NEW ORLEANS -- Hibernia Corp., the state's largest bank holding company burdened by losses and growing loan problems, said Tuesday it is actively seeking capital from outside investors, a merger partner or both to bring up its capital ratios to regulatory standards.
The $7.2 billion-asset company, which reported a $33.2 million second quarter loss, also announced a systemwide reorganization that will include a 10 percent staff reduction and the sale of all its Texas operations which include 27 locations in Dallas, San Antonio, Austin and Houston.
The bank moved into Texas with the purchase of the failed BancTexas last year and since then has bought a number of other failed Texas institutions.
After the sale of the Texas operations, Hibernia will be left with 154 locations in Louisiana.
Spokesman Mark Romig said the company would seek other financial institutions to buy its Texas operations but gave no other details.
In other major announcements, Hibernia said that Chairman Martin C. Miler had retired and that Sidney W. Lassen, chairman of the Executive Committee of the corporation, will succeed him. Lassen will also act as President and chief executive officer of the company.
The company said it is 'actively seeking outside investors, a merger partner or both in order to inject capital into the corporation as part of a plan to bring regulatory capital ratios within required government standards.'
'We are currently examining a number of alternatives to achieve meaningful cost savings that will allow us to reduce operating expenses and conserve resources,' Lassen said. 'Such plans will include an approximate 10 percent reduction in staffing.' The company employs about 3,700 employees.
Lassen also said a number of other senior managers would voluntarily step down 'to make way for a new management philosophy and team.'
The Wall Street Journal had reported that NCNB Corp. of Charlotte, N. C., which plans to merge with C&S/Sovran, might be interested in Hibernia. However, NCNB denied any such possibility and said it is concentrating on the C&S/Sovran merger.
In its second quarter results, Hibernia reported its total risk-based capital stood at 6.42 percent at the end of the quarter, compared to 7.3 percent at the end of the second quarter of last year.
Government standards require this ratio to be a minimum of 7.25 percent. By the end of this year, this requirement will be raised to 8 percent.
'Hibernia's board also expects to enter into an agreement with the Office of the Comptroller of the Currency consenting to various measures aimed at improving and strengthening the financial condition of the bank,' the company said.
Hibernia's second quarter loss of $33.2 million, equal to $1.18 a share, comes on top of a loss of $49.5 million in the first quarter. In the second quarter of last year, Hibernia earned $17 million, or 62 cents a share.
The company said it had renegotiated agreements with its lenders as a result of the first quarter loss and hence was no longer in violation of the covenants.
Hibernia said the suspension of its regular quarterly cash dividend announced earlier this year would continue.
The company said the second-quarter loss was the result of a $42 million addition to the reserve for possible loan losses.
'The provision and resulting reserve represent our best assessment of future performance of the loan portfolio,' Lassen said. 'Notwithstanding our current assessment, we constantly re-evaluate reserve adequacy and provisioning in light of economic conditions and the quality of the portfolio assets at that time.'
Hibernia's core operating income, or income before the provision for possible loan losses and income tax, totalled $9.8 million for the second quarter, compared to $37.9 million last year.
Total assets dropped to $7.2 billion at June 30, from $7.4 billion a year earlier.