Magazine article American Banker

Hibernia, despite Troubles, Finds Favor with Investors

Magazine article American Banker

Hibernia, despite Troubles, Finds Favor with Investors

Article excerpt

Hibernia Corp., the New Orleans banking company that has struggled with rising nonperforming assets and a sluggish regional economy, is showing new signs of vigor.

Its shares hit a 52-week high this month after better-than-expected second-quarter earnings, and analysts said the company, under new management, has been making progress in turning itself around.

But merger rumors, fueled by statements from the company's own management, have had at least as large a role in the stock runup. In May, chief executive officer C. Herbert Boydstun, who was appointed in December to succeed Stephen A. Hansel, indicated his willingness to entertain offers.

Potential suitors could include San Francisco's Wells Fargo & Co., if only because it is known as a buyer of underperforming companies, and Regions Financial Corp. of Birmingham, Ala., because its management has praised Mr. Boydstun's accomplishments, said Brock Vandervliet, an analyst at Lehman Brothers.

Mr. Vandervliet, who has a "market outperform" rating on Hibernia shares, says the company will probably see no offers for a while. "They are definitely amenable to a sale, but I don't see a long list of buyers," he said.

The company's shares have also fallen a bit since their July 18 peak, closing up 0.2% in trading Tuesday.

Hibernia is among a handful of regional banking companies that have been pummeled by rising loan losses, higher expenses, and top management shifts only to have their shares soar in recent months as the stocks of larger banking companies -- with better earnings track records -- falter. …

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