Hibernia National Bank, Louisiana's largest financial institution, has reentered the credit card business with a no-fee, low-interest-rate product.
For four weeks, Hibernia will send direct mailings to 145,000 customers, offering a 6.9% teaser rate for its new credit card. On April l, 1995, rates will jump to 5.65% over prime.
Hibernia's card is provided through First USA Inc., the seventh-largest issuer of Visa and MasterCard credit cards, which will make credit decisions, issue cards, and own receivables.
The two institutions have had an ongoing relationship.
A spate of bad real estate loans in the late 1980s forced Hibernia to sell its $315 million credit card program in 1991 in an effort to recapitalize the bank and satisfy federal examiners. First USA acquired the 440,000-account portfolio for an estimated $25 million, "Pan of the agreement allowed us to remain as an agent or correspondent of theirs, meaning we could originate new credit card accounts with our name on it, issued by First USA," said Bill Howland, vice president of retail deposit services at Hibernia.
What's different about the new program is a more attractive product, a better financial arrangement with First USA, and an aggressive marketing campaign, Mr. Howland said. "Instead of just haying applications available in the office, we are now actively soliciting the new cards to our customer base," he said.
After financial setbacks earlier in the decade, which prompted the sale of its Texas banking subsidiary and other loan portfolios along with the credit cards, Hibernia is back on its feet.
Since chief executive officer Stephen A. Hansel took over in 1992, bank strategy has "gotten more inwardly focused on Louisiana and the consumer," said Henry J. Coffey Jr., an analyst with J.C. Bradford, a Nashville brokerage firm. "They're adding a product that makes sense."
"We felt for some time that we needed to have a product of this kind to be fully competitive in our market area," said Mr. Howland. "It's been a missing link for us since we sold the portfolio."
Other card features include a free balance transfer option, a 25day grace period, automatic travel insurance, and 24-hour toll-free customer service.
Mr. Coffey pointed out that Hibernia's relationship with First USA will save the overhead of running a card program while offering customers a service they may want. "It's certainly a smart thing to do," he said.
The $5.7 billion-asset company has acquired several Louisiana banks over the past two years and is now awaiting regulatory approval for mergers with First State Bank and Trust Co. of Bogalusa and Pioneer Bancshares Corp. in Shreveport, which will increase assets to $6.2 billion.