Magazine article American Banker

Hibernia Sees Shortfall despite Comerica Deal

Magazine article American Banker

Hibernia Sees Shortfall despite Comerica Deal

Article excerpt

NEW ORLEANS - Hibernia Corp. said the planned sale of its Texas bank to Detroit-based Comerica Inc. would not raise capital ratios enough for effective competition.

The deal was announced late Friday. Approval by banking regulators required.

The sale would bring Hibernia $63 million, most of which will be injected directly into capital.

This, along with a planned debt restructuring, would raise the bank's leverage ratio to 4.5%, president Stephen Hansel said at a press conference.

But he said that competitiveness requires "a stronger capital ratio than the 4.5%. We're now in a position where we need additional capital to achieve our full potential in Louisiana."

Aiming for 5.5%

Mr. Hansel said the company would like to improve its leverage ratio to 5.5%, which would require another $50 million. Hibernia is planning a common stock rights offering to raise this cash.

Comerica, meanwhile, said it will use the Hibernia purchase to expand its current Dallas-based operation into Houston, San Antonio, and Austin.

No charge is foreseen by Comerica in connection with the cash acquisition. Charles Gummer, president of Comerica Bank-Texas, said in an interview that he believes Hibernia National Bank in Texas has enough reserves to cover its problem assets.

"We expect their problem loans are adequately reserved for," he said. "These banks were mostly bought by Hibernia, so they've been through the merger process before."

Lone Star Expansion

The deal will nearly double Comerica's Texas assets, currently $1. …

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