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Deficient management leads INDITEX on the verge of fail
BUCHAREST,
ROMANIA - Zara wants to cover losses from theft with employees’
money.
The management, theft and losses give headaches to the Spanish
group INDITEX, the owner of the ZARA chain. Only 10 months before, on
July 25th, 2011, the publication Ziarul Financiar
announced the fact that “INDITEX takes the manager from the
Douglas perfumeries” pointing at Paul Cuza, who previously had
the function of General Manager for Parfumerie Douglas SRL.
Currently, the Romanian INDITEX group performs salary and structural
changes without precedent, which the management team from Bucharest doesn’t want to explain.
The problem of the clothes theft is a known phenomenon, especially
when it comes to expensive brands such as ZARA or Massimo Dutti. The
phenomenon was publicly recognized even by the management of the
INDITEX Group Romania, two years before. Probably worried by this
fact, Mihai Cioltea, the development manager of the INDITEX Group
from Romania, also named by the press as “the Zara man”,
stated in 2010 for the economic website InCont the following: “They
steal a lot. Only for the stores in Bucharest we have 10 cases of
stealing per day, which we discover and, depending on the severity,
we call the police”.[...]
Read the rest of the article...
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994 Commission File Number 1-10294
HIBERNIA CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 72-0724532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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313 Carondelet Street, New Orleans, Louisiana 70130
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (504) 533-5332
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at April 30, 1994
Class A Common Stock, no par value 83,675,413 Shares
CONSOLIDATED BALANCE SHEETS
Hibernia Corporation and Subsidiary
March 31 December 31 March 31
Unaudited ($ in thousands) 1994 1993 1993
ASSETS
Cash and due from banks $262,264 $216,675 $226,889
Short-term investments 287,167 220,000 313,066
Securities available for sale 457,384 402,579 478,589
Securities held to maturity (estimated market values at
March 31, 1994, December 31, 1993 and March 31, 1993,
respectively, were $1,551,978, $1,543,893, and $1,366,148) 1,562,959 1,518,292 1,333,768
Loans, net of unearned income 2,347,542 2,328,119 2,215,115
Reserve for possible loan losses (158,922) (159,143) (185,049)
Loans, net 2,188,620 2,168,976 2,030,066
Bank premises and equipment 83,430 81,291 86,723
Customers' acceptance liability 12,350 11,800 9,372
Other assets 165,009 175,970 185,890
TOTAL ASSETS $5,019,183 $4,795,583 $4,664,363
LIABILITIES
Deposits:
Demand, noninterest-bearing $915,970 $812,693 $705,506
Interest-bearing 3,400,896 3,273,342 3,381,754
Total Deposits 4,316,866 4,086,035 4,087,260
Federal funds purchased and securities sold under
agreements to repurchase 172,780 137,986 118,508
Liability on acceptances 12,350 11,800 9,372
Payables arising from securities transactions not yet settled - 50,875 -
Other liabilities 85,476 80,515 63,518
Debt - - 6,241
TOTAL LIABILITIES 4,587,472 4,367,211 4,284,899
SHAREHOLDERS' EQUITY
Preferred Stock, no par value:
Authorized - 100,000,000 shares; issued and
outstanding - none - - -
Class A Common Stock, no par value:
Authorized - 100,000,000 shares; issued and
outstanding - 83,666,469, 83,611,764, and 82,406,902 at
March 31, 1994, December 31, 1993, and March 31, 1993 160,640 160,535 158,221
Class B Common Stock (non-voting), no par value:
Authorized - 100,000,000 shares; issued and
outstanding - none - - -
Surplus 405,051 404,745 403,562
Retained earnings (deficit) (133,369) (147,160) (182,319)
Unrealized gain (loss) on securities available for sale (611) 10,252 -
TOTAL SHAREHOLDERS' EQUITY 431,711 428,372 379,464
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,019,183 $4,795,583 $4,664,363
See notes to consolidated financial statements.
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CONSOLIDATED INCOME STATEMENTS
Hibernia Corporation and Subsidiary
Three Months Ended March 31
Unaudited ($ in thousands, except per-share data) 1994 1993
-------- --------
Interest Income
Interest and fees on loans $46,751 $46,850
Interest on securities available for sale:
U.S. government securities and obligations
of U.S. government agencies 5,649 8,932
Other 46 -
Interest on securities held to maturity:
U.S. government securities and obligations
of U.S. government agencies 20,920 17,241
Trading account interest 5 2
Interest on time deposits in domestic banks - 173
Interest on federal funds sold and securities
purchased under agreements to resell 1,483 3,371
Total Interest Income 74,854 76,569
Interest Expense
Interest on deposits 24,823 25,121
Interest on federal funds purchased and securities sold
under agreements to repurchase 1,084 861
Interest on debt - 194
Total Interest Expense 25,907 26,176
Net Interest Income 48,947 50,393
Provision for possible loan losses - 5,000
Net Interest Income After Provision for Possible Loan Losses 48,947 45,393
Noninterest Income
Trust fees 2,951 3,054
Service charges on deposits 7,885 7,214
Other service, collection and exchange charges 4,607 3,912
Other operating income 1,757 1,516
Securities gains, net - -
Total Noninterest Income 17,200 15,696
Noninterest Expense
Salaries and employee benefits 22,409 20,743
Occupancy expense, net 5,099 4,893
Equipment expense 2,834 2,737
Data processing expense 4,729 3,669
Foreclosed property expense, net (4,256) 2,594
Other operating expense 17,216 16,170
Total Noninterest Expense 48,031 50,806
Income Before Income Taxes 18,116 10,283
Income tax expense 980 -
Net Income $17,136 $10,283
Net Income Per Share $0.20 $0.12
See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Hibernia Corporation and Subsidiary
Unrealized
Shares of Retained Gains (Losses)
Three Months Ended March 31, 1994 Common Common Earnings on Securities
Unaudited ($ in thousands) Stock Stock Surplus (Deficit) Available for Sale Total
------------- --------- ---------- ---------- ------------------ ------------
Balances at December 31, 1993 83,611,764 $160,535 $404,745 ($147,160) $10,252 $428,372
Net income - - - 17,136 - 17,136
Issuance of Common Stock:
Divdend Reinvestment Plan 54,257 104 304 - - 408
Employee Benefit Plan 448 1 2 - - 3
Cash dividends declared - - - (3,345) - (3,345)
Change in unrealized valuation of securities
available for sale - - - - (10,863) (10,863)
-------------------------------------------------------------------------------
Balances at March 31, 1994 83,666,469 $160,640 $405,051 ($133,369) ($611) $431,711
===============================================================================
Unrealized
Shares of Retained Gains (Losses)
Three Months Ended March 31, 1993 Common Common Earnings on Securities
Unaudited ($ in thousands) Stock Stock Surplus (Deficit) Available for Sale Total
------------- --------- ---------- ---------- ------------------ ------------
Balances at December 31, 1992 82,397,009 $158,202 $403,528 ($192,602) - $369,128
Net income - - - 10,283 - 10,283
Issuance of Common Stock:
Divdend Reinvestment Plan 1,906 4 10 - - 14
Stock Option Plan 7,987 15 24 - - 39
-------------------------------------------------------------------------------
Balances at March 31, 1993 82,406,902 $158,221 $403,562 ($182,319) - $379,464
===============================================================================
See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Hibernia Corporation and Subsidiary
Three Months Ended March 31
Unaudited ($ in thousands) 1994 1993
------ ------
Operating Activities
Net income $17,136 $10,283
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses - 5,000
Amortization of intangibles and deferred charges 1,258 1,646
Depreciation and amortization 2,688 2,661
Discount accretion, net of premium amortization 4,448 2,530
Gain on sale of assets (4,176) (1,587)
ORE valuations - 2,500
Decrease (increase) in interest receivable and other assets 5,107 (6,534)
Increase (decrease) in interest payable and other liabilities (45,914) 8,652
Net Cash (Used) Provided By Operating Activities (19,453) 25,151
Investing Activities
Purchases of securities (225,612) (674,296)
Maturities of securities 108,662 157,209
Net decrease (increase) in loans (82,941) 82,706
Proceeds from sales of loans 63,205 56,351
Purchases of premises, equipment and other assets (4,682) (2,067)
Proceeds from sales of other real estate acquired 8,719 6,515
Net Cash (Used) By Investing Activities (132,649) (373,582)
Financing Activities
Net increase in domestic deposits 225,100 44,542
Net increase in time deposits - foreign office 5,731 6,278
Net increase in short-term borrowings 34,794 6,606
Payments on debt - (2,028)
Issuance of common stock 411 53
Dividends paid (3,345) -
Net Cash Provided By Financing Activities 262,691 55,451
Increase (decrease) in cash and cash equivalents 110,589 (292,980)
Cash and cash equivalents at beginning of year 436,675 832,419
Cash And Cash Equivalents at End of Year $547,264 $539,439
See notes to consolidated financial statements.
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Hibernia Corporation
Notes to Consolidated Financial Statements
Note 1 BASIS OF PRESENTATION The accompanying unaudited
consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended March
31, 1994, are not necessarily indicative of the results that may
be expected for the year ending December 31, 1994. For further
information, refer to the consolidated financial statements and
notes included in the Registrant's annual report on Form 10-K for
the year ended December 31, 1993.
Note 2 STOCK OPTIONS The Company's stock option plans
provide incentive and non-qualified options to various key
employees and non-employee directors to purchase shares of Class A
Common Stock at no less than the fair market value of the stock at
the date of grant. All options issued prior to 1992 became
exercisable six months from the date of grant. The remaining
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 issued 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 do not
expire unless the holder dies, retires, becomes permanently
disabled or leaves the employ of the Company, at which time the
options expire at various times ranging from 30 to 180 days.
At March 31, 1994, shares available for grant under the 1987
Stock Option Plan, the Long-Term Incentive Plan and the 1993
Directors' Stock Option Plan amounted to 163,945; 1,117,352; and
925,000, respectively.
The table below summarizes the activity in the plans during
the first quarter of 1994:
Incentive Non-Qualified
---------- --------------
1987 STOCK OPTION PLAN
Outstanding, December 31, 1993 190,741 1,358,696
Granted - 10,000
Canceled - -
Exercised - (448)
------- ---------
Outstanding, March 31, 1994 190,741 1,368,248
======= =========
Exercisable, March 31, 1994 39,068 577,255
======= =========
LONG-TERM INCENTIVE PLAN
Outstanding, December 31, 1993 - 905,000
Granted 12,598 1,635,137
Canceled - (10,000)
------- ----------
Outstanding, March 31, 1994 12,598 2,530,137
======= ==========
Exercisable, March 31, 1994 - -
======= ==========
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Non-qualified stock options outstanding at March 31, 1994 in
the 1993 Directors' Stock Option Plan totaled 75,000. There were
no changes in this plan for the first quarter of 1994.
Note 3 MERGER AGREEMENTS The Company is a party to merger
agreements with four Louisiana financial institutions which, as of
March 31, 1994, are pending regulatory and shareholder approval.
All of these transactions are expected to be consummated during
1994 and will be accounted for as poolings of interests. The
Company has entered into definitive agreements to merge with
Commercial Bancshares, Inc., a $169-million-asset holding company;
First Bancorp of Louisiana -- a $225-million-asset holding company;
Bastrop National Bank -- a $131-million-asset bank and First
Continental Bancshares, Inc. -- a $400-million-asset holding
company.
Note 4 PER-SHARE DATA Income per common share data are based
on the weighted average number of shares outstanding of 83,635,150
for the three months ended March 31, 1994, and 82,399,612 for the
three months ended March 31, 1993.
Note 5 EQUITY On April 26, 1994 the shareholders of the
Company approved an amendment to the Company's Articles of
Incorporation which increased the number of authorized shares of
Class A Common Stock to 200,000,000 and eliminated all Class B
Common Stock and Series A and B Preferred Stock.
Note 6 CONTINGENCIES The Company is a party to certain
pending legal proceedings arising from matters incidental to its
business.
In addition, the Company is a named defendant in a shareholder
class-action suit which alleges that, during the period March 19, 1990,
to July 30, 1991, the market value of the Company's common stock was
artificially inflated due to false and misleading news releases and
public statements and the failure to disclose material facts. This
suit is in the discovery stage. The Company intends to contest the suit
vigorously.
The Company has established reserves for potential litigation
losses of approximately $11,580,000 at March 31, 1994. In the opinion
of management and counsel, the aggregated unreserved liability or loss,
if any, of legal proceedings will not have a significant effect on the
consolidated financial condition of the Company.
QUARTERLY CONSOLIDATED SUMMARY OF INCOME
AND SELECTED FINANCIAL DATA (1)
Hibernia Corporation and Subsidiary
Three Months Ended
($ in thousands, except March 31 Dec. 31 March 31
per-share data) 1994 1993 1993
-------- -------- --------
Interest income $ 74,854 $ 73,788 $ 76,569
Interest expense 25,907 25,439 26,176
Net interest income 48,947 48,349 50,393
Provision for possible loan losses 0 (17,500) 5,000
Net interest income after provision 48,947 65,849 45,393
Noninterest income:
Noninterest income 17,200 17,142 15,696
Securities gains - - -
Noninterest income 17,200 17,142 15,696
Noninterest expense 48,031 67,356 50,806
Income (Loss) before taxes 18,116 15,635 10,283
Income tax expense (benefit) 980 1,696 0
Net Income (Loss) $ 17,136 $ 13,939 $ 10,283
Income (Loss) per common share (2) $ 0.20 $ 0.17 $ 0.12
Cash dividends declared per share (2) $ 0.04 $ - $ -
Average shares outstanding (000s) 83,635 83,594 82,400
Selected Quarter-End Balances (in millions)
Loans $2,347.5 $2,328.1 $2,215.1
Deposits 4,316.9 4,086.0 4,087.3
Debt 0.0 0.0 6.2
Equity 431.7 428.4 379.5
Total assets 5,019.2 4,795.6 4,664.3
Selected Average Balances (in millions)
Loans $2,315.3 $2,275.1 $2,270.7
Deposits 4,113.0 3,976.0 4,010.5
Debt 0.0 0.0 8.2
Equity 434.4 410.6 373.7
Total assets 4,872.4 4,644.2 4,677.9
Selected Ratios (%)
Return on average assets 1.41 1.20 0.88
Return on average equity 15.78 13.58 11.01
Net interest margin (taxable-equivalent) 4.42 4.51 4.76
Efficiency (3) 71.68 72.05 75.48
Tier 1 risk-based capital 15.63 15.56 14.34
Total risk-based capital 16.94 16.87 15.85
Leverage 8.17 8.25 7.28
(1) Prior periods have been conformed to current-period presentation.
(2) Income (loss) per share data were based on the weighted average number of common shares outstanding in the
respective period. Dividends per share are historical amounts.
(3) Noninterest expense as a percentage of net interest income (T.E.) plus noninterest income (excluding securities
transactions). Fourth-quarter 1993 ratio adjusted to exclude the effect of $19.5 million in nonrecurring expenses.
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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") and its bank subsidiary (the "Bank") and should be read
in conjunction with the accompanying consolidated financial
statements, notes and tables.
FIRST-QUARTER 1994 HIGHLIGHTS
Strong earnings growth, increased loans and deposits,
continued improvement in asset quality and decreased expenses
highlight Hibernia Corporation's first quarter 1994 performance.
o Net income totaled $17.1 million ($.20 per share), up 67%
from $10.3 million ($.12 per share) in the first quarter
of 1993.
o Returns on assets and equity were 1.41% and 15.78%,
respectively, compared to .88% and 11.01% in the first
quarter of 1993.
o Loans increased for the fourth consecutive quarter, up
$132.4 million (6%) from March 31, 1993 to $2.35 billion
at March 31, 1994. Consumer loans, led by automobile and
residential mortgage lending increased 26%, reflecting
Hibernia's effort to balance the commercial portfolio
with retail loans.
o Core deposits at March 31, 1994 grew 8% to $3.6 billion
and total deposits were up 6% to $4.3 billion compared to
March 31, 1993.
o Nonperforming assets decreased 60% from a year ago to
$61.5 million as nonperforming loans fell 66% to $38.0
million. Nonperforming assets stand at 2.59% of loans
plus foreclosed assets, down from 6.79% at March 31,
1993.
o There was no first-quarter loan loss provision compared
to $5.0 million in the first quarter of 1993. Because of
the strong asset quality improvement, reserves were
maintained at $159 million as reserve coverage of
nonperforming loans improved to 418% compared to 167% a
year earlier.
o Four pending mergers representing nearly $1 billion in
assets, which would increase locations by 27% and provide entry
into five new parishes, were progressing toward
completion.
In response to these positive trends, Hibernia's board of
directors in April declared a quarterly cash dividend of $.04 per
share. This follows the $.04 per share dividend declared in
January 1994 and paid in February 1994. The most recent dividend
is payable May 20 to shareholders of record on May 6.
FINANCIAL CONDITION:
EARNING ASSETS
Earning assets averaged $4,540.5 million in the first quarter
of 1994, a $164.9 million (4%) increase from the first-quarter 1993
average of $4,375.6 million. Compared to the first quarter of
1993, average loans increased $44.6 million (2%) and securities
held to maturity increased $402.3 million (35%), while securities
available for sale decreased $15.9 million (3%) and short-term
investments decreased $266.1 million (58%).
Loans. Average loans for the first quarter of 1994 increased
$44.6 million (1.96%) to $2,315.3 million compared to a first-
quarter 1993 average of $2,270.7 million.
Table 1 presents the Company's loan portfolio classified
according to industry concentration at March 31, 1994, December 31,
1993 and March 31, 1993. Total loans increased $19.4 million
during the first quarter of 1994. Net growth in consumer loans
totaling $46.4 million was offset by a net decline of $27.0 million
in commercial loans. The contraction in the commercial loan
portfolio is due to the Company's efforts to reduce the level of
nonperforming and criticized assets and to refocus lending efforts
in Louisiana.
Total loans at March 31, 1994 increased $132.4 million compared
to March 31, 1993, as consumer loans were up $186.2 (26.0%), partially
offset by a $53.8 million (3.6%) decrease in commercial loans.
The change in the mix over the past twelve months
evidences the Company's strategy of seeking growth in consumer
lending while maintaining preeminence in Louisiana commercial
lending. Consumer loans comprised 38.4% of the loan portfolio at
March 31, 1994 compared to 32.3% at March 31, 1993. The growth was
primarily in residential mortgage loans and indirect auto loans.
Securities Available for Sale. Average securities available
for sale decreased $15.9 million from the first quarter of 1993 to
$470.6 million for the first quarter of 1994, as the effects of
contractual repayments and prepayments of principal related to
residential mortgage refinancings were partially offset by
purchases of adjustable-rate mortgage-backed securities.
Securities classified as "available for sale" are primarily
mortgage-backed securities. Beginning December 31, 1993,
securities available for sale are stated at fair value with the
unrealized gains or losses, net of tax, reported as a separate
component of shareholders' equity. During 1993, securities
available for sale were stated at amortized cost.
Securities Held to Maturity. Average securities held to
maturity for the first quarter of 1994 increased $402.3 million
(35%) compared to the same period a year ago. Because the growth
in investable funds has outpaced opportunities for new loans, the
Company elected to invest in securities of the U.S. Treasury, as
well as in adjustable- and fixed-rate mortgage-backed securities.
Short-Term Investments. Average short-term investments for
the three months ended March 31, 1994, primarily federal funds
sold, decreased $266.1 million compared to the first quarter of
1993 as the Company invested excess liquidity in higher-yielding
securities.
ASSET QUALITY
Table 2 presents a summary of nonperforming assets at the end
of the past five quarters. Table 3 presents a summary of changes
in nonperforming assets in 1994.
Nonperforming assets -- which include nonaccrual loans,
restructured loans and foreclosed assets (including in-substance
foreclosures) -- totaled $61.5 million at March 31, 1994, down 60%
compared to $153.4 million at March 31, 1993. Foreclosed assets
totaled $23.5 million at March 31, 1994, and included $19.1 million
of in-substance foreclosures. Nonperforming assets declined $20.9
million during the first quarter of 1994. As illustrated in Table
3, $18.8 million of the decline was attributable to payments on and
sales of nonperforming assets. As a percentage of total loans plus
foreclosed assets, nonperforming assets at March 31, 1994, improved
to 2.59% from 6.79% at March 31, 1993, and 3.50% at year-end 1993.
In addition to the nonperforming loans discussed above, the
Company has identified other commercial loans for which payments
are current but, in management's opinion, are subject to potential
future classification as nonperforming. As of March 31, 1994,
there were $53.0 million of these loans, compared to $33.7 million
at year-end 1993. The bulk of the increase was due to a single
large commercial real estate loan.
RESERVE AND PROVISION FOR POSSIBLE LOAN LOSSES
Hibernia made no provision to the reserve for possible loan
losses during the first quarter of 1994, compared to a $5.0 million
provision in the same quarter a year ago and a $17.5 million
negative provision in the fourth quarter of 1993. The absence of
a provision in the current quarter reflects continued improvement
in asset quality, evidenced by declines in charge-offs coupled with
lower levels of nonperforming loans. Because net charge-offs
totaled just $.2 million, reserve coverage continued to strengthen.
The reserve for possible loan losses as a percentage of
nonperforming loans increased to 418% at March 31, 1994 compared to
167% a year ago and 292% and year-end 1993.
Net charge-offs declined $4.8 million (96%) in the first
quarter compared to a year ago. As a percentage of average loans,
annualized net loan charge-offs for the first quarter of 1994 were
.04%, compared to .88% for the same period in 1993.
The reserve for possible loan losses totaled $158.9 million,
or 6.8% of total loans, at March 31, 1994, compared to $185.0
million, or 8.4%, a year earlier. Table 4 presents an analysis of
the activity in the reserve for possible loan losses for the first
quarters of 1994 and 1993.
FUNDING SOURCES:
DEPOSITS AND BORROWINGS
Deposits. Average deposits totaled $4,113.0 million in the
first quarter of 1994, a $102.5 million (2.6%) increase from the
first quarter of 1993. Average core deposits were up $131.7
million (4.0%) due to increases in demand deposits, NOW accounts,
money-market deposit accounts and savings deposits. These
increases were partially offset by a decline in consumer time
deposits (an industrywide trend). Noncore deposits declined $29.2
million (4.1%) as public fund certificates of deposit decreased
$10.1 million, other large denomination certificates of deposits
decreased $24.7 million and foreign time deposits increased $5.6
million.
Table 5 presents the composition of average deposits for the
first quarter of 1994 and the first and fourth quarters of 1993.
Borrowings. Average borrowings for the first quarter of 1994
- - -- which include federal funds purchased, securities sold under
agreements to repurchase and debt -- increased $20.6 million to
$148.5 million compared to the first quarter of 1993 as the Company
purchased funds as part of its correspondent relationship with
downstream banks.
INTEREST RATE SENSITIVITY
The primary objective of asset/liability management is
controlling interest rate risk. On a monthly basis, management
monitors the sensitivity of net interest income to changes in
interest rates through methods that include simulation and gap
reports and attempts to optimize the asset/liability mix to
minimize the impact of significant rate movements within a broad
range of interest rate scenarios. Management limits interest rate
risk by alterations to the mix of floating- and fixed-rate assets
and liabilities, changes to pricing schedules and adjustment of
maturities through sales and purchases of securities. On a limited
basis, the Company enters into interest rate swap agreements in
order to manage interest rate exposure and not for speculative
purposes.
In April 1994 the Bank added to the above mentioned interest
rate management tools by becoming a member of the Federal Home Loan
Bank of Dallas. This membership provides the Company greater
flexibility in matching the rates and maturities of its funding
with those of its earning assets.
RESULTS OF OPERATIONS:
NET INTEREST INCOME
Taxable-equivalent net interest income for the three months
ended March 31, 1994, totaled $49.8 million, a $1.8 million
decrease from the same period in 1993 and a $.5 million increase
from the fourth quarter of 1993. Increases in interest income in
the first quarter of 1994 compared to the same quarter in 1993,
resulting from the growth in earning assets, were more than offset
by declining yields in all components of earning assets. The
negative impact of declining yields was reduced by a change in the
mix of earning assets. The Company invested more funds in
securities held to maturity -- 34.5% of average earning assets in
the first quarter of 1994 compared to 26.6% in the first quarter of
1993 -- while during that same period short-term investments have
declined from 10.4% to 4.1%. Yields on securities held to maturity
are more than 200 basis points higher than those on short-term
investments.
The net interest margin was 4.42% for the first quarter of
1994 compared to 4.76% in the first quarter of 1993 and 4.51% in
the fourth quarter of 1993.
Table 6 details the net interest margin for the most recent
five quarters. Table 7 presents an analysis of the Company's taxable-
equivalent net interest income and average balance sheets for the
three months ended March 31, 1994, December 31, 1993, and March 31,
1993. Table 8 presents an analysis of changes in taxable-
equivalent net interest income between the first quarter of 1994
and the fourth quarter of 1993 and between the first quarter of
1994 and the first quarter of 1993.
NONINTEREST INCOME
Noninterest income increased $1.5 million (10%) to $17.2
million for the first quarter of 1994. The major categories of
noninterest income for the three months ended March 31, 1994, and
the comparable period in 1993 are presented in Table 9. Service
charges on deposits increased $.7 million (9%) due to both a change
in the fee structure and an increase in fee-generating deposit
balances. Retail investment service income rose $.7 million (59%).
The increase is a result of the Company's six-month-old intensive
management and sales-and-service training program.
NONINTEREST EXPENSE
For the first quarter of 1994, noninterest expense totaled
$48.0 million, a $2.8 million (5%) decrease from the first quarter
of 1993. Noninterest expense for the three months ended March 31,
1994 and March 31, 1993, is presented by major category in Table
10.
Staff costs, the largest component of noninterest expense,
increased $1.7 million (8%) for the quarter compared to the same
period a year ago. Increases in full-time equivalent employees
(4%), employee merit reviews, and management incentive programs
based on the Company's profitability were the primary reasons for
the rise in staff costs.
Outside data processing expenses increased $1.1 million (29%)
due to higher fees from its third-party supplier, as well as
merger-related increases. In 1995, the Company's outside data
processing will be provided by a new vendor. The Company expects
use of the new vendor will result in significant savings in 1995
and beyond.
Foreclosed property expense decreased $6.7 million in the
first quarter of 1994 compared to the first quarter of 1993. Gains
from the sale of foreclosed assets increased $2.5 million; due to
the reduced level of foreclosed assets, costs declined almost $2.0
million; and the first quarter of 1993 included a $2.5 million
charge to the valuation allowance for foreclosed assets.
Deposit insurance premiums, computed under the new risk-
related premium system beginning in 1993, decreased approximately
15% for the first quarter of 1994 compared to the same period a
year ago. A reduction in the assessment rate used to calculate
the premiums reflects Hibernia's improved capital position and
management rating from the Office of the Comptroller of the
Currency.
Other changes in noninterest expense in the first quarter of
1994 compared to the first quarter of 1993 included a reduction in
loan collection expenses of $.7 million, a result of the
improvement in asset quality.
The Company's efficiency ratio, defined as noninterest expense
as a percentage of taxable-equivalent net interest income plus
noninterest income (excluding securities transactions), was 71.68%
for the first quarter of 1994 compared to 75.48% for the same
period in 1993. This improvement in efficiency reflects continued
cost control efforts and increased noninterest income, partially
offset by a decline in net interest income.
INCOME TAXES
The Company recorded a $1.0 million provision for state income
taxes in the first quarter of 1994. The Bank is subject to a
Louisiana shareholder tax based partly on income. In the first
quarter of 1994, the Company recorded a deferred federal tax
benefit equal to its current federal tax liability. The Company
does not expect to record federal income tax expense in 1994.
CAPITAL
Shareholders' equity totaled $431.7 million at March 31, 1994,
compared to $379.5 million at March 31, 1993 primarily as a result
of $54.8 million net income over the most recent 12 months. Risk-
based capital and leverage ratios for Hibernia Corporation and
Hibernia National Bank exceed the ratios required for designation
as a "well-capitalized" institution under regulatory guidelines.
Table 11 presents these ratios for the Company and the Bank for the
most recent five quarters.
LIQUIDITY
Management believes that current and projected levels of
federal funds and securities available for sale are adequate to
meet the Company's liquidity needs. Membership in the Federal Home
Loan Bank of Dallas also enhances the Company's sources of
liquidity.
The Company's liquidity, as measured by its loan-to-deposit
ratio, increased slightly from 54.2% at March 31, 1993 to 54.4% at
March 31, 1994. The Company's continuing improvement in
certificate of deposit ratings enhances its ability to raise funds
in the open market.
TABLE 1 - LOAN COMPOSITION
March 31, 1994 December 31, 1993 March 31, 1993
----------------------- ----------------------- ------------------------
Loans Percentage Loans Percentage Loans Percentage
($ in millions) Outstanding of Total Outstanding of Total Outstanding of Total
----------------------- ----------------------- ------------------------
Commercial:
Energy $ 50.2 2.1 % $ 66.1 2.8 % $ 52.5 2.3 %
Transportation,
communications
and utilities 102.3 4.4 111.8 4.8 129.6 5.9
Commercial real estate 306.3 13.0 308.9 13.3 328.4 14.8
Health care 226.4 9.6 214.6 9.2 234.0 10.6
Services 246.6 10.5 239.6 10.3 199.8 9.0
Commercial and
industrial 374.8 16.0 393.5 16.9 400.4 18.1
Other commercial 139.7 6.0 138.8 6.0 155.4 7.0
Total commercial 1,446.3 61.6 1,473.3 63.3 1,500.1 67.7
Consumer:
Residential mortgage 380.0 16.2 365.9 15.7 306.8 13.9
Indirect 269.7 11.5 238.2 10.2 158.1 7.1
Student 72.4 3.1 74.5 3.2 68.9 3.1
Revolving credit 51.8 2.2 49.2 2.1 49.9 2.3
Other 127.3 5.4 127.0 5.5 131.3 5.9
Total consumer 901.2 38.4 854.8 36.7 715.0 32.3
Total Loans $2,347.5 100.0 % $2,328.1 100.0 % $2,215.1 100.0 %
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TABLE 2 - NONPERFORMING ASSETS
March 31 Dec. 31 Sept. 30 June 30 March 31
($ in thousands) 1994 1993 1993 1993 1993
-------- -------- -------- -------- --------
Nonaccrual loans $ 37,985 $ 52,613 $ 66,884 $ 78,282 $110,729
Restructured loans - 1,841 1,845 - -
Total nonperforming loans 37,985 54,454 68,729 78,282 110,729
Foreclosed assets 23,470 27,920 30,464 37,742 42,650
Total nonperforming assets $ 61,455 $ 82,374 $ 99,193 $116,024 $153,379
Accruing loans past due
90 days or more $ 2,809 $ 2,712 $ 2,660 $ 6,690 $ 1,521
Reserve for possible loan losses $158,922 $159,143 $183,925 $185,189 $185,049
Nonperforming assets as a percentage
of loans plus foreclosed assets 2.59 % 3.50 % 4.37 % 5.11 % 6.79 %
Reserve for possible loan losses as a
percentage of nonperforming loans 418.38 % 292.25 % 267.61 % 236.57 % 167.12 %
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TABLE 3 - ANALYSIS OF CHANGES IN
NONPERFORMING ASSETS
($ in thousands)
Nonperforming assets
at December 31, 1993 $ 82,374
Additions 2,372
Gross charge-offs (1,778)
Returned to performing status (2,736)
Payments and sales of assets (18,777)
Nonperforming assets
at March 31, 1994 $ 61,455
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TABLE 4 - RESERVE FOR POSSIBLE LOAN LOSSES
Three Months
Ended March 31
($ in thousands) 1994 1993
-------- --------
Balance at beginning of period $159,143 $185,061
Loans charged off (2,611) (8,040)
Recoveries 2,390 3,028
Net loans charged off (221) (5,012)
Provision for possible loan losses 0 5,000
Balance at end of period $158,922 $185,049
Reserve for possible loan losses
as a percentage of loans 6.77 % 8.35 %
Net charge-offs as a percentage
of average loans 0.04 % 0.88 %
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TABLE 5 - DEPOSIT COMPOSITION
First Quarter 1994 Fourth Quarter 1993 First Quarter 1993
------------------------ ------------------------ ------------------------
Average % of Average % of Average % of
($ in millions) Outstandings Deposits Outstandings Deposits Outstandings Deposits
------------------------ ------------------------ ------------------------
Demand, noninterest-bearing $ 781.9 19.0 % $ 737.3 18.5 % $ 702.2 17.5 %
NOW accounts 435.0 10.6 395.2 9.9 390.1 9.7
Money market deposit accounts 933.6 22.7 924.7 23.3 891.4 22.2
Savings accounts 162.1 3.9 159.9 4.0 151.6 3.8
Other consumer time deposits 1,119.3 27.2 1,116.2 28.1 1,164.9 29.1
Total core deposits 3,431.9 83.4 3,333.3 83.8 3,300.2 82.3
Public fund certificates of
deposit of $100,000 or more 587.6 14.3 548.5 13.8 597.7 14.9
Certificates of deposit of
$100,000 or more 84.4 2.1 87.4 2.2 109.1 2.7
Foreign time deposits 9.1 0.2 6.8 0.2 3.5 0.1
Total deposits $ 4,113.0 100.0 % $ 3,976.0 100.0 % $ 4,010.5 100.0 %
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TABLE 6 - NET INTEREST MARGIN (taxable-equivalent)
1994 1993
-------- ------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
Yield on earning assets 6.74% 6.83% 6.88% 7.08% 7.19%
Rate on interest-bearing liabilities 3.02 2.99 3.02 3.06 3.10
Net interest spread 3.72 3.84 3.86 4.02 4.09
Contribution of
noninterest-bearing funds .70 .67 .64 .62 .67
Net interest margin 4.42% 4.51% 4.50% 4.64% 4.76%
Noninterest-bearing funds
supporting earning assets 23.37% 22.38% 21.19% 19.91% 21.47%
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TABLE 7 - CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
Taxable-equivalent basis (1)
First Quarter 1994 Fourth Quarter 1993 First Quarter 1993
-------------------------- ------------------------- -------------------------
Interest Interest Interest
(Average balances $ in millions, Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
interest income/expense $ in thousands) Balances Expense Rate Balances Expense Rate Balances Expense Rate
-------------------------- ------------------------- -------------------------
ASSETS
Interest-earning assets:
Loans (2) $2,315.3 $47,612 8.33 % $2,275.1 $48,059 8.38 % $2,270.7 $48,068 8.59 %
Securities available for sale 470.6 5,695 4.84 370.2 5,465 5.90 486.5 8,932 7.34
Securities held to maturity:
U.S. government securities and obligations
of U. S. government agencies 1,565.7 20,918 5.37 1,543.9 20,004 5.17 1,163.4 17,238 5.96
Other 0.0 2 0.00 0.0 4 0.00 0.0 3 0.00
Total securities held to maturity 1,565.7 20,920 5.37 1,543.9 20,008 5.17 1,163.4 17,241 5.96
Short-term investments 188.9 1,488 3.19 158.1 1,196 3.00 455.0 3,546 3.17
Total interest-earning assets 4,540.5 $75,715 6.74 % 4,347.3 $74,728 6.83 % 4,375.6 $77,787 7.19 %
Reserve for possible loan losses (159.7) (183.4) (186.4)
Noninterest-earning assets:
Cash (excluding items in process of collection) 114.3 106.8 110.4
Items in process of collection 108.9 98.2 97.6
Other assets 268.4 275.3 280.7
Total noninterest-earning assets 491.6 480.3 488.7
Total assets $4,872.4 $4,644.2 $4,677.9
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 435.0 $ 1,540 1.44 % $ 395.2 $ 1,382 1.39 % $ 390.1 $ 1,579 1.65 %
Money market deposit accounts 933.6 5,426 2.36 924.7 5,447 2.34 891.4 5,702 2.60
Savings accounts 162.1 679 1.70 159.9 686 1.70 151.6 717 1.92
Other consumer time deposits 1,119.3 11,504 4.17 1,116.2 11,566 4.11 1,164.9 11,157 3.90
Public fund certificates of deposits of
$100,000 or more 587.6 4,836 3.34 548.5 4,505 3.26 597.7 4,989 3.39
Certificates of deposits of $100,000 or more 84.4 768 3.69 87.4 812 3.69 109.1 951 3.54
Foreign time deposits 9.1 70 3.13 6.8 51 2.97 3.5 26 2.97
Total interest-bearing deposits 3,331.1 24,823 3.02 3,238.7 24,449 3.00 3,308.3 25,121 3.09
Short-term borrowings 148.5 1,084 2.96 135.6 990 2.90 119.7 861 2.93
Debt 0.0 0 0.00 0.0 0 0.00 8.2 194 9.53
Total interest-bearing liabilities 3,479.6 $25,907 3.02 % 3,374.3 $25,439 2.99 % 3,436.2 $26,176 3.10 %
Noninterest-bearing liabilities:
Demand deposits 781.9 737.3 702.2
Other liabilities 176.5 122.0 165.8
Total noninterest-bearing liabilities 958.4 859.3 868.0
Total shareholders' equity 434.4 410.6 373.7
Total liabilities and
shareholders' equity $4,872.4 $4,644.2 $4,677.9
SPREAD AND NET YIELD
Interest rate spread 3.72 % 3.84 % 4.09 %
Cost of funds supporting interest-earning assets 2.32 % 2.32 % 2.43 %
Net interest income/margin $49,808 4.42 % $49,289 4.51 % $51,611 4.76 %
(1) Based on the statutory income tax rate of 35%.
(2) Excludes unearned income. For purposes of yield computations, nonaccrual loans are included in loans outstanding.
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TABLE 8 - CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME (1)
First Quarter 1994 Compared to:
Fourth Quarter 1993 First Quarter 1993
Increase (Decrease) Due to Change In:
($ in thousands) Volume Rate Total Volume Rate Total
------------------------------------ ------------------------------------
Taxable-Equivalent
Interest Earned On:
Loans $ 893 $(1,340) $ (447) $ 1,003 $(1,459) $ (456)
Securities available for sale 685 (455) 230 (284) (2,953) (3,237)
Securities held to maturity:
U.S. government securities and
and obligations of U.S.
government agencies 285 629 914 5,143 (1,463) 3,680
Other (1) (1) (2) (3) 2 (1)
Short-term investments 242 50 292 (2,095) 37 (2,058)
Total 2,104 (1,117) 987 3,764 (5,836) (2,072)
Interest Paid On:
NOW accounts 140 18 158 440 (479) (39)
Money market deposit accounts 54 (75) (21) 296 (572) (276)
Savings accounts 10 (17) (7) 59 (97) (38)
Other consumer time deposits 32 (94) (62) (400) 747 347
Public fund certificates of
deposit of $100,000 or more 322 9 331 (84) (69) (153)
Certificates of deposit
of $100,000 or more (27) (17) (44) (226) 43 (183)
Foreign time deposits 17 2 19 42 2 44
Short-term borrowings 94 - 94 210 13 223
Debt - - - (194) - (194)
Total 642 (174) 468 143 (412) (269)
Taxable-Equivalent
Net Interest Income $ 1,462 $ (943) $ 519 $ 3,621 $(5,424) $(1,803)
(1) Change due to mix (both rate and volume) has been allocated to volume and rate changes in proportion to the
relationship of the absolute dollar amounts to the changes in each.
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TABLE 9 - NONINTEREST INCOME
Three Months Ended
---------------------------------------------------
Percentage
March 31 March 31 Increase
($ in thousands) 1994 1993 (Decrease)
-------- -------- ----------
Trust fees $ 2,951 $ 3,054 (3)%
Service charges on deposits 7,885 7,214 9
Other service, collection and
exchange charges:
Mortgage loan servicing income 1,369 1,552 (12)
Retail investment service income 1,765 1,108 59
Other 1,473 1,252 18
Gain on settlement of acquired loans 298 179 66
Other income:
Computer services 440 767 (43)
Other income 1,019 570 79
Total fee income 17,200 15,696 10
Securities gains, net - - -
Total Noninterest Income $17,200 $15,696 10 %
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TABLE 10 - NONINTEREST EXPENSE
Three Months Ended
-----------------------------------------------------
Percentage
March 31 March 31 Increase
($ in thousands) 1994 1993 (Decrease)
------- ------- ----------
Salaries $18,621 $17,055 9 %
Benefits 3,788 3,688 3
Total staff costs 22,409 20,743 8
Occupancy, net 5,099 4,893 4
Equipment 2,834 2,737 4
Data processing 4,729 3,669 29
Foreclosed property expense (4,256) 2,594 (264)
Deposit insurance and
examination fees 2,717 3,195 (15)
Postage 941 847 11
Stationery and supplies 901 875 3
Professional-related fees 1,581 2,331 (32)
Amortization of intangibles 1,243 1,624 (23)
Other 9,833 7,298 35
Total Noninterest Expense $48,031 $50,806 (5)%
Efficiency ratio (1) 71.68 % 75.48 %
(1) Noninterest expense as a percentage of net interest income (T.E.) plus noninterest income (excluding
securities transactions).
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TABLE 11 - QUARTERLY SELECTED CAPITAL ADEQUACY RATIOS
March 31 Dec. 31 Sept. 30 June 30 March 31
1994 1993 1993 1993 1993
-------- ------- -------- ------- --------
Hibernia National Bank:
Risk-based capital
Tier 1 13.59 % 13.35 % 12.82 % 12.12 % 11.46 %
Total 14.91 % 14.67 % 14.15 % 13.45 % 12.97 %
Leverage capital 7.09 % 7.04 % 6.61 % 6.21 % 5.80 %
Hibernia Corporation:
Risk-based capital
Tier 1 15.63 % 15.56 % 15.67 % 14.96 % 14.34 %
Total 16.94 % 16.87 % 17.00 % 16.30 % 15.85 %
Leverage capital 8.17 % 8.25 % 7.98 % 7.68 % 7.28 %
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PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
A report on form 8-K dated January 20, 1994, was filed by the
registrant reporting Item 5 Other Events.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized to sign on behalf of the registrant.
HIBERNIA CORPORATION
(Registrant)
Date: May 13, 1994 By: /s/ Ron E. Samford, Jr.
Ron E. Samford, Jr.
Executive Vice President and
Controller (principal accounting
officer)
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