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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, 1997 Commission file No. 1-10294
HIBERNIA CORPORATION
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0724532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
313 CARONDELET STREET, NEW ORLEANS, LOUISIANA 70130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 533-5332
Securities registered pursuant to Section 12 (b) of the Act:
CLASS A COMMON STOCK, NO PAR VALUE
(Title of class)
NEW YORK STOCK EXCHANGE
(Name of each exchange on which registered)
Securities registered pursuant to Section 12 (g) of the Act: NONE
Indicated by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock
held by non-affiliates of the Registrant as of
February 28, 1998.
Class A Common Stock, no par value $2,828,875,480
State the aggregate number of shares outstanding of
each of the Registrant's classes of common stock as of
February 28, 1998.
Class A Common Stock, no par value - 148,282,810
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's annual report to shareholders for the year ended
December 31, 1997 are incorporated by reference into Parts I and II of this
Report.
Portions of the Registrant's definitive proxy statement, which was filed on
March 20, 1998, are incorporated by reference into Part III of this Report.
INDEX TO FORM 10-K
Certain information required by Form 10-K is incorporated by reference
from the Annual Report as indicated below. Only that information expressly
incorporated by reference is deemed filed with the Commission.
PART I
Item 1 Business *
Item 2 Properties *
Item 3 Legal Proceedings *
Item 4 Submission of Matters to a Vote of Security Holders None
Item X Identification of Executive Officers *
PART II
Item 5 Market of the Registrant's Common Equity and Related
Stockholder Matters ***
Item 6 Selected Financial Data ***
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations ***
Item 8 Financial Statements and Supplementary Data ***
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure None
PART III (1)
Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements
Report of Independent Auditors' ***
Hibernia Corporation and Subsidiaries:
Consolidated Balance Sheets - December 31,
1997 and 1996 ***
Consolidated Income Statements - Years
Ended December 31, 1997, 1996 and 1995 ***
Consolidated Statements of Changes in
Shareholders' Equity - Years Ended
December 31, 1997, 1996 and 1995 ***
Consolidated Statements of Cash Flows -
Years Ended December 31, 1997, 1996 and 1995 ***
Notes to Consolidated Financial Statements
(b) Reports on Form 8-K **
Item 5 Other Event September 22, 1997
Item 5 Other Event October 28, 1997
Item 5 Other Event January 12, 1998
Item 5 Other Event March 4, 1998
(c) Exhibits **
* This information is included in the Form 10-K and is not incorporated by
reference to the Annual Report.
** Reports on Form 8-K and Exhibits have been separately filed with the
Commission.
*** This information is included in Ex-13.
(1) The material required by Items 10 through 13 is incorporated by reference to
the Company's definitive Proxy Statement filed with the Commission on March 20,
1998, however, the "Report of Executive Compensation Committee" and the
"Performance Graph" contained therein are not incorporated herein by reference.
PART I
ITEM 1. BUSINESS
Hibernia Corporation (Company) is a bank holding company organized in
1972 and, as of December 31, 1997, was the largest bank holding company
headquartered in Louisiana with assets of $11.0 billion and deposits of $8.6
billion. The Company operates two wholly-owned bank subsidiaries. Hibernia
National Bank was chartered in Louisiana in 1933 and Hibernia National Bank of
Texas, formerly The Texarkana National Bank, was chartered in 1887 (Banks). On
December 31, 1996, the Company reentered the Texas market by acquiring Texarkana
National Bancshares, Inc., the holding company of The Texarkana National Bank.
In addition to the bank subsidiaries, the Company also owns two nonbank
subsidiaries, Hibernia Capital Corporation (HCC) and Zachary Taylor Life
Insurance Company (Zachary Taylor). HCC is a licensed Small Business Investment
Company formed in 1995 to provide equity capital and long-term loans to small
businesses. Zachary Taylor is currently inactive, and the Company has an
agreement with the Federal Reserve Bank whereby the Company will not actively
operate this subsidiary as an insurance company without Federal Reserve Board
approval.
As of December 31, 1997 the Company operated 202 banking locations in
29 Louisiana parishes and five Texas counties. In February 1997, the Company
established a mortgage loan introduction and brokerage services office in
Southwestern Mississippi. During 1997, the Company completed mergers with two
East Texas institutions with combined assets of $254 million and seven offices.
Since the beginning of 1994, 17 mergers have been completed involving 19 banks
with combined assets of $3.7 billion and 121 offices. Two mergers completed in
1997, three mergers in 1996 and all mergers completed in 1995 and 1994 were
accounted for as poolings of interests. Two additional mergers completed in 1996
were accounted for as purchase transactions.
The Company offers a broad array of financial products and services,
including consumer, small business, commercial, international, mortgage and
private banking; leasing; corporate finance; treasury management; trust and
investment management; brokerage; and insurance.
The Company also provides financial risk management products and
advisory services to customers. These products are designed to assist customers
in managing their exposure in the areas of interest rate, currency and commodity
risks. The Company offers repurchase agreements, bankers acceptances, eurodollar
deposits, safekeeping of securities, U.S. Government and Government agency
obligations, tax-free municipal obligations, reverse repurchase agreements,
letters of credit, and collection and foreign exchange transactions. At December
31, 1997, the Company performed mortgage servicing, which includes acceptance
and application of mortgage loan and escrow payments, for over 42,000
residential loans.
In addition, the Company offers a variety of agency, fiduciary,
investment advisory, employee benefit and custodial services. Hibernia National
Bank through Hibernia Insurance Agency, L.L.C. sells fixed annuities and life
and health insurance in retail markets. The Company also provides retail and
discount brokerage services through a wholly-owned subsidiary of Hibernia
National Bank, Hibernia Investment Securities, Inc. (HISI). HISI is a registered
broker-dealer and member of the National Association of Securities Dealers, Inc.
COMPETITION
The financial services industry in which the Company operates is highly
competitive. The Banks compete with national and state banks for deposits,
loans, and trust accounts and with savings and loan associations and credit
unions for loans and deposits. In addition, the Banks compete with other
providers of financial services, from both inside and outside Louisiana and
Texas, including finance companies, institutional buyers of commercial paper,
money market funds, brokerage firms, investment companies, insurance companies,
insurance agencies and brokers, and governmental agencies. These competitors are
actively engaged in marketing various types of loans, commercial paper,
short-term obligations, investments and other services.
SUPERVISION AND REGULATION
The banking industry is extensively regulated under both federal and
state law. The Company is subject to regulation under the Bank Holding Company
Act of 1956 (BHCA) and to supervision by the Board of Governors of the Federal
Reserve System (FRB). The BHCA requires the Company to obtain the prior approval
of the FRB for bank acquisitions, limits the acquisition of shares of
out-of-state banking organizations unless permitted by state law and prescribes
limitations on the nonbanking activities of the Company. The Banks are subject
to regulation and examination by the Office of the Comptroller of the Currency
(OCC).
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) further expanded the regulatory and enforcement powers of bank
regulatory agencies. Among the significant provisions of FDICIA is the
requirement that bank regulatory agencies prescribe standards relating to
internal controls, information systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, compensation, fees and benefits. FDICIA
mandates annual examinations of banks by their primary regulators.
The banking industry is affected by the monetary and fiscal policies of
the FRB. An important function of the FRB is to regulate the national supply of
bank credit to moderate recessions and to curb inflation. Among the instruments
of monetary policy used by the FRB to implement its objectives are: open-market
operations in U.S. Government securities, changes in the discount rate and the
federal funds rate (which is the rate banks charge each other for overnight
borrowings) and changes in reserve requirements on bank deposits.
HISI is regulated by the Securities and Exchange Commission, the
National Association of Securities Dealers, Inc., and the Louisiana Office of
Financial Institutions through the Deputy Commissioner of Securities. HCC is
regulated by the Small Business Administration. Zachary Taylor is regulated by
the Louisiana Commissioner of Insurance. The Louisiana Commissioner of Insurance
also regulates the licensing of Hibernia Insurance Agency, L.L.C. and those
persons engaged in the sale of insurance products. The Texas Commissioner of
Insurance performs a similar function in Texas, although Hibernia National Bank
of Texas is not currently engaged in the types of activities regulated by the
Texas Commissioner of Insurance other than the sale of credit life insurance.
LOAN PORTFOLIO
The amounts and percentages of loans outstanding by type are as
follows:
- ------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
% of % of % of % of % of
Amount Total Amount Total Amount Total Amount Total Amount Total
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial, financial
and agricultural ....... $2,370,670 31% $1,735,112 28% $1,294,622 27% $ 954,207 24% $ 809,338 23%
Real estate - construction 94,483 1 70,657 1 38,572 1 55,886 1 51,418 1
Real estate - mortgage ... 3,410,521 45 2,756,842 45 2,211,691 46 1,905,617 49 1,856,467 54
Consumer ................. 1,354,715 18 1,375,971 22 1,166,142 24 887,751 23 652,302 19
Lease financing .......... 31,031 1 16,162 - - - - - - -
All other ................ 318,831 4 211,159 4 108,528 2 102,465 3 100,969 3
- ------------------------------------------------------------------------------------------------------------------------------------
$7,580,251 100% $6,165,903 100% $4,819,555 100% $3,905,926 100% $3,470,494 100%
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED LOAN MATURITIES
The following table shows selected categories of loans outstanding as
of December 31, 1997, which, based on remaining scheduled repayments of
principal, are due in the periods indicated. In addition, the amounts
contractually due after one year are summarized according to their interest
sensitivity.
- ------------------------------------------------------------------------------------------
Maturing
- ------------------------------------------------------------------------------------------
After One
Within But Within After
($ in thousands) One Year Five Years Five Years Total
- ------------------------------------------------------------------------------------------
Commercial, financial and
agricultural ........... $ 741,720 $1,159,220 $ 469,730 $2,370,670
Real estate - construction 61,812 28,666 4,005 94,483
- ------------------------------------------------------------------------------------------
$ 803,532 $1,187,886 $ 473,735 $2,465,153
==========================================================================================
- -----------------------------------------------------------------------
Interest Sensitivity
- -----------------------------------------------------------------------
Fixed Variable
Rate Rate
- -----------------------------------------------------------------------
Due after one but within five years $ 251,500 $ 936,386
Due after five years .............. 108,481 365,254
- -----------------------------------------------------------------------
$ 359,981 $1,301,640
=======================================================================
SUMMARY OF LOAN LOSS EXPERIENCE
The following is a summary of activity in the reserve for possible loan
losses:
Year Ended December 31
- ----------------------------------------------------------------------------------------------------------------
($ in thousands) 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
Balance of reserve for
possible loan losses
at beginning of period ..... $ 129,039 $ 151,367 $ 156,896 $ 187,368 $ 212,674
Addition due to purchased
companies .................. - 5,856 - - 359
Loans charged off:
Commercial, financial,
and agricultural ......... (10,924) (5,958) (6,036) (7,659) (12,515)
Real estate - construction . (50) (76) (14) (54) (417)
Real estate - mortgage ..... (5,135) (2,639) (5,035) (11,765) (11,866)
Consumer ................... (27,715) (26,231) (14,327) (12,168) (18,215)
All other .................. (118) (243) (4) (1) -
- ----------------------------------------------------------------------------------------------------------------
Total loans charged
off .................... (43,942) (35,147) (25,416) (31,647) (43,013)
Recoveries of loans
previously charged off:
Commercial, financial,
and agricultural ......... 3,642 6,785 7,884 7,536 7,157
Real estate - construction . 103 138 235 97 181
Real estate - mortgage ..... 8,218 4,604 5,480 7,148 7,700
Consumer ................... 9,670 7,450 4,972 4,083 4,903
All other .................. 190 403 98 70 64
- ----------------------------------------------------------------------------------------------------------------
Total recoveries ......... 21,823 19,380 18,669 18,934 20,005
- ----------------------------------------------------------------------------------------------------------------
Net loans charged off ........ (22,119) (15,767) (6,747) (12,713) (23,008)
Additions to reserve
charged to operating
expense * .................. 620 (12,417) 1,218 (17,759) (2,657)
- ----------------------------------------------------------------------------------------------------------------
Balance at end of period ..... $ 107,540 $ 129,039 $ 151,367 $ 156,896 $ 187,368
================================================================================================================
Ratio of net charge-offs
to average loans outstanding 0.33% 0.29% 0.16% 0.35% 0.69%
================================================================================================================
- ----------
* The Company recorded negative provisions in 1996, 1994 and 1993 of
$15,000,000, $17,500,000 and $6,200,000, respectively. All other provisions are
the result of merger activity.
ALLOCATION OF RESERVE FOR LOAN LOSSES
The reserve for possible loan losses has been allocated according to
the amount deemed to be reasonably necessary to provide for the possibility of
losses being incurred within the categories of loans set forth in the table
below. See "Reserve and Provision for Possible Loan Losses" in Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Registrant's Annual Report to Shareholders for a discussion of the factors which
influence management's judgment in determining the adequacy of the reserve for
possible loan losses.
- -------------------------------------------------------------------------------------
($ in thousands) 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------
Reserve at end of period:
Commercial, financial and
agricultural .......... $ 17,935 $ 17,721 $ 31,763 $ 42,040 $ 57,129
Real estate - construction 553 535 505 1,123 1,274
Real estate - mortgage ... 15,878 19,239 38,680 55,574 75,848
Consumer ................. 49,774 59,590 34,550 21,280 19,155
Not allocated ............ 23,400 31,954 45,869 36,879 33,962
- -------------------------------------------------------------------------------------
$107,540 $129,039 $151,367 $156,896 $187,368
=====================================================================================
MATURITIES OF LARGE-DENOMINATION CERTIFICATES OF DEPOSIT
The following table shows large-denomination certificates of deposit as
of December 31, 1997 by remaining maturity.
- ------------------------------------------------------------------
($ in thousands) Domestic Foreign
- ------------------------------------------------------------------
3 months or less .............. $ 817,146 $187,517
Over 3 months through 6 months 314,874 -
Over 6 months through 12 months 202,559 -
Over 12 months through 5 years 114,104 -
Over 5 years .................. 21,101 -
- ------------------------------------------------------------------
Total .................... $1,469,784 $187,517
==================================================================
ITEM 2. PROPERTIES
The Company's executive offices are located in downtown New Orleans,
Louisiana, in the downtown branch office of Hibernia National Bank. The Company
leases its main office building and operations center under the terms of
sale/leaseback agreements. The Company and the Banks consider all properties
owned or leased to be suitable and adequate for their intended purposes and
consider the terms of existing leases to be fair and reasonable.
On December 31, 1997 the Banks reported miscellaneous property with a
net book value of $4,812,000. These properties include $2,452,000 of properties
acquired from borrowers either as a result of foreclosures or voluntarily in
full or partial satisfaction of indebtedness previously contracted and
$2,360,000 of duplicate or excess bank-owned premises. See "Asset Quality" in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Registrant's Annual Report for a further discussion of these
properties.
ITEM 3. LEGAL PROCEEDINGS
The Company and the Banks are parties to certain pending legal
proceedings arising from matters incidental to their business. Management is of
the opinion that these actions will not have a material effect on the financial
condition, results of operations, or liquidity of the Company.
ITEM X. IDENTIFICATION OF EXECUTIVE OFFICERS
Each executive officer of the Company holds his or her position until
the earlier of (a) their removal or resignation from office, (b) their successor
is appointed by the Board of Directors, or (c) such time that the Board no
longer deems their position to be that of an executive officer.
J. HERBERT BOYDSTUN, 52, Chairman of the Southwest Region of the
Company and Hibernia National Bank, assumed those responsibilities in 1996. Mr.
Boydstun is also responsible for the Company's operations in Southeast Texas.
Mr. Boydstun served as Southcentral/Northeast Regional Chairman from 1995 to
1996 and as Northeast Regional Chairman from August 1994 until 1995. Mr.
Boydstun joined the Company in August 1994 following the merger of First Bancorp
of Louisiana, Inc., a bank holding company headquartered in West Monroe,
Louisiana, with and into the Company, where he served as President of First
Bancorp and as Chairman and Chief Executive Officer of First National Bank of
West Monroe, the primary national banking subsidiary of First Bancorp, from 1982
to 1994. Mr. Boydstun also serves on the Boards of Directors of the Company and
Hibernia National Bank.
E.R. "BO" CAMPBELL, 56, is Vice Chairman of the Board of Directors of
the Company and Hibernia National Bank. Mr. Campbell also serves on the Board of
Directors of Hibernia National Bank of Texas. Mr. Campbell served as Northern
Regional Chairman of the Company and Hibernia National Bank from January 1995
until 1997. Mr. Campbell joined Hibernia in that position following the merger
of Pioneer Bancshares Corporation, a bank holding company headquartered in
Shreveport, Louisiana, with and into the Company. Mr. Campbell served from 1992
to 1994 as Chairman of the Board of Pioneer Bancshares and its Louisiana banking
subsidiary, Pioneer Bank & Trust Company, and served as President of Pioneer
Bancshares from 1977 to 1992.
K. KIRK DOMINGOS III, 56, Senior Executive Vice President/Retail Arena
and Technology of the Company and Hibernia National Bank, assumed those
responsibilities in September 1997. Mr. Domingos is responsible for various
retail lines of business and the overall administrative functions of the
Company. Mr. Domingos has been employed by the Company and/or its subsidiaries
since August 1975 and assumed the position of Senior Executive Vice President
responsible for Support Services in August 1994 and the position of Executive
Vice President and Administrative Executive of Hibernia National Bank in August
1991.
B.D. FLURRY, 56, serves as Chairman of the Northern Region for the
Company and Hibernia National Bank, a position he assumed in 1997 and which
includes responsibility for the Company's operations in Northeast Texas. Mr.
Flurry also serves on the Board of Directors of Hibernia National Bank of Texas.
From January 1995 until 1997, Mr. Flurry served as the president of the Northern
Region for the Company and Hibernia National Bank. Prior to joining Hibernia,
Mr. Flurry served as President (from 1991 through 1994) of Pioneer Bank & Trust
Company, a subsidiary of Pioneer Bancshares Corporation, a bank holding company
headquartered in Shreveport, Louisiana that merged with and into Hibernia in
January 1995. Mr. Flurry assumed primary responsibility for oversight of the
Northeast Texas market at year-end 1996.
MARSHA M. GASSAN, 45, serves as Senior Executive Vice President and
Chief Financial Officer of the Company and Hibernia National Bank, positions
which she assumed in April 1996. Prior to that time, Ms. Gassan served as
Executive Vice President, General Auditor and manager of Credit Risk Management
of the Company and Hibernia National Bank (from 1994 to 1996), and as Senior
Vice President and manager of Credit Risk Management (from 1992 to 1994).
STEPHEN A. HANSEL, 50, serves as President and Chief Executive Officer
of the Company and Hibernia National Bank, positions which he assumed in March
1992. Mr. Hansel also serves on the Boards of Directors of the Company and
Hibernia National Bank.
RUSSELL S. HOADLEY, 53, serves as Executive Vice President/Employee and
Public Relations for the Company and Hibernia National Bank, a position he
assumed in 1994. From the time he joined the Company in July 1993 until his
promotion in 1994, Mr. Hoadley served as Senior Vice President/Public Affairs
and Marketing for the Company. Prior to joining the Company, Mr. Hoadley served
as Vice President/Director of Corporate Communications for Barnett Banks, Inc.,
a bank holding company based in Jacksonville, Florida, which position he held
from 1988 to June 1993.
RANDALL E. HOWARD, 50, serves as Chairman of the Southeast Region for
the Company and Hibernia National Bank. Mr. Howard has served in that position
since February 1998. Prior to that time, from 1987 to February 1998, Mr. Howard
served as President and Chief Executive Officer of ArgentBank, a Louisiana
banking association headquartered in Thibodaux, Louisiana, which was merged with
and into the Company in early 1998.
SCOTT P. HOWARD, 50, serves as Senior Executive Vice
President/Commercial Arena for the Company and Hibernia National Bank and has
served in that position since March 1996. From May 1992 until that time, Mr.
Howard served as Executive Vice President/Corporate and International Banking
for Hibernia National Bank.
RONALD E. SAMFORD, JR., 45, serves as Executive Vice President and
Controller of the Company and Hibernia National Bank and Chief Accounting
Officer of the Company, which positions he has held since November 1992. Prior
to joining Hibernia, Mr. Samford served as Senior Vice President and Chief
Accounting Officer of TeamBank, a bank headquartered in Forth Worth, Texas from
August 1990 to November 1992.
RICHARD G. WRIGHT, 48, serves as Senior Executive Vice President and
Chief Credit Officer of the Company, a position which he assumed in March 1996.
From August 1994 until that time, Mr. Wright served as Executive Vice
President/Credit Policy and Analysis of Hibernia National Bank, and from the
time he joined the Company in May 1992 until August 1994, he served as Senior
Vice President in the Credit and Asset Quality area of Hibernia National Bank
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HIBERNIA CORPORATION
(Registrant)
/s/ Stephen A. Hansel
Stephen A. Hansel, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on March 24, 1998, by the following persons on
behalf of the Registrant and in the capacities indicated.
/s/ Marsha M. Gassan /s/ Ronald E. Samford, Jr.
Marsha M. Gassan Ronald E. Samford, Jr.
Senior Executive Vice President Executive Vice President & Controller
Chief Financial Officer Chief Accounting Officer
Robert H. Boh*, Director Laura A. Leach*, Director
J. Herbert Boydstun*, Director James R. Murphey*, Director
J. Terrell Brown*, Director Donald J. Nalty*, Director
E.R. "Bo" Campbell*, Director William C. O'Malley*, Director
Richard W. Freeman, Jr.*, Director James R. Peltier*, Director
Stephen A. Hansel*, Director Robert T. Ratcliff*, Director
Dick H. Hearin*, Director Duke Shackelford*, Director
Robert T. Holleman*, Director Janee M. Tucker*, Director
Elton R. King*, Director Virginia E. Weinmann*, Director
Sidney W. Lassen*, Director Robert E. Zetzmann*, Director
*By: /s/ Patricia C. Meringer
Patricia C. Meringer
Attorney-in-fact