Bad loans have cropped up once again at Hibernia Corp., which said Thursday that it would mark the new year with disappointing profits.

In his first announcement since taking over Monday as chief executive officer at Hibernia, J. Herbert Boydstun said fourth-quarter profits would be about $17 million, or 10 cents a share, far below the 34-cent consensus of Wall Street analysts. Profits for the full year would be $170 million, or $1.04 a share, lower than the $1.29 expected by analysts.

Loans are again the culprit. Hibernia said its loan-loss provision would be $70 million for the fourth quarter and about $120 million for the year. Chargeoffs in the fourth quarter would total $55 million, more than triple the third-quarter figure, and nonperforming loans would be about $90 million.

Russ Hoadley, executive vice president at Hibernia, said that the troubled credits are mainly on the commercial side, but he would not elaborate on the size of the bad loans or the borrowers. He said Hibernia would continue to charge off the loans on a complete or partial basis, create payment plans, and possibly sell the charged-off assets.

Despite the gloomy forecast, the company put on a cheery face, as it has done on past occasions when it has had to disclose loan losses. Hibernia is anticipating a healthy 2001, Mr. Hoadley said. The company said the loan-loss provision for next year will likely be between $65 million and $70 million.

"Our mission hasn't changed," Mr. Hoadley said. "We have growth plans and technology investment plans. We feel cautiously optimistic depending how the economy plays out."

Hibernia has said as much before. Mr. Boydstun completed his first week at the helm of the $16 billion-asset New Orleans company after succeeding Stephen A. Hansel, who resigned Monday after coming under fire for credit-quality problems that dogged him at the end of his eight-year tenure.

Hibernia's credit outlook has bounced up and down for the last two years. The company scrambled to raise reserves and cut profit targets in March 1999, after taking a $33 million loss on a loan to the bankrupt United Companies Financial Corp.

Hibernia told the market it had everything under control, but in the fourth quarter of last year it again warned that nonperforming assets were on the rise.

At the beginning of this year analysts raised their ratings on the company's stock after seeing an improvement in loan quality. In April, Hibernia announced it was buying back shares in a move that suggested an improvement in credit quality. But analysts said conditions deteriorated in the third quarter, when chargeoffs started growing.

Mr. Hansel on Monday denied that credit quality had anything to do with his decision to resign. He said he was "very proud of our record" during his tenure.

Brock Vandervliet, an analyst with Lehman Brothers, said Thursday's news sheds some light on Mr. Hansel's resignation. "Now we know it was driven by a corporate issue," he said.

Some analysts revised their outlooks on the company following the announcement.

Sandra Flannigan, an analyst at Merrill Lynch & Co., said slowing economic growth and worsening credit quality has led her to review 2000 and 2001 per-share earnings estimates for several banks, including Hibernia. This week the Federal Reserve Board said the risks of "economic weakness in the foreseeable future" exceed the risks of inflation, but it left short-term interest rates unchanged.

J.P. Morgan & Co. reduced its estimate on Hibernia's 2001 per-share earnings by 10 cents, to $1.30, and said operating trends outside of credit quality have also weakened this quarter. J.P. Morgan, which maintained its "market performer" rating for the company, classified the lower earnings as a "house-cleaning move" by Mr. Boydstun, who wants to establish a better operating platform.

"We are still cautious on the stock," said J.P. Morgan analyst Michael Granger. "It appears that credit quality is still worsening for Hibernia, although the aggressive actions to write off a large portion of the problem loans could reduce the impact on 2001 earnings."

Mr. Boydstun said that Hibernia is continuing to work on its credit-quality problems. "Although the overall level of problem loans continues to decrease, the amount of loss that we've now been able to identify in certain nonperforming loans has increased," he said. "By adding to the provision and charging off some of these problem loans, we're demonstrating our commitment to building shareholder value."

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