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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, 1996 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. [ X ]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant as of February 28, 1997.
Class A Common Stock, no par value $1,700,714,859
State the aggregate number of shares outstanding of each of
the Registrant's classes of common stock as of February 28, 1997.
Class A Common Stock, no par value - 128,917,331
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's annual report to shareholders for the year ended
December 31, 1996 are incorporated by reference into Parts I and II of this
Report.
Portions of the Registrant's definitive proxy statement, which was filed on
March 21, 1997, are incorporated by reference into Part III of this Report.
INDEX TO FORM 10-K
Certain information required by Form 10-K is incorporated by reference
from the Annual Report as indicated below. Only that information expressly
incorporated by reference is deemed filed with the Commission.
PART I
Item 1 Business *
Item 2 Properties *
Item 3 Legal Proceedings *
Item 4 Submission of Matters to a Vote of Security Holders None
Item X Identification of Executive Officers *
PART II
Item 5 Market of the Registrant's Common Equity and Related
Stockholder Matters ***
Item 6 Selected Financial Data ***
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations ***
Item 8 Financial Statements and Supplementary Data ***
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure None
PART III (1)
Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements
Report of Independent Auditors' ***
Hibernia Corporation and Subsidiaries:
Consolidated Balance Sheets - December 31,
1996 and 1995 ***
Consolidated Income Statements - Years
Ended December 31, 1996, 1995 and 1994 ***
Consolidated Statements of Changes in
Shareholders' Equity - Years Ended
December 31, 1996, 1995 and 1994 ***
Consolidated Statements of Cash Flows -
Years Ended December 31, 1996, 1995
and 1994 ***
Notes to Consolidated Financial Statements ***
(b) Reports on Form 8-K **
None
(c) Exhibits **
* This information is included in the Form 10-K and is not incorporated by
reference to the Annual Report.
** Reports on Form 8-K and Exhibits have been separately filed with the
Commission.
*** This information is included in EX-13.
(1) The material required by Items 10 through 13 is incorporated by reference to
the Company's definitive Proxy Statement filed with the Commission on March 21,
1997, however, the "Report of Executive Compensation Committee" and the
"Performance Graph" contained therein are not incorporated herein by reference.
PART I
ITEM 1. BUSINESS
Hibernia Corporation (Company) is a bank holding company organized in
1972 and, as of December 31, 1996, was the largest bank holding company in
Louisiana with assets of $9.3 billion and deposits of $7.8 billion. The Company
operates two wholly owned bank subsidiaries. Hibernia National Bank was
chartered in Louisiana in 1933 and Hibernia National Bank of Texas, formerly The
Texarkana National Bank, was chartered in 1887 (Banks). On December 31, 1996,
the Company reentered the Texas market by acquiring Texarkana National
Bancshares, Inc., the holding company of The Texarkana National Bank. In
addition to the bank subsidiaries, the Company also owns two nonbank
subsidiaries, Hibernia Capital Corporation (HCC) and Zachary Taylor Life
Insurance Company (Zachary Taylor). HCC is a licensed Small Business Investment
Company formed in 1995 to provide equity capital and long-term loans to small
businesses. Zachary Taylor is currently inactive, and the Company has an
agreement with the Federal Reserve Bank whereby the Company will not actively
operate this subsidiary as an insurance company without Federal Reserve Board
approval.
As of December 31, 1996 the Company operated 201 banking locations in
29 Louisiana parishes and two Texas counties. During 1996, the Company completed
mergers with five institutions with combined assets of $1.6 billion and 48
offices. Since the beginning of 1994, 15 mergers have been completed involving
16 banks with combined assets of $3.4 billion and 111 offices. Two mergers
completed in 1996 were accounted for as purchase transactions. The other three
mergers in 1996 and all mergers completed in 1995 and 1994 were accounted for as
poolings of interests.
The Company offers a broad array of financial products and services,
including consumer, small business, commercial, international, mortgage and
private banking; leasing; corporate finance; treasury management; trust;
brokerage; and investments.
The Company also provides financial risk management products and
advisory services to customers. These products are designed to assist customers
in managing their exposure in the areas of interest rate, currency and commodity
risks. The Company offers repurchase agreements, bankers acceptances, eurodollar
deposits, safekeeping of securities, U.S. Government and Government agency
obligations, tax-free municipal obligations, reverse repurchase agreements,
letters of credit, and collection and foreign exchange transactions. At December
31, 1996, the Company performed mortgage servicing, which includes acceptance
and application of mortgage loan and escrow payments, for over 37,000
residential loans.
In addition, the Company offers a variety of agency, fiduciary,
investment advisory, employee benefit and custodial services. Through Tower
Investors, Inc., its wholly owned subsidiary, Hibernia National Bank sells fixed
and variable annuities in retail markets. The Company also provides retail and
discount brokerage services through a wholly owned subsidiary of Hibernia
National Bank, Hibernia Investment Securities, Inc. (HISI). HISI is a registered
broker-dealer and member of the National Association of Securities Dealers, Inc.
COMPETITION
The financial services industry in which the Company operates is highly
competitive. The Banks compete with national and state banks for deposits,
loans, and trust accounts and with savings and loan associations and credit
unions for loans and deposits. In addition, the Banks compete with other
providers of financial services, from both inside and outside Louisiana and
Texas, including finance companies, institutional buyers of commercial paper,
money market funds, brokerage firms, investment companies, insurance companies
and governmental agencies. These competitors are actively engaged in marketing
various types of loans, commercial paper, short-term obligations, investments
and other services.
SUPERVISION AND REGULATION
The banking industry is extensively regulated under both federal and
state law. The Company is subject to regulation under the Bank Holding Company
Act of 1956 (BHCA) and to supervision by the Board of Governors of the Federal
Reserve System (FRB). The BHCA requires the Company to obtain the prior approval
of the FRB for bank acquisitions, limits the acquisition of shares of
out-of-state banking organizations unless permitted by state law and prescribes
limitations on the nonbanking activities of the Company. The Banks are subject
to regulation and examination by the Office of the Comptroller of the Currency
(OCC).
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) further expanded the regulatory and enforcement powers of bank
regulatory agencies. Among the significant provisions of FDICIA is the
requirement that bank regulatory agencies prescribe standards relating to
internal controls, information systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, compensation, fees and benefits.
FDICIA mandates annual examinations of banks by their primary regulators.
The banking industry is affected by the monetary and fiscal policies of
the FRB. An important function of the FRB is to regulate the national supply of
bank credit to moderate recessions and to curb inflation. Among the instruments
of monetary policy used by the FRB to implement its objectives are: open-market
operations in U.S. Government securities, changes in the discount rate and the
federal funds rate (which is the rate banks charge each other for overnight
borrowings) and changes in reserve requirements on bank deposits.
HISI is regulated by the Securities and Exchange Commission, the
National Association of Securities Dealers, Inc., and the Louisiana Office of
Financial Institutions through the Deputy Commissioner of Securities. HCC is
regulated by the Small Business Administration. Zachary Taylor is regulated by
the Louisiana Commissioner of Insurance. The Louisiana Commissioner of Insurance
also regulates the licensing of Tower Investors, Inc. and those persons engaged
in the sale of fixed annuities and insurance products. The Texas Commissioner of
Insurance performs a similar function in Texas, although Hibernia National Bank
of Texas is not currently engaged in the types of activities regulated by the
Texas Commissioner of insurance other than the sale of credit life insurance.
LOAN PORTFOLIO
The amounts and percentages of loans outstanding by type are as
follows:
- ------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
% of % of % of % of % of
Amount Total Amount Total Amount Total Amount Total Amount Total
Commercial, financial
and agricultural ..... $1,722,301 29% $1,282,553 27% $ 942,125 25% $ 799,743 24% $ 890,256 26%
Real estate - construction 65,289 1 35,066 1 53,606 1 48,810 1 32,253 1
Real estate - mortgage . 2,676,515 44 2,150,796 46 1,849,317 48 1,806,526 53 1,854,984 55
Consumer ............... 1,351,711 22 1,146,355 24 871,542 23 637,770 19 531,642 16
Lease financing ........ 16,162 1 -- -- -- -- -- -- -- --
All other .............. 211,050 3 108,423 2 102,330 3 96,313 3 53,538 2
- ------------------------------------------------------------------------------------------------------------------------------------
$6,043,028 100% $4,723,193 100% $3,818,920 100% $3,389,162 100% $3,362,673 100%
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED LOAN MATURITIES
The following table shows selected categories of loans outstanding as
of December 31, 1996, which, based on remaining scheduled repayments of
principal, are due in the periods indicated. In addition, the amounts
contractually due after one year are summarized according to their interest
sensitivity.
Maturing
- --------------------------------------------------------------------------------------------------------
After One
Within But Within After
($ in thousands) One Year Five Years Five Years Total
- --------------------------------------------------------------------------------------------------------
Commercial, financial and
agricultural ........... $542,824 $873,213 $ 306,264 $1,722,301
Real estate - construction 44,757 16,941 3,591 65,289
- --------------------------------------------------------------------------------------------------------
$587,581 $890,154 $ 309,855 $1,787,590
========================================================================================================
Interest Sensitivity
- --------------------------------------------------------------------------------------------------------
Fixed Variable
Rate Rate
- --------------------------------------------------------------------------------------------------------
Due after one but within five years $194,693 $695,461
Due after five years .............. 52,489 257,366
- --------------------------------------------------------------------------------------------------------
$247,182 $952,827
========================================================================================================
SUMMARY OF LOAN LOSS EXPERIENCE
The following is a summary of activity in the reserve for possible loan
losses:
Year Ended December 31
- ----------------------------------------------------------------------------------------------------------
($ in thousands) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------
Balance of reserve for
possible loan losses
at beginning of period ..... $ 150,516 $ 156,005 $ 186,562 $ 211,820 $ 235,165
Addition due to purchased
companies .................. 5,611 -- -- 359 --
Loans charged off:
Commercial, financial,
and agricultural ......... (5,880) (5,723) (7,653) (12,377) (38,899)
Real estate - construction . (76) (14) (54) (417) (1,587)
Real estate - mortgage ..... (2,630) (4,980) (11,689) (11,866) (36,599)
Consumer ................... (26,046) (14,264) (12,123) (18,134) (21,154)
All other .................. (243) (4) (1) -- (311)
------------------------------------------------------------------------------
Total loans charged
off .................... (34,875) (24,985) (31,520) (42,794) (98,550)
Recoveries of loans
previously charged off:
Commercial, financial,
and agricultural ......... 6,688 7,868 7,490 7,136 6,890
Real estate - construction . 138 235 97 181 250
Real estate - mortgage ..... 4,477 5,194 7,107 7,700 5,941
Consumer ................... 7,435 4,961 4,069 4,883 4,911
All other .................. 403 98 69 63 422
------------------------------------------------------------------------------
Total recoveries ......... 19,141 18,356 18,832 19,963 18,414
------------------------------------------------------------------------------
Net loans charged off ........ (15,734) (6,629) (12,688) (22,831) (80,136)
Additions to reserve
charged to operating
expense .................... (12,625) 1,140 (17,869) (2,786) 72,297
Reduction due to sale
of Texas bank .............. -- -- -- -- (15,506)
------------------------------------------------------------------------------
Balance at end of period ..... $ 127,768 $ 150,516 $ 156,005 $ 186,562 $ 211,820
==============================================================================
Ratio of net charge-offs
to average loans outstanding 0.30% 0.16% 0.36% 0.70% 2.04%
==============================================================================
ALLOCATION OF RESERVE FOR LOAN LOSSES
The reserve for possible loan losses has been allocated according to
the amount deemed to be reasonably necessary to provide for the possibility of
losses being incurred within the categories of loans set forth in the table
below. See "Reserve and Provision for Possible Loan Losses" in Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Registrant's Annual Report to Shareholders for a discussion of the factors which
influence management's judgment in determining the adequacy of the reserve for
possible loan losses.
- -----------------------------------------------------------------------------------------
($ in thousands) 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------
Reserve at end of period:
Commercial, financial and
agricultural .......... $ 17,615 $ 31,678 $ 41,937 $ 57,018 $ 54,791
Real estate - construction 493 481 1,104 1,254 1,070
Real estate - mortgage ... 18,561 38,238 55,130 75,446 67,424
Consumer ................. 59,400 34,419 21,134 19,044 22,435
Not allocated ............ 31,699 45,700 36,700 33,800 66,100
-------------------------------------------------------------
$127,768 $150,516 $156,005 $186,562 $211,820
=============================================================
MATURITIES OF LARGE-DENOMINATION CERTIFICATES OF DEPOSIT
The following table shows large-denomination certificates of deposit as
of December 31, 1996 by remaining maturity.
- ------------------------------------------------------------
($ in thousands) Domestic Foreign
- ------------------------------------------------------------
3 months or less .............. $ 736,278 $71,015
Over 3 months through 6 months 328,496 --
Over 6 months through 12 months 170,603 --
Over 12 months through 5 years 72,384 --
Over 5 years .................. 18,239 --
- ------------------------------------------------------------
Total .................... $1,326,000 $71,015
============================================================
SHORT-TERM BORROWINGS
The following table summarizes pertinent data related to federal funds
purchased and securities sold under agreements to repurchase for 1996, 1995 and
1994. Funds purchased and securities sold under agreements to repurchase
generally mature within one to 14 days from the transaction date.
- -----------------------------------------------------------------------
($ in thousands) 1996 1995 1994
- -----------------------------------------------------------------------
Outstanding at December 31 ... $331,796 $265,126 $173,490
Maximum month-end outstandings 363,496 359,582 202,737
Average daily outstandings ... 320,654 259,647 175,499
Average rate during the year . 4.8% 5.3% 3.6%
Average rate at year end ..... 5.0% 4.8% 3.7%
ITEM 2. PROPERTIES
The Company's executive offices are located in downtown New Orleans,
Louisiana, in the downtown branch office of Hibernia National Bank. The Company
leases its main office building and operations center under the terms of
sale/leaseback agreements. The Company and the Banks consider all properties
owned or leased to be suitable and adequate for their intended purposes and
consider the terms of existing leases to be fair and reasonable.
On December 31, 1996 the Banks reported miscellaneous property with a
net book value of $8,876,000. These properties include $5,206,000 of properties
acquired from borrowers either as a result of foreclosures or voluntarily in
full or partial satisfaction of indebtedness previously contracted and
$3,670,000 of duplicate or excess bank-owned premises. See "Asset Quality" in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Registrant's Annual Report for a further discussion of these
properties.
ITEM 3. LEGAL PROCEEDINGS
The Company and the Banks are parties to certain pending legal
proceedings arising from matters incidental to their business. Management is of
the opinion that these actions will not have a material effect on the financial
condition, results of operations, or liquidity of the Company.
ITEM X. IDENTIFICATION OF EXECUTIVE OFFICERS
Each executive officer of the Company and Hibernia National Bank 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, 51, Regional Chairman, Southwest Louisiana of the
Company and Hibernia National Bank, assumed those responsibilities in 1996. Mr.
Boydstun served as Regional Chairman, Southcentral/Northeast Louisiana from 1995
to 1996 and as Regional Chairman, Northeast Louisiana from August 1994 until
1995. Mr. Boydstun joined the Company in August 1994 following the merger of
First Bancorp of Louisiana, Inc., a bank holding company headquartered in West
Monroe, Louisiana, with and into the Company, where he served as President of
First Bancorp and as Chairman and Chief Executive Officer of First National Bank
of West Monroe, the primary national banking subsidiary of First Bancorp, from
1982 to 1994. Mr. Boydstun also serves on the Boards of Directors of the Company
and Hibernia National Bank.
E.R. "BO" CAMPBELL, 55, Regional Chairman, Northern Louisiana of the
Company and Hibernia National Bank, is responsible for the operations of
Hibernia National Bank in North Louisiana and assumed responsibilities for
Northeast Texas at year end 1996. Mr. Campbell also serves on the Boards of
Directors of the Company and Hibernia National Bank. Mr. Campbell assumed his
position at Hibernia National Bank in January 1995 following the merger of
Pioneer Bancshares Corporation, a bank holding company headquartered in
Shreveport, Louisiana, with and into the Company. Mr. Campbell served from 1992
to 1994 as Chairman of the Board of Pioneer Bancshares and its Louisiana banking
subsidiary, Pioneer Bank & Trust Company, and served as President of Pioneer
Bancshares from 1977 to 1992.
K. KIRK DOMINGOS III, 55, Senior Executive Vice President/Support
Services of the Company and Hibernia National Bank, is responsible for the
overall administrative functions of Hibernia National Bank. 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, 55, serves as Regional President, Northern Louisiana for
the Company and Hibernia National Bank, a position he has held since January
1995. Prior to joining Hibernia, Mr. Flurry served as President (from 1991
through 1994) of Pioneer Bank & Trust Company, a subsidiary of Pioneer
Bancshares Corporation, a bank holding company headquartered in Shreveport,
Louisiana that merged with and into Hibernia in January 1995. Mr. Flurry assumed
primary responsibility for oversight of the Texarkana, Texas market at year-end
1996.
MARSHA M. GASSAN, 44, serves as Senior Executive Vice President and
Chief Financial Officer of the Company and Hibernia National Bank, positions
which she assumed in April 1996. Prior to that time, Ms. Gassan served as
Executive Vice President, General Auditor and manager of Credit Risk Management
of the Company and Hibernia National Bank (from 1994 to 1996), and as Senior
Vice President and manager of Credit Risk Management (from 1992 to 1994).
STEPHEN A. HANSEL, 49, serves as President and Chief Executive Officer
of the Company and Hibernia National Bank, which positions he assumed in March
1992. Mr. Hansel also serves on the Boards of Directors of the Company and
Hibernia National Bank.
RUSSELL S. HOADLEY, 52, 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 this
promotion in 1994, Mr. Hoadley served as Senior Vice President/Public Affairs
and Marketing for the Company. Prior to joining the Company, Mr. Hoadley served
as Vice President/Director of Corporate Communications for Barnett Banks, Inc.,
a bank holding company based in Jacksonville, Florida, which position he held
from 1988 to June 1993.
SCOTT P. HOWARD, 49, serves as Senior Executive Vice President/Arena
Executive for Commercial Banking for the Company and Hibernia National Bank and
has served in that position since March 1996. From May 1992 until that time, Mr.
Howard served as Executive Vice President/Corporate and International Banking
for Hibernia National Bank.
RONALD E. SAMFORD, JR., 44, serves as Executive Vice President and
Controller of the Company and Hibernia National Bank and Chief Accounting
Officer of the Company, which positions he has held since November 1992. Prior
to joining Hibernia, Mr. Samford served as Senior Vice President and Chief
Accounting Officer of TeamBank, a bank headquartered in Forth Worth, Texas from
August 1990 to November 1992.
RICHARD L. "IKE" STAGE, 52, serves as Senior Executive Vice
President/Arena Executive for Consumer Banking for the Company and Hibernia
National Bank, positions he assumed in March 1996. Prior to joining the Company,
Mr. Stage served as Executive Vice President and Director of Community Banking
(from 1994 to 1995) and as Executive Vice President and Director of
Complimentary Delivery Systems (from 1991 to 1993) for Huntington National Bank,
a national bank headquartered in Columbus, Ohio. During 1994 and 1995, Mr. Stage
served as an Executive Vice President and the head of retail banking for
Huntington Bancshares, the parent holding company of Huntington National Bank.
RICHARD G. WRIGHT, 47, serves as Senior Executive Vice President and
Chief Credit Officer of the Company and Hibernia National Bank, a position which
he assumed in March 1996. From August 1994 until that time, Mr. Wright served as
Executive Vice President/Credit Policy and Analysis of Hibernia National Bank,
and he served as Senior Vice President in the Credit and Asset Quality area of
Hibernia National Bank from the time he joined the Company in May 1992 until
August 1994. Prior to joining the Company, Mr. Wright served as President and
Chief Operating Officer for ACTION, Inc., a manufacturer of Western saddles and
tack, headquartered in McKinney, Texas.
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 26, 1997, 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 Sidney W. Lassen*, Director
J. Herbert Boydstun*, Director Laura A. Leach*, Director
J. Terrell Brown*, Director Donald J. Nalty*, Director
E.R. "Bo" Campbell*, Director William C. O'Malley*, Director
Richard W. Freeman, Jr.*, Director Robert T. Ratcliff*, Director
Stephen A. Hansel*, Director Duke Shackelford*, Director
Dick H. Hearin*, Director James H. Stone*, Director
Robert T. Holleman*, Director Janee M. Tucker*, Director
Hugh J. Kelly*, Director Virginia E. Weinmann*, Director
Elton R. King*, Director Robert E. Zetzmann*, Director
*By: /s/ Patricia C. Meringer
Patricia C. Meringer
Attorney-in-fact