Exhibit   13

HIBERNIA CORPORATIONCORPORATE OFFICES
313 Carondelet Street
New Orleans, LA 70130
504-533-3333MAILING ADDRESS
P.O. Box 61540
New Orleans, LA 70161ELECTRONIC ADDRESSInternet: Hibernia.comE-mail: Hibernia.com/emailusSHAREHOLDER, EMPLOYEE DATA(at December 31, 2003)
Shareholder's of record: 15,021
Full-time equivalent employees: 5,339

STOCK LISTINGCommon Stock
Exchange: NYSE     
Symbol:  HIBPrice and volume
Listed asHibernia or HIB in The Wall Street Journal and under
similar designations in other daily newspapers.

|                                              |                 
|--------------------------------------------- | ----------------
|Hibernia Stock Price and Dividend Information |                 
|                                              | 2003            
|                                              |                 
|                                              |                 
|                                              | Market Price (1)
|                                              | High            
|                                              |                 
|1st quarter                                   | $20.33          
|2nd quarter                                   | $19.56          
|3rd quarter                                   | $21.15          
|4th quarter                                   | $23.69          
|                                              |                 
|(1)NYSE closing price.                        |                 
|                                              |                 

SHAREHOLDER ASSISTANCE
For change of address,
records, transfer of stock from one name to another, assistance with lost
certificates, direct deposits of dividends or a Dividend Reinvestment and Stock
Purchase Plan prospectus:
     Mellon Investor Services
     Securityholder Relations Department
     85 Challenger Road, Overpeck Centre
     Ridgefield Park, NJ 07660
     Toll free:800-814-0305
     www.melloninvestor.com

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Once enrolled, shareholders
may purchase new shares directly from the Company through reinvested dividends,
optional cash purchases or bothan economical, convenient way to increase
Hibernia holdings. For more information, call800-814-0305.

DIRECT DEPOSIT OF DIVIDENDS
Obtain dividends faster
through direct deposit. To sign up or to receive information, call 800-814-0305.

DUPLICATE MAILINGS
Shareholders of record who receive more than one copy of this annual report can contact
Mellon Investor Services at the address above and arrange to have their accounts consolidated.

FOR INFORMATION
Shareholders, media and other
individuals requesting the annual report, Forms 10-K or 10-Q and general
information: Jim Lestelle, Senior Vice President and Manager of Corporate
Communications, 504-533-5482 or 800-245-4388, option 4.
        Analysts
and others requesting financial data: Trisha Voltz, Senior Vice President and Manager
of Investor Relations, 504-533-2180 or 800-245-4388, option 2.
        The Companys  annual reports
on Form 10-K,  quarterly reports on Form
10-Q,  current  reports  on Form 8-K and all  amendments  to those  reports  are
available  free  of  charge  through  the  Companys  Web site  as  soon  as
reasonably  practicable after such material is electronically filed or furnished
to the SEC. The Companys Web site address is www.hibernia.com.
        Corporate  governance  information,
including the  Companys  Code of
Ethics that  applies to its  principal  executive  officer and senior  financial
officers,  is available on the  Companys  Web site  (www.hibernia.com)  under
Corporate,  Investor  and  Media  Relations  in the  Corporate
Governance  section located within the Company Overview.  The Company will
also post amendments to or waivers from that Code of Ethics on its Web site.
        The  Company has filed the CEO and CFO
certifications  required by Section
302 of the Sarbanes-Oxley Act as an exhibit to its 2003 Form 10-K.

|                                                                                                                                                                                                                                                                 
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Purpose Statement                                                                                                                                                                                                                                                
|Hibernias purpose is to help people achieve their
financial goals and realize their dreams.                                                                                                                                                                     
|                                                                                                                                                                                                                                                                 
|New Mission Statement                                                                                                                                                                                                                                            
|Hibernia announced a new mission statement in fourth-quarter 2003:
Hibernia will continue to be Louisianas first choice as a trusted financial resource, and by 2007 will have at least 25% of
our deposits in Texas, while growing earnings 8% to 10% annually.
|                                                                                                                                                                                                                                                                 

|Five-Year Consolidated Summary of Income and Selected Financial Data(1)
|-----------------------------------------------------------------------
|                                                                       
|HIBERNIA CORPORATION AND SUBSIDIARIES                                  
|Year Ended December 31                                                 
|($  in thousands, except per-share data)                               
|                                                                       
|Interest income                                                        
|Interest expense                                                       
|                                                                       
|Net interest income                                                    
|Provision for loan losses                                              
|                                                                       
|Net interest income after                                              
|provision for loan losses                                              
|                                                                       
|Noninterest income:                                                    
|Noninterest income                                                     
|Securities gains (losses), net                                         
|                                                                       
|Noninterest income                                                     
|Noninterest expense                                                    
|                                                                       
|Income before income taxes                                             
|Income tax expense                                                     
|                                                                       
|Net income                                                             
|                                                                       
|Net income applicable to common shareholders                           
|                                                                       
|Adjusted net income(2)                                                 
|                                                                       
|Adjusted net income applicable to common shareholders(2)               
|                                                                       
|Per common share information: (3)                                      
|Net income                                                             
|Net income - assuming dilution                                         
|Adjusted net income(2)                                                 
|Adjusted net income - assuming dilution(2)                             
|Cash dividends declared                                                
|Average shares outstanding (000s)                                      
|Average shares outstanding - assuming dilution (000s)                  
|Dividend payout ratio                                                  
|                                                                       
|Selected year-end balances (in millions)                               
|Loans                                                                  
|Deposits                                                               
|Federal Home Loan Bank advances                                        
|Equity                                                                 
|Total assets                                                           
|                                                                       
|Selected average balances (in millions)                                
|Loans                                                                  
|Deposits                                                               
|Federal Home Loan Bank advances                                        
|Equity                                                                 
|Total assets                                                           
|                                                                       
|Selected ratios                                                        
|Net interest margin (taxable-equivalent)                               
|Return on assets                                                       
|Return on common equity                                                
|Return on total equity                                                 
|Efficiency ratio                                                       
|Adjusted efficiency ratio(2)                                           
|Average equity/average assets                                          
|Tier 1 risk-based capital ratio                                        
|Total risk-based capital ratio                                         
|Leverage ratio                                                         
|                                                                       

|(1)All financial information has been restated for mergers accounted for as poolings of
interests. The effects of mergers accounted for as purchase transactions have been
included from the date of consummation. Prior periods have been conformed to
current-period presentation.(2)Excludes amortization of
goodwill.(3)Dividends per common share are historical amounts. For a discussion of net income per common
share computations refer to Note 21 of the Notes to the Consolidated Financial
Statements.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|Managements Discussion and Analysis of Financial Condition and Results of Operations
|-------------------------------------------------------------------------------------
|                                                                                     

Managements Discussion presents
a review of the major factors and trends affecting the performance of Hibernia Corporation
and its subsidiaries (collectively, the Company or Hibernia),
principally Hibernia National Bank (the Bank). This discussion should be read
in conjunction with the accompanying tables and consolidated financial statements.

|2003 Overview
|-------------
|             

Hibernia
Corporation is a financial holding company which, through its bank and nonbank
subsidiaries, provides a broad array of financial products and services throughout
Louisiana and portions of Texas. At December 31, 2003, the Company operated 259 locations
in 34 Louisiana parishes and 18 Texas counties and two mortgage loan production and retail
brokerage services offices in Southern Mississippi. The principal products and services
offered include retail, small business, commercial, international, mortgage and private
banking; leasing; investment banking; corporate finance; treasury management; insurance;
and trust and investment management. The Bank, through a wholly owned subsidiary, also
acts as a retail broker, providing access to alternative investments products, including
mutual funds and annuities.

Financial
results for 2003 include:

| |  | Net income for 2003 totaled $258.3 million, a 3% increase compared to $249.9 million for
2002. Net income per common share for 2003 of $1.67 increased 5% compared to $1.59 for
2002, and net income per common share  assuming dilution was $1.64 for 2003, an
increase of 5% compared to $1.56 for 2002.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Loans increased to $12.9 billion at December 31, 2003, a $1.4 billion (12%) increase from
$11.5 billion at December 31, 2002. Consumer loans totaled $7.0 billion at December 31,
2003, up 15% from $6.1 billion a year earlier; commercial loans were $3.2 billion, up 12%
from $2.9 billion at December 31, 2002; and small business loans were $2.6 billion, up 5%
from $2.5 billion a year earlier. Hibernias participation in shared national credits
continued to decrease and totaled $698.3 million, or 5.4% of total loans, at the end of
2003, as compared to $803.0 million, or 7% of total loans, at the end of 2002.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Deposits grew to $14.2 billion at
December 31, 2003, a $678.5 million (5%) increase from December 31, 2002.
|- |  | -----------------------------------------------------------------------------------------------------------

| |  | Hibernia reported total assets of $18.6
billion at December 31, 2003, up 7% from $17.4 billion a year earlier.
|- |  | --------------------------------------------------------------------------------------------------------------

| |  | The provision for loan losses in 2003 totaled $60.1 million, down 26% from $80.6 million
in 2002. Net charge-offs were $59.5 million in 2003, down 6% from $63.6 million in 2002.
The net charge-off ratio for 2003 was 0.50% as compared to 0.56% for 2002.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Reserve coverage of total and nonperforming loans remained strong at 1.66% and 384%,
respectively, at December 31, 2003, compared to 1.85% and 388%, a year earlier. The
nonperforming asset and nonperforming loan ratios improved to 0.53% and 0.43%,
respectively, at December 31, 2003, compared to 0.54% and 0.48% a year earlier.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Net interest income totaled $670.8 million for 2003, down 5% from 2002, primarily due to
$20.7 million in expenses for the prepayment of a $300 million Federal Home Loan Bank
advance and the termination of a related interest rate swap, as well as the low interest
rate environment throughout the year. The net interest margin was 4.16% for 2003, compared
to 4.68% for 2002.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Noninterest income totaled $350.1 million for the year ended December 31, 2003, an
increase of $49.1 million (16%) from $300.9 million for the year ended December 31, 2002.
Mortgage banking income totaled $26.5 million in 2003, compared to $11.5 million a year
earlier. Hibernia funded a record $6.4 billion in mortgage loans in 2003, up 21% from $5.3
billion a year earlier.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Noninterest expense totaled $564.4 million for 2003, up 4% from $541.7 million in 2002.
Contributing to the increase was a $9.6 million valuation adjustment of an energy asset
reclassified from the private-equity portfolio to other foreclosed assets, as well as
expenses associated with a reduction in force that was announced in the second quarter of
2003.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Return on assets and return on common equity ratios were 1.45% and 15.08%, respectively,
for the year ended December 31, 2003, compared to 1.51% and 15.43% for the prior year.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Cash dividends per common share for 2003 increased to $.63, 11% higher than the 2002 cash
dividend of $.57 per common share and 19% higher than the 2001 cash dividend of $.53 per
common share. In the fourth quarter of 2003, the Company increased its targeted dividend
payout ratio to be between 35% to 45%, compared to its previous target of 30% to 40%.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Capital remained strong at December 31, 2003, with a leverage ratio of 8.65%, compared to
8.45% at December 31, 2002. In 2003, the Company repurchased approximately 4.5 million
shares of its common stock under buyback programs.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Hibernias common stock price experienced a 22% increase during 2003, closing at
$23.51 per share at December 31, 2003, compared to $19.26 per share at December 31, 2002.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Over
the past three years, Hibernias emphasis has been on developing a stronger sales
culture, growing within its geographic footprint, generating more fee income, improving
credit quality and expanding and enhancing its delivery channels. To help guide and build
the franchise in 2004 and beyond, Hibernia developed a new mission statement in 2003. The
new mission statement reads as follows: Hibernia will continue to be Louisianas
first choice as a trusted financial resource, and by 2007 will have at least 25% of our
deposits in Texas, while growing earnings 8% to 10% annually.

To
achieve these goals, Hibernia launched a Texas de novo branch expansion and embarked on
plans for its largest merger to date. The Companys Texas expansion program made
significant strides in 2003, including the opening of Hibernias second Texas
commercial financial center, located in Houston, and the addition of three new branches in
high-growth Texas markets. In the first week of 2004, Hibernia opened a new branch in
South Plano, a suburb of Dallas, and expects to open an additional 15 de novo offices in
Texas during 2004. In the fourth quarter of 2003, Hibernia announced plans for its largest
merger ever by signing a definitive merger agreement with $2.7-billion-asset Coastal
Bancorp, Inc. (Coastal), a transaction which would give Hibernia an increased presence in
Houston and entry into additional Texas markets from Austin to the Rio Grande Valley. The
merger is subject to, among other things, regulatory and Coastal shareholder approval.

Looking
forward to 2004, Hibernia expects earnings per share- assuming dilution to remain in line
with its missions stated goal of 8% to 10% annual growth. This projection does not
include the Coastal transaction, which is expected to be neutral to slightly accretive to
earnings in 2004 and accretive to earnings in 2005. Excluding the Coastal transaction, the
Company expects high single-digit growth for revenues and expenses in 2004. The Company
expects mortgage-related revenues to decline during the year as a result of a shrinking
mortgage pipeline, a growing percentage of adjustable rate mortgages and Hibernias
decision to exit correspondent mortgage lending. The Companys guidance for 2004 does
not include any addition or reversal of the reserve for temporary impairment of mortgage
servicing rights, although either of these may occur. The projected expense growth
includes increased costs associated with the Texas de novo branch expansion program. These
branches are expected to positively contribute to net income within two years, however,
will negatively impact 2004 earnings as expenses exceed revenues.

|Application of Critical Accounting Policies
|-------------------------------------------
|                                           

The
Companys management exercises judgment in choosing and applying the most appropriate
accounting policies and methodologies in many different areas. These choices are
important, not only to ensure compliance with generally accepted accounting principles,
but also to reflect the exercise of managements judgment in determining the most
appropriate manner in which to record Hibernias financial performance. For Hibernia,
these key areas include the accounting for the reserve for loan losses, the valuations of
goodwill and mortgage servicing rights, and the accounting for stock options.

The
reserve for loan losses is maintained to provide for probable credit losses related to
specifically identified loans and for losses inherent in the loan portfolio that have been
incurred as of the balance sheet date. The reserve is comprised of three components:
specific reserves on certain problem loans, general reserves determined from historical
loss allocation factors applied to pools of loans and an unallocated portion for exposures
arising from factors which are not addressed by the general and specific reserves. The
reserve is calculated using both objective and subjective information. The provision for
loan losses is a charge to earnings to maintain the reserve for loan losses at a level
consistent with managements assessment of the loan portfolio in light of current
economic conditions and market trends. For further discussion on this calculation and
assumptions and methods used, see the Reserve and Provision for Loan Losses
section of this analysis.

The
Company is required to perform valuations of assets in accordance with various generally
accepted accounting principles. Impairment testing of goodwill requires the Company to
determine its fair value by reporting unit. Impairment testing is a two-step process that
first compares the fair value of a reporting unit with its carrying amount, and second, if
necessary, measures impairment loss by comparing the implied fair value of the reporting
unit goodwill with the carrying amount of that goodwill. The Companys reporting
units are operating segments as defined by Statement of Financial Accounting Standards
(SFAS) No. 131, Disclosure about Segments of an Enterprise and Related
Information. The Companys reporting units are based on lines of business.
Assets and liabilities are allocated to reporting units using the Companys internal
management reporting system. Goodwill is allocated directly to these reporting units, when
applicable, or based on the allocation of loans to the reporting segments for each region
in which the goodwill originated. When quoted market prices are not available for assets
and liabilities, fair values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. However, management uses assumptions
that it considers to be appropriate in its impairment testing. The Company has recorded no
impairment of goodwill in 2003 or 2002.

The
Company records a servicing asset when the right to service mortgage loans for others is
acquired through a purchase or retained upon the sale of loans. Based upon current fair
values, servicing rights are periodically assessed for impairment. For this valuation, the
mortgage servicing portfolio is stratified on the basis of certain risk characteristics
including loan type and interest rate. A discounted cash flow analysis is performed using
various assumptions including prepayment speeds, discount rates and servicing costs. The
Company uses national prepayment speed assumptions and adjusts them based on actual
prepayment behavior of its own portfolio with information obtained from an independent
third party. To the extent that temporary impairment exists, write-downs are recognized in
current earnings as an adjustment to the corresponding valuation allowance. If market
conditions improve, the valuation allowance is reversed in current earnings.
Other-than-temporary impairment is recognized through a write-down of the asset with a
corresponding reduction in the valuation allowance. Changes in these assumptions could
materially affect the operating results of the Company, however, management considers the
assumptions used to be appropriate. For a discussion of the sensitivity of significant
assumptions, see the Interest Rate Sensitivity section of this analysis. For
additional third-party mortgage servicing portfolio data, see the Noninterest
Income section of this analysis.

The
Company has elected to account for its stock-based compensation plans under the intrinsic
value method of Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees, which is allowed by SFAS No. 123, Accounting for
Stock-Based Compensation. In accordance with APB Opinion No. 25, compensation
expense relating to stock options is not reflected in net income provided the exercise
price of the stock options granted equals or exceeds the market value of the underlying
common stock at the date of grant. The Companys practice has been to grant options
at no less than the fair market value of the stock at the date of grant. If the Company
had elected to apply the fair value recognition provisions of SFAS No. 123 for stock
options, year-to-date net income would have been reduced by $6.0 million ($0.04 per common
share), $6.1 million ($0.04 per common share) and $5.6 million ($0.03 per common share)
for the periods ended December 31, 2003, 2002 and 2001, respectively. Compensation expense
under the fair value method was calculated using the Black-Scholes option valuation model.

The
Black-Scholes option valuation model was developed for use in estimating the fair value of
traded options which have no vesting restrictions and are fully transferable. In addition,
the option valuation model requires the input of highly subjective assumptions, including
the expected stock price volatility. Because the Companys stock options have
characteristics significantly different from those traded options, and because changes in
the subjective input assumptions can materially affect the fair value estimate, in
managements opinion the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options.

The
Companys management has discussed the development and selection of these critical
accounting policies with the Audit Committee of the Companys Board of Directors and
the Audit Committee has reviewed the Companys disclosure relating to these policies.

|Merger Activity
|---------------
|               

In
December 2003, the Company signed a definitive merger agreement with Coastal Bancorp, Inc.
(Coastal), headquartered in Houston, Texas. The proposed merger, the largest in Company
history, would give Hibernia an increased presence in Houston and entry into the Austin
and Rio Grande Valley areas. At December 31, 2003, Coastal had loans of $2.0 billion,
deposits of $1.7 billion and total assets of $2.7 billion. Upon completion of the
transaction, approximately 22% of Hibernias deposits would be in Texas, up from 12%
at December 31, 2003. Under terms of the agreement, Hibernia would purchase all of the
outstanding stock and options of Coastal for approximately $230 million in cash. The
merger is subject to approvals by regulators and Coastal shareholders and, assuming all
approvals are obtained and other considerations are satisfied or waived, should be
completed in or near the second quarter of 2004.

On
April 1, 2002, the Company enhanced its expertise in life insurance and financial planning
by consummating the purchase of Friedler/LaRocca Financial Partners, L.L.C.
(Friedler/LaRocca). Friedler/LaRocca, a New Orleans based firm specializing in life
insurance and other financial services for wealthy clients, serves customers in shipping,
financial services, legal and other key regional industries. It now operates as part of
Hibernias Private Client Group and continues to serve the needs of clients in such
areas as life insurance, incentive-compensation and deferred compensation planning, estate
and financial planning, retirement planning and other investment products. The Company did
not consummate any mergers in 2003 or 2001.

|Consolidated Average Balances, Interest and Rates                   
|--------------------------------------------------------------------
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|HIBERNIA CORPORATION AND SUBSIDIARIES                               
|                                                                    
|Taxable-equivalent basis (1)                                        
|                                                                    
|(Average balances $ in millions,                                    
|interest $ in thousands)                                            
|                                                                    
|Assets                                                              
|Interest-earning assets:                                            
|Commercial loans                                                    
|Small business loans                                                
|Consumer loans                                                      
|                                                                    
|Total loans(2)                                                      
|                                                                    
|Securities available for sale                                       
|Securities held to maturity                                         
|                                                                    
|Total securities                                                    
|                                                                    
|Short-term investments                                              
|Mortgage loans held for sale                                        
|                                                                    
|Total interest-earning assets                                       
|                                                                    
|Reserve for loan losses                                             
|Noninterest-earning assets:                                         
|Cash and due from banks                                             
|Trade-date securities available for sale                            
|Other assets                                                        
|                                                                    
|Total noninterest-earning assets                                    
|                                                                    
|Total assets                                                        
|                                                                    
|Liabilities and Shareholders' Equity                                
|Interest-bearing liabilities:                                       
|Interest-bearing deposits:                                          
|NOW accounts                                                        
|Money market deposit accounts                                       
|Savings accounts                                                    
|Other consumer time deposits                                        
|Public fund certificates of deposit                                 
|of $100,000 or more                                                 
|Certificates of deposit                                             
|of $100,000 or more                                                 
|Foreign time deposits                                               
|                                                                    
|Total interest-bearing deposits                                     
|                                                                    
|Short-term borrowings:                                              
|Federal funds purchased                                             
|Repurchase agreements                                               
|Federal Home Loan Bank advances                                     
|                                                                    
|Total interest-bearing liabilities                                  
|                                                                    
|Noninterest-bearing liabilities:                                    
|Noninterest-bearing deposits                                        
|Other liabilities                                                   
|                                                                    
|Total noninterest-bearing liabilities                               
|                                                                    
|Total shareholders' equity                                          
|                                                                    
|Total liabilities and                                               
|shareholders' equity                                                
|                                                                    
|Spread and Net Yield                                                
|Interest rate spread                                                
|Cost of funds supporting interest-earning assets                    
|Net interest income/margin                                          
|                                                                    
|(1)Based on the statutory income tax rate of 35%.                   
|(2)Yield computations include nonaccrual loans in loans outstanding.

|
|

|
|

|Consolidated Average Balances, Interest and Rates                   
|--------------------------------------------------------------------
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|HIBERNIA CORPORATION AND SUBSIDIARIES                               
|                                                                    
|Taxable-equivalent basis (1)                                        
|                                                                    
|(Average balances $ in millions,                                    
|interest $ in thousands)                                            
|                                                                    
|Assets                                                              
|Interest-earning assets:                                            
|Commercial loans                                                    
|Small business loans                                                
|Consumer loans                                                      
|                                                                    
|Total loans(2)                                                      
|                                                                    
|Securities available for sale                                       
|Securities held to maturity                                         
|                                                                    
|Total securities                                                    
|                                                                    
|Short-term investments                                              
|Mortgage loans held for sale                                        
|                                                                    
|Total interest-earning assets                                       
|                                                                    
|Reserve for loan losses                                             
|Noninterest-earning assets:                                         
|Cash and due from banks                                             
|Trade-date securities available for sale                            
|Other assets                                                        
|                                                                    
|Total noninterest-earning assets                                    
|                                                                    
|Total assets                                                        
|                                                                    
|Liabilities and Shareholders' Equity                                
|Interest-bearing liabilities:                                       
|Interest-bearing deposits:                                          
|NOW accounts                                                        
|Money market deposit accounts                                       
|Savings accounts                                                    
|Other consumer time deposits                                        
|Public fund certificates of deposit                                 
|of $100,000 or more                                                 
|Certificates of deposit                                             
|of $100,000 or more                                                 
|Foreign time deposits                                               
|                                                                    
|Total interest-bearing deposits                                     
|                                                                    
|Short-term borrowings:                                              
|Federal funds purchased                                             
|Repurchase agreements                                               
|Federal Home Loan Bank advances                                     
|                                                                    
|Total interest-bearing liabilities                                  
|                                                                    
|Noninterest-bearing liabilities:                                    
|Noninterest-bearing deposits                                        
|Other liabilities                                                   
|                                                                    
|Total noninterest-bearing liabilities                               
|                                                                    
|Total shareholders' equity                                          
|                                                                    
|Total liabilities and                                               
|shareholders' equity                                                
|                                                                    
|Spread and Net Yield                                                
|Interest rate spread                                                
|Cost of funds supporting interest-earning assets                    
|Net interest income/margin                                          
|                                                                    
|(1)Based on the statutory income tax rate of 35%.                   
|(2)Yield computations include nonaccrual loans in loans outstanding.

|
|

|
|

|Consolidated Average Balances, Interest and Rates                   
|--------------------------------------------------------------------
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|HIBERNIA CORPORATION AND SUBSIDIARIES                               
|                                                                    
|Taxable-equivalent basis (1)                                        
|                                                                    
|(Average balances $ in millions,                                    
|interest $ in thousands)                                            
|                                                                    
|Assets                                                              
|Interest-earning assets:                                            
|Commercial loans                                                    
|Small business loans                                                
|Consumer loans                                                      
|                                                                    
|Total loans(2)                                                      
|                                                                    
|Securities available for sale                                       
|Securities held to maturity                                         
|                                                                    
|Total securities                                                    
|                                                                    
|Short-term investments                                              
|Mortgage loans held for sale                                        
|                                                                    
|Total interest-earning assets                                       
|                                                                    
|Reserve for loan losses                                             
|Noninterest-earning assets:                                         
|Cash and due from banks                                             
|Trade-date securities available for sale                            
|Other assets                                                        
|                                                                    
|Total noninterest-earning assets                                    
|                                                                    
|Total assets                                                        
|                                                                    
|Liabilities and Shareholders' Equity                                
|Interest-bearing liabilities:                                       
|Interest-bearing deposits:                                          
|NOW accounts                                                        
|Money market deposit accounts                                       
|Savings accounts                                                    
|Other consumer time deposits                                        
|Public fund certificates of deposit                                 
|of $100,000 or more                                                 
|Certificates of deposit                                             
|of $100,000 or more                                                 
|Foreign time deposits                                               
|                                                                    
|Total interest-bearing deposits                                     
|                                                                    
|Short-term borrowings:                                              
|Federal funds purchased                                             
|Repurchase agreements                                               
|Federal Home Loan Bank advances                                     
|                                                                    
|Total interest-bearing liabilities                                  
|                                                                    
|Noninterest-bearing liabilities:                                    
|Noninterest-bearing deposits                                        
|Other liabilities                                                   
|                                                                    
|Total noninterest-bearing liabilities                               
|                                                                    
|Total shareholders' equity                                          
|                                                                    
|Total liabilities and                                               
|shareholders' equity                                                
|                                                                    
|Spread and Net Yield                                                
|Interest rate spread                                                
|Cost of funds supporting interest-earning assets                    
|Net interest income/margin                                          
|                                                                    
|(1)Based on the statutory income tax rate of 35%.                   
|(2)Yield computations include nonaccrual loans in loans outstanding.

|Financial Condition
|-------------------
|                   

EARNING ASSETS

Interest
income from earning assets (primarily loans and securities) is the Companys main
source of income. Average earning assets totaled $16.3 billion in 2003, up from $15.2
billion and $15.3 billion in 2002 and 2001, respectively. The increase of $1.1 billion in
average earning assets for 2003 compared to 2002 was primarily due to growth in securities
available for sale, adjusted for trade-date transactions, of $540.8 million and consumer
loans of $520.4 million.

Average
loans as a percentage of average earning assets decreased to 73.2% in 2003, compared to
74.1% in 2002 and 75.9% in 2001. Average securities were 22.8% of average earning assets
in 2003 compared to 21.6% in 2002 and 20.5% in 2001.

Total
earning assets at December 31, 2003, were $17.2 billion, up from $15.7 billion (9%) a year
earlier. This increase was due to growth in loans and securities, offset by declines in
mortgage loans held for sale and short-term investments.

Beginning
in the first quarter of 2003, securities that have been purchased but are not yet settled
(trade-date securities purchased) were reclassified as noninterest-earning assets.
Trade-date securities purchased were previously classified as securities in
interest-earning assets. Securities that have been sold but are not yet settled
(trade-date securities sold) remain classified as interest-earning assets until
settlement. Previously, trade-date securities sold reduced earning assets at the trade
date. Prior periods have been restated to conform to the current presentation.

LOANS 
        The
Companys lending activities are subject to both liquidity considerations and
underwriting standards which are tailored to each of the Companys loan portfolios.
Loans allow Hibernia to meet customer credit needs and at the same time achieve yields
that are generally higher than those available on other earning assets. Lending
relationships are one way Hibernia meets its goal of providing for all the financial needs
of its customers.

Hibernia
engages in commercial, small business and consumer lending. The specific underwriting
criteria for each major loan category are outlined in a credit policy that is approved by
the Board of Directors. In general, commercial loans and larger small business loans are
evaluated based on cash flow, collateral, market conditions, prevailing economic trends,
character and leverage capacity of the borrower, and capital and investment in a
particular property, if applicable. Most small business and consumer loans are
underwritten using credit scoring models which consider factors including payment
capacity, credit history and collateral. In addition, market conditions, economic trends
and the character of the borrower may be considered. Hibernias credit policy,
including the underwriting criteria for major loan categories, is reviewed on a regular
basis and adjusted when warranted.

Average
loans increased $640.1 million (6%) in 2003 and decreased $347.9 million (3%) in 2002.
Growth in the consumer loan portfolio was responsible for the largest portion of the
increase in 2003. The decrease in 2002 compared to 2001 was primarily due to efforts to
diversify the risk of the portfolio, weak loan demand and tightening of some credit
underwriting standards.

Loan
demand improved in all of the Companys portfolios in 2003. Loan growth is expected
to continue in 2004, excluding the impact of any acquisitions. This growth is expected to
be led by the consumer portfolio, with higher levels of growth in all portfolios as the
economy continues to recover and the Company continues its expansion into strategic Texas
markets.

Table
1 details Hibernias commercial and small business loans classified by repayment
source and consumer loans classified by type. In 2003, commercial loans increased $357.7
million (12%), small business loans increased $135.1 million (5%) and consumer loans
increased $898.0 million (15%). The portfolio mix was 25% commercial, 21% small business
and 54% consumer at year-end 2003, compared to 25%, 22% and 53%, respectively, at year-end
2002.

Commercial Loans  The change in the
commercial portfolio was due to increases in real estate, up $185.0 million (46%); energy,
up $95.6 million (33%); the services industry, up $35.4 million (5%); other commercial, up
$22.2 million (21%); commercial and industrial, up $20.8 million (2%); and health care, up
$17.3 million (8%); offset by a decline in transportation, communications and utilities,
down $18.6 million (12%).

The
growth in commercial loans was the result of improved loan demand driven by a
strengthening economy. Shared national credits totaled $698.3 million at December 31,
2003, down 13% from $803.0 million a year earlier. The Companys strategy related to
shared national credits is to focus on lending to customers who operate in Hibernias
markets, particularly those who use other Company services. A shared national credit is
one that is shared by three or more banks and aggregates $20 million or more.

|Table 1   COMPOSITION OF LOAN PORTFOLIO
|---------------------------------------
|                                       

|December 31 ($ in millions)                  | 2003    | 2002   
|-------------------------------------------- | ------- | -------
|                                            
|Balance                                      | Percent | Balance
|                                            
|Commercial                                   |         |        
|Commercial and industrial                    |         |        
|Services industry                            |         |        
|Real estate                                  |         |        
|Health care                                  |         |        
|Transportation, communications and utilities |         |        
|Energy                                       |         |        
|Other                                        |         |        
|                                            
|Total commercial                             |         |        
|                                            
|Small Business                               |         |        
|Commercial and industrial                    |         |        
|Services industry                            |         |        
|Real estate                                  |         |        
|Health care                                  |         |        
|Transportation, communications and utilities |         |        
|Energy                                       |         |        
|Other                                        |         |        
|                                            
|Total small business                         |         |        
|                                            
|Consumer                                     |         |        
|Residential mortgages:                       |         |        
|First mortgages                              |         |        
|Junior liens                                 |         |        
|Indirect                                     |         |        
|Revolving credit:                            |         |        
|Secured                                      |         |        
|Unsecured                                    |         |        
|Other:                                       |         |        
|Secured                                      |         |        
|Unsecured                                    |         |        
|                                            
|Total consumer                               |         |        
|                                            
|Total loans                                  |         |        
|                                            

Hibernias
commercial loan portfolio remains well diversified across industries, as evidenced by the
portfolio percentages presented in Table 1. Hibernias commercial loan portfolio does
not contain significant exposure to foreign countries.

Small Business Loans  Hibernia
generally categorizes companies with annual revenues of less than $10 million as small
businesses. The small business portfolio showed growth primarily in real estate, up $126.0
million (26%); health care, up $26.3 million (16%); and the services industry, up $20.6
million (3%), partially offset by decreases in other small business loans, down $30.7
million (8%) and commercial and industrial, down $11.6 million (2%). While this portfolio
has been impacted by slow demand for loans in recent years, loan demand increased in 2003
in line with improving economic indicators.

Consumer Loans  The increase in the
consumer portfolio was primarily due to increases in residential first mortgages, up
$705.8 million (29%); indirect, up $277.5 million (14%); revolving credit secured, up
$107.0 million (19%); and other unsecured consumer loans, up $30.9 million (21%),
partially offset by decreases in residential junior liens, down $167.3 million (31%) and
other consumer secured loans, down $56.7 million (15%). An indirect loan is a loan
purchased from a retailer who arranged the loan to the consumer. During the fourth quarter
of 2003, Hibernia reclassified $204.9 million of junior liens to first mortgages based on
a review of the collateral securing these loans.

Residential
mortgage loans comprise half of the consumer loan portfolio. The relatively low interest
rate environment resulted in $6.4 billion in mortgage loan fundings for the purchase or
refinancing of homes during 2003, compared to $5.3 billion in 2002. While the Company
experienced a record volume of fundings, the majority of these loans were fixed-rate
mortgages and were sold with servicing retained. The Company did, however, experience an
83% increase in variable-rate mortgages, resulting in an increase in the consumer loan
portfolio. Generally, Hibernia retains adjustable-rate mortgage loans and sells fixed-rate
mortgage loans, while retaining the associated servicing rights. At December 31, 2003,
Hibernia serviced approximately $12.1 billion in residential mortgage loans. In addition
to loans for the purchase of homes, Hibernia offers customers a broad assortment of loans
secured by residential mortgages, including the Hibernia Equity PrimeLineSM, an
attractively priced line of credit secured by the customers residence.

During
2001, Hibernia securitized $305.2 million of its residential first mortgages through the
Federal National Mortgage Association (FNMA). These portions of the consumer portfolio
were securitized and classified as available for sale securities. Under recourse
provisions with FNMA, the Company assumes the risk of borrower default on these loans.
Reserves have been established to cover estimated losses. These transactions affect the
categorization of individual line items on the balance sheet by reducing mortgage loans
and increasing securities.

During
2001, the Company securitized and sold $592.2 million of indirect auto loans from its
consumer portfolio. This transaction further diversified the loan portfolio and reduced
short-term borrowings.

INVESTMENT SECURITIES 
        At
the end of 2003, investment securities totaled $3.9 billion, an increase of $275.0
million, or 8%, from the end of 2002. Of total investment securities at December 31, 2003,
92% are debt securities of the U.S. government or its agencies. Most securities held by
the Company qualify as pledgeable securities and are used to collateralize repurchase
agreements and public fund or trust deposits. A repurchase agreement is a transaction,
primarily overnight, involving the sale of financial assets by one party to another,
subject to an agreement by the seller to repurchase the assets at a specified date or in
specified circumstances. Public fund deposits are monies of various governmental units of
states, counties, municipalities and other public entities deposited in financial
institutions. Deposits of this type as well as certain trust deposits are required by
state law to be collateralized for collected balances in excess of applicable deposit
insurance. The composition of the investment securities portfolio is shown in Table 2.

Securities Available for Sale  Average
securities available for sale, adjusted for trade-date transactions, increased $540.8
million (18%) to $3.6 billion in 2003. This increase was partially due to purchases of
securities required to collateralize certain public fund deposits and repurchase
agreements. Further, as the Company continued to increase borrowings and experience higher
deposit growth compared to loan growth, additional purchases of securities available for
sale helped to increase income on earning assets. The securities purchased generally have
relatively short average lives which exhibit limited extension risk as interest rates
rise. These purchases were partially offset by the sale of $293.7 million of
mortgage-backed and collateral mortgage obligation securities in June 2003 and $25.0
million of Fannie Mae preferred stock in September 2003. Average securities available for
sale, adjusted for trade-date transactions, increased $259.1 million, or 9%, from 2001 to
2002.

At
December 31, 2003, the securities available for sale portfolio included $1.7 billion of
adjustable-rate securities, primarily mortgage-backed securities, which are tied to a
cost-of-funds index. In much the same manner as Hibernias cost of funds adjusts to
new market rates over a period of time, the rates on these securities may not fully
reflect a change in market interest rates for more than a year.

The
average repricing period of securities available for sale at December 31, 2003, was 3.0
years, down from 3.5 years at December 31, 2002. Carrying securities available for sale at
market value has the effect of recognizing a yield on the securities equal to the current
market yield.

|Table 2   COMPOSITION OF INVESTMENT SECURITIES
|----------------------------------------------
|                                              

|December 31 ($ in millions)                      | 2003 | 2002 | 2001
|------------------------------------------------ | ---- | ---- | ----
|                                                
|Available for sale:    U.S. Treasuries           |      |      | $   
|U.S. government agencies:                        |      |     
|Mortgage-backed securities                       |      |      |     
|Bonds                                            |      |      |     
|Stocks                                           |      |      |     
|States and political subdivisions                |      |      |     
|Other                                            |      |      |     
|                                                
|Total available for sale                         |      |      |     
|                                                
|Held to maturity:      U.S. government agencies:
|Mortgage-backed securities                       |      |      |     
|                                                
|Total held to maturity                           |      |      |     
|                                                
|Total investment securities                      |      |      | $   
|                                                

|
|

|
|

|Table 3  MATURITIES AND YIELDS OF INVESTMENT SECURITIES(1)
|----------------------------------------------------------
|                                                          

|December 31, 2003 ($ in millions) | Due in 1 year
or less | Due after 1
year through
5 years | Due after 5
years through
10 years | Due after
10 years | Total 
|--------------------------------- | --------------------- | -------------------------------- | ---------------------------------- | ------------------ | ------
|                                 
|                                  | Amount                | Yield                            | Amount                             | Yield              | Amount
|                                 
|Available for sale:               |                       |                                  |                                    |                    |       
|U.S. Treasuries                   |                       |                                  | $                                  | 31                 | .2    
|U.S. government agencies:         |                       |                                 
|Mortgage-backed securities        |                       |                                  |                                    | 0                  | .2    
|Bonds                             |                       |                                  |                                    | 14                 | .7    
|Stocks                            |                       |                                  |                                    | 67                 | .8    
|States and political subdivisions |                       |                                  |                                    | 8                  | .9    
|Other                             |                       |                                  |                                    | 104                | .5    
|                                 
|Total available for sale          |                       |                                  | $                                  | 227                | .3    
|                                 
|Held to maturity:                 |                       |                                 
|U.S. government agencies:         |                       |                                 
|Mortgage-backed securities        |                       |                                  | $                                  |                    | --    
|                                 
|Total held to maturity            |                       |                                  | $                                  |                    | --    
|                                 

|(1)Yield
computations are presented on a taxable-equivalent basis using market values for
securities available for sale, amortized cost for securities held to maturity and a
statutory income tax rate of 35%.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Securities Held to Maturity  Hibernias held to maturity securities are comprised of U.S. government agency
mortgage-backed securities. Average securities held to maturity totaled $96.8 million in
2003, down from $201.3 million in 2002. This decrease is due to both contractually due
payments and prepayments on mortgage-backed securities.

At
December 31, 2003, the securities held to maturity portfolio included $45.7 million of
adjustable-rate mortgage-backed securities which are tied to a cost-of-funds index. The
average repricing period of securities held to maturity at December 31, 2003, was 1.9
years, down from 2.0 years at December 31, 2002.

Maturities
and yields of investment securities at year-end 2003 are detailed in Table 3.
Mortgage-backed securities are classified according to contractual maturity without
consideration of principal amortization, projected prepayments or call options.

SHORT-TERM INVESTMENTS 
        Short-term
investments consist of federal funds sold, securities purchased under agreements to resell
(reverse repurchase agreements) and an interest-only strip receivable resulting from the
previously mentioned indirect auto loan securitization. The interest-only strip receivable
is classified as a trading account asset; all other short-term investments are considered
to be cash equivalents. Average short-term investments decreased $38.8 million (14%) in
2003 to $230.4 million. This decrease in average short-term investments was due in part to
a $45.4 million decrease in average federal funds sold, partially offset by a $17.4
million increase in average reverse repurchase agreements. The interest-only strip totaled
$3.2 million at December 31, 2003, down $5.2 million from $8.4 million at December 31,
2002. Average short-term investments increased $36.6 million (16%) in 2002 compared to
2001. This increase in short-term investments resulted from an increase in federal funds
sold, partially offset by a decreased level of reverse repurchase agreements.

At
December 31, 2003 and 2002, the Company held minimal amounts of trading account assets
resulting from activity in its investment banking subsidiary. Trading gains and losses on
these securities are included in other noninterest income. There were no material trading
gains or losses for 2003, 2002 or 2001.

MORTGAGE LOANS HELD FOR
SALE         Mortgage
loans held for sale are loans that have been originated and are pending securitization or
sale in the secondary market. Average mortgage loans held for sale were $421.9 million in
2003, a $24.4 million (6%) increase from $397.5 million in 2002. Average mortgage loans
held for sale in 2002 increased $86.3 million (28%) from $311.2 million in 2001. As a
result of continued low interest rates in 2003, the Company experienced an increase in the
volume of fixed-rate mortgage loans originated as compared to the same periods in 2002 and
2001. Generally, Hibernia retains adjustable-rate mortgage loans and sells most fixed-rate
mortgage loans.

Since
mortgage warehouse loans are generally held in inventory for a short period of time (30 to
60 days), there may be significant differences between average and period-end balances. At
year-end 2003, mortgage loans held for sale totaled $195.2 million compared to $526.3
million and $566.9 million in 2002 and 2001, respectively.

The
mortgage pipeline at December 31, 2003 was $450.4 million, down from $862.9 million at
September 30, 2003, as refinancing activity declined. That trend is expected to continue
in 2004. Also, in a change of strategy, the Company is exiting correspondent mortgage
lending, a move that will allow Hibernia to focus its efforts and resources on retail
mortgage banking as expansion into high growth Texas markets continues. As a result, the
level of mortgage loans held for sale is expected to decline in 2004.

|ASSET QUALITY
|-------------
|             

Several
key measures are used to evaluate and monitor the Companys asset quality. These
measures include the level of loan delinquencies; nonaccrual loans; restructured loans;
charge-offs; and foreclosed assets and excess bank-owned property, in addition to their
related ratios.

A
loans past due or delinquency status is based on contractual terms. Table 4 details
loan delinquencies and delinquencies as a percentage of their related portfolio segment
and in total for each of the past five years. Loans in Table 4 are still in accrual status
and are not included in nonperforming loans. Managed accruing, delinquent loans past due
30 days or more were $57.8 million, or 0.45% of total managed loans at December 31, 2003,
down from $61.1 million, or 0.52% at December 31, 2002, and $71.5 million, or 0.61% at
year-end 2001. These decreases evidence improvement in the quality of the portfolio and
reflect a modest recovery from the slow economic conditions of the last few years. The
decrease in delinquent loans in 2003 reflected a decline in delinquencies in the small
business loan portfolio offset by modest increases in the commercial and consumer
portfolios. Small business delinquencies decreased to 0.19% at year-end 2003, down from
0.41% at year-end 2002 and 2001. Commercial delinquencies increased to 0.07% at year-end
2003, up from 0.05% at year-end 2002, but down from 0.25% at year-end 2001. Delinquent
consumer loans increased from a year ago, but declined as a percentage of the portfolio
due to growth in the consumer loan portfolio. The consumer delinquencies ratio was 0.68%
at year-end 2003, down from 0.75% a year ago and 0.84% at year-end 2001. The indirect
automobile delinquency ratio was up slightly from the prior year but down from year-end
2001. Residential mortgage delinquency ratios decreased from both 2002 and 2001. The
secured nature of these loans results in low levels of charge-offs in this portfolio.
Other consumer delinquencies, which includes real estate secured revolving lines of
credit, were down from both year-end 2002 and 2001, led by declines in the other secured
loan portfolio. The managed consumer loan delinquency ratio decreased to 0.71% at year-end
2003, down from 0.78% at year-end 2002 and 0.87% at the end of 2001.

|Table 4 LOAN DELINQUENCIES
|--------------------------
|                          

|December 31 ($ in millions)                   | 2003 | 2002 | 2001 | 2000 | 1999
|--------------------------------------------- | ---- | ---- | ---- | ---- | ----
|                                             
|Days past due and still accruing:             |      |      |      |      |     
|30 to 89 days                                 |      |      | $    |      | 47.4
|90 days or more                               |      |      |      |      | 7.7 
|                                             
|Total delinquencies                           |      |      |      |      | 55.1
|Securitized indirect auto delinquencies       |      |      |      |      | 2.7 
|                                             
|Total managed delinquencies                   |      |      | $    |      | 57.8
|                                             
|Total delinquencies as a percentage of loans: |      |     
|Commercial                                    |      |      |      | 0    | .07%
|Small business                                |      |      |      | 0    | .19%
|Consumer:                                     |      |     
|Residential mortgage                          |      |      |      | 0    | .47%
|Indirect                                      |      |      |      | 0    | .99%
|Other Consumer                                |      |      |      | 0    | .74%
|Total Consumer                                |      |      |      | 0    | .68%
|Total held loans                              |      |      |      | 0    | .43%
|Managed consumer                              |      |      |      | 0    | .71%
|Total managed loans                           |      |      |      | 0    | .45%
|                                             

|
|

|
|

|Table 5 NONPERFORMING ASSETS
|----------------------------
|                            

|($ in thousands)                  | 2003 | 2002 | 2001 | 2000        | 1999
|--------------------------------- | ---- | ---- | ---- | ----------- | ----
|                                 
|Nonaccrual loans:                 |      |      |      |             |     
|Commercial                        |      |      |      | $    20,113 |     
|Small business                    |      |      |      | 22,994      |     
|Consumer                          |      |     
|Residential mortgage              |      |      |      | 11,407      |     
|Other consumer                    |      |      |      | 1,062       |     
|                                 
|Total nonperforming loans         |      |      |      | 55,576      |     
|                                 
|Foreclosed assets                 |      |      |      | 11,512      |     
|Excess bank-owned property        |      |      |      | 678         |     
|                                 
|Total nonperforming assets        |      |      |      | $    67,766 |     
|                                 
|Reserve for loan losses           |      |      |      | $  213,275  |     
|Nonperforming loan ratio:         |      |     
|Commercial loans                  |      |      |      | 0.62        | %   
|Small business loans              |      |      |      | 0.87        | %   
|Consumer loans                    |      |     
|Residential mortgage              |      |      |      | 0.32        | %   
|Other consumer                    |      |      |      | 0.03        | %   
|Total consumer                    |      |      |      | 0.18        | %   
|Total loans                       |      |      |      | 0.43        | %   
|Nonperforming asset ratio         |      |      |      | 0.53        | %   
|Reserve for loan losses as a      |      |     
|percentage of nonperforming loans |      |      |      | 383.75      | %   
|                                 

Nonperforming
loans consist of nonaccrual loans (loans on which interest income is not currently
recognized) and restructured loans (loans with below-market interest rates or other
concessions due to the deteriorated financial condition of the borrower). Commercial and
small business loans are placed in nonaccrual status at 90 days past due or sooner if, in
managements opinion, there is doubt concerning full collectibility of both principal
and interest. Real estate secured consumer loans are placed in nonaccrual status at 180
days past due. All other consumer loans are subject to mandatory charge-off when any
payment of principal or interest is more than 120 days delinquent and are therefore not
placed in nonaccrual status prior to charge-off. Nonperforming loans totaled $55.6 million
at December 31, 2003, up from $54.9 million a year ago and down from $70.9 million in
2001. Total additions to nonperforming loans in 2003 were $78.2 million, up from $56.2
million in the prior year but down from $114.5 million in 2001. The modest increase in
nonperforming loans was driven by increases in commercial and consumer nonperforming loans
offset in part by a decline in small business nonperforming loans. Commercial
nonperforming loans comprised 36% of total nonperforming loans at December 31, 2003, up
from 29% a year ago but down from 40% in 2001. The majority of nonperforming consumer
loans are residential mortgage loans on which no significant losses are expected. The
composition of nonperforming loans, foreclosed assets (assets to which title has been
assumed in satisfaction of debt) and excess bank-owned property, as well as certain key
asset quality ratios for the past five years, are presented in Table 5.

Interest
payments received on nonperforming loans are applied to reduce principal if there is doubt
as to the collectibility of the principal; otherwise, these receipts are recorded as
interest income. Certain nonperforming loans are current as to principal and interest
payments but are classified as nonperforming because there is doubt concerning full
collectibility.

Loans
are considered to be impaired when it is probable that all amounts due in accordance with
the contractual terms will not be collected. Specific reserves are established for
impaired loans based on a review of the collectibility of the principal after considering
any prior charge-offs. Loans that are considered to be impaired under SFAS No. 114 totaled
$43.1 million at December 31, 2003 and $44.6 million at December 31, 2002. These amounts
include $27.0 million and $32.3 million, respectively, of impaired loans for which the
related reserve for loan losses was $3.4 million and $6.8 million at December 31, 2003 and
2002, respectively. The remaining impaired loans did not require specific reserves.
Impaired loans are included in nonaccrual loans in Table 5.

|Table 6 SUMMARY OF NONPERFORMING LOAN ACTIVITY
|----------------------------------------------
|                                              

|($ in thousands)                         | Commercial         
Real Estate | Other         
Commercial | Small         
Business | Consumer         
Residential         
Mortgages | Other         
Consumer | Total
|---------------------------------------- | ------------------------------- | ------------------------- | ----------------------- | ------------------------------------------------ | ----------------------- | -----
|                                        
|Nonperforming loans at December 31, 2002 |                                 |                           |                         | $   1,644                                        |                         |      
|Additions                                |                                 |                           |                         | --                                               |                         |      
|Charge-offs, gross                       |                                 |                           |                         | --                                               |                         |      
|Transfers to foreclosed assets           |                                 |                           |                         | --                                               |                         |      
|Returns to performing status             |                                 |                           |                         | --                                               |                         |      
|Payments                                 |                                 |                           |                         | --                                               |                         |      
|Sales                                    |                                 |                           |                         | (1,644                                           | )                       |      
|                                        
|Nonperforming loans at December 31, 2003 |                                 |                           |                         | $         --                                     |                         |      
|                                        

The
amount of interest income actually recognized on nonperforming loans during 2003, 2002 and
2001 was approximately $1.0 million, $0.9 million and $0.6 million, respectively,
substantially all of which related to impaired loans. The amount of interest income that
would have been recorded during 2003, 2002 and 2001 if these loans had been current in
accordance with their original terms was approximately $4.9 million, $5.3 million and $8.8
million, respectively. Interest payments received on impaired loans are applied to
principal if there is doubt as to the collectibility of the principal; otherwise, these
receipts are recorded as interest income.

In
addition to the nonperforming loans discussed earlier, there were $20.5 million of loans
at December 31, 2003, which in managements opinion, were subject to potential future
classification as nonperforming, compared to $44.2 million at December 31, 2002.

Table
6 presents a summary of changes in nonperforming loans for 2003 by loan type (commercial
real estate, other commercial, small business, consumer residential mortgages and other
consumer). Loans totaling $78.2 million were added during 2003, up from $56.2 million in
2002. Commercial loans were the largest component of the additions to nonperforming loans
in 2003. Additions of $36.2 million from this portfolio were up from $13.1 million in 2002
but down from $64.0 million in 2001. The majority of the additions in the prior year
related to the small business loan portfolio. Total additions to nonperforming loans in
2003 were offset by charge-offs of $18.5 million and sales of $15.2 million as management
decided to exit certain credits. Payments of $33.1 million also reduced nonperforming
loans in 2003. Recoveries experienced on previously charged-off loans are reflected in the
reserve for loan losses in Table 7 and are not a component of nonperforming loan activity.

Foreclosed
assets and excess bank-owned property, which are recorded at fair value less estimated
selling costs, totaled $12.2 million at December 31, 2003, up from $6.8 million at
December 31, 2002, and $7.3 million at December 31, 2001. The increase in the current year
was driven by the reclassification of a $4.6 million energy asset to foreclosed assets in
the third quarter of 2003, further discussed in the Noninterest Expense
section of this analysis.

Nonperforming
assets as a percentage of total loans plus foreclosed assets and excess bank-owned
property (nonperforming asset ratio) is one measure of asset quality. At December 31,
2003, the Companys nonperforming asset ratio was 0.53%, compared to 0.54% at
year-end 2002 and 0.69% at year-end 2001.

Another
measure of asset quality is the amount of net charge-offs during the year compared to
average loans. As shown in Table 7, net charge-offs totaled $59.5 million in 2003,
compared to $63.6 million in 2002 and $72.4 million in 2001. Net charge-offs as a
percentage of average loans were 0.50% in 2003, compared to 0.56% in 2002 and 0.62% in
2001. The decrease was principally due to the small business loan portfolio which had a
net charge-off ratio of 0.64% in 2003, down from 0.91% in 2002 and 0.70% in 2001. The
commercial net charge-off ratio decreased to 0.19% in 2003 from 0.22% in 2002 and was down
significantly from 0.76% in 2001. The commercial charge-offs in each of the last three
years primarily related to shared national credits. As previously discussed, exposure to
these types of credits has been significantly reduced over the past several years. Net
charge-offs in both the small business and commercial loan portfolios included losses
relating to the factoring portfolio, a business which the Company has exited. Losses
relating to the factoring portfolio negatively affected the small business net charge-off
ratio by eight basis points in 2003 and 15 basis points in 2002 and the commercial net
charge-off ratio by six basis points in 2003. The consumer loan net charge-off ratio was
0.59% in 2003, virtually unchanged from 0.58% in 2002 and up modestly from 0.52% in 2001.
The decrease in other consumer net charge-offs was driven by lower losses across most loan
types.

|Table 7 RESERVE FOR LOAN LOSSES ACTIVITY
|----------------------------------------
|                                        

|Year Ended December 31 ($ in thousands)           | 2003 | 2002 | 2001
|------------------------------------------------- | ---- | ---- | ----
|                                                 
|Balance at beginning of year                      |      |      |     
|Loans charged off:                                |      |     
|Commercial                                        |      |      |     
|Small business                                    |      |      |     
|Consumer:                                         |      |     
|Residential mortgage                              |      |      |     
|Indirect                                          |      |      |     
|Other consumer                                    |      |      |     
|Recoveries:                                       |      |     
|Commercial                                        |      |      |     
|Small business                                    |      |      |     
|Consumer:                                         |      |     
|Residential mortgage                              |      |      |     
|Indirect                                          |      |      |     
|Other consumer                                    |      |      |     
|                                                 
|Net loans charged off                             |      |      |     
|Provision for loan losses                         |      |      |     
|Transfer due to securitizations                   |      |      |     
|                                                 
|Balance at end of year                            |      |      |     
|                                                 
|Reserve for loan losses as a percentage of loans  |      |      |     
|Net charge-offs as a percentage of average loans: |      |     
|Commercial                                        |      |      |     
|Small business                                    |      |      |     
|Consumer:                                         |      |     
|Residential mortgage                              |      |      |     
|Indirect                                          |      |      |     
|Other consumer                                    |      |      |     
|Total consumer                                    |      |      |     
|Total loans                                       |      |      |     
|                                                 

|
|

|
|

|RESERVE AND PROVISION FOR
LOAN LOSSES
|-------------------------------------
|                                     

The
provision for loan losses is a charge to earnings to maintain the reserve for loan losses
at a level consistent with managements assessment of the loan portfolio in light of
current economic conditions and market trends. The Company recorded a $60.1 million
provision for loan losses in 2003, compared to $80.6 million in 2002 and $97.3 million in
2001. Table 7 presents an analysis of the activity in the reserve for loan losses for the
past three years.

The
reserve for loan losses is comprised of specific reserves (assessed for each loan that is
reviewed for impairment or for which a probable loss has been identified), general
reserves and an unallocated reserve.

The
Company continuously evaluates its reserve for loan losses to maintain an adequate level
to absorb loan losses inherent in the loan portfolio. Reserves on impaired loans are based
on discounted cash flows using the loans initial effective interest rate, the
observable market value of the loan or the fair value of the collateral for certain
collateral-dependent loans. Factors contributing to the determination of specific reserves
include the financial condition of the borrower, changes in the value of pledged
collateral and general economic conditions. General reserves are established based on
historical charge-offs, considering factors which include risk rating, industry
concentration and loan type, with the most recent charge-off experience weighted more
heavily. The unallocated reserve, which is judgmentally determined, generally serves to
compensate for the uncertainty in estimating loan losses, particularly in times of
changing economic conditions, and considers the possibility of improper risk ratings and
possible over- or under-allocations of specific reserves. As a part of the evaluation of
the unallocated reserve, management also considers the lagging impact of historical
charge-off ratios in periods where future charge-offs are expected to increase or decrease
significantly. In addition, management considers trends in delinquencies and nonaccrual
loans, industry concentration, the volatility of risk ratings and the evolving portfolio
mix in terms of collateral, relative loan size, the degree of seasoning in the various
loan products and loans recently acquired through mergers. Changes in underwriting
standards, credit administration and collection, regulation and other factors which impact
the credit quality and collectibility of the loan portfolio also impact the unallocated
reserve levels. The results of reviews performed by internal and external examiners are
also considered.

The
methodology used in the periodic review of reserve adequacy, which is performed at least
quarterly, is designed to be dynamic and responsive to changes in actual and expected
credit losses. These changes are reflected in both the general and unallocated reserves.
The historical loss ratios, which are key factors in this analysis, are updated quarterly
and are weighted more heavily for recent charge-off experience. The review of reserve
adequacy is performed by executive management and presented to the Board of Directors for
its review, consideration and ratification.

The
composition of the loan portfolio reflected the previously discussed changes, which
included growth in the commercial, small business and consumer portfolios. The growth in
the consumer portfolio included increases in the residential mortgage and indirect
portfolios. The residential mortgage portfolio was impacted by the rebound in mortgage
rates in the second half of 2003 which resulted in a renewed interest in adjustable-rate
mortgage loans. The majority of fixed-rate consumer mortgages are sold in the secondary
market with servicing retained, while adjustable-rate mortgages are retained in the
Companys portfolio.

The
Company continued to proactively manage its exposure to credit risk in 2003, and enhanced
its underwriting and portfolio monitoring processes. Reserve levels were relatively
unchanged in 2003, but declined as a percentage of the total portfolio in view of current
improving economic conditions, growth in the portfolio, the risk profile of the portfolio
and based upon consistent application of the Companys reserve methodology.

The
reserve coverage of net charge-offs was 358% at December 31, 2003, up from 334% in 2002
and 270% in 2001. The reserve for loan losses is established to provide for losses which
are inherent in the portfolio. Therefore, a comparison of historical charge-offs to the
reserve, which is a backward-looking measure, is not necessarily an appropriate measure of
reserve adequacy, especially in periods where net charge-off ratios are expected to
significantly increase or decrease and where there is a lag between the timing of
charge-offs and recoveries. This is particularly true with respect to the last three
years, since a significant portion of charge-offs in these years related to the complete
disposition through sale of several large commercial credits.

The
year-end 2003 reserve of $213.3 million provided 384% coverage of nonperforming loans
compared to $212.8 million with 388% coverage at year-end 2002 and $195.8 million with
276% coverage at year-end 2001. As a percentage of total loans, the reserve for loan
losses was 1.66% at December 31, 2003, compared to 1.85% and 1.74% at December 31, 2002
and 2001, respectively.

The
allocation of the reserve for loan losses at December 31, 2003 is presented in Table 8.

|Table 8 ALLOCATION OF RESERVE FOR LOAN LOSSES
|---------------------------------------------
|                                             

|December 31, 2003
($ in millions) | Reserve for        
Loan Losses | % of Total
Reserve
|--------------------------------- | ------------------------------- | ------------------
|                                 
|Commercial real estate loans      |                                 |                   
|Other commercial loans            |                                 |                   
|Small business loans              |                                 |                   
|Residential mortgage loans        |                                 |                   
|Indirect loans                    |                                 |                   
|Other consumer loans              |                                 |                   
|Unallocated reserve               |                                 |                   
|                                 
|Total                             |                                 |                   
|                                 

The basic
assumptions and methodologies used in allocating the reserve for loan losses were
relatively unchanged in 2003, however, refinements to the existing methodology continue to
be made as evolving risk trends are identified. As a result, the allocation to the
high-risk tier asset-based-lending portfolio was discontinued in the third quarter of 2003
as the Company had essentially exited this line of business. Allocations to the commercial
portfolio decreased to $26.5 million at December 31, 2003, from $40.2 million a year ago
as a result of the decrease in several portfolio segments which had been experiencing
higher levels of losses over the past several years. The allocation to the small business
portfolio increased from $47.9 million at December 31, 2002, to $49.5 million at December
31, 2003, reflecting higher charge-off experience in recent years. The allocation to the
consumer portfolio increased from $70.2 million at December 31, 2002, to $84.7 million at
December 31, 2003, primarily related to the growth in the indirect auto loan portfolio and
increased charge-offs. The unallocated reserve was virtually unchanged at 25% of the total
reserve in 2003 compared to 26% in 2002. These allocations reflect the loan loss
methodology which weighs recent history more heavily. As a result, the allocated portion
of the reserve increases in periods when charge-offs are relatively high. Management
considers both the allocated and unallocated reserve levels when assessing reserve
adequacy.

Management
believes the present level of the reserve for loan losses is adequate to absorb probable
loan losses inherent in the portfolio considering the level and mix of the loan portfolio,
the level of delinquent and nonperforming loans, the Companys risk management
strategies and current expectations with respect to economic conditions and market trends.
Current forecasts for the overall U.S. economy predict a continued strengthening of
economic conditions, and as a result, the reserve as a percentage of the loan portfolio is
expected to decline. The Company will continue to evaluate economic trends and their
impact on credit quality and provide for losses accordingly.

|Funding Sources
|---------------
|               

DEPOSITS

Deposits
are the Companys primary source of funding for earning assets. Hibernia offers a
variety of products designed to attract and retain customers, with the primary focus on
core deposits. Summaries of average deposit rates and deposit composition are presented in
Tables 9 and 10, respectively.

Average
deposits totaled $13.6 billion in 2003, a $742.2 million (6%) increase from 2002. Average
deposits totaled $12.9 billion in 2002, a $258.4 million (2%) increase from 2001.

Average
core deposits in 2003 totaled $11.3 billion or 83.0% of total average deposits, up $748.8
million (7%) compared to 2002. Average money market deposit accounts increased $611.8
million (24%), average noninterest-bearing deposits increased $401.9 million (16%) and
average NOW accounts grew $47.5 million (14%), offset by decreases in other consumer time
deposits of $222.4 million (9%) and savings of $90.0 million (3%). Contributing to the
increase in average noninterest-bearing deposits was a $168.2 million increase in
mortgage-related demand deposits as a result of the high level of refinancing activity.
Increases in average noninterest-bearing and NOW account balances also resulted from the
marketing of Hibernias Completely Free CheckingSM program, discussed below.

In
March 2002, Hibernia launched a high performance checking campaign, a simplified
consumer-checking program that includes Hibernias Completely Free CheckingSM
product. This program offers gifts to customers who open new personal checking accounts or
refer prospects who then open new personal checking accounts. Following the successful
introduction of the free checking program for consumers, Hibernia launched Completely Free
Small Business CheckingSM in August of 2002. The Completely Free Small Business CheckingSM
program, much like the consumer version, eliminates monthly cycle service charges, offers
free gifts for new accounts and buys back unused checks and banking cards. The goal of
both programs is to grow lower-cost deposits and increase revenues through cross-selling
opportunities. These programs include extensive advertising and marketing that continue
today. These programs continue to substantially increase the number of new account
openings, with new consumer checking account openings for 2003 up 4% and new small
business checking account openings for 2003 up 25% when compared to the same periods last
year. The high performance checking products are anticipated to continue to grow core
deposits in 2004 and beyond. In addition, in September 2003, the Company introduced free
online bill pay, which is anticipated to further contribute to deposit account growth and
increase deposit retention.

|Table 9 AVERAGE DEPOSIT RATES
|-----------------------------
|                             

|                                                        | 2003 | 2002 | 2001
|------------------------------------------------------- | ---- | ---- | ----
|                                                       
|NOW accounts                                            |      |      |     
|Money market deposit accounts                           |      |      |     
|Savings accounts                                        |      |      |     
|Other consumer time deposits                            |      |      |     
|Public fund certificates of deposit of $100,000 or more |      |      |     
|Certificates of deposit of $100,000 or more             |      |      |     
|Foreign time deposits                                   |      |      |     
|                                                       
|Total interest-bearing deposits                         |      |      |     
|                                                       

NOW
account average balances for 2003 increased $47.5 million (14%) compared to 2002 and money
market average deposits were up $611.8 million (24%) in 2003 compared to 2002. NOW account
average balances for 2002 were down $9.7 million (3%) compared to 2001, and money market
average deposits were up $280.3 million (12%) in 2002 compared to 2001. These balances are
affected by the Reserve Money Manager account, in which each NOW account is joined with a
money market deposit account. As needed, funds are moved from the money market deposit
account to cover items presented for payment to the customers NOW account up to a
maximum of six transfers per statement cycle. The effect of the Reserve Money Manager
account on average balances was $2,638.5 million in 2003, $2,105.8 million in 2002 and
$1,779.3 million in 2001 (reducing NOW account average balances and increasing money
market deposit account average balances). Net of this effect, NOW account average balances
were up $580.2 million (24%) in 2003 compared to 2002 and $316.8 million (15%) in 2002
compared to 2001, and money market deposit account average balances were up $79.0 million
(18%) in 2003 compared to 2002 and down $46.2 million (9%) in 2002 compared to 2001.

Average
core deposits in 2002 totaled $10.5 billion or 81.9% of total average deposits, up $391.1
million (4%) compared to 2001. Average NOW accounts, net of the effect of the reserve
money manager account, increased $316.8 million (15%), average noninterest-bearing
deposits increased $268.1 million (12%) and average savings accounts grew $107.8 million
(4%), offset by a decrease in other consumer time deposits of $255.4 million (9%).
Contributing to the increase in NOW and noninterest-bearing deposits was the launch of the
consumer high performance checking campaign and an increase of $90.0 million in
mortgage-related demand deposits.

|Table 10 DEPOSIT COMPOSITION
|----------------------------
|                            

|                             
|-----------------------------
|                             
|($ in millions)              
|                             
|Noninterest-bearing          
|NOW accounts                 
|Money market deposit accounts
|Savings accounts             
|Other consumer time deposits 
|                             
|Total core deposits          
|                             
|Public fund certificates of  
|deposit of $100,000 or more  
|Certificates of deposit of   
|$100,000 or more             
|Foreign time deposits        
|                             
|Total deposits               
|                             

Average
noncore deposits decreased $6.6 million from 2002 to $2,319.5 million in 2003. This
decrease was due to competitive pricing in the market on public fund certificates of
deposit. Average public fund certificates of deposit of $100,000 or more decreased $46.5
million (5%). Average other large-denomination certificates of deposit increased $23.0
million (3%), and foreign deposits increased $16.9 million (3%).

Average
noncore deposits decreased $132.7 million (5%) from 2001 to $2,326.1 million in 2002.
Average public fund certificates of deposit of $100,000 or more increased $53.9 million
(6%). Average other large-denomination certificates of deposit decreased $163.5 million
(16%) and foreign deposits decreased $23.1 million (4%). The decrease in large
denomination consumer time deposits was the result of competitive pricing in the market
and the movement of longer-term deposit funds into more liquid deposit products as
interest rates continued to fall in 2002.

Deposits
at December 31, 2003, totaled $14.2 billion, up $678.5 million (5%) from December 31,
2002.

|BORROWINGS
|----------
|          

Average
borrowings  which include federal funds purchased; securities sold under agreements
to repurchase (repurchase agreements); treasury, tax and loan accounts; and Federal Home
Loan Bank (FHLB) advances  increased $268.2 million (16%) from 2002 to $1.9 billion
in 2003.

Average
federal funds purchased and treasury, tax and loan borrowings were $171.9 million during
2003, an increase of $96.6 million (128%) from 2002. Fluctuations in federal funds
purchased stem from differences in the timing of growth in the loan portfolio and growth
of other funding sources (deposits, proceeds from maturing and sold securities, and FHLB
advances). Average repurchase agreements decreased $12.6 million (2%) in 2003 from 2002.
This decline is the result of decreased customer demand for repurchase agreements due to
the lower rate environment. For additional information on short-term borrowings, see Note
10 of the Notes to Consolidated Financial Statements.

The
Companys FHLB advances totaled $1.1 billion at December 31, 2003, and are comprised
of various advances from the Federal Home Loan Bank of Dallas. The average rate on FHLB
advances during 2003 was 6.12%, compared to 5.12% during 2002. During 2003, FHLB advances
totaling $100 million and $200 million were funded in January and June, respectively.
These advances were offset by the prepayment of a $300 million advance late in September
2003, which negatively impacted the average rate on FHLB advances in 2003 by 169 basis
points.

The
FHLB may demand payment of $400 million in callable advances at quarterly intervals. If
called prior to maturity, replacement funding will be offered by the FHLB at a
then-current rate.

Of
the $1.1 billion in FHLB advances outstanding at December 31, 2003, $700 million accrues
interest at variable rates. In 2001 and 2002, Hibernia instituted hedges against the
effect of rising interest rates on a portion of its variable rate debt by entering into
interest rate swap agreements. These interest rate swap agreements enable Hibernia to
receive quarterly variable rate (LIBOR) payments and pay fixed rates. The maturities of
these interest rate swap agreements match the maturities of the underlying debt. The
Company had interest rate swap agreements outstanding with notional amounts of $400
million and $700 million at December 31, 2003 and 2002, respectively. The estimated
negative fair value of these interest rate swap agreements totaled $2.4 million and $36.4
million at December 31, 2003 and 2002, respectively, and are recorded on the balance sheet
as liabilities, with the corresponding offset, net of income taxes, recorded in other
comprehensive income. Net settlements on the swap agreements are accrued monthly and
effectively convert the hedged FHLB advances from variable to fixed rates.

In
September 2003, Hibernia prepaid a five-year $300 million variable-rate FHLB advance which
originated in September 2000, and terminated the related interest rate swap agreement. The
total cost associated with the prepayment of the FHLB advance and the termination of the
related swap was $20.7 million. Although these transactions increased interest expense and
negatively impacted the net interest margin, this action is expected to reduce interest
expense in the future based on managements current assumptions about interest rates.

The
Companys reliance on borrowings continues to be within parameters determined by
management to be prudent in terms of liquidity and interest rate sensitivity.

|INTEREST RATE SENSITIVITY
|-------------------------
|                         

Interest
rate risk represents the potential impact from changes in the level of interest rates on
net income and capital resulting from mismatches in repricing opportunities of assets and
liabilities. A number of tools are used to monitor and manage interest rate risk,
including simulation models and interest rate sensitivity (Gap) analyses. Management uses
simulation models to estimate the effects of changing interest rates and various balance
sheet strategies on the level of the Companys net income and capital. Gap reports
measure the net amounts of assets or liabilities that reprice in the same time period over
the remaining lives of those assets and liabilities. As a means of limiting interest rate
risk to an acceptable level, management may alter the mix of floating- and fixed-rate
assets and liabilities, change pricing schedules, adjust maturities through sales and
purchases of securities available for sale, and enter into derivative contracts.

The
simulation models incorporate managements assumptions regarding the level of
interest rates and balances for indeterminate maturity deposits (demand, NOW, savings and
money market deposits) for a given level of market rate changes. These assumptions have
been developed through a combination of historical analysis and future expected pricing
behavior. Key assumptions in the simulation models include anticipated prepayments on
mortgage-related instruments, loans and investments; contractual cash flows and maturities
of all financial instruments; deposit sensitivity; and changes in market conditions. In
addition, the impact of planned growth and anticipated new business is factored into the
simulation models. These assumptions are inherently uncertain, and as a result, the models
cannot precisely estimate net interest income or precisely predict the impact of a change
in interest rates on net income or capital. Actual results will differ from simulated
results due to the timing, magnitude and frequency of interest rate changes and changes in
market conditions and management strategies, among other factors.

The
objective of Hibernias interest rate risk policy is to limit the change in after-tax
net interest income, from an immediate and sustained change in interest rates of 200 basis
points, compared to a flat rate scenario, to 15% of projected 12-month net income. Based
on the results of the simulation models at December 31, 2003, the Company would expect a
decrease in after-tax net interest income of $1.5 million from a 200-basis-point increase
in interest rates. In the event of a 50-basis-point decrease in interest rates (utilized
in place of a 200-basis-point-drop scenario due to the low interest rate environment), the
Company would expect after-tax net interest income to decrease by $10.6 million. Results
of both scenarios are within the limits of Hibernias policy, although there is no
assurance that actual results would be the same as the model. In addition, the Company
projects an increase in after-tax net interest income of $3.0 million and a decrease of
$13.3 million if interest rates gradually rise or decline, respectively, by 100 basis
points over the next year. The projected decline in net interest income in the
50-basis-point decrease and the gradual decline simulations reflect the limited
flexibility to reduce rates further on interest-bearing deposits in the current low
interest rate environment.

Based
on the results of the simulation models at December 31, 2002, the Company would have
expected an increase in after-tax net interest income of $7.1 million in the event of a
200-basis-point increase in interest rates, and a decrease in after-tax net interest
income of $32.0 million in the event of a 100-basis-point decrease in interest rates
(utilized in place of a 200-basis-point-drop scenario due to the low interest rate
environment). Results of both scenarios were within the limits of Hibernias policy.
In addition, the Company projected an increase in after-tax net interest income of $1.3
million and a decrease of $1.8 million if interest rates gradually increased or decreased,
respectively, by 100 basis points over the next year.

|Table 11 INTEREST RATE SENSITIVITY AND GAP ANALYSIS
|---------------------------------------------------
|                                                   

|December 31, 2003
($ in thousands) | 1-30
Days | 31-60
Days | 61-90
Days | 91-365
Days | 1 Year -
5 Years | Over 5 Years
and Non-
Sensitive | Total     
|---------------------------------- | --------- | ---------- | ---------- | ----------- | ---------------- | ------------------------------- | ----------
|                                  
|Earning assets:                    |           |            |            |             |                  |                                 |           
|Loans                              |           |            | $          | 4,455,920   |                  | $                               | 912,996   
|Securities available for sale(1)   |           |            |            | 3,806,540   |                  |                                 | --        
|Securities held to maturity        |           |            |            | 5,707       |                  |                                 | 4,339     
|Mortgage loans held for sale       |           |            |            | 195,177     |                  |                                 | --        
|Other earning assets               |           |            |            | 262,404     |                  |                                 | --        
|                                  
|Total earning assets               |           |            |            | 8,725,748   |                  |                                 | 917,335   
|                                  
|Funding sources:                   |           |           
|NOW accounts                       |           |            |            | 409,329     |                  |                                 | --        
|Money market deposit accounts      |           |            |            | 3,795,820   |                  |                                 | --        
|Savings accounts                   |           |            |            | 2,509,174   |                  |                                 | --        
|Foreign deposits                   |           |            |            | 703,183     |                  |                                 | --        
|Other interest-bearing deposits    |           |            |            | 1,410,470   |                  |                                 | 298,241   
|Short-term borrowings              |           |            |            | 1,280,802   |                  |                                 | --        
|Federal Home Loan Bank advances    |           |            |            | 400,031     |                  |                                 | 31        
|Noninterest-bearing sources        |           |            |            | --          |                  |                                 | --        
|                                  
|Total funding sources              |           |            |            | 10,508,809  |                  |                                 | 298,272   
|                                  
|Repricing/maturity gap:            |           |           
|Period                             |           |            | $          | (1,783,061  | )                | $                               | 619,063   
|Cumulative                         |           |            | $          | (1,783,061  | )                | $                               | (1,163,998
|                                  
|Gap/total earning assets:          |           |           
|Period                             |           |            |            | (10.4)      | %                |                                 | 3.6       
|Cumulative                         |           |            |            | (10.4)      | %                |                                 | (6.8)     
|                                  

|(1)Excludes trade-date securities transactions.
|-----------------------------------------------

Table
11 presents Hibernias interest rate sensitivity position at December 31, 2003. This
Gap analysis is based on a point in time and may not be meaningful because assets and
liabilities must be categorized according to contractual maturities and repricing periods
rather than estimating more realistic behaviors, as is done in the simulation models.
Also, the Gap analysis does not consider subsequent changes in interest rate levels or
spreads between asset and liability categories.

Although
the Gap analysis indicates the Company is liability-sensitive (repricing of
interest-bearing liabilities exceeds repricing of interest-earning assets) for the 1-30
days category, this may not be true in practice. The 1-30 days deposit category includes
NOW, money market and savings deposits which have indeterminate maturities. The rates paid
on these core deposits, which account for 49% of interest-bearing liabilities, do not
necessarily reprice in a direct relationship to changes in market interest rates. In
addition, Hibernias deposit products include certain certificates of deposit that
give customers an opportunity to adjust rates. As of December 31, 2003, these deposits
totaled $632.6 million, of which approximately $28.4 million had been repriced. Of the
remaining $604.2 million, $581.0 million are included in the 1-30 days deposit category
because they may reprice at any time. However, these deposits adjust to market rates over
a much longer period as depositors choose when to exercise the option to adjust the rate
on their deposits.

In
addition to core deposits, which serve to lessen the volatility of net interest income in
changing rate conditions, the Companys loan portfolio contains mortgage loans that
have actual maturities and cash flows that vary with the level of interest rates.
Depending on market interest rates, actual cash flows from these earning assets will vary
from the contractual maturities due to payoffs and refinancing activity.

The
level of interest rates also affects the prepayment assumptions used in the valuation of
mortgage servicing rights. As an indication of the sensitivity of the fair value of
mortgage servicing rights, at December 31, 2003, an immediate 10% and 25% adverse change
in the prepayment speed assumptions would decrease after-tax net income by $3.8 million
and $8.6 million, respectively. At December 31, 2003, an immediate 10% and 25% adverse
change in the discount rate assumptions would decrease after-tax net income by $2.2
million and $5.4 million, respectively. At December 31, 2002, an immediate 10% and 25%
adverse change in prepayment speed assumptions would decrease after-tax net income by $3.4
million and $8.1 million, respectively; and an immediate 10% and 25% adverse change in
discount rates would decrease after-tax net income by $1.6 million and $3.8 million,
respectively. These sensitivities are hypothetical and should be used with caution. The
effect of a variation in a particular assumption on the fair value of mortgage servicing
rights is calculated without changing any other assumptions; in actuality, changes of one
factor may result in changes in another, which could magnify or counteract the
sensitivities.

On
a limited basis, the Company has entered into interest rate and foreign exchange rate
swaps, forward and option contracts, and forward sales contracts to hedge interest rate or
foreign exchange rate risk on specific assets and liabilities on behalf of itself and for
customers.

The
Company enters into forward sales contracts relating to its mortgage origination activity.
These contracts protect the Company against changes in the fair value of mortgage loans
held for sale (as well as anticipated loan fundings) due to changes in market conditions,
primarily the interest rate environment. The Company designates a portion of these forward
sales contracts relating to mortgage loans held for sale as fair value hedges. Forward
sales contracts designated as fair value hedges had notional values of $141.3 million and
$451.4 million at December 31, 2003 and 2002, respectively, with estimated negative fair
values of $2.5 million and $8.2 million at December 31, 2003 and 2002, respectively. The
related hedged mortgage loans held for sale had principal balances of $141.3 million and
$451.4 million at December 31, 2003 and 2002, respectively, and were increased by positive
changes in fair value of $2.5 million and $8.2 million at December 31, 2003 and 2002,
respectively, resulting in no impact on earnings related to the hedges. The forward sales
contracts relating to interest rate lock commitments are not designated as hedges and are
adjusted to fair value through income. At December 31, 2003, interest rate lock
commitments had notional amounts that totaled $189.1 million with a positive fair value of
$2.0 million, and the related forward sales contracts had notional amounts that totaled
$189.1 million with a negative fair value of $1.8 million. At December 31, 2002, interest
rate lock commitments had notional amounts that totaled $559.3 million with a positive
fair value of $6.8 million, and the related forward sales contracts had notional amounts
that totaled $559.3 million with a negative fair value of $6.1 million.

Derivative
financial instruments are also held or issued by the Company to provide customers the
ability to manage their own interest rate sensitivity. Matched positions are established
to minimize risk to the Company. The notional value of customer-related derivative
financial instruments not designated as hedges totaled $2.1 billion at December 31, 2003,
with positive fair values of $32.3 million and negative fair values of $27.7 million.
Notional amounts at December 31, 2002 totaled $1.9 billion, with positive fair values of
$44.0 million and negative fair values of $40.3 million.

Hibernia
holds foreign exchange rate forward contracts that had notional amounts totaling $7.7
million and $6.5 million at December 31, 2003 and 2002, respectively, which minimize the
Companys exchange rate risk on loans to be repaid in foreign currencies.

The
interest rate swap agreements discussed in Borrowings were entered into by the
Company to hedge against the effect of rising interest rates on portions of its variable
rate FHLB advances. Hibernia receives quarterly variable-rate (LIBOR) payments and pays
fixed rates under the interest rate swap agreements. The notional amount of these interest
rate swap agreements was $400 million at December 31, 2003 and $700 million at December
31, 2002. The estimated negative fair value of derivative financial instruments designated
as cash flow hedges totaled $2.4 million and $36.4 million at December 31, 2003 and 2002,
respectively.

|NET INTEREST MARGIN
|-------------------
|                   

The
net interest margin is taxable-equivalent net interest income as a percentage of average
earning assets. Net interest income is the difference between total interest and fee
income generated by earning assets and total interest expense incurred on interest-bearing
liabilities and is affected by the:

| |      volume, yield and mix of earning assets;
| | ----------------------------------------------

| |      level of nonperforming loans;
| | -----------------------------------

| |      volume, yield and mix of interest-bearing liabilities;
| | ------------------------------------------------------------

| |      volume, amount of
noninterest-bearing funds supporting earning assets; and
| | --------------------------------------------------------------------------------

| |      interest rate environment.
| | --------------------------------

The
net interest margin is comprised of the net interest spread, which measures the difference
between the average yield earned on earning assets and the average rate paid on
interest-bearing liabilities, and the contribution of noninterest-bearing funds supporting
earning assets (primarily demand deposits and shareholders equity). The net interest
margin is impacted not only by the level of noninterest-bearing liabilities supporting
earning assets, but also by the value of these funds in relation to the interest rate
environment. Hibernias noninterest-bearing funds ratio was 22.32% in 2003, compared
to 20.89% in 2002 and 18.64% in 2001. Table 12 details the components of the net interest
margin for the past five years.

The
net interest margin of 4.16% in 2003 compares to 4.68% in 2002 and 4.41% in 2001. The
decrease in the net interest margin in 2003 reflects the continued low interest rate
environment, which resulted in downward repricing of loans, increased prepayments on
mortgage-backed securities along with higher levels of premium amortization, and the
replacement of securities maturing and sold with lower-yielding instruments. In addition,
the rates on interest-bearing deposits have limited downward movement since many have
already reached their floor. The prepayment of the FHLB advance and the related interest
rate swap termination, previously discussed, also negatively impacted the 2003 margin by
13 basis points.

|Table 12 NET INTEREST MARGIN (taxable-equivalent)
|-------------------------------------------------
|                                                 

|                                                    | 2003 | 2002 | 2001 | 2000 | 1999
|--------------------------------------------------- | ---- | ---- | ---- | ---- | ----
|                                                   
|Yield on earning assets                             |      |      |      | 5    | .63%
|Rate on interest-bearing liabilities                |      |      |      | 1    | .89 
|                                                   
|Net interest spread                                 |      |      |      | 3    | .74 
|Contribution of noninterest-bearing funds           |      |      |      | 0    | .42 
|                                                   
|Net interest margin                                 |      |      |      | 4    | .16%
|                                                   
|Noninterest-bearing funds supporting earning assets |      |      |      | 22   | .32%
|                                                   

The
net interest margin of 4.68% in 2002 compares to 4.41% in 2001. The increase in the net
interest margin in 2002 reflected the benefits derived from the lower rate environment,
steeper yield curve, an increase in broad-based low-cost deposit funding and accelerated
downward repricing of liabilities in comparison to assets. The yield on average
interest-earning assets declined 110 basis points while the rate on average
interest-bearing liabilities declined 162 basis points for 2002 compared to 2001.

The
Company expects the 2004 net interest margin to be comparable to the fourth quarter 2003
level of 4.27%, as presented in Table 23 in the "Fourth Quarter Results" section of this analysis.

|Results of Operations
|---------------------
|                     

The
Company earned $258.3 million, or $1.67 per common share, in 2003. In 2002, net income was
$249.9 million, or $1.59 per common share, and 2001 net income was $218.8 million, or
$1.37 per common share. Net income per common share  assuming dilution was $1.64 in
2003, compared to $1.56 and $1.35 for 2002 and 2001, respectively.

Effective
January 1, 2002, with the adoption of SFAS No. 142, Goodwill and Other Intangible
Assets, the Company applied accounting rules that eliminated amortization of
goodwill. Net income adjusted to exclude goodwill amortization, net of taxes, for 2001 was
$230.3 million. On that same basis, net income per common share and net income per common
share  assuming dilution for 2001 was $1.45 and $1.42, respectively.

Operating
results increased in 2003 due to a $49.1 million increase in noninterest income (which
includes a $6.5 million decrease in net securities losses) and a $20.6 million decrease in
the provision for loan losses compared to 2002. These positive effects on operations were
partially offset by a $34.9 million decrease in taxable-equivalent net interest income and
a $22.7 million increase in noninterest expense.

|Table 13 INTEREST-EARNING ASSET COMPOSITION
|-------------------------------------------
|                                           

|(Percentage of average balances) | 2003 | 2002 | 2001 | 2000 | 1999
|-------------------------------- | ---- | ---- | ---- | ---- | ----
|                                
|Commercial loans                 |      |      |      | 17   | .9% 
|Small business loans             |      |      |      | 15   | .6  
|Consumer loans                   |      |      |      | 39   | .7  
|                                
|Total loans                      |      |      |      | 73   | .2  
|                                
|Securities available for sale    |      |      |      | 22   | .2  
|Securities held to maturity      |      |      |      | 0    | .6  
|                                
|Total securities                 |      |      |      | 22   | .8  
|                                
|Short-term investments           |      |      |      | 1    | .4  
|Mortgage loans held for sale     |      |      |      | 2    | .6  
|                                
|Total interest-earning assets    |      |      |      | 100  | .0% 
|                                

|
|

|
|

|Table 14 CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME(1)
|-------------------------------------------------------------
|                                                             

|                                       | 2003 Compared to 2002                 | 2002 Compared to 2001
|-------------------------------------- | ------------------------------------- | ---------------------
|                                      
|                                       | Increase (Decrease) Due to Change In:
|                                      
|($ in thousands)                       | Volume                                | Rate                 
|                                      
|Taxable-equivalent interest earned on: |                                       |                      
|Commercial loans                       |                                       |                      
|Small business loans                   |                                       |                      
|Consumer loans                         |                                       |                      
|                                      
|Loans                                  |                                       |                      
|                                      
|Securities available for sale          |                                       |                      
|Securities held to maturity            |                                       |                      
|                                      
|Securities                             |                                       |                      
|                                      
|Short-term investments                 |                                       |                      
|Mortgage loans held for sale           |                                       |                      
|                                      
|Total                                  |                                       |                      
|                                      
|Interest paid on:                      |                                       |                      
|NOW accounts                           |                                       |                      
|Money market deposit accounts          |                                       |                      
|Savings accounts                       |                                       |                      
|Other consumer time deposits           |                                       |                      
|Public fund certificates of            |                                       |                      
|deposit of $100,000 or more            |                                       |                      
|Certificates of deposit                |                                       |                      
|of $100,000 or more                    |                                       |                      
|Foreign time deposits                  |                                       |                      
|Federal funds purchased                |                                       |                      
|Repurchase agreements                  |                                       |                      
|Federal Home Loan Bank advances        |                                       |                      
|                                      
|Total                                  |                                       |                      
|                                      
|Taxable-equivalent net interest income |                                       |                      
|                                      

|(1)Change due to mix (both volume and rate) has been allocated to volume and rate changes in
proportion to the relationship of the absolute dollar amounts to the changes in
each.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
increase in 2002 from 2001 was due to increases in taxable-equivalent net interest income
of $38.2 million, a $16.6 million decrease in the provision for loan losses and a $6.9
million increase in noninterest income (which includes a $4.4 million increase in net
securities losses). Partially offsetting these positive effects was a $17.5 million
increase in noninterest expense.

|NET INTEREST INCOME
|-------------------
|                   

Taxable-equivalent
net interest income, based on the statutory tax rate of 35%, decreased $34.9 million, or
5%, to $677.6 million in 2003 from $712.4 million in 2002. Taxable-equivalent net interest
income in 2001 was $674.2 million. Included in interest expense for 2003 is $20.7 million
in charges related to the prepayment of a $300 million FHLB advance and termination of the
related interest rate swap, discussed further in the Borrowings section of
this analysis. Taxable-equivalent net interest income decreased in 2003 compared to 2002
as a result of yields on interest-earning assets decreasing more than funding costs on
interest-bearing liabilities. The average yield on earning assets declined 91 basis points
while the average rate paid on interest-bearing liabilities decreased 46 basis points. The
decrease in the Companys earning asset yield was the result of the continued
downward repricing of loan yields; increased prepayments on mortgage-backed securities
along with higher levels of premium amortization; and the decreasing yield on the
investment portfolio, as higher-rate securities paid down, matured or were sold and
replaced by lower-yielding securities in the current low interest rate environment. The
FHLB transactions, mentioned previously, increased the average rate on interest-bearing
liabilities 16 basis points for the year. In addition, the rates paid on certain
interest-bearing deposit products have limited ability to be repriced downward since many
have already reached rate floors. The increase in taxable-equivalent net interest income
in 2002 as compared to 2001 was due to the change in the mix of funding sources and the
impact from declining interest rates resulting in funding costs decreasing faster than
earning asset yields.

As
indicated in Table 14, the change in volume increased taxable-equivalent net interest
income in 2003 by $57.9 million from 2002. A $66.3 million increase in taxable-equivalent
interest income due to growth in earning assets was partially offset by an $8.5 million
increase in interest expense from an increase in the volume of interest-bearing
liabilities. As interest rates declined in 2003, taxable-equivalent net interest income
decreased $92.7 million. Taxable-equivalent interest income on earning assets decreased
$144.5 million reflecting decreases in earning asset yields. Interest expense decreased
$51.8 million due to decreases in the rates paid on interest-bearing deposits, the
maturity of some high-rate interest-bearing products, and the previously mentioned FHLB
transactions.

For
2002 compared to 2001, the change in net volume increased taxable-equivalent net interest
income by $15.5 million. A $9.2 million decrease in taxable-equivalent interest income due
to a decrease in earning assets was offset by a $24.8 million decrease in interest expense
from the lower volume of interest-bearing liabilities. As interest rates declined in 2002,
taxable-equivalent net interest income increased $22.7 million. Taxable-equivalent
interest income on earning assets decreased $164.4 million due to decreases in yields.
Interest expense decreased $187.1 million due to decreases in the rates paid on
interest-bearing deposits and the maturity of some high-rate interest-bearing products.

|Table 15 NONINTEREST INCOME
|---------------------------
|                           

|                                               | Percent Increase (Decrease)
|---------------------------------------------- | ---------------------------
|                                              
|($ in thousands)                               | 2003                       
|                                              
|Service charges on deposits                    |                            
|Card-related fees                              |                            
|Mortgage Banking:                              |                            
|Mortgage loan origination and servicing fees   |                            
|Amortization of mortgage servicing rights      |                            
|Provision for temporary impairment of          |                            
|mortgage servicing rights                      |                            
|Gain on sales of mortgage loans                |                            
|                                              
|Total mortgage banking                         |                            
|                                              
|Retail investment fees                         |                            
|Trust fees                                     |                            
|Insurance                                      |                            
|Investment banking                             |                            
|Other service, collection and exchange charges |                            
|Other operating income:                        |                            
|Gain on indirect auto loan securitization      |                            
|Mortgage loan derivative income                |                            
|Derivative income from interest rate contracts |                            
|Other income                                   |                            
|                                              
|Total other operating income                   |                            
|                                              
|Securities gains (losses), net                 |                            
|                                              
|Total noninterest income                       |                            
|                                              

|                  
|------------------
|NONINTEREST INCOME
|                  

Noninterest
income totaled $350.1 million in 2003 compared to $300.9 million in 2002 and $294.0
million in 2001. Noninterest income was up $49.1 million (16%) in 2003 compared to 2002
and $6.9 million (2%) in 2002 compared to 2001.

The
major categories contributing to the 2003 increase in noninterest income were the service
charges on deposits, up $18.9 million; mortgage banking up $15.0 million; card-related
fees, up $8.0 million; securities losses, down $6.5 million; other operating income, up
$6.2 million; and insurance, up $2.0 million. These increases were partially offset by
declines in retail investment fees, down $3.2 million; investment banking income of $2.6
million; trust fees, down $0.9 million; and other service collection and exchange charges
of $0.8 million.

Service
charges on deposits increased $18.9 million (14%) from 2002 to $157.7 million in 2003.
This change was the result of growth in transaction-based fees due to an increased number
of accounts resulting from the high performance checking campaigns launched in 2002 and
increased account related fee revenue due to other revenue initiatives implemented in the
past year. Fees from treasury management products and services also increased compared to
the prior year. These increases were partially offset by declines in fees as a result of
new deposit products featuring no service charges.

Card-related
fees were $47.9 million in 2003, up $8.0 million (20%) compared to 2002. This increase
resulted from fees generated by Hibernias debit and credit cards due to increased
activity and annual card fees from the consumer and small business high performance
checking products launched in 2002. Debit card fees from retailers increased, despite the
settlement of a national lawsuit in August 2003 which lowered the transaction fees the
Company receives on debit card transactions.

Effective
in the first quarter of 2003, mortgage loan origination and servicing fees, gain on sales
of mortgage loans, amortization of mortgage servicing rights and the provision for
temporary impairment of mortgage servicing rights are listed collectively in noninterest
income under mortgage banking. In previous financial statements, amortization
of mortgage servicing rights and the provision for temporary impairment of mortgage
servicing rights were classified in amortization of other intangibles in
noninterest expense. The reclassification is consistent with industry practice and did not
affect net income. Prior periods have been reclassified to conform to the new
presentation.

Total
mortgage banking increased $15.0 million (130%) to $26.5 million for 2003 as compared to
$11.5 million in 2002.

Mortgage
loan origination and servicing fees increased $2.7 million (8%) to $38.2 million in 2003,
compared to $35.5 million in 2002. The increase in these mortgage fees resulted from
increased mortgage activity due to favorable interest rates during 2003. Hibernia closed
and funded $6.4 billion in residential first mortgages in 2003, compared to $5.3 billion
in 2002. The volume of mortgage loans serviced for third parties increased to $10.2
billion at December 31, 2003, compared to $9.0 billion at December 31, 2002.

Amortization
of mortgage servicing rights, a non-cash expense, increased $15.7 million (54%) to $44.4
million in 2003, compared to $28.8 million for 2002. The increase is the result of an
increased volume of mortgage loans serviced as well as shorter expected lives of the loans
serviced. In 2003, the Company recorded net provision for temporary impairment expense of
$18.5 million as compared to $23.2 million in 2002. These non-cash provisions are due to
changes in the actual and expected speeds of mortgage loan prepayments resulting from the
fluctuating interest rate environment. In 2003, the Company reclassified $25.9 million of
mortgage servicing rights impairment from temporary to other-than-temporary, which reduced
the impairment reserve and the gross mortgage servicing rights balance with no effect to
the net mortgage servicing rights asset. At December 31, 2003, the impairment reserve
totaled $31.1 million, compared to $38.5 million at December 31, 2002. Future increases in
interest rates and/or slower-than-expected prepayment speeds could result in a reversal of
the temporary impairment reserve. Conversely, future decreases in interest rates and/or
faster-than-expected prepayment speeds could necessitate an increase in the temporary
impairment reserve and could result in additional other-than-temporary impairment.

Amortization
of mortgage servicing rights and the provision for temporary impairment of mortgage
servicing rights are calculated using the present value of expected future cash flows.
This cash flow analysis is performed using various assumptions including estimated future
prepayment speeds, discount rates and servicing costs. The Company uses national
prepayment speed assumptions and adjusts these assumptions to approximate actual
prepayment behavior of its own portfolio based on information obtained from an independent
third party. Actual results may vary from these assumptions. Table 16 provides selected
third party mortgage servicing portfolio data at December 31, 2003 and 2002.

|Table 16 THIRD PARTY MORTGAGE SERVICING PORTFOLIO DATA
|------------------------------------------------------
|                                                      

|December 31 ($ in thousands)                                            | 2003 | 2002
|----------------------------------------------------------------------- | ---- | ----
|                                                                       
|Third party servicing portfolio                                         |      |     
|Weighted average annual note rate                                       |      |     
|Capitalized mortgage servicing rights, net                              |      |     
|Mortgage servicing rights as a percentage of servicing portfolio        |      |     
|Average annual servicing fee (basis points)                             |      |     
|Mortgage servicing rights as a multiple of average annual servicing fee |      |     
|Weighted average annual constant prepayment rate                        |      |     
|Weighted average annual discount rate                                   |      |     
|Weighted average life (months)                                          |      |     
|                                                                       

|
|

|
|

|Table 17 STRATIFICATION OF MORTGAGE SERVICING RIGHTS
|----------------------------------------------------
|                                                    

|December 31, 2003 ($ in thousands)
|----------------------------------
|                                  
|Loan type                         
|                                  
|Adjustable                        
|Conventional                      
|Conventional                      
|Conventional                      
|Conventional                      
|Governmental                      
|Governmental                      
|Governmental                      
|Governmental                      
|                                  
|                                  
|                                  

In
measuring the impairment of mortgage servicing rights, loans in Hibernias servicing
portfolio are grouped in tranches stratified on the basis of certain risk characteristics,
including loan type, rate type (fixed vs. adjustable) and interest rate. Impairment is
measured by estimating the fair value of each tranche. An impairment allowance for a
tranche is recorded when, and in the amount by which, its fair value is less than its
carrying value. Table 17 details the stratification of mortgage servicing rights,
including the related prepayment speed assumptions, at December 31, 2003.

Table
18 presents a sensitivity analysis of the fair value of mortgage servicing rights of a
hypothetical immediate 10% and 25% adverse change in selected key assumptions. These
sensitivities are theoretical and should be used with caution. Changes in fair value based
on a given variation in assumptions generally cannot be extrapolated because the
relationship of the change in the assumption to the change in fair value may not be
linear. Additionally, the effect of a variation in a particular assumption on the fair
value of mortgage servicing rights is calculated without changing any other assumptions;
in actuality, changes of one factor may result in changes in another which could magnify
or counteract the sensitivities.

|Table 18 SENSITIVITY ANALYSIS OF MORTGAGE SERVICING RIGHTS
|----------------------------------------------------------
|                                                          

|December 31 ($ in thousands)                                              | 2003 | 2002
|------------------------------------------------------------------------- | ---- | ----
|                                                                         
|Fair value of mortgage servicing rights                                   |      |     
|Weighted average life (months)                                            |      |     
|Weighted average annual constant prepayment rate assumption               |      |     
|Weighted average annual discount rate                                     |      |     
|Impact on fair value of 10% adverse change in prepayment rate assumptions |      |     
|Impact on fair value of 25% adverse change in prepayment rate assumptions |      |     
|Impact on fair value of 10% adverse change in discount rate assumptions   |      |     
|Impact on fair value of 25% adverse change in discount rate assumptions   |      |     
|                                                                         

Gain
on sales of mortgage loans increased $23.3 million (83%) in 2003 compared to 2002. This
increase was primarily due to the continued low interest rate environment, resulting in an
increased volume of fixed-rate loans. Generally, Hibernia retains adjustable-rate mortgage
loans and sells fixed-rate mortgage loans, while retaining the associated servicing
rights. In addition, during 2003, the Company recorded a $5.3 million gain on the sale of
$137.8 million of portfolio mortgage loans.

Retail
investment fees were $27.2 million in 2003, down $3.2 million (11%) from 2002. The
decrease was due to market conditions which resulted in a reduction in the sales of fixed
annuities, mutual funds and discount brokerage services. These decreases were partially
offset by increased sales of variable rate annuities.

Trust
fees were $23.5 million in 2003, down $0.9 million (4%) compared to 2002. The decrease was
due to fluctuations in stock market indices which directly affect trust account values and
the associated asset management fees. To remain competitive in the marketplace, certain
trust fees were also reduced in 2003.

Hibernia
National Bank manages mutual funds and, through a wholly-owned subsidiary, acts as a
broker in providing access to mutual funds and variable annuities, but does not underwrite
annuities. Through an insurance subsidiary of Hibernia Corporation, the Company also
provides access to fixed annuities. Income from the sale and servicing of mutual funds and
annuities totaled $25.9 million, a decrease of $3.1 million for 2003, compared to $29.0
million in 2002. These commissions and fees are included in retail investment and trust
fees, discussed earlier.

Insurance
fees were $18.2 million in 2003, up $2.0 million (13%) from 2002. This increase was due to
increased property and casualty commission income, as well as higher life and health
commission income.

Investment
banking fees, which include brokerage commission income, contributed $12.5 million to
noninterest income in 2003, down $2.6 million (17%) from 2002. The decrease was due to
lower levels of commission income and decreased investment banking transactions in 2003,
partially offset by an increase in corporate underwriting bond income of $1.6 million for
the year.

Other
operating income increased $6.2 million (36%) to $23.4 million in 2003, compared to $17.2
million in 2002. This increase is due to a $6.2 million gain from the sale of
Hibernias interest in a company formed to originate, sell and service loans under
Fannie Maes delegated underwriting and servicing (DUS) lender program.

Net
securities losses totaled $6.8 million in 2003, compared to $13.4 million in 2002. The net
securities losses in 2003 are primarily due to securities losses of $12.2 million from the
writedown for other-than-temporary impairment of Fannie Mae preferred stock held in the
investment securities portfolio and $5.4 million of losses associated with the sale of
$25.0 million of Fannie Mae preferred stock, partially offset by gains of $9.9 million
related to the sale of $293.7 million in mortgage-backed and collateral mortgage
obligation securities. The net securities losses in 2002 were due to the writedown for
other-than-temporary impairment of certain private equity investments.

The
Companys private equity investments are valued at current fair value as determined
by management. In establishing these values, management considers, among other factors,
the cost of the investment to the Company, developments since the acquisition of the
investment, the financial condition and operating results of the investee, the long-term
potential of the business of the investee, the quoted price of securities that are
publicly traded, recent arms-length transactions involving similar securities, and
expected initial public offering prices. On investments for which there is no public
market, the Company, in making its valuations, relies on financial data of the investees
and, in many instances, on information from the Board of Directors and management of the
investee companies as to the potential effect of future developments. Because of the
inherent uncertainty in these valuations, those estimated fair values may differ
significantly from the values that would have been derived had a ready market for the
portfolio securities existed.

The
private equity portfolio totaled $7.0 million and $22.3 million at December 31, 2003 and
2002, respectively. During the third quarter of 2003, Hibernia reclassified an energy
asset totaling $14.2 million that had been part of the Companys private equity
portfolio to other foreclosed assets, and designated it as held for
sale, which resulted in a $9.6 million valuation adjustment and added $4.6 million
to nonperforming assets.

While
the Company does not plan any new private equity investments, there will be instances when
additional funding of existing investments is required. The Company has current
commitments for existing private equity investments totaling $4.7 million. For the years
ended December 31, 2003 and 2002, the Company funded $3.3 million and $7.7 million,
respectively, to these existing private equity investments.

The
major categories contributing to the increase in noninterest income in 2002 compared to
2001 were service charges on deposits, up $21.6 million; card-related fees, up $7.4
million; insurance fees, up $2.8 million; and retail investment fees, up $2.5 million;
other service collection and exchange charges, up $2.0 million; investment banking, up
$1.7 million; offset by decreases in other operating income, down $12.9 million (primarily
due to $11.4 million gain on indirect auto loan securitization in 2001); mortgage banking,
down $12.3 million (primarily due to a $10.9 million increase in the provision for
temporary impairment of mortgage servicing rights) and an increase in securities losses,
up $4.4 million.

The
Company expects high single digit growth in noninterest income in 2004 absent the effect
of the Coastal merger. Mortgage refinancing activity is expected to continue to decline
and, in a change of strategy, the Company will exit mortgage correspondent lending in
2004. This is expected to allow the Company to focus its efforts and resources on retail
mortgage banking, as the Company continues to expand in Texas markets. As a result, the
Company expects a decline in mortgage revenues. This projection does not include any
addition to or reversal of mortgage servicing impairment, although either of these may
occur.

|NONINTEREST EXPENSE
|-------------------
|                   

Noninterest
expense totaled $564.4 million in 2003 compared to $541.7 million in 2002 and $524.2
million in 2001.

Noninterest
expense increased $22.7 million (4%) in 2003 compared to 2002. The major categories
contributing to the increase in noninterest expense were foreclosed property expense, up
$8.8 million; staff costs, up $6.9 million; other expense, up $3.6 million; occupancy and
equipment expense, up $2.4 million; card-related processing expense, up $1.9 million; data
processing expense, up $1.4 million; and advertising and promotional expense, up $1.2
million, offset by a $1.8 million decrease in professional fees.

Staff
costs increased $6.9 million in 2003 compared to 2002. The increase compared to the prior
year was due to $5.2 million in expenses associated with a workforce reduction announced
in the second quarter of 2003; a $3.0 million increase in salaries, primarily due to wage
increases; and a $0.5 million increase in incentives. These increases were partially
offset by a $1.1 million decrease in ESOP compensation expense and a $0.4 million decrease
in other compensation related expenses.

Occupancy
and equipment expenses increased $2.4 million (4%) to $70.7 million in 2003. The increase
in 2003 was due to increased depreciation and utility expenses.

Data
processing costs increased $1.4 million (4%) to $35.9 million in 2003, due to increased
software maintenance expenses in 2003.

Advertising
and promotional expenses were up $1.2 million (6%) in 2003, due to increased marketing
expenses associated with the promotion of high performance checking products and increased
advertising in the Texas markets.

|Table 19 NONINTEREST EXPENSE
|----------------------------
|                            

|                                                                                                                                                        | Percent Increase (Decrease)
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------
|                                                                                                                                                       
|($ in thousands)                                                                                                                                        | 2003                       
|                                                                                                                                                       
|Salaries                                                                                                                                                |                            
|Benefits                                                                                                                                                |                            
|                                                                                                                                                       
|Total staff costs                                                                                                                                       |                            
|                                                                                                                                                       
|Occupancy, net                                                                                                                                          |                            
|Equipment                                                                                                                                               |                            
|                                                                                                                                                       
|Total occupancy and equipment                                                                                                                           |                            
|                                                                                                                                                       
|Data processing                                                                                                                                         |                            
|Advertising and promotional expenses                                                                                                                    |                            
|Foreclosed property expense, net                                                                                                                        |                            
|Amortization of goodwill                                                                                                                                |                            
|Amortization of other intangibles                                                                                                                       |                            
|State taxes on equity                                                                                                                                   |                            
|Loan collection expense                                                                                                                                 |                            
|Telecommunications                                                                                                                                      |                            
|Card-related processing expense                                                                                                                         |                            
|Postage                                                                                                                                                 |                            
|Stationery and supplies                                                                                                                                 |                            
|Professional fees                                                                                                                                       |                            
|Regulatory expense                                                                                                                                      |                            
|Other                                                                                                                                                   |                            
|                                                                                                                                                       
|Total noninterest expense                                                                                                                               |                            
|                                                                                                                                                       
|Efficiency ratio(1)                                                                                                                                     |                            
|                                                                                                                                                       
|Adjusted efficiency ratio(2)                                                                                                                            |                            
|                                                                                                                                                       
|(1)Noninterest expense as a percentage of taxable-equivalent net interest income
          plus noninterest income (excluding securities transactions).
|(2) Excludes amortization of goodwill.                                                                                                                 

Foreclosed
property expense increased $8.8 million (807%) to $9.9 million in 2003. This increase is
due to the writedown of an energy asset reclassified from private equity investments to
other foreclosed assets, which is designated as held for sale, resulting in a $9.6 million
valuation adjustment.

Card-related
processing expense increased $1.9 million (28%) to $8.8 million in 2003. The increase was
due to higher debit card and ATM processing expenses in 2003 due to increased
transactions.

Professional
fees decreased $1.8 million (19%) to $7.7 million in 2003. The decrease in professional
fees was due to a contingency fee associated with certain revenue enhancement initiatives
and higher consulting fees related to high performance checking products in 2002.

Other
noninterest expense increased $3.6 million (7%) to $51.5 million in 2003. This increase is
due to higher NSF/overdraft charge-offs, increased insurance premiums, higher loan closing
costs and an increase in fraud losses.

Noninterest
expense increased $17.5 million (3%) in 2002 compared to 2001. The major categories
contributing to the increase were staff costs, up $11.8 million; advertising and
promotional expenses, up $6.6 million; other expenses, up $4.9 million; data processing,
up $3.1 million; and professional fees, up $2.1 million. These increases were partially
offset by a $12.7 million decrease in amortization of goodwill in 2002 due to a change in
accounting principle, discussed earlier.

The
Companys efficiency ratio, defined as noninterest expense as a percentage of
taxable-equivalent net interest income plus noninterest income (excluding securities
transactions), is one measure of the success of efforts to control costs and generate
income efficiently. The efficiency ratio for 2003 was 54.56%, compared to 52.76% in 2002
and 53.64% in 2001. The 2001 adjusted efficiency ratio, which excludes the impact of the
amortization of goodwill, was 52.35%. The efficiency ratio for 2003 was negatively
impacted by expenses of $20.7 million associated with the FHLB transactions, a net
provision for the reserve for temporary impairment of mortgage servicing rights of $18.5
million, a valuation adjustment of $9.6 million on an energy asset and charges totaling
$6.1 million relating to a workforce reduction, partially offset by a gain on sale of
portfolio mortgage loans of $5.3 million. As discussed earlier, effective in the first
quarter of 2003, amortization of mortgage servicing rights and the provision for temporary
impairment of mortgage servicing rights were reclassified from noninterest expense to
noninterest income. While the reclassification of prior periods did not affect income, it
did have a positive effect on the efficiency ratio.

Hibernia
implemented expense initiatives designed to reduce spending levels across the Company
beginning in the second quarter of 2003. First among these initiatives was a company-wide
reduction in workforce. In addition, other cost saving measures have been implemented
targeting employee-related expenses, marketing, hardware and software, and many other
expenses.

The
Company expects noninterest expense growth in 2004 to be in the high single digits,
without the effect of the Coastal merger. This expense growth includes increased expenses
due to the Texas de novo branch expansion.

|INCOME TAXES
|------------
|            

The
Company recorded a $138.1 million provision for income taxes in 2003, compared to $133.0
million in 2002 and $118.5 million in 2001. The Companys effective tax rates for
2003, 2002 and 2001 were 34.8%, 34.7% and 35.1%, respectively. The 2003 and 2002 effective
tax rates declined compared to 2001 primarily due to the elimination of non-deductible
goodwill expense as a result of the adoption of a new accounting standard in 2002,
discussed earlier.

Hibernia
National Bank is subject to a Louisiana shareholders tax based partly on income. The
income portion is reported as state income tax. In addition, certain other subsidiaries of
the Company are subject to Louisiana state income tax. The Texas operations of the Bank
and certain other subsidiaries of the Company are also subject to Texas franchise tax.

|SEGMENT RESULTS
|---------------
|               

The
Companys segment information is presented by line of business. Each line of business
provides various products and services to groups of customers who share certain
characteristics. The reportable operating segments are Consumer, Small Business,
Commercial, Investments and Public Funds, and Other. The Consumer segment provides
individuals with comprehensive products and services, including mortgage and other loans,
deposit accounts, trust and investment management, brokerage, and life and health
insurance. The Small Business and Commercial segments provide business entities with
comprehensive products and services, including loans, deposit accounts, leasing, treasury
management, investment banking, property and casualty insurance and private equity
investments. The Small Business segment provides products and services to mid-size and
smaller business entities and the Commercial segment provides products and services to
larger business entities. The Investments and Public Funds segment includes the management
of public entity deposits and provides the treasury function for the Company by managing
the investment portfolio, interest rate risk, and liquidity and funding positions. The
provision for temporary impairment of mortgage servicing rights, primarily a function of
interest rate risk, is also included in this segment. The Other segment includes the areas
of support services and facilities management as well as income and expense items
considered to be unusual. Segment net income for the years ended 2003, 2002 and 2001 is
presented in Table 20.

Net
income for the Consumer segment was $177.6 million in 2003, up $46.8 million (36%) from
$130.8 million for 2002. The increase in the Consumer segment net income is due to
increases in the retail banking and mortgage areas. The retail banking area benefited from
growth in transaction-based fees related to increased number of accounts from the high
performance checking products and other revenue initiatives. The increase in the mortgage
area was due to the increased volume of mortgage loans originated due to the favorable
rate environment. The Small Business segment net income was up $5.2 million (11%) to $50.6
million for 2003 from $45.4 million in 2002. The Commercial segment net income increased
$19.5 million (65%) from $30.2 million in 2002 to $49.7 million in 2003. The increases in
the Small Business and Commercial segments were due in part to reductions in the provision
for loan losses resulting from improved asset quality. The Commercial segment also
improved as a result of a $6.2 million gain on the sale of an interest in a Fannie Mae DUS
lender, increases in treasury management as well as fewer losses on private equity
investments in 2003 compared to 2002. The Investments and Public Funds segment net loss
was $8.9 million for 2003, down $51.7 million (121%) from net income of $42.8 million for
2002. The decrease in net income for this segment is due to a decline in net interest
income as the Company experienced margin compression in 2003 resulting from the low
interest rate environment. Net losses in the other segment increased $11.1 million to
$14.2 million in 2003 from $3.1 million in 2002. This segment was negatively impacted by
the $20.7 million of charges related to the prepayment of a $300 million FHLB advance and
termination of the related interest rate swap, discussed earlier, and $6.1 million of
charges related to the reduction in force announced in the second quarter of 2003.

In
2002, the Consumer segment net income increased $18.3 million (16%) to $130.8 million,
from $112.5 million in 2001. The increase in the Consumer segment net income is primarily
due to increases in the mortgage and retail banking areas. The mortgage area benefited
from the lower interest rate environment. The retail banking area benefited from growth in
transaction-based fees related to the new high performance checking campaign. The Small
Business segment net income was $45.4 million in 2002, up $3.6 million (9%) from $41.8
million in 2001. The increase in the Small Business segment was primarily due to an
increase in noninterest income from treasury management products and service charges on
deposits. The Commercial segment net income increased from $24.1 million in 2001 to $30.2
million in 2002. The increase in the Commercial segment was due to a reduction in the
provision for loan losses resulting from improved asset quality. The Investment and Public
Funds segment net income was $42.8 million in 2002, down $0.8 million (2%) from the 2001
level of $43.5 million. The Other segment net losses totaled $3.1 million in 2002, a
decrease of $1.5 million from the 2001 loss of $4.6 million.

|Table 20 SEGMENT RESULTS
|------------------------
|                        

|($ in thousands)      | 2003 | 2002 | 2001
|--------------------- | ---- | ---- | ----
|                     
|Consumer              |      |      |     
|Small Business        |      |      |     
|Commercial            |      |      |     
|Investments and       |      |     
|Public Funds          |      |      |     
|Other                 |      |      |     
|                     
|Segment Total         |      |      |     
|Reconciling items (1) |      |      |     
|                     
|Total net income      |      |      |     
|                     

|(1)
          For a discussion of reconciling items refer to Note 29 of the Notes to the
          Consolidated Financial Statements.
|---------------------------------------------------------------------------------------------------------------------------------------

|
|

|
|

|Capital
|-------
|       

Capital
represents shareholder ownership in the Company  the book value of assets in excess
of liabilities. It provides a base for asset growth while serving, together with the
reserve for loan losses, as a cushion against potential losses. Support for future asset
expansion could come from utilization of existing capital, issuance of debt or new
capital, and retention of earnings.

Dividends
of $.63 per share were declared on the Companys common stock in 2003, representing
an 11% increase over the $.57 per common share declared in 2002. Hibernias common
dividend payout ratio (common dividends declared per share divided by net income per
common share) was 37.7% in 2003, 35.9% in 2002 and 38.7% in 2001. The Company continues to
evaluate its dividend payout policy as part of its capital management. Hibernias
future dividend payout ratio is targeted between 35% and 45%, although the payout target
is subject to change and the dividend payments are at the discretion of its Board of
Directors and subject to regulatory requirements.

|Table 21 CAPITAL
|----------------
|                

|($ in millions)     | 2003                        | 2002 | 2001 | 2000   | 1999
|------------------- | --------------------------- | ---- | ---- | ------ | ----
|                   
|Risk-based capital: | Tier 1                      |      | $    | 1,534  | .1  
|                    | Total                       |      | $    | 1,717  | .1  
|                   
|Assets:             | Quarterly average assets(1) |      | $    | 17,740 | .1  
|                    | Net risk-adjusted assets    |      | $    | 14,609 | .0  
|                   
|Ratios:             | Tier 1 risk-based capital   |      |      | 10.50  | %   
|                    | Total risk-based capital    |      |      | 11.75  | %   
|                    | Leverage                    |      |      | 8.65   | %   
|                   

|(1)Excluding the adjustment for
accumulated other comprehensive income and other disallowed assets.
|---------------------------------------------------------------------------------------------------

Shareholders
equity totaled $1,777.5 million at the end of 2003, compared to $1,680.9 million at the
end of 2002 and $1,559.8 million at the end of 2001. The $96.6 million (6%) increase in
2003 was primarily due to earnings totaling $258.3 million and the issuance of $26.0
million of common stock. These increases were partially offset by the payment of $97.5
million in dividends on common stock, the acquisition of $87.6 million of treasury stock
(most of which was purchased under buyback programs) and a $12.6 million decline in
accumulated other comprehensive income.

During
2003, the Company repurchased approximately 4.5 million shares of its common stock at a
cumulative weighted average price of $19.65 per share under common stock repurchase plans
authorized by the Board of Directors. At December 31, 2003, approximately 1.8 million
shares remained authorized for repurchase under a plan announced in July 2003 that allowed
for the repurchase of up to 3.5 million shares of the Companys common stock until
July 2004.

The
$121.1 million (8%) increase in 2002 compared to 2001 was primarily due to earnings
totaling $249.9 million, the issuance of $35.8 million of common stock, a net tax benefit
related to stock option plans and the ESOP of $12.7 million and a $12.1 million change in
accumulated other comprehensive income. These increases were partially offset by the
acquisition of $107.0 million of treasury stock, most of which was purchased under buyback
programs, and payment of $89.4 million in dividends on common stock.

Regulations
applicable to national banks and their holding companies prescribe minimum capital levels.
These levels are based on established guidelines which relate required capital standards
to both risk-weighted assets (risk-based capital ratios) and total assets (leverage
ratio). In accordance with risk-based guidelines, assets and off-balance-sheet financial
instruments are assigned weights to measure their levels of risk. The total risk-based
capital ratio for the Company was 11.75% at year-end 2003, 11.82% at year-end 2002 and
11.39% at year-end 2001. Leverage ratios were 8.65%, 8.45% and 8.14% at year-end 2003,
2002 and 2001, respectively. Table 21 shows the calculation of capital ratios for the
Company for the past five years. The Company expects its leverage ratio to decline in 2004
to between 7% and 8% following the completion of the Coastal merger.

The
most recent notifications from the Office of the Comptroller of the Currency categorized
Hibernia National Bank as well capitalized under the regulatory framework for prompt
corrective action. For a bank to be designated as well capitalized, it must have Tier 1
and total risk-based capital ratios of at least 6.0% and 10.0%, respectively, and a
leverage ratio of at least 5.0%. At December 31, 2003, the Banks Tier 1, total
risk-based and leverage ratios were 9.47%, 10.72% and 7.80%, respectively.

|Off-Balance Sheet Arrangements and Contractual Obligations
|----------------------------------------------------------
|                                                          

In
the normal course of business, the Company enters into a number of financial commitments.
Commitments to extend credit (loan commitments) are legally binding, conditional
agreements having fixed expiration or termination dates and specific interest rates and
purposes. These commitments generally require customers to maintain certain credit
standards. Collateral requirements and loan-to-value ratios are the same as those for
funded transactions and are established based on managements credit assessment of
the customer. Commitments may expire without being drawn upon. Therefore, the total
commitment amount does not necessarily represent future requirements. At December 31,
2003, commitments to extend credit totaled $3.6 billion, compared to $3.1 billion a year
ago.

The
Company also issues letters of credit and financial guarantees (standby letters of credit)
whereby it agrees to honor certain financial commitments in the event its customers are
unable to perform. The majority of the standby letters of credit consist of performance
guarantees. At December 31, 2003, standby letters of credit had expiration dates through
2010. Collateral requirements are the same as those for funded transactions and are
established based on managements credit assessment of the customer. Management
conducts regular reviews of all outstanding standby letters of credit, and the results of
these reviews are considered in assessing the adequacy of the Companys loss
reserves. Management does not anticipate any material losses related to these instruments.
Letters of credit and financial guarantees totaled $562.7 million and $456.0 million at
December 31, 2003 and 2002, respectively.

Additional
information regarding commitments and letters of credit can be found in Note 24 of the
Notes to Consolidated Financial Statements.

In
June 2001, the Company sold fixed-rate indirect automobile loans totaling $592.2 million
in a securitization transaction. Under the terms of the transaction, the Company receives
annual servicing fees of approximately one percent of the outstanding balance of the
automobile loans and retains the rights to future cash flows remaining after the investors
in the securitization trust have received their contractual return. The investors have no
recourse to the Companys other assets beyond a cash reserve account in the event of
failure of debtors to pay when due. The Companys retained interests are subordinate
to the investors interests. The value of the retained interests is subject to credit
and prepayment risks on the transferred financial assets. At December 31, 2003 and 2002,
the outstanding principal balance of the securitized automobile loans totaled $111.1
million and $245.7 million, respectively. The retained interests totaled $31.9 million at
December 31, 2003, and consisted of $3.2 million of an interest-only strip receivable,
included in trading account assets, and $28.7 million of securitization proceeds
receivable, included in other assets.

From
1999 through 2001, the Company securitized and retained portions of its first residential
mortgage loans with recourse provisions through the Federal National Mortgage Association
(FNMA). The loans were reclassified to investment securities, which resulted in the
retention of 100% of the interests in the securitizations. Under the recourse provisions
with FNMA, the Company assumes the risk of borrower default and has established reserves
to cover potential losses. Individual securities from these securitizations have been sold
from the available for sale portfolio and control over the assets were surrendered. For
securities that were sold, the remaining interest consists only of the servicing rights
asset and the recourse provision. Investment securities resulting from mortgage loan
securitizations had carrying values of $69.1 million at December 31, 2003. At December 31,
2003, the balance of these securitized loans, which are serviced by the Bank, totaled
$115.9 million and the recourse reserve, included in other liabilities, totaled $0.5
million.

Table
22 presents the Companys significant fixed and determinable contractual obligations,
within the categories described below, by payment date, at December 31, 2003. The payment
amounts represent those amounts that are contractually due to the recipient as of December
31, 2003, for time deposits, Federal Home Loan Bank (FHLB) advances and operating leases.
These amounts do not include interest that may accrue over the periods presented. The
contractual amount was estimated for the purchase obligation for Coastal Bancorp, Inc.

|Table 22 CONTRACTUAL OBLIGATIONS
|--------------------------------
|                                

|                                              | Payments Due By Period
|--------------------------------------------- | ----------------------
|                                              |                       
|December 31, 2003 ($ in thousands)            | Total                 
|                                             
|Time deposits                                 |                       
|Federal Home Loan Bank advances               |                       
|Operating leases                              |                       
|Purchase obligation for Coastal Bancorp, Inc. |                       
|                                             
|Total                                         |                       
|                                             

Time
deposits are included in Table 22 based on contractual maturities. Contractual maturities
presented in the table are not necessarily an indication of cash obligations as customers
often automatically renew their time deposits or may withdraw the funds prior to maturity.
For further discussion of time deposits see the Deposits section of this
analysis and Note 9 in the Notes to Consolidated Financial Statements.

The
Companys FHLB advances totaled $1.1 billion at December 31, 2003, and are comprised
of various advances from the Federal Home Loan Bank of Dallas. FHLB advances consist of
both callable and long-term advances totaling $400.0 million and $701.8 million,
respectively, at December 31, 2003. Additional information regarding rates and terms of
the various FHLB advances is included in the Borrowings section of this
discussion and Note 11 of the Notes to Consolidated Financial Statements.

The
Company leases its headquarters, operations center and certain other office space,
premises and equipment under non-cancelable operating leases which expire at various dates
through 2035. Certain of these leases have escalation clauses and renewal options ranging
from one to 50 years. Required payments under facilities leases totaled $72.7 million
while required payments attributable to equipment leases totaled $2.9 million at December
31, 2003. Additional information regarding leases can be found in Note 18 of the
Notes to Consolidated Financial Statements.

In
December 2003, the Company signed a definitive merger agreement with Coastal Bancorp, Inc.
Under the terms of the agreement, Hibernia would purchase all of the outstanding common
stock and options of Coastal for approximately $230 million in cash in or near the second
quarter of 2004. The merger is pending certain regulatory approvals and the approval of
Coastal shareholders.

The
Company also has various other contracts with vendors that were entered into in the
ordinary course of business and are not included in Table 22. Payments under these
contracts are included in the operating expenses of the Company.

|Liquidity
|---------
|         

Liquidity
is a measure of the ability to fund loan commitments and meet deposit maturities and
withdrawals in a timely and cost-effective way. These needs can be met by generating
profits, attracting new deposits, converting assets (including short-term investments,
mortgage loans held for sale, securities available for sale and loans) to cash through
sales or securitizations and increasing borrowings. To minimize funding risks, management
monitors liquidity through a periodic review of maturity profiles, yield and rate
behaviors, and loan and deposit forecasts.

Core
deposits that are maintained at competitive rates are the Companys primary source of
liquidity. Core deposits totaled $11.7 billion at year-end 2003, up $645.8 million (6%)
from $11.1 billion a year earlier. This increase is the result of Hibernias
extensive branch network, aided by the promotion of the high performance deposit products,
discussed earlier. Management expects the volume of core deposits to further increase as a
result of the continued promotion of these products and the Companys strategic
expansion into Texas markets. In addition, Hibernia has a large base of treasury
management-related repurchase agreements and foreign deposits which are part of a
customers relationship. Because of the nature of the relationships, these funds are
considered stable and not subject to the same volatility as other sources of noncore
funds. Large-denomination certificates of deposit were additional sources of liquidity
during the year.

Hibernias
loan-to-deposit ratio at year-end 2003 increased to 91.0% from 85.2% at year-end 2002 and
86.8% at year-end 2001. The increase from the last two years is due to the significant
growth in loans, which outpaced increases in the deposit base.

Another
indicator of liquidity is the large liability dependence ratio, which measures reliance on
short-term borrowings and other large liabilities (including large-denomination and public
fund certificates of deposit and foreign deposits). Based on average balances, 17.4% of
Hibernias earning assets were funded by net large liabilities (total liabilities
less short-term investments) at year-end 2003, down 51 basis points from the prior-year
level of 17.9%.

Management
believes that the current level of short-term investments and securities available for
sale is adequate to meet the Companys current liquidity needs. Additional sources of
liquidity available to the Company include the ability to issue brokered certificates of
deposit and the ability to sell or securitize a substantial portion of the Companys
$3.2 billion residential first mortgage portfolio and $2.2 billion indirect consumer
portfolio. The Company also had federal funds lines of credit totaling $2.2
billion at December 31, 2003, and its membership in the FHLB which provided an additional
line totaling $1.6 billion to further augment liquidity by providing a readily
accessible source of funds at competitive rates. In the beginning of 2004, the FHLB line of credit
was increased to a total of $1.9 billion. Outstanding borrowings under these facilities totaled
$1.7 billion at December 31, 2003.

Hibernia
Corporation (the Parent Company) requires liquidity to fund operating expenses
and investments and to pay dividends. At December 31, 2003, the Parent Company had $134.0
million in available funds. During 2003, the Parent Company received $195.3 million in
dividends from its subsidiaries. The issuance of common stock during 2003 provided the
Parent Company with $26.0 million of additional funds. The Parent Company paid $97.5
million in dividends to common shareholders and repurchased $87.6 million in common stock
during 2003.

In
accordance with the definitive merger agreement with Coastal, the Parent Company will
purchase all of the outstanding stock and options of Coastal for approximately $230.0
million. The merger is pending the approval of regulators and Coastal shareholders, and is
expected to be completed in or near the second quarter of 2004. The Parent Company plans
to fund this transaction through approximately $100.0 million in debt at the Parent
Company level, with the remaining balance funded through available cash and bank
dividends.

The
payment of dividends by the Bank to the Parent Company is restricted by various regulatory
limitations. In 2004, the Bank would have available to pay dividends to the Parent
Company, without prior approval of the Office of the Comptroller of the Currency,
approximately $165.4 million plus net retained profits earned in 2004 prior to the
dividend declaration date.

The
Consolidated Statements of Cash Flows can be used to assess the Companys ability to
generate positive future net cash flows from operations and its ability to meet future
obligations. The Company had a net decrease in cash and cash equivalents in 2003 of $146.1
million. Net cash used by investing activities totaled $2.1 billion, resulting from a net
increase in loans of $1.5 billion, net purchases of securities totaling $615.2 million and
purchases of premises, equipment and other assets of $84.7 million. These activities were
partially offset by cash provided from financing activities of $1.2 billion, resulting
from an increase in short-term borrowings of $705.4 million and an increase in deposits of
$678.5 million, partially offset by the payment of dividends of $97.5 million and the
repurchase of common stock of $87.6 million. Net cash provided by operating activities
totaled $766.1 million after adjusting 2003 net income for non-cash and other operating
items.

Cash
and cash equivalents increased $405.0 million in 2002. Net cash provided by operating
activities totaled $508.4 million after adjusting 2002 net income for non-cash and other
operating items. These activities were partially offset by net cash used in investing
activities of $352.5 million, primarily resulting from a net increase in loans of $307.5
million, and purchases of premises, equipment and other assets of $87.0 million. Cash
provided by financing activities totaled $249.1 million, resulting from the increase in
deposits of $527.9 million and a net increase in FHLB advances of $59.3 million, partially
offset by the decrease in short-term borrowings of $177.3 million, the repurchase of
common stock of $107.0 million and the payment of dividends of $89.4 million.

Cash
and cash equivalents decreased $121.6 million in 2001. Cash used in financing activities
totaled $461.9 million, primarily due to a decrease in short-term borrowings of $557.8
million, cash paid for dividends of $88.7 million and the repurchase of common stock of
$87.0 million, partially offset by increased deposits of $260.4 million. Net cash used in
operating activities totaled $83.1 million after adjusting 2001 net income for non-cash
and other operating items. These activities were partially offset by net cash provided
from investing activities of $423.3 million, primarily resulting from a net reduction in
loans of $507.2 million, offset by the purchase of premises, equipment and other assets of
$74.3 million.

|Quarterly Consolidated Summary of Income and Selected Financial Data (1)                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                    
|HIBERNIA CORPORATION AND SUBSIDIARIES                                                                                                                                               
|                                                                                                                                                                                    
|($  in thousands, except per-share data)                                                                                                                                            
|                                                                                                                                                                                    
|Interest income                                                                                                                                                                     
|Interest expense                                                                                                                                                                    
|                                                                                                                                                                                    
|Net interest income                                                                                                                                                                 
|Provision for loan losses                                                                                                                                                           
|                                                                                                                                                                                    
|Net interest income after                                                                                                                                                           
|provision for loan losses                                                                                                                                                           
|                                                                                                                                                                                    
|Noninterest income:                                                                                                                                                                 
|Noninterest income                                                                                                                                                                  
|Securities gains (losses), net                                                                                                                                                      
|                                                                                                                                                                                    
|Noninterest income                                                                                                                                                                  
|Noninterest expense                                                                                                                                                                 
|                                                                                                                                                                                    
|Income before income taxes                                                                                                                                                          
|Income tax expense                                                                                                                                                                  
|                                                                                                                                                                                    
|Net income                                                                                                                                                                          
|                                                                                                                                                                                    
|Per common share information: (2)                                                                                                                                                   
|Net income                                                                                                                                                                          
|Net income - assuming dilution                                                                                                                                                      
|Cash dividends declared                                                                                                                                                             
|Average shares outstanding (000s)                                                                                                                                                   
|Average shares outstanding - assuming dilution (000s)                                                                                                                               
|Dividend payout ratio                                                                                                                                                               
|                                                                                                                                                                                    
|Selected quarter-end balances (in millions)                                                                                                                                         
|Loans                                                                                                                                                                               
|Deposits                                                                                                                                                                            
|Federal Home Loan Bank advances                                                                                                                                                     
|Equity                                                                                                                                                                              
|Total assets                                                                                                                                                                        
|                                                                                                                                                                                    
|Selected average balances (in millions)                                                                                                                                             
|Loans                                                                                                                                                                               
|Deposits                                                                                                                                                                            
|Federal Home Loan Bank advances                                                                                                                                                     
|Equity                                                                                                                                                                              
|Total assets                                                                                                                                                                        
|                                                                                                                                                                                    
|Selected ratios                                                                                                                                                                     
|Net interest margin (taxable-equivalent)                                                                                                                                            
|Annualized return on assets                                                                                                                                                         
|Annualized return on equity                                                                                                                                                         
|Efficiency ratio                                                                                                                                                                    
|Average equity/average assets                                                                                                                                                       
|Tier 1 risk-based capital ratio                                                                                                                                                     
|Total risk-based capital ratio                                                                                                                                                      
|Leverage ratio                                                                                                                                                                      
|                                                                                                                                                                                    
|(1)The effects of mergers
accounted for as purchase transactions have been included from the date of consummation.
Prior periods have been conformed to current-period presentation.
|(2)For a
discussion of net income per common share computations refer to Note 21 of the Notes
to Consolidated Financial Statements.                                               

|
|

|
|

|Fourth Quarter Results
|----------------------
|                      

Hibernia
reported net income of $71.5 million in the fourth quarter of 2003, compared to $64.9
million in the fourth quarter of 2002 and $69.3 million in the third quarter of 2003. Net
income per common share was $.47 in the fourth quarter of 2003, compared to $.42 and $.45
in the fourth quarter of 2002 and the third quarter of 2003, respectively. Fourth-quarter
2003 net income per common share  assuming dilution was $.46 compared to $.41 and
$.44 for the fourth quarter of 2002 and the third quarter of 2003, respectively.

Average
earning assets totaled $16.5 billion in the fourth quarter of 2003, a $1.1 billion
increase from the fourth quarter of 2002. The increase from the fourth quarter of 2002 was
due to increases in average loans of $1.1 billion and average securities, adjusted for
trade date transactions, of $417.8 million, partially offset by decreases in average
mortgage loans held for sale of $301.8 million and average short-term investments of
$185.1 million. The increase in average loans from the same period last year is due to
growth in all portfolios as economic conditions have improved. The increase in average
securities was due to increased purchases to collateralize certain public fund deposits
and repurchase agreements, and reflects the investment of excess funds from deposits and
other borrowings. Average earning assets were down $32.8 million in the fourth quarter of
2003 compared to the prior quarter. This decrease is due to decreases in average mortgage
loans held for sale of $271.8 million; average short-term investments of $194.7 million;
and average securities, net of trade-date transactions, of $105.6 million; partially
offset by an increase in average loans of $539.3 million, primarily in the consumer
portfolio.

Average
deposits increased $540.3 million (4%) to $13.7 billion in the fourth quarter of 2003 from
$13.1 billion in the fourth quarter of 2002. Average deposits were down $54.9 million from
the third quarter of 2003. Average short-term borrowings in the fourth quarter of 2003
increased $412.0 million compared to the fourth quarter of 2002 and $274.5 compared to the
third quarter of 2003. Average FHLB advances increased $68.0 million compared to
fourth-quarter 2002 and $283.8 million compared to third-quarter 2003.

Net
interest income, on a taxable-equivalent basis, totaled $177.0 million in the fourth
quarter of 2003, compared to $178.4 million in the fourth quarter of 2002 and $151.5
million in the third quarter of 2003. The increase in net interest income in the fourth
quarter of 2003 compared to the fourth quarter of 2002 was the result of yields on
interest-earning assets decreasing more than the rates on interest-bearing liabilities,
partially offset by an increased volume of earning assets. The increase in net interest
income as compared to the third quarter of 2003 is due to a charge to interest expense
totaling $20.7 million related to the prepayment of a $300 million FHLB advance and
termination of the related interest rate swap in the third quarter of 2003, discussed
earlier.

The
net interest margin of 4.27% for the fourth quarter of 2003 decreased 33 basis points from
the fourth quarter of 2002. An 87 basis-point decrease in loan yields and an 83
basis-point decrease in securities yields led to the 78 basis-point decrease in the yield
on earning assets. The rate on interest-bearing liabilities decreased 59 basis points, and
the contribution of noninterest-bearing funds decreased 14 basis points compared to the
fourth quarter of 2002.

The
net interest margin of 4.27% for the fourth quarter of 2003 increased 62 basis points from
3.65% in the third quarter of 2003. The increase in the margin was primarily the result of
the $20.7 million charge related to the FHLB transactions in the third quarter of 2003,
discussed earlier. The effect of this charge resulted in a decrease in the third-quarter
2003 net interest margin of 50 basis points. Table 23 illustrates the components of the
net interest margin for the last eight quarters.

|Table 23 NET INTEREST MARGIN (taxable-equivalent)
|-------------------------------------------------
|                                                 

|                            
|----------------------------
|                            
|                            
|                            
|Yield on earning assets     
|Rate on interest-bearing    
|liabilities                 
|                            
|Net interest spread         
|Contribution of noninterest-
|bearing funds               
|                            
|Net interest margin         
|                            
|Noninterest-bearing funds   
|supporting earning assets   
|                            

The
Company recorded a $13.3 million provision for loan losses in the fourth quarter of 2003
compared to $16.0 million in the prior quarter and $15.0 million in the comparable period
a year ago. Net charge-offs were $13.3 million in the fourth quarter of 2003, down from
$15.9 million in the prior quarter and $14.6 million in the fourth quarter of 2002.

Noninterest
income was $78.4 million, up $1.5 million (2%) from the fourth quarter of 2002 and down
$44.1 million (36%) from the third quarter of 2003. Significant changes in noninterest
income from fourth quarter 2002 include increased securities losses of $10.2 million, of
which $12.2 million is due to the writedown of Fannie Mae preferred stock; a $6.2 million
gain on the sale of Hibernias interest in a Fannie Mae DUS lender; an increase of
$5.4 million in service charges on deposits due to increased number of deposit accounts
and the implementation of revenue incentives in the past year; and a $2.7 million decrease
in mortgage banking income. Mortgage banking income decreased $43.4 million in the fourth
quarter of 2003, compared to the third quarter of 2003, resulting from the reversal of
$27.5 million of temporary impairment of mortgage servicing rights (compared to a $3.5
million provision expense for temporary impairment in the fourth quarter of 2003) and
higher gains on sales of mortgage loans in the third quarter of 2003.

Noninterest
expense of $131.6 million in the fourth quarter of 2003 was $7.1 million (5%) lower than
$138.7 million in the fourth quarter of 2002 and $18.2 million (12%) lower than $149.9
million in the third quarter of 2003. The decrease compared to the fourth quarter 2002 is
the result of the reversal of a portion of the medical insurance reserve in the fourth
quarter of 2003 and lower incentives, primarily in the mortgage banking. Also contributing
to the decrease when compared to the previous quarter was a $9.6 million expense due to
the writedown of an energy asset in the third quarter of 2003.

The
Companys efficiency ratio was 49.18% in the fourth quarter of 2003 compared to 53.9%
and 53.7% in the fourth quarter of 2002 and the third quarter of 2003, respectively.

Statements
in this report that are not historical facts should be considered forward-looking
statements with respect to Hibernia. Forward-looking statements of this type speak only as
of the date of this report. By nature, forward-looking statements involve inherent risk
and uncertainties. Various factors, including, but not limited to, unforeseen local,
regional, national or global events, economic conditions, asset quality, interest rates,
prepayment speeds, servicing costs, loan demand, changes in business or consumer spending,
borrowing or savings habits, deposit growth, adequacy of the reserve for loan losses,
competition, stock price volatility, government monetary policy, anticipated expense
levels, changes in laws and regulations, the level of success of the Companys
asset/liability management strategies as well as its marketing, product development, sales
and other strategies, the effect of changes in accounting policies and practices, as may
be adopted by the regulatory agencies as well as the Financial Accounting Standards Board
and other accounting standard setters, the costs and effects of litigation and of
unexpected or adverse outcomes in such litigation, unexpected costs or issues in its
expansion or acquisition plans and changes in the assumptions used in making the
forward-looking statements, could cause actual results to differ materially from those
contemplated by the forward-looking statements and could impact Hibernias ability to
achieve the goals described in its mission statement. Hibernia undertakes no obligation to
update or revise forward-looking statements to reflect subsequent circumstances, events or
information or for any other reason.

|GRAPHIC DESCRIPTION                   | CROSS REFERENCE/FINANCIAL INFORMATION                                    
|------------------------------------- | -------------------------------------------------------------------------
|Average Earning Assets Bar Graph      | See Consolidated Average Balances, Interest and Rates                    
|Total Deposits Bar Graph              | See Five-Year Consolidated Summmary of Income and Selected Financial Data
|Noninterest Interest Income Bar Graph | See Five-Year Consolidated Summmary of Income and Selected Financial Data
|Annual Common Dividends Bar Graph     | See Five-Year Consolidated Summmary of Income and Selected Financial Data
|Total Shareholders' Equity Bar Graph  | See Five-Year Consolidated Summmary of Income and Selected Financial Data

Report of Independent
Auditors

The Board of Directors
and Shareholders Hibernia Corporation

We have audited the accompanying
consolidated balance sheets of Hibernia Corporation and Subsidiaries as of
December 31, 2003 and 2002, and the related consolidated statements of income,
changes in shareholders equity, and cash flows for each of the three years in the
period ended December 31, 2003. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance
with auditing standards generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the consolidated
financial position of Hibernia Corporation and Subsidiaries at December 31, 2003 and
2002, and the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 2003, in conformity with accounting
principles generally accepted in the United States.

As discussed in Note 1 to the
financial statements, effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.

/s/ Ernst & Young, LLP 
New Orleans, Louisiana 
January 15, 2004

|Consolidated Balance Sheets                                                   
|------------------------------------------------------------------------------
|                                                                              
|HIBERNIA CORPORATION AND SUBSIDIARIES                                         
|December 31 ($ in thousands)                                                  
|                                                                              
|Assets                                                                        
|Cash and cash equivalents                                                     
|Trading account assets                                                        
|Securities available for sale                                                 
|Securities held to maturity (estimated fair value of $61,633 and $146,369     
|at December 31, 2003 and 2002, respectively)                                  
|Mortgage loans held for sale                                                  
|Loans, net of unearned income                                                 
|Reserve for loan losses                                                       
|                                                                              
|Loans, net                                                                    
|                                                                              
|Premises and equipment                                                        
|Customers' acceptance liability                                               
|Goodwill                                                                      
|Other intangible assets                                                       
|Other assets                                                                  
|                                                                              
|Total assets                                                                  
|                                                                              
|Liabilities                                                                   
|Deposits:                                                                     
|Noninterest-bearing                                                           
|Interest-bearing                                                              
|                                                                              
|Total deposits                                                                
|                                                                              
|Short-term borrowings                                                         
|Liability on acceptances                                                      
|Other liabilities                                                             
|Federal Home Loan Bank advances                                               
|                                                                              
|Total liabilities                                                             
|                                                                              
|Shareholders' equity                                                          
|Class A Common Stock, no par value:                                           
|Authorized - 300,000,000 shares; issued - 168,214,757  and                    
|166,252,171 shares at December 31, 2003 and 2002, respectively                
|Surplus                                                                       
|Retained earnings                                                             
|Treasury stock at cost -  12,953,260 and 8,840,005 shares at December 31, 2003
|and 2002, respectively                                                        
|Accumulated other comprehensive income                                        
|Unearned compensation                                                         
|                                                                              
|Total shareholders' equity                                                    
|                                                                              
|Total liabilities and shareholders' equity                                    
|                                                                              

|See notes to consolidated
financial statements.
|-----------------------------------------------

|
|

|
|

|Consolidated Income Statements                                   
|-----------------------------------------------------------------
|                                                                 
|HIBERNIA CORPORATION AND SUBSIDIARIES                            
|Year Ended December 31 ($ in thousands, except per-share data)   
|                                                                 
|Interest income                                                  
|Interest and fees on loans                                       
|Interest on securities available for sale                        
|Interest on securities held to maturity                          
|Interest on short-term investments                               
|Interest on mortgage loans held for sale                         
|                                                                 
|Total interest income                                            
|                                                                 
|Interest expense                                                 
|Interest on deposits                                             
|Interest on short-term borrowings                                
|Interest on Federal Home Loan Bank advances                      
|                                                                 
|Total interest expense                                           
|                                                                 
|Net interest income                                              
|Provision for loan losses                                        
|                                                                 
|Net interest income after provision for loan losses              
|                                                                 
|Noninterest income                                               
|Service charges on deposits                                      
|Card-related fees                                                
|Mortgage banking                                                 
|Retail investment fees                                           
|Trust fees                                                       
|Insurance                                                        
|Investment banking                                               
|Other service, collection and exchange charges                   
|Other operating income                                           
|Securities gains (losses), net                                   
|                                                                 
|Total noninterest income                                         
|                                                                 
|Noninterest expense                                              
|Salaries and employee benefits                                   
|Occupancy expense, net                                           
|Equipment expense                                                
|Data processing expense                                          
|Advertising and promotional expense                              
|Foreclosed property expense, net                                 
|Amortization of goodwill                                         
|Amortization of other intangibles                                
|Other operating expense                                          
|                                                                 
|Total noninterest expense                                        
|                                                                 
|Income before income taxes                                       
|Income tax expense                                               
|                                                                 
|Net income                                                       
|                                                                 
|Net income applicable to common shareholders                     
|                                                                 
|Net income excluding amortization of goodwill                    
|                                                                 
|Net income applicable to common shareholders excluding           
|amortization of goodwill                                         
|                                                                 
|Per common share information:                                    
|Net income                                                       
|                                                                 
|Net income - assuming dilution                                   
|                                                                 
|Net income excluding amortization of goodwill                    
|                                                                 
|Net income excluding amortization of goodwill - assuming dilution
|                                                                 

|See notes to consolidated
financial statements.
|-----------------------------------------------

|
|

|
|

|Consolidated Statements of Changes in Shareholders' Equity
|----------------------------------------------------------
|                                                          
|HIBERNIA CORPORATION AND SUBSIDIARIES                     
|($ in thousands, except per-share data)                   
|                                                          
|                                                          
|Balances at December 31, 2000                             
|Net income for 2001                                       
|Change in unrealized gains (losses) on                    
|securities, net of reclassification                       
|adjustments                                               
|Change in accumulated gains (losses)                      
|on cash flow hedges, net of                               
|reclassification adjustments                              
|                                                          
|Comprehensive income                                      
|                                                          
|Issuance of common stock:                                 
|Stock option plans                                        
|Restricted stock awards                                   
|Cash dividends declared:                                  
|Preferred ($2.5875 per share)                             
|Common ($.53 per share)                                   
|Acceleration of vesting of                                
|stock options                                             
|Redemption of preferred stock                             
|Allocation of ESOP shares                                 
|Net tax benefit related to stock option plans             
|and ESOP                                                  
|Other                                                     
|                                                          
|Balances at December 31, 2001                             
|                                                          
|Net income for 2002                                       
|Change in unrealized gains (losses) on                    
|securities, net of reclassification                       
|adjustments                                               
|Change in accumulated gains (losses)                      
|on cash flow hedges, net of                               
|reclassification adjustments                              
|                                                          
|Comprehensive income                                      
|                                                          
|Issuance of common stock:                                 
|Stock option plans                                        
|Restricted stock awards                                   
|Cash dividends declared on                                
|common ($.57 per share)                                   
|Acquisition of treasury stock                             
|Allocation of ESOP shares                                 
|Net tax benefit related to stock option plans             
|and ESOP                                                  
|Other                                                     
|                                                          
|Balances at December 31, 2002                             
|                                                          
|Net income for 2003                                       
|Change in unrealized gains (losses) on                    
|securities, net of reclassification                       
|adjustments                                               
|Change in accumulated gains (losses)                      
|on cash flow hedges, net of                               
|reclassification adjustments                              
|                                                          
|Comprehensive income                                      
|                                                          
|Issuance of common stock:                                 
|Stock option plans                                        
|Restricted stock awards                                   
|Directors' compensation                                   
|Purchase warrants                                         
|Cash dividends declared on                                
|common ($.63 per share)                                   
|Acquisition of treasury stock                             
|Allocation of ESOP shares                                 
|Net tax benefit related to stock option plans             
|and ESOP                                                  
|Other                                                     
|                                                          
|Balances at December 31, 2003                             
|                                                          

|See notes to consolidated
financial statements.
|-----------------------------------------------

|
|

|
|

|Consolidated Statements of Cash Flows                                         
|------------------------------------------------------------------------------
|                                                                              
|HIBERNIA CORPORATION AND SUBSIDIARIES                                         
|Year Ended December 31 ($ in thousands)                                       
|                                                                              
|Operating activities                                                          
|Net income                                                                    
|Adjustments to reconcile net income to net                                    
|cash provided (used) by operating activities:                                 
|Provision for loan losses                                                     
|Amortization of intangibles and deferred charges                              
|Depreciation and amortization                                                 
|Non-cash derivative instruments gains, net                                    
|Non-cash compensation expense                                                 
|Premium amortization (discount accretion), net                                
|Realized securities losses, net                                               
|Gains on sales of assets, net                                                 
|Provision for losses on foreclosed and other assets                           
|Decrease (increase) in mortgage loans held for sale                           
|Decrease (increase) in deferred income tax asset                              
|Net tax benefit related to stock options and the employee                     
|stock ownership plan                                                          
|Increase in interest receivable and other assets                              
|Increase in interest payable and other liabilities                            
|                                                                              
|Net cash provided (used) by operating activities                              
|                                                                              
|Investing activities                                                          
|Purchases of securities available for sale                                    
|Proceeds from maturities of securities available for sale                     
|Proceeds from maturities of securities held to maturity                       
|Proceeds from sales of securities available for sale                          
|Net decrease (increase) in loans                                              
|Proceeds from sales of loans                                                  
|Purchases of loans                                                            
|Acquisitions, net of cash acquired of $36 for the year ended December 31, 2002
|Purchases of premises, equipment and other assets                             
|Proceeds from sales of foreclosed assets and excess bank-owned property       
|Proceeds from sales of premises, equipment and other assets                   
|                                                                              
|Net cash provided (used) by investing activities                              
|                                                                              
|Financing activities                                                          
|Net increase in deposits                                                      
|Net increase (decrease) in short-term borrowings                              
|Proceeds from issuance of Federal Home Loan Bank advances                     
|Payments on Federal Home Loan Bank advances                                   
|Proceeds from issuance of common stock                                        
|Dividends paid                                                                
|Redemption of preferred shares                                                
|Acquisition of treasury stock                                                 
|                                                                              
|Net cash provided (used) by financing activities                              
|                                                                              
|Increase (decrease) in cash and cash equivalents                              
|Cash and cash equivalents at beginning of year                                
|                                                                              
|Cash and cash equivalents at end of year                                      
|                                                                              
|Supplemental disclosures                                                      
|Cash paid during the year for:                                                
|Interest expense                                                              
|Income taxes                                                                  
|Non-cash investing and financing activities:                                  
|Loans, bank premises and equipment and other assests transferred              
|to foreclosed assets and excess bank-owned property                           
|Mortgage loans securitized and retained                                       
|Acquisitions:                                                                 
|Fair value of assets acquired                                                 
|Fair value of liabilities assumed                                             
|                                                                              

|See notes to consolidated
financial statements.
|-----------------------------------------------

|Notes to Consolidated
Financial Statements
|------------------------------------------
|                                          
|Hibernia Corporation and Subsidiaries     

|Note 1
     SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
|------------------------------------------------------
|                                                      

Hibernia Corporation
(the Parent Company) is a financial holding company which, through its bank and nonbank
subsidiaries, provides a broad array of financial products and services throughout
Louisiana, portions of Texas and South Mississippi. The principal products and services
offered include retail, small business, commercial, international, mortgage and private
banking; leasing; investment banking; corporate finance; treasury management; insurance;
and trust and investment management. Hibernia National Bank (the Bank), through a wholly
owned subsidiary, also acts as a retail broker, providing access to alternative investment
products, including mutual funds and annuities.

The
accounting principles followed by Hibernia Corporation and Subsidiaries (the Company or
Hibernia) and the methods of applying those principles conform with accounting principles
generally accepted in the United States and those generally practiced within the banking
industry.

CONSOLIDATION        The
consolidated financial statements include the accounts of the Parent Company and its
subsidiaries, all of which are wholly owned. The effects of mergers accounted for as
purchase transactions have been included from the date of consummation (see Note 2). All
significant intercompany transactions and balances have been eliminated.

CASH AND CASH EQUIVALENTS         The
Company considers all highly liquid investments with a stated maturity of three months or
less when purchased to be cash equivalents.

SHORT-TERM INVESTMENTS        Short-term
investments include interest-bearing time deposits in domestic banks, federal funds sold,
securities purchased under agreements to resell and trading account assets. Included in
trading account assets is an interest-only strip receivable resulting from a loan
securitization and securities held by an investment banking subsidiary. Certain short-term
investments are considered to be cash equivalents.

SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
        Securities purchased under
agreements to resell and securities sold under agreements
to repurchase aregenerally treated as collateralized
financing transactions and are recorded at the amounts at which the securities were
acquired or sold plus accrued interest. The fair value of securities pledged as collateral
under these agreements is continually monitored to ensure protection of the Companys
assets.

SECURITIES        Management
determines the appropriate classification of securities (trading, available for sale or
held to maturity) at the time of purchase and re-evaluates this classification
periodically. Securities classified as trading account assets are held for sale in
anticipation of short-term market movements. Debt securities are classified as held to
maturity when the Company has the positive intent and ability to hold the securities to
maturity. Securities not classified as held to maturity or trading are classified as
available for sale.

Securities
classified as trading account assets are carried at market value and are included in
short-term investments. Gains and losses, both realized and unrealized, are reflected in
earnings as other operating income. Securities classified as held to maturity are stated
at amortized cost. Securities classified as available for sale are stated at fair value,
with unrealized gains and losses, net of tax, reported in shareholders equity and
included in other comprehensive income. Securities with limited marketability, such as
stocks of the Federal Reserve Bank and Federal Home Loan Bank, are carried at cost and are
included in securities available for sale.

The
estimated fair value of securities is based on quoted market prices and prices obtained
from independent pricing services, when available, or estimated by management for
securities for which there is no public market. In establishing values for securities for
which there is no public market, including the Companys private equity portfolio,
the Companys management considers, among other factors, the cost of the investment
to the Company, developments since the acquisition of the investment, the financial
condition and operating results of the investee, the long-term potential of the business
of the investee, recent arms-length transactions involving similar securities, and
expected initial public offering prices. For these investments, the Company has relied on
financial data of the investees and, in many instances, on information from the Board of
Directors and management of the investee companies as to the potential effect of future
developments.

The
amortized cost of securities classified as held to maturity or available for sale is
adjusted for amortization of premiums and accretion of discounts to maturity or, in the
case of mortgage-backed securities, over the estimated life of the security. Amortization,
accretion and accruing interest are included in interest income on securities using the
level-yield method. Realized gains and losses on sales are included in net securities
gains (losses). The cost of securities sold is determined based on the specific
identification method.

The
Company reviews investment securities for impairment at least quarterly. Impairment is
considered to be other-than-temporary if it is likely that all amounts contractually due
will not be received for debt securities and when there is no positive evidence indicating
that an investments carrying amount is recoverable for equity securities. When
impairment is considered other-than-temporary, the cost basis of the security is written
down to fair value and the write-down is included in earnings in net securities gains
(losses). The new cost basis is not changed for subsequent recoveries in fair value.
Increases in fair value above cost are reflected net of tax in shareholders equity
and included in other comprehensive income. In evaluating whether impairment is temporary
or other-than-temporary, the Company considers, among other things, the time period the
security has been in an unrealized loss position; the financial condition of the issuer
and its industry; recommendations of investment advisors; economic forecasts; market or
industry trends; changes in tax laws, regulations or other governmental policies
significantly affecting the issuer; any downgrades from rating agencies; and any reduction
or elimination of dividends. The intent and ability of the Company to hold a security for
a period of time sufficient to allow for any anticipated recovery in fair value is also
considered.

MORTGAGE LOANS HELD FOR SALE 
        Mortgage
loans held for sale consist primarily of single-family residential loans collateralized by
the underlying property. Mortgage loans held for sale that are covered by forward sales
contracts are designated as hedged items. These mortgage loans are carried at cost,
adjusted for changes in fair value based on sales commitments or current market quotes
after the date of designation as a hedged item. Those loans not designated as hedged items
are carried at the lower of aggregate cost or market. Market adjustments and realized
gains and losses are classified as noninterest income.

LOANS        Loans
are stated at the principal amounts outstanding, less unearned income and the reserve for
loan losses. Interest on loans and accretion of unearned income are computed by methods
which approximate a level rate of return on recorded principal. Loan origination and
commitment fees and certain direct loan origination costs are deferred, and the net amount
is amortized as an adjustment of the related loans yield over the life of the loan.

A
loans past due or delinquency status is determined based on its contractual terms.
Commercial and small business loans are placed in nonaccrual status at 90 days past due or
sooner if, in managements opinion, there is doubt concerning full collectibility of
both principal and interest. Real estate secured consumer loans are placed in nonaccrual
status at 180 days past due. All other consumer loans are subject to mandatory charge-off
when any payment of principal or interest is more than 120 days delinquent and are
therefore not placed in nonaccrual status prior to charge-off. Commercial and small
business nonaccrual loans are considered to be impaired in accordance with the provisions
of Statement of Financial Accounting Standards (SFAS) No. 114, Accounting by
Creditors for Impairment of a Loan, when it is probable that all amounts due in
accordance with the contractual terms will not be collected. For purposes of determining
impairment, consumer loans are collectively evaluated as they are considered to be
comprised of large groups of smaller-balance homogeneous loans and therefore are not
individually evaluated for impairment under the provisions of SFAS No. 114. Nonaccrual
loans are charged off when deemed uncollectible by management. Interest payments received
on nonaccrual loans are applied to principal if there is doubt as to the collectibility of
the principal; otherwise, these receipts are recorded as interest income. A loan remains
in nonaccrual status until it is current as to principal and interest and the borrower
demonstrates the ability to fulfill the contractual obligation.

RESERVE FOR LOAN LOSSES        The
reserve for loan losses is maintained to provide for probable credit losses related to
specifically identified loans and for losses inherent in the loan portfolio that have been
incurred as of the balance sheet date. The reserve is comprised of specific reserves,
general reserves and an unallocated reserve. Specific reserves are assessed for each loan
that is reviewed for impairment or for which a probable loss has been identified. The
reserve related to loans that are identified as impaired is based on discounted expected
future cash flows (using the loans initial effective interest rate), the observable
market value of the loan, or the estimated fair value of the collateral for certain
collateral dependent loans. Factors contributing to the determination of specific reserves
include the financial condition of the borrower, changes in the value of pledged
collateral and general economic conditions.

General
reserves are established based on historical charge-offs considering factors which include
risk rating, industry concentration and loan type, with the most recent charge-off
experience weighted more heavily. The unallocated reserve, which is judgmentally
determined, generally serves to compensate for the uncertainty in estimating loan losses,
particularly in times of changing economic conditions, and considers the possibility of
improper risk ratings and possible over- or under-allocations of specific reserves. In
evaluating the unallocated reserve, management considers the lagging impact of historical
charge-off ratios in periods where future charge-offs are expected to increase or decrease
significantly. In addition, management considers trends in delinquencies and nonaccrual
loans, industry concentration, the volatility of risk ratings and the evolving portfolio
mix in terms of collateral, relative loan size, the degree of seasoning in the various loan products and loans recently acquired
through mergers. Changes in underwriting standards, credit administration and collection,
regulation and other factors which impact the credit quality and collectibility of the
loan portfolio also impact the unallocated reserve levels. The results of loan reviews
performed by internal and external examiners are also considered.

The
reserve for loan losses is based on managements estimate of probable credit losses
inherent in the loan portfolio; actual credit losses may vary from the current estimate.
The reserve for loan losses is reviewed periodically, taking into consideration the risk
characteristics of the loan portfolio, past charge-off experience, general economic
conditions and other factors that warrant current recognition. As adjustments to the
reserve for loan losses become necessary, they are reflected as a provision for loan
losses in current earnings. Actual loan charge-offs are deducted from and subsequent
recoveries are added to the reserve.

PREMISES AND EQUIPMENT        Premises
and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are computed primarily using the straight-line method over
the estimated useful lives of the assets, which generally are 10 to 20 years for buildings
and 3 to 10 years for equipment, and over the shorter of the lease terms or the estimated
lives of leasehold improvements.

CUSTOMERS
ACCEPTANCE LIABILITIES AND LIABILITY ON ACCEPTANCES        Customers
acceptance liabilities are recorded when funds are payable to another financial
institution on behalf of the Companys customer. At the time the amount is determined
to be payable (due to a triggering event such as delivery of goods), a liability on
acceptances is recorded to reflect the amount payable, offset with a customers
acceptance liability receivable from the customer. Prior to the triggering event, the
contractual amount of the agreement is included in standby letters of credit.

FORECLOSED ASSETS AND
EXCESS BANK-OWNED PROPERTY        Foreclosed
assets include real estate and other collateral acquired upon the default of loans.
Foreclosed assets and excess bank-owned property are recorded at the fair value of the
assets less estimated selling costs. The initial reduction of an outstanding loan amount
to fair value upon transfer to foreclosed assets is deducted from the reserve for loan
losses. Losses arising from the transfer of premises and equipment and other assets to
excess bank-owned property or foreclosed assets are charged to expense. A valuation
reserve for foreclosed assets and excess bank-owned property is maintained for subsequent
valuation adjustments on a specific-property basis. Income and expenses associated with
foreclosed assets and excess bank-owned property prior to sale are included in noninterest
expense.

GOODWILL AND OTHER
PURCHASE ACCOUNTING INTANGIBLES        Effective January
1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible
Assets, which addresses the accounting and reporting for excess costs of net assets
acquired in purchase transactions (goodwill) and other intangible assets. In accordance
with these rules, goodwill and intangible assets deemed to have indefinite lives are no
longer amortized but are subject to impairment tests. These impairment tests are performed
at a reporting unit level annually, or more frequently if events or changes in
circumstances indicate that the asset might be impaired. To the extent that impairment
exists, write-downs to realizable value are recorded. Purchased intangible assets with
finite useful lives are amortized using various methods over the period which each such
asset is expected to contribute directly to the future cash flows of the Company.

Prior
to the adoption of SFAS No. 142, goodwill was being amortized using the straight-line
method over the estimated periods benefited, generally 25 years. The Company reviewed its
intangible assets periodically for other-than-temporary impairment. The realizability of
goodwill was evaluated by geographic region and line of business based on a comparison of
the recorded balance of goodwill to the applicable discounted cumulative net income before
goodwill amortization expense, over the remaining amortization period of the associated
goodwill. To the extent that impairment existed, write-downs to realizable value were
recorded.

TRANSFERS AND SERVICING
OF FINANCIAL ASSETS        The
Company sells mortgage and other loans through secondary market securitizations. A
transfer of financial assets is accounted for as a sale when control is surrendered over
the asset transferred. Control is considered surrendered when 1) the transferred assets
have been isolated from the transferor; 2) each transferee has the right to pledge or
exchange the asset; and 3) the transferor does not maintain effective control over the
assets through either any agreement that entitles or obligates the transferor to
repurchase the assets or the ability to unilaterally cause the holder to return specific
assets. Upon consummation of the sale, the securitized loans are removed from the balance
sheet and a gain or loss on the sale is recognized. If the securitized asset is retained
rather than sold, the asset is reclassified on the balance sheet and no gain or loss is
recognized.

The
Company may retain residual interests in the securitized and sold assets, which may take
the form of an interest-only strip receivable, a cash reserve account (securitization
proceeds receivable) or a servicing asset. Gains and losses on sales of loans depend in
part on the previous carrying amount of the financial assets involved in the transfer.
These carrying amounts are allocated between the assets sold and the retained interests
based on their relative fair values at the date of transfer. The fair value of retained
interests are determined using quoted market prices, if available, or estimated based on
the present value of expected future cash flows using managements estimates of key
assumptions. Key assumptions may include credit losses, prepayment speeds and discount
rates commensurate with the risks involved.

Interest-only
strip receivables are carried at fair value in trading account assets. Cash receipts are
applied as a reduction of the balance. Securitization proceeds receivable are included in
other assets. Changes in the fair value of retained interests are recorded as other
operating income.

A
servicing asset is recorded when the right to service loans for others is acquired through
a purchase or retained upon the sale of loans. The fair value of capitalized servicing
rights is based upon the present value of estimated future cash flows. Based upon current
fair values, capitalized servicing rights are periodically assessed for impairment. To the
extent that temporary impairment exists, write-downs are recognized in current earnings as
an adjustment to the corresponding valuation allowance. Other-than-temporary impairment is
recognized through a write-down of the asset with a corresponding reduction in the
valuation allowance. Impairment is considered to be other-than-temporary when the Company
determines that the carrying value is expected to continue to exceed the fair value for an
extended period of time based on forecasted assumptions, including expected interest rate
levels and prepayment speeds. For purposes of performing an impairment evaluation, the
portfolio is stratified on the basis of certain risk characteristics including loan type
and interest rate. Capitalized servicing rights are amortized over the period of estimated
net servicing income, which considers appropriate prepayment assumptions.

INCOME TAXES        The
Parent Company and its subsidiaries file a consolidated federal income tax return. The
Company accounts for income taxes using the liability method. Temporary differences occur
between the financial reporting and tax bases of assets and liabilities. Deferred tax
assets and liabilities are recorded for these differences based on enacted tax rates and
laws that will be in effect when the differences are expected to reverse.

Hibernia
National Bank is subject to a Louisiana shareholders tax, which is based partly on
income. The income portion is reported as state income tax. In addition, certain
subsidiaries of the Parent Company and Hibernia National Bank are subject to Louisiana
state income and franchise tax. The Texas operations of Hibernia National Bank and other
subsidiaries of the Parent are subject to Texas franchise tax.

DERIVATIVE FINANCIAL
INSTRUMENTS        The
Company may enter into derivative contracts for the purposes of managing exposure to
interest rate or foreign exchange risk or to meet the financing needs of its customers.

For
derivatives designated as hedging the exposure to changes in the fair value of an asset or
liability (fair value hedge), the gain or loss is recognized in earnings in the period of
the fair value change together with the offsetting loss or gain on the hedged item
attributable to the risk being hedged. Earnings will be affected to the extent to which
the hedge is not effective in achieving offsetting changes in fair value. For derivatives
designated as hedging exposure to variable cash flows of a forecasted transaction (cash
flow hedge), the effective portion of the derivatives gain or loss is initially
reported as a component of other comprehensive income and subsequently reclassified into
earnings when the forecasted transaction affects earnings or when the hedge is terminated.
The ineffective portion of the gain or loss is reported in earnings immediately. For
derivatives that are not designated as hedging instruments, changes in the fair value of
the derivatives are recognized in earnings immediately.

In
applying hedge accounting for derivatives, the Company establishes a method for assessing
the effectiveness of the hedging derivative and a measurement approach for determining the
ineffective aspect of the hedge upon the inception of the hedge. These methods are
consistent with the Companys approach to managing risk.

STOCK OPTIONS        The
Company provides stock-based compensation under plans which grant stock options to
employees and directors (see Note 16). SFAS No. 123, Accounting for Stock-Based
Compensation, defines financial accounting and reporting standards for stock-based
compensation plans using a fair-value-based method of accounting for stock-based
compensation. However, SFAS No. 123 also allows an entity to measure stock-based
compensation cost using the intrinsic value method of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees. The Company has
elected to account for its stock-based compensation plans under APB Opinion No. 25. In
accordance with APB Opinion No. 25, compensation expense relating to stock options is not
reflected in net income provided the exercise price of the stock options granted equals or
exceeds the market value of the underlying common stock at the date of the grant. The
Companys practice has been to grant options at no less than the fair market value of
the stock at the date of grant. The following table illustrates the effect on net income
and earnings per share if the Company had applied the fair value recognition provisions of
SFAS No. 123 for stock options.

|( $ in thousands, except per share data)                   | Year ended December 31
|---------------------------------------------------------- | ----------------------
|                                                          
|                                                           | 2003                  
|                                                          
|Reported net income                                        | $ 258,336             
|Deduct:  Stock option compensation expense under the      
|fair value method, net of related tax effect (see Note 16) | (6,021)               
|                                                          
|Pro forma net income                                       | $ 252,315             
|                                                          
|Reported net income per common share                       | $        1.67         
|                                                          
|Pro forma net income per common share                      | $        1.63         
|                                                          
|Reported net income per common share - assuming dilution   | $        1.64         
|                                                          
|Pro forma net income per common share - assuming dilution  | $        1.60         
|                                                          

The
fair values of the options were estimated using a Black-Scholes option valuation model.
The Black-Scholes option valuation model was developed for use in estimating the fair
value of traded options which have no vesting restrictions and are fully transferable. In
addition, the option valuation model requires the input of highly subjective assumptions,
including the expected stock price volatility. Because the Companys stock options
have characteristics substantially different from those of traded options, and because
changes in subjective input assumptions can materially affect the fair value estimate, in
managements opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its stock options.

USE OF ESTIMATES        The
preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. The
determination of the allowance for loan losses, the valuation of mortgage servicing rights
and judgments regarding goodwill impairment are particularly critical because they involve
a higher degree of complexity and subjectivity and require estimates and assumptions about
uncertain matters. Actual results could differ from those estimates.

RECLASSIFICATION        Certain
items included in the consolidated financial statements for 2002 and 2001 have been
reclassified to conform with the 2003 presentation.

RECENT ACCOUNTING
PRONOUNCEMENTS        In
November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No.
45, Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others. This interpretation
requires additional disclosure of obligations under certain guarantees and requires the
guarantor to recognize, at inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The disclosure requirements were effective
for financial statements ending after December 15, 2002. The recognition and measurement
provisions of the interpretation were applicable on a prospective basis to guarantees
issued or modified after December 31, 2002. Application of this interpretation did not
have a material impact on the financial condition or operating results of the Company.

In
January 2003, the FASB issued Interpretation No. 46 (FIN 46), Consolidation of
Variable Interest Entities. This interpretation addresses consolidation by business
enterprises of certain variable interest entities in which they have controlling financial
interests. This interpretation applied immediately to any variable interest entities
created after January 31, 2003, and was effective July 1, 2003 for variable interests
acquired prior to February 1, 2003. The effective date was later delayed, however the
Company adopted the requirements of FIN 46 effective July 1, 2003, with no impact on the
financial condition or operating results of the Company. In December 2003, the FASB issued
a revised FIN 46 that incorporated guidance from certain FASB staff positions relating to
the original interpretation. The revised FIN 46 is effective for periods ending after
December 15 or March 15, 2004, depending on the type of variable interest entity. The
issuance of the revised FIN 46 did not affect the Companys initial adoption. The
interpretation of FIN 46 and its application to various transaction types and structures
are still evolving and management will continue to monitor these emerging issues.

In
April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. This statement amends and clarifies financial
accounting and reporting for derivative instruments and for hedging activities under SFAS
No. 133. SFAS No. 149 is effective for contracts entered into or modified and for hedging
relationships designated after June 30, 2003. Application of this statement did not have a
material impact on the financial condition or operating results of the Company.

In
May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity. This statement establishes
standards for classification and measurement of certain financial instruments with
characteristics of both liabilities and equity. SFAS No. 150 was effective July 1, 2003
and did not have a material impact on the financial condition or operating results of the
Company.

In
December 2003, the Securities and Exchange Commission (SEC) staff issued informal interim
guidance relating to the accounting for interest rate lock commitments that are subject to
SFAS No. 133 Implementation Issue No. C13, which includes the Companys mortgage loan
interest rate lock commitments. Under the Companys current accounting policy,
described in Note 23, an asset or a liability is recorded for the fair value of the
interest rate lock commitments depending on whether interest rates have decreased or
increased from the date of commitment to the valuation date. The SEC interim guidance will
require that all interest rate lock commitments entered into in the period beginning after
March 15, 2004 (April 1, 2004 for the Company), be recorded as a written option liability
with a corresponding expense charge. As the guidance has not yet been formalized in a
Staff Accounting Bulletin and details of the valuation methodology are not available, it
is difficult to ascertain the effect on the Company; however, it is not anticipated that
the adoption of this guidance will have a material effect on the financial condition or
the operating results of the Company.

|Note 2
     MERGERS
|-------------------
|                   

On
April 1, 2002, the Company purchased Friedler/LaRocca Financial Partners, L.L.C.
(Friedler/LaRocca), a firm specializing in life insurance and other financial services for
wealthy clients, for a total purchase price of $2,500,000. Under the purchase method of
accounting, the assets and liabilities of the purchased company were adjusted to their
estimated fair values as of the purchase date. Pro forma results of operations have not
been presented as the effect of the Friedler/LaRocca acquisition was not considered
material to the operations of the Company.

Hibernia
is a party to a definitive merger agreement with Coastal Bancorp, Inc. (Coastal). Under
the terms of the agreement, the Company would purchase all of the outstanding stock and
options of Coastal for approximately $230,000,000 in cash. Coastal is the parent of
Coastal Banc Holding Company, Inc., which owns Coastal Banc ssb, a Texas-chartered FDIC
insured state savings bank headquartered in Houston, Texas. At December 31, 2003, Coastal
had $2,001,313,000 in loans, $1,676,131,000 in deposits and $2,682,990,000 in assets, and
operated 43 branch offices in 18 Texas counties. The merger is subject to certain
regulatory and shareholder approvals. The Company anticipates that this merger will be
consummated in or near second-quarter 2004.

|Note 3
     CASH AND CASH EQUIVALENTS
|-------------------------------------
|                                     

The following is a summary of
cash and cash equivalents.

|($ in thousands)                                 | December 31
|------------------------------------------------ | -----------
|                                                
|                                                 |            
|                                                
|Cash and due from banks                          |            
|Federal funds sold                               |            
|Securities purchased under agreements to resell  |            
|Interest-bearing time deposits in domestic banks |            
|                                                
|Total cash and cash equivalents                  |            
|                                                

|Note 4
     SECURITIES
|----------------------
|                      

The
following is a summary of securities classified as available for sale and held to
maturity.

|($ in thousands)    |  |                                     |  | December 31, 2003
|------------------- |  | ----------------------------------- |  | -----------------
|                   
|                    |  |                                     |  | Amortized        
|                    |  |                                     |  | Cost             
|                   
|Available for sale: |  | U.S. Treasuries                     |  | $     30,680     
|                    |  | U.S. government agencies:           | 
|                    |  | Mortgage-backed securities          |  | 2,748,486        
|                    |  | Bonds                               |  | 764,564          
|                    |  | Stocks                              |  | 67,832           
|                    |  | States and political subdivisions   |  | 124,940          
|                    |  | Other                               |  | 107,878          
|                   
|                    |  | Total securities available for sale |  | $3,844,380       
|                   
|Held to maturity:   |  | U.S. government agencies:           | 
|                    |  | Mortgage-backed securities          |  | $     60,209     
|                   
|                    |  | Total securities held to maturity   |  | $     60,209     
|                   
|                   
|($ in thousands)    |  |                                     |  | December 31, 2002
|                   
|                    |  |                                     |  | Amortized        
|                    |  |                                     |  | Cost             
|                   
|Available for sale: |  | U.S. Treasuries                     |  | $     31,459     
|                    |  | U.S. government agencies:           | 
|                    |  | Mortgage-backed securities          |  | 1,944,640        
|                    |  | Bonds                               |  | 1,107,646        
|                    |  | Stocks                              |  | 105,000          
|                    |  | States and political subdivisions   |  | 150,673          
|                    |  | Other                               |  | 96,299           
|                   
|                    |  | Total securities available for sale |  | $3,435,717       
|                   
|Held to maturity:   |  | U.S. government agencies:           | 
|                    |  | Mortgage-backed securities          |  | $   140,525      
|                   
|                    |  | Total securities held to maturity   |  | $   140,525      
|                   

The
following is a summary of realized gains and losses from sales and writedowns due to
otherthantemporary impairment of securities available for sale.

|($ in thousands)                                  |  | Year Ended December 31, 2003
|------------------------------------------------- |  | ----------------------------
|                                                 
|                                                  |  | 2003                        
|                                                 
|Realized gains                                    |  | $ 10,887                    
|Realized losses                                   |  | (5,403                      
|Writedowns due to other-than-temporary impairment |  | (12,295                     
|                                                 
|Securities gains (losses), net                    |  | $  (6,811                   
|                                                 

Included
in realized gains are gains on sales of private equity securities. These gains totaled
$725,000 and $497,000 for the years ended December 31, 2003 and 2002, respectively. There
were no private equity securities gains in 2001. Included in writedowns due to
other-than-temporary impairment are losses associated with private equity securities.
These losses totaled $128,000, $14,017,000 and $9,756,000 for the years ended December 31,
2003, 2002 and 2001, respectively.

The
following is a summary of securities in an unrealized loss position at December 31, 2003,
by category and length of time that the individual securities have been in a continuous
unrealized loss position.

|($ in thousands)                              | December 31, 2003  
|--------------------------------------------- | -------------------
|                                             
|                                              | Less than 12 Months
|                                             
|                                              |                    
|                                              |                    
|                                             
|Available for sale:                           |                    
|U.S. government agencies:                     |                    
|Mortgage-backed securities                    |                    
|Bonds                                         |                    
|States and political subdivisions             |                    
|Other                                         |                    
|                                             
|Total temporarily impaired available for sale |                    
|                                             
|Held to maturity:                             |                    
|U.S. government agencies:                     |                    
|Mortgage-backed securities                    |                    
|                                             
|Total temporarily impaired held to maturity   |                    
|                                             

Included
in U.S. government agency securities available for sale are five individual debt
securities, purchased at a premium, which have been in a continuous unrealized loss
position for 12 months or longer. These securities had fair values totaling $5,001,000 and
unrealized losses totaling $115,000 at December 31, 2003. The temporary impairment on
these securities is caused by the relatively low interest rate environment and faster than
expected prepayments. The Company believes it will collect all amounts contractually due
on these securities and that it has the intent and ability to hold these securities until
the fair value is at least equal to the carrying value. Included in states and political
subdivisions securities available for sale are three individual debt securities which have
been in a continuous unrealized loss position for 12 months or longer. These securities
had fair values totaling $463,000 and unrealized losses totaling $11,000 at December 31,
2003. The temporary impairment on these securities is also caused by the relatively low
interest rate environment. The Company believes it will collect all amounts contractually
due on these securities and that it has the intent and ability to hold these securities
until the fair value is at least equal to the carrying value.

Included
in other securities available for sale are private equity securities which have been in a
continuous unrealized loss position for 12 months or longer. These securities had fair
values totaling $7,032,000 and unrealized losses totaling $1,475,000 at December 31, 2003.
These securities consist of equity interests in four limited partnerships that invest in
various other companies. Three of the four partnerships have been impaired since 2001;
however, other-than-temporary impairment writedowns have been reported on portions of each
of these investments during this period of impairment, as information indicated that the
impairment would not be recoverable. The fourth investment has been impaired since the
third quarter of 2002. In establishing the fair value of these investments, the
Companys management considers, among other factors, the cost of the investment to
the Company, developments since the acquisition of the investment, the financial condition
and operating results of the investee, the long-term potential of the business of the
investee, the quoted price of the securities that are publicly traded, recent arms
length transactions involving similar securities, and expected initial public offering
prices. There is no public market for these private equity investments and the Company, in
making its valuations, has relied on financial data of the investees and, in many
instances, on information from the Board of Directors and management of the investee
companies as to the potential effect of future developments. Based on all information
available, including financial and other information provided by the investee, the Company
considers this impairment to be temporary.

The
Company considers the impairment on the securities that have been in an unrealized loss
position for less than 12 months to be temporary. The Company believes that it will
collect all amounts contractually due and has the intent and the ability to hold these
securities until the fair value is at least equal to the carrying value.

Securities
with carrying values of $3,682,617,000 and $3,130,279,000 at December 31, 2003 and 2002,
respectively, were pledged to secure public or trust deposits or were sold under
repurchase agreements. The following is a summary of pledged securities.

|($ in thousands)    |  | December 31                               
|------------------- |  | ------------------------------------------
|                   
|                    |  |                                           
|                   
|Available for sale: |  | U.S. Treasuries                           
|                    |  | U.S. government agencies:                 
|                    |  | Mortgage-backed securities                
|                    |  | Bonds                                     
|                    |  | States and political subdivisions         
|                    |  | Other                                     
|                   
|                    |  | Total available for sale                  
|                   
|Held to maturity:   |  | U.S. government agencies:                 
|                    |  | Mortgage-backed securities                
|                   
|                    |  | Total held to maturity                    
|                   
|                    |  | Total carrying value of pledged securities
|                   

The
amortized cost and estimated fair value by maturity of securities are shown in the
following table. Securities are classified according to their contractual maturities
without consideration of principal amortization, potential prepayments or call options.
Accordingly, actual maturities may differ from contractual maturities.

|($ in thousands)    |  | December 31, 2003                  
|------------------- |  | -----------------------------------
|                   
|                    |  |                                    
|                    |  |                                    
|                   
|Available for sale: |  | Due in 1 year or less              
|                    |  | Due after 1 year through 5 years   
|                    |  | Due after 5 years through 10 years 
|                    |  | Due after 10 years                 
|                   
|                    |  | Total securities available for sale
|                   
|Held to maturity:   |  | Due after 1 years through 5 years  
|                    |  | Due after 10 years                 
|                   
|                    |  | Total securities held to maturity  
|                   

|Note 5
     LOANS
|-----------------
|                 

The
following is a summary of commercial and small business loans classified by repayment
source and consumer loans classified by type.

|($ in thousands) |  | December 31                                 
|---------------- |  | --------------------------------------------
|                
|                 |  |                                             
|                
|Commercial:      |  | Commercial and industrial                   
|                 |  | Services industry                           
|                 |  | Real estate                                 
|                 |  | Health care                                 
|                 |  | Transportation, communications and utilities
|                 |  | Energy                                      
|                 |  | Other                                       
|                
|                 |  | Total commercial                            
|                
|Small Business:  |  | Commercial and industrial                   
|                 |  | Services industry                           
|                 |  | Real estate                                 
|                 |  | Health care                                 
|                 |  | Transportation, communications and utilities
|                 |  | Energy                                      
|                 |  | Other                                       
|                
|                 |  | Total small business                        
|                
|Consumer:        |  | Residential mortgages:                      
|                 |  | First mortgages                             
|                 |  | Junior liens                                
|                 |  | Indirect                                    
|                 |  | Revolving credit:                           
|                 |  | Secured                                     
|                 |  | Unsecured                                   
|                 |  | Other:                                      
|                 |  | Secured                                     
|                 |  | Unsecured                                   
|                
|                 |  | Total consumer                              
|                
|                 |  | Total loans                                 
|                

The
following is a summary of nonperforming loans, foreclosed assets and excess bank-owned property.

|($ in thousands)                                  | December 31
|------------------------------------------------- | -----------
|                                                 
|                                                  |            
|                                                 
|Nonaccrual loans                                  |            
|Restructured loans                                |            
|                                                 
|Nonperforming loans                               |            
|                                                 
|Foreclosed assets                                 |            
|Excess bank-owned property                        |            
|                                                 
|Total nonperforming assets                        |            
|                                                 
|Loans 90 days or more past due and still accruing |            
|                                                 

At
December 31, 2003 and 2002, the recorded investment in loans that were considered to be
impaired was $43,107,000 and $44,573,000, respectively. Included in the 2003 and 2002
amounts were $27,008,000 and $32,346,000, respectively, of impaired loans for which the
related reserve for loan losses was $3,367,000 and $6,804,000, respectively. At December
31, 2003 and 2002, impaired loans that did not require a reserve for loan losses amounted
to $16,099,000 and $12,227,000, respectively. The average recorded investment in impaired
loans during the years ended December 31, 2003, 2002 and 2001 was approximately
$42,851,000, $55,205,000 and $62,277,000, respectively.

The
amount of interest income actually recognized on nonperforming loans during 2003, 2002 and
2001 was approximately $962,000, $903,000 and $645,000, respectively, substantially all of
which related to impaired loans. The amount of interest income that would have been
recorded during 2003, 2002 and 2001 if these loans had been current in accordance with
their original terms was approximately $4,885,000, $5,322,000 and $8,812,000,
respectively. Interest payments received on impaired loans are applied to principal if
there is doubt as to the collectibility of the principal; otherwise, these receipts are
recorded as interest income.

The
following is a summary of activity in the reserve for loan losses.

|($ in thousands)                | Year Ended December 31
|------------------------------- | ----------------------
|                               
|                                |                       
|                               
|Balance at beginning of year    |                       
|Loans charged off               |                       
|Recoveries                      |                       
|                               
|Net loans charged off           |                       
|                               
|Provision for loan losses       |                       
|Transfer due to securitizations |                       
|                               
|Balance at end of year          |                       
|                               

The
2001 transfer due to securitizations includes a reduction of the reserve for loan losses
of $7,168,000 associated with an indirect auto loan securitization. This transfer reduced
the book value of the loans sold, thereby increasing the gain on sale in the transaction.
Also included in the transfer due to securitization is a reduction of the reserve for loan
losses of $123,000 associated with the securitization of mortgage loans that were
reclassified to securities available for sale. This reduction in the reserve for loan
losses was reclassified to a recourse reserve included in other liabilities.

|Note 6
     SECURITIZATIONS
|---------------------------
|                           

In June
2001, the Company sold fixed-rate indirect automobile loans totaling $592,177,000 in a
securitization transaction and recognized a pre-tax gain of $11,417,000, which was
recorded in other operating income. This gain was partially offset by a loss of $1,025,000
on an interest rate swap used to lock in the gain on the transaction. Under the terms of
the transaction, the Company receives annual servicing fees of approximately one percent
of the outstanding balance of the automobile loans and retains the rights to future cash
flows remaining after the investors in the securitization trust have received their
contractual return. The investors have no recourse to the Companys other assets
beyond a cash reserve account in the event of failure of debtors to pay when due. The
Companys retained interests are subordinate to the investors interests. The
value of the retained interests is subject to credit and prepayment risks on the
transferred financial assets.

Key
economic assumptions used in measuring the retained interests and the components of
retained interests at the date of securitization were as follows: a monthly prepayment
rate of 1.5%, a weighted average remaining life of 1.5 years, expected annual net credit
losses of 0.98% and residual cash flows discounted at 15%. The fair value of the retained
interests at the date of the securitization included an interest-only strip receivable of
$24,648,000, recorded as a trading account asset, and a cash reserve account
(securitization proceeds receivable) of $20,494,000, included in other assets. Cash flows
from the securitization and sale consisted of proceeds received of $570,041,000. No
servicing rights were recorded on this transaction as the expected benefits of servicing
were just adequate to compensate the Company for the expected costs of its servicing
responsibilities.

At
December 31, 2003 and 2002, the outstanding principal balance of the securitized
automobile loans totaled $111,062,000 and $245,720,000, respectively, of which $279,000
and $664,000, respectively, were past due 90 days or more. Net charge-offs on these
securitized automobile loans totaled $2,982,000 and $4,710,000 during 2003 and 2002,
respectively. Cash flows consisted of $1,930,000, $3,714,000 and $2,680,000 of servicing
income and $342,000, $482,000 and $416,000 of interest on the securitization proceeds
receivable in 2003, 2002 and 2001, respectively. The securitization proceeds receivable
was increased by $1,560,000 and $3,644,000 during 2003 and 2002, respectively. There were
no additions to the securitization proceeds receivable in 2001. Additionally, excess cash
flows of $5,634,000, $12,103,000 and $4,156,000 were applied to reduce the balance of the
interest-only strip receivable during 2003, 2002 and 2001, respectively. The interest-only
strip totaled $3,226,000 and $8,353,000 at December 31, 2003 and 2002, respectively. The
securitization proceeds receivable totaled $28,743,000 and $25,381,000 at December 31,
2003 and 2002, respectively.

At
December 31, 2003 and 2002, key economic assumptions and the sensitivity to current fair
value of residual cash flows to immediate 10 percent and 20 percent adverse changes in
those assumptions are reflected in the following table. These sensitivities are
hypothetical and should be used with caution. In this table, the effect of a variation in
a particular assumption on the fair value of the retained interests is calculated without
changing any other assumptions; in actuality, changes in one factor may result in changes
in another which could magnify or counteract the sensitivities.

|($ in thousands)                                 | December 31
|------------------------------------------------ | -----------
|                                                
|                                                 |            
|                                                
|Carrying amount/fair value of retained interests |            
|                                                
|Prepayment speed assumption (monthly rate)       |            
|Impact on fair value of 10% adverse change       |            
|Impact on fair value of 20% adverse change       |            
|                                                
|Expected credit losses (annual rate)             |            
|Impact on fair value of 10% adverse change       |            
|Impact on fair value of 20% adverse change       |            
|                                                
|Residual cash flows discount rate (annual rate)  |            
|Impact on fair value of 10% adverse change       |            
|Impact on fair value of 20% adverse change       |            
|                                                

From
1999 through 2001, the Company securitized and retained portions of its first residential
mortgage loans with recourse provisions through the Federal National Mortgage Association
(FNMA). The loans were reclassified to investment securities, which resulted in the
retention of 100% of the interests in the securitizations. Under the recourse provisions
with FNMA, the Company assumes the risk of borrower default and has established reserves
to cover potential losses. For loans reclassified as available for sale securities, a
servicing rights asset was recorded and is being amortized over the period of net
servicing income. No servicing rights asset was recorded on the loans reclassified as held
to maturity securities. Individual securities from these securitizations have been sold
from the available for sale portfolio and control over the assets was surrendered. For
securities that were sold, the remaining interests consist only of the servicing rights
asset and the recourse provision. Investment securities resulting from mortgage loan
securitizations had carrying values of $8,884,000 and $125,830,000 in securities available
for sale at December 31, 2003 and 2002, respectively, and $60,209,000 and $140,525,000 in
securities held to maturity at December 31, 2003 and 2002, respectively. The balance of
these securitized loans, which are serviced by the Bank, totaled $115,937,000 and
$276,015,000 at December 31, 2003 and 2002, respectively. Included in these balances are
securitized loans 90 days or more past due of $349,000 and $601,000 at December 31, 2003
and 2002, respectively.

|Note 7
     PREMISES AND
EQUIPMENT
|----------------------------------
|                                  

The following tables detail
premises and equipment and related depreciation and amortization expense.

|($ in thousands)                               | December 31
|---------------------------------------------- | -----------
|                                              
|                                               |            
|                                              
|Land                                           |            
|Buildings                                      |            
|Leasehold improvements                         |            
|Furniture and equipment                        |            
|                                              
|                                               |            
|Less accumulated depreciation and amortization |            
|                                              
|Total premises and equipment                   |            
|                                              

|                                                         
|---------------------------------------------------------
|($ in thousands)                                         
|                                                         
|                                                         
|                                                         
|Provisions for depreciation and amortization included in:
|Occupancy expense                                        
|Equipment expense                                        
|                                                         
|Total depreciation and amortization expense              
|                                                         

|Note 8
     GOODWILL AND OTHER
INTANGIBLES
|------------------------------------------
|                                          

Effective
January 1, 2002, the Company adopted the requirements of SFAS No. 142, Goodwill and
Other Intangible Assets. Under the new rules, goodwill and intangible assets deemed
to have indefinite lives are no longer amortized, but are subject to annual impairment
tests in accordance with the provisions of SFAS No. 142. Other intangible assets continue
to be amortized over their useful lives.

The
Company performed the first of the required impairment tests of goodwill as of January 1,
2002 and its annual impairment tests as of September 30, 2003 and 2002. The results of
these tests did not indicate impairment of the Companys recorded goodwill. The
carrying amount of goodwill not subject to amortization totaled $206,625,000 at January 1,
2002, which was net of accumulated amortization of $66,914,000. On April 1, 2002, goodwill
of $2,489,000 was recorded and added to the Consumer segment as a result of the purchase
of Friedler/LaRocca. At December 31, 2003 and 2002, goodwill totaled $209,114,000 and is
included in the Companys reportable segments as follows: Consumer 
$102,490,000; Small Business  $48,340,000; Commercial  $58,276,000; and
Investments and Public Funds  $8,000.

The
Company records purchase accounting intangible assets that consist of core deposit
intangibles, trust intangibles and insurance customer lists intangibles, which are subject
to amortization. These include both contractual and noncontractual customer relationships.
The core deposit and trust intangibles reflect the value of deposit and trust customer
relationships which arose from the purchases of financial institutions. The insurance
customer lists intangibles represent the purchase of customer lists and contracts from
individual insurance agents or agencies. The following table summarizes the Companys
purchase accounting intangible assets subject to amortization.

|(in thousands)                  | December 31, 2003 | December 31, 2002
|------------------------------- | ----------------- | -----------------
|                               
|                                | Gross             |                  
|                                | Carrying          | Accumulated      
|Purchase accounting intangibles | Amount            | Amortization     
|                               
|Core deposit                    | $36,152           | $31,925          
|Trust                           | 17,059            | 11,692           
|Insurance customer lists        | 4,458             | 1,390            
|                               
|Total                           | $57,669           | $45,007          
|                               

Amortization
expense relating to purchase accounting intangibles totaled $5,055,000, $5,940,000 and
$7,342,000 for the years ended December 31, 2003, 2002 and 2001, respectively. The
weighted-average amortization period of these assets is 9 years. Estimated future
amortization expense is as follows: 2004  $4,392,000; 2005  $3,799,000; 2006
 $2,274,000; 2007 -$776,000; 2008  $610,000; and thereafter  $811,000.
These estimates do not assume the addition of any new purchase accounting intangibles.

Also
included in intangible assets are capitalized mortgage servicing rights with net carrying
amounts of $118,334,000 and $114,403,000 at December 31, 2003 and 2002, respectively. The
carrying amounts are net of a reserve for temporary impairment of $31,121,000 and
$38,500,000 at December 31, 2003 and 2002, respectively. Amortization expense of mortgage
servicing rights, included in noninterest income, totaled $44,438,000, $28,771,000 and
$14,293,000 for the years ended 2003, 2002 and 2001, respectively. Activity in the
valuation reserve included net additions, recorded in noninterest income, of $18,500,000,
$23,199,000 and $12,301,000 in 2003, 2002 and 2001, respectively. In addition, in 2003 the
Company reduced the valuation reserve by recording other-than-temporary impairment
totaling $25,879,000.

|Note 9
     TIME DEPOSITS
|-------------------------
|                         

At
December 31, 2003, time deposits with a remaining maturity of one year or more amounted to
$1,326,148,000. Maturities of all time deposits are as follows: 2004 
$3,291,406,000; 2005  $429,406,000; 2006  $131,574,000; 2007 
$470,577,000; 2008  $217,497,000; and thereafter  $77,094,000.

Domestic
certificates of deposit of $100,000 or more amounted to $1,801,313,000 and $1,927,822,000
at December 31, 2003 and 2002, respectively. Interest on these certificates amounted to
$40,258,000, $53,453,000 and $97,648,000 in 2003, 2002 and 2001, respectively.

Foreign
deposits, which are deposit liabilities of the Cayman Island office of Hibernia National
Bank, amounted to $703,183,000 and $530,943,000 at December 31, 2003 and 2002,
respectively. These deposits are comprised primarily of individual deposits of $100,000 or
more. Interest expense on foreign deposits amounted to $5,668,000, $8,418,000 and
$20,741,000 for 2003, 2002 and 2001, respectively.

|Note 10
     SHORT-TERM
BORROWINGS
|----------------------------------
|                                  

The following
is a summary of short-term borrowings.

|($ in thousands)                                    | December 31
|--------------------------------------------------- | -----------
|                                                   
|                                                    |            
|                                                   
|Federal funds purchased                             |            
|Securities sold under agreements to repurchase      |            
|Federal Reserve Bank treasury, tax and loan account |            
|Trading account liabilities                         |            
|                                                   
|Total short-term borrowings                         |            
|                                                   

Federal
funds purchased and securities sold under agreements to repurchase generally mature within
one to 14 days from the transaction date. The Federal Reserve Bank treasury, tax and loan
account is an open-ended note option with the Federal Reserve Bank of Atlanta. Trading
account liabilities result from trading activity by the Companys investment banking
subsidiary. The following is a summary of pertinent data related to short-term borrowings.

|($ in thousands)               | December 31
|------------------------------ | -----------
|                              
|                               | 2003       
|                              
|Outstanding at December 31     | $1,280,802 
|Maximum month-end outstandings | $1,280,802 
|Average daily outstandings     | $   709,553
|Average rate during the year   | 0.89%      
|Average rate at year end       | 0.80%      
|                              

|Note 11
     FEDERAL HOME
LOAN BANK ADVANCES
|--------------------------------------------
|                                            

The following
is a summary of Federal Home Loan Bank (FHLB) advances.

|($ in thousands)                          | December 31
|----------------------------------------- | -----------
|                                         
|                                          |            
|                                         
|Federal Home Loan Bank callable advances  |            
|Federal Home Loan Bank long-term advances |            
|                                         
|Total Federal Home Loan Bank advances     |            
|                                         

The
FHLB advances are secured by the Companys investment in FHLB stock and by a blanket
floating lien on portions of the Companys residential mortgage loan portfolio. FHLB
stock totaled $72,575,000 and $60,547,000 at December 31, 2003 and 2002, respectively, and
is included in securities available for sale.

The
FHLB callable advances require monthly interest payments. An advance in the amount of
$200,000,000 matures in 2004, accrues interest at a rate of 5.65%, and is callable at
quarterly intervals which began in September 2001. Another $200,000,000 advance matures in
2008, accrues interest at a rate of 5.28%, and is callable at quarterly intervals which
began in June 2003. If called prior to maturity, replacement funding will be offered by
the FHLB at a then-current rate.

The
FHLB long-term advances include advances of $1,812,000 and $2,241,000 at December 31, 2003
and 2002, respectively, which accrue interest at fixed contractual rates ranging from
5.70% to 8.36%, and advances of $700,000,000, for both periods, which accrue interest at
variable rates. The long-term fixed-rate advances are due in monthly installments and are
scheduled to amortize through various dates through 2008. The variable rate advances had
rates ranging from 1.10% to 1.14% at December 31, 2003 and 1.30% to 1.73% at December 31,
2002 and average rates of 1.19% during 2003 and 1.84% during 2002. These variable rate
advances require quarterly interest payments and have maturities ranging from 2004 to
2008. Should the residential mortgage loans for which the fixed or variable long-term
advances were obtained repay at a faster rate than anticipated, the advances are to be
repaid at a correspondingly faster rate.

The
Company instituted hedges against the effect of rising interest rates on a portion of its
variable rate debt by entering into interest rate swap agreements during 2001 and 2002
whereby the Company will receive quarterly variable rate (LIBOR) payments and pay fixed
rates on notional amounts. These notional amounts totaled $400,000,000 and $700,000,000 at
December 31, 2003 and 2002, respectively. The maturities of these interest rate swaps
match the maturities of the underlying debt. Net settlements on the swap agreements are
accrued monthly, effectively converting the related FHLB advances from variable rates to
weighted average fixed rates of 4.51% and 4.80% for the years ended December 31, 2003 and
2002, respectively.

Maturities
of FHLB advances are as follows: 2004  $500,369,000; 2005  $704,000; 2006
 $200,291,000; 2007  $100,289,000; and 2008  $300,159,000.

|Note 12
     OTHER ASSETS AND
OTHER LIABILITIES
|-----------------------------------------------
|                                               

The
following are summaries of other assets and other liabilities.

|($ in thousands)   |  | December 31                                     
|------------------ |  | ------------------------------------------------
|                  
|                   |  |                                                 
|                  
|Other assets:      |  | Accrued interest receivable                     
|                   |  | Fair value derivative assets                    
|                   |  | Accounts receivable                             
|                   |  | Securitization proceeds receivable              
|                   |  | Cash surrender value of life insurance          
|                   |  | Deferred income taxes                           
|                   |  | Foreclosed assets and excess bank-owned property
|                   |  | Prepaid expenses                                
|                   |  | Other private equity investments                
|                   |  | Other                                           
|                  
|                   |  | Total other assets                              
|                  
|Other liabilities: |  | Trade accounts payable and accrued liabilities  
|                   |  | Trade date securities payable                   
|                   |  | Fair value derivative liabilities               
|                   |  | Accrued interest payable                        
|                   |  | Other                                           
|                  
|                   |  | Total other liabilities                         
|                  

|Note 13
     PREFERRED AND
COMMON STOCK
|---------------------------------------
|                                       

The
Company has authorized 100,000,000 shares of no par value preferred stock. There were no
preferred shares issued and outstanding at December 31, 2003 or 2002.

The
Company has authorized 300,000,000 shares of no par value Class A Common Stock. There were
168,214,757 and 166,252,171 shares issued and 155,261,497 and 157,412,166 shares
outstanding at December 31, 2003 and 2002, respectively. The Company held 12,953,260 and
8,840,005 shares of Class A Common Stock in treasury at December 31, 2003 and 2002,
respectively. During 2003, the Company repurchased 4,454,000 shares of common stock under
buyback programs at a total cost of $87,527,000. During 2002, the Company repurchased
5,452,000 shares of common stock under a buyback program at a total cost of $105,175,000.
There were no repurchases of common stock during 2001.

As
partial consideration in the July 6, 2000 acquisition of Rosenthal Agency, Inc., an
insurance brokerage firm, the Company issued 790,888 common stock purchase warrants
recorded at a fair value of $2,000,000. Each warrant was convertible into one share of
Class A Common Stock at an exercise price of $13.12 per share. The warrants became
exercisable July 7, 2003 and were exercised during 2003.

|Note 14
     EMPLOYEE BENEFIT
PLANS
|-----------------------------------
|                                   

The
Company maintains a defined-contribution benefit plan under Section 401(k) of the Internal
Revenue Code, the Retirement Security Plan (RSP). Substantially all employees who have
completed one year of service are eligible to participate in the RSP. Employees contribute
a portion of their compensation with the Company matching 100% of the first 5%. The
matching contributions are invested in Hibernia Class A Common Stock and are charged to
employee benefits expense. Participants may elect to immediately transfer Company
contributions received to any of the plans investment options. At December 31, 2003,
the RSP owned approximately 3,835,000 shares of Hibernia Class A Common Stock. The
Companys contributions to the RSP totaled $8,673,000 in 2003, $8,071,000 in 2002 and
$7,291,000 in 2001.

The
Company maintains incentive pay and bonus programs for certain employees. Costs of these
programs were $58,803,000, $58,252,000 and $52,646,000 for the years ended December 31,
2003, 2002 and 2001, respectively.

|Note 15
     EMPLOYEE STOCK
OWNERSHIP PLAN
|------------------------------------------
|                                          

The
Company has an internally-leveraged employee stock ownership plan (ESOP) in which
substantially all employees participate. The ESOP owned approximately 3,523,000 and
3,777,000 shares of Hibernia Class A Common Stock at December 31, 2003 and 2002,
respectively. The outstanding debt obligation of the ESOP totaled $18,122,000 and
$21,565,000 at December 31, 2003 and 2002, respectively. The Bank makes annual
contributions to the ESOP in an amount determined by its Board of Directors (or a
committee authorized by the Board of Directors), but at least equal to the ESOPs
minimum debt service less dividends received by the ESOP. Dividends received by the ESOP
in 2003, 2002 and 2001 were used to pay debt service, and it is anticipated that this
practice will continue in the future. The ESOP shares initially were pledged as collateral
for its debt. As the debt is repaid, shares are released from collateral and allocated to
active participants.

The
debt of the ESOP is recorded as debt of the Parent Company, and the shares pledged as
collateral are reported as unearned compensation in equity. Hibernia National Banks
loan asset and the Parent Companys debt liability are eliminated in consolidation.
As shares are committed to be released, the Company reports compensation expense equal to
the current market value of the shares, and the shares become outstanding for net income
per common share computations. Dividends on allocated ESOP shares are recorded as a
reduction of retained earnings; dividends on unallocated ESOP shares are recorded as a
reduction of debt and accrued interest by the Parent Company.

Compensation
expense of $4,881,000, $5,971,000 and $5,337,000 relating to the ESOP was recorded during
2003, 2002 and 2001, respectively. The ESOP held 2,093,000 and 2,072,000 allocated shares
and 1,430,000 and 1,705,000 suspense shares at December 31, 2003 and 2002, respectively.
The fair value of the suspense shares at December 31, 2003 and 2002 was $33,622,000 and
$32,833,000, respectively.

|Note 16
     STOCK OPTIONS
|--------------------------
|                          

SFAS
No. 123, Accounting for Stock-Based Compensation, defines financial accounting
and reporting standards for stock-based compensation plans. Those plans include all
arrangements by which employees and directors receive shares of stock or other equity
instruments of a company, or a company incurs liabilities to employees or directors in
amounts based on the price of the stock. SFAS No. 123 defines a fair-value-based method of
accounting for stock-based compensation. However, SFAS No. 123 also allows an entity to
continue to measure stock-based compensation cost using the intrinsic value method of APB
Opinion No. 25, Accounting for Stock Issued to Employees. Entities electing to
retain the accounting prescribed in APB No. 25 must make pro forma disclosures of net
income, net income per common share and net income per common share  assuming
dilution as if the fair-value-based method of accounting defined in SFAS No. 123 had been
applied. The Company retained the provisions of APB No. 25 for expense recognition
purposes. Under APB No. 25, because the exercise price of the Companys stock options
equals the market price of the underlying stock on the date of grant, no compensation
expense is recognized.

The
Companys stock option plans provide incentive and nonqualified options to various
key employees and non-employee directors. The Companys practice has been to grant
options at no less than the fair market value of the stock at the date of grant. Until
October 1997, options granted to non-employee directors were granted under the 1987 Stock
Option Plan; after October 1997 through January 2003, those options were granted under the
1993 Directors Stock Option Plan. Under those plans, options granted to non-employee
directors upon inception of service as a director and certain options granted to directors
who retire as employees vest six months from the date of grant. Other options granted to
directors under those plans and options granted to employees under the 1987 Stock Option
Plan and the Long-Term Incentive Plan generally become exercisable in the following
increments: 50% two years from the date of grant, an additional 25% three years from the
date of grant and the remaining 25% four years from the date of grant. During 2001, an
option was granted to a former chief executive officer, prior to his separation from the
Company, under an individual stock option plan referred to as the 2001 Nonqualified Stock
Option Plan. That option vested in July 2001.

Options
granted to employees and directors under the plans described above generally become
immediately exercisable if the holder of the option dies while the option is outstanding.
Options granted under the 1987 Stock Option Plan generally expire 10 years from the date
granted unless the holder leaves the employ of the Company other than through retirement,
death or disability, in which case the options expire at the date of termination. Options
granted under the Long-Term Incentive Plan and the 1993 Directors Stock Option Plan
generally expire 10 years from the date of grant, although they may expire earlier if the
holder dies, retires, becomes permanently disabled or otherwise leaves the employ of the
Company (in which case the options expire at various times ranging from 90 days to 12
months). All options vest immediately upon a change of control of the Company.

During
2003, shareholders approved the 2003 Long-Term Incentive Compensation Plan (2003 Plan).
The 2003 Plan supersedes and replaces the Companys Long-Term Incentive Plan and
replaces the 1993 Directors Stock Option Plan. Existing options granted under these
plans remain outstanding under the original terms of the plans. Options that are granted
to employees under the 2003 Plan that have a vesting schedule that is based on length of
service (as opposed to performance measures) generally are exercisable in the same
increments as those issued under the Long-Term Incentive Plan, although they may vest
earlier in the event of termination of employment as a result of death, disability or
retirement or in the event of a change in control of the Company. Options issued to
non-employee directors under the 2003 Plan vest immediately. Stock issued to non-employee
directors pursuant to the exercise of those options (other than those used to pay the
exercise price, if permitted) is subject to a minimum one-year holding period. Options
issued under the 2003 Plan generally expire 10 years from the date of grant, although they
may expire earlier if (i) the holder leaves the employ or service of the Company other
than through retirement, death or disability, in which case vested options expire in 90
days (or at original expiration date, if earlier), or (ii) the holder retires, dies or
becomes disabled, in which case vested options expire in 3 years (or at original
expiration date, if earlier). All options vest immediately upon a change of control of the
Company. Unvested options are forfeited upon termination.

The
option granted under the 2001 Nonqualified Stock Option Plan expires January 31, 2006,
unless the holder dies, in which case the option expires one year following the death (but
not later than January 31, 2006). Shares to be issued upon the exercise of the option
granted under the 2001 Nonqualified Stock Option Plan are to be issued out of the
Companys treasury stock.

The
following summarizes the option activity in the plans during 2003, 2002 and 2001. At
December 31, 2003 there were 9,695,754 shares available for grant under the 2003 Long-Term
Incentive Compensation Plan. There are no shares available for grant under the 1987 Stock
Option Plan, the Long-Term Incentive Plan, the 1993 Directors Stock Option Plan and
the 2001 Nonqualified Stock Option Plan.

|                                                      |           |              |             |             
|----------------------------------------------------- | --------- | ------------ | ----------- | ------------
|                                                      |           |              |             | Weighted-   
|                                                      |           |              |             | Average     
|                                                      |           |              |             | Exercise    
|                                                      | Incentive | Nonqualified | Total       | Price       
|                                                     
|1987 Stock Option Plan:                              
|Outstanding, December 31, 2000                        | 43,913    | 1,079,279    | 1,123,192   | $       6.09
|Exercised                                             | (22,500)  | (84,856)     | (107,356)   | $       5.15
|Converted to nonqualified                             | (13,913)  | 13,913       | -           | $       7.19
|                                                     
|Outstanding, December 31, 2001                        | 7,500     | 1,008,336    | 1,015,836   | $       6.19
|Exercised                                             | (7,500)   | (988,336)    | (995,836)   | $       6.15
|                                                     
|Outstanding, December 31, 2002                        | -         | 20,000       | 20,000      | $       8.31
|Exercised                                             | -         | (15,000)     | (15,000)    | $       8.46
|                                                     
|Outstanding, December 31, 2003                        | -         | 5,000        | 5,000       | $       7.88
|                                                     
|Exercisable, December 31, 2003                        | -         | 5,000        | 5,000       | $       7.88
|                                                     
|                                                     
|Long-Term Incentive Plan:                            
|Outstanding, December 31, 2000                        | 12,598    | 10,980,534   | 10,993,132  | $     12.36 
|Granted (weighted-average fair value $3.66 per share) | -         | 2,774,585    | 2,774,585   | $     13.54 
|Canceled                                              | -         | (507,855)    | (507,855)   | $     13.68 
|Exercised                                             | -         | (1,158,247)  | (1,158,247) | $       9.77
|Converted to nonqualified                             | (12,598)  | 12,598       | -           | $       7.94
|                                                     
|Outstanding, December 31, 2001                        | -         | 12,101,615   | 12,101,615  | $     12.82 
|Granted (weighted-average fair value $4.87 per share) | -         | 2,880,522    | 2,880,522   | $     17.97 
|Canceled                                              | -         | (394,924)    | (394,924)   | $     15.06 
|Exercised                                             | -         | (2,840,385)  | (2,840,385) | $     10.56 
|                                                     
|Outstanding, December 31, 2002                        | -         | 11,746,828   | 11,746,828  | $     14.56 
|Granted (weighted-average fair value $4.15 per share) | -         | 2,962,760    | 2,962,760   | $     18.52 
|Canceled                                              | -         | (669,359)    | (669,359)   | $     16.56 
|Exercised                                             | -         | (1,746,544)  | (1,746,544) | $     12.56 
|                                                     
|Outstanding, December 31, 2003                        | -         | 12,293,685   | 12,293,685  | $     15.69 
|                                                     
|Exercisable, December 31, 2003                        | -         | 5,454,070    | 5,454,070   | $     14.16 
|                                                     
|                                                     
|1993 Directors' Stock Option Plan:                   
|Outstanding, December 31, 2000                        | -         | 430,000      | 430,000     | $     12.20 
|Granted (weighted-average fair value $4.35 per share) | -         | 60,000       | 60,000      | $     15.48 
|Canceled                                              | -         | (10,000)     | (10,000)    | $     21.72 
|Exercised                                             | -         | (77,500)     | (77,500)    | $       9.78
|                                                     
|Outstanding, December 31, 2001                        | -         | 402,500      | 402,500     | $     12.91 
|Granted (weighted-average fair value $5.47 per share) | -         | 70,000       | 70,000      | $     19.80 
|Exercised                                             | -         | (18,750)     | (18,750)    | $     12.15 
|                                                     
|Outstanding, December 31, 2002                        | -         | 453,750      | 453,750     | $     14.01 
|Exercised                                             | -         | (146,250)    | (146,250)   | $     12.22 
|                                                     
|Outstanding, December 31, 2003                        | -         | 307,500      | 307,500     | $     14.86 
|                                                     
|Exercisable, December 31, 2003                        | -         | 232,500      | 232,500     | $     14.04 
|                                                     

|                                                      |           |              |         |            
|----------------------------------------------------- | --------- | ------------ | ------- | -----------
|                                                      |           |              |         | Weighted-  
|                                                      |           |              |         | Average    
|                                                      |           |              |         | Exercise   
|                                                      | Incentive | Nonqualified | Total   | Price      
|                                                     
|2001 Nonqualified Stock Option Plan:                 
|Granted (weighted-average fair value $3.61 per share) | -         | 250,000      | 250,000 | $     13.84
|                                                     
|Outstanding, December 31, 2001                        | -         | 250,000      | 250,000 | $     13.84
|                                                     
|Outstanding, December 31, 2002                        | -         | 250,000      | 250,000 | $     13.84
|                                                     
|Outstanding, December 31, 2003                        | -         | 250,000      | 250,000 | $     13.84
|                                                     
|Exercisable, December 31, 2003                        | -         | 250,000      | 250,000 | $     13.84
|                                                     
|                                                     
|2003 Long - Term Incentive Compensation Plan:        
|Granted (weighted-average fair value $4.14 per share) | -         | 67,250       | 67,250  | $     18.80
|Exercised                                             | -         | (5,000)      | (5,000) | $     18.23
|                                                     
|Outstanding, December 31, 2003                        | -         | 62,250       | 62,250  | $     18.85
|                                                     
|Exercisable, December 31, 2003                        | -         | 45,000       | 45,000  | $     18.23
|                                                     

In addition
to the above option activity in the plans, 3,000 shares, 44,627 shares and 41,350 shares
of restricted stock were awarded under the Long-Term Incentive Plan during the years ended
December 31, 2003, 2002 and 2001, respectively. During the year ended December 31, 2003,
30,950 shares of restricted stock were awarded under the 2003 Long-Term Incentive
Compensation Plan.

The
following table presents the weighted-average remaining life by plan as of December 31,
2003 for options outstanding within the stated exercise price ranges.

|                                              | Outstanding |                | Exercisable   
|--------------------------------------------- | ----------- | -------------- | --------------
|                                              |             |                |               
|                                              |             | Weighted-      | Weighted-     
|                                              | Number      | Average        | Average       
|Exercise Price Range Per Share                | of Options  | Exercise Price | Remaining Life
|                                             
|1987 Stock Option Plan:                      
|$7.88                                         | 5,000       | $   7.88       | 0.07 years    
|                                             
|Long-Term Incentive Plan:                    
|$6.94 to $12.13                               | 1,974,293   | $   9.70       | 4.76 years    
|$13.31 to $14.00                              | 2,483,208   | $ 13.46        | 6.16 years    
|$15.13 to $17.15                              | 1,369,860   | $ 16.09        | 5.16 years    
|$17.75 to $18.54                              | 6,367,824   | $ 18.26        | 7.82 years    
|$18.89 to $20.25                              | 98,500      | $ 19.58        | 4.57 years    
|                                             
|1993 Directors' Stock Option Plan:           
|$7.88 to $10.44                               | 92,500      | $   9.64       | 3.50 years    
|$11.81 to $15.48                              | 110,000     | $ 13.75        | 5.51 years    
|$19.80 to $21.72                              | 105,000     | $ 20.62        | 6.59 years    
|                                             
|2001 Nonqualified Stock Option Plan:         
|$13.84                                        | 250,000     | $ 13.84        | 2.09 years    
|                                             
|2003 Long - Term Incentive Compensation Plan:
|$18.23 to $22.97                              | 62,250      | $ 18.85        | 9.42 years    
|                                             

The
following pro forma information was determined as if the Company had accounted for stock
options using the fair-value-based method as defined in SFAS No. 123, in which the
estimated fair value of the options granted is amortized to expense over the options
vesting period. The fair value of the options was estimated using a Black-Scholes option
valuation model with the following weighted-average assumptions for 2003, 2002 and 2001,
respectively: risk-free interest rates of 3.25%, 4.68% and 5.62%; expected dividend yields
of 3.24%, 3.11% and 3.83%; expected volatility factors of the market price of the Hibernia
Class A Common Stock of 30%, 33% and 35%; and the expected life of the options.

The
Black-Scholes option valuation model was developed for use in estimating the fair value of
traded options which have no vesting restrictions and are fully transferable. In addition,
the option valuation model requires the input of highly subjective assumptions, including
the expected stock price volatility. Because the Companys stock options have
characteristics significantly different from those of traded options, and because changes
in the subjective input assumptions can materially affect the fair value estimate, in
managements opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee and director stock options.

|($ in thousands, except per-share data) | Year Ended December 31
|--------------------------------------- | ----------------------
|                                       
|                                        | 2003                  
|                                       
|                                        | As Reported           
|                                       
|Net income                              | $      258,336        
|Net income per common share             | $            1.67     
|Net income per common share -          
|assuming dilution                       | $            1.64     
|                                       

|Note 17
     MORTGAGE BANKING
|-----------------------------
|                             

The
following is a summary of the components of mortgage banking income.

|($ in thousands)                                                | Year Ended December 31
|--------------------------------------------------------------- | ----------------------
|                                                               
|                                                                | 2003                  
|                                                               
|Mortgage loan origination and servicing fees                    | $ 38,205              
|Amortization of mortgage servicing rights                       | (44,438)              
|Provision for temporary impairment of mortgage servicing rights | (18,500)              
|Gain on sales of mortgage loans                                 | 51,239                
|                                                               
|Total mortgage banking                                          | $ 26,506              
|                                                               

|Note 18
     LEASES
|-------------------
|                   

The Company
leases its headquarters, operations center and certain other office space, premises and
equipment under non-cancelable operating leases which expire at various dates through
2035. Certain of the leases have escalation clauses and renewal options ranging from one
to 50 years.

Total
rental expense (none of which represents contingent rentals) included in occupancy and
equipment expense was $15,875,000, $16,030,000 and $15,462,000 in 2003, 2002 and 2001,
respectively.

Minimum
rental commitments for long-term operating leases are as follows: 2004  $15,598,000;
2005  $15,156,000; 2006  $11,909,000; 2007  $11,174,000; 2008 
$8,437,000; and thereafter  $12,976,000.

|Note 19
     OTHER OPERATING
EXPENSE
|------------------------------------
|                                    

The following is
a summary of other operating expense.

|($ in thousands)                | Year Ended December 31
|------------------------------- | ----------------------
|                               
|                                |                       
|                               
|State taxes on equity           |                       
|Loan collection expense         |                       
|Telecommunications              |                       
|Card-related processing expense |                       
|Postage                         |                       
|Stationery and supplies         |                       
|Professional fees               |                       
|Regulatory expense              |                       
|Other                           |                       
|                               
|Total other operating expense   |                       
|                               

|Note 20
     INCOME TAXES
|-------------------------
|                         

Income
tax expense includes amounts currently payable and amounts deferred to or from other years
as a result of differences in the timing of recognition of income and expense for
financial reporting and federal tax purposes. The following is a summary of the components
of income tax expense.

|($ in thousands)                     | Year Ended December 31
|------------------------------------ | ----------------------
|                                    
|                                     |                       
|                                    
|Current tax expense:                 |                       
|Federal income tax                   |                       
|State income tax                     |                       
|                                    
|Total current tax expense            |                       
|                                    
|Deferred tax expense (benefit):      |                       
|Federal income tax                   |                       
|                                    
|Total deferred tax expense (benefit) |                       
|                                    
|Income tax expense                   |                       
|                                    

The
preceding table does not reflect the tax effects of unrealized gains and losses on
securities and cash flow hedges that are included in shareholders equity, and the
tax effects recorded in shareholders equity related to the Companys stock
option plans and employee stock ownership plan. As a result of these tax effects,
shareholders equity increased by $10,998,000 and $6,169,000 in 2003 and 2002,
respectively, and decreased by $5,266,000 in 2001.

The
following is a reconciliation of the federal statutory income tax rate to the
Companys effective rate.

|($ in thousands)                            | Year Ended December 31
|------------------------------------------- | ----------------------
|                                           
|                                            | 2003                  
|                                           
|                                            |                       
|                                           
|Tax expense based on federal statutory rate |                       
|Tax-exempt interest                         |                       
|State income tax, net of federal benefit    |                       
|Amortization of non-deductible goodwill     |                       
|Other                                       |                       
|                                           
|Income tax expense                          |                       
|                                           

Deferred
income taxes are based on differences between the bases of assets and liabilities for
financial statement purposes and tax reporting purposes and capital loss and net operating
loss carryforwards. The tax effects of the cumulative temporary differences and loss
carryforwards which create deferred tax assets and liabilities are detailed in the
following table.

|($ in thousands)          | December 31
|------------------------- | -----------
|                         
|                          |            
|                         
|Deferred tax assets:      |            
|                          |            
|                          |            
|                          |            
|                          |            
|                          |            
|                          |            
|                          |            
|                         
|                          |            
|                         
|Deferred tax liabilities: |            
|                          |            
|                          |            
|                          |            
|                          |            
|                         
|                          |            
|                         
|                          |            
|                         

Management
assesses realizability of the net deferred tax asset based on the Companys ability
to first, recover taxes previously paid and, second, generate taxable income and capital
gains in the future. A deferred tax valuation reserve is established, if needed, to limit
the net deferred tax asset to its realizable value.

|Note 21
     NET INCOME PER
COMMON SHARE DATA
|---------------------------------------------
|                                             

The
following sets forth the computation of net income per common share and net income per
common share  assuming dilution.

|($ in thousands, except per-share data)         | Year Ended December 31
|----------------------------------------------- | ----------------------
|                                               
|                                                |                       
|                                               
|Numerator:                                      |                       
|                                                |                       
|                                               
|                                                |                       
|                                                |                       
|                                               
|                                                |                       
|                                                |                       
|                                               
|Denominator:                                    |                       
|                                                |                       
|                                                |                       
|                                                |                       
|                                                |                       
|                                                |                       
|                                               
|                                                |                       
|                                                |                       
|                                               
|Net income per common share                     |                       
|                                               
|Net income per common share - assuming dilution |                       
|                                               

The
weighted-average shares outstanding exclude 1,620,221, 1,952,030 and 2,298,581 average
common shares in 2003, 2002 and 2001, respectively, held by the Hibernia ESOP (see Note
15) which have not been committed to be released.

Options
with an exercise price greater than the average market price of the Companys Class A
Common Stock for the year are antidilutive and, therefore, are not included in the
computation of net income per common share  assuming dilution. During 2003 there
were 73,000 antidilutive options outstanding (which had exercise prices ranging from
$19.86 to $22.97 per option share), during 2002 there were 218,500 antidilutive options
outstanding (which had exercise prices ranging from $19.50 to $21.72 per option share) and
during 2001 there were 3,505,653 antidilutive options outstanding (which had exercise
prices ranging from $16.09 to $21.72 per option share).

|Note 22
     COMPREHENSIVE
INCOME
|---------------------------------
|                                 

The following
is a summary of the components of other comprehensive income.

|                                                                          |              | Income Tax |             
|------------------------------------------------------------------------- | ------------ | ---------- | ------------
|                                                                          | Before       | Expense    | After       
|($ in thousands)                                                          | Income Taxes | (Benefit)  | Income Taxes
|                                                                         
|Year ended December 31, 2003                                             
|                                                                         
|Unrealized gains (losses) on securities available for sale, net           | $(39,630)    | $(13,870)  | $(25,760)   
|Reclassification adjustment for net (gains) losses realized in net income | (13,716)     | (4,801)    | (8,915)     
|                                                                         
|Unrealized gains (losses) on securities available for sale, net           | (53,346)     | (18,671)   | (34,675)    
|                                                                         
|Unrealized gains (losses) on cash flow hedges, net                        | 10,376       | 3,632      | 6,744       
|Reclassification adjustment for net (gains) losses realized in net income | 23,574       | 8,251      | 15,323      
|                                                                         
|Unrealized gains (losses) on cash flow hedges, net                        | 33,950       | 11,883     | 22,067      
|                                                                         
|Other comprehensive income                                                | $(19,396)    | $(6,788)   | $(12,608)   
|                                                                         
|Year ended December 31, 2002                                             
|                                                                         
|Unrealized gains (losses) on securities available for sale, net           | $ 43,990     | $ 15,397   | $ 28,593    
|Reclassification adjustment for net (gains) losses realized in net income | (39)         | (14)       | (25)        
|                                                                         
|Unrealized gains (losses) on securities available for sale, net           | 43,951       | 15,383     | 28,568      
|                                                                         
|Unrealized gains (losses) on cash flow hedges, net                        | (25,324)     | (8,864)    | (16,460)    
|Reclassification adjustment for net (gains) losses realized in net income | -            | -          | -           
|                                                                         
|Unrealized gains (losses) on cash flow hedges, net                        | (25,324)     | (8,864)    | (16,460)    
|                                                                         
|Other comprehensive income                                                | $ 18,627     | $   6,519  | $ 12,108    
|                                                                         
|Year ended December 31, 2001                                             
|                                                                         
|Unrealized gains (losses) on securities available for sale, net           | $ 30,686     | $ 10,741   | $ 19,945    
|Reclassification adjustment for net (gains) losses realized in net income | 1,844        | 645        | 1,199       
|                                                                         
|Unrealized gains (losses) on securities available for sale, net           | 32,530       | 11,386     | 21,144      
|                                                                         
|Unrealized gains (losses) on cash flow hedges, net                        | (11,055)     | (3,869)    | (7,186)     
|Reclassification adjustment for net (gains) losses realized in net income | -            | -          | -           
|                                                                         
|Unrealized gains (losses) on cash flow hedges, net                        | (11,055)     | (3,869)    | (7,186)     
|                                                                         
|Other comprehensive income                                                | $ 21,475     | $   7,517  | $ 13,958    
|                                                                         

The
following is a summary of the components of accumulated other comprehensive income.

|($ in thousands)                                       | December 31
|------------------------------------------------------ | -----------
|                                                      
|                                                       | 2003       
|                                                      
|Unrealized gains on securities available for sale, net | $ 14,358   
|Unrealized losses on cash flow hedges, net             | (1,579)    
|                                                      
|Total accumulated other comprehensive income           | $ 12,779   
|                                                      

|Note 23
     DERIVATIVE
FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
|--------------------------------------------------------------------
|                                                                    

Effective January
1, 2001, the Company adopted the requirements of SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities as amended by SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities  Deferral of the
Effective Date of FASB Statement No. 133, and SFAS No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities. These statements
require the Company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through other operating
income. If the derivative is a hedge, depending on the nature of the hedge, changes in the
fair value of the derivative are either offset against the change in the fair value of the
hedged item through other operating income or recognized in other comprehensive income
until the hedged item is recognized in earnings. As a result of the adoption of SFAS No.
133 (as amended) on January 1, 2001, $640,000 was recognized in noninterest income due to
the cumulative effect of the accounting change. The after-tax cumulative effect of the
accounting change of $416,000 was considered immaterial and therefore is not separately
presented in the Consolidated Income Statements.

The
Company maintains positions in a variety of derivative financial instruments. Many of
these positions are customer-oriented and include interest rate swaps, options, caps,
floors and foreign exchange contracts. Matched positions are established for these
customer-oriented activities to minimize risk to the Company. Additionally, the Company
enters into forward sales contracts for its own account related to mortgage origination
activity. These contracts protect the Company against changes in the fair value of
mortgage loans held for sale (as well as anticipated loan fundings) due to changes in
market conditions, primarily the interest rate environment. Portions of these contracts
are designated as fair value hedges. The Company also enters into interest rate swap
agreements to manage interest rate risk on a portion of its Federal Home Loan Bank (FHLB)
advances and into foreign exchange forward contracts to minimize risk on loans which will
be repaid in foreign currencies. These contracts are designated as hedges.

Interest
rate contracts are entered into by the Company in order to manage interest rate exposure.
Interest rate contracts involve the risk of dealing with counterparties and their ability
to meet contractual terms. These counterparties must receive appropriate credit approval
before the Company enters into such interest rate contracts.

The
amounts disclosed in the following table represent the notional amounts and estimated fair
values of derivative financial instruments which were not designated as hedges at December
31, 2003 and 2002. Notional principal amounts express the volume of these derivative
financial instruments although the amounts potentially subject to credit and market risk
are much smaller. The estimated fair values represent the net present values of the
expected future cash flows of these derivative financial instruments, based on quoted
market prices, dealer quotes and prices obtained from independent pricing services.

|                                        | December 31
|--------------------------------------- | -----------
|                                       
|($ in thousands)                        | 2003       
|                                       
|                                        | Notional   
|                                        | Amount     
|                                       
|Interest rate swaps:                    |            
|Assets                                  |            
|Liabilities                             |            
|Options, caps and floors held           |            
|Options, caps and floors written        |            
|Mortgage interest rate lock commitments |            
|Mortgage forward sales contracts        |            
|Foreign exchange contracts:             |            
|Purchased                               |            
|Sold                                    |            
|                                       

Noninterest income
of $2,492,000, $1,982,000 and $4,068,000 was recognized on interest rate contracts not
designated as hedges during 2003, 2002 and 2001, respectively. Also during 2003, 2002 and
2001, noninterest income was reduced by $412,000, and increased by $230,000 and $423,000,
respectively, relating to the value of interest rate lock commitment derivatives and the
related forward sales contracts resulting from the Companys mortgage origination
activity.

The
amounts disclosed in the following table represent the notional amounts and estimated fair
values of derivative financial instruments which were designated as hedges at December 31,
2003 and 2002. Notional principal amounts express the volume of these derivative financial
instruments although the amounts potentially subject to credit and market risk are much
smaller. The estimated fair values represent the net present values of the expected future
cash flows of these derivative financial instruments, based on quoted market prices,
dealer quotes and prices obtained from independent pricing services.

|($ in thousands)                 | December 31, 2003 | December 31, 2002
|-------------------------------- | ----------------- | -----------------
|                                
|                                 | Hedged Item       | Hedged Item      
|                                
|                                 |                   |                  
|                                 | Notional          | Estimated        
|                                 | Amount            | Fair Value       
|                                
|Fair value hedges:              
|Mortgage forward sales contracts | $ 141,265         | $    (2,465)     
|Mortgage loans held for sale     |                   |                  
|Foreign exchange contracts       | $     7,665       | $       16       
|Foreign-denominated loans        |                   |                  
|Cash flow hedges:               
|Interest rate swap liability    
|relating to FHLB advances        | $ 400,000         | $    (2,429)     
|                                

Fair value
hedges:Portions of the forward sales contracts relating to mortgage loans
held for sale are designated as fair value hedges. The purpose of these contracts is to
protect the Company from the risk that changes in the interest rate environment will
affect the sales price of loans when they are eventually sold. As interest rates rise, the
decline in the value of the loans is offset by the increase in the value of the forward
sales contracts. Conversely, as interest rates decline, the value of the forward sales
contracts decreases, but the value of the loans increases, resulting in no impact on
earnings. There was no effect on income related to hedge ineffectiveness in 2003, 2002 or
2001.

The
Company enters into forward exchange contracts to hedge certain expected loan payments
denominated in foreign currencies. The purpose of these derivative contracts is to protect
the Company from risk that changes in the foreign exchange rates will affect the value of
the foreign-denominated loans. Changes in the fair value of the foreign exchange contracts
are offset by changes in the fair value of the corresponding hedged loans, resulting in no
impact on earnings.

Cash
flow hedges:During 2002 and 2001, the Company entered into interest rate
swap agreements that effectively modify the Companys exposure to interest rate risk
by converting a portion of the Companys variable rate FHLB advances to fixed rates.
The maturities of these interest rate swaps match the maturities of the underlying debt,
with various maturities from 2004 to 2007. These contracts are designated as cash flow
hedges. These agreements involve the receipt of floating rate amounts in exchange for
fixed-rate interest payments over the life of the agreements without an exchange of the
underlying principal amount. There was no effect on income related to hedge
ineffectiveness in 2003, 2002 or 2001. As a result of these swaps, interest expense was
increased by $21,121,000, $19,176,000 and $5,892,000 for the years ended December 31,
2003, 2002 and 2001, respectively. This impact represents the difference between fixed and
floating rates for the period the swaps were in effect. As interest is accrued monthly on
the underlying FHLB advances, the fair value of the swaps recorded in other comprehensive
income is adjusted and the current months swap payable or receivable is recorded in
interest expense. In accordance with the provisions of SFAS No. 133 for cash flow hedges,
the hedged FHLB advances are not marked to market and therefore are not reflected in the
preceding table.

During
2003, the Company prepaid a five-year $300 million variable-rate FHLB advance and
terminated the related interest rate swap agreement. The cost associated with the
termination of the related swap agreement was $19,690,000, which was recorded in interest
expense.

During
2001, the Company entered into an interest rate swap agreement designated as a fair value
hedge relating to the indirect automobile loan securitization discussed in Note 6. A loss
of $1,025,000 was recognized in other noninterest income upon the termination of this
swap.

|Note 24
     COMMITMENTS AND
CONTINGENCIES
|------------------------------------------
|                                          

In
the normal course of business, the Company enters into a number of financial commitments.
Commitments to extend credit are legally binding, conditional agreements generally having
fixed expiration or termination dates and specified interest rates and purposes. These
commitments generally require customers to maintain certain credit standards. Collateral
requirements and loan-to-value ratios are the same as those for funded transactions and
are established based on managements credit assessment of the customer. Commitments
may expire without being drawn upon. Therefore, the total commitment amount does not
necessarily represent future requirements.

The
Company issues letters of credit and financial guarantees (standby letters of credit)
whereby it agrees to honor certain financial commitments in the event its customers are
unable to perform. The majority of the standby letters of credit consist of performance
guarantees. At December 31, 2003, standby letters of credit had expiration dates through
2010. Collateral requirements are the same as those for funded transactions and are
established based on managements credit assessment of the customer. Management
conducts regular reviews of all outstanding standby letters of credit, and the results of
these reviews are considered in assessing the adequacy of the Companys loss
reserves. Management does not anticipate any material losses related to these instruments.

Effective
January 1, 2003, the Company adopted the recognition and measurement provisions of FASB
Interpretation No 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others. The recognition
and measurement provisions of the interpretation were applicable on a prospective basis to
certain guarantees issued or modified after December 31, 2002 and require the guarantor to
recognize, at the inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. Of the standby letters of credit and
financial guarantees outstanding at December 31, 2003, $248,970,000 relate to guarantees
entered into after January 1, 2003, which have a negative fair value of $2,591,000 and are
included in other liabilities.

The
Company entered into agreements for advances from the Federal Home Loan Bank of Dallas in
December 2002, which were received in January 2003 and are included in the outstanding
FHLB advance balance as of December 31, 2003.

The
following is a summary of the contractual amounts of financial commitments at December 31,
2003 and 2002.

|($ in thousands)                                | December 31      
|----------------------------------------------- | -----------------
|                                               
|                                                | 2003             
|                                               
|Commitments to extend credit                    | $3,561,661       
|Letters of credit and financial guarantees      | $   562,659      
|Commitments for Federal Home Loan Bank advances | $               -
|                                               

In December 2003,
 the Company signed a definitive merger
agreement with Coastal Bancorp, Inc. Under the terms of the agreement, Hibernia would
purchase all of the outstanding common stock and options of Coastal for approximately
$230,000,000 in cash in or near the second quarter of 2004. The merger is pending certain
regulatory approvals and the approval of Coastal shareholders.

The
Company is a party to certain legal proceedings arising from matters incidental to its
business. Management and counsel are of the opinion that these actions will not have a
material effect on the financial condition or operating results of the Company.

|Note 25
     FAIR VALUE OF
FINANCIAL INSTRUMENTS
|------------------------------------------------
|                                                

Generally
accepted accounting principles require disclosure of fair value information about
financial instruments for which it is practicable to estimate fair value, whether or not
the financial instruments are recognized in the financial statements. When quoted market
prices are not available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. The derived fair value
estimates cannot be substantiated through comparison to independent markets and, in many
cases, could not be realized in immediate settlement of the instrument. Certain financial
instruments and all non-financial instruments are excluded from these disclosure
requirements. Further, the disclosures do not include estimated fair values for items
which are not financial instruments but which represent significant value to the Company,
including core deposit intangibles, trust operations and other fee-generating businesses.
Accordingly, the aggregate fair value amounts presented do not represent the underlying
value of the Company.

The
carrying amount of cash and cash equivalents, trading account assets, mortgage loans held
for sale, noninterest-bearing deposits and short-term borrowings approximates the
estimated fair value of these financial instruments. The estimated fair value of
securities is based on quoted market prices and prices obtained from independent pricing
services, when available, or estimated by management using various factors for securities
for which there is no public market. The estimated fair value of loans, interest-bearing
deposits and FHLB advances is based on present values using applicable risk-adjusted
spreads to the appropriate yield curve to approximate current interest rates applicable to
each category of these financial instruments. The estimated fair value of mortgage
servicing rights is based on present values of estimated future cash flows. Mortgage
servicing rights are valued on an individual loan basis, grouped in tranches stratified by
loan type, rate type (fixed vs. adjustable) and interest rate. The estimated fair value of
commitments to extend credit and letters of credit and financial guarantees are based on
fees currently charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the counterparties credit standing. The estimated fair
value of the commitment for FHLB advances is based on the estimated fee charged to
cancel the commitment, which is based on changes in the interest rate environment from
the date of the commitment.

Interest
rates are not adjusted for changes in credit risk of performing commercial and small
business loans for which there are no known credit concerns. Management segregates loans
in appropriate risk categories and believes the risk factor embedded in the interest rates
results in a fair valuation of these loans on an entry-value basis.

Variances
between the carrying amount and the estimated fair value of loans reflect both credit risk
and interest rate risk. The Company is protected against changes in credit risk by the
reserve for loan losses which totaled $213,275,000 and $212,765,000 at December 31, 2003
and 2002, respectively. In addition, credit risk exposure on loans is mitigated by many
factors including maintaining a diversified portfolio and obtaining collateral or other
forms of credit support from borrowers. The loan portfolio is diversified by loan type,
industry and borrower. The requirements for collateral, covenants or guarantees are
assessed as part of the Companys underwriting process based on the loan type and the
borrowers credit-worthiness. The Companys credit policies provide standards
with respect to monitoring and valuation of collateral.

The
fair value estimates presented are based on information available to management as of
December 31, 2003 and 2002. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, these amounts have not been
revalued for purposes of these financial statements since those dates. Therefore, current
estimates of fair value may differ significantly from the amounts presented.

|($ in thousands)                | December 31    
|------------------------------- | ---------------
|                               
|                                | 2003           
|                               
|                                | Carrying       
|                                | Amount         
|                               
|Assets                         
|Cash and cash equivalents       | $     957,611  
|Trading account assets          | $         3,853
|Securities available for sale   | $  3,866,470   
|Securities held to maturity     | $       60,209 
|Mortgage loans held for sale    | $     195,177  
|Commercial loans                | $  3,234,178   
|Small business loans            | $  2,642,902   
|Consumer loans                  | $  7,005,906   
|Mortgage servicing rights, net  | $     118,334  
|                               
|Liabilities                    
|Noninterest-bearing deposits    | $  2,827,642   
|Interest-bearing deposits       | $11,331,877    
|Short-term borrowings           | $  1,280,802   
|Federal Home Loan Bank advances | $  1,101,812   
|                               

The
following table represents the contractual amounts and estimated fair value of other
financial instruments.

|($ in thousands)                                | December 31
|----------------------------------------------- | -----------
|                                               
|                                                | 2003       
|                                               
|                                                |            
|                                                |            
|                                               
|Commitments to extend credit                    |            
|Letters of credit and financial guarantees      |            
|Commitments for Federal Home Loan Bank advances |            
|                                               

See
Note 23 for fair value information on derivative financial instruments.

|Note 26
     RELATED-PARTY
TRANSACTIONS
|---------------------------------------
|                                       

Certain
directors and officers of the Company, members of their immediate families and entities in
which they or members of their immediate families have principal ownership interests are
customers of and have other transactions with the Company in the ordinary course of
business. As customers, related parties engage in various transactions including but not
limited to loans, deposits and securities sold under repurchase agreements.

Loans to these parties are made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable third-party transactions and do not involve
more than normal risks of collectibility or present other unfavorable features. Loans
outstanding to these related parties were $21,428,000 and $17,924,000 at December 31, 2003
and 2002, respectively. The change during 2003 reflects $14,334,000 in loan advances and
$10,830,000 in loan payments. These amounts do not include loans made in the ordinary
course of business to other entities with which the Company has no relationship, other
than a director of the Company being a director of the other entity, unless that director
had the ability to significantly influence the other entity.

Securities
sold to related parties under repurchase agreements amounted to $7,494,000 and $8,427,000
at December 31, 2003 and 2002, respectively. The security repurchase agreements are
between the Bank and entities with which directors of the Company have affiliations. These
agreements are made in the ordinary course of business and are on the same terms as those
with unrelated entities.

In
November 2003, the Company sold its 50% interest in a joint venture with an unrelated
third party to originate, sell and service loans under the Federal National Mortgage
Association (Fannie Mae) Delegated Underwriting & Servicing (DUS) program. A gain of
$6,166,000 was recorded on the sale of the Companys interest in the joint venture
and is included in other operating income. The Companys investment in this joint
venture had been accounted for using the equity method, and totaled $4,716,000 at December
31, 2002. Pretax operating earnings of $965,000 and $1,345,000 related to this joint
venture were recorded during 2003 and 2002, respectively. The joint venture originated
loans which totaled $72,265,000 during 2003 and $81,629,000 during 2002. All loans
originated were sold within a short time period (less than one quarter) after origination.
These loan originations corresponded directly with an amount advanced on the joint
ventures line of credit with the Company. The Company had extended a line of credit
to this joint venture which totaled $35,000,000 and had an outstanding loan balance
related to this line of credit of $9,165,000 at December 31, 2002. During 2003, during the
period in which the joint venture remained a related party, the joint venture drew
advances of $72,265,000 and made payments of $81,430,000 on its line of credit. These
advances were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable third party transactions and
did not involve more than normal risk of collectibility or present other unfavorable
features.

The
Companys joint venture was not a party to any loan securitizations involving the
Company. The loans originated by the joint venture were commercial real estate loans,
primarily multifamily properties. The loans were sold to investors (primarily FNMA), and
servicing rights were recorded at the time of the sale by the joint venture. The other
partner in the joint venture serviced these loans under a sub-servicing agreement. The
servicing rights were carried at the lower of amortized cost or market value in the
financial statements of the joint venture. There were no security interests purchased by
the Company or the other partner in the joint venture that related to any loans sold by
the joint venture.

|Note 27
     REGULATORY
MATTERS AND DIVIDEND RESTRICTIONS
|---------------------------------------------------------
|                                                         

The
Company and the Bank are subject to various regulatory capital requirements administered
by the Federal Reserve Bank (FRB) and the Office of the Comptroller of the Currency (OCC),
respectively. Failure to meet minimum capital requirements can initiate certain mandatory
 and possibly additional discretionary  actions by the FRB and OCC that, if
undertaken, could have a direct material effect on the Companys financial
statements. Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Company and the Bank must meet specific capital guidelines that
involve quantitative measures of assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Companys and the
Banks capital amounts and classifications are also subject to qualitative judgments
by the FRB and OCC about components, risk weightings and other factors.

As
of December 31, 2003 and 2002, the most recent notifications from the OCC categorized the
Bank as well capitalized under the regulatory framework for prompt corrective action. For
a bank to be designated as well capitalized, it must have Tier 1 and total risk-based
capital ratios of at least 6.0% and 10.0%, respectively, and a leverage ratio of at least
5.0%. There are no conditions or events since those notifications that management believes
have changed the Banks categories nor is management aware of any material unresolved
regulatory issues.

The
Companys and the Banks actual capital amounts and ratios are presented in the
following table.

|($ in thousands)       | Tier 1 Risk-Based Capital | Total Risk-Based Capital | Leverage  
|---------------------- | ------------------------- | ------------------------ | ----------
|                      
|                       | Amount                    | Ratio                    | Amount    
|                      
|December 31, 2003     
|                      
|Hibernia Corporation   | $1,534,079                | 10.50%                   | $1,717,078
|Hibernia National Bank | $1,381,815                | 9.47%                    | $1,564,639
|                      
|                      
|                      
|December 31, 2002     
|                      
|Hibernia Corporation   | $1,412,327                | 10.57%                   | $1,579,991
|Hibernia National Bank | $1,298,624                | 9.72%                    | $1,466,172
|                      

Under
current FRB regulations, the Bank may lend the Parent Company up to 10% of its capital and
surplus, provided that any such loan is secured at the time of the transaction by
collateral having the market value required by applicable regulations.

The
payment of dividends by the Bank to the Parent Company is restricted by various regulatory
and statutory limitations. In 2004, the Bank would have available to pay dividends to the
Parent Company, without approval of the OCC, approximately $165,419,000, plus net retained
profits earned in 2004 prior to the dividend declaration date.

Banks
are required to maintain cash on hand or noninterest-bearing balances with the FRB to meet
reserve requirements. Average noninterest-bearing balances with the FRB were $44,576,000
in 2003 and $28,430,000 in 2002.

|Note 28
     HIBERNIA
CORPORATION
|---------------------------------
|                                 

The
following Balance Sheets, Income Statements and Statements of Cash Flows reflect the
financial position and results of operations for the Parent Company only.

|Balance Sheets                             | December 31 
|------------------------------------------ | ------------
|                                          
|($ in thousands)                           | 2003        
|                                          
|Investment in bank subsidiary              | $1,594,992  
|Investment in nonbank subsidiaries         | 56,102      
|Other assets                               | 155,249     
|                                          
|Total assets                               | $1,806,343  
|                                          
|Other liabilities                          | $     10,736
|Debt (ESOP guarantee)                      | 18,122      
|Shareholders' equity                       | 1,777,485   
|                                          
|Total liabilities and shareholders' equity | $1,806,343  
|                                          

|Income Statements                                  | Year Ended December 31
|-------------------------------------------------- | ----------------------
|                                                  
|($ in thousands)                                   | 2003                  
|                                                  
|Equity in undistributed net income of subsidiaries | $  64,224             
|Dividends from subsidiaries                        | 195,340               
|Other income                                       | 1,307                 
|Securities gains (losses), net                     | 699                   
|                                                  
|Total income                                       | 261,570               
|Total expense                                      | 2,502                 
|                                                  
|Income before income taxes                         | 259,068               
|Income tax expense                                 | 732                   
|                                                  
|Net income                                         | $258,336              
|                                                  

|Statements of Cash Flows                             | Year Ended December 31
|---------------------------------------------------- | ----------------------
|                                                    
|($ in thousands)                                     | 2003                  
|                                                    
|Operating activities:                               
|Net income                                           | $ 258,336             
|Non-cash adjustment for equity in                   
|subsidiaries' undistributed net income               | (64,224)              
|Realized securities (gains) losses, net              | (699)                 
|Other adjustments                                    | 13,403                
|                                                    
|Net cash provided by operating activities            | 206,816               
|                                                    
|Investing activities:                               
|Investment in and advances to subsidiaries           | (4,700)               
|Repayment of advances to subsidiaries                | 3,250                 
|Purchases of securities available for sale           | (466)                 
|Proceeds from sales of securities available for sale | 1,457                 
|Other                                                | -                     
|                                                    
|Net cash used by investing activities                | (459)                 
|                                                    
|Financing activities:                               
|Dividends paid                                       | (97,509)              
|Issuance of common stock                             | 25,997                
|Redemption of preferred stock                        | -                     
|Purchase of treasury stock                           | (87,605)              
|                                                    
|Net cash used by financing activities                | (159,117)             
|                                                    
|Increase in cash and cash equivalents                | 47,240                
|Cash and cash equivalents at beginning of year       | 86,733                
|                                                    
|Cash and cash equivalents at end of year             | $ 133,973             
|                                                    

|Note 29
     SEGMENT
INFORMATION
|--------------------------------
|                                

SFAS
No. 131, Disclosures about Segments of an Enterprise and Related Information,
establishes standards for the reporting of financial information from operating segments
in annual and interim financial statements. SFAS No. 131 requires that financial
information be reported on the same basis that is reported internally for evaluating
segment performance and allocating resources to segments.

The
Companys segment information is presented by line of business. Each line of business
is a strategic unit that provides various products and services to groups of customers
that have certain common characteristics. The reportable operating segments are Consumer,
Small Business, Commercial, and Investments and Public Funds. The Consumer segment
provides individuals with comprehensive products and services, including mortgage and
other loans, deposit accounts, trust and investment management, brokerage, and life and
health insurance. The Small Business and Commercial segments provide business entities
with comprehensive products and services, including loans, deposit accounts, leasing,
treasury management, investment banking, property and casualty insurance and private
equity investments. The Small Business segment provides products and services to mid-size
and smaller business entities (generally with annual revenues less than $10,000,000) and
the Commercial segment provides products and services to larger business entities. The
Investments and Public Funds segment provides a treasury function for the Company by
managing public entity deposits, the investment portfolio, interest rate risk, and
liquidity and funding positions. The provision for temporary impairment of mortgage
servicing rights, primarily a function of interest rate risks, is also included in this
segment. The Other segment includes the areas of support services and facilities
management as well as income and expense items considered to be unusual.

The
accounting policies used by each segment are the same as those discussed in the summary of
significant accounting policies, except as described in the reconciliation of segment
totals to consolidated totals. The following is a summary of certain average balances by
segment.

|                  |            |            |            | Investments    |            |            
|----------------- | ---------- | ---------- | ---------- | -------------- | ---------- | -----------
|                  |            | Small      |            | and Public     |            | Segment    
|($ in thousands)  | Consumer   | Business   | Commercial | Funds          | Other      | Total      
|                 
|December 31, 2003
|                 
|Average loans     | $6,459,600 | $2,521,700 | $2,931,900 | $          300 | $    1,500 | $11,915,000
|Average assets    | $9,187,900 | $2,561,000 | $3,028,400 | $3,969,200     | $672,600   | $19,419,100
|Average deposits  | $7,721,900 | $1,960,500 | $1,229,600 | $2,314,400     | $  24,400  | $13,250,800
|                 
|December 31, 2002
|                 
|Average loans     | $5,968,000 | $2,473,000 | $2,820,800 | $       1,900  | $  11,200  | $11,274,900
|Average assets    | $8,704,300 | $2,483,700 | $2,915,000 | $3,491,800     | $654,100   | $18,248,900
|Average deposits  | $7,393,800 | $1,917,500 | $1,097,500 | $2,096,400     | $  19,100  | $12,524,300
|                 

The following
table presents condensed income statements for each segment.

|                             |          |           |            | Investments |           |         
|---------------------------- | -------- | --------- | ---------- | ----------- | --------- | --------
|                             |          | Small     |            | and Public  |           | Segment 
|($ in thousands)             | Consumer | Business  | Commercial | Funds       | Other     | Total   
|                            
|Year ended December 31, 2003
|                            
|Net interest income          | $401,227 | $172,742  | $119,084   | $   23,954  | $(42,712) | $674,295
|Provision for loan losses    | 24,424   | 16,393    | 19,227     | -           | 6         | 60,050  
|                            
|Net interest income after   
|provision for loan losses    | 376,803  | 156,349   | 99,857     | 23,954      | (42,718)  | 614,245 
|                            
|Noninterest income           | 252,495  | 35,121    | 82,668     | (23,343)    | 3,142     | 350,083 
|Noninterest expense          | 356,121  | 113,675   | 106,053    | 14,309      | (25,775)  | 564,383 
|                            
|Income before income taxes   | 273,177  | 77,795    | 76,472     | (13,698)    | (13,801)  | 399,945 
|Income tax expense           | 95,612   | 27,228    | 26,765     | (4,794)     | 363       | 145,174 
|                            
|Net income                   | $177,565 | $  50,567 | $  49,707  | $  (8,904)  | $(14,164) | $254,771
|                            
|                            
|Year ended December 31, 2002
|                            
|Net interest income          | $344,548 | $168,909  | $111,340   | $ 100,148   | $(16,576) | $708,369
|Provision for loan losses    | 28,197   | 21,715    | 30,703     | -           | 10        | 80,625  
|                            
|Net interest income after   
|provision for loan losses    | 316,351  | 147,194   | 80,637     | 100,148     | (16,586)  | 627,744 
|                            
|Noninterest income           | 219,553  | 32,601    | 60,042     | (20,332)    | 9,071     | 300,935 
|Noninterest expense          | 334,743  | 109,945   | 94,239     | 14,029      | (11,229)  | 541,727 
|                            
|Income before income taxes   | 201,161  | 69,850    | 46,440     | 65,787      | 3,714     | 386,952 
|Income tax expense           | 70,406   | 24,448    | 16,254     | 23,025      | 6,781     | 140,914 
|                            
|Net income                   | $130,755 | $  45,402 | $  30,186  | $   42,762  | $(3,067)  | $246,038
|                            
|                            
|Year ended December 31, 2001
|                            
|Net interest income          | $307,307 | $164,638  | $118,629   | $   90,593  | $(12,095) | $669,072
|Provision for loan losses    | 34,441   | 20,810    | 41,992     | -           | 7         | 97,250  
|                            
|Net interest income after   
|provision for loan losses    | 272,866  | 143,828   | 76,637     | 90,593      | (12,102)  | 571,822 
|                            
|Noninterest income           | 209,479  | 29,002    | 59,193     | (10,317)    | 6,667     | 294,024 
|Noninterest expense          | 309,281  | 108,522   | 98,710     | 13,298      | (5,616)   | 524,195 
|                            
|Income before income taxes   | 173,064  | 64,308    | 37,120     | 66,978      | 181       | 341,651 
|Income tax expense           | 60,572   | 22,508    | 12,992     | 23,442      | 4,757     | 124,271 
|                            
|Net income                   | $112,492 | $  41,800 | $  24,128  | $   43,536  | $(4,576)  | $217,380
|                            

In
order to analyze segments on an individual basis, each segments balance sheet is
balanced by adjusting assets or liabilities to reflect its net funding position. Assets
are increased if the segment has excess funds; liabilities are increased if the segment
requires funding. Segment assets and deposits are decreased for cash items in process of
collection, which are reclassified from assets to deposits.

Each
segments net interest income includes an adjustment for match funding of the
segments earning assets and liabilities. Match funding is calculated as the net
interest income attributable to the various products of the segment and also indicates the
historical interest rate risk taken by the entity as a whole. Interest income for
tax-exempt and tax-deferred loans is adjusted to a taxable-equivalent basis. Each segment
is charged a provision for loan losses that is determined based on each loans risk
rating or loan type. In addition, each reportable segment recognizes income tax assuming a
35% income tax rate. State income tax expense is included in the Other segment.

Direct
support costs, such as deposit servicing, technology, and loan servicing and underwriting,
are allocated to each segment based on activity-based cost studies, where appropriate, or
on various statistics or staff costs. Indirect costs, such as management expenses and
corporate support, are allocated to each segment based on various statistics or staff
costs. There are no significant intersegment revenues.

The following is
a reconciliation of segment totals to consolidated totals.

|                                                        | Average     | Average      | Average    
|------------------------------------------------------- | ----------- | ------------ | -----------
|($ in thousands)                                        | Loans       | Assets       | Deposits   
|                                                       
|December 31, 2003                                      
|                                                       
|Segment total                                           | $11,915,000 | $ 19,419,100 | $13,250,800
|Excess funds invested                                   | -           | (2,020,200)  | -          
|Reclassification of cash items in process of collection | -           | 358,100      | 358,100    
|                                                       
|Consolidated total                                      | $11,915,000 | $ 17,757,000 | $13,608,900
|                                                       
|                                                       
|December 31, 2002                                      
|                                                       
|Segment total                                           | $11,274,900 | $ 18,248,900 | $12,524,300
|Excess funds invested                                   | -           | (2,030,100)  | -          
|Reclassification of cash items in process of collection | -           | 342,400      | 342,400    
|                                                       
|Consolidated total                                      | $11,274,900 | $ 16,561,200 | $12,866,700
|                                                       

|                              |              | Provision |             |             | Income Tax |           
|----------------------------- | ------------ | --------- | ----------- | ----------- | ---------- | ----------
|                              | Net Interest | for Loan  | Noninterest | Noninterest | Expense    |           
|($ in thousands)              | Income       | Losses    | Income      | Expense     | (Benefit)  | Net Income
|                             
|Year ended December 31, 2003 
|                             
|Segment total                 | $ 674,295    | $60,050   | $350,083    | $564,383    | $ 145,174  | $254,771  
|Taxable-equivalent adjustment | (3,542)      | -         | -           | -           | (3,542)    | -         
|Income tax expense            | -            | -         | -           | -           | (3,565)    | 3,565     
|                             
|Consolidated total            | $ 670,753    | $60,050   | $350,083    | $564,383    | $ 138,067  | $258,336  
|                             
|                             
|Year ended December 31, 2002 
|                             
|Segment total                 | $ 708,369    | $80,625   | $300,935    | $541,727    | $ 140,914  | $246,038  
|Taxable-equivalent adjustment | (4,132)      | -         | -           | -           | (4,132)    | -         
|Income tax expense            | -            | -         | -           | -           | (3,819)    | 3,819     
|                             
|Consolidated total            | $ 704,237    | $80,625   | $300,935    | $541,727    | $ 132,963  | $249,857  
|                             
|                             
|Year ended December 31, 2001 
|                             
|Segment total                 | $ 669,072    | $97,250   | $294,024    | $524,195    | $ 124,271  | $217,380  
|Taxable-equivalent adjustment | (4,401)      | -         | -           | -           | (4,401)    | -         
|Income tax expense            | -            | -         | -           | -           | (1,418)    | 1,418     
|                             
|Consolidated total            | $ 664,671    | $97,250   | $294,024    | $524,195    | $ 118,452  | $218,798  
|