTEREST MARGIN (taxable-equivalent)
===================================================================================================================
1999 1998 1997 1996 1995
===================================================================================================================
<S> <C> <C> <C> <C> <C>
Yield on earning assets ........................... 7.83% 8.04% 8.21% 8.22% 8.09%
Rate on interest-bearing liabilities .............. 4.24 4.40 4.34 4.28 4.31
- -------------------------------------------------------------------------------------------------------------------
Net interest spread ............................... 3.59 3.64 3.87 3.94 3.78
Contribution of noninterest-bearing funds ......... 0.79 0.87 0.86 0.90 0.90
===================================================================================================================
Net interest margin ............................... 4.38% 4.51% 4.73% 4.84% 4.68%
===================================================================================================================
Noninterest-bearing funds supporting earning assets 18.61% 19.67% 19.92% 21.03% 21.07%
===================================================================================================================
</TABLE>
The net interest margin of 4.38% in 1999 compares to 4.51% in 1998 and
4.73% in 1997. The decline in the net interest margin in 1999 was the result of
a decline in loan yields to 8.29% from 8.63% in 1998, a decline in the interest
rate spread to 3.59% from 3.64% in 1998, an increased use of market-rate funds
and a decline in the level of noninterest-bearing funds supporting earning
assets. The decline in loan yields and the interest rate spread are the result
of an increasingly competitive lending environment. The level of noninterest-
bearing funds supporting earning assets decreased 106 basis points to 18.61% in
1999 from 19.67% in 1998. This change resulted in an eight-basis-point decline
in the contribution of noninterest-bearing funds to the net interest margin to
0.79% in 1999. These negative impacts were partially offset by the change in the
mix of earning assets to proportionately more loans with comparatively higher
yields than other earning assets. In 1999 loans amounted to 77% of average
earning assets compared to 74% in 1998.
The net interest margin was negatively impacted (approximately three basis
points) in 1998 due to a $3.0 million adjustment related to revenue-sharing
arrangements with certain automobile dealers brought about by a higher-than-
expected level of consumer automobile prepayments. Borrowers had increasingly
opted to prepay these types of loans, resulting in a decrease in the reserve
established to protect the Company against the impact of prepayments. This
behavior was primarily due to economic and market conditions, the current
interest rate environment and the ability of borrowers to obtain alternative
financing at attractive rates. In addition, the net interest margin was reduced
approximately two basis points in 1998 by the funding cost of a transaction
designed to utilize capital losses. On a normalized basis, the net interest
margin would have been 4.56% for 1998.
The net interest margin was reduced approximately two basis points in 1997
by the funding cost of a transaction designed to utilize capital losses. From
1997 to 1998, the normalized net interest margin decreased 19 basis points. The
negative effects of an increased use of market-rate funds, a decline in loan
yields to 8.63% from 8.92%, a 25-basis-point decrease in the level of
noninterest bearing funds supporting earning assets and a six-basis-point
increase in the cost of interest-bearing liabilities were partially offset
by the change in the mix of earning assets.
Results of Operations
The Company earned $175.1 million, or $1.07 per common share, in 1999. In
1998 net income was $181.0 million, or $1.11 per common share, and 1997 net
income was $147.9 million, or $.90 per common share. Net income per common
share - assuming dilution was $1.06, $1.09 and $.89 for 1999, 1998 and 1997,
respectively.
Operating results slightly decreased in 1999 because of an $87.8 million
provision for loan losses compared to a $27.2 million provision in 1998, a $14.8
million increase in noninterest expense and a $5.5 million decrease in
securities gains. As discussed in the Reserve for Loan Losses section, the 1999
provision for loan losses exceeded charge-offs by $22.9 million. These negative
effects on operations were partially offset by a $42.2 million increase in
taxable-equivalent net interest income resulting from a higher level of earning
assets and a $32.7 million increase in noninterest income (excluding securities
transactions).
<TABLE>
<CAPTION>
================================================================================================================================
TABLE 13 - INTEREST-EARNING ASSET COMPOSITION
================================================================================================================================
(Percentage of average balances) 1999 1998 1997 1996 1995
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Loans....................................... 76.7% 74.2% 70.3% 66.7% 58.8%
Securities available for sale............... 20.1 22.1 26.1 30.5 13.3
Securities held to maturity................. 0.2 - - - 25.6
- --------------------------------------------------------------------------------------------------------------------------------
Total securities........................ 20.3 22.1 26.1 30.5 38.9
- --------------------------------------------------------------------------------------------------------------------------------
Short-term investments...................... 1.7 2.1 3.0 2.8 2.3
Mortgage loans held for sale................ 1.3 1.6 0.6 - -
================================================================================================================================
Total interest-earning assets........... 100.0% 100.0% 100.0% 100.0% 100.0%
================================================================================================================================
</TABLE>
The improvement in net income in 1998 from 1997 was due to a $49.3 million
increase in taxable-equivalent net interest income, a $27.9 million improvement
in noninterest income (excluding securities transactions) and a $3.2 million
increase in securities gains. Partially offsetting these favorable effects,
1998 results included a $27.2 million provision for loan losses compared to a
$3.4 million provision in 1997, an increase in noninterest expense of $7.3
million and a $15.6 million increase in income tax expense.
Net Interest Income
Net interest income on a taxable-equivalent basis increased $42.2 million,
or 8%, to $596.3 million in 1999 from $554.1 million in 1998. Taxable-equivalent
net interest income in 1997 was $504.9 million. Taxable-equivalent net interest
income increased in 1999 compared to 1998 and in 1998 compared to 1997 primarily
as the result of the growth and change in the mix of earning assets.
As indicated in Table 14, the change in volumes increased taxable-
equivalent net interest income in 1999 by $59.8 million compared to 1998. A
$112.1 million increase in taxable-equivalent interest income due to the growth
in loans was partially offset by a $52.0 million increase in interest expense
due to growth in interest-bearing liabilities.
<TABLE>
<CAPTION>
================================================================================================================================
TABLE 14 - CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME(1)
================================================================================================================================
1999 Compared to 1998 1998 Compared to 1997
- --------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) Due to Change In:
- --------------------------------------------------------------------------------------------------------------------------------
($ in thousands) Volume Rate Total Volume Rate Total
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Taxable-equivalent interest earned on:
Commercial loans ..................... $ 29,443 $ (18,925) $ 10,518 $ 72,196 $ (9,214) $ 62,982
Small business loans ................. 24,785 (6,185) 18,600 19,125 (6,230) 12,895
Consumer loans ....................... 57,828 (7,015) 50,813 48,420 (5,974) 42,446
- --------------------------------------------------------------------------------------------------------------------------------
Loans .............................. 112,056 (32,125) 79,931 139,741 (21,418) 118,323
- --------------------------------------------------------------------------------------------------------------------------------
Securities available for sale ........ 1,343 2 1,345 (4,470) (6,616) (11,086)
Securities held to maturity .......... 1,908 - 1,908 - - -
- --------------------------------------------------------------------------------------------------------------------------------
Securities ......................... 3,251 2 3,253 (4,470) (6,616) (11,086)
- --------------------------------------------------------------------------------------------------------------------------------
Short-term investments ............... (1,359) (1,749) (3,108) (3,511) 844 (2,667)
Mortgage loans held for sale ......... (2,118) (193) (2,311) 9,026 (34) 8,992
- --------------------------------------------------------------------------------------------------------------------------------
Total ............................. 111,830 (34,065) 77,765 140,786 (27,224) 113,562
- --------------------------------------------------------------------------------------------------------------------------------
Interest paid on:
NOW accounts ......................... 435 (2,399) (1,964) (5,487) 2,483 (3,004)
Money market deposit accounts ........ 1,041 (2,659) (1,618) 5,799 (668) 5,131
Savings accounts ..................... 20,443 5,958 26,401 9,768 2,784 12,552
Other consumer time deposits ......... (5,133) (8,989) (14,122) (627) (987) (1,614)
Public fund certificates of
deposit of $100,000 or more ........ 2,431 (4,394) (1,963) (1,208) (1,517) (2,725)
Certificates of deposit
of $100,000 or more ................ 6,985 (560) 6,425 4,239 363 4,602
Foreign deposits ..................... 3,845 (1,002) 2,843 6,485 (266) 6,219
Federal funds purchased .............. 11,897 (1,377) 10,520 6,988 (242) 6,746
Repurchase agreements ................ 2,864 (866) 1,998 2,648 (345) 2,303
Debt ................................. 7,196 (130) 7,066 34,504 (404) 34,100
- --------------------------------------------------------------------------------------------------------------------------------
Total ............................. 52,004 (16,418) 35,586 63,109 1,201 64,310
- --------------------------------------------------------------------------------------------------------------------------------
Taxable-equivalent
net interest income .................. $ 59,826 $ (17,647) $ 42,179 $ 77,677 $ (28,425) $ 49,252
================================================================================================================================
- ---------------
(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 change in interest rates caused a decline in taxable-equivalent net
interest income of $17.6 million. Taxable-equivalent interest income on loans
declined $32.1 million due to changes in yields caused by the competitive
lending environment and a change in the mix of the loan portfolio. Interest
expense decreased $16.4 million due to a decrease in the rates paid on interest-
bearing deposits and a change in the mix of funding sources toward market-rate
funds.
Net interest income for 1998 was negatively impacted by a $3.0 million
adjustment related to revenue-sharing arrangements with certain automobile
dealers, discussed in the Net Interest Margin section. In addition, net interest
income in 1998 and 1997 was reduced by the funding cost of a transaction that
utilized capital loss carryforwards. Income of $3.8 million in 1998 and $2.2
million in 1997 associated with this transaction is recorded as a securities
gain in noninterest income rather than in net interest income.
For 1998 compared to 1997, the change in net volumes increased taxable-
equivalent net interest income by $77.7 million. This increase was primarily the
result of growth in loans adding $139.7 million to taxable-equivalent interest
income, partially offset by a higher level of interest-bearing funds which
increased interest expense by $63.1 million. Taxable-equivalent interest income
on loans decreased $21.4 million, and interest expense increased $1.2 million
due to changes in the interest rate environment.
Noninterest Income
Noninterest income totaled $214.7 million in 1999 compared to $187.4
million in 1998 and $156.4 million in 1997. Excluding securities transactions,
noninterest income was up $32.7 million (18%) in 1999 compared to 1998. Included
in noninterest income in 1999 is a $1.7 million gain related to an investment in
a mezzanine financing.
Net of the nonrecurring item and securities transactions, noninterest
income was up $31.1 million (17%). The effect of the Beaumont transaction
accounted for approximately 25% of the increase in 1999. The major categories
contributing to the increase in noninterest income were service charges on
deposits, up $10.1 million; trust fees, up $6.5 million; retail investment
service fees, up $6.3 million; debit/credit card fees, up $3.7 million; mortgage
loan origination and servicing fees, up $3.4 million; and ATM fees, up $1.7
million.
<TABLE>
<CAPTION>
============================================================================================================================
TABLE 15 - NONINTEREST INCOME
============================================================================================================================
Percent Increase (Decrease)
- ----------------------------------------------------------------------------------------------------------------------------
1999 1998
($ in thousands) 1999 1998 1997 over 1998 over 1997
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Service charges on deposits .......... $ 97,301 $ 87,222 $ 79,909 11.6% 9.2%
Trust fees ........................... 23,190 16,683 15,535 39.0 7.4
Retail investment service fees........ 23,561 17,230 12,070 36.7 42.8
Mortgage loan origination
and servicing fees ................. 18,737 15,366 9,739 21.9 57.8
Other service, collection and
exchange charges:
ATM fees ........................... 12,010 10,333 9,030 16.2 14.4
Debit/credit card fees ............. 11,660 7,983 4,919 46.1 62.3
Other .............................. 12,319 10,351 8,911 19.0 16.2
- ----------------------------------------------------------------------------------------------------------------------------
Total other service, collection
and exchange charges .......... 35,989 28,667 22,860 25.5 25.4
- ----------------------------------------------------------------------------------------------------------------------------
Other operating income:
Gain on sales of mortgage loans 5,578 8,640 3,758 (35.4) 129.9
Other income ....................... 9,915 7,722 9,806 28.4 (21.3)
- ----------------------------------------------------------------------------------------------------------------------------
Total other operating income .... 15,493 16,362 13,564 (5.3) 20.6
- ----------------------------------------------------------------------------------------------------------------------------
Securities gains, net ................ 432 5,899 2,739 (92.7) 115.4
============================================================================================================================
Total noninterest income ...... $ 214,703 $ 187,429 $ 156,416 14.6% 19.8%
============================================================================================================================
</TABLE>
Service charges on deposits increased $10.1 million (12%) to $97.3 million
in 1999 compared to 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.
Trust fees were $23.2 million in 1999, up $6.5 million (39%) compared to
1998 primarily due to new business and the income associated with the $1.4
billion increase in trust assets resulting from the Beaumont transaction. The
effect of the Beaumont transaction accounted for approximately 75% of the
increase in trust fees.
Retail investment service fees increased $6.3 million (37%) in 1999
compared to 1998. The increase is primarily due to market conditions which
resulted in an increase in the sale of financial products including annuities
and discount brokerage services, and the availability of insurance products
throughout the banking office network from business lines acquired in 1998.
Mortgage loan origination and servicing fees were $18.7 million in 1999, up
$3.4 million (22%) compared to 1998. The increase in mortgage fees primarily
resulted from the Company's continued emphasis on mortgage banking and the
increase in the volume of mortgage loans serviced to $5.4 billion. In 1999
Hibernia funded $2.3 billion in residential first mortgages.
ATM fees increased $1.7 million (16%) to $12.0 million in 1999 compared to
1998 due to the continued growth of the ATM network and the expansion of ATM
services.
Debit/credit card fees were $11.7 million in 1999, an increase of $3.7
million (46%) compared to 1998. The increase primarily resulted from fees
generated by Hibernia's CheckMateSM debit card and Capital Access(C) credit card
for small businesses.
Gains on sales of mortgage loans decreased $3.1 million (35%) in 1999
compared to 1998. As a result of changes in the interest rate environment, the
Company experienced an increase in the percentage of adjustable-rate mortgages
funded and retained. Generally, Hibernia retains adjustable-rate mortgage loans
and sells fixed-rate mortgage loans, while retaining the associated servicing
rights.
Securities gains decreased $5.5 million (93%) to $0.4 million in 1999
compared to 1998. As previously mentioned in the Securities section, the
Company liquidated high-quality securities in 1998 for a gain and used the
proceeds to buy securities with similar credit quality and a higher yield made
possible by the interest rate environment. This transaction resulted in a
$1.3 million securities gain. The remainder of the securities gains in 1998
were primarily the result of the completion of a transaction designed to utilize
capital losses.
Nonrecurring items in 1997 affect comparisons of noninterest income from
1998 to 1997. In 1997, nonrecurring items included a $1.2 million gain
recognized on the sale of Hibernia's interest in an electronic funds transfer
network and $1.2 million in trading account income resulting from a single
transaction related to a tax planning strategy. Excluding securities
transactions and nonrecurring items, noninterest income in 1998 increased $30.3
million (20%) compared to 1997. The increase in 1998 noninterest income was
primarily the result of growth in service charges on deposits, retail investment
service fees, and mortgage loan origination and servicing fees.
Noninterest Expense
Noninterest expense totaled $440.9 million in 1999 compared to $426.2
million in 1998 and $418.9 million in 1997.
Noninterest expense increased $14.8 million (3%) in 1999 compared to 1998.
Excluding the effect of the Beaumont transaction in 1999, noninterest expense
would have increased $2.4 million (1%) in 1999 compared to 1998. Excluding
certain merger-related expenses for both years and a nonrecurring charge in
1998, noninterest expense in 1999 would have been $431.9 million, a $10.9
million (3%) increase from 1998. Merger-related expenses were $9.0 million and
$3.1 million in 1999 and 1998, respectively. Noninterest expense in 1998
included a $2.0 million nonrecurring charge related to asset write-downs
resulting from activities designed to improve customer delivery convenience by
optimizing an expanding banking office network. The major categories
contributing to the increase in noninterest expense were amortization of
intangibles, up $6.6 million; data processing, up $1.9 million; occupancy and
equipment, up $1.1 million; state taxes on equity, up $0.9 million; professional
fees, up $0.6 million; and stationery and supplies, up $0.6 million.
Staff costs, which represent the largest component of noninterest expense,
decreased $0.6 million in 1999 compared to 1998. The Company reduced management
incentives in 1999 and reversed $8.0 million accrued in 1998 related to a long-
term performance share award for senior management. The reversal resulted from
the failure to meet certain requirements necessary to achieve a payout under
that plan. In addition, a management bonus program for 1999 affecting a much
larger group was not fulfilled at originally planned levels. Excluding the
effect of merger-related expenses, staff costs decreased $5.4 million (3%) in
1999 compared to 1998. Merger-related expenses were $5.1 million and $0.4
million in 1999 and 1998, respectively. Merger-related expenses in 1999 included
the cost of 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.
Occupancy and equipmen expenses in 1999 increased $1.1 million (2%)
compared to 1998. Excluding the effect of merger-related expenses and the $2.0
million charge in 1998 discussed above, occupancy and equipment expenses
increased $1.7 million (3%).
Data processing expenses increased $1.9 million (6%) to $31.5 million in
1999. Excluding the effect of merger-related expenses, data processing expenses
increased $1.6 million (5%). The increase in data processing expenses is
primarily related to continued improvements in technology and increased
transaction volume related to growth in the Company's customer base.
Advertising and promotional expenses in 1999 decreased $1.0 million (6%)
compared to 1998. Excluding the effect of merger-related expenses, advertising
and promotional expenses decreased $0.6 million (4%) primarily due to higher
expenses in 1998 related to advertising, direct marketing and shareholder
communications. Higher expenses in 1998 were the result of opportunities related
to mergers of several competitors, the expansion of the franchise into the
markets of merged companies and the promotion of products, including Tower Super
SavingsSM and Hibernia CheckMateSM debit card.
Amortization of intangibles, a noncash expense, increased $6.6 million
(39%) primarily due to amortization of goodwill, core deposit intangibles and
trust intangibles associated with the purchase of the Beaumont branches. The
Beaumont transaction resulted in an increase of $62.6 million in goodwill, $12.7
million in core deposit intangibles and $17.1 million in trust intangibles.
These intangible assets are being amortized over periods from seven to 25 years.
The remainder of the change from 1998 is due to an increase of $2.0 million in
the amortization of mortgage servicing rights resulting from the growth in
mortgage lending activity.
<TABLE>
<CAPTION>
========================================================================================================================
TABLE 16 - NONINTEREST EXPENSE
========================================================================================================================
Percent Increase (Decrease)
- ------------------------------------------------------------------------------------------------------------------------
1999 1998
($ in thousands) 1999 1998 1997 over 1998 over 1997
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Salaries ........................... $ 177,904 $ 182,231 $ 174,243 (2.4)% 4.6%
Benefits ........................... 33,622 29,911 33,475 12.4 (10.6)
- ------------------------------------------------------------------------------------------------------------------------
Total staff costs ................ 211,526 212,142 207,718 (0.3) 2.1
- ------------------------------------------------------------------------------------------------------------------------
Occupancy, net ..................... 33,388 34,604 34,691 (3.5) (0.3)
Equipment .......................... 33,465 31,167 31,259 7.4 (0.3)
- ------------------------------------------------------------------------------------------------------------------------
Total occupancy and equipment .... 66,853 65,771 65,950 1.6 (0.3)
- ------------------------------------------------------------------------------------------------------------------------
Data processing .................... 31,503 29,590 26,891 6.5 10.0
Advertising and promotional expenses 14,258 15,226 15,907 (6.4) (4.3)
Foreclosed property expense, net ... (866) (1,019) (3,173) (15.0) (67.9)
Amortization of intangibles ........ 23,763 17,138 15,034 38.7 14.0
Telecommunications ................. 9,844 11,259 11,437 (12.6) (1.6)
Postage ............................ 7,256 7,216 7,110 0.6 1.5
Stationery and supplies ............ 6,344 5,736 6,355 10.6 (9.7)
Professional fees .................. 7,371 6,755 10,539 9.1 (35.9)
State taxes on equity .............. 12,115 11,237 7,681 7.8 46.3
Regulatory expense ................. 3,061 2,867 2,953 6.8 (2.9)
Loan collection expense ............ 5,003 4,771 4,054 4.9 17.7
Other .............................. 42,890 37,466 40,423 14.5 (7.3)
========================================================================================================================
Total noninterest expense ........ $ 440,921 $ 426,155 $ 418,879 3.5% 1.7%
========================================================================================================================
Efficiency ratio (1) ............... 54.40% 57.93% 63.61%
========================================================================================================================
Cash-basis efficiency ratio (2)..... 52.29% 56.24% 61.53%
========================================================================================================================
- ----------
(1)Noninterest expense as a percentage of taxable-equivalent net interest income
plus noninterest income (excluding securities transactions).
(2)Excluding amortization of purchase accounting intangibles.
</TABLE>
Telecommunications expense in 1999 totaled $9.8 million, a decrease of
$1.4 million (13%) compared to 1998. Stationery and supplies expense increased
$0.6 million (11%) to $6.3 million in 1999.
Professional fees in 1999 totaled $7.4 million, an increase of $0.6 million
(9%) compared to 1998. State taxes on equity expense increased $0.9 million
(8%) to $12.1 million in 1999 due to the growth in equity and increases in
millages used to assess those taxes.
Noninterest expense increased $7.3 million (2%) in 1998 compared to
1997. Excluding the effect of merger-related expenses of $3.1 million in 1998
and $14.6 million in 1997, and a nonrecurring item in 1998 previously discussed,
noninterest expense increased $16.8 million (4%) in 1998. Other significant
changes in noninterest expense, excluding merger-related expenses, included
staff costs, up $7.8 million; data processing, up $4.4 million; state taxes on
equity, up $3.6 million; occupancy and equipment, up $2.2 million; and
amortization of intangibles, up $2.1 million.
The Company's efficiency ratio, defined as noninterest expense as a
percentage of taxable-equivalent net interest income plus noninterest income
(excluding securities transactions), is one measure of the success of its
efforts to control costs and generate income efficiently. The efficiency ratio
for 1999 was 54.40% compared to 57.93% in 1998 and 63.61% in 1997. The
improvements in the efficiency ratio reflect continued higher revenue growth
rates compared to expense growth rates. Excluding the merger-related expenses
and nonrecurring items discussed previously, the efficiency ratio would have
been 53.39%, 57.24% and 61.61% in 1999, 1998 and 1997, respectively.
The cash-basis efficiency ratio, which excludes the impact of the
amortization of purchase accounting intangibles, was 52.29% in 1999 compared
to 56.24% and 61.53% in 1997. Excluding the effect of merger-related expenses
and nonrecurring items discussed previously, the cash-basis efficiency ratio
would have been 51.28%, 55.55% and 59.52% in 1999, 1998 and 1997, respectively.
Income Taxes
The Company recorded a $95.7 million provision for income taxes in 1999
compared to $95.9 million in 1998 and $80.3 million in 1997.
Hibernia National Bank is subject to a Louisiana shareholders' tax based
partly on income. The income portion is reported as state income tax. In
addition, certain subsidiaries of the Company and Hibernia National Bank are
subject to Louisiana state income tax. 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.
Net future deductible temporary differences at December 31, 1999 were
$209.4 million. The reserve for loan losses represents $156.1 million of the
future deductible temporary differences. The provision for loan losses which
contributed to the reserve has been recognized as expense for financial
reporting purposes but is not deductible for federal income tax purposes until
the loans are charged off. Valued at the 35% federal statutory tax rate, the
net future deductible amounts, if ultimately recognized, would generate tax
benefits of $73.3 million. These benefits are recorded as a deferred tax asset
at December 31, 1999.
Capital
Capital represents shareholder ownership in the Company - the book value of
assets in excess of liabilities. It provides a base for asset growth while
serving, together with th reserve for loan losses, as a cushion against
potential losses. Support for future asset expansion could come from utilization
of existing capital, issuance of debt or new capital and retention of earnings.
Hibernia's common dividend payout ratio (common dividends declared per-
share divided by net income per common share) was 40.7% in 1999, 33.8% in 1998
and 36.7% in 1997.
Shareholders' equity totaled $1,375.5 million at the end of 1999 compared
to $1,344.6 million at the end of 1998 and $1,220.4 million at the end of 1997.
The $30.9 million (2%) increase in 1999 was primarily due to current-year
earnings totaling $175.1 million, the issuance of $9.8 million of common stock
($5.4 million of which related to stock issued by a pooled company prior to
merger) and a $3.1 million change in unearned compensation due to the allocation
of shares in Hibernia's Employee Stock Ownership Plan (ESOP). These increases
were partially offset by an $82.1 million change in unrealized gains (losses)
on securities available for sale, $68.1 million in dividends on common stock
and $6.9 million in dividends on preferred stock. The change in unrealized gains
(losses) is primarily due to a rising interest rate environment.
The $124.2 million (10%) increase in shareholders' equity in 1998
reflected the Company's $181.0 million in earnings, the issuance of common stock
of $15.5 million and a $12.5 million increase in unrealized gains on securities
available for sale. These increases were partially offset by common dividends
totaling $57.5 million, preferred dividends totaling $6.9 million and a $20.4
million change in unearned compensation. The increase in unearned compensation
is related to the purchase of stock for the ESOP. During 1998 the ESOP completed
its purchase of the originally authorized $30.0 million of stock and acquired
an additional $15.0 million in stock in a purchase which was authorized later
that same year. As a result, the ESOP acquired approximately 1,443,000 shares
of stock during 1998.
Regulations applicable to national banks and their holding companies
prescribe minimum capital levels. These levels are based on established
guidelines which relate required capital standards to both risk-weighted assets
(risk-based capital ratios) and total assets (leverage ratio). In accordance
with risk-based guidelines, assets and off-balance-sheet financial instruments
are assigned weights to measure their levels of risk. The total risk-based
capital ratio for the Company was 11.46% at year-end 1999, 11.98% at year-end
1998 and 12.51% at year-end 1997. Leverage ratios were 8.11%, 8.55% and 8.61%
at year-end 1999, 1998 and 1997, respectively. Table 17 shows the calculation
of capital ratios for the Company for the past five years.
The purchase of the Beaumont branches during 1999 enabled Hibernia to
leverage its capital by acquiring assets without increasing equity. As a result
of this transaction, leverage and risk-based capital ratios declined in 1999
but still significantly exceed the standards required for designation of an
institution as "well capitalized" by regulators.
<TABLE>
<CAPTION>
=====================================================================================================================
TABLE 17 - CAPITAL
=====================================================================================================================
($ in millions) 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Risk-based capital:
Tier 1 .................... $ 1,203.2 $ 1,166.0 $ 1,042.5 $ 932.0 $ 874.2
Total ..................... 1,350.7 1,296.3 1,158.4 1,024.9 947.3
Assets:
Quarterly average assets(1) 14,833.7 13,629.9 12,108.1 10,450.6 8,944.7
Net risk-adjusted assets .. 11,788.6 10,819.7 9,258.4 7,375.3 5,754.9
Ratios:
Tier 1 risk-based capital . 10.21% 10.78% 11.26% 12.64% 15.19%
Total risk-based capital .. 11.46% 11.98% 12.51% 13.90% 16.46%
Leverage .................. 8.11% 8.55% 8.61% 8.92% 9.77%
=====================================================================================================================
- ----------
(1)Excluding the adjustment for unrealized gains (losses)on securities available
for sale 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 (including 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 periodic reviews
of maturity profiles, yield and rate behaviors, and loan and deposit forecasts.
Core deposits that are maintained at competitive rates are the Company's
primary source of liquidity. Core deposits totaled $9.5 billion at year-end
1999, up $613.1 million (7%) from $8.9 billion a year earlier. This increase
is the result of Hibernia's extensive banking office network, aided by the
introduction of new deposit products, and the effect of the Beaumont transaction
in 1999, which added $331.0 million in core deposits. As previously discussed
in the Funding Sources section, Hibernia has a large base of treasury
management-related repurchase agreements and foreign deposits that are a part of
total customer relationships. Because of the nature of the relationships, these
funds are considered stable and not subject to the same volatility as other
sources of noncore funds. Large-denomination certificates of deposit and public
funds were additional sources of liquidity during the year.
Hibernia's loan-to-deposit ratio at year-end 1999 increased to 91.6%
compared to 91.0% at year-end 1998 and 83.0% at year-end 1997. These increases
primarily resulted from significant growth in loans, which outpaced increases
in the deposit base. A factor contributing to the change in the growth rate from
1998 to 1999 compared to the growth rate from 1997 to 1998 is the effect of
the Beaumont transaction in 1999, which added $464.8 million in deposits and
$172.0 million in loans (a 37.0% loan-to-deposit ratio).
Another indicator of liquidity is the large liability dependence ratio,
which measures reliance on short-term borrowings and other large liabilities
(including large-denomination and public fund certificates of deposit and
foreign deposits). Based on average balances, 22.1% of Hibernia's earning assets
were funded by net large liabilities (total liabilities less short-term
investments) at year-end 1999, up approximately 236 basis points from the prior-
year level of 19.7%.
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 program. Notes issued under this program will mature
30 days or more after the date of issue and bear fixed or floating interest
rates. Additional sources of liquidity available to the Company include the
ability to issue brokered certificates of deposit and the ability to sell or
securitize a substantial portion of the Company's $2.3 billion residential first
mortgage portfolio and $1.3 billion indirect consumer portfolio. The Company
also has available Federal funds lines and its membership in the FHLB to further
augment liquidity by providing a readily accessible source of funds at
competitive rates.
Hibernia Corporation (the "Parent Company") requires liquidity to fund
operating expenses and investments and to pay dividends. At December 31, 1999
the Parent Company had $127.8 million in available funds. During 1999 the Parent
Company received $77.0 million in dividends from its bank subsidiaries. The
Parent Company paid $68.1 million in dividends to common shareholders and $6.9
million in dividends to preferred shareholders and increased its investment in
two of its subsidiaries by a total of $15.5 million.
The Consolidated Statements of Cash Flows can be used to assess the
Company's ability to generate positive future net cash flows from operations and
its ability to meet future obligations. The Company had a net decrease in cash
and cash equivalents in 1999 of $117.3 million. This decrease was the result
of cash used in investing activities of $1,035.9 million, as loans (net of
sales) used cash of $1,365.1 million and purchases of securities available for
sale totaled $428.3 million, partially offset by $608.2 million from the sales
and maturities of securities available for sale and the maturities of securities
held to maturity. These activities were partially offset with net cash provided
from financing activities of $436.5 million, as deposits provided cash of
$498.5 million. Net cash provided by operating activities totaled $482.1
million after adjusting 1999 net income for noncash items.
Cash and cash equivalents decreased $141.2 million in 1998. Cash used in
investing activities totaled $1,591.9 million, as loans (net of sales) used cash
of $1,554.2 million and purchases of securities available for sale used $1,833.4
million, partially offset by $1,833.1 million from the sales and maturities of
securities available for sale. These activities were partially offset with net
cash provided from financing activities of $1,420.2 million, as deposits
provided cash of $789.6 million, short-term borrowings provided $414.2 million
and the proceeds from debt issuance, net of payments, totaled $298.8 million.
Cash and cash equivalents increased $182.7 million in 1997. Cash provided
by financing activities totaled $1,405.6 million, as deposits provided cash of
$632.5 million, short-term borrowings provided $376.4 million and the proceeds
from debt issuance, net of payments, totaled $447.8 million. These increases
were partially offset by net cash used in investing activities of $1,348.1
million, as loans (net of sales) used cash of $1,460.3 million and purchases of
securities available for sale used $920.3 million, partially offset by $994.2
million from sales and maturities of securities available for sale. Net cash
provided by operating activities totaled $125.3 million after adjusting 1997 net
income for noncash items.
Year 2000
The Year 2000 issue arose from the fact that many computer programs stored
and processed data using two digits rather than four to define the applicable
year. Any computer programs that have date-sensitive software may have
recognized a date using "00" as the year 1900 rather than the year 2000 upon the
date change. This issue affected not only Hibernia, but virtually all companies
and organizations that use computer information systems.
A team composed of Hibernia employees and representatives of the Company's
third party data processor, Alltel Information Services, Inc., was formed in
early 1997 to address the Year 2000 issue. During 1999, the Company completed
its plan 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. Efforts to ensure Year 2000
compliance, which included both the remediation of the application program code
and the successful unit testing in an isolated and fully functional environment
occurred throughout 1999. In addition to testing and making appropriate
changes to its internal systems, the Company discussed the Year 2000 issue and
its potential impact on business operations with many of its customers and
vendors. The Company evaluated the Year 2000 readiness of its significant
borrowers and the resulting effect on the credit quality of its loan portfolio.
In addition, the Company evaluated the Year 2000 readiness of its significant
depositors and the potential effect on its liquidity. The status of these
activities was provided to Hibernia's Board of Directors, and the Company's
regulators monitored Year 2000 efforts.
The majority of the costs associated with Year 2000 efforts were the
responsibility of the Company's third party data processor which also provides
many of the Company's software applications. Contract specifications required
the Company's third party data processor to ensure that all systems met Year
2000 compliance and other banking regulations. Hibernia supplemented its
vendors' efforts with its own efforts at a total cost of approximately $1.7
million, most of which was expensed in 1998 and early 1999, in order to upgrade
ATMs, hardware, software and other technology. Year 2000 expenses were spread
throughout a number of noninterest expense categories and did not include
computer equipment and software that was scheduled to be replaced in the normal
course of business. The Company did not separately track the indirect costs
incurred for the Year 2000 project, which primarily consisted of payroll costs
of employees from various departments. This investment was funded through
operating cash flows and expensed as incurred. The Company does not expect to
incur any additional costs associated with the Year 2000 issue.
As a result of the efforts and preparations, the Company did not experience
any systematic problems associated with the Year 2000 issue. The Company and its
data processing vendors and service providers achieved their objective of
allowing Hibernia to conduct business without interruption. As a result of the
successful transition into 2000, customers were provided continuous access to
their funds and account information. Based upon current analysis, the Company
does not believe its borrowers, depositors or vendors to be negatively impacted
by the Year 2000 issue. The Company will continue to monitor Year 2000 related
issues and will implement business resumption plans as necessary; however, an
adverse impact on the Company's operations is not expected.
<PAGE>
<TABLE>
<CAPTION>
Quarterly Consolidated Summary of Income and Selected Financial Data (1)
Hibernia Corporation and Subsidiaries 1999 1998
====================================================================================================================================
($ in thousands, except per-share data) Fourth Third Second First Fourth Third Second First
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income........................ $ 277,144 $ 270,480 $ 256,613 $ 251,088 $ 251,436 $ 246,738 $ 243,272 $ 236,282
Interest expense....................... 127,929 120,776 111,804 110,011 110,872 112,001 107,087 104,974
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income.................... 149,215 149,704 144,809 141,077 140,564 134,737 136,185 131,308
Provision for loan losses.............. 17,100 28,500 12,200 30,000 9,988 8,089 5,581 3,568
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses.......... 132,115 121,204 132,609 111,077 130,576 126,648 130,604 127,740
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Noninterest income.................. 54,996 55,798 52,301 51,176 47,804 46,202 46,579 40,945
Securities gains (losses), net...... 24 (1) 368 41 2,201 2,774 37 887
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest income..................... 55,020 55,797 52,669 51,217 50,005 48,976 46,616 41,832
Noninterest expense.................... 112,175 100,822 111,587 116,337 106,496 104,668 108,785 106,206
- ------------------------------------------------------------------------------------------------------------------------------------
Income before taxes.................... 74,960 76,179 73,691 45,957 74,085 70,956 68,435 63,366
Income tax expense..................... 26,249 26,711 26,338 16,386 26,098 23,458 24,132 22,198
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net income............................. $ 48,711 $ 49,468 $ 47,353 $ 29,571 $ 47,987 $ 47,498 $ 44,303 $ 41,168
- ------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common
shareholders.......................... $ 46,986 $ 47,743 $ 45,628 $ 27,846 $ 46,262 $ 45,773 $ 42,578 $ 39,443
====================================================================================================================================
Per common share information: (2)
Net income.......................... $ 0.30 $ 0.30 $ 0.29 $ 0.18 $ 0.29 $ 0.29 $ 0.27 $ 0.25
Net income - assuming dilution...... $ 0.30 $ 0.30 $ 0.29 $ 0.18 $ 0.29 $ 0.29 $ 0.27 $ 0.25
Cash dividends declared............. $ 0.12 $ 0.105 $ 0.105 $ 0.105 $ 0.105 $ 0.09 $ 0.09 $ 0.09
Average shares outstanding (000s)...... 157,513 157,354 157,186 156,952 156,887 157,342 157,354 157,093
Average shares outstanding -
assuming dilution(000S)............... 158,741 158,879 158,693 158,952 158,833 159,686 160,241 159,926
Dividend payout ratio.................. 40.00% 35.00% 36.21% 58.33% 36.21% 31.03% 33.33% 36.00%
====================================================================================================================================
Selected quarter-end balances
(in millions)
Loans.................................. $10,856.7 $10,876.1 $10,484.8 $10,148.8 $ 9,907.2 $ 9,612.2 $ 9,134.7 $ 8,676.3
Deposits............................... 11,855.9 11,459.6 11,328.9 10,828.9 10,892.6 10,209.1 10,202.8 10,274.8
Debt................................... 844.8 1,045.1 805.3 805.5 806.3 706.7 706.9 707.3
Equity................................. 1,375.5 1,367.1 1,345.1 1,349.6 1,344.6 1,334.9 1,280.9 1,255.5
Total assets........................... 15,314.2 15,045.9 14,734.6 14,283.7 14,329.9 13,590.8 13,143.2 12,869.0
====================================================================================================================================
Selected average balances
(in millions)
Loans.................................. $10,879.0 $10,654.5 $10,279.2 $ 9,998.3 $ 9,714.7 $ 9,331.7 $ 8,897.2 $ 8,527.3
Deposits............................... 11,554.2 11,304.1 11,072.6 10,767.9 10,388.2 10,229.5 10,185.9 10,065.7
Debt................................... 934.0 815.6 805.3 806.0 800.0 706.8 707.1 630.8
Equity................................. 1,372.3 1,353.4 1,356.5 1,356.5 1,333.7 1,301.3 1,268.2 1,241.1
Total assets........................... 15,022.0 14,827.7 14,428.4 14,259.2 13,816.6 13,257.4 12,945.7 12,820.0
====================================================================================================================================
Selected ratios
Net interest margin (taxable-equivalent) 4.34% 4.42% 4.39% 4.35% 4.42% 4.42% 4.61% 4.58%
Annualized return on assets............ 1.30% 1.33% 1.31% 0.83% 1.39% 1.43% 1.37% 1.28%
Annualized return on common equity..... 14.77% 15.24% 14.53% 8.86% 15.00% 15.24% 14.58% 13.83%
Annualized return on total equity...... 14.20% 14.62% 13.96% 8.72% 14.39% 14.60% 13.97% 13.27%
Efficiency ratio....................... 54.21% 48.30% 55.83% 59.64% 55.69% 56.95% 58.63% 60.67%
Average equity/average assets.......... 9.14% 9.13% 9.40% 9.51% 9.65% 9.82% 9.80% 9.68%
Tier 1 risk-based capital ratio........ 10.21% 9.99% 9.85% 10.82% 10.78% 11.03% 11.08% 11.29%
Total risk-based capital ratio......... 11.46% 11.24% 11.10% 12.07% 11.98% 12.28% 12.33% 12.54%
Leverage ratio......................... 8.11% 7.97% 7.96% 8.43% 8.55% 8.72% 8.66% 8.54%
====================================================================================================================================
Cash-basis financial data (3)
Net income applicable to
common shareholders................... $ 50,984 $ 51,963 $ 48,708 $ 30,489 $ 48,974 $ 48,529 $ 45,377 $ 42,266
Net income per common share (2)........ $ 0.32 $ 0.33 $ 0.31 $ 0.19 $ 0.31 $ 0.31 $ 0.29 $ 0.27
Net income per common share -
assuming dilution (2)................. $ 0.32 $ 0.33 $ 0.31 $ 0.19 $ 0.31 $ 0.30 $ 0.28 $ 0.26
Annualized return on assets............ 1.42% 1.47% 1.41% 0.91% 1.48% 1.53% 1.47% 1.39%
Annualized return on common equity..... 18.92% 19.70% 17.93% 10.98% 18.05% 18.48% 17.89% 17.17%
Efficiency ratio....................... 51.76% 45.72% 54.00% 58.14% 54.12% 55.27% 56.93% 58.84%
Average equity/average assets.......... 7.94% 7.89% 8.32% 8.58% 8.67% 8.78% 8.71% 8.57%
====================================================================================================================================
- ----------
(1)All financial information has been restated for mergers accounted for as
poolings of interests. The effects of mergers accounted for as purchase
transactions have been included from the date of consummation. Prior periods
have been conformed to current-period presentation.
(2)Dividends per common share are historical amounts. For a discussion of net
income per common share computations refer to Note 18 of the consolidated
financial statements - "Net Income Per Common Share Data."
(3)Excluding amortization and balances of purchase accounting intangibles net
of applicable taxes.
</TABLE>
<PAGE>
Fourth Quarter Results
Hibernia reported net income of $48.7 million in the fourth quarter of
1999, a 2% increase from $48.0 million in the fourth quarter of 1998 and a 2%
decrease from $49.5 million in the third quarter of 1999. Net income per common
share of $.30 for the fourth quarter of 1999 increased $.01 from $.29 in the
fourth quarter of 1998 and remained unchanged from the third quarter of 1999.
Net income per common share - assuming dilution was $.30 in the fourth quarter
of 1999 compared to $.29 and $.30 for the fourth quarter of 1998 and the third
quarter of 1999, respectively.
Cash-basis net income of $52.7 million in the fourth quarter of 1999
increased 4% from $50.7 million in the fourth quarter of 1998 and decreased 2%
from $53.7 million in the third quarter of 1999. Cash-basis net income
per common share of $.32 for the fourth quarter of 1999 increased $.01 from $.31
in the fourth quarter of 1998 and decreased $.01 from the third quarter of 1999.
Fourth quarter 1999 cash-basis net income per common share - assuming dilution
was $.32 compared to $.31 for the fourth quarter of 1998 and $.33 for the
third quarter of 1999.
Net interest income, on a taxable-equivalent basis, totaled $151.9 million
in the fourth quarter of 1999 compared to $143.4 million in the fourth quarter
of 1998 and $152.9 million in the third quarter of 1999. Net interest income
for the fourth quarter of 1998 was negatively impacted by the funding cost of
transactions designed to utilize an expiring loss carryforward. The $1.9 million
in income associated with this transaction is recorded as securities gains in
noninterest income rather than in net interest income.
The fourth-quarter 1999 increase in net interest income compared to the
fourth quarter of 1998 was primarily the result of the effect of the Beaumont
transaction in 1999 (which accounted for approximately one-third of the
increase) and the growth in loans both in total and as a percentage of
average earning assets. Average loans increased $1.2 billion from the fourth
quarter of 1998 to $10.9 billion, or 78.1% of average earning assets compared to
75.2% of average earning assets in the fourth quarter of 1998. Average loans
increased $224.5 million in the fourth quarter of 1999 compared to the third
quarter of 1999. The net interest spread of 3.54% in the fourth quarter of 1999
was down two basis points from the fourth quarter of 1998 and down 11 basis
points from the third quarter of 1999. The average yield on earning assets was
7.98%, up 15 basis points compared to the fourth quarter of 1998 and up seven
basis points from the third quarter of 1999. The average rate paid on
interest-bearing liabilities increased by 17 basis points from the fourth
quarter of 1998 and 18 basis points from the third quarter of 1999 to 4.44% in
the fourth quarter of 1999.
The net interest margin decreased eight basis points from the fourth
quarter of 1998 to 4.34% for the fourth quarter of 1999. A two-basis-point
increase in loan yields and a 46-basis-point increase in securities yields
led to the 15-basis-point increase in the yield on earning assets. At the same
time, the rate on interest-bearing liabilities increased 17 basis points, and
the contribution of noninterest-bearing funds decreased six basi points
compared to the fourth quarter of 1998.
The net interest margin of 4.34% for the fourth quarter of 1999 decreased
eight basis points from the third quarter of 1999. A seven-basis-point
increase in loan yields and a two-basis-point increase in securities resulted
in a seven-basis-point increase in the yield on earning assets. These increases
were offset by an 18-basis-point increase in the rate on interest-bearing
liabilities and a 15-basis-point increase in the cost of funds supporting
earning assets. Table 18 illustrates the components of the net interest margin
on a quarterly basis for 1999 and 1998.
<TABLE>
<CAPTION>
=============================================================================================================================
TABLE 18 - NET INTEREST MARGIN (taxable-equivalent)
=============================================================================================================================
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Yield on earning assets .... 7.98% 7.91% 7.72% 7.70% 7.83% 8.00% 8.17% 8.19%
Rate on interest-bearing
liabilities .............. 4.44 4.26 4.11 4.14 4.27 4.47 4.44 4.43
- -----------------------------------------------------------------------------------------------------------------------------
Net interest spread ... 3.54 3.65 3.61 3.56 3.56 3.53 3.73 3.76
Contribution of noninterest-
bearing funds ............ 0.80 0.77 0.78 0.79 0.86 0.89 0.88 0.82
=============================================================================================================================
Net interest margin ... 4.34% 4.42% 4.39% 4.35% 4.42% 4.42% 4.61% 4.58%
=============================================================================================================================
Noninterest-bearing funds/
earning assets ........... 17.98% 18.27% 19.07% 19.17% 20.22% 19.89% 19.81% 18.66%
=============================================================================================================================
</TABLE>
Average earning assets increased $1.0 billion (8%) to $13.9 billion in the
fourth quarter of 1999 from $12.9 billion in the fourth quarter of 1998. Average
earning assets were up $176.3 million (1%) compared to the third quarter of
1999. Average loans increased $1.2 billion (12%) from the fourth quarter of 1998
and increased $224.5 million (2%) from the third quarter of 1999. Excluding the
effect of the Beaumont transaction in 1999, average loans increased
approximately 10% from the fourth quarter of 1998. Average securities for the
fourth quarter of 1999 totaled $2.8 billion, down $30.9 million (1%) from the
fourth quarter of 1998 and up $26.6 million (1%) from the third quarter of 1999.
Average deposits increased $1.2 billion (11%) to $11.6 billion in the
fourth quarter of 1999 from $10.4 billion in the fourth quarter of 1998. Average
deposits were up $250.1 million (2%) from the third quarter of 1999. Excluding
the effect of the Beaumont transaction in 1999, average deposits increased
7% from the fourth quarter of 1998.
Noninterest income, excluding securities transactions, was $55.0 million,
up $7.2 million (15%) from the fourth quarter of 1998 and down $0.8 million (1%)
from the third quarter of 1999. Excluding the effect of the Beaumont transaction
in 1999, noninterest income would have increased approximately 9% from the
fourth quarter of 1998. Service charges on deposits and income from mortgage
loan origination and servicing fees were the major categories of noninterest
income that increased in the fourth quarter of 1999 compared to the fourth
quarter of 1998.
Noninterest expense of $112.2 million in the fourth quarter of 1999 was
$5.7 million (5%) higher than $106.5 million in the fourth quarter of 1998 and
$11.4 million (11%) higher than $100.8 million in the third quarter of 1999.
Excluding the effect of the Beaumont transaction in 1999, noninterest expense
would have been virtually unchanged from the fourth quarter of 1998. Excluding
merger-related expenses, noninterest expense would have increased $6.3 million
(6%) from the fourth quarter of 1998. The increase in noninterest expense from
the third quarter of 1999 is primarily due to an increase of $11.0 million (26%)
in staff costs. During the third quarter of 1999, no accrual for management
incentives was made and $11.3 million accrued in prior periods was reversed.
In the fourth quarter of 1999 the Company incurred minimal expenses related
to Year 2000 compliance, as virtually all expenses related to Year 2000
compliance occurred in prior periods.
The Company's efficiency ratio was 54.21% in the fourth quarter of 1999
compared to 55.69% and 48.30% in the fourth quarter of 1998 and the third
quarter of 1999, respectively. The change in the efficiency ratio from the
third quarter of 1999 primarily resulted from the reduction in staff costs
discussed earlier. The cash-basis efficiency ratio, which excludes the
amortization of purchase accounting intangibles, was 51.76% in the fourth
quarter of 1999 compared to 54.12% in the fourth quarter of 1998 and 45.72% in
the third quarter of 1999.
Excluding the effect of merger-related expenses, the Company's efficiency
ratio would have been 54.21% in the fourth quarter of 1999 compared to 55.35%
and 48.27% in the fourth quarter of 1998 and the third quarter of 1999,
respectively. Excluding the effect of merger-related expenses, the cash-basis
efficiency ratio would have been 51.75% in the fourth quarter of 1999 compared
to 53.77% in the fourth quarter of 1998 and 45.69% in the third quarter of 1999.
Statements in Management's Discussion and Analysis of Financial Condition
and Results of Operations that are not historical facts should be considered
forward-looking statements with respect to Hibernia. Forward-looking statements
of this type speak only as of the date of this filing. By nature, forward-
looking statements involve inherent risk and uncertainties. Various factors,
including, but not limited to, economic conditions, asset quality, interest
rates, loan demand and changes in the assumptions used in making the forward-
looking statements, could cause actual results to differ materially from those
contemplated by the forward-looking statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balances, Interest and Rates
- ------------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1) 1999 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 ... $ 3,863.7 $ 306,945 7.94% $ 3,501.9 $ 296,427 8.46%
Small business loans 2,238.8 199,326 8.90 1,962.2 180,726 9.21
Consumer loans ............................... 4,353.3 360,981 8.29 3,657.5 310,168 8.48
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans (2)............................. 10,455.8 867,252 8.29 9,121.6 787,321 8.63
- ------------------------------------------------------------------------------------------------------------------------------------
Securities available for sale................. 2,741.2 174,755 6.38 2,720.1 173,410 6.38
Securities held to maturity .................. 31.5 1,908 6.06 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities ........................... 2,772.7 176,663 6.37 2,720.1 173,410 6.38
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term investments ....................... 232.5 11,928 5.13 257.1 15,036 5.85
Mortgage loans held for sale ................. 167.2 10,962 6.55 199.5 13,273 6.65
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets............... 13,628.2 $ 1,066,805 7.83% 12,298.3 $ 989,040 8.04%
- ------------------------------------------------------------------------------------------------------------------------------------
Reserve for loan losses ........................ (147.9) (126.3)
Noninterest-earning assets:
Cash and due from banks ...................... 492.5 452.2
Other assets ................................. 664.2 588.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets 1,156.7 1,040.8
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets ............................... $ 14,637.0 $ 13,212.8
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts ............................... $ 349.2 $ 9,182 2.63% $ 335.6 $ 11,146 3.32%
Money market deposit accounts .............. 2,073.3 50,083 2.42 2,031.8 51,701 2.54
Savings accounts ........................... 1,688.0 62,292 3.69 1,117.4 35,891 3.21
Other consumer time deposits................ 2,948.3 144,427 4.90 3,049.1 158,549 5.20
Public fund certificates of deposit
of $100,000 or more ...................... 1,051.8 51,771 4.92 1,005.0 53,734 5.35
Certificates of deposit
of $100,000 or more ...................... 745.7 38,823 5.21 611.7 32,398 5.30
Foreign time deposits ...................... 308.5 14,266 4.62 226.7 11,423 5.04
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits........... 9,164.8 370,844 4.05 8,377.3 354,842 4.24
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased .................... 628.8 31,824 5.06 395.2 21,304 5.39
Repurchase agreements ...................... 457.7 20,932 4.57 395.7 18,934 4.78
Debt ......................................... 840.5 46,920 5.58 711.6 39,854 5.60
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 11,091.8 $ 470,520 4.24% 9,879.8 $ 434,934 4.40%
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits .............................. 2,012.4 1,840.9
Other liabilities ............................ 173.1 205.7
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabilities....... 2,185.5 2,046.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ..................... 1,359.7 1,286.4
====================================================================================================================================
Total liabilities and
shareholders' equity.................. $ 14,637.0 $ 13,212.8
====================================================================================================================================
SPREAD AND NET YIELD
Interest rate spread ........................... 3.59% 3.64%
Cost of funds supporting interest-earning assets 3.45% 3.53%
Net interest income/margin ..................... $ 596,285 4.38% $ 554,106 4.51%
====================================================================================================================================
- ----------------
(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
- ------------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1) 1997 1996
====================================================================================================================================
(Average balances $ in millions, Average Average
interest $ in thousands) Balance Interest Rate Balance Interest Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Commercial loans.............................. $ 2,652.6 $ 233,445 8.80% $ 2,286.1 $ 209,891 9.18%
Small business loans.......................... 1,756.4 167,831 9.56 1,127.1 106,831 9.48
Consumer loans................................ 3,087.9 267,722 8.67 2,623.1 233,860 8.92
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans (2)............................ 7,496.9 668,998 8.92 6,036.3 550,582 9.12
- ------------------------------------------------------------------------------------------------------------------------------------
Securities available for sale................. 2,788.7 184,496 6.62 2,759.7 180,058 6.52
Securities held to maturity................... - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities............................ 2,788.7 184,496 6.62 2,759.7 180,058 6.52
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term investments........................ 317.7 17,703 5.57 258.0 13,748 5.33
Mortgage loans held for sale.................. 63.8 4,281 6.71 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets............... 10,667.1 $ 875,478 8.21% 9,054.0 $ 744,388 8.22%
- ------------------------------------------------------------------------------------------------------------------------------------
Reserve for loan losses......................... (136.5) (161.6)
Noninterest-earning assets:
Cash and due from banks....................... 449.2 394.9
Other assets.................................. 557.8 449.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets............ 1,007.0 844.3
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets................................ $ 11,537.6 $ 9,736.7
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts................................ $ 511.7 $ 14,150 2.77% $ 495.9 $ 12,899 2.60%
Money market deposit accounts............... 1,804.3 46,570 2.58 1,660.4 40,100 2.42
Savings accounts............................ 806.4 23,339 2.89 501.7 10,998 2.19
Other consumer time deposits................ 3,061.2 160,163 5.23 2,738.6 149,820 5.47
Public fund certificates of deposit
of $100,000 or more....................... 1,027.2 56,459 5.50 934.6 50,482 5.40
Certificates of deposit
of $100,000 or more....................... 531.6 27,796 5.23 412.1 21,443 5.20
Foreign time deposits....................... 98.2 5,204 5.30 41.8 2,261 5.41
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits........... 7,840.6 333,681 4.26 6,785.1 288,003 4.24
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased..................... 265.6 14,558 5.48 51.2 2,643 5.16
Repurchase agreements....................... 340.5 16,631 4.88 281.8 13,244 4.70
Debt.......................................... 96.0 5,754 6.00 32.2 1,969 6.11
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities.......... 8,542.7 $ 370,624 4.34% 7,150.3 $ 305,859 4.28%
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits............................... 1,666.9 1,457.4
Other liabilities............................. 173.1 163.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liabi1ities....... 1,840.0 1,620.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity...................... 1,154.9 966.0
====================================================================================================================================
Total liabilities and
shareholders' equity.................. $ 11,537.6 $ 9,736.7
====================================================================================================================================
SPREAD AND NET YIELD
Interest rate spread............................ 3.87% 3.94%
Cost of funds supporting interest-earning assets 3.48% 3.38%
Net interest income/margin...................... $ 504,854 4.73% $ 438,529 4.84%
====================================================================================================================================
- -------------
(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
- ---------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1)
===============================================================================================================
5-Year
1995 Compound
- ----------------------------------------------------------------------------------------------Growth Rate
(Average balances $ in millions, Average For Average
interest $ in thousands) Balance Interest Rate Balances
===============================================================================================================
<S> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Commercial loans.............................. $ 1,890.8 $ 182,003 9.63%
Small business loans.......................... 922.3 90,081 9.77
Consumer loans................................ 2,052.6 179,524 8.75
- ---------------------------------------------------------------------------------------------------------------
Total loans (2)............................ 4,865.7 451,608 9.28 20.8%
- ---------------------------------------------------------------------------------------------------------------
Securities available for sale................. 1,101.8 71,692 6.51 17.5
Securities held to maturity................... 2,118.4 134,635 6.36 (58.0)
- ---------------------------------------------------------------------------------------------------------------
Total securities............................ 3,220.2 206,327 6.41 (5.2)
- ---------------------------------------------------------------------------------------------------------------
Short-term investments........................ 189.3 11,165 5.90 (1.7)
Mortgage loans held for sale.................. - - - -
- ---------------------------------------------------------------------------------------------------------------
Total interest-earning assets............... 8,275.2 $ 669,100 8.09% 11.4
- ---------------------------------------------------------------------------------------------------------------
Reserve for loan losses......................... (172.1) (5.7)
Noninterest-earning assets:
Cash and due from banks....................... 376.9 5.5
Other assets.................................. 369.9 12.0
- ---------------------------------------------------------------------------------------------------------------
Total noninterest-earning assets............ 746.8 8.9
- ---------------------------------------------------------------------------------------------------------------
Total assets................................ $ 8,849.9 11.5%
===============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts................................ $ 812.5 $ 18,031 2.22% (17.2)%
Money market deposit accounts............... 1,332.2 35,328 2.65 8.1
Savings accounts............................ 479.6 10,907 2.27 26.7
Other consumer time deposits................ 2,484.9 138,094 5.56 5.9
Public fund certificates of deposit
of $100,000 or more....................... 760.2 44,761 5.89 8.8
Certificates of deposit
of $100,000 or more....................... 325.9 16,118 4.95 18.5
Foreign time deposits....................... 35.1 2,018 5.75 78.3
- ---------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits........... 6,230.4 265,257 4.26 8.6
- ---------------------------------------------------------------------------------------------------------------
Short-term borrowings:
Federal funds purchased..................... 55.2 3,184 5.77 73.7
Repurchase agreements....................... 215.5 11,202 5.20 26.0
Debt.......................................... 30.6 2,014 6.58 87.3
- ---------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities.......... 6,531.7 $ 281,657 4.31% 12.1
- ---------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits............................... 1,350.0 9.0
Other liabilities............................. 137.9 (0.4)
- ---------------------------------------------------------------------------------------------------------------
Total noninterest-bearing liab1ities........ 1,487.9 8.1
- ---------------------------------------------------------------------------------------------------------------
Total shareholders' equity...................... 830.3 12.9
===============================================================================================================
Total liabilities and
shareholders' equity.................. $ 8,849.9 11.5%
===============================================================================================================
SPREAD AND NET YIELD
Interest rate spread............................ 3.78%
Cost of funds supporting interest-earning assets 3.41%
Net interest income/margin...................... $ 387,443 4.68%
===============================================================================================================
- -------------
(1)Based on the statutory income tax rate of 35%.
(2)Yield computations include nonaccrual loans in loans outstanding.
</TABLE>
<PAGE>
GRAPHIC MATERIAL INDEX
GRAPHIC DESCRIPTION CROSS REFERENCE
- ------------------- ---------------
Average Earning Asset Mix Pie Chart See Consolidated Average Balances,
Interest and Rates
Total Loans Bar Graph See Five-Year Consolidated Summary of
Income and Selected Financial Data
Total Deposits Bar Graph See Five-Year Consolidated Summary of
Income and Selected Financial Data
Net Interest Income Bar Graph See Consolidated Average Balances,
Interest and Rates
Annual Common Dividends Bar Graph See Five-Year Consolidated Summary of
Income and Selected Financial Data
Total Shareholdres' Equity Bar Graph See Five-Year Consolidated Summary of
Income and Selected Financial Data
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Shareholders
Hibernia Corporation
We have audited the accompanying consolidated balance sheets of Hibernia
Corporation and Subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Hibernia
Corporation and Subsidiaries at December 31, 1999 and 1998, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young, LLP
New Orleans, Louisiana
January 17, 2000
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
Consolidated Balance Sheets
Hibernia Corporation and Subsidiaries
December 31 ($ in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents .................................................... $ 827,699 $ 945,021
Securities available for sale ................................................ 2,660,322 2,761,701
Securities held to maturity (estimated fair value of $297,072
at December 31, 1999) ..................................................... 300,525 -
Mortgage loans held for sale ................................................. 92,704 281,434
Loans, net of unearned income ................................................ 10,856,676 9,907,194
Reserve for loan losses .................................................. (156,072) (130,347)
- ------------------------------------------------------------------------------------------------------------------------
Loans, net ........................................................... 10,700,604 9,776,847
- ------------------------------------------------------------------------------------------------------------------------
Bank premises and equipment .................................................. 205,165 194,723
Customers' acceptance liability .............................................. 108 331
Other assets ................................................................. 527,052 369,827
- ------------------------------------------------------------------------------------------------------------------------
Total assets ......................................................... $ 15,314,179 $ 14,329,884
- ------------------------------------------------------------------------------------------------------------------------
Liabilities
Deposits:
Noninterest-bearing ...................................................... $ 2,085,322 $ 2,065,770
Interest-bearing ......................................................... 9,770,581 8,826,803
- ------------------------------------------------------------------------------------------------------------------------
Total deposits ....................................................... 11,855,903 10,892,573
- ------------------------------------------------------------------------------------------------------------------------
Short-term borrowings ........................................................ 1,102,690 1,134,136
Liability on acceptances ..................................................... 108 331
Other liabilities ............................................................ 135,114 151,905
Debt ......................................................................... 844,849 806,337
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities .................................................... 13,938,664 12,985,282
- ------------------------------------------------------------------------------------------------------------------------
Shareholders' equity
Preferred Stock, no par value:
Authorized - 100,000,000 shares; 2,000,000 Series A issued and outstanding
at December 31, 1999
and 1998, respectively .................................................... 100,000 100,000
Class A Common Stock, no par value:
Authorized - 300,000,000 shares; issued and outstanding - 160,324,729 and
159,850,398 at December 31, 1999 and
1998, respectively ........................................................ 307,824 306,913
Surplus ...................................................................... 425,185 416,269
Retained earnings ............................................................ 631,314 531,233
Accumulated other comprehensive income ....................................... (54,122) 27,938
Unearned compensation ........................................................ (34,686) (37,751)
- ------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity ........................................... 1,375,515 1,344,602
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity ........................... $ 15,314,179 $ 14,329,884
========================================================================================================================
- ----------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================
Consolidated Income Statements
Hibernia Corporation and Subsidiaries
Year Ended December 31 ($ in thousands, except per-share data) 1999 1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans ...................... $ 862,310 $ 782,939 $ 665,017
Interest on securities available for sale ....... 168,217 166,480 177,703
Interest on securities held to maturity ......... 1,908 - -
Interest on short-term investments .............. 11,928 15,036 17,703
Interest and fees on mortgage loans held for sale 10,962 13,273 4,281
- ----------------------------------------------------------------------------------------------------
Total interest income ....................... 1,055,325 977,728 864,704
- ----------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits ............................ 370,844 354,842 333,681
Interest on short-term borrowings ............... 52,756 40,238 31,189
Interest on debt ................................ 46,920 39,854 5,754
- ----------------------------------------------------------------------------------------------------
Total interest expense ...................... 470,520 434,934 370,624
- ----------------------------------------------------------------------------------------------------
Net interest income ................................. 584,805 542,794 494,080
Provision for loan losses ....................... 87,800 27,226 3,433
- ----------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses . 497,005 515,568 490,647
- ----------------------------------------------------------------------------------------------------
Noninterest income
Service charges on deposits ..................... 97,301 87,222 79,909
Trust fees ...................................... 23,190 16,683 15,535
Retail investment service fees .................. 23,561 17,230 12,070
Mortgage loan origination and servicing fees .... 18,737 15,366 9,739
Other service, collection and exchange charges .. 35,989 28,667 22,860
Other operating income .......................... 15,493 16,362 13,564
Securities gains, net ........................... 432 5,899 2,739
- ----------------------------------------------------------------------------------------------------
Total noninterest income .................... 214,703 187,429 156,416
- ----------------------------------------------------------------------------------------------------
Noninterest expense
Salaries and employee benefits .................. 211,526 212,142 207,718
Occupancy expense, net .......................... 33,388 34,604 34,691
Equipment expense ............................... 33,465 31,167 31,259
Data processing expense ......................... 31,503 29,590 26,891
Advertising and promotional expense ............. 14,258 15,226 15,907
Foreclosed property expense, net ................ (866) (1,019) (3,173)
Amortization of intangibles ..................... 23,763 17,138 15,034
Other operating expense ......................... 93,884 87,307 90,552
- ----------------------------------------------------------------------------------------------------
Total noninterest expense ................... 440,921 426,155 418,879
- ----------------------------------------------------------------------------------------------------
Income before income taxes .......................... 270,787 276,842 228,184
Income tax expense .................................. 95,684 95,886 80,289
- ----------------------------------------------------------------------------------------------------
Net income .......................................... $ 175,103 $ 180,956 $ 147,895
====================================================================================================
Net income applicable to common shareholders ........ $ 168,203 $ 174,056 $ 140,995
====================================================================================================
Net income per common share ......................... $ 1.07 $ 1.11 $ .90
====================================================================================================
Net income per common share - assuming dilution ..... $ 1.06 $ 1.09 $ .89
====================================================================================================
- ----------
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, 1996 ................. $100,000 $ 302,839 $ 380,875 $ 322,158 $ 8,034 $ (13,887)
Net income for 1997 ........................... - - - 147,895 - - $ 147,895
Unrealized gains (losses) on securities,
net of reclassification adjustments ......... - - - - 7,388 - 7,388
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income .......................... $ 155,283
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock:
Dividend Reinvestment Plan ................. - 418 2,693 - - 477
Stock Option Plan .......................... - 1,068 4,457 - - 166
Retirement Security Plan ................... - 44 265 - - -
Restricted stock awards .................... - 7 45 - - -
Director compensation ...................... - - 32 - - 225
By pooled companies prior to merger ........ - - 13,963 - - -
Cash dividends declared:
Preferred ($3.45 per share) ................ - - - (6,900) - -
Common ($.33 per share) .................... - - - (42,109) - -
By pooled companies prior to merger ........ - - - (6,339) - -
Acquisition of treasury stock ................. - - - - - (299)
Purchase of common shares by ESOP ............. - - - - - (5,021)
Allocation of ESOP shares ..................... - - 920 - - 952
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1997 ................. 100,000 304,376 403,250 414,705 15,422 (17,387)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income for 1998 ........................... - - - 180,956 - - $ 180,956
Unrealized gains (losses) on securities,
net of reclassification adjustments ......... - - - - 12,516 - 12,516
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income .......................... $ 193,472
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock:
Stock Option Plan .......................... - 949 4,189 - - -
Restricted stock awards .................... - 870 7,433 - - -
Exercise of purchase warrants .............. - 409 177 - - -
By pooled companies prior to merger ........ - - 62 - - -
Cash dividends declared:
Preferred ($3.45 per share) ................ - - - (6,900) - -
Common ($.375 per share) ................... - - - (56,647) - -
By pooled companies prior to merger ........ - - - (881) - -
Purchase of common shares by ESOP ............. - - - - - (23,630)
Allocation of ESOP shares ..................... - - 943 - - 3,266
Other ......................................... - 309 215 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1998 ................. 100,000 306,913 416,269 531,233 27,938 (37,751)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income for 1999 ........................... - - - 175,103 - - $ 175,103
Unrealized gains (losses) on securities,
net of reclassification adjustments ......... - - - - (82,060) - (82,060)
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income .......................... $ 93,043
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock:
Stock Option Plan .......................... - 882 4,083 - - -
Restricted stock awards .................... - 29 172 - - -
By pooled company prior to merger .......... - - 5,387 - - -
Cash dividends declared:
Preferred ($3.45 per share) ................ - - - (6,900) - -
Common ($.435 per share) ................... - - - (67,995) - -
By pooled company prior to merger- ......... - - - (127) - -
Allocation of ESOP shares ..................... - - (480) - - 3,065
Other ......................................... - - (246) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1999 ................. $100,000 $ 307,824 $ 425,185 $ 631,314 $ (54,122) $(34,686)
====================================================================================================================================
- ----------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
Consolidated Statements of Cash Flows
Hibernia Corporation and Subsidiaries
Year Ended December 31 ($ in thousands) 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income ............................................................ $ 175,103 $ 180,956 $ 147,895
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses ...................................... 87,800 27,226 3,433
Amortization of intangibles and deferred charges ............... 23,809 16,739 14,566
Depreciation and amortization .................................. 30,316 30,390 29,336
Non-cash compensation expense .................................. 4,385 62 43
Premium amortization, net of discount accretion ................ 6,493 4,438 2,972
Realized securities gains, net ................................. (432) (5,899) (2,739)
Gains on sales of assets, net .................................. (3,098) (2,418) (3,453)
Provision for losses on foreclosed and other assets ............ 1,254 664 2,377
Decrease (increase) in mortgage loans held for sale ............ 188,730 (211,851) (69,583)
Decrease (increase) in deferred income tax asset ............... (814) 722 12,716
Increase in interest receivable and other assets ............... (17,667) (19,716) (9,314)
(Decrease) increase in interest payable and other liabilities .. (13,806) 9,178 (2,964)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities ........................ 482,073 30,491 125,285
- ------------------------------------------------------------------------------------------------------------------------
Investing activities
Purchases of securities available for sale ............................ (428,316) (1,833,372) (920,272)
Proceeds from maturities of securities available for sale ............. 391,608 1,058,737 698,527
Proceeds from maturities of securities held to maturity ............... 2,314 - -
Proceeds from sales of securities available for sale .................. 214,315 774,314 295,637
Net increase in loans ................................................. (883,673) (1,354,074) (1,333,356)
Proceeds from sales of loans .......................................... 83,149 7,932 7,682
Purchases of loans .................................................... (564,577) (208,094) (134,642)
Acquisitions, net of cash acquired of $277,702 and $64,095 for the
years ended December 31, 1999 and 1997, respectively ................ 188,552 - 56,563
Purchases of premises, equipment and other assets ..................... (52,504) (46,776) (34,428)
Proceeds from sales of foreclosed assets and excess bank-owned property 11,069 8,190 14,999
Proceeds from sales of premises, equipment and other assets ........... 2,174 1,259 1,151
- ------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities ............................ (1,035,889) (1,591,884) (1,348,139)
- ------------------------------------------------------------------------------------------------------------------------
Financing activities
Net increase in deposits .............................................. 498,483 789,599 632,519
Net increase (decrease) in short-term borrowings ...................... (31,446) 414,175 376,410
Proceeds from issuance of debt ........................................ 240,000 600,000 500,000
Payments on debt ...................................................... (201,488) (301,225) (52,193)
Proceeds from issuance of common stock ................................ 5,967 5,724 9,539
Purchase of common stock by ESOP ...................................... - (23,630) (5,021)
Dividends paid ........................................................ (75,022) (64,428) (55,362)
Acquisition of treasury stock ......................................... - - (299)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities ........................ 436,494 1,420,215 1,405,593
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents ........................ (117,322) (141,178) 182,739
Cash and cash equivalents at beginning of year ........................ 945,021 1,086,199 903,460
- ------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year ......................... $ 827,699 $ 945,021 $ 1,086,199
- ------------------------------------------------------------------------------------------------------------------------
Supplemental disclosures Cash paid during the year for:
Interest expense ..................................................... $ 486,333 $ 437,463 $ 373,076
Income taxes ......................................................... $ 90,566 $ 87,700 $ 64,359
Non-cash investing and financing activities:
Loans and bank premises and equipment transferred to foreclosed
assets and excess bank-owned property ............................. $ 7,923 $ 14,422 $ 8,186
Mortgage loans securitized and retained .............................. $ 511,354 $ - $ -
Acquisitions:
Common stock issued ............................................... $ - $ - $ 13,968
Fair value of assets acquired ..................................... $ 554,567 $ - $ 161,762
Fair value of liabilities assumed ................................. $ 465,417 $ - $ 140,262
========================================================================================================================
- ----------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
Hibernia Corporation and Subsidiaries
Note 1
Summary of Significant Accounting Policies
Hibernia Corporation (the Parent Company), through its wholly owned
subsidiary, Hibernia National Bank (the Bank), provides a broad array of
financial products and services throughout Louisiana and East Texas. The
principal products and services offered include retail, small business,
commercial, international, mortgage and private banking; leasing; private equity
investments; corporate finance; treasury management; insurance; and trust and
investment management. The Bank, through wholly owned subsidiaries, also
provides insurance products, retail brokerage and alternative investments,
including mutual funds and annuities. Effective January 1, 1999, Hibernia
National Bank of Texas was merged with and into Hibernia National Bank in a
transaction that was accounted for at historical cost in a manner similar to
that of a pooling-of-interests transaction.
The accounting principles followed by Hibernia Corporation and
Subsidiaries (the Company or Hibernia) and the methods of applying those
principles conform with generally accepted accounting principles and those
generally practiced within the banking industry.
Consolidation
The consolidated financial statements include the accounts of the
Parent Company and its wholly owned subsidiaries: Hibernia National Bank,
Hibernia Capital Corporation (HCC) and Zachary Taylor Life Insurance Company
(Zachary Taylor). HCC, a licensed Small Business Investment Company, provides
private equity investments to small businesses. Zachary Taylor is currently
inactive, and the Parent Company has an agreement with the Federal Reserve Bank
whereby Zachary Taylor will not be actively operated as an insurance company
without Federal Reserve Board approval.
These consolidated financial statements give retroactive effect to
mergers accounted for as poolings of interests. In addition, the effects of
mergers accounted for as purchase transactions have been included from the date
of consummation (see Note 2).
All significant intercompany transactions and balances have been
eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks,
interest-bearing time deposits in domestic banks, federal funds sold and
securities purchased under agreements to resell and trading account assets.
Securities
Management determines the appropriate classification of debt securities
(trading, available for sale, or held to maturity) at the time of purchase and
re-evaluates this classification periodically. Securities classified as trading
account assets are held for sale in anticipation of short-term market movements.
Debt securities are classified as held to maturity when the Company has the
positive intent and ability to hold the securities to maturity. Securities not
classified as held to maturity or trading are classified as available for sale.
Securities classified as trading account assets are carried at market
value and are included in short-term investments. Gains and losses, both
realized and unrealized, are reflected in earnings as other operating income.
Securities classified as held to maturity are stated at amortized cost.
Securities classified as available for sale are stated at fair value, with
unrealized gains and losses, net of tax, reported in shareholders' equity and
included in other comprehensive income.
The amortized cost of debt securities classified as held to maturity or
available for sale is adjusted for amortization of premiums and accretion of
discounts to maturity or, in the case of mortgage-backed securities, over the
estimated life of the security. Amortization, accretion and accruing interest
are included in interest income on securities using the level-yield method.
Realized gains and losses, and declines in value judged to be other than
temporary, are included in net securities gains (losses). The cost of securities
sold is determined based on the specific identification method.
Mortgage Loans Held for Sale
Mortgage loans held for sale are carried at the lower of aggregate cost
or market value. Market adjustments and realized gains and losses are classified
as other operating income.
<PAGE>
Loans
Loans are stated at the principal amounts outstanding, less unearned
income and the reserve for loan losses. Interest on loans and accretion of
unearned income are computed by methods which approximate a level rate of return
on recorded principal. Loan origination and commitment fees and certain direct
loan origination costs are deferred, and the net amount is amortized as an
adjustment of the related loan's yield over the life of the loan.
Commercial and small business loans are placed in nonaccrual status
when, in management's opinion, there is doubt concerning full collectibility of
both principal and interest. Commercial and small business nonaccrual loans are
considered to be impaired when it is probable that all amounts due in accordance
with the contractual terms will not be collected. Consumer loans are generally
charged off when any payment of principal or interest is more than 120 days
delinquent. Interest payments received on nonaccrual loans are applied to
principal if there is doubt as to the collectibility of the principal;
otherwise, these receipts are recorded as interest income. A loan remains in
nonaccrual status until it is current as to principal and interest and the
borrower demonstrates the ability to fulfill the contractual obligation.
Reserve for Loan Losses
The reserve for loan losses is maintained to provide for probable
credit losses related to specifically identified loans and for losses inherent
in the loan portfolio that have been incurred as of the balance sheet date. The
reserve related to loans that are identified as impaired is based on discounted
expected future cash flows (using the loan's initial effective interest rate),
the observable market value of the loan, or the estimated fair value of the
collateral for certain collateral dependent loans.
The reserve for loan losses is based on management's estimate of
probable credit losses inherent in the loan portfolio; actual credit losses may
vary from the current estimate. The reserve for loan losses is reviewed
periodically, taking into consideration the risk characteristics of the loan
portfolio, past charge-off experience, general economic conditions and other
factors that warrant current recognition. As adjustments to the reserve for loan
losses become necessary, they are reflected as a provision for loan losses in
current-period earnings. Actual loan charge-offs are deducted from and
subsequent recoveries are added to the reserve.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are computed
primarily using the straight-line method over the estimated useful lives of the
assets, which generally are 10 to 30 years for buildings and 3 to 15 years for
equipment, and over the shorter of the lease terms or the estimated lives of
leasehold improvements.
Foreclosed Assets and Excess Bank-Owned Property
Foreclosed assets include real estate and other collateral acquired
upon the default of loans. Foreclosed assets and excess bank-owned property are
recorded at the fair value of the assets less estimated selling costs. Losses
arising from the initial reduction of an outstanding loan amount to fair value
are deducted from the reserve for loan losses. Losses arising from the transfer
of bank premises and equipment to excess bank-owned property are charged to
expense. A valuation reserve for foreclosed assets and excess bank-owned
property is maintained for subsequent valuation adjustments on a
specific-property basis. Income and expenses associated with foreclosed assets
and excess bank-owned property prior to sale are included in current earnings.
Excess of Cost Over Fair Value of Net Assets Acquired
The excess of cost over the fair value of net assets acquired
(goodwill) is being amortized using the straight-line method over the estimated
periods benefited, generally 25 years.
As events or changes in circumstances warrant, the Company evaluates
the realizability of goodwill by geographic region based on a comparison of the
recorded balance of goodwill to the applicable discounted cumulative net income,
before goodwill amortization expense, over the remaining amortization period of
the associated goodwill. To the extent that impairment exists, write-downs to
realizable value are recorded.
Mortgage Servicing Rights
Mortgage servicing rights are recorded when purchased or originated
mortgage loans are sold with servicing rights retained. The fair value of
capitalized mortgage servicing rights is based upon the present value of
estimated future cash flows. Based upon current fair values, capitalized
mortgage servicing rights are periodically assessed for impairment. To the
extent that impairment exists, write-downs are recognized in current earnings as
an adjustment to the corresponding valuation allowance. For purposes of
performing its impairment evaluation, the portfolio is stratified on the basis
of certain risk characteristics including origination date, loan type and
interest rate. Capitalized mortgage servicing rights are amortized over the
period of estimated net servicing income, which considers appropriate prepayment
assumptions.
<PAGE>
Income Taxes
The Parent Company and its subsidiaries file a consolidated federal
income tax return. The Company accounts for income taxes using the liability
method. Temporary differences occur between the financial reporting and tax
bases of assets and liabilities. Deferred tax assets and liabilities are
recorded for these differences based on enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
Hibernia National Bank is subject to a Louisiana shareholders' tax,
which is based partly on income. The income portion is reported as state income
tax. In addition, certain subsidiaries of the Parent Company and Hibernia
National Bank are subject to Louisiana state income tax. 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.
Derivative Financial Instruments
The Company may enter into derivative financial instruments for
purposes other than trading to assist in the management of its exposure to
interest rate risk. Derivative financial instruments used for asset and
liability hedges are recorded using the accrual method of accounting. Under this
method, the expected differential to be paid or received is accrued in the
appropriate income or expense caption on the income statement (i.e., hedge of a
loan in interest income, hedge of a deposit or debt in interest expense). The
fair value of these instruments and the changes in the fair value are not
recognized in the financial statements. In addition, the Company may enter into
derivative financial instruments to manage its exposure to changes in interest
rates on the market value of its securities available for sale portfolio. These
instruments are recorded using the fair value method of accounting. Under this
method, gains and losses are recognized, net of tax, in shareholders' equity and
are included in other comprehensive income.
The Company may also enter into derivative financial instruments for
trading purposes. These instruments are recorded using the fair value method of
accounting. Changes in the fair value of these instruments are recorded in
noninterest income.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
Reclassification
Certain items included in the consolidated financial statements for
1998 and 1997 have been reclassified to conform with the 1999 presentation.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
Subsequently, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133," which defers the effective date of SFAS No. 133 to apply to
all financial statements for years beginning after June 15, 2000. Because of the
limited use of derivatives, management does not anticipate that the adoption of
SFAS No. 133 will have a material impact on the financial condition or operating
results of the Company.
<PAGE>
Note 2
Mergers
The Company completed mergers with two East Texas financial
institutions in 1997 which were accounted for as poolings of interests. In 1998,
the Company completed mergers with four financial institutions, three in
Louisiana and one in East Texas, all of which were accounted for as poolings of
interests. In 1999, the Company completed a merger with one East Texas financial
institution which was accounted for as a pooling of interests. Additionally in
1999, the Company purchased the assets and assumed the liabilities of the
Beaumont branches of Chase Bank of Texas, N.A. Completed mergers include
Executive Bancshares, Inc. (Executive) and Unicorp Bancshares - Texas, Inc.
(Unicorp) in 1997; Northwest Bancshares of Louisiana, Inc. (Northwest),
ArgentBank (Argent), Firstshares of Texas, Inc. (Firstshares) and Peoples
Holding Corporation (Peoples) in 1998; and MarTex Bancshares, Inc. (MarTex) in
1999.
The institutions with which the Company merged are collectively
referred to as the "merged companies." The merged companies in transactions
accounted for as poolings of interests are referred to as the "pooled
companies," and institutions in transactions accounted for as purchases are
referred to as the "purchased companies."
The following table shows the merger date, consideration issued,
exchange ratio and accounting method for each merger.
<TABLE>
<CAPTION>
====================================================================================================================================
Exchange
Merger Date Consideration(1) Ratio Accounting Method
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Executive .............................................. August 31, 1997 1,161,680 shares 15.85:1 Pooling of interests
Unicorp ................................................ November 7, 1997 2,233,388 shares 1.60:1 Pooling of interests
Northwest .............................................. January 1, 1998 1,508,019 shares 3.90:1 Pooling of interests
Argent ................................................. February 1, 1998 13,317,236 shares 2.04:1 Pooling of interests
Firstshares ............................................ March 15, 1998 3,690,615 shares 7.15:1 Pooling of interests
Peoples ................................................ July 1, 1998 3,562,367 shares 9.50:1 Pooling of interests
MarTex ................................................. March 8, 1999 3,450,000 shares 0.25:1 Pooling of interests
Beaumont branches of
Chase Bank of Texas, N.A .......................... May 21, 1999 $87,000,000 N/A Purchase
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------
(1)All shares issued were Hibernia Class A Common Stock.
====================================================================================================================================
</TABLE>
The following table shows the key components of the results of
operations of the pooled companies.
<TABLE>
<CAPTION>
================================================================================
Hibernia 1998 1999 Pooled
(originally Pooled Company
($ in thousands) reported) Companies(1 (MarTex) Total
- --------------------------------------------------------------------------------
Year ended December 31, 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net interest income ........ $530,534 $ - $12,260 $542,794
Net income ................. $178,629 $ - $ 2,327 $180,956
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year ended December 31, 1997
- --------------------------------------------------------------------------------
Net interest income ........ $427,757 $54,279 $12,044 $494,080
Net income ................. $137,389 $ 7,407 $ 3,099 $147,895
- --------------------------------------------------------------------------------
- ----------
(1)Results of operations for the year ended December 31, 1998 are included in
Hibernia's results.
================================================================================
</TABLE>
<PAGE>
Under the purchase method of accounting, the assets and liabilities of
the Beaumont branches were adjusted to their estimated fair values as of the
purchase date. The excess of cost over the fair value of net assets acquired was
$62.6 million and is being amortized on a straight-line basis over 25 years. In
addition, intangibles of $12.7 million related to core deposits and $17.1
million related to trust business were recorded and are being amortized on an
accelerated basis over approximately seven years. The following table presents
unaudited pro forma information giving effect to the purchase of the Beaumont
branches as if the transaction had occurred at the beginning of each period
presented. The effect of anticipated savings resulting from the merger has not
been included in the pro forma information. Unaudited pro forma information is
not necessarily indicative of future results.
<TABLE>
<CAPTION>
===============================================================================================
($ in thousands, except per-share data) Year Ended December 31
===============================================================================================
1999 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net interest and noninterest income ........... $ 810,539 $ 760,325 $ 679,191
Net income .................................... $ 173,565 $ 179,928 $ 146,498
Net income per common share ................... $ 1.06 $ 1.10 $ 0.89
Net income per common share - assuming dilution $ 1.05 $ 1.08 $ 0.88
===============================================================================================
</TABLE>
Hibernia is a party to a definitive merger agreement with Southcoast
Capital, L.L.C. (Southcoast) which is pending regulatory approval. Southcoast is
a full-service investment banking firm providing corporate finance, equity
research, institutional equity sales and trading services. The Company
anticipates that this merger will be consummated in the second quarter of 2000
and that it will be accounted for as a purchase transaction.
Note 3
Cash and Cash Equivalents
The following is a summary of cash and cash equivalents.
<TABLE>
<CAPTION>
================================================================================
($ in thousands) December 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash and due from banks ............................. $571,051 $567,057
Short-term investments:
Federal funds sold ............................. 167,050 224,580
Securities purchased under agreements to resell 85,000 147,991
Interest-bearing time deposits in domestic banks 4,598 5,393
- --------------------------------------------------------------------------------
Total short-term investments .............. 256,648 377,964
- --------------------------------------------------------------------------------
Total cash and cash equivalents ........... $827,699 $945,021
================================================================================
</TABLE>
<PAGE>
Note 4
Securities
The following is a summary of securities classified as available for
sale and held to maturity. The Company had no securities classified as held to
maturity during 1998.
<TABLE>
<CAPTION>
===================================================================================================================
($ in thousands) December 31, 1999
- -------------------------------------------------------------------------------------------------------------------
Amortized Fair Unrealized Unrealized
Type Cost Value Gains Losses
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
U.S. Treasuries ........................................... $ 278,869 $ 276,973 $ 115 $ 2,011
U.S. government agencies:
Mortgage-backed securities ........................... 1,020,715 997,758 4,291 27,248
Bonds ................................................ 1,122,229 1,065,331 215 57,113
States and political subdivisions ......................... 225,098 224,442 1,890 2,546
Other ..................................................... 96,675 95,818 184 1,041
- -------------------------------------------------------------------------------------------------------------------
Total securities available for sale .................. $2,743,586 $2,660,322 $ 6,695 $89,959
- -------------------------------------------------------------------------------------------------------------------
Held to maturity:
U.S. government agencies:
Mortgage-backed securities ........................... $ 300,525 $ 297,072 $ 557 $ 4,010
- -------------------------------------------------------------------------------------------------------------------
Total securities held to maturity .................... $ 300,525 $ 297,072 $ 557 $ 4,010
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
($ in thousands) December 31, 1998
- -------------------------------------------------------------------------------------------------------------------
Amortized Fair Unrealized Unrealized
Type Cost Value Gains Losses
- -------------------------------------------------------------------------------------------------------------------
Available for sale:
U.S. Treasuries ........................................... $ 253,423 $ 257,608 $ 4,185 $ -
U.S. government agencies:
Mortgage-backed securities ........................... 1,007,913 1,019,708 14,928 3,133
Bonds ................................................ 1,136,711 1,153,179 18,349 1,881
States and political subdivisions ......................... 245,489 255,815 10,528 202
Other ..................................................... 75,203 75,391 188 -
- -------------------------------------------------------------------------------------------------------------------
Total securities available for sale .................. $2,718,739 $2,761,701 $48,178 $ 5,216
===================================================================================================================
</TABLE>
The following is a summary of realized gains and losses from the sale
of securities available for sale.
<TABLE>
<CAPTION>
=================================================================
($ in thousands) Year Ended December 31
- -----------------------------------------------------------------
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
Realized gains ........ $ 465 $ 6,356 $ 2,894
Realized losses ....... (33) (457) (155)
- -----------------------------------------------------------------
Net realized gains $ 432 $ 5,899 $ 2,739
=================================================================
</TABLE>
<PAGE>
Securities with carrying values of $2,802,414,000 and $2,587,140,000 at
December 31, 1999 and 1998, respectively, were pledged to secure public or trust
deposits or were sold under repurchase agreements.
<TABLE>
<CAPTION>
================================================================================
($ in thousands) December 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Available for sale:
U.S. Treasuries ............................... $ 276,973 $ 257,608
U.S. government agencies:
Mortgage-backed securities ............... 994,715 993,041
Bonds .................................... 1,061,737 1,143,460
States and political subdivisions ............. 165,699 192,024
Other ......................................... 2,765 1,007
- --------------------------------------------------------------------------------
Total available for sale ................. 2,501,889 2,587,140
- --------------------------------------------------------------------------------
Held to maturity:
U.S. government agencies:
Mortgage-backed securities ............... 300,525 -
- --------------------------------------------------------------------------------
Total held to maturity ................... 300,525 -
- --------------------------------------------------------------------------------
Total carrying value of pledged securities $2,802,414 $2,587,140
================================================================================
</TABLE>
The amortized cost and estimated fair value by maturity of securities
are shown in the following table. Securities are classified according to their
contractual maturities without consideration of principal amortization,
potential prepayments or call options. Accordingly, actual maturities may differ
from contractual maturities.
<TABLE>
<CAPTION>
================================================================================
($ in thousands) December 31, 1999
- --------------------------------------------------------------------------------
Amortized Fair
Cost Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Available for sale:
Due in 1 year or less .................. $ 270,054 $ 268,611
Due after 1 year through 5 years ....... 454,657 447,608
Due after 5 years through 10 years ..... 979,188 938,272
Due after 10 years ..................... 1,039,687 1,005,831
- --------------------------------------------------------------------------------
Total securities available for sale $2,743,586 $2,660,322
- --------------------------------------------------------------------------------
Held to maturity:
Due after 5 years through 10 years ..... $ 6,313 $ 5,855
Due after 10 years ..................... 294,212 291,217
- --------------------------------------------------------------------------------
Total securities held to maturity.. $ 300,525 $ 297,072
================================================================================
</TABLE>
<PAGE>
Note 5
Loans
The following is a summary of commercial and small business loans
classified by repayment source and consumer loans classified by type.
<TABLE>
<CAPTION>
================================================================================
($ in thousands) December 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Commercial:
Commercial and industrial .................. $ 1,501,038 $1,371,174
Services industry .......................... 955,418 1,055,589
Real estate ................................ 434,232 457,427
Health care ................................ 298,070 306,522
Transportation, communications and utilities 228,614 211,986
Energy ..................................... 192,587 421,998
Other ...................................... 83,349 55,140
- --------------------------------------------------------------------------------
Total commercial ...................... 3,693,308 3,879,836
- --------------------------------------------------------------------------------
Small Business:
Commercial and industrial .................. 823,369 770,811
Services industry .......................... 539,585 440,194
Real estate ................................ 340,190 274,661
Health care ................................ 150,818 107,616
Transportation, communications and utilities 91,947 82,175
Energy ..................................... 43,652 46,312
Other ...................................... 372,305 347,975
- --------------------------------------------------------------------------------
Total small business .................. 2,361,866 2,069,744
- --------------------------------------------------------------------------------
Consumer:
Residential mortgages:
First mortgages ....................... 2,263,405 1,915,562
Junior liens .......................... 282,123 190,073
Indirect ................................... 1,277,294 850,501
Revolving credit ........................... 374,152 325,788
Other ...................................... 604,528 675,690
- --------------------------------------------------------------------------------
Total consumer ........................ 4,801,502 3,957,614
- --------------------------------------------------------------------------------
Total loans ........................... $10,856,676 $9,907,194
================================================================================
</TABLE>
The following is a summary of nonperforming loans, foreclosed assets
and excess bank-owned property. For a discussion of private equity investments,
refer to Note 23 - "Hibernia Corporation."
<TABLE>
<CAPTION>
============================================================
($ in thousands) December 31
- ------------------------------------------------------------
1999 1998
- ------------------------------------------------------------
<S> <C> <C>
Nonaccrual loans .............. $76,461 $40,940
Restructured loans ............ - -
- ------------------------------------------------------------
Nonperforming loans ...... 76,461 40,940
- ------------------------------------------------------------
Foreclosed assets ............. 7,710 10,762
Excess bank-owned property .... 4,197 2,648
- ------------------------------------------------------------
Total nonperforming assets $88,368 $54,350
============================================================
</TABLE>
At December 31, 1999 and 1998, the recorded investment in loans that
were considered to be impaired was $69,997,000 and $37,191,000, respectively.
Included in the 1999 and 1998 amounts were $65,896,000 and $33,226,000,
respectively, of impaired loans for which the related reserve for loan losses
was $17,244,000 and $9,798,000, respectively. At December 31, 1999 and 1998,
impaired loans that did not have a reserve for loan losses amounted to
$4,101,000 and $3,965,000, respectively. The average recorded investment in
impaired loans during the years ended December 31, 1999, 1998 and 1997 was
approximately $60,834,000, $26,911,000 and $16,466,000, respectively.
<PAGE>
Interest payments received on impaired loans are applied to principal
if there is doubt as to the collectibility of the principal; otherwise, these
receipts are recorded as interest income. For the years ended December 31, 1999,
1998 and 1997, the Company recognized interest income on impaired loans of
$3,145,000, $1,682,000 and $1,199,000, respectively.
Interest income in the amount of $6,723,000 for 1999, $3,291,000 for
1998 and $2,057,000 for 1997 would have been recorded on nonperforming loans if
they had been classified as performing. The Company recorded $3,145,000,
$1,682,000 and $1,199,000 of interest income on nonperforming loans during 1999,
1998 and 1997, respectively.
The following is a summary of activity in the reserve for loan losses.
<TABLE>
<CAPTION>
===================================================================================
($ in thousands) Year Ended December 31
- -----------------------------------------------------------------------------------
1999 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year ............. $ 130,347 $ 126,557 $ 146,097
Loans charged off ................... (83,366) (40,888) (46,417)
Recoveries .......................... 18,438 17,452 22,965
- -----------------------------------------------------------------------------------
Net loans charged off .......... (64,928) (23,436) (23,452)
- -----------------------------------------------------------------------------------
Provision for loan losses ........... 87,800 27,226 3,433
Addition due to purchase transactions 3,035 - 479
Transfer due to securitizations ..... (182) - -
- -----------------------------------------------------------------------------------
Balance at end of year ................... $ 156,072 $ 130,347 $ 126,557
===================================================================================
</TABLE>
<PAGE>
Note 6
Bank Premises and Equipment
The following tables detail bank premises and equipment and related
depreciation and amortization expense.
<TABLE>
<CAPTION>
================================================================================
($ in thousands) December 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Land ......................................... $ 38,632 $ 37,904
Buildings .................................... 190,285 179,860
Leasehold improvements ....................... 33,946 30,660
Furniture and equipment ...................... 149,169 131,682
- --------------------------------------------------------------------------------
412,032 380,106
Less accumulated depreciation and amortization (206,867) (185,383)
- --------------------------------------------------------------------------------
Total bank premises and equipment ....... $ 205,165 $ 194,723
================================================================================
</TABLE>
<TABLE>
================================================================================
($ in thousands) Year Ended December 31
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Provisions for depreciation
and amortization included in:
Occupancy expense $ 9,756 $11,086 $ 9,525
Equipment expense 17,429 16,980 17,976
- --------------------------------------------------------------------------------
Total depreciation and
amortization expense $27,185 $28,066 $27,501
================================================================================
</TABLE>
<PAGE>
Note 7
Deposits
At December 31, 1999, time deposits with a remaining maturity of one
year or more amounted to $985,142,000. Maturities of all time deposits are as
follows: 2000 - $4,270,170,000; 2001 - $732,287,000; 2002 - $109,412,000; 2003 -
$32,542,000; 2004 - $56,572,000; and thereafter - $54,329,000.
Domestic certificates of deposit of $100,000 or more amounted to
$2,085,972,000 and $1,746,404,000 at December 31, 1999 and 1998, respectively.
Interest on these certificates amounted to $90,594,000, $86,132,000 and
$84,255,000 in 1999, 1998 and 1997, respectively.
Foreign deposits, which are deposit liabilities of the Cayman Island
office of Hibernia National Bank, amounted to $362,723,000 and $321,537,000 at
December 31, 1999 and 1998, respectively. These deposits are comprised primarily
of individual deposits of $100,000 or more. Interest expense on foreign deposits
amounted to $14,266,000, $11,422,000 and $5,204,000 for 1999, 1998 and 1997,
respectively.
Note 8
Short-Term Borrowings
The following is a summary of short-term borrowings.
<TABLE>
<CAPTION>
=========================================================================================
($ in thousands) December 31
- -----------------------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Federal funds purchased ........................... $ 552,275 $ 705,320
Securities sold under agreements to repurchase .... 475,416 390,743
Federal Reserve Bank treasury, tax and loan account 74,999 38,073
- -----------------------------------------------------------------------------------------
Total short-term borrowings .................. $1,102,690 $1,134,136
=========================================================================================
</TABLE>
Federal funds purchased and securities sold under agreements to
repurchase generally mature within one to 14 days from the transaction date. The
Federal Reserve Bank treasury, tax and loan account is an open-ended note option
with the Federal Reserve Bank of Atlanta. The following is a summary of
pertinent data related to short-term borrowings.
<TABLE>
<CAPTION>
====================================================================================
($ in thousands) December 31
- ------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at December 31 ... $1,102,690 $1,134,136 $719,961
Maximum month-end outstandings $1,301,423 $1,134,136 $938,716
Average daily outstandings ... $1,086,547 $ 790,890 $606,102
Average rate during the year.. 4.9% 5.1% 5.2%
Average rate at year end ..... 4.9% 5.0% 5.7%
====================================================================================
</TABLE>
<PAGE>
Note 9
Debt
The following is a summary of outstanding debt.
<TABLE>
<CAPTION>
================================================================================
($ in thousands) December 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank callable advances $400,000 $300,000
Federal Home Loan Bank long-term advances 444,849 505,689
Other ................................... - 648
- --------------------------------------------------------------------------------
Total debt ......................... $844,849 $806,337
================================================================================
</TABLE>
The Federal Home Loan Bank (FHLB) advances are secured by the Company's
investment in FHLB stock, which totaled $48,972,000 and $43,032,000 at December
31, 1999 and 1998, respectively, and also by a blanket floating lien on portions
of the Company's residential mortgage loan portfolio.
The FHLB callable advances require monthly interest payments. An
advance in the amount of $200,000,000 matures in 2008, accrues interest at a
rate of 5.28%, and is callable at quarterly intervals which begin in June 2003.
Another $200,000,000 advance matures in 2004, accrues interest at a rate of
5.65%, and is callable at quarterly intervals which begin in September 2001. If
called prior to maturity, replacement funding will be offered by the FHLB at a
then-current rate. The FHLB long-term advances accrue interest at contractual
rates of 4.61% to 8.36%, are due in monthly installments of approximately
$2,251,000, including interest, and are scheduled to amortize through various
dates between 2000 and 2015. However, should the residential mortgage loans for
which the long-term advances were obtained repay at a faster rate than
anticipated, the advances are to be repaid at a correspondingly faster rate.
Maturities of debt are as follows: 2000 - $100,853,000; 2001 -
$301,014,000; 2002 - $40,741,000; 2003 - $429,000; 2004 - $200,369,000; and
thereafter - $201,443,000.
Note 10
Other Assets and Other Liabilities
The following are summaries of other assets and other liabilities.
<TABLE>
<CAPTION>
================================================================================
($ in thousands) December 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Other assets:
Accrued interest receivable ...... $ 96,907 $ 93,765
Foreclosed assets and excess
bank-owned property ......... 11,907 13,410
Deferred income taxes ............ 73,277 26,482
Goodwill, net .................... 194,217 140,877
Core deposit intangibles, net .... 17,170 9,650
Trust intangibles, net ........... 15,007 -
Mortgage servicing rights, net ... 45,746 31,111
Other ............................ 72,821 54,532
- --------------------------------------------------------------------------------
Total other assets .......... $527,052 $369,827
- --------------------------------------------------------------------------------
Other liabilities:
Accrued interest payable ......... $ 39,711 $ 37,524
Trade accounts payable and
accrued liabilities ......... 52,408 74,347
Reserve for future rental payments
under sale/leaseback ........ 18,270 19,821
Other ............................ 24,725 20,213
- --------------------------------------------------------------------------------
Total other liabilities ..... $135,114 $151,905
================================================================================
</TABLE>
Amortization expense relating to goodwill totaled $9,840,000,
$8,591,000 and $8,772,000 for the years ended December 31, 1999, 1998 and 1997,
respectively. Accumulated amortization relating to goodwill at December 31, 1999
and 1998 totaled $54,338,000 and $46,274,000, respectively. Amortization expense
relating to core deposit intangibles totaled $5,197,000, $3,847,000 and
$4,931,000 in 1999, 1998 and 1997, respectively. Accumulated amortization
relating to core deposit intangibles totaled $15,852,000 and $10,655,000 at
December 31, 1999 and 1998, respectively. Amortization expense relating to trust
intangibles totaled $2,052,000 in 1999. Accumulated amortization relating to
trust intangibles totaled $2,052,000 at December 31, 1999.
<PAGE>
Mortgage servicing rights of $27,009,000 and $24,066,000 were added
during the years ended December 31, 1999 and 1998, respectively. Amortization
expense related to mortgage servicing rights totaled $6,674,000, $3,900,000 and
$1,331,000 for 1999, 1998 and 1997, respectively. There was no valuation reserve
for mortgage servicing rights in 1997. A valuation reserve in the amount of
$800,000 was established in 1998. There was no activity in this valuation
reserve during 1999.
Note 11
Preferred Stock
The Company has authorized 100,000,000 shares of no par value preferred
stock. At December 31, 1999 and 1998, 2,000,000 shares of Series A
Fixed/Adjustable Rate Noncumulative Preferred Stock (Series A Preferred Stock)
were issued and outstanding. The Series A Preferred Stock is nonconvertible,
with a $50 per-share liquidation preference and a 6.9% annual dividend through
October 1, 2001, payable on the first business day of each calendar quarter.
Beginning October 1, 2001, the dividend rate is adjustable but will not be less
than 7.4% nor greater than 13.4% per annum. The Series A Preferred Stock
qualifies as Tier 1 capital for regulatory purposes and is redeemable at
Hibernia's option (with prior Federal Reserve Board approval) at any time after
October 1, 2001.
Note 12
Employee Benefit Plans
The Company maintains a defined-contribution benefit plan under Section
401(k) of the Internal Revenue Code, the Retirement Security Plan (RSP).
Substantially all employees who have completed one year of service are eligible
to participate in the RSP. Under the RSP, employees contribute a portion of
their compensation, with the Company matching 100% of the first 5% of an
employee's contribution. The matching contributions are invested in Hibernia
Class A Common Stock and are charged to employee benefits expense. At December
31, 1999, the RSP owned approximately 3,149,000 shares of Hibernia Class A
Common Stock. The Company's contributions to the RSP totaled $5,627,000 in 1999,
$5,511,000 in 1998 and $5,048,000 in 1997.
The Company maintains incentive pay and bonus programs for certain
employees. Costs of these programs were $24,371,000, $25,732,000 and $21,051,000
for the years ended December 31, 1999, 1998 and 1997, respectively.
During 1995, the Company established a plan (1995-1997 Plan) for the
grant of performance share awards under its Long-Term Incentive Plan for certain
members of management. Under the 1995-1997 Plan, if the Company achieved certain
predetermined performance goals during the three-year period from January 1,
1995 through December 31, 1997, the Company would award Hibernia Class A Common
Stock to certain members of management who contributed to that achievement. A
total of 425,499 shares of Hibernia Class A Common Stock, net of personal tax
withholding, was issued under the 1995-1997 Plan in the first quarter of 1998.
Compensation expense of $6,390,000 was recorded in 1997 relating to the
1995-1997 Plan.
A new performance share awards plan (1998-2000 Plan) was established
for the three-year period from January 1, 1998 through December 31, 2000. The
structure of the 1998-2000 Plan was similar to that of the 1995-1997 Plan.
Compensation expense of $8,000,000 was recorded in 1998 relating to the
1998-2000 Plan and reversed in 1999. The reversal resulted from the failure to
meet certain requirements necessary to achieve a payout under the plan.
Note 13
Employee Stock Ownership Plan
During 1995, the Company instituted an employee stock ownership plan
(ESOP) in which substantially all employees participate. The ESOP was authorized
to purchase $30,000,000 of Hibernia Class A Common Stock and to borrow the
needed funds from Hibernia National Bank, with a guarantee from the Parent
Company. The ESOP acquired $30,000,000 of Hibernia Class A Common Stock in
open-market transactions from March 1995 to May 1998. During 1998, the ESOP was
authorized to acquire an additional $15,000,000 of Hibernia Class A Common Stock
which was to be funded by an additional borrowing from Hibernia National Bank,
with a guarantee from the Parent Company. The additional $15,000,000 of Hibernia
Class A Common Stock was purchased on October 22, 1998.
The ESOP owned approximately 3,874,000 shares of Hibernia Class A
Common Stock at December 31, 1999 and 1998. The outstanding debt obligation of
the ESOP totaled $34,686,000 and $37,751,000 at December 31, 1999 and 1998,
respectively. The Bank makes annual contributions to the ESOP in an amount
determined by its Board of Directors, but at least equal to the ESOP's minimum
debt service less dividends received by the ESOP. Dividends received by the ESOP
in 1999, 1998 and 1997 were used to pay debt service, and it is anticipated that
this practice will continue in the future. The ESOP shares initially were
pledged as collateral for its debt. As the debt is repaid, shares are released
from collateral and allocated to active employees.
<PAGE>
The debt of the ESOP is recorded as debt of the Parent Company, and the
shares pledged as collateral are reported as unearned compensation in equity.
Hibernia National Bank's loan asset and the Parent Company's debt liability are
eliminated in consolidation. As shares are committed to be released, the Company
reports compensation expense equal to the current market value of the shares,
and the shares become outstanding for net income per common share computations.
Dividends on allocated ESOP shares are recorded as a reduction of retained
earnings; dividends on unallocated ESOP shares are recorded as a reduction of
debt and accrued interest by the Parent Company.
<PAGE>
Compensation expense of $2,763,000, $4,224,000 and $3,014,000 relating
to the ESOP was recorded during 1999, 1998 and 1997, respectively. The ESOP held
1,151,000 and 872,000 allocated shares and 2,723,000 and 3,002,000 suspense
shares at December 31, 1999 and 1998, respectively. The fair value of the
suspense shares at December 31, 1999 and 1998 was $28,929,000 and $52,168,000,
respectively.
Note 14
Stock Options
SFAS No.123,"Accounting for Stock-Based Compensation," defines financial
accounting and reporting standards for stock-based compensation plans. Those
plans include all arrangements by which employees and directors receive shares
of stock or other equity instruments of the company, or the company incurs
liabilities to employees or directors in amounts based on the price of the
stock. SFAS No. 123 defines a fair-value-based method of accounting for
stock-based compensation. However, SFAS No. 123 also allows an entity to
continue to measure stock-based compensation cost using the intrinsic value
method of Accounting Principles Board Opinion No. 25 (APB No. 25), "Accounting
for Stock Issued to Employees." Entities electing to retain the accounting
prescribed in APB No. 25 must make pro forma disclosures of net income, net
income per common share and net income per common share - assuming dilution as
if the fair-value-based method of accounting defined in SFAS No. 123 had been
applied. The Company retained the provisions of APB No. 25 for expense
recognition purposes. Under APB No. 25, because the exercise price of the
Company's stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.
The Company's stock option plans provide incentive and non-qualified
options to various key employees and non-employee directors. The options are
granted at no less than the fair market value of the stock at the date of grant.
Options granted to directors upon inception of service as a director vest in six
months. Until October 1997, those options were granted under the 1987 Stock
Option Plan; after October 1997, those options are granted under the 1993
Directors' Stock Option Plan. All other options granted under the 1987 Stock
Option Plan, the Long-Term Incentive Plan and the 1993 Directors' Stock Option
Plan become exercisable in the following increments: 50% after the expiration of
two years from the date of grant, an additional 25% three years from the date of
grant and the remaining 25% four years from the date of grant.
Options granted to employees and directors, other than the chief
executive officer, become immediately exercisable if the holder of the option
dies while the option is outstanding. Options granted under the 1987 Stock
Option Plan generally expire 10 years from the date granted. Options granted
under the Long-Term Incentive Plan and the 1993 Directors' Stock Option Plan
generally expire 10 years from the date of grant unless the holder dies,
retires, becomes permanently disabled or leaves the employ of the Company, at
which time the options expire at various times ranging from 90 to 365 days. All
options vest immediately upon a change in control of the Company.
The following summarizes the option activity in the plans during 1999,
1998 and 1997. During 1997, the 1987 Stock Option Plan was terminated;
therefore, there are no shares available for grant under this plan. The
termination did not impact options outstanding under the 1987 Stock Option Plan.
<TABLE>
<CAPTION>
=====================================================================================
Weighted-
Average
Exercise
Incentive Non-Qualified Total Price
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1987 Stock Option Plan:
Outstanding, December 31, 1996 160,553 1,343,588 1,504,141 $ 7.45
Canceled ................ - (67,104) (67,104) 16.37
Exercised ............... (18,750) (34,745) (53,495) 5.47
- -------------------------------------------------------------------------------------
Outstanding, December 31, 1997 141,803 1,241,739 1,383,542 7.10
Canceled ................ - (42,625) (42,625) 16.45
Exercised ............... (91,640) (19,777) (111,417) 4.61
- -------------------------------------------------------------------------------------
Outstanding, December 31, 1998 50,163 1,179,337 1,229,500 7.00
Canceled ................ - (86,876) (86,876) 18.80
Exercised ............... (6,250) (8,949) (15,199) 6.05
- -------------------------------------------------------------------------------------
Outstanding, December 31, 1999 43,913 1,083,512 1,127,425 $ 6.10
- -------------------------------------------------------------------------------------
Exercisable, December 31, 1999 43,913 1,083,512 1,127,425 $ 6.10
=====================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
Weighted-
Average
Exercise
Incentive Non-Qualified Total Price
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Incentive Plan:
Outstanding, December 31, 1996 ........................... 12,598 4,841,972 4,854,570 $ 8.27
Granted (weighted-average fair value $3.99 per share) - 1,540,300 1,540,300 13.43
Canceled ............................................ - (172,488) (172,488) 10.92
Exercised ........................................... - (473,772) (473,772) 7.31
- -------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 ........................... 12,598 5,736,012 5,748,610 9.65
Granted (weighted-average fair value $5.59 per share) - 1,919,684 1,919,684 18.35
Canceled ............................................ - (222,819) (222,819) 13.81
Exercised ........................................... - (366,728) (366,728) 7.99
- -------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1998 ........................... 12,598 7,066,149 7,078,747 11.97
Granted (weighted-average fair value $4.49 per share) - 2,411,175 2,411,175 15.95
Canceled ............................................ - (260,788) (260,788) 16.29
Exercised ........................................... - (407,062) (407,062) 8.40
- -------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1999 ........................... 12,598 8,809,474 8,822,072 $ 13.09
- -------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1999 ........................... 12,598 3,842,659 3,855,257 $ 9.20
- -------------------------------------------------------------------------------------------------------------------
Available for Grant, December 31, 1999 ................... 1,164,446
- -------------------------------------------------------------------------------------------------------------------
1993 Directors' Stock Option Plan:
Outstanding, December 31, 1996 ........................... - 263,750 263,750 $ 8.57
Granted (weighted-average fair value $3.90 per share) - 70,000 70,000 13.00
Exercised ........................................... - (43,750) (43,750) 8.11
- -------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 ........................... - 290,000 290,000 9.70
Granted (weighted-average fair value $7.14 per share) - 75,000 75,000 21.57
Canceled ............................................ - (10,000) (10,000) 17.36
Exercised ........................................... - (20,000) (20,000) 8.44
- -------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1998 ........................... - 335,000 335,000 12.21
Granted (weighted-average fair value $3.45 per share) - 80,000 80,000 12.90
Canceled ............................................ - (5,000) (5,000) 21.72
Exercised ........................................... - (40,000) (40,000) 9.79
- -------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1999 ........................... - 370,000 370,000 $ 12.49
- -------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1999 ........................... - 193,750 193,750 $ 9.65
- -------------------------------------------------------------------------------------------------------------------
Available for Grant, December 31, 1999 ................... 502,500
===================================================================================================================
</TABLE>
In addition to the above option activity in the plans, 82,346, 484,915
and 7,900 shares of restricted stock were awarded under the Long-Term Incentive
Plan during the years ended December 31, 1999, 1998 and 1997, respectively.
<PAGE>
The following table presents the weighted-average remaining life as of
December 31, 1999 for options outstanding for the 1987 Stock Option Plan, the
Long-Term Incentive Plan and the 1993 Directors' Stock Option Plan within the
stated exercise price ranges.
<TABLE>
<CAPTION>
=========================================================================================================
Outstanding Exercisable
- ---------------------------------------------------------------------------------------------------------
Weighted- Weighted- Weighted-
Number Average Average Number Average
Exercise Price Range Per Share of Options Exercise Price Remaining Life of Options Exercise Price
- ---------------------------------------------------------------------------------------------------------
1987 Stock Option Plan:
<S> <C> <C> <C> <C> <C>
$4.19 to $5.31 .............. 457,759 $ 4.42 2.23 years 457,759 $ 4.42
$7.19 to $8.75 .............. 667,666 $ 7.23 3.29 years 667,666 $ 7.23
$14.94....................... 2,000 $ 14.94 0.55 years 2,000 $ 14.94
- ---------------------------------------------------------------------------------------------------------
Long-Term Incentive Plan:
$6.88 to $8.25 .............. 2,274,322 $ 7.48 4.41 years 2,274,322 $ 7.48
$10.19 to $13.97 ............ 2,630,000 $ 12.00 6.81 years 1,578,635 $ 11.65
$15.13 to $16.09 ............ 2,202,325 $ 16.09 9.08 years 1,100 $ 16.09
$18.28 to $21.56 ............ 1,715,425 $ 18.37 8.08 years 1,200 $ 18.28
- ---------------------------------------------------------------------------------------------------------
1993 Directors' Stock Option Plan:
$7.31 to $8.13 .............. 115,000 $ 7.83 4.45 years 115,000 $ 7.83
$10.44 to $13.00 ............ 185,000 $ 12.09 7.85 years 68,750 $ 11.46
$17.00 to $21.72 ............ 70,000 $ 21.22 8.35 years 10,000 $ 18.25
=========================================================================================================
</TABLE>
The following pro forma information was determined as if the Company
had accounted for stock options issued in 1995 and thereafter using the
fair-value-based method as defined in SFAS No. 123. The fair value of the
options was estimated using a Black-Scholes option valuation model with the
following weighted-average assumptions for 1999, 1998 and 1997, respectively:
risk-free interest rates of 4.92%, 5.66% and 6.67%; expected dividend yields of
2.66%, 1.95% and 2.39%; expected volatility factors of the market price of the
Hibernia Class A Common Stock of 29%, 24% and 23%; and an expected life of the
options of 10 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion the existing models do not necessarily provide a reliable
single measure of the fair value of its employee and director stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options granted in 1995 and thereafter is amortized to expense over the options'
vesting period. Since the Company's options generally vest over a four-year
period, the pro forma disclosures are not indicative of future amounts until
SFAS No. 123 is applied to all outstanding, nonvested options.
<TABLE>
<CAPTION>
================================================================================================================
($ in thousands, except per-share data) Year Ended December 31
- ----------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income ........... $ 175,103 $ 170,348 $ 180,956 $ 177,268 $ 147,895 $ 145,832
Net income per
common share .... $ 1.07 $ 1.04 $ 1.11 $ 1.08 $ .90 $ .89
Net income per
common share -
assuming dilution $ 1.06 $ 1.03 $ 1.09 $ 1.07 $ .89 $ .87
================================================================================================================
</TABLE>
<PAGE>
Note 15
Leases
The Company leases its headquarters, operations center and certain
other office space, bank premises and equipment under non-cancelable operating
leases which expire at various dates through 2035. Certain of the leases have
escalation clauses and renewal options ranging from one to 50 years.
Total rental expense (none of which represents contingent rentals)
included in occupancy and equipment expense was $13,697,000, $12,449,000 and
$12,745,000 in 1999, 1998 and 1997, respectively.
Minimum rental commitments for long-term operating leases are as
follows: 2000 - $12,131,000; 2001 - $12,041,000; 2002 - $11,737,000; 2003 -
$11,267,000; 2004 - $10,865,000; and thereafter - $40,760,000.
Note 16
Other Operating Expense
The following is a summary of other operating expense.
<TABLE>
<CAPTION>
=======================================================================
($ in thousands) Year Ended December 31
- -----------------------------------------------------------------------
1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
State taxes on equity .......... $12,115 $11,237 $ 7,681
Telecommunications ............. 9,844 11,259 11,437
Professional fees .............. 7,371 6,755 10,539
Postage ........................ 7,256 7,216 7,110
Stationery and supplies ........ 6,344 5,736 6,355
Loan collection expense ........ 5,003 4,771 4,054
Regulatory expense ............. 3,061 2,867 2,953
Other .......................... 42,890 37,466 40,423
- -----------------------------------------------------------------------
Total other operating expense $93,884 $87,307 $90,552
=======================================================================
</TABLE>
Note 17
Income Taxes
Income tax expense includes amounts currently payable and amounts
deferred to or from other years as a result of differences in the timing of
recognition of income and expense for financial reporting and federal tax
purposes. The following is a summary of the components of income tax expense.
<TABLE>
<CAPTION>
================================================================================
($ in thousands) Year Ended December 31
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense:
Federal income tax ..................... $ 90,089 $89,035 $ 63,483
State income tax ....................... 6,963 6,181 3,882
- --------------------------------------------------------------------------------
Total current tax expense ......... 97,052 95,216 67,365
- --------------------------------------------------------------------------------
Deferred tax expense (benefit):
Federal income tax ..................... (1,368) 670 16,241
Change in deferred tax valuation reserve - - (3,317)
- --------------------------------------------------------------------------------
Total deferred tax expense ........ (1,368) 670 12,924
- --------------------------------------------------------------------------------
Income tax expense .......................... $ 95,684 $95,886 $ 80,289
- --------------------------------------------------------------------------------
Shareholders' equity:
Change in accumulated other
comprehensive income .............. $(44,166) $ 6,609 $ 3,829
================================================================================
</TABLE>
<PAGE>
The following is a reconciliation of the federal statutory income tax
rate to the Company's effective rate.
<TABLE>
<CAPTION>
========================================================================================================================
($ in thousands) Year Ended December 31
- ------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
Amount Rate Amount Rate Amount Rate
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax expense based on federal statutory rate $ 94,775 35.0 % $ 96,895 35.0 % $ 79,864 35.0 %
Tax-exempt interest ....................... (6,634) (2.5) (6,543) (2.4) (6,396) (2.8)
State income tax, net of federal benefit .. 4,526 1.7 4,018 1.5 2,523 1.1
Goodwill .................................. 2,873 1.0 2,891 1.0 3,040 1.3
Other ..................................... 144 0.1 (1,375) (0.5) 1,258 0.6
- ------------------------------------------------------------------------------------------------------------------------
Income tax expense ................... $ 95,684 35.3 % $ 95,886 34.6 % $ 80,289 35.2 %
========================================================================================================================
</TABLE>
Deferred income taxes are based on differences between the bases of
assets and liabilities for financial statement purposes and tax reporting
purposes and capital loss and net operating loss carryforwards. The tax effects
of the cumulative temporary differences and loss carryforwards which create
deferred tax assets and liabilities are detailed in the following table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
($ in thousands) December 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
Deferred tax assets:
<S> <C> <C>
Reserve for loan losses ........... $ 54,625 $45,621
Sale/leaseback .................... 6,116 7,024
Loan fees ......................... 4,126 3,443
Accrued expenses .................. 9,071 9,614
Deferred compensation ............. 4,146 3,659
Net unrealized losses on securities
available for sale ........... 29,142 -
Other ............................. 5,007 7,708
- --------------------------------------------------------------------------------
Total deferred tax assets .... 112,233 77,069
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Net unrealized gains on securities
available for sale ........... - 15,024
Depreciation ...................... 12,123 14,260
Core deposit intangibles .......... 1,380 2,601
Mortgage servicing rights ......... 6,525 4,764
Other ............................. 18,928 13,938
- --------------------------------------------------------------------------------
Total deferred tax liabilities 38,956 50,587
- --------------------------------------------------------------------------------
Deferred tax assets, net of
deferred tax liabilities $ 73,277 $26,482
================================================================================
</TABLE>
Management assesses realizability of the net deferred tax asset based
on the Company's ability to: first, recover taxes previously paid and, second,
generate taxable income and capital gains in the future. A deferred tax
valuation reserve is established, if needed, to limit the net deferred tax asset
to its realizable value.
<PAGE>
Note 18
Net Income Per Common Share Data
The following sets forth the computation of net income per common share
and net income per common share - assuming dilution.
<TABLE>
<CAPTION>
==============================================================================================================
($ in thousands, except per-share data) Year Ended December 31
- --------------------------------------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Numerator:
Net income ..................................... $ 175,103 $ 180,956 $ 147,895
Preferred stock dividends ...................... (6,900) (6,900) (6,900)
- --------------------------------------------------------------------------------------------------------------
Numerator for net income per common share ...... 168,203 174,056 140,995
Effect of dilutive securities .................. - - -
- --------------------------------------------------------------------------------------------------------------
Numerator for net income per common
share - assuming dilution ................ $ 168,203 $ 174,056 $ 140,995
- --------------------------------------------------------------------------------------------------------------
Denominator:
Denominator for net income per common
share (weighted-average shares outstanding) 157,253,229 157,168,782 156,323,513
Effect of dilutive securities:
Stock options ............................. 1,548,018 2,410,838 2,204,500
Purchase warrants ......................... - - 174,376
Restricted stock awards ................... 100,775 35,850 151,255
- --------------------------------------------------------------------------------------------------------------
Denominator for net income per common
share - assuming dilution ................. 158,902,022 159,615,470 158,853,644
- --------------------------------------------------------------------------------------------------------------
Net income per common share ......................... $ 1.07 $ 1.11 $ 0.90
- --------------------------------------------------------------------------------------------------------------
Net income per common share - assuming dilution ..... $ 1.06 $ 1.09 $ 0.89
==============================================================================================================
</TABLE>
The weighted-average shares outstanding exclude 2,902,121, 2,224,254
and 1,782,937 average common shares in 1999, 1998 and 1997, respectively, held
by the Hibernia ESOP (discussed in Note 13) which have not been committed to be
released. The common shares issued in all mergers accounted for as poolings
of interests consummated in 1999, 1998 and 1997 are considered to be
outstanding as of the beginning of the earliest period presented.
Options with an exercise price greater than the average market price of
the Company's Class A Common Stock for the year are antidilutive and, therefore,
are not included in the computation of net income per common share - assuming
dilution. During 1999 there were 4,014,750 antidilutive options outstanding with
exercise prices ranging from $13.97 to $21.72, during 1998 there were 269,076
antidilutive options outstanding with exercise prices ranging from $18.80 to
$21.72 and during 1997 there were 129,501 antidilutive options outstanding with
exercise prices ranging from $16.30 to $18.80.
<PAGE>
Note 19
Comprehensive Income
The following is a summary of the components of other comprehensive
income.
<TABLE>
<CAPTION>
=====================================================================================
Income Tax
Before Expense After
($ in thousands) Income Taxes (Benefit Income Taxes
- -------------------------------------------------------------------------------------
Year ended December 31, 1999
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized gains (losses) on securities .. $(124,472) $(43,552) $(80,920)
available for sale, net
Reclassification adjustment for net
(gains) losses realized in net income (1,754) (614) (1,140)
- -------------------------------------------------------------------------------------
Other comprehensive income ..... $(126,226) $(44,166) $(82,060)
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Year ended December 31, 1998
- -------------------------------------------------------------------------------------
Unrealized gains (losses) on securities
available for sale, net ............. $ 18,278 $ 6,313 $ 11,965
Reclassification adjustment for net
(gains) losses realized in net income 847 296 551
- -------------------------------------------------------------------------------------
Other comprehensive income ..... $ 19,125 $ 6,609 $ 12,516
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Year ended December 31, 1997
- -------------------------------------------------------------------------------------
Unrealized gains (losses) on securities
available for sale, net ............. $ 11,404 $ 3,894 $ 7,510
Reclassification adjustment for net
(gains) losses realized in net income (187) (65) (122)
- -------------------------------------------------------------------------------------
Other comprehensive income ..... $ 11,217 $ 3,829 $ 7,388
- -------------------------------------------------------------------------------------
</TABLE>
Note 20
Related-Party Transactions
Certain directors and officers of the Company, members of their
immediate families and entities in which they or members of their immediate
families have principal ownership interests are customers of and have other
transactions with the Company in the ordinary course of business. Loans to these
parties are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable third-party
transactions and do not involve more than normal risks of collectibility or
present other unfavorable features.
Loans outstanding to related parties were $24,668,000 and $22,008,000
at December 31, 1999 and 1998, respectively. The change during 1999 reflects
$5,439,000 in loan advances and $2,779,000 in loan payments. These amounts do
not include loans made in the ordinary course of business to other entities with
which the Company has no relationship, other than a director of the Company
being a director of the other entity, unless that director had the ability to
significantly influence the other entity.
Securities sold to related parties under repurchase agreements amounted
to $4,693,000 and $7,882,000 at December 31, 1999 and 1998, respectively.
Note 21
Financial Instruments and Derivative Financial Instruments
Generally accepted accounting principles require disclosure of fair
value information about financial instruments for which it is practicable to
estimate fair value, whether or not the financial instruments are recognized in
the financial statements. When quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. The derived fair value
estimates cannot be substantiated through comparison to independent markets and,
in many cases, could not be realized in immediate settlement of the instrument.
Certain financial instruments and all non-financial instruments are excluded
from these disclosure requirements. Further, the disclosures do not include
estimated fair values for items which are not financial instruments but which
represent significant value to the Company, among them: core deposit
intangibles, trust operations and other fee-generating businesses. Accordingly,
the aggregate fair value amounts presented do not represent the underlying value
of the Company.
<PAGE>
The carrying amount of cash and cash equivalents, noninterest-bearing
deposits and short-term borrowings approximates the estimated fair value of
these financial instruments. The estimated fair value of securities, interest
rate agreements and other off-balance-sheet instruments is based on quoted
market prices, dealer quotes and prices obtained from independent pricing
services. The estimated fair value of loans, interest-bearing deposits and debt
is based on present values using applicable risk-adjusted spreads to the
appropriate yield curve to approximate current interest rates applicable to each
category of these financial instruments. The estimated fair value of mortgage
servicing rights is based on present values of estimated future cash flows. The
estimated fair value of commitments to extend credit and letters of credit and
financial guarantees are based on fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
counterparties' credit standing.
Interest rates are not adjusted for changes in credit risk of
performing commercial and small business loans for which there are no known
credit concerns. Management segregates loans in appropriate risk categories and
believes the risk factor embedded in the interest rates results in a fair
valuation of these loans on an entry-value basis.
Variances between the carrying amount and the estimated fair value of
loans reflect both credit risk and interest rate risk. The Company is protected
against changes in credit risk by the reserve for loan losses which totaled
$156,072,000 and $130,347,000 at December 31, 1999 and 1998, respectively.
The fair value estimates presented are based on information available
to management as of December 31, 1999 and 1998. Although management is not aware
of any factors that would significantly affect the estimated fair value amounts,
these amounts have not been revalued for purposes of these financial statements
since those dates. Therefore, current estimates of fair value may differ
significantly from the amounts presented.
<TABLE>
<CAPTION>
===========================================================================================
($ in thousands) December 31
- -------------------------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents ... $ 827,699 $ 827,699 $ 945,021 $ 945,021
Securities available for sale $2,660,322 $2,660,322 $2,761,701 $2,761,701
Securities held to maturity.. $ 300,525 $ 297,072 $ - $ -
Mortgage loans held for sale $ 92,704 $ 92,951 $ 281,434 $ 294,367
Commercial loans ............ $3,693,308 $3,711,726 $3,879,836 $3,919,242
Small business loans ........ $2,361,866 $2,381,764 $2,069,744 $2,105,160
Consumer loans .............. $4,801,502 $4,854,143 $3,957,614 $4,050,755
Mortgage servicing rights ... $ 45,746 $ 62,618 $ 31,111 $ 37,018
Liabilities
Noninterest-bearing deposits $2,085,322 $2,085,322 $2,065,770 $2,065,770
Interest-bearing deposits ... $9,770,581 $9,781,759 $8,826,803 $8,864,682
Short-term borrowings ....... $1,102,690 $1,102,690 $1,134,136 $1,134,136
Debt ........................ $ 844,849 $ 848,150 $ 806,337 $ 815,530
===========================================================================================
</TABLE>
The Company issues financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers and
to reduce exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit, letters of credit, standby
letters of credit and interest rate contracts and involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized on
the balance sheet.
Commitments to extend credit are legally binding, conditional
agreements generally having fixed expiration or termination dates and specified
interest rates and purposes. These commitments generally require customers to
maintain certain credit standards. Collateral requirements and loan-to-value
ratios are the same as those for funded transactions and are established based
on management's credit assessment of the customer. Commitments may expire
without being drawn upon. Therefore, the total commitment amount does not
necessarily represent future requirements.
<PAGE>
The Company issues letters of credit and financial guarantees (standby
letters of credit) whereby it agrees to honor certain financial commitments in
the event its customers are unable to perform. The majority of the standby
letters of credit consist of performance guarantees. Management conducts regular
reviews of all outstanding standby letters of credit, and the results of these
reviews are considered in assessing the adequacy of the Company's reserve for
loan losses. Management does not anticipate any material losses related to these
instruments.
<TABLE>
<CAPTION>
==========================================================================================
($ in thousands) December 31
- ------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------
Contract Fair Contract Fair
Amount Value Amount Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commitments
to extend credit ... $3,519,620 $(31,477) $3,492,945 $(31,559)
- ------------------------------------------------------------------------------------------
Letters of credit and
financial guarantees $ 269,563 $ (2,003) $ 227,247 $ (1,679)
==========================================================================================
</TABLE>
The Company maintains trading positions in a variety of derivative
financial instruments. These trading activities are customer-oriented and,
generally, matched trading positions are established to minimize risk to the
Company. The credit exposure that results from interest rate contracts held for
trading purposes is limited to the current fair value of asset derivative
positions, which at December 31, 1999 and 1998 was $5,370,000 and $3,993,000,
respectively. The Company manages the potential credit exposure through
evaluation of the counterparty credit standing, collateral agreements and other
contract provisions. The potential credit exposure from future market movements
is estimated by using a statistical model that takes into consideration possible
changes in interest rates over time.
The amounts disclosed in the following table represent the
end-of-period notional and estimated fair value of derivative financial
instruments held or issued for trading purposes and the average aggregate fair
value of those instruments during the year. Net trading gains recognized in
earnings on interest rate contracts outstanding were immaterial for all years
presented.
<TABLE>
<CAPTION>
===========================================================================================================
($ in thousands) Notional Amount Fair Value Average Fair Value
- -----------------------------------------------------------------------------------------------------------
December 31 December 31 Year Ended December 31
- -----------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest rate swaps:
Assets .................... $259,650 $227,180 $ 5,370 $ 3,993 $ 3,181 $ 3,284
Liabilities ............... $239,650 $150,580 $(4,643) $(2,805) $(2,325) $(2,117)
Options, caps and floors held .. $ 502 $ 13,603 $ - $ - $ - $ 3
Options, caps and floors written $ 502 $ 13,603 $ (1) $ (1) $ (1) $ (4)
===========================================================================================================
</TABLE>
The Company also enters into interest rate contracts in order to manage
interest rate exposure. Interest-rate contracts involve the risk of dealing with
counterparties and their ability to meet contractual terms. These counterparties
must receive appropriate credit approval before the Company enters into an
interest-rate contract. Notional principal amounts express the volume of these
transactions, although the amounts potentially subject to credit and market risk
are much smaller.
One interest rate swap with a notional amount of $125,000,000 at
December 31, 1998 was entered into during 1998 as a hedge against a deposit
relationship of the same maturity. The differential to be paid or received was
accrued as interest rates changed and was recognized as an adjustment to
interest expense on deposits. The related amount payable or receivable was
included in other assets or other liabilities. This interest rate swap matured
on January 4, 1999.
<PAGE>
Note 22
Regulatory Matters and Dividend Restrictions
The Company and the Bank are subject to various regulatory capital
requirements administered by the Federal Reserve Bank (FRB) and the Office of
the Comptroller of the Currency (OCC), respectively. Failure to meet minimum
capital requirements can initiate certain mandatory - and possibly additional
discretionary - actions by the FRB and OCC that, if undertaken, could have a
direct material effect on the Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and the Bank must meet specific capital guidelines that involve
quantitative measures of assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Company's and the
Bank's capital amounts and classifications are also subject to qualitative
judgments by the FRB and OCC about components, risk weightings and other
factors.
As of December 31, 1999 and 1998, the most recent notifications from
the OCC categorized the Bank as well capitalized under the regulatory framework
for prompt corrective action. For a bank to be designated as well capitalized,
it must have Tier 1 and total risk-based capital ratios of at least 6.0% and
10.0%, respectively, and a leverage ratio of at least 5.0%. There are no
conditions or events since those notifications that management believes have
changed the Bank's categories.
The Company's and the Bank's actual capital amounts and ratios are
presented in the following table.
<TABLE>
<CAPTION>
========================================================================================================================
($ in thousands) Tier 1 Risk-Based Capital Total Risk-Based Capital Leverage
- ------------------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- ------------------------------------------------------------------------------------------------------------------------
December 31, 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hibernia Corporation ........... $1,203,242 10.21% $1,350,708 11.46% $1,203,242 8.11%
Hibernia National Bank ......... $1,073,402 9.11% $1,220,769 10.36% $1,073,402 7.24%
- ------------------------------------------------------------------------------------------------------------------------
December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation ........... $1,165,985 10.78% $1,296,332 11.98% $1,165,985 8.55%
Hibernia National Bank ......... $1,040,458 9.61% $1,170,805 10.82% $1,040,458 7.67%
========================================================================================================================
</TABLE>
Under current FRB regulations, the Bank may lend the Parent Company up
to 10% of its capital and surplus.
The payment of dividends by the Bank to the Parent Company is
restricted by various regulatory and statutory limitations. In 2000, the Bank
would have available to pay dividends to the Parent Company, without approval of
the OCC, approximately $223,578,000, plus net retained profits earned in 2000
prior to the dividend declaration date.
Banks are required to maintain cash on hand or noninterest-bearing
balances with the FRB to meet reserve requirements. Average noninterest-bearing
balances with the FRB were $18,947,000 in 1999 and $22,804,000 in 1998.
Note 23
Hibernia Corporation
The following Balance Sheets, Income Statements and Statements of Cash
Flows reflect the financial position and results of operations for the Parent
Company only.
<TABLE>
<CAPTION>
================================================================================
Balance Sheets
- --------------------------------------------------------------------------------
($ in thousands) December 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment in bank subsidiary ................... $1,246,205 $1,218,705
Other assets .................................... 165,940 165,898
- --------------------------------------------------------------------------------
Total assets ............................... $1,412,145 $1,384,603
- --------------------------------------------------------------------------------
Other liabilities ............................... $ 1,944 $ 1,603
Debt (includes ESOP guarantee
of $34,686 and $37,751
at December 31, 1999 and 1998, respectively) 34,686 38,398
Shareholders' equity ............................ 1,375,515 1,344,602
- --------------------------------------------------------------------------------
Total liabilities and shareholders' equity.. $1,412,145 $1,384,603
================================================================================
</TABLE>
The Parent Company and certain of its nonbank subsidiaries engage in
private equity investments. These investments, totaling $34,966,000 and
$29,346,000 at December 31, 1999 and 1998, respectively, are primarily equity
transactions, some of which contain minor debt features. At December 31, 1999,
$7,000,000 of these investments were not in compliance with their contractual
terms.
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
Income Statements
- ------------------------------------------------------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- ------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity in undistributed net income of subsidiaries $ 96,087 $127,277 $ 86,526
Dividends from bank subsidiary ................... 77,044 50,520 53,596
Other income ..................................... 9,748 7,582 12,260
- ------------------------------------------------------------------------------------------------------------------------
Total income ................................ 182,879 185,379 152,382
- ------------------------------------------------------------------------------------------------------------------------
Interest expense ................................. - 77 519
Other expense .................................... 7,183 2,829 1,516
- ------------------------------------------------------------------------------------------------------------------------
Total expense ............................... 7,183 2,906 2,035
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes ....................... 175,696 182,473 150,347
Income tax expense ............................... 593 1,517 2,452
- ------------------------------------------------------------------------------------------------------------------------
Net income ....................................... $175,103 $180,956 $147,895
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================================
Statements of Cash Flows
- ------------------------------------------------------------------------------------------------------------------------
($ in thousands) Year Ended December 31
- ------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income ......................................... $ 175,103 $ 180,956 $ 147,895
Non-cash adjustment for equity in
subsidiaries' undistributed net income ........ (96,087) (127,277) (86,526)
Realized securities gains, net ..................... (364) (3,778) (1,305)
Other adjustments .................................. 3,739 2,213 (8,688)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities ..... 82,391 52,114 51,376
- ------------------------------------------------------------------------------------------------------------------------
Investing activities
Investment in subsidiaries ......................... (15,500) (8,360) (28,000)
Purchases of securities available for sale ......... (9,292) (205,513) (120,000)
Proceeds from sales of securities available for sale 603 206,697 121,305
Other .............................................. 4,455 (6,430) 834
- ------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities ......... (19,734) (13,606) (25,861)
- ------------------------------------------------------------------------------------------------------------------------
Financing activities
Payments on debt ................................... (647) (366) (7,392)
Issuance of common stock ........................... 6,168 14,027 9,848
Purchase of treasury stock ......................... - - (299)
Dividends paid ..................................... (75,022) (64,428) (55,362)
- ------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities ......... (69,501) (50,767) (53,205)
- ------------------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents ................... (6,844) (12,259) (27,690)
Cash and cash equivalents at beginning of year .......... 134,610 146,869 174,559
- ------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year ................ $ 127,766 $ 134,610 $ 146,869
========================================================================================================================
</TABLE>
<PAGE>
Note 24
Segment Information
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for the reporting of financial information
from operating segments in annual and interim financial statements. SFAS No. 131
requires that financial information be reported on the same basis that is
reported internally for evaluating segment performance and allocating resources
to segments.
The Company's segment information is presented by line of business.
Each line of business is a strategic unit that provides various products and
services to groups of customers that have certain common characteristics. The
reportable operating segments are Commercial Banking, Small Business Banking,
Consumer Banking, and Investments and Public Funds. The Commercial Banking and
Small Business Banking segments provide business entities with comprehensive
products and services, including loans, deposit accounts, leasing, factoring,
treasury management and private equity investments. The Commercial Banking
segment provides products and services to larger business entities and the Small
Business Banking segment provides products and services to mid-size and smaller
business entities. The Consumer Banking segment provides individuals with
comprehensive products and services, including mortgage and other loans, deposit
accounts, trust and investment management, brokerage and insurance. The
Investments and Public Funds segment provides a treasury function for the
Company by managing public entity deposits, the investment portfolio,
interest-rate risk, and liquidity and funding positions.
The accounting policies used by each segment are the same as those
discussed in the summary of significant accounting policies, except as described
in the reconciliation of segment totals to consolidated totals. The following is
a summary of certain average balances by segment.
<TABLE>
<CAPTION>
===================================================================================================
Small Investments
Commercial Business Consumer and Public Segment
($ in thousands) Banking Banking Banking Funds Other Total
- ---------------------------------------------------------------------------------------------------
December 31, 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average loans ... $3,899,600 $2,188,400 $4,332,300 $ 1,300 $ 34,200 $10,455,800
Average assets .. $3,962,400 $2,237,400 $7,743,400 $3,028,700 $574,600 $17,546,500
Average deposits $ 847,600 $1,499,800 $6,646,200 $1,828,100 $ 57,800 $10,879,500
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
December 31, 1998
- ---------------------------------------------------------------------------------------------------
Average loans ... $3,487,700 $1,685,400 $3,901,800 $ - $ 46,700 $ 9,121,600
Average assets .. $3,550,200 $1,726,100 $6,962,500 $3,187,600 $452,800 $15,879,200
Average deposits $ 711,600 $1,215,700 $6,448,800 $1,527,700 $ 53,200 $ 9,957,000
===================================================================================================
</TABLE>
<PAGE>
The following table presents condensed income statements for each
segment.
<TABLE>
<CAPTION>
===================================================================================================
Small Investments
Commercial Business Consumer and Public Segment
($ in thousands) Banking Banking Banking Funds Other Total
- ---------------------------------------------------------------------------------------------------
Year ended December 31, 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income .......... $128,130 $142,138 $279,658 $58,552 $(18,731) $589,747
Provision for loan losses .... 43,578 17,608 26,883 - (269) 87,800
- ---------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 84,552 124,530 252,775 58,552 (18,462) 501,947
- ---------------------------------------------------------------------------------------------------
Noninterest income ........... 26,805 20,539 166,189 1,048 7,899 222,480
Noninterest expense .......... 51,768 91,990 311,638 7,991 (19,582) 443,805
- ---------------------------------------------------------------------------------------------------
Income before income taxes ... 59,589 53,079 107,326 51,609 9,019 280,622
Income tax expense ........... 20,856 18,578 37,564 18,063 7,684 102,745
- ---------------------------------------------------------------------------------------------------
Net income ................... $ 38,733 $ 34,501 $ 69,762 $33,546 $ 1,335 $177,877
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Year ended December 31, 1998
- ---------------------------------------------------------------------------------------------------
Net interest income .......... $120,710 $115,582 $261,810 $59,839 $(10,765) $547,176
Provision for loan losses .... 10,450 5,638 10,844 - 294 27,226
- ---------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 110,260 109,944 250,966 59,839 (11,059) 519,950
- ---------------------------------------------------------------------------------------------------
Noninterest income ........... 18,821 17,412 139,181 5,084 11,132 191,630
Noninterest expense .......... 46,967 79,826 292,340 7,216 2,437 428,786
- ---------------------------------------------------------------------------------------------------
Income before income taxes ... 82,114 47,530 97,807 57,707 (2,364) 282,794
Income tax expense ........... 28,740 16,636 34,233 20,197 3,190 102,996
- ---------------------------------------------------------------------------------------------------
Net income ................... $ 53,374 $ 30,894 $ 63,574 $37,510 $ (5,554) $179,798
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Year ended December 31, 1997
- ---------------------------------------------------------------------------------------------------
Net interest income .......... $ 95,046 $ 84,393 $274,488 $48,654 $ (4,520) $498,061
Provision for loan losses .... 1,068 577 1,660 - 128 3,433
- ---------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 93,978 83,816 272,828 48,654 (4,648) 494,628
- ---------------------------------------------------------------------------------------------------
Noninterest income ........... 16,193 13,591 117,317 2,064 10,963 160,128
Noninterest expense .......... 41,273 64,960 300,772 6,302 7,943 421,250
- ---------------------------------------------------------------------------------------------------
Income before income taxes ... 68,898 32,447 89,373 44,416 (1,628) 233,506
Income tax expense ........... 24,114 11,356 31,281 15,545 3,799 86,095
- ---------------------------------------------------------------------------------------------------
Net income ................... $ 44,784 $ 21,091 $ 58,092 $28,871 $ (5,427) $147,411
===================================================================================================
</TABLE>
Each segment's balance sheet is adjusted to reflect its net funding
position. Assets are increased if excess funds are provided; liabilities are
increased if the funds are needed to support assets. Segment assets and deposits
are decreased for cash items in process of collection, which are reclassified
from assets to deposits.
The Consumer Banking Segment contains an intangible asset related to
certain mortgage servicing rights associated with loans originated and sold
before January 1, 1995 and all loans originated and retained in the Company's
loan portfolio after origination. Noninterest income is adjusted for gains and
fees associated with these mortgage servicing rights, and noninterest expense is
adjusted for the amortization of these mortgage servicing rights. Generally
accepted accounting principles do not allow the capitalization of these
servicing rights; therefore, they are not currently recorded in these financial
statements.
Each segment's net interest income includes an adjustment for match
funding of the segment's earning assets and liabilities. Match funding is
calculated as the economic spread value attributable to the various products of
the segment and indicates the historical interest-rate risk taken by the entity
as a whole. Interest income for tax-exempt loans is adjusted to a
taxable-equivalent basis. Each segment is charged a provision for loan losses
that is determined based on each loan's risk rating or loan type. In addition,
each reportable segment recognizes income tax assuming a 35% income tax rate.
State income tax expense is included in the Other category.
Direct support costs, such as deposit servicing, technology, and loan
servicing and underwriting, are allocated to each segment based on
activity-based cost studies, where appropriate, or on various statistics or
staff costs. Indirect costs, such as management expenses and corporate support,
are allocated to each segment based on various statistics or staff costs. There
are no significant intersegment revenues.
<PAGE>
The following is a reconciliation of segment totals to consolidated
totals.
<TABLE>
<CAPTION>
================================================================================
Average Average Average
($ in thousands) Loans Assets Deposits
- --------------------------------------------------------------------------------
December 31, 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Segment total ................... $10,455,800 $ 17,546,500 $10,879,500
Excess funds invested ........... - (3,189,700) -
Mortgage servicing rights ....... - (17,500) -
Reclassification of cash items in
process of collection ...... - 297,700 297,700
- --------------------------------------------------------------------------------
Consolidated total .............. $10,455,800 $ 14,637,000 $11,177,200
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
Segment total ................... $ 9,121,600 $ 15,879,200 $ 9,957,000
Excess funds invested ........... - (2,911,700) -
Mortgage servicing rights ....... - (15,900) -
Reclassification of cash items in
process of collection ...... - 261,200 261,200
- --------------------------------------------------------------------------------
Consolidated total .............. $ 9,121,600 $ 13,212,800 $10,218,200
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================================
Provision Income Tax
Net Interest for Loan Noninterest Noninterest Expense
($ in thousands) Income Losses Income Expense (Benefit) Net Income
- ------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Segment total ............... $ 589,747 $87,800 $ 222,480 $ 443,805 $ 102,745 $ 177,877
Taxable-equivalent adjustment (4,942) - - - (1,730) (3,212)
Mortgage servicing rights ... - - (7,777) (2,884) (1,713) (3,180)
Income tax expense .......... - - - - (3,618) 3,618
- ------------------------------------------------------------------------------------------------------------------------
Consolidated total .......... $ 584,805 $87,800 $ 214,703 $ 440,921 $ 95,684 $ 175,103
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
Segment total ............... $ 547,176 $27,226 $ 191,630 $ 428,786 $ 102,996 $ 179,798
Taxable-equivalent adjustment (4,382) - - - (1,534) (2,848)
Mortgage servicing rights ... - - (4,201) (2,631) (550) (1,020)
Income tax expense .......... - - - - (5,026) 5,026
- ------------------------------------------------------------------------------------------------------------------------
Consolidated total .......... $ 542,794 $27,226 $ 187,429 $ 426,155 $ 95,886 $ 180,956
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------
Segment total ............... $ 498,061 $ 3,433 $ 160,128 $ 421,250 $ 86,095 $ 147,411
Taxable-equivalent adjustment (3,981) - - - (1,393) (2,588)
Mortgage servicing rights ... - - (3,712) (2,371) (469) (872)
Income tax expense .......... - - - - (3,944) 3,944
- ------------------------------------------------------------------------------------------------------------------------
Consolidated total .......... $ 494,080 $ 3,433 $ 156,416 $ 418,879 $ 80,289 $ 147,895
========================================================================================================================
</TABLE>
Note 25
Contingencies
The Company is a party to certain legal proceedings arising from
matters incidental to its business. Management and counsel are of the opinion
that these actions will not have a material effect on the financial condition or
operating results of the Company.
EXHIBIT 21
SUBSIDIARIES OF HIBERNIA CORPORATION
Name of Subsidiary State or other Jurisdiction of
Incorporation or Organization
Hibernia National Bank United States
Hibernia Capital Corporation Lousiana
Zachary Taylor Life Insurance Lousiana
Company, Inc.
Hibernia Investments L.L.C. (formerly
Hibernia Investment Securities, Inc.) (1) Lousiana
Hibernia Insurance Agency L.L.C. (1) Lousiana
Hibernia Insurance Agency of Texas, Inc. (1) Texas
- ----------
(1) Subsidiary of Hibernia National Bank
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Hibernia Corporation of our report dated January 17, 2000, included in the
1999 Annual Report to Shareholders of Hibernia Corporation.
We also consent to the incorporation by reference in the following Hibernia
Corporation Registration Statements
Form S-3 No. 33-26553 (dated February 21, 1989)
Form S-8 No. 2-81353 (dated February 23, 1989)
Form S-8 No. 33-26871 (dated February 23, 1989)
Form S-3 No. 33-37701 (dated January 31, 1991)
Form S-8 No. 2-96194 (dated April 8, 1991)
Form S-3 No. 33-53108 (dated December 28, 1992)
Form S-3 No. 33-55844 (dated December 28, 1992)
Form S-8 No. 33-59743 (dated June 1, 1995)
Form S-3 No. 333-8133 (dated September 19, 1996)
Form S-8 No. 333-07761 (dated July 8, 1996)
Form S-8 No. 333-36017 (dated September 19, 1997)
Form S-8 No. 333-56053 (dated June 4, 1998)
Form S-8 No. 333-83611 (dated July 23, 1999)
of our report dated January 17, 2000, with respect to the consolidated financial
statements of Hibernia Corporation incorporated by reference in this Annual
Report (Form 10-K) for the year ended December 31, 1999.
s/ERNST & YOUNG LLP
New Orleans, Louisiana
March 10, 2000
EXHIBIT 24
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Chairman and director
of Hibernia Corporation, a Louisiana corporation (the "Corporation"), does
hereby name, constitute and appoint Patricia C. Meringer and Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/S/ Robert H. Boh
-------------------------
Robert H. Boh
Chairman and Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/S/ J. Herbert Boydstrun
-------------------------
J. Herbert Boydstun
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on
this 15TH day of December 1999.
/s/ E. R. "Bo" Campbell
-------------------------
E. R. "Bo" Campbell
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Richarad W. Freman, Jr.
-------------------------
Richard W. Freeman, Jr.
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned President, Chief
Executive Officer and director of Hibernia Corporation, a Louisiana corporation
(the "Corporation"), does hereby name, constitute and appoint Robert H. Boh,
Patricia C. Meringer, Gary L. Ryan, and each of them (with full power to each of
them to act alone), his true and lawful agents and attorneys-in-fact, for him
and on his behalf and in his name, place and stead, in any and all capacities,
to sign, execute, acknowledge, deliver, and file with the Securities and
Exchange Commission (or any other governmental or regulatory authority), the
Annual Report of the Corporation on Form 10-K (or other appropriate form) for
the fiscal year ended December 31, 1999, and any and all amendments thereto,
with any and all exhibits and any and all other documents required to be filed
with respect thereto or in connection therewith, granting unto said agents and
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as the
undersigned might or could do if personally present, and the undersigned hereby
ratifies and confirms all that said agents and attorneys-in-fact, or any of them
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Stephen A. Hansel
-------------------------
Stephen A. Hansel
President, Chief Executive Officer
and Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Dick H. Hearin
------------------------
Dick H. Hearin
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Robert T. Holeman
-------------------------
Robert T. Holleman
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Elton R. King
-------------------------
Elton R. King
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Sindey W. Lassen
-------------------------
Sidney W. Lassen
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Donald J. Nalty
-------------------------
Donald J. Nalty
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Ray B. Nesbitt
-------------------------
Ray B. Nesbitt
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ William C. O'Malley
-------------------------
William C. O'Malley
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s James R. Peltier
-------------------------
James R. Peltier
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/Robert T. Ratclifff
-------------------------
Robert T. Ratcliff
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), her true and lawful
agents and attorneys-in-fact, for her and on her behalf and in her name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on this 15TH
day of December 1999.
Janee M. "Gee" Tucker
-------------------------
Janee M. "Gee" Tucker
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), her true and lawful
agents and attorneys-in-fact, for her and on her behalf and in her name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on this 15TH
day of December 1999.
/s/ Virginia E. Weinmann
-------------------------
Virginia E. Weinmann
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Hibernia
Corporation, a Louisiana corporation (the "Corporation"), does hereby name,
constitute and appoint Robert H. Boh, Patricia C. Meringer, Gary L. Ryan, and
each of them (with full power to each of them to act alone), his true and lawful
agents and attorneys-in-fact, for him and on his behalf and in his name, place
and stead, in any and all capacities, to sign, execute, acknowledge, deliver,
and file with the Securities and Exchange Commission (or any other governmental
or regulatory authority), the Annual Report of the Corporation on Form 10-K (or
other appropriate form) for the fiscal year ended December 31, 1999, and any and
all amendments thereto, with any and all exhibits and any and all other
documents required to be filed with respect thereto or in connection therewith,
granting unto said agents and attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, and the undersigned hereby ratifies and confirms all that said agents
and attorneys-in-fact, or any of them may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Robert E. Zetmann
-------------------------
Robert E. Zetzmann
Director
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Controller and Chief
Accounting Officer of Hibernia Corporation, a Louisiana corporation (the
"Corporation"), does hereby name, constitute and appoint Robert H. Boh, Patricia
C. Meringer, Gary L. Ryan, and each of them (with full power to each of them to
act alone), his true and lawful agents and attorneys-in-fact, for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute, acknowledge, deliver, and file with the Securities and Exchange
Commission (or any other governmental or regulatory authority), the Annual
Report of the Corporation on Form 10-K (or other appropriate form) for the
fiscal year ended December 31, 1999, and any and all amendments thereto, with
any and all exhibits and any and all other documents required to be filed with
respect thereto or in connection therewith, granting unto said agents and
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as the
undersigned might or could do if personally present, and the undersigned hereby
ratifies and confirms all that said agents and attorneys-in-fact, or any of them
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on this 15TH
day of December 1999.
/s/ Ron E. Samford, Jr.
-------------------------
Ron E. Samford, Jr.
Controller and Chief Accounting Officer
HIBERNIA CORPORATION
<PAGE>
P0WER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Chief Financial
Officer of Hibernia Corporation, a Louisiana corporation (the "Corporation"),
does hereby name, constitute and appoint Robert H. Boh, Patricia C. Meringer,
Gary L. Ryan, and each of them (with full power to each of them to act alone),
her true and lawful agents and attorneys-in-fact, for her and on her behalf and
in her name, place and stead, in any and all capacities, to sign, execute,
acknowledge, deliver, and file with the Securities and Exchange Commission (or
any other governmental or regulatory authority), the Annual Report of the
Corporation on Form 10-K (or other appropriate form) for the fiscal year ended
December 31, 1999, and any and all amendments thereto, with any and all exhibits
and any and all other documents required to be filed with respect thereto or in
connection therewith, granting unto said agents and attorneys, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as the undersigned
might or could do if personally present, and the undersigned hereby ratifies and
confirms all that said agents and attorneys-in-fact, or any of them may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on this 15TH
day of December 1999.
/s/ Marsha M. Gassen
-------------------------
Marsha M. Gassan
Chief Financial Officer
HIBERNIA CORPORATION
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