Insider Selloff Softens Price Of Hibernia
The summer purge of Hibernia Corp.'s senior management resulted in a six-week avalanche of insider selling of shares in the troubled New Orleans banking company, which may soon face government intervention.
Between July 30, when the ousters occurred, and Sept. 10, insiders sold 398,276 shares, according to figures provided by Invest/Net Group Inc., Fort Lauderdale, Fla., which tracks buying and selling of stock by officers and directors of publicly-held companies.
"In this instance there obviously was no willingness to take any market risk," noted Robert J. Gabele, president of Invest/Net. All the shares were sold at prices between $3 and $4 per share.
Analysts Not Surprised
Former chairman and chief executive officer Martin C. Miler sold 101,500 shares and former president Charles J. Shaw shed 63,466 shares. New Orleans attorney Roland C. Kizer Jr., a former director, was the top seller, parting with 184,196 shares in one day, Aug. 2.
Under revised Securities and Exchange Commission regulations, insiders no longer face a waiting period after changes in their status. Still, most do not sell immediately, for valuation reasons.
Analysts said the sales were not surprising, given the bank's condition and the circumstances of the departures. But they noted that the heavy selling had surely contributed to the further weakening during this quarter of Hibernia's already moribund stock.
The shares of Louisiana's largest banking firm have fallen 30.6% since midyear and are currently 75% below their 52-week high.
Hibernia, plagued by problem loans, lost $82.7 million during the first half of the year and is under regulatory orders to bolster capital ratios. Earlier this month, the bank acknowledged it is borrowing from the Federal Reserve System via the central bank's discount window.
On July 30, the company announced the departure of all senior managers and said it is "actively seeking outsider investors, a merger partner, or both."
Besides Mr. Miler and Mr. Shaw, another ousted officer, Thomas A. Masilla Jr., sold 29,427 shares on Aug 5. Mr. Masilla was chairman of Hibernia National Bank and treasurer of Hibernia Corp.
On Friday, Hibernia spokesman James Lestelle said the departures of the officers and Mr. Kizer's leaving the board of directors were not related events. A current director, Joe D. Smith Jr., a Louisiana publisher, sold, 17,681 shares on Aug. 27, at $3.375 a share.