Mix 3,000 pounds of crawfish with 400 pounds of barbecue, and what do you have?
Just the sort of party Hibernia Corp. chief executive officer Stephen A. Hansel likes to throw: a Louisiana-style celebration of a Texas bank acquisition.
That was the scene in May when $9.7 billion-asset Hibernia slapped its name and logo on the former Texarkana National Bank, which it had bought in December.
The deal itself was relatively small - $82.6 million for a 10-branch institution in northeast Texas.
But there was more to this acquisition than the addition of $406 million of assets. It marked Hibernia's return to Texas; regulators concerned about capital adequacy had forced the company to sell its Texas holdings in 1992.
Its reentry is emblematic of the changes since Mr. Hansel was hired five years ago to put the New Orleans company back on a healthy course.
"He's been a good leader," said Hope Willard, an analyst at J.C. Bradford & Co. "They're executing. They're on the right track."
Mr. Hansel, 50, has indeed engineered numerous changes. After directing a $180 million recapitalization immediately upon joining Hibernia, which was then swamped with bad loans, Mr. Hansel built a new management team. Nine of 12 members on the bank's policy group have joined since his arrival.
Mr. Hansel, a former Barnett Banks Inc. chief financial officer, said he is pleased with what he has accomplished to date but far from satisfied.
"Generally we have done what I expected to do," he said. "We've had a few disappointments, but we've executed our plans well, and the organization is doing a lot of innovative things."
The most visible result of his influence is the company's pursuit of market share through a series of small acquisitions. Since July 1994, Hibernia has bought 16 banks, with more than $3.4 billion of assets. Four acquisitions, of operations with $1.1 billion of assets, are expected to be completed by yearend.
The most recently announced deal was for Argentbank in Thibodaux, La. The $190 million stock transaction would add to Hibernia's presence in the southeastern, coastal part of the state. Argentbank has $760 million of assets.
The Argentbank deal and the pending purchase of a $105 million-asset bank in Mansfield, La., would increase the lead Hibernia wrenched last year from First Commerce Corp. in statewide market share. Hibernia has 17.64% of Louisiana deposits; First Commerce, 16.8%.
In addition, Hibernia has two deals pending in Texas-a market for which Mr. Hansel has high hopes.
The Texas deals would add $253 million of assets and six banking locations. But Mr. Hansel's game plan calls for building the Texas operation to as much as $5 billion of assets within five years and a 15% to 20% statewide market share.
"We think east Texas is the most attractive market to which we're contiguous," said Mr. Hansel. "I see those areas as underbanked markets with good economies where we can leverage what we do well. East Texas gives us tremendous access to middle-market customers."
Christopher T. Kelley, an analyst at Morgan Keegan & Co., said northeast Texas offers Hibernia lots of opportunities in potential customers and in independent banking companies available for purchase.
While expanding geographically, Hibernia has also been building its business lines.
The commercial side has long been a major contributor to Hibernia's bottom line, but under Mr. Hansel it has grown to encompass several initiatives, including asset-based lending and equipment leasing. Hibernia has also started a private equity division that invests in a range of ventures, including a Dallas toy company that generated a 50% return, according to bank officials.
Trying to grow internationally, too, Hibernia also recently entered a new line of work-acting as strategic adviser to the Central American country of Belize. Part of the job is to analyze the feasibility of various development projects.
"We've had tremendous growth in recent years," said Scott P. Howard, senior executive vice president in charge of commercial banking, whom Mr. Hansel recruited in 1992 from J.P. Morgan & Co.
Commercial loans grew 34%, to $2.6 billion, in the second quarter, driven mostly by energy and maritime loans, said Mr. Howard. Those sectors produced $85.4 million of loans in all of 1995, and $271.1 million just in this year's second quarter.
Asset-based lending has jumped from $4.7 million in 1995 to $82.4 million at the end of June, he said.
Small-business banking has also been a success. After aiming a series of products and marketing efforts at companies with less than $10 million of annual revenues, Hibernia saw loans to those customers rise 26% in the 12 months ended June 30, to $1.2 billion.
Another of Mr. Hansel's goals is to bolster the retail side of the company.
"Retail is at the top of the list" of areas where Hibernia has "significant room for continued improvement," he said. "We're not making as much money as we want to make there."
But things are improving. To jump-start the effort, Richard L. "Ike" Stage, director of retail banking, came in 18 months ago from Columbus, Ohio-based Huntington Bancshares.
Under his direction, the company is reinventing an assortment of products and reaching out more to customers. Mr. Stage said his initiatives include a home equity line of credit similar to one that generated $220 million of outstandings for Huntington in its first five months.
A money market account started in February has been popular, attracting a steady flow of deposits, 60% of which is "new money," according to Mr. Stage.
In 1996 the company moved to expand its "alternative delivery" network by installing or adding through merger 53 automated teller machines. It plans to add 20 this year.
Through marketing campaigns and product development, Hibernia has reversed a trend of losing retail customers. Through May, it had a net gain of 12,000 transaction accounts, up from a gain of 8,000 in all of 1996. It had a net loss of 12,000 in 1995, said Mr. Stage.
"Our biggest goal has been to stop the bleeding," he said.
The changes at Hibernia have helped balance out its loan portfolio. In 1992 about two-thirds of loans were to commercial businesses. By mid-1997 traditional commercial loans were 40% of the portfolio, while consumer balances totaled 42% and small-business banking 18%.
Many programs under way at Hibernia-retail and otherwise-are benefiting from investments in new technology. An automated customer information system and a new data warehouse supplies sales and service information for a universal workstation platform.
The company also established a Web site where on-line loan applications are available.
Amid all the improvements, Hibernia continues to struggle with overhead. Its efficiency ratio was 62.79% at midyear, and its return on equity of 14.63% also lags that of many peers.
Yet Hibernia managers refuse to spend much time worrying about the ratios.
"Shareholders are more interested in earnings-per-share growth," said Mr. Hansel. "We're trying to build long-run value."
