Stephen A. Hansel, chief executive officer of New Orleans-based Hibernia Corp., is happy to watch hometown rival First Commerce Corp. be swallowed by Banc One Corp. of Columbus, Ohio.
Banc One's planned purchase of First Commerce-which is scheduled to close in the first quarter-will change the competitive landscape in Louisiana and position $10.1 billion-asset Hibernia as one of the last big home-state banks.
In an interview last week, Mr. Hansel said he hopes to use that position to attract new business and strengthen the value of Hibernia, should suitors come calling.
"We think it creates some opportunities for us," Mr. Hansel said of the deal. "We have organized ourselves in a way that will hopefully help us prosper out of something like this. Time will tell."
William L. Marks, chief executive officer of nearby Whitney Holding Corp., is equally optimistic about the business possibilities that may result from the First Commerce acquisition. Whitney, also based in New Orleans, has $4.2 billion of assets and is the next largest homegrown banking company.
Both Mr. Marks and Mr. Hansel stressed that their strategies remain relatively unchanged and focused on independence. But they said there is no question that the competitive environment around them is shifting. Indeed, questions about further consolidation, competitive pricing, and customer response to the changes are among the many issues arising in the wake of the First Commerce deal.
"It will be interesting to see how this turns out," said John A. Pandtle, an analyst with Robinson-Humphrey Co.
With its $3.1 billion acquisition of First Commerce, Banc One would have a 27% deposit market share in Louisiana, a position that would far exceed the No. 1 share-17.64%-that Hibernia now has.
Banc One already has some $5.5 billion of assets in the state, gained last year when it bought its way into Louisiana with the acquisition of Premier Bancorp in Baton Rouge.
Since then, Banc One has made no secret of its desire to make another acquisition in Louisiana. First Commerce officials said they decided to sell because of the current high-premium environment.
Some analysts said another reason may have been First Commerce's lackluster performance.
"They just haven't executed," said one analyst.
In contrast, Hibernia's financial performance of late has been applauded by analysts, and Mr. Hansel has expressed a staunch desire to remain independent.
Nevertheless, the marriage of Banc One and First Commerce is causing speculation about whether Banc One's move will prompt further consolidation in the Louisiana market.
At the time of the Banc One deal, First Union Corp. also reportedly made a bid for First Commerce-and lost out. Charlotte, N.C.-based First Union has made it clear that it likes the Louisiana market. Though it has no retail presence in the state, it has been pursuing new business there.
"Louisiana, and New Orleans in particular, is one of several key markets that we have targeted," said First Union spokesman R. Jeep Bryant. He would not comment, however, about possible acquisitions in Louisiana. NationsBank Corp., also of Charlotte, N.C., is also pursuing business relationships in Louisiana, but has not publicly expressed any acquisition plans.
Such interest is easily explained: The Louisiana economy has been growing by leaps and bounds over the last few years, fueled by a resurgence in the energy industry and related maritime development, as well as strong growth in the chemical industry.
Whether either of the Charlotte-based banking giants-or any others-will make a play for Hibernia is uncertain, industry observers say.
"Someone like a NationsBank or a First Union would be able to assimilate Hibernia's franchise," said Mr. Pandtle. "But you've got to have a willing seller."
Regardless of whether further consolidation occurs anytime soon, competitive changes in Louisiana are expected, said bankers and analysts. There will likely be some customer runoff associated with the integration of First Commerce into Banc One, they said. And they believe Banc One will establish more "rational pricing" in the marketplace. First Commerce had altered pricing for its most lucrative clientele, undercutting competitors but hurting its own bottom line.
"First Commerce has been a tough competitor," said Mr. Hansel. "This deal enhances our prospects for internal growth."
