Hibernia Reports Almost $200M of Storm Costs

By Davenport, Todd | American Banker, October 24, 2005 | Go to article overview
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Hibernia Reports Almost $200M of Storm Costs


Davenport, Todd, American Banker


Hibernia Corp., perhaps the industry's Hurricane Katrina bellwether, said Gulf Coast storms cost close to $200 million in the third quarter and put a big dent in credit quality - but deposits increased substantially.

Charges related to Katrina and, to a lesser extent, Hurricane Rita pushed the New Orleans banking company to a loss of $58.1 million, or 37 cents a share. A year earlier Hibernia earned $76.5 million, or 49 cents a share.

The average of analysts' estimates, which Katrina rendered largely meaningless, had called for earnings of 49 cents a share.

Hibernia pegged its hurricane costs at $197.7 million, including a $175 million provision expense based on "management's best estimate" of loan portfolio losses and roughly $9.2 million of property damages not covered by insurance.

Shareholders are scheduled to meet Nov. 14 to vote on Hibernia's deal to sell itself to Capital One Financial Corp. The two companies, which initially reached a deal in March, knocked nearly $400 million off the price tag when they amended the deal Sept. 7 - a little over a week after Katrina came ashore. If Hibernia's shareholders approve the deal, the companies expect it to close Nov. 16.

Capital One's chief executive, Richard Fairbank, said Thursday in a conference call that Katrina had changed the timing of some of the financial aspects of the transaction but had not changed the long-term outlook for Hibernia.

"We do not expect any material change to the original estimate of $175 million in expected integration costs, and we remain confident that we can achieve the $135 million run-rate synergies by 2007," Mr. Fairbank said.

J. Herbert Boydstun, Hibernia's chief executive, said in an interview Friday that the $175 million provision is "more than a guess" on his company's part. "We've done a lot of homework in this area."

The estimate is "well supported and well documented" but is subject to change, he said, "because no one knows what the future holds."

Hibernia hopes to move back to its headquarters Oct. 31. "New Orleans is a fun city on Halloween," Mr. Boydstun said.

Of its 326 branches in Louisiana and Texas, 37 remain closed.

Hibernia's asset quality took a hit.

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