Regional banking firm Hibernia
Though unknown to many, the firm maintains a dominant foothold here in the land of crawfish, Mardi Gras, and gumbo. Hibernia is the largest mortgage lender in Louisiana, and its 260 branches manage a quarter of all deposits in the state.
Plans are also well underway for an earnest expansion into the rapidly growing Texas market. Financial centers in Dallas and Houston have exceeded sales goals by generating over $100 million in new loans, and three more such centers are slated to open within the next few months. Furthermore, the acquisition of Houston-based Coastal Bancorp's
Hibernia derives nearly two-thirds of its revenue from loan activity, and the first quarter saw double-digit growth across key segments. Commercial loan, small-business loan, and consumer-loan volume swelled 11%, 10%, and 16%, respectively, with total loans outstanding rising 13% to $13 billion. Meanwhile, deposits inched up 8% to a record $14.9 billion. Net interest income for the quarter grew to $178.4 million, and total non-interest income from service charges, fees, investment banking, trust, and brokerage sales rose 10% to $80.1 million.
Hibernia's net profit margin, return on assets, and return on equity were 19%, 1.4%, and 14.6%, each within the top quartile of peers, such as AmSouth
Net interest margins have contracted by over 60 basis points recently to 4.17%, and management expects margins will narrow another 20 basis points as a result of the Coastal merger. Furthermore, rising interest rates will not only slow mortgage loan activity, which comprises half of Hibernia's loan portfolio, but may also lead to even further margin compression.
Unsubstantiated talk of Hibernia's status as a likely takeover candidate has long swirled, as it would make a prime target for a larger bank looking to establish a presence in Louisiana and Texas. The rumors have yet to materialize into anything, but if Hibernia can successfully make inroads in the Texas market, and execute on its plans to curb bad loans and transition to a more fee-based revenue stream, it may still earn respectable returns.
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Fool contributor Nathan Slaughter lives in Louisiana and owns none of the shares mentioned, though he did have crawfish and gumbo for supper last night.