NCNB Said To Discuss Acquisition of Hibernia
With the ink barely dry on its agreement to buy C&S/Sovran, NCNB Corp. is holding informal merger talks with the largest banking company in Louisiana, according to a person familiar with the discussions.
Hibernia Corp., with $7.3 billion in assets, has quietly put itself up for sale in the wake of major problems with commercial real estate loans and with credits financing highly leveraged transactions, the source said. It was not clear whether Hibernia is discussing a merger with other parties.
Visit from Texas Crew
Officials of NCNB's Texas bank visited Hibernia's New Orleans headquarters on Friday, the source said.
Spokesmen for NCNB, which has $69 billion in assets, and Hibernia declined to comment.
Another acquisition by Charlotte. N.C.-based NCNB might seem unlikely following the announcement last Monday that it will buy C&S/Sovran, which has $49.1 billion in assets.
Hugh McColl, chairman and chief executive of NCNB, told a group of bank analysts last week that the only additional acquisitions likely anytime soon would be of failed institutions whose portfolios had been sterilized by the government. Though Hibernia is troubled, the banking company is not seen as a bailout candidate.
Small Deal for NCNB
However, a Hibernia takeover would be a relatively small deal for NCNB, which will have $118 billion in assets after the C&S/Sovran Corp. acquisition. And the company has an experienced takeover team at NCNB Texas National Bank, its Dallas-based subsidiary.
With more than 150 offices in Louisiana, Hibernia owns the dominant franchise in the state and would help fill out NCNB's Southeast banking empire, which will grow to 1,900 branch offices in nine states with the C&S/Sovran deal.
Hibernia also controls 25 banking offices and more than $1 billion of assets in Texas. The company halted its Texas expansion last year when the parent's problem loans grew.
Premium Not Expected
Analysts said that because of Hibernia's loan problems, the company probably would not fetch a premium over its book value, which stood at $315 million, or $11.20 a share, on March 31. Hibernia's common shares are trading at 60% of book value, putting the bank's market value at about $126 million.
On Friday, Hibernia's stock was at $4.375, off 12.5 cents, in late trading. NCNB was also down 12.5 cents, at $34.375.
A deal with Hibernia would pull NCNB ahead of Banc One Corp. in Louisiana.
Banc One struck a $102.2 million stakeout agreement this spring with Premier Bancorp, a $4 billion-asset company based in Baton Rouge. As part of the arrangement, Banc One bought a $65 million capital note from Premier and in turn gained the option to buy the company at a 25% premium over a book value that is net of problem loans.
NCNB Gaining in Texas
NCNB's Texas operation has grown rapidly through acquisitions. In a 30-month charge spearheaded by NCNB Texas chairman and chief executive Timothy Hartman, the unit acquired 130 branches during 19 takeovers of failed banks and thrifts. The Texas unit is built around the failed First Republic-Bank Corp., which NCNB acquired in December 1988.
Hibernia's decision to seek a buyer punctuates an arduous 18 months in which a deteriorating loan portfolio dragged the company down from hefty profits to hefty losses.
The banking company suffered a $49.5 million loss during the first quarter of 1991 and eliminated its already-truncated common dividend of 15 cents a share. The company at March 31 held $289.6 million of problem assets comprising a daunting 5.6% of gross loans.