<PAGE>



HIBERNIA CORPORATION

Corporate Offices
313 Carondelet St., New Orleans, LA 70130
504-533-3333

Mailing Address
P.O. Box 61540
New Orleans, LA 70161

Electronic Address
Internet: www.hiberniabank.com
E-mail: mailus@hiberniabank.com

At December 31, 1998 -- Shareholders of record: 17,179/Full-time equivalent
employees: 5,012

Stock Listing
The  common  stock of  Hibernia  Corporation  is  listed  on the New York  Stock
Exchange (NYSE) under the ticker symbol "HIB." Price and volume  information are
listed under  "Hibernia"  and "HIB" in The Wall Street Journal and under similar
designations in other daily newspapers.


Shareholder Assistance
Shareholders  requesting a change of address,  records or information about lost
certificates  or wanting to have dividends  deposited  directly into checking or
savings accounts should contact:
ChaseMellon Shareholder Services 
Securityholder Relations Department
85 Challenger Road, Overpeck Centre
Ridgefield Park, NJ 07660
Toll free: 800-814-0305

Dividend Reinvestment and Stock Purchase Plan
Hibernia's  Dividend  Reinvestment  and Stock  Purchase  Plan is an  economical,
convenient  way for  shareholders  to increase  their  holdings of the Company's
stock. Once enrolled in the plan,  shareholders may purchase new shares directly
from the Company by reinvesting  cash dividends,  making optional cash purchases
or both.

Direct Deposit of Dividends
By depositing  dividends directly to checking or savings accounts,  shareholders
can  receive  their  funds  faster.  To sign  up or  receive  information,  call
toll-free 800-814-0305.

For Information
Shareholders,  media representatives and other individuals seeking copies of the
annual report, Form 10-K and Form 10-Q, as well as general  information,  should
contact  Jim   Lestelle,   Senior  Vice   President  and  Manager  of  Corporate
Communications,  at  504-533-5482  or toll free at  800-245-4388.  Analysts  and
others seeking  financial data or a prospectus on the Dividend  Reinvestment and
Stock Purchase Plan should  contact Trisha Voltz,  Vice President and Manager of
Investor Relations, at 504-533-2180 or toll free at 800-245-4388. 

For fax access to news releases, quarterly reports, analyst reports and dividend
reinvestment details, call toll free 800-207-9063.

Duplicate Mailings
The  Company is  required to mail  information  to each name on its  shareholder
list,  even if it means sending  duplicates.  Shareholders  wishing to eliminate
duplicate  mailings  should  write to  ChaseMellon  Shareholder  Services at the
address on this page  indicating  which names  should be removed.  This will not
affect dividend or proxy mailings.

<TABLE>
<CAPTION>
Hibernia Stock Price And Dividend Information
-------------------------------------------------------------------------------
                            1998                           1997
-------------------------------------------------------------------------------
                                    Cash                           Cash
                  Market Price(1)   Dividends    Market Price(1)   Dividends
                  High     Low      Declared     High     Low      Declared
-------------------------------------------------------------------------------
<S>               <C>      <C>      <C>          <C>      <C>      <C> 
1st quarter       $21.63   $17.25   $  .09       $14.75   $12.75   $.08
2nd quarter       $21.94   $19.56   $  .09       $14.50   $12.38   $.08
3rd quarter       $20.31   $13.50   $  .09       $17.19   $13.81   $.08
4th quarter       $17.75   $13.06   $  .105      $19.38   $16.63   $.09
-------------------------------------------------------------------------------
----------
(1) NYSE closing price.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
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)                    1998           1997           1996           1995           1994
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>           <C>           <C>            <C>           <C>
Interest income .....................................   $  953,722    $  842,058    $  722,098     $  647,920    $  554,466
Interest expense ....................................      423,188       360,022       299,829        276,560       205,752
---------------------------------------------------------------------------------------------------------------------------------
Net interest income .................................      530,534       482,036       422,269        371,360       348,714
Provision for possible loan losses ..................       26,000         3,148       (12,127)           416       (19,810)
---------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
    for possible loan losses ........................      504,534       478,888       434,396        370,944       368,524
---------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
   Noninterest income ...............................      179,257       151,272       125,853        112,247       102,538
   Securities gains (losses), net ...................        5,678         2,725        (5,152)           958        (1,183)
---------------------------------------------------------------------------------------------------------------------------------
Noninterest income ..................................      184,935       153,997       120,701        113,205       101,355
Noninterest expense .................................      416,584       409,254       359,815        319,856       338,651
---------------------------------------------------------------------------------------------------------------------------------
Income before taxes .................................      272,885       223,631       195,282        164,293       131,228
Income tax expense ..................................       94,256        78,835        67,389         18,087        14,156
---------------------------------------------------------------------------------------------------------------------------------
Net income ..........................................   $  178,629    $  144,796    $  127,893     $  146,206    $  117,072
---------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders ........   $  171,729    $  137,896    $  126,153     $  146,206    $  117,072
=================================================================================================================================
Per common share information: (2)
   Net income .......................................   $     1.12    $     0.90    $     0.83     $     0.96    $     0.76
   Net income - assuming dilution ...................   $     1.10    $     0.89    $     0.82     $     0.95    $     0.76
   Tax-effected net income (3) ......................   $     1.12    $     0.90    $     0.83     $     0.70    $     0.56
   Cash dividends declared ..........................   $    0.375    $     0.33    $     0.29     $     0.25    $     0.19
Average shares outstanding (000s) ...................      153,719       152,874       152,239        152,354       153,069
Average shares outstanding - assuming dilution (000s)      156,165       155,404       153,737        153,280       154,149
Dividend payout ratio ...............................        33.48%        36.67%        34.94%         26.04%        25.00%
=================================================================================================================================
Selected year-end balances (in millions)
Loans ...............................................   $ 10,006.2    $  8,286.5    $  6,738.4     $  5,285.0    $  4,289.8
Deposits ............................................     10,603.0       9,814.4       9,073.3        7,669.0       7,412.2
Debt ................................................        805.7         506.5          57.2           36.7          23.5
Equity ..............................................      1,318.1       1,196.1       1,078.9          900.8         754.7
Total assets ........................................     14,011.5      12,388.2      10,730.9        9,017.6       8,502.3
=================================================================================================================================
Selected average balances (in millions)
Loans ...............................................   $  9,142.2    $  7,395.4    $  5,921.6     $  4,767.2    $  4,002.6
Deposits ............................................      9,926.2       9,242.8       8,083.6        7,440.7       7,256.1
Debt ................................................        710.7          94.1          32.2           29.6          35.8
Equity ..............................................      1,260.7       1,132.5         950.7          817.1         730.6
Total assets ........................................     12,892.4      11,247.8       9,562.3        8,694.5       8,381.9
=================================================================================================================================
Selected ratios
Net interest margin (taxable-equivalent) ............         4.51%         4.74%         4.83%          4.66%         4.55%
Return on assets ....................................         1.39%         1.29%         1.34%          1.68%         1.40%
Return on common equity .............................        14.80%        13.36%        13.63%         17.89%        16.02%
Return on total equity ..............................        14.17%        12.79%        13.45%         17.89%        16.02%
Efficiency ratio ....................................        57.79%        63.57%        64.76%         65.07%        73.77%
Average equity/average assets .......................         9.78%        10.07%         9.94%          9.40%         8.72%
Tier 1 risk-based capital ratio .....................        10.76%        11.26%        12.68%         15.25%        16.21%
Total risk-based capital ratio ......................        11.96%        12.51%        13.94%         16.52%        17.49%
Leverage ratio ......................................         8.58%         8.65%         8.92%          9.81%         9.09%
=================================================================================================================================
Tax-effected net income and ratios excluding
  purchase accounting intangible amortization
  and balances (3) (4)
Net income applicable to common shareholders ........   $  182,398    $  149,432    $  133,162     $  109,994    $  107,698
Net income per common share (2) .....................   $     1.19    $     0.98    $     0.87     $     0.72    $     0.70
Net income per common share - assuming dilution (2)..   $     1.17    $     0.96    $     0.87     $     0.72    $     0.70
Return on assets ....................................         1.49%         1.41%         1.43%          1.27%         1.29%
Return on common equity .............................        18.04%        16.99%        17.20%         13.83%        15.57%
Efficiency ratio ....................................        56.13%        61.51%        63.50%         64.42%        68.89%
=================================================================================================================================
----------------
(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)Dividends per common share are  historical  amounts.  For a discussion of net
   income per common  share  computations  refer to Note 18 of the  consolidated
   financial statements - "Net Income Per Common Share Data."
(3)Adjusted to reflect a 35% effective tax rate for years prior to 1996.
(4)Amortization and  balances of core deposit intangibles  are net of applicable
   taxes. Goodwill amortization and balances are not tax effected.
</TABLE>

<PAGE>

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 (the "Company" or "Hibernia")
and its subsidiaries,  principally  Hibernia National Bank and Hibernia National
Bank of Texas,  collectively  referred to as the "Banks."  Effective  January 1,
1999, Hibernia National Bank of Texas was merged with and into Hibernia National
Bank. This discussion should be read in conjunction with the accompanying tables
and consolidated financial statements.


1998 Highlights

--   Net income for  1998 totaled  $178.6  million,  a 23% increase  compared to
     $144.8  million  for 1997.  Net income  per common  share for 1998 of $1.12
     increased 24% compared to $.90 for 1997,  and net income per common share -
     assuming  dilution was $1.10 for 1998,  an increase of 24% compared to $.89
     for 1997.

--   Pre-tax,  pre-provision  earnings  in  1998   were  $298.9  million,  a 32%
     increase  compared to $226.8 million in 1997 and a 63% increase compared to
     $183.2  million in 1996.  The  provision  for possible  loan losses in 1998
     totaled $26.0 million.

--   Tangible  returns on assets (ROA) and common  equity (ROCE) were 1.49%  and
     18.04%,  respectively,  in 1998 compared to 1.41% and 16.99% in 1997.

--   Profitability,  loans  and deposits  continued to increase;  asset  quality
     remained  sound;  and the Company's  franchise was further  enhanced by the
     expansion of its market coverage through four completed mergers during 1998
     and three pending transactions at December 31, 1998.

--   Loans grew  21% to $10.0  billion at December  31,  1998,  with  commercial
     loans up 25%,  small  business loans up 6% and consumer loans up 24% from a
     year earlier.

--   The  nonperforming  asset  ratio was 0.52% at December 31, 1998 compared to
     0.33% at year-end 1997. The year-end 1998 reserve coverage of nonperforming
     loans was 319% compared to 550% at the end of 1997. Although there has been
     a decline in these measures, overall asset quality remains sound.

--   Deposits increased  to $10.6 billion at December 31, 1998, a $788.6 million
     (8%) increase from year-end 1997.

--   Net interest  income  increased  $48.5  million in  1998  compared to 1997,
     primarily due to a $1.7 billion  increase in average  loans.  The change in
     the mix of earning assets, due to average loans increasing at a faster rate
     than lower-yielding securities, was more than offset by the negative impact
     of declining loan yields,  the increased use of  market-rate  funds and the
     decline in the percentage of  noninterest-bearing  funds supporting earning
     assets, resulting in a 23-basis-point decline in the net interest margin to
     4.51% for 1998 from 4.74% for 1997.

--   Operating  efficiency  and productivity  continued to improve.  In 1998 the
     efficiency  ratio was 57.79% compared to 63.57% in 1997 and 64.76% in 1996.
     The tangible efficiency ratio, which excludes the impact of amortization of
     purchase accounting  intangibles,  was 56.13% in 1998 compared to 61.51% in
     1997 and 63.50% in 1996. Revenue per full-time equivalent employee for 1998
     increased 10% compared to 1997.
     
--   Cash dividends per common  share for 1998 increased to $.375, or 14% higher
     than the 1997 cash  dividend  of $.33 per common  share and 29% higher than
     the 1996 cash dividend of $.29 per common share. The dividend payout ratios
     for 1998, 1997 and 1996 were 33.5%, 36.7% and 34.9%, respectively.

--   Hibernia  completed  mergers  in  1998  with  four  institutions  that  had
     combined  assets of $1.4  billion and 37 offices.  Since the  beginning  of
     1994,  Hibernia has completed  mergers with 21 institutions  (comprising 23
     banks) with  combined  assets of $5.1 billion and 158 offices.  At December
     31, 1998  transactions  were pending with three  institutions with combined
     assets of $1.1 billion and 19 offices.


Merger Activity

     In 1998 the Company  completed four mergers,  three in Louisiana and one in
East Texas  which were  accounted  for as  poolings  of  interests.  In 1997 the
Company completed two mergers with East Texas financial  institutions which were
accounted for as poolings of interests.  The Company  completed  five mergers in
1996,  two in  Louisiana  and one in East  Texas  which  were  accounted  for as
poolings of interests, and two in Louisiana which were accounted for as purchase
transactions.

     The institutions with which the Company merged are collectively referred to
as  the  "merged   companies."  The  merged  companies  that  were  acquired  in
transactions  accounted  for as poolings  of  interests  are  referred to as the
"pooled   companies,"  and  institutions  that  were  acquired  in  transactions
accounted for as purchases are referred to as the "purchased companies."

     All  prior-year  information  has been  restated  to reflect  the effect of
mergers accounted for as poolings of interests.  For all purchase  transactions,
the financial  information of those institutions is combined with Hibernia as of
and  subsequent to  consummation;  therefore,  certain  items  contained in this
discussion  are only  comparable  after  excluding  the effect of the  purchased
companies.

     Measures of financial  performance  subsequent to the purchase transactions
are more relevant when comparing  "tangible" results (i.e.,  before amortization
of purchase  accounting  intangibles)  because they are more  indicative of cash
flows, and thus the Company's  ability to support growth and pay dividends.  The
tangible  measures of financial  performance  are presented in the Five-Year and
Quarterly Consolidated Summary of Income and Selected Financial Data on pages 28
and 51.


Financial Condition

Earning Assets

     Interest  income from  earning  assets  (including  loans,  securities  and
short-term  investments) is the Company's main source of income. Average earning
assets totaled $12.0 billion in 1998, compared to $10.4 billion in 1997 and $8.9
billion in 1996. The increase in average  earning assets of $1.6 billion in 1998
and $1.5 billion in 1997 was primarily due to growth in the loan portfolio.

     Loan demand  remained  strong  throughout  1998.  Loans as a percentage  of
average earning assets  increased to 76.2% in 1998 compared to 71.1% in 1997 and
66.6% in 1996. Average  securities  decreased to 21.8% of average earning assets
in  1998  from  25.9%  in  1997  and  30.5% in 1996. The Company funded the 1998
increase in earning assets through the growth  in  interest-bearing  deposits of
$513.2   million,   other   interest-bearing   liabilities  of  $801.4  million,
noninterest-bearing  liabilities of $201.8 million and  shareholders'  equity of
$128.2 million.

     Total  earning  assets  at  December  31, 1998  were $13.0 billion, up $1.6
 billion from a year earlier  primarily due to a $1.7  billion (21%) increase in
loans.

     LOANS.  The  Company's  lending  activities  are  subject  to both  prudent
underwriting  standards and liquidity  considerations.  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  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 such as payment  capacity,  credit history and collateral.  In
addition,  market conditions,  economic trends and the character of the borrower
are considered. The credit policy, including the underwriting criteria for major
loan categories, is reviewed on a regular basis and adjusted when warranted.

     Average  loans  increased  $1.7 billion in 1998 and $1.5 billion in 1997 as
all segments  experienced strong growth.  Hibernia's efforts to achieve its goal
of  becoming  the best  financial  services  company  in each of its  markets by
building the most comprehensive and convenient  banking network,  and delivering
top-quality  service  across a broad range of financial  products and  services,
enabled the Company to increase loans  by deepening  relationships with existing
customers and by attracting new customers from competitors.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
TABLE 1 - COMPOSITION OF LOAN PORTFOLIO
-----------------------------------------------------------------------------------------------------------------
December 31 ($ in millions)                                        1998                         1997
-----------------------------------------------------------------------------------------------------------------
                                                            Balance     Percent         Balance     Percent
-----------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                <C>       <C>               <C>
Commercial:
    Commercial and industrial ..................       $   1,371.2        13.7%     $  1,089.2        13.1%
    Services industry ..........................           1,055.6        10.5           719.6         8.7
    Real estate ................................             457.4         4.6           444.2         5.4
    Health care ................................             306.5         3.1           251.7         3.0
    Transportation, communications and utilities             212.0         2.1           253.6         3.1
    Energy .....................................             422.0         4.2           279.0         3.4
    Other ......................................              55.1         0.6            54.2         0.6
-----------------------------------------------------------------------------------------------------------------
          Total commercial .....................           3,879.8        38.8         3,091.5        37.3
-----------------------------------------------------------------------------------------------------------------
Small Business:
    Commercial and industrial ..................             678.7         6.8           981.3        11.8
    Services industry ..........................             440.2         4.4           309.9         3.7
    Real estate ................................             274.6         2.7           179.0         2.2
    Health care ................................             107.6         1.1            74.1         0.9
    Transportation, communications and utilities              82.2         0.8            38.0         0.5
    Energy .....................................              46.3         0.5            17.3         0.2
    Other ......................................             348.0         3.5           259.6         3.1
-----------------------------------------------------------------------------------------------------------------
          Total small business .................           1,977.6        19.8         1,859.2        22.4
-----------------------------------------------------------------------------------------------------------------
Consumer:
    Residential mortgages:
        First mortgages ........................           2,195.9        21.9         1,591.2        19.2
        Junior liens ...........................             190.1         1.9           129.4         1.6
    Indirect ...................................             850.5         8.5           748.4         9.0
    Revolving credit ...........................             325.8         3.2           282.9         3.4
    Other ......................................             586.5         5.9           583.9         7.1
-----------------------------------------------------------------------------------------------------------------
          Total consumer .......................           4,148.8        41.4         3,335.8        40.3
-----------------------------------------------------------------------------------------------------------------
Total loans ....................................       $  10,006.2       100.0%     $  8,286.5       100.0%
=================================================================================================================
</TABLE>

     Table 1 details  Hibernia's  commercial and small business loans classified
by repayment  source and consumer loans  classified by type. In 1998  commercial
loans grew $788.3  million  (25%),  small  business loans were up $118.4 million
(6%) and consumer loans  increased  $813.0 million (24%).  The portfolio mix was
39% commercial, 20% small business and 41% consumer at year-end 1998 compared to
37%, 23% and 40%,  respectively,  at year-end 1997.  Hibernia's lending strategy
includes maintaining an appropriately balanced portfolio.

     Commercial  Loans.  The growth in the commercial  portfolio was distributed
among the services industry, up $336.0 million (47%); commercial and industrial,
up $282.0 million (26%);  energy, up $143.0 million (51%); health care, up $54.8
million  (22%);  and  commercial  real  estate,  up $13.2  million  (3%).  These
increases  were  partially  offset by a decrease of $41.6  million  (16%) in the
transportation,  communications  and  utilities  industry.  Despite  significant
growth  in  several   industries,   Hibernia's  loan  portfolio  is  still  well
diversified, as evidenced by the portfolio percentages presented in Table 1.

     Hibernia's  experienced   relationship   managers,   including  experts  in
specialized  industries such as health care,  commercial real estate, energy and
maritime,  allowed Hibernia to increase the commercial  portfolio.  Part of that
increase is a result of the identification of niches such as asset-based lending
and  equipment  leasing,  where  Hibernia  offers  products  and services and is
meeting customer needs efficiently and profitably.  In addition,  the skills and
market  knowledge of lenders who have joined the Company through mergers enabled
Hibernia to capitalize on opportunities in new markets.

     The energy industry  experienced a decline in 1998 as oil prices  decreased
worldwide. The Company's experienced energy/maritime management team reviews the
energy  portfolio for potential  adverse  developments  and proactively  manages
Hibernia's  exposure  to  risk.  The  Company  does not  have  significant  risk
associated  with  the  energy  industry  as  its  energy  portfolio   represents
approximately  10.9% of the  commercial  loan  portfolio  and only 4.7% of total
loans as of December 31, 1998. In addition,  more than  two-thirds of Hibernia's
energy  portfolio is composed of  customers  which are  well-capitalized  public
companies with decades of experience in the energy industry.

     Hibernia's  commercial loan portfolio does not contain significant exposure
to foreign countries and has no hedge-fund exposure.

     Small Business Loans. The small business  portfolio showed increases in the
services industry, up $130.3 million (42%); real estate, up $95.6 million (53%);
transportation,  communications and utilities,  up $44.2 million (116%);  health
care, up $33.5 million (45%);  energy,  up $29.0 million  (168%);  and other, up
$88.4 million (34%).  These  increases  were  partially  offset by a decrease of
$302.6 million (31%) in the commercial  and industrial  category.  This decrease
and  the  increase  in  the  "other"  category   primarily   resulted  from  the
reclassification  of  merger  bank  loans to their  appropriate  category  after
converting to Hibernia's loan system.

     Centralized  underwriting,  utilization  of  sophisticated  credit  scoring
models  and  Hibernia's  shortened  application  form,  QuickApp,  have made the
underwriting  process more efficient  while  maintaining  credit  quality.  This
allows the experienced business bankers located in each market to concentrate on
serving the credit and other financial needs of small business customers.

     Consumer Loans.  The increase in consumer loans to $4.1 billion at December
31, 1998 from $3.3 billion at December 31, 1997 resulted  primarily  from growth
in  the  residential  mortgage  portfolio.   Increased  marketing  efforts,  new
products,  shortened  application and approval  processes,  and extended service
hours were the major factors in the growth.

     Residential  mortgage  loans  increased  $665.4  million  (39%) in 1998 and
comprise  more than half of 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, 1998 Hibernia
serviced approximately $4.0 billion in residential mortgage loans.

     Technology-driven  enhancements helped streamline the mortgage application,
approval  and  closing  processes,  thereby  improving  customer  service.  This
improvement as well as Hibernia's  increased focus on mortgage  lending resulted
in over $2.4 billion in loan  originations  during 1998,  a 125%  increase  from
1997.

     In addition to loans for the purchase of homes, Hibernia offers customers a
broad assortment of loans secured by residential mortgages, including the Equity
PrimeLine(R),  an  attractively  priced line of credit secured by the customer's
residence.

     SECURITIES.  At the  end of  1998,  securities  totaled  $2.7  billion,  an
increase of $48.1 million, or 1.8%, from the end of 1997. Of total securities at
December  31,  1998,  88% 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 deposits.
The composition of the securities portfolio is shown in Table 2.

     During  1998,  as  a  result  of  the  interest  rate environment, Hibernia
restructured its securities portfolio.  This restructuring  resulted in the sale
of $30.0 million of U.S. Treasuries and the purchase of a similar amount of U.S.
government  agencies.  In  connection  with  these  transactions,  the   Company
recognized a gain on   the  sale of  securities of $1.3 million, while enhancing
future interest income.

     The Company  held no trading  securities at December 31, 1998. The  Company
held $35.9 million in securities as trading account assets at December 31, 1997.
These  trading  account  assets,  purchased  in  late  1997, related to a single
transaction associated with a tax planning strategy  and were sold in early 1998
for slightly more than their carrying  value at year-end  1997. The Company held
no trading  account assets at December 31, 1996, and  there was  no  significant
trading  activity  during 1996.  Hibernia  classifies its trading account assets
as short-term investments.

     Average securities  available for sale decreased $74.0 million (3%) to $2.6
billion in 1998 as a result of the  reinvestment  of  maturing  securities  into
higher-yielding  loans  during  1997.  Average  securities  available  for  sale
decreased  $22.0  million  from 1996 to 1997  primarily  due to a  reduction  in
mortgage-backed  securities as a result of contractual  payments and prepayments
of principal.  The proceeds from these  principal  reductions  were used to fund
loans.

     Maturities  and yields of securities at year-end 1998 are detailed in Table
3.  Mortgage-backed  securities are classified according to contractual maturity
without consideration of principal  amortization,  projected prepayments or call
options.

     At December  31, 1998 the  available  for sale  portfolio  included  $209.6
million of  adjustable-rate  securities.  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.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
TABLE 2 - COMPOSITION OF SECURITIES AVAILABLE FOR SALE
-------------------------------------------------------------------------------------
December 31  ($ in millions)                 1998          1997            1996
-------------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>       
U.S. Treasuries .................       $    254.5     $    433.8     $    512.8
U.S. government agencies:
     Mortgage-backed securities..            971.1        1,296.9        1,507.2
     Bonds ......................          1,134.2          582.0          455.2
States and political subdivisions            241.1          248.9          181.2
Other ...........................             75.4           66.6           61.6
Derivative financial instruments                 -              -            1.8
-------------------------------------------------------------------------------------
          Total .................       $  2,676.3     $  2,628.2     $  2,719.8
-------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
TABLE 3 - MATURITIES AND YIELDS OF SECURITIES AVAILABLE FOR SALE(1)
------------------------------------------------------------------------------------------------------------------------------------
                                                          Due after 1          Due after 5
                                      Due in 1 year       year through        years through          Due after
December 31, 1998 ($ in millions)        or less             5 years            10 years              10 years           Total
------------------------------------------------------------------------------------------------------------------------------------
                                       Amount   Yield    Amount    Yield     Amount    Yield     Amount     Yield    Amount    Yield
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>         <C>     <C>        <C>     <C>        <C>     <C>          <C>     <C>         <C>  
U.S. Treasuries ..................  $   56.6    6.46%   $ 197.9    5.63%   $     -       -%   $      -        -%   $ 254.5     5.82%
------------------------------------------------------------------------------------------------------------------------------------
U.S. government agencies:
    Mortgage-backed securities (2)       1.3    4.93       60.5    6.51      192.5    7.13       716.8     6.47       971.1    6.60
------------------------------------------------------------------------------------------------------------------------------------
    Bonds ........................      36.5    6.19      165.7    5.68      806.9    6.30       125.1     6.19     1,134.2    6.20
------------------------------------------------------------------------------------------------------------------------------------
States and political subdivisions       14.5    7.68       44.1    7.71       55.4    7.51       127.1     8.07       241.1    7.46
------------------------------------------------------------------------------------------------------------------------------------
Other ............................      72.4    4.53        1.8    5.03        1.2    5.03           -        -        75.4    4.55
------------------------------------------------------------------------------------------------------------------------------------
       Total .....................  $  181.3    5.72%   $ 470.0    5.96     1056.0    6.51%   $  969.0     6.64%   $2,676.3    6.37%
====================================================================================================================================
----------------
(1)Yield  computations are presented on a taxable-equivalent  basis using market
   values and a statutory income tax rate of 35%.
(2)Mortgage-backed  securities are classified  according to contractual maturity
   without  consideration of principal  amortization,  projected  prepayments or
   call options.
</TABLE>

     The average  repricing  period of total securities at December 31, 1998 was
5.5 years  compared to 3.9 years at December  31,  1997.  The  repricing  period
increased due to a movement  toward longer maturity agency bonds which have call
features.  These call  features are not  considered  in the  calculation  of the
average repricing period. Carrying securities available for sale at market value
has the effect of  recognizing  a yield on the  securities  equal to the current
market yield.


Asset Quality

Nonperforming assets consist of nonaccrual loans (loans on which interest income
is not  currently  recognized),  restructured  loans  (loans  with  below-market
interest rates or other concessions due to the deteriorated  financial condition
of the borrower),  foreclosed  assets (assets to which title has been assumed in
satisfaction  of debt) and  excess  bank-owned  property.  Nonperforming  assets
totaled $52.4 million at year-end  1998, a $24.9 million (90%) increase from the
prior year.  Nonperforming  assets  totaling  $27.5 million at December 31, 1997
were up $1.2 million  (5%) from  December  31,  1996.  Approximately  50% of the
increase in nonperforming  assets is the result of one large  non-energy-related
commercial loan. The composition of  nonperforming  assets and certain key asset
quality ratios for the past five years are illustrated in Table 4.

     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  of both
principal and interest.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
TABLE 4 - NONPERFORMING ASSETS
-------------------------------------------------------------------------------------------------------------
December 31 ($ in thousands)                  1998         1997         1996         1995         1994
-------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>          <C>          <C>     
Nonaccrual loans ......................    $ 40,152     $ 22,598     $ 17,109     $ 18,515     $ 23,610
Restructured loans ....................           -            -            -            -        6,024
-------------------------------------------------------------------------------------------------------------
    Nonperforming loans ...............      40,152       22,598       17,109       18,515       29,634
Foreclosed assets .....................       9,618        2,577        5,533        6,654       11,156
Excess bank-owned property ............       2,648        2,360        3,670        2,946            -
-------------------------------------------------------------------------------------------------------------
    Total nonperforming assets ........    $ 52,418     $ 27,535     $ 26,312     $ 28,115     $ 40,790
-------------------------------------------------------------------------------------------------------------
Accruing loans past due 90 days or more    $  7,054     $  5,767     $  5,918     $  3,201     $  5,581
Reserve for possible loan losses ......    $127,976     $124,381     $143,566     $165,099     $171,454
Nonperforming assets/loans plus
    foreclosed assets and excess
    bank-owned property ...............        0.52%        0.33%        0.39%       0.53%         0.95%
Reserve for possible loan losses/loans         1.28%        1.50%        2.13%       3.12%         4.00%
Reserve for possible loan losses/
    nonperforming loans ...............       318.7%       550.4%       839.1%      891.7%        578.6%
Net loans charged off/average loans ...        0.25%        0.31%        0.26%       0.14%         0.30%
=============================================================================================================
</TABLE>

     Loans are  considered  to be impaired  when it is probable that all amounts
due in accordance with the contractual terms will not be collected.  Included in
nonaccrual  loans are loans that are  considered  to be impaired  which  totaled
$36.5 million at December 31, 1998 and $17.2  million at December 31, 1997.  The
reserve for  possible  loan losses  related to these loans was $9.8  million and
$2.6 million at December 31, 1998 and 1997, respectively.

     In addition to the  nonperforming  loans discussed  above,  there are $20.7
million of loans which, in management's opinion, are subject to potential future
classification as nonperforming.

     Foreclosed  assets and excess  bank-owned  property,  which are recorded at
fair value less estimated selling cost,  totaled $12.3 million at year-end 1998,
$4.9 million at year-end 1997 and $9.2 million at year-end 1996.

     Table 5  details  nonperforming  loan  activity  during  1998 by loan  type
(commercial  real  estate,  other  commercial,  small  business  and  consumer).
Payments and loans returned to performing  status  accounted for a $21.2 million
reduction  in  nonperforming  loans.  Charge-offs  of  nonperforming  loans  and
transfers to foreclosed  assets  totaled $13.7  million,  while $52.4 million in
loans were transferred to nonperforming status in 1998.

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
TABLE 5 - SUMMARY OF NONPERFORMING LOAN ACTIVITY
---------------------------------------------------------------------------------------------------------------------
                                            Commercial      Other         Small
($ in thousands)                            Real Estate   Commercial     Business      Consumer        Total
---------------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>            <C>            <C>           <C>     
Nonperforming loans at December 31, 1997      $ 199       $  5,083       $ 11,306       $ 6,010       $ 22,598
Additions ..............................          -         25,000         23,201         4,227         52,428
Gross charge-offs ......................       (118)          (875)        (2,998)         (511)        (4,502)
Transfers to foreclosed assets .........          -         (7,686)          (893)         (575)        (9,154)
Returned to performing status ..........          -              -         (1,281)       (2,069)        (3,350)
Payments ...............................          -         (2,388)       (12,291)       (3,189)       (17,868)
---------------------------------------------------------------------------------------------------------------------
Nonperforming loans at December 31, 1998      $  81       $ 19,134       $ 17,044       $ 3,893       $ 40,152
=====================================================================================================================
</TABLE>


     Nonperforming  assets  compared to total loans plus  foreclosed  assets and
excess bank-owned property  (nonperforming  asset ratio) is one measure of asset
quality. At December 31, 1998 the Company's  nonperforming asset ratio was 0.52%
compared to 0.33% at year-end 1997 and 0.39% at year-end 1996.  Another  measure
of asset  quality is the amount of net  charge-offs  during the year compared to
average loans.  As illustrated in Table 6, net charge-offs in 1998 totaled $22.4
million,  a $0.4 million decrease from $22.8 million in 1997. Net charge-offs as
a  percentage  of average  loans were 0.25% in 1998,  0.31% in 1997 and 0.26% in
1996.

     The  level of  accruing,  delinquent  loans  (over 30 days  past  due) as a
percentage  of total  loans was 0.6% at December  31,  1998  compared to 0.8% at
year-end 1997 and 1.3% at year-end 1996. The commercial loan  delinquency  ratio
increased in 1998 to 0.3% from 0.2% at the end of 1997.  The small business loan
delinquency ratio declined in 1998 to 0.5% from 0.8% at the end of 1997, and the
consumer loan delinquency  ratio decreased to 0.9% from 1.4%. The improvement in
consumer  delinquencies  from 1997 is primarily due to a change in the reporting
methodology  from number of days to payment  cycle dates for mortgage  loans,  a
methodology utilized in the banking industry.


Reserve and Provision for Possible Loan Losses

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

     Management  continuously  evaluates the reserve for possible loan losses to
ensure  the  level is  adequate  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 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 such as risk rating,  industry concentration and loan type,
with  the  most  recent  charge-off  experience  weighted  more  heavily.    The
unallocated  reserve generally  serves  to compensate  for  the  uncertainty  in
estimating  loan  losses,  including  the possibility  of improper  risk ratings
and  specific  reserve  allocations.  The  reserve  also  considers  trends   in
delinquencies  and nonaccrual loans  as  well  as the evolving  portfolio mix in
terms of  collateral,  relative  loan  size  and  the degree of seasoning in the
various loan products.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------
TABLE 6 - LOAN LOSS RESERVE ACTIVITY
----------------------------------------------------------------------------
Year Ended December 31
($ in thousands)                1998           1997           1996
----------------------------------------------------------------------------
<S>                         <C>             <C>             <C>   
Balance at beginning
  of year ............      $ 124,381       $ 143,566       $ 165,099
  Loans charged off ..        (39,702)        (45,596)        (36,228)
  Recoveries .........         17,297          22,784          20,608
----------------------------------------------------------------------------
Net loans
  charged off ........        (22,405)        (22,812)        (15,620)
----------------------------------------------------------------------------
Provision for possible
  loan losses ........         26,000           3,148         (12,127)
Addition due to
  purchase
  transactions .......              -             479           6,214
----------------------------------------------------------------------------
Balance at end
  of year ............      $ 127,976       $ 124,381       $ 143,566
============================================================================
</TABLE>

     The  provision  for  possible  loan losses (a component of earnings) is the
means by which the reserve for  possible  loan losses is adjusted to establish a
reserve level considered  adequate by management to absorb future potential loan
losses.

     The Board of Directors reviews the adequacy of the reserve each quarter. As
a result of continued  growth in the loan  portfolio and increases in nonaccrual
loans,  Hibernia  recorded a $26.0  million  provision  for loan losses in 1998,
compared to a $3.1 million provision recorded by certain of the pooled companies
in 1997 and a $12.1 million negative provision recorded in 1996.

     The  year-end  1998 reserve of $128.0  million  provided  319%  coverage of
nonperforming  loans  compared to $124.4  million with 550% coverage at year-end
1997 and $143.6  million with 839% coverage at year-end 1996. As a percentage of
total loans,  the reserve for possible loan losses amounted to 1.28% at December
31, 1998  compared to 1.50% and 2.13% at year-end  1997 and 1996,  respectively.
While the reserve for possible loan losses as a percentage of loans has declined
over the last five years,  the present  level is  considered  adequate to absorb
future potential losses.

     During 1999 the Company  expects the quarterly  provision for possible loan
losses to increase to maintain an adequate  reserve level.  Factors such as loan
growth,  the level of  nonperforming  loans and the amounts and timing of future
cash flows expected to be received on impaired loans will be considered and will
impact the estimate of the required provision.

     The allocation of the December 31, 1998 reserve for possible loan losses is
presented in Table 7.

     Allocations  to  commercial  and  consumer  loans  declined  slightly  as a
percentage of their respective  portfolios in 1998 compared to 1997,  reflecting
improved loss  experience.  The  unallocated  reserve has increased as a prudent
response to potential risk factors  including the impact on all three portfolios
of declining oil prices in the economies where Hibernia operates.

<TABLE>
<CAPTION>
----------------------------------------------------------------
TABLE 7 - ALLOCATION OF RESERVE
FOR POSSIBLE LOAN LOSSES
----------------------------------------------------------------
                                    Reserve for      % of
December 31, 1998                    Possible        Total
($ in millions)                     Loan Losses     Reserve
----------------------------------------------------------------
<S>                                 <C>             <C> 
Commercial real estate loans        $    2.2          1.7%
Other commercial loans .....            23.6         18.5
Small business loans .......            13.8         10.8
Consumer loans .............            51.3         40.0
Unallocated reserve ........            37.1         29.0
----------------------------------------------------------------
    Total ..................        $  128.0        100.0%
----------------------------------------------------------------
</TABLE>

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 Table 8 and Table 9, respectively.

     Average  deposits  totaled  $9.9  billion in 1998,  a $683.4  million  (7%)
increase from 1997.  Average core  deposits were up $502.1  million (7%) to $8.1
billion or 81.8% of total  deposits.  This growth  resulted  from an emphasis on
attracting new deposits  and  expanding current  banking  relationships  through
outstanding service and the promotion of products such as Tower Super  SavingsSM
and  Tower GoldSM  Services,  which offer  liquidity, competitive interest rates
and the security of a bank deposit.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
TABLE 8 - AVERAGE DEPOSIT RATES
--------------------------------------------------------------------------
                                     1998         1997         1996
--------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>  
NOW accounts .............           3.33%        2.77%        2.60%
Money market
  deposit accounts .......           2.53         2.57         2.41
Savings accounts .........           3.22         2.90         2.19
Other consumer
  time deposits ..........           5.19         5.23         5.47
Public fund certificates
  of deposit of
  $100,000 or more .......           5.35         5.50         5.40
Certificates of deposit
  of $100,000 or more ....           5.28         5.21         5.18
Foreign time deposits ....           5.04         5.30         5.41
--------------------------------------------------------------------------
    Total interest-bearing
      deposits ...........           4.22%        4.25%        4.24%
==========================================================================
</TABLE>

     NOW account average  balances for 1998 were down $181.5 million compared to
1997, and money market average  deposits were up $224.4 million in 1998 compared
to 1997. NOW account average balances for 1997 were up $13.3 million compared to
1996, and money market average  deposits were up $120.6 million in 1997 compared
to 1996. During the fourth quarter of 1995,  Hibernia  instituted a new product,
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. As a result of
additional  analysis  performed  in 1997,  the  Reserve  Money  Manager  account
was enhanced  in  the  first  quarter  of 1998 to create a more efficient  sweep
process.  The effect of the Reserve Money Manager  account on  average  balances
was $1,097.0 million in 1998, $743.9 million in 1997 and $533.5  million in 1996
(reducing  NOW  account  average  balances  and  increasing money market deposit
account average  balances).  Net of this effect, NOW  account  average  balances
were up $171.6  million (14%) in  1998  compared  to 1997 and up $223.7  million
(22%) in 1997  compared  to 1996,  and  money  market  deposit  account  average
balances were down $128.7 million (13%) in 1998 compared to  1997 and down $89.8
million (8%) in 1997 compared to 1996.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
TABLE 9  -  DEPOSIT COMPOSITION
---------------------------------------------------------------------------------------------------------------------
                                                 1998                     1997                     1996
---------------------------------------------------------------------------------------------------------------------
                                        Average      % of         Average      % of        Average         % of
($ in millions)                        Balances     Deposits     Balances    Deposits     Balances     Deposits
---------------------------------------------------------------------------------------------------------------------
<S>                                  <C>              <C>      <C>              <C>      <C>              <C>  
Noninterest-bearing ...........      $  1,803.1       18.2%    $  1,632.9       17.7%    $  1,433.8       17.7%
NOW accounts ..................           323.6        3.3          505.1        5.4          491.8        6.1
Money market deposit accounts..         1,970.0       19.8        1,745.6       18.9        1,625.0       20.1
Savings accounts ..............         1,104.2       11.1          792.6        8.6          493.1        6.1
Other consumer time deposits ..         2,924.2       29.4        2,946.8       31.9        2,673.1       33.1
---------------------------------------------------------------------------------------------------------------------
        Total core deposits ...         8,125.1       81.8        7,623.0       82.5        6,716.8       83.1
---------------------------------------------------------------------------------------------------------------------
Public fund certificates of
    deposit of $100,000 or more           992.1       10.0        1,014.3       11.0          926.9       11.5
Certificates of deposit of
    $100,000 or more ..........           582.3        5.9          507.3        5.5          398.1        4.9
Foreign time deposits .........           226.7        2.3           98.2        1.0           41.8        0.5
---------------------------------------------------------------------------------------------------------------------
        Total deposits ........      $  9,926.2      100.0%    $  9,242.8      100.0%    $  8,083.6      100.0%
=====================================================================================================================
</TABLE>

     Average noncore deposits  increased $181.3 million (11%) to $1.8 billion in
1998 compared to 1997.  Public fund  certificates of deposit of $100,000 or more
decreased  $22.2 million (2%),  while other  large-denomination  certificates of
deposit  increased  $75.0 million (15%) and foreign  deposits  increased  $128.5
million (131%). The growth in other  large-denomination  certificates of deposit
was primarily the result of competitive  pricing and increased marketing efforts
as the  Company  funded  its  growing  loan  portfolio.  Foreign  deposits  were
positively   impacted  by  a  treasury  management  sweep  product  which  moves
commercial customer funds into higher-yielding  Eurodollar deposits.  Because of
the nature of these commercial  customer funds,  they are considered  stable and
not subject to the same volatility as other sources of foreign deposits.


Borrowings

     Average borrowings - which include federal funds purchased; securities sold
under agreements to repurchase (repurchase  agreements);  treasury, tax and loan
account;  and debt - increased  $801.4  million  (114%) to $1.5  billion in 1998
compared to 1997.

     Average  federal  funds  purchased  were $395.2  million  during  1998,  an
increase of $129.6 million from 1997. Fluctuations in short-term borrowings stem
from  differences  in the timing of growth in the loan  portfolio  and growth of
other funding sources  (deposits,  proceeds from maturing  securities and debt).
Average repurchase  agreements increased $55.2 million in 1998 compared to 1997.
This increase resulted primarily from treasury  management  products which sweep
funds from commercial customers' deposit accounts.

     The Company's debt at December 31, 1998,  which totaled $805.7 million,  is
comprised  of advances  from the Federal  Home Loan Bank of Dallas  (FHLB).  The
average rate on debt during 1998 was 5.60%  compared to 5.94% during 1997.  Debt
increased $299.1 million from December 31, 1997 as Hibernia locked in attractive
fixed rates to fund its growing loan  portfolio.  The FHLB may demand payment of
$300 million in callable advances at quarterly intervals,  of which $200 million
may not be called before June of 2003. If called prior to maturity,  replacement
funding  will be  offered  by the FHLB at a  then-current  rate.  The  Company's
reliance on  borrowings,  while  higher than a year ago,  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 of interest rate changes
on net income and capital  resulting from mismatches in repricing  opportunities
of assets and  liabilities  over a period of time. A number of tools are used to
monitor and manage interest rate risk,  including simulation models and interest
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.  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 or balance changes 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 the relative timing of prepayments on mortgage-related
assets  and  cash  flows  and  maturities  of  derivative  and  other  financial
instruments  held for purposes  other than trading.  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.

     Hibernia's  policy objective is to limit the impact on net interest income,
from an immediate and sustained change in interest rates of 200 basis points, to
20% of  projected  12-month net income.  Based on the results of the  simulation
models at  December  31,  1998,  the  Company  would  expect an  increase in net
interest  income of $2.1  million in the event of an  immediate  200-basis-point
increase  in  interest  rates and an  increase  in net  interest  income of $3.0
million in the event of an immediate 200-basis-point decrease in interest rates.
In addition,  the Company  projects an increase in net  interest  income of $2.0
million and a decrease of $4.9 million if interest rates  gradually  increase or
decrease, respectively, by 150 basis points over the next year.

     Table 10 presents Hibernia's interest rate sensitivity position at December
31,  1998.  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.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
TABLE 10 - INTEREST RATE SENSITIVITY AND GAP ANALYSIS
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Over 5 Years
December 31, 1998                       1-30         31-60       61-90         91-365       1 Year          -and Non-
($ in thousands)                        Days          Days        Days          Days        5 Years         Sensitive      Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>          <C>           <C>           <C>            <C>            <C>
Earning assets:
    Loans ......................... $ 4,262,112   $ 186,472    $ 184,804     $1,406,221    $3,272,437     $  694,136     $10,006,182
    Securities available for sale..   2,676,311           -            -              -             -              -       2,676,311
    Other earning assets ..........     350,132           -            -              -             -              -         350,132
------------------------------------------------------------------------------------------------------------------------------------
        Total earning assets ......   7,288,555     186,472      184,804      1,406,221     3,272,437        694,136      13,032,625
------------------------------------------------------------------------------------------------------------------------------------
Funding sources:
    NOW accounts ..................     295,180           -            -              -             -              -         295,180
    Money market deposit accounts..   2,220,112           -            -              -             -              -       2,220,112
    Savings accounts ..............   1,205,742           -            -              -             -              -       1,205,742
    Foreign deposits ..............     321,537           -            -              -             -              -         321,537
    Other interest-bearing deposits   1,480,209     436,771      345,820      1,595,436       620,782         55,198       4,534,216
    Short-term borrowings .........   1,134,136           -            -              -             -              -       1,134,136
    Debt ..........................     100,070          70           70        100,630       603,037          1,812         805,689
    Noninterest-bearing sources ...           -           -            -              -             -      2,516,013       2,516,013
------------------------------------------------------------------------------------------------------------------------------------
        Total funding sources .....   6,756,986     436,841      345,890      1,696,066     1,223,819      2,573,023      13,032,625
------------------------------------------------------------------------------------------------------------------------------------
Repricing/maturity gap:
    Period ........................ $   531,569   $(250,369)   $(161,086)$     (289,845)   $2,048,618     (1,878,887)   
    Cumulative .................... $   531,569   $ 281,200    $ 120,114 $     (169,731)   $1,878,887              -    
------------------------------------------------------------------------------------------------------------------------------------
Gap/total earning assets:
    Period ........................         4.1%       (1.9)%       (1.2)%         (2.2)%        15.7%         (14.4)%
    Cumulative ....................         4.1%        2.2 %        0.9 %         (1.3)%        14.4%
====================================================================================================================================
</TABLE>

     Although  the Gap  analysis  indicates  the Company is  liability-sensitive
(interest-bearing  liabilities exceed  interest-earning  assets) up to one year,
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  35%  of  interest-bearing
liabilities,  do not necessarily  reprice in a direct relationship to changes in
market interest rates. In addition,  one of Hibernia's  deposit  products is the
consumer One Way CDSM, which gives the customer a one-time opportunity to adjust
the rate on a certificate  of deposit  during its two-year  term. As of December
31, 1998 these deposits totaled $546.4 million,  of which  approximately  $127.2
million had been repriced. Of the remaining $419.2 million, approximately $388.2
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.

     On a limited  basis,  Hibernia uses  derivative  financial  instruments  to
manage  interest rate exposure.  These  instruments  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 an interest rate contract.  Notional  principal  amounts express the
volume of these transactions, although the amounts potentially subject to credit
and market risk are much  smaller.  Deposit-related  interest  rate swaps may be
entered into as hedges against  deposits of the same maturity.  The differential
to be paid or received is accrued  as interest rates change and is recognized as
an adjustment to interest  expense on deposits.  The notional amount of deposit-
related interest rate swaps totaled $125.0 million at the end of 1998 and $100.0
million at the end of 1997, respectively. There were no deposit-related interest
rate swaps at the end of 1996.

     Derivative financial instruments are also held or issued by the Company for
trading  purposes to provide  customers the ability to manage their own interest
rate sensitivity. In general, matched positions are established to minimize risk
to the Company. The notional value of derivative financial  instruments held for
trading totaled $405.0 million at year-end 1998, $224.3 million at year-end 1997
and $209.9  million at year-end 1996.  However,  Hibernia's  credit  exposure to
derivative  financial  instruments  held for trading  totaled only a fraction of
those amounts:  $4.0 million at December 31, 1998,  $0.9 million at December 31,
1997 and $0.9 million at December 31, 1996.


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:

     o volume,  yield and mix of earning assets; 
     o level of nonperforming loans;
     o volume, yield and mix of interest-bearing liabilities;
     o amount of  noninterest-bearing  funds  supporting  earning assets;  and 
     o interest rate environment.

     The net interest  margin is comprised  of the net  interest  spread,  which
measures  the  difference  between the average  yield on earning  assets and the
average  rate paid on  interest-bearing  liabilities,  and the  contribution  of
noninterest-bearing  funds,  which  measures  the effect of  noninterest-bearing
funds  (primarily  demand  deposits  and  shareholders'  equity) on net interest
income. In general, the higher the ratio of noninterest-bearing funds supporting
earning   assets,    the   higher   the   net   interest   margin.    Hibernia's
noninterest-bearing  funds  ratio was 19.79% in 1998  compared to 20.09% in 1997
and 21.09% in 1996.  Table 11 details the components of the net interest  margin
for the past five years.

     The net  interest  margin  of 4.51% in 1998  compares  to 4.74% in 1997 and
4.83% in 1996. The decline in the net interest  margin in 1998 was the result of
a decline  in loan  yields to 8.57%  from  8.89% in 1997,  an  increased  use of
market-rate  funds and the  decline  in the level of  noninterest-bearing  funds
supporting  earning  assets.  The  decline in loan yields  results  from a lower
interest-rate  environment  and a change in the mix of the loan  portfolio.  The
increased   use  of   market-rate   funds  and  the  decline  in  the  level  of
noninterest-bearing  funds are  evidenced  by the  increase in the cost of funds
supporting  earning  assets to 3.53% in 1998 from 3.46% in 1997.  These negative
impacts  were  partially  offset by the change in the mix of  earning  assets to
proportionately  more loans with comparatively  higher yields than other earning
assets.  In 1998 loans amounted to 76% of average earning assets compared to 71%
in 1997.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
TABLE 11 - NET INTEREST MARGIN (taxable-equivalent)
-------------------------------------------------------------------------------------------------------------------
                                                            1998       1997       1996       1995       1994
-------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>        <C>        <C>        <C>        <C>  
Yield on earning assets ...........................         8.04%      8.20%      8.20%      8.06%      7.17%
Rate on interest-bearing liabilities ..............         4.40       4.33       4.27       4.31       3.32
-------------------------------------------------------------------------------------------------------------------
    Net interest spread ...........................         3.64       3.87       3.93       3.75       3.85
Contribution of noninterest-bearing funds .........         0.87       0.87       0.90       0.91       0.70
-------------------------------------------------------------------------------------------------------------------
    Net interest margin ...........................         4.51%      4.74%      4.83%      4.66%      4.55%
-------------------------------------------------------------------------------------------------------------------
Noninterest-bearing funds supporting earning assets        19.79%     20.09%     21.09%     21.14%     21.06%
===================================================================================================================
</TABLE>

     The net interest margin was negatively impacted  (approximately three basis
points) in 1998 due to a $3.0  million  adjustment  related  to  revenue-sharing
arrangements   with   certain    automobile   dealers   brought   about   by   a
higher-than-expected  level of consumer automobile  prepayments.  Borrowers have
increasingly  opted to prepay  these types of loans,  resulting in a decrease in
the  reserve   established  to  protect  the  Company   against  the  impact  of
prepayments.  This behavior is primarily due to economic and market  conditions,
the current  interest  rate  environment  and the ability of borrowers to obtain
alternative  financing  at  attractive  rates. The Company will actively monitor
future prepayment activity and adjust pricing and the reserve level accordingly.
In  addition,  the net  interest  margin was reduced  approximately  three basis
points in 1998 and one basis point in 1997 by the funding cost of a  transaction
designed to utilize  capital  losses.  On a normalized  basis,  the net interest
margin would have been 4.57% for 1998 compared to 4.75% in 1997.

     From 1996 to 1997 the normalized net interest margin  decreased eight basis
points. The negative effects of an increased use of market-rate funds, a decline
in loan  yields to 8.89%  from  9.10% and a  six-basis-point  increase  in total
funding costs were partially offset by the change in the mix of earning assets.


Results of Operations

     The Company earned $178.6  million,  or $1.12 per common share, in 1998. In
1997 net income  was $144.8  million,  or $.90 per  common  share,  and 1996 net
income was $127.9 million, or $.83 per common share. Net income per common share
assuming   dilution  was  $1.10,   $.89  and  $.82  for  1998,  1997  and  1996,
respectively.

     Operating  results  improved in 1998 because of a $49.0 million increase in
taxable-equivalent  net interest income resulting from a higher level of earning
assets, a $28.0 million  increase in noninterest  income  (excluding  securities
transactions) and a $3.0 million increase in securities  gains.  These favorable
effects were  partially  offset by a $26.0  million  provision for possible loan
losses in 1998  compared  to a $3.1  million  provision  taken by certain of the
pooled companies in 1997 and a $7.3 million increase in noninterest  expense. In
addition, income tax expense increased $15.4 million in 1998 compared to 1997.

     The  improvement  in 1997 from 1996 was due to a $62.7 million  increase in
taxable-equivalent   net  interest  income,  a  $25.4  million   improvement  in
noninterest  income  (excluding  securities  transactions)  and $2.7  million in
securities gains in 1997 compared to $5.2 million in securities  losses in 1996.
Partially  offsetting  these  favorable  effects,  1997 results  included a $3.1
million  provision for possible loan losses compared to a $12.1 million negative
provision in 1996,  an increase in  noninterest  expense of $49.4 million and an
$11.4 million increase in income tax expense.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
TABLE 12  -  INTEREST-EARNING ASSET COMPOSITION
--------------------------------------------------------------------------------------------
(Percentage of average balances)     1998       1997       1996       1995       1994
--------------------------------------------------------------------------------------------
<S>                                 <C>        <C>        <C>        <C>        <C>  
Loans .......................        76.2%      71.1%      66.6%      58.6%      51.0%
Securities available for sale        21.8       25.9       30.5       13.1       15.3
Securities held to maturity..         -          -          -         26.0       30.5
--------------------------------------------------------------------------------------------
Total securities ............        21.8       25.9       30.5       39.1       45.8
--------------------------------------------------------------------------------------------
Short-term investments ......         2.0        3.0        2.9        2.3        3.2
--------------------------------------------------------------------------------------------
Total interest-earning assets       100.0%     100.0%     100.0%     100.0%     100.0%
============================================================================================
</TABLE>

Net Interest Income

     Net interest income on a taxable-equivalent  basis increased $49.0 million,
or  10%,   to  $541.5   million   in  1998   from   $492.5   million   in  1997.
Taxable-equivalent   net   interest   income   in  1996  was   $429.8   million.
Taxable-equivalent net interest income increased in 1998 compared to 1997 and in
1997  compared to 1996  primarily  as the result of the growth and change in the
mix of earning assets.

     As   indicated   in   Table   13,   the   change   in   volumes   increased
taxable-equivalent  net  interest  income in 1998 by $77.7  million  compared to
1997. A $148.7 million increase in taxable-equivalent interest income due to the
growth in loans was  partially  offset by a $62.1  million  increase in interest
expense due to growth in  interest-bearing  liabilities.  The change in interest
rates  caused a  decline  in  taxable-equivalent  net  interest  income of $28.6
million.  Taxable-equivalent interest income on loans declined $22.2 million due
to changes in yields caused by the competitive  lending environment and a change
in the mix of the loan portfolio. Interest expense increased $1.1 million due to
an increase in the rates paid on  interest-bearing  deposits and a change in the
mix of funding sources toward market-rate funds.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TABLE 13 - CHANGES IN TAXABLE-EQUIVALENT NET INTEREST INCOME(1)
--------------------------------------------------------------------------------------------------------------------
                                              1998 Compared to 1997                1997 Compared to 1996
--------------------------------------------------------------------------------------------------------------------
                                                         Increase (Decrease) Due to Change In:
--------------------------------------------------------------------------------------------------------------------
($ in thousands)                         Volume        Rate        Total       Volume       Rate        Total
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>         <C>          <C>          <C>         <C>
Taxable-equivalent interest earned on:
    Commercial loans ..............    $  73,169   $  (9,191)  $   63,978   $   32,540   $  (8,986)  $  23,554
    Small business loans ..........       15,852      (3,325)      12,527       57,467       1,039      58,506
    Consumer loans ................       59,726      (9,638)      50,088       43,620      (7,399)     36,221
--------------------------------------------------------------------------------------------------------------------
       Loans ......................      148,747     (22,154)     126,593      133,627     (15,346)    118,281
--------------------------------------------------------------------------------------------------------------------
    Securities available for sale..       (4,821)     (6,391)     (11,212)      (1,444)      2,439         995
    Short-term investments ........       (4,211)      1,022       (3,189)       3,123         527       3,650
--------------------------------------------------------------------------------------------------------------------
        Total .....................      139,715     (27,523)     112,192      135,306     (12,380)    122,926
--------------------------------------------------------------------------------------------------------------------
Interest paid on:
    NOW accounts ..................       (5,676)      2,491       (3,185)         352         828       1,180
    Money market deposit accounts..        5,692        (573)       5,119        3,004       2,644       5,648
    Savings accounts ..............        9,824       2,743       12,567        7,946       4,275      12,221
    Other consumer time deposits ..       (1,176)     (1,209)      (2,385)      14,510      (6,715)      7,795
    Public fund certificates of
        deposit of $100,000 or more       (1,204)     (1,518)      (2,722)       4,790         920       5,710
    Certificates of deposit
        of $100,000 or more .......        3,953         362        4,315        5,683          94       5,777
    Foreign deposits ..............        6,485        (267)       6,218        2,990         (47)      2,943
    Federal funds purchased .......        6,989        (243)       6,746       11,738         177      11,915
    Repurchase agreements .........        2,648        (345)       2,303        2,848         539       3,387
    Debt ..........................       34,529        (339)      34,190        3,674         (57)      3,617
--------------------------------------------------------------------------------------------------------------------
        Total .....................       62,064       1,102       63,166       57,535       2,658      60,193
--------------------------------------------------------------------------------------------------------------------
Taxable-equivalent
    net interest income ...........    $  77,651   $ (28,625)  $   49,026   $   77,771   $ (15,038)  $  62,733
====================================================================================================================
--------------
(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.
</TABLE>

     Net  interest  income for 1998 was  negatively  impacted by a $3.0  million
adjustment  related to  revenue-sharing  arrangements  with  certain  automobile
dealers discussed in the Net Interest Margin section. In addition,  net interest
income in 1998 and 1997 was reduced by the funding  cost of a  transaction  that
utilized  capital  loss  carryforwards.  Income of $3.8 million in 1998 and $2.2
million in 1997  associated  with this  transaction  is recorded as a securities
gain in noninterest income rather than in net interest income.

     For  1997   compared  to  1996,   the  change  in  net  volumes   increased
taxable-equivalent  net  interest  income by $77.8  million.  This  increase was
primarily   the   result  of  growth  in  loans   adding   $133.6   million   to
taxable-equivalent   interest  income,   partially  offset  by  an  increase  in
interest-bearing   funds   increasing   interest   expense  by  $57.5   million.
Taxable-equivalent  interest  income  on  loans  decreased  $15.3  million,  and
interest  expense  increased  $2.7 million due to changes in the  interest  rate
environment.

Noninterest Income

     Noninterest  income  totaled  $184.9  million  in 1998  compared  to $154.0
million in 1997 and $120.7 million in 1996. Excluding  securities  transactions,
noninterest income was up $28.0 million (19%) in 1998 compared to 1997.

     Nonrecurring  items in 1997 affect  comparisons of noninterest  income from
1998  to  1997.  In  1997,  nonrecurring  items  included  a $1.2  million  gain
recognized on the sale of Hibernia's  interest in an electronic  funds  transfer
network  and $1.2  million in trading  account  income  resulting  from a single
transaction related to a tax planning strategy.

     Net of the  nonrecurring  items and  securities  transactions,  noninterest
income was up $30.4 million  (20%).  The major  categories  contributing  to the
increase  in  noninterest  income  were  service  charges on  deposits,  up $7.4
million;  mortgage loan origination and servicing fees, up $5.6 million;  retail
investment  service fees, up $5.2 million;  gains on the sale of mortgage loans,
up $4.8 million;  debit/credit  card fees,  up $3.0  million;  ATM fees, up $1.3
million; and trust fees, up $1.2 million.

     Service  charges on deposits  increased $7.4 million (10%) to $85.6 million
in  1998   compared   to  1997.   This  change  was  the  result  of  growth  in
transaction-based  fees and commercial  account analysis fees due to an increase
in the number of accounts.

     Trust fees were $16.7  million in 1998,  up $1.2 million  (7%)  compared to
1997, and retail  investment  service fees were $17.2  million,  up $5.2 million
(43%) due to market  conditions,  the expanded  availability  of investment  and
brokerage services throughout the banking office network and the addition of new
customers from merger banks where these products previously were not offered.

     Mortgage loan origination and servicing fees were $15.2 million in 1998, up
$5.6  million  (58%)  compared to 1997.  The increase  was  primarily  due to an
increase in mortgage  origination activity brought about by a continued focus on
mortgage banking and the favorable  interest rate environment.  In 1998 Hibernia
processed $2.4 billion in residential  first mortgages  compared to $1.0 billion
in 1997.

     ATM fees  increased  $1.3 million (14%) to  $10.3  million in 1998 compared
to 1997 due to the continued  growth of the ATM network and the expansion of ATM
services.

     Debit/credit  card  fees  were  $7.9  million  in 1998, an increase of $3.0
million  (61%)  compared  to  1997.  The  increase  resulted primarily from fees
generated by Hibernia's CheckMateSM debit card and Capital Access(C) credit card
for small businesses.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TABLE 14 - NONINTEREST INCOME
--------------------------------------------------------------------------------------------------------------------
                                                                                   Percent Increase (Decrease)
--------------------------------------------------------------------------------------------------------------------
                                                                                         1998        1997
($ in thousands)                                1998          1997          1996      over 1997   over 1996
--------------------------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>          <C>              <C>        <C>  
Service charges on deposits .............     $ 85,567     $ 78,132     $  64,982          9.5%     20.2%
Trust fees ..............................       16,678       15,519        14,055          7.5      10.4
Retail investment service fees ..........       17,231       12,070         8,659         42.8      39.4
Mortgage loan origination
    and servicing fees ..................       15,235        9,642         8,131         58.0      18.6
Other service, collection and
    exchange charges:
    ATM fees ............................       10,255        8,971         7,034         14.3      27.5
    Debit/credit card fees ..............        7,894        4,897         2,606         61.2      87.9
    Other ...............................       10,297        8,768         9,258         17.4      (5.3)
--------------------------------------------------------------------------------------------------------------------
          Total other service, collection
              and exchange charges ......       28,446       22,636        18,898         25.7      19.8
--------------------------------------------------------------------------------------------------------------------
Other operating income:
    Gain on sales of mortgage loans .....        8,607        3,772         2,411        128.2      56.4
    Other income ........................        7,493        9,501         8,717         21.1       9.0
--------------------------------------------------------------------------------------------------------------------
          Total other operating income ..       16,100       13,273        11,128         21.3      19.3
--------------------------------------------------------------------------------------------------------------------
Securities gains (losses), net ..........        5,678        2,725        (5,152)       108.4       N/M
--------------------------------------------------------------------------------------------------------------------
          Total noninterest income ......     $184,935     $153,997     $ 120,701         20.1%     27.6%
====================================================================================================================
--------------
N/M = Not meaningful
</TABLE>

     Gains on sales of mortgage loans were up $4.8  million in 1998  compared to
1997  due  to  the  significant  increase  in  volume  in  the  mortgage banking
operation.

     Securities  gains  increased  $3.0  million  (108%) to $5.7 million in 1998
compared to 1997. As previously  mentioned in the  discussion in the  Securities
section, the Company liquidated  high-quality securities for a gain and used the
proceeds to buy  securities  with similar credit quality and a higher yield made
possible by the interest rate environment.  This transaction  resulted in a $1.3
million  securities  gain.  The  remainder  of the  securities  gain in 1998 was
primarily  the result of the  completion  of a  transaction  designed to utilize
capital losses.

     Excluding  securities  transactions and  nonrecurring  items in both years,
noninterest  income in 1997 increased  $24.9 million (20%) compared to 1996. The
nonrecurring  items in 1996 included a $1.4 million gain on the settlement of an
acquired  loan  and a $0.5  million  gain  related  to the  sale  of  Hibernia's
municipal bond administration  business. The increase in 1997 noninterest income
was  primarily  the result of growth in service  charges on deposits  and retail
investment service fees.


Noninterest Expense

     Noninterest  expense  totaled  $416.6  million in 1998  compared  to $409.3
million in 1997 and $359.8  million in 1996.  Excluding  certain  merger-related
expenses for both years and a $2.0 million  nonrecurring  charge in 1998 related
to asset  write-downs  resulting from  activities  designed to improve  customer
delivery   convenience  by  optimizing  an  expanding  banking  office  network,
noninterest expense in 1998 would have been $411.5 million, a $16.9 million (4%)
increase from 1997.  Merger-related expenses were $3.1 million and $14.6 million
in 1998  and  1997,  respectively.  The  major  categories  contributing  to the
increase in noninterest  expense were staff costs, up $4.1 million;  state taxes
on  equity,  up  $3.7  million;  data  processing,  up  $2.6 million; foreclosed
property  expense,  up  $2.2  million;  and amortization of intangibles, up $2.1
million.

<TABLE>
<CAPTION>
TABLE 15 - NONINTEREST EXPENSE
-------------------------------------------------------------------------------------------------------------------
                                                                                  Percent Increase (Decrease)
-------------------------------------------------------------------------------------------------------------------
                                                                                           1998        1997
($ in thousands)                            1998            1997            1996        over 1997   over 1996
-------------------------------------------------------------------------------------------------------------------
<S>                                      <C>             <C>             <C>               <C>          <C>  
Salaries ...........................     $ 177,867       $ 170,130       $ 149,564           4.5%       13.8%
Benefits ...........................        29,265          32,914          31,574         (11.1)        4.2
-------------------------------------------------------------------------------------------------------------------
    Total staff costs ..............       207,132         203,044         181,138           2.0        12.1
-------------------------------------------------------------------------------------------------------------------
Occupancy, net .....................        33,923          33,956          30,244          (0.1)       12.3
Equipment ..........................        30,584          30,808          31,723          (0.7)       (2.9)
-------------------------------------------------------------------------------------------------------------------
    Total occupancy and equipment ..        64,507          64,764          61,967          (0.4)        4.5
-------------------------------------------------------------------------------------------------------------------
Data processing ....................        28,808          26,181          22,813          10.0        14.8
Advertising and promotional expenses        14,991          15,634          10,907          (4.1)       43.3
Foreclosed property expense, net ...          (999)         (3,235)         (1,786)        (69.1)       81.1
Amortization of intangibles ........        16,715          14,593           7,791          14.5        87.3
Telecommunications .................        11,129          11,314           9,675          (1.6)       16.9
Postage ............................         6,951           6,916           7,024           0.5        (1.5)
Stationery and supplies ............         5,501           6,006           6,482          (8.4)       (7.3)
Professional fees ..................         6,574          10,170           8,641         (35.4)       17.7
State taxes on equity ..............        11,237           7,578           6,760          48.3        12.1
Regulatory expense .................         2,761           2,854           1,629          (3.3)       75.2
Loan collection expense ............         4,771           4,037           2,552          18.2        58.2
Other ..............................        36,506          39,398          34,222          (7.3)       15.1
-------------------------------------------------------------------------------------------------------------------
    Total noninterest expense ......     $ 416,584       $ 409,254       $ 359,815           1.8%       13.7%
-------------------------------------------------------------------------------------------------------------------
Efficiency ratio (1) ...............         57.79%          63.57%          64.76%
-------------------------------------------------------------------------------------------------------------------
Tangible efficiency ratio (2) ......         56.13%          61.51%          63.50%
===================================================================================================================
--------------
(1)Noninterest expense as a percentage of taxable-equivalent net interest income
   plus noninterest income (excluding securities transactions).

(2)Noninterest   expense   (excluding   amortization   of  purchase   accounting
   intangibles) as a percentage of  taxable-equivalent  net interest income plus
   noninterest income (excluding securities transactions).
</TABLE>

     Staff costs,  which  represent  approximately  50% of noninterest  expense,
increased  $4.1 million (2%) in 1998  compared to 1997.  Excluding the effect of
merger-related  expenses,  staff  costs  increased  $7.5  million  (4%)  in 1998
compared to 1997.  Higher accruals for performance  based incentives and bonuses
and for normal merit  increases were major factors  contributing to the increase
in staff costs.

     Occupancy and equipment expenses in 1998 decreased $0.3 million compared to
1997. However, after adjusting for the effect of merger-related expenses and the
$2.0 million  charge  discussed  above,  occupancy and  equipment  expenses were
virtually unchanged.

     Data processing  expenses  increased $2.6 million (10%) to $28.8 million in
1998. Excluding the effect of merger-related  expenses, data processing expenses
increased  $4.4  million  (18%).  The  increase in data  processing  expenses is
primarily due to increased transaction volume related to growth in the Company's
customer base,  expenses  related to Year 2000  compliance and  improvements  in
technology which enhance risk-management and sales tools.

     Amortization of intangibles,  a noncash expense, was $16.7 million in 1998,
an increase of $2.1 million (15%)  compared to 1997.  This increase is primarily
due to an increase in the  amortization of mortgage  servicing  rights resulting
from the growth in the Company's mortgage banking  operations,  partially offset
by a decline in the amortization of the core deposit intangibles.

     Professional fees in 1998 totaled $6.6 million,  a decrease of $3.6 million
(35%)  compared  to 1997.  Excluding  the  effect  of  merger-related  expenses,
professional  fees  increased  $0.4 million (8%).  State taxes on equity expense
increased  $3.7  million  (48%) to $11.2  million  in 1998 due to the  growth in
equity and increases in millages used to assess those taxes.

     Loan collection  expense in 1998 totaled $4.8 million, a $0.7 million (18%)
increase  compared to 1997. This increase  reflects growth in the loan portfolio
and efforts to more  proactively  collect  problem  loans.  Foreclosed  property
expense  increased  $2.2 million (69%) in 1998  compared to 1997  primarily as a
result of gains recorded on the sale of several significant properties in 1997.

     Noninterest expense increased $49.4 million (14%) in 1997 compared to 1996.
Excluding  the effect of the  purchased  companies,  merger-related  expenses of
$14.6 million in 1997 and $4.3 million in 1996, and nonrecurring  items in 1996,
noninterest  expense  increased  $46.4 million (13%) in 1997.  The  nonrecurring
items in 1996 included $4.0 million in asset  write-downs  related to technology
enhancements  and a $3.3 million  addition to reserves for health care  benefits
and  other  expenses.   Other  significant  increases  in  noninterest  expense,
excluding  merger-related  expenses,  included  staff costs,  up $24.5  million;
occupancy and equipment, up $6.7 million;  advertising and promotional expenses,
up $4.2 million; and data processing, up $1.4 million.

     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 its
efforts to control costs and generate income  efficiently.  The efficiency ratio
of  57.79% in 1998  compares  favorably  to  63.57% in 1997 and  64.76% in 1996.
Excluding  the   merger-related   expenses  and  nonrecurring   items  discussed
previously,  the efficiency  ratio would have been 56.85%,  61.52% and 62.88% in
1998, 1997 and 1996, respectively.

     The tangible efficiency ratio, which excludes the impact of amortization of
goodwill and core deposit intangibles, was 56.13% in 1998, down 538 basis points
from 61.51% in 1997 and down 737 basis points from 63.50% in 1996. Excluding the
effect of merger-related  expenses and nonrecurring items discussed  previously,
the tangible efficiency ratio would have been 55.19%, 59.46% and 61.62% in 1998,
1997 and 1996,  respectively.  The  improvements  in efficiency  reflect  higher
revenue growth rates compared to expense growth rates. The Company believes this
ratio will  decline  further in future  periods.  The  declines  are expected to
result from cost  efficiencies  contemplated  in completed and pending  mergers,
enhancement of noninterest revenue sources and increased net interest income.


Income Taxes

     The Company  recorded a $94.3  million  provision for income taxes in  1998
compared to $78.8 million in 1997 and $67.4 million in 1996.

     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  subsidiaries  of the Company and Hibernia  National Bank are
subject to  Louisiana  state  income  tax.  Hibernia  National  Bank of Texas is
subject to Texas franchise tax.  Effective  January 1, 1999,  Hibernia  National
Bank of Texas was merged with and into Hibernia  National Bank  resulting in one
bank in all  markets.  The  Texas  operations  of  Hibernia  National  Bank will
continue to be subject to Texas franchise tax.

     Net future deductible temporary differences at December 31, 1998 were $77.2
million.  The reserve for possible loan losses  represents $128.0 million of the
future deductible temporary differences.  The provision for possible loan losses
which  contributed  to the reserve has been  recognized as expense for financial
reporting  purposes but is not  deductible for federal income tax purposes until
the loans are charged off. Valued at the 35% federal statutory tax rate, the net
future deductible amounts, if ultimately recognized, would generate tax benefits
of $27.0  million.  These  benefits  are  recorded  as a  deferred  tax asset at
December 31, 1998.



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  possible  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.  Hibernia's common dividend payout ratio (common dividends declared
per share divided by net income per common  share) was 33.5 % in 1998,  36.7% in
1997 and 34.9% in 1996.

     Shareholders'  equity totaled  $1,318.1 million at the end of 1998 compared
to $1,196.1  million at the end of 1997 and $1,078.9 million at the end of 1996.
The $122.0  million (10%)  increase in 1998 was  primarily  due to  current-year
earnings totaling $178.6 million,  issuance of common stock of $15.5 million and
a $12.2 million increase in unrealized  gains on securities  available for sale,
partially offset by $57.0 million in dividends on common stock,  $6.9 million in
dividends  on  preferred  stock  and  a  $20.4  million   increase  in  unearned
compensation.  The increase in unearned  compensation is related to the purchase
of stock for Hibernia's  Employee Stock  Ownership Plan (ESOP).  During 1998 the
ESOP completed its purchase of the originally  authorized $30.0 million of stock
and acquired an additional $15.0 million in stock,  the  purchase of  which  was
authorized in 1998. As a result,  the  ESOP  acquired   approximately  1,443,000
shares  of  stock  during  1998 and  holds a  total  of  approximately 3,874,000
shares at December 31, 1998.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
TABLE 16 - CAPITAL
--------------------------------------------------------------------------------------------------------------------------
($ in millions)                             1998             1997            1996             1995            1994
--------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>              <C>              <C>              <C>             <C>    
Risk-based capital:
    Tier 1 ....................      $    1,142.9     $    1,021.8     $      913.8     $     862.0     $     761.6
    Total .....................           1,270.9          1,135.4          1,004.5           933.9           821.7

Assets:
    Quarterly average assets(1)          13,316.2         11,806.8         10,248.1         8,786.9         8,381.8
    Net risk-adjusted assets ..          10,623.9          9,076.5          7,207.1         5,652.3         4,699.1

Ratios:
    Tier 1 risk-based capital..             10.76%           11.26%           12.68%          15.25%          16.21%
    Total risk-based capital ..             11.96%           12.51%           13.94%          16.52%          17.49%
    Leverage ..................              8.58%            8.65%            8.92%           9.81%           9.09%
==========================================================================================================================
---------------
(1)Excluding   the  adjustment  for  unrealized  gains  (losses)  on  securities
   available for sale and disallowed intangibles.
</TABLE>

     The $117.2 million (11%) increase in shareholders' equity in 1997 reflected
the  Company's  $144.8  million in  earnings,  issuance of common stock of $23.8
million and a $6.9 million increase in unrealized gains on securities  available
for sale.  These increases were partially  offset by common  dividends  totaling
$48.0  million,  preferred  dividends  totaling  $6.9 million and a $4.1 million
increase in unearned compensation.

     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 11.96% at year-end  1998,  12.51% at year-end
1997 and 13.94% at year-end 1996. Leverage ratios were 8.58%, 8.65% and 8.92% at
year-end 1998,  1997 and 1996,  respectively.  Table 16 shows the calculation of
capital ratios for the Company for the past five years.

     A shelf  registration  statement filed by the Company in July 1996 with the
Securities  and  Exchange  Commission  allows  the  Company  to issue up to $250
million of securities,  including  preferred  stock and  subordinated  debt. The
Company issued $100 million of  Fixed/Adjustable  Rate  Noncumulative  Preferred
Stock  on  September 30, 1996.  This  issuance,  which  is  nonconvertible   and
qualifies as Tier 1 capital, allowed Hibernia to  maintain  its  strong  capital
ratios and enhanced its ability to act  when  future  opportunities  arise.  The
remaining  $150  million  in  securities  included  in  this  shelf registration
provides   Hibernia   with  the  flexibility  to  quickly   modify  its  capital
structure to meet competitive and market conditions.

     The  Company  anticipates  issuing  approximately  7.5  million  shares  of
Hibernia  Class A Common Stock in pending  mergers with First  Guaranty Bank and
MarTex Bancshares, Inc.



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 and converting
assets (such as short-term  investments  and  securities  available for sale) to
cash.  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.  Hibernia's extensive banking office network, aided
by the  introduction  of new deposit  products,  provided  $8.6  billion in core
deposits at  year-end  1998,  up $555.4  million  (7%) from $8.1  billion a year
earlier.

     As  previously  discussed in the Funding  Sources  section,  Hibernia has a
large base of  treasury  management-related  repurchase  agreements  and foreign
deposits that are a part of total customer relationships.  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 and public funds were  additional  sources of liquidity
during the year.

     Hibernia's  loan-to-deposit  ratio  at  year-end  1998  increased  to 94.4%
compared to 84.4% at year-end 1997 and 74.3% at year-end 1996.  These  increases
resulted primarily from 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
(such as large-denomination  and public fund certificates of deposit and foreign
deposits).  Based on average balances,  20.0% of Hibernia's loans and securities
were  funded  by  net  large  liabilities  (total  liabilities  less  short-term
investments)  at  year-end  1998,  up  approximately  100 basis  points from the
prior-year level of 19.0%.

     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.  The  Company  also has $150  million  remaining  on its shelf
registration  previously discussed in the Capital section, and its membership in
the FHLB further augments  liquidity by providing a readily accessible source of
funds at competitive rates. In addition,  a substantial portion of the Company's
$2.2 billion  residential  first mortgage  portfolio and $850.5 million indirect
consumer portfolio can be sold or securitized and, therefore,  provides an added
source of liquidity, if needed.

     Hibernia  Corporation  (the "Parent  Company")  requires  liquidity to fund
operating  expenses and investments  and to pay dividends.  At December 31, 1998
the Parent Company had $134.6 million in available funds. During 1998 the Parent
Company  received  $50.0 million in dividends  from its bank  subsidiaries.  The
Parent Company paid $57.0 million in dividends to common  shareholders  and $6.9
million in dividends to preferred  shareholders  and increased its investment in
two of its subsidiaries by a total of $8.4 million.

     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 1998 of $159.4 million.  This decrease was the result of
cash used in investing  activities of $1.8 billion, as loans (net of sales) used
cash of $1.8 billion,  while the purchase of  securities  available for sale was
offset by the sale and  maturities  of  securities  available  for  sale.  These
activities  were  partially   offset  with  net  cash  provided  from  financing
activities  of $1.4  billion,  as  deposits  provided  cash of  $788.7  million,
short-term  borrowings  provided  $414.2  million  and the  proceeds  from  debt
issuance,  net of  payments,  totaled  $299.1  million.  Net  cash  provided  by
operating  activities totaled $239.3 million after adjusting 1998 net income for
noncash items.

     Cash and cash  equivalents  increased $192.3 million in 1997. Cash provided
by financing  activities  totaled $1.4  billion,  as deposits  provided  cash of
$602.0 million,  short-term borrowings provided $376.4 million and debt totaling
$500.0  million was issued.  Net cash provided by operating  activities  totaled
$191.7  million  after  adjusting  1997 net  income  for  noncash  items.  These
increases to cash were partially offset by net cash used in investing activities
of $1.4 billion,  as loans (net of sales) used cash of $1.5  billion,  partially
offset  by $99.3  million  in net cash  provided  from  activity  in  securities
available for sale.

     Cash and cash  equivalents  increased $255.5 million in 1996. Cash provided
by financing  activities  totaled $598.3 million,  as deposits  provided cash of
$488.7 million and the issuance of preferred  stock provided $98.0 million.  Net
cash provided by operating  activities  totaled $194.4  million after  adjusting
1996 net income for noncash items.  These increases were partially offset by net
cash used in investing  activities  of $537.2  million,  as loans (net of sales)
used  cash of $1.0  billion,  partially  offset by  $591.7  million  in net cash
provided from activity in securities available for sale.


Year 2000

     The Year 2000 issue results from the fact that many computer programs store
and  process  data using two digits  rather  than four to define the  applicable
year. Any computer  programs that have  date-sensitive  software may recognize a
date using "00" as the year 1900 rather than the year 2000.  This issue  affects
not only  Hibernia,  but  virtually all  companies  and  organizations  that use
computer information systems.

     A team comprised of Hibernia employees and representatives of the Company's
third party data processor was formed in early 1997 to address Year 2000 issues.
The team's plan is to achieve Year 2000 compliance for all mainframe application
systems,  local  area  network  application  systems,  departmental  and  vendor
application  systems and its  infrastructure by the end of the second quarter of
1999. In addition to testing and making appropriate  changes to its own internal
systems,  the Company  continues to discuss Year 2000 issues and their potential
impact on business  operations with many customers and suppliers.  The status of
these activities is provided to Hibernia's Board of Directors, and the Company's
regulators monitor Year 2000 efforts.

     Through the performance of a  business-unit  impact  analysis,  the Company
identified 37 mission  critical  systems or systems  identified as vital to core
business  activities  of the Company.  As of December 31, 1998,  the Company has
remediated  and  substantially  completed  unit  testing on 35 mission  critical
systems,  which  represents  95% of all mission  critical  systems.  The mission
critical  systems that have been  remediated are currently in  production.  Unit
testing and  validations  began in the third  quarter of 1998 and are  scheduled
throughout  1999 to  continuously  reaffirm the Year 2000  compliance of mission
critical systems.

     A small number of mission critical systems are provided by third parties on
a service  bureau  basis,  such as small  business  credit card  processing  and
services supporting  securities brokerage  businesses.  Third party providers of
mission  critical  services are on schedule to certify Year 2000  readiness  and
complete testing by March 31, 1999, as required by federal banking  regulations.
Non-mission  critical systems are expected to be Year 2000 compliant prior to or
during the second quarter of 1999. Date-reliant infrastructure components, which
include items such as ATMs;  personal  computers;  and internal phone, vault and
alarm systems, have been verified to be Year 2000 compliant. The Company and its
data  processing  vendors  and  service  providers  will  monitor  progress  and
implement  contingency  plans in the event that these procedures fail to achieve
their objectives.

     The Company  expects to  continue  incurring  charges  related to Year 2000
compliance. However, the majority of the costs associated with these efforts are
the  responsibility  of the  Company's  third  party data  processor  which also
provides many of the Company's software  applications.  Contract  specifications
require the Company's third party data processor to ensure that all systems meet
Year 2000 compliance and other banking  regulations.  Hibernia estimates that it
will supplement its vendors' efforts with a total of approximately $1.5 million,
much of which has already been expensed, to upgrade ATMs, hardware, software and
other  technology.  This investment will be funded through  operating cash flows
and will be expensed as incurred.

     As of December 31, 1998, the Company has incurred direct expenses amounting
to  approximately  $1.1 million.  Year 2000  expenses  were spread  throughout a
number of noninterest  expense  categories and do not include computer equipment
and software that was scheduled to be replaced in the normal course of business.
The Company does not  separately  track the indirect costs incurred for the Year
2000 project which  primarily  consist of the related payroll costs of employees
from various departments.

     The Company's estimate of Year 2000 investment costs and the estimated time
periods set forth above by which the Company expects to  substantially  complete
mission critical system  programming and testing and implementation are based on
management's  best  current  estimates,  which were derived  utilizing  numerous
assumptions about future events.  There can be no guarantee that these estimates
will be  achieved,  and actual  results  could  differ  from those  anticipated.
Because of the critical nature of the Year 2000 issues to the Company's business
and to all of the financial  services industry,  if necessary  modifications are
not made, the Company's  operations could be materially  impacted.  Hibernia and
its data  processing  vendors  remain on schedule to ensure  achievement of Year
2000 compliance; therefore, an adverse impact on the Company's operations is not
expected.


     The  discussion  above  entitled  "Year 2000,"  includes  certain  "forward
looking  statements"  within the  meaning of the Private  Securities  Litigation
Reform Act of 1995 ("PSLRA"). This statement is included for the express purpose
of availing  Hibernia of the  protections  of the safe harbor  provisions of the
PSLRA. Management's ability to predict results or effects of Year 2000 issues is
inherently uncertain, and is subject to factors that may cause actual results to
differ  materially  from those  projected.  Factors that could affect the actual
results include the possibility that remediation  efforts and contingency  plans
will not operate as  intended,  the  Company's  failure to timely or  completely
identify  all  software  and  hardware   applications   requiring   remediation,
unexpected  costs,  and the uncertainty  associated with the impact of Year 2000
issues on the banking  industry and on the  Company's  customers,  vendors,  and
others with whom it conducts business.  Readers are cautioned not to place undue
reliance on these forward looking statements.

<PAGE>
<TABLE>
<CAPTION>
Quarterly Consolidated Summary of Income and Selected Financial Data (1)

Hibernia Corporation and Subsidiaries                        1998                                           1997
------------------------------------------------------------------------------------------------------------------------------------
($ in thousands, except per-share data)     Fourth     Third       Second     First      Fourth      Third      Second      First

------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>        <C>         <C>        <C>        <C>         <C>         <C>        <C>      
Interest income ..........................$ 245,533  $ 240,742   $ 237,201  $ 230,246  $ 223,384   $ 216,164   $ 205,440  $ 197,070
Interest expense .........................  108,122    109,085     104,079    101,902     98,639      92,566      86,556     82,261
------------------------------------------------------------------------------------------------------------------------------------
Net interest income ......................  137,411    131,657     133,122    128,344    124,745     123,598     118,884    114,809
Provision for possible loan losses .......    9,000      8,000       5,500      3,500      2,761         191          47        149
------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
    for possible loan losses .............  128,411    123,657     127,622    124,844    121,984     123,407     118,837    114,660
------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
   Noninterest income ....................   47,149     45,644      46,046     40,418     39,994      37,792      38,807     34,679
   Securities gains (losses), net ........    2,077      2,687          27        887      2,231          75         404         15
------------------------------------------------------------------------------------------------------------------------------------
Noninterest income .......................   49,226     48,331      46,073     41,305     42,225      37,867      39,211     34,694
Noninterest expense ......................  104,113    102,293     106,403    103,775    110,557     102,581     100,654     95,462
------------------------------------------------------------------------------------------------------------------------------------
Income before taxes ......................   73,524     69,695      67,292     62,374     53,652      58,693      57,394     53,892
Income tax expense .......................   25,610     23,032      23,744     21,870     20,149      20,184      20,044     18,458
------------------------------------------------------------------------------------------------------------------------------------
Net income ...............................$  47,914  $  46,663   $  43,548  $  40,504  $  33,503   $  38,509   $  37,350  $  35,434
------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common 
shareholders .............................$  46,189  $  44,938   $  41,823  $  38,779  $  31,778   $  36,784   $  35,625  $  33,709
------------------------------------------------------------------------------------------------------------------------------------
Per common share information: (2)
   Net income ............................$    0.30  $    0.29   $    0.27  $    0.25  $    0.21   $    0.24   $    0.23  $    0.22
   Net income - assuming dilution ........$    0.30  $    0.29   $    0.27  $    0.25  $    0.20   $    0.24   $    0.23  $    0.22
   Cash dividends declared ...............$   0.105  $    0.09   $    0.09  $    0.09  $    0.09   $    0.08   $    0.08  $    0.08
Average shares outstanding (000s) ........  153,437    153,892     153,904    153,643    153,182     152,879     152,682    152,746
Average shares outstanding -
 assuming dilution (000s)                   155,383    156,236     156,791    156,476    156,365     155,153     154,576    154,732
Dividend payout ratio ....................    35.00%     31.03%      33.33%     36.00%     42.86%      33.33%      34.78%     36.36%
------------------------------------------------------------------------------------------------------------------------------------
Selected quarter-end balances
(in millions)
Loans ....................................$10,006.2  $ 9,594.7   $ 9,126.7  $ 8,715.3  $ 8,286.5   $ 7,804.3   $ 7,357.9  $ 6,914.7
Deposits ................................. 10,603.0    9,920.1     9,908.8    9,978.3    9,814.4     9,362.7     9,384.8    9,211.3
Debt .....................................    805.7      705.9       706.1      706.3      506.5       109.8        12.7       13.1
Equity ...................................  1,318.1    1,308.4     1,255.4    1,230.6    1,196.1     1,170.5     1,133.8    1,085.1
Total assets ............................. 14,011.5   13,272.8    12,821.5   12,544.8   12,388.2    11,540.9    11,302.9   10,845.2
------------------------------------------------------------------------------------------------------------------------------------
Selected average balances 
(in millions)
Loans ....................................$ 9,764.5  $ 9,347.8   $ 8,914.8  $ 8,526.0  $ 8,040.7   $ 7,609.4   $ 7,117.2  $ 6,798.4
Deposits ................................. 10,100.8    9,938.7     9,890.8    9,770.6    9,472.7     9,349.4     9,144.8    8,998.0
Debt .....................................    799.2      706.0       706.2      629.7      254.4        57.1        12.9       50.1
Equity ...................................  1,306.5    1,275.5     1,243.0    1,216.5    1,186.0     1,153.2     1,100.9    1,088.7
Total assets ............................. 13,499.4   12,938.4    12,623.0   12,497.1   11,980.6    11,384.4    10,903.5   10,707.1
------------------------------------------------------------------------------------------------------------------------------------
Selected ratios
Net interest margin(taxable-equivalent)...     4.42%      4.42%       4.63%      4.59%      4.57%       4.78%       4.83%      4.79%
Annualized return on assets ..............     1.42%      1.44%       1.38%      1.30%      1.12%       1.35%       1.37%      1.32%
Annualized return on common equity .......    15.31%     15.29%      14.64%     13.89%     11.70%      13.97%      14.24%     13.64%
Annualized return on total equity ........    14.67%     14.63%      14.01%     13.32%     11.30%      13.36%      13.57%     13.02%
Efficiency ratio .........................    55.58%     56.80%      58.50%     60.51%     66.03%      62.50%      62.80%     62.83%
Average equity/average assets ............     9.68%      9.86%       9.85%      9.73%      9.90%      10.13%      10.10%     10.17%
Tier 1 risk-based capital ratio ..........    10.76%     11.02%      11.07%     11.29%     11.26%      11.90%      12.25%     12.70%
Total risk-based capital ratio ...........    11.96%     12.27%      12.32%     12.54%     12.51%      13.15%      13.50%     13.96%
Leverage ratio ...........................     8.58%      8.76%       8.70%      8.58%      8.65%       8.88%       8.98%      8.93%
------------------------------------------------------------------------------------------------------------------------------------
Tax-effected net income and ratios
 excluding purchase accounting 
 intangible amortization 
 and balances (3)
Net income applicable to 
common shareholders ......................$  48,796  $  47,590      44,515     41,495     34,570   $  39,635   $  38,526  $  36,700
Net income per common share (2) ..........$    0.32  $    0.31   $    0.29  $    0.27  $    0.23   $    0.26   $    0.25  $    0.24
Net income per common share - 
assuming dilution (2) ....................$    0.31  $    0.30   $    0.28  $    0.27  $    0.22   $    0.26   $    0.25  $    0.24
Annualized return on assets ..............     1.51%      1.54%       1.48%      1.40%      1.23%       1.47%       1.50%      1.46%
Annualized return on common equity .......    18.40%     18.54%      17.95%     17.24%     14.87%      17.72%      18.06%     17.50%
Efficiency ratio .........................    54.02%     55.15%      56.83%     58.71%     64.12%      60.50%      60.72%     60.55%
====================================================================================================================================
----------------
(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)Dividends per common share are historical amounts.  For a  discussion of  net
   income per common share  computations  refer to  Note 18 of  the consolidated 
   financial statements - "Net Income Per Common Share Data."
(3)Amortization  and balances of core deposit intangibles  are net of applicable 
   taxes. Goodwill amortization and balances are not tax effected.
</TABLE>

<PAGE>
Fourth Quarter Results

     Hibernia  reported  net income of $47.9  million  in the fourth  quarter of
1998, a 43% increase from $33.5  million in the fourth  quarter of 1997 and a 3%
increase from $46.7 million in the third quarter of 1998.  Net income per common
share of $.30 for the  fourth  quarter of 1998  increased  $.09 from $.21 in the
fourth  quarter  of 1997 and $.01 from $.29 in the third  quarter  of 1998.  Net
income per common share - assuming  dilution  was $.30 in the fourth  quarter of
1998  compared  to $.20 and $.29 for the  fourth  quarter  of 1997 and the third
quarter of 1998, respectively.

     Excluding  merger-related expenses in all periods and nonrecurring activity
in the fourth  quarter of 1997 and third quarter of 1998,  net income would have
been $48.3  million in the fourth  quarter of 1998,  a 20%  increase  from $40.2
million in the fourth quarter of 1997 and virtually unchanged from $48.9 million
in the third  quarter of 1998.  Net income per common share would have been $.30
for the fourth  quarter of 1998 compared to $.25 for the same period in 1997 and
$.31 for the third  quarter of 1998.  Fourth  quarter 1998 net income per common
share - assuming  dilution  would have been $.30 compared to $.25 for the fourth
quarter of 1997 and $.30 for the third quarter of 1998.

     Net interest income, on a taxable-equivalent  basis, totaled $140.2 million
in the fourth  quarter of 1998 compared to $127.4  million in the fourth quarter
of 1997 and $134.4 million in the third quarter of 1998. Net interest income was
negatively  impacted by the funding cost of transactions  designed to utilize an
expiring loss carryforward.  The $1.9 million,  $1.2 million and $1.1 million in
income  associated with these  transactions  is recorded as securities  gains in
noninterest  income rather than in net interest income for the fourth quarter of
1998, the fourth quarter of 1997 and the third quarter of 1998, respectively. In
addition,  the third quarter of 1998 was  negatively  impacted by a $3.0 million
charge related to  revenue-sharing  arrangements with certain automobile dealers
brought  about by a  higher-than-expected  level  of  consumer  automobile  loan
prepayments.

     The  fourth-quarter  1998 increase in net interest  income  compared to the
fourth  quarter of 1997 was  primarily the result of the growth in loans both in
total and as a percentage of average  earning  assets.  Average loans  increased
$1.7  billion  from the  fourth  quarter  of 1997 to $9.8  billion,  or 77.4% of
average earning assets compared to 72.4% of average earning assets in the fourth
quarter of 1997.  Loans  increased  $416.7 million in the fourth quarter of 1998
compared to the third quarter of 1998.  The net interest  spread of 3.55% in the
fourth  quarter of 1998 was down 13 basis points from the fourth quarter of 1997
and up two basis  points from the third  quarter of 1998.  The average  yield on
earning assets was 7.82%, down 27 basis points compared to the fourth quarter of
1997 and down 18 basis points from the third  quarter of 1998.  The average rate
paid on  interest-bearing  liabilities  decreased  by 14 basis  points  from the
fourth  quarter of 1997 and 20 basis  points  from the third  quarter of 1998 to
4.27% in the fourth quarter of 1998.

     The net interest  margin  decreased 15 basis points from the fourth quarter
of 1997 to 4.42% for the fourth  quarter of 1998.  A  46-basis-point  decline in
loan  yields  and a  24-basis-point  decline  in  securities  yields  led to the
27-basis-point  decrease in the yield on earning  assets.  At the same time, the
rate  on  interest-bearing  liabilities  decreased  14  basis  points,  and  the
contribution of noninterest-bearing funds decreased two basis points compared to
the fourth quarter of 1997.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
TABLE 17 - NET INTEREST MARGIN  (taxable-equivalent)
-----------------------------------------------------------------------------------------------------------------------------
                                                     1998                                      1997
-----------------------------------------------------------------------------------------------------------------------------
                                   Fourth     Third      Second      First     Fourth     Third     Second      First
                                   Quarter   Quarter     Quarter    Quarter    Quarter    Quarter   Quarter    Quarter
-----------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>  
Yield on earning assets ....         7.82%      8.00%      8.17%      8.19%      8.09%      8.27%      8.28%      8.17%
Rate on interest-bearing
    liabilities ............         4.27       4.47       4.43       4.42       4.41       4.35       4.31       4.25
-----------------------------------------------------------------------------------------------------------------------------
        Net interest spread          3.55       3.53       3.74       3.77       3.68       3.92       3.97       3.92
Contribution of noninterest-
    bearing funds ..........         0.87       0.89       0.89       0.82       0.89       0.86       0.86       0.87
-----------------------------------------------------------------------------------------------------------------------------
        Net interest margin          4.42%      4.42%      4.63%      4.59%      4.57%      4.78%      4.83%      4.79%
-----------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing funds/
    earning assets .........        20.33%     20.01%     19.94%     18.78%     20.09%     19.82%     20.09%     20.38%
=============================================================================================================================
</TABLE>

     The net interest  margin of 4.42% for the fourth  quarter of 1998  remained
unchanged from the third quarter of 1998.  The $3.0 million charge  discussed in
the Net  Interest  Margin  section  negatively  impacted  the third  quarter net
interest margin by ten basis points.  A  15-basis-point  decrease in loan yields
and a 29-basis-point decrease in securities yields resulted in an 18-basis-point
decrease in the yield on earning assets.  These decreases were partially  offset
with a  20-basis-point  decrease  in the  cost  of  funds  and a  32-basis-point
increase  in the  percentage  of  noninterest-bearing  funds  (primarily  demand
deposits  and  shareholders'   equity)  supporting  earning  assets.   Table  17
illustrates  the components of the net interest  margin on a quarterly basis for
1998 and 1997.

     Average earning assets increased $1.5 billion (14%) to $12.6 billion in the
fourth quarter of 1998 from $11.1 billion in the fourth quarter of 1997. Average
earning  assets were up $522.8  million  (4%)  compared to the third  quarter of
1998. Average loans increased $1.7 billion (21%) from the fourth quarter of 1997
and increased  $416.7  million (4%) from the third  quarter of 1998.  Period-end
loans grew $411.5 million, 17% on an annualized basis, during the fourth quarter
of 1998. Average securities for the fourth quarter of 1998 totaled $2.7 billion,
virtually  unchanged from the fourth quarter of 1997 and up $242.4 million (10%)
from the third quarter of 1998.

     Average  deposits  increased  $628.1  million (6%) to $10.1  billion in the
fourth quarter of 1998 from $9.5 billion in the fourth quarter of 1997.  Average
deposits were up $162.1 million (2%) from the third quarter of 1998.

     Noninterest income, excluding securities  transactions,  was $47.1 million,
up $7.2 million  (18%) from the fourth  quarter of 1997 and up $1.5 million (3%)
from the third quarter of 1998. Fourth quarter 1997 noninterest  income included
$1.2  million in trading  account  income  resulting  from a single  transaction
related  to  a  tax  planning   strategy.   Excluding  this  nonrecurring  item,
noninterest  income for the fourth  quarter  of 1998 was up $8.2  million  (20%)
compared to the fourth quarter of 1997.  Service  charges on deposits and income
from mortgage loan  origination and servicing fees were the major  categories of
noninterest  income that increased in the fourth quarter of 1998 compared to the
fourth  quarter of 1997 and the third  quarter of 1998.  The  increase in income
from  mortgage  loan  origination  and  servicing  fees is  primarily  due to an
increase in mortgage  origination  activity  brought about by continued focus on
mortgage banking and the interest rate environment.

     Noninterest  expense of $104.1  million  in the fourth  quarter of 1998 was
$6.4  million (6%) lower than $110.6  million in the fourth  quarter of 1997 and
$1.8 million (2%) higher than $102.3  million in the third quarter of 1998.  The
decrease  compared to the fourth quarter of 1997 was primarily due to a decrease
in staff costs as a result of higher accruals for performance  based  incentives
and bonuses in 1997.  Excluding  merger-related  expenses,  noninterest  expense
would have been $103.5  million in the fourth  quarter of 1998,  a $4.9  million
(5%)  increase  from  $98.6  million  in the  fourth  quarter of 1997 and a $1.6
million (2%) increase from $101.9 million in the third quarter of 1998.

     In the fourth quarter of 1998 the Company  incurred  expenses  amounting to
approximately $0.1 million related to Year 2000 compliance.

     The  Company's  efficiency  ratio was 55.58% in the fourth  quarter of 1998
compared  to 66.03%  and  56.80%  in the  fourth  quarter  of 1997 and the third
quarter of 1998, respectively. The tangible efficiency ratio, which excludes the
impact of purchase accounting  intangibles,  was 54.02% in the fourth quarter of
1998  compared  to 64.12% in the fourth  quarter of 1997 and 55.15% in the third
quarter of 1998.

     Excluding  merger-related  expenses and nonrecurring items discussed above,
the Company's  efficiency  ratio would have been 55.23% in the fourth quarter of
1998  compared to 59.29% and 57.53% in the fourth  quarter of 1997 and the third
quarter of 1998,  respectively.  The tangible  efficiency  ratio would have been
53.68% in the fourth quarter of 1998 compared to 57.37% in the fourth quarter of
1997 and 55.85% in the third quarter of 1998.

<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balances, Interest and Rates
------------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1)                                          1998                                    1997
------------------------------------------------------------------------------------------------------------------------------------
(Average balance $ in millions,                        Average                                Average
interest $ in thousands)                               Balance      Interest      Rate        Balance       Interest        Rate
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>             <C>      <C>           <C>                <C>
ASSETS
Interest-earning assets:
    Commercial loans ...........................     $   3,513.4   $  297,423      8.47%    $   2,652.6   $   233,445        8.80%
    Small business loans .......................         1,862.4      174,245      9.36         1,693.6       161,718        9.55
    Consumer loans .............................         3,766.4      312,115      8.29         3,049.2       262,027        8.59
------------------------------------------------------------------------------------------------------------------------------------
        Total loans (2).........................         9,142.2      783,783      8.57         7,395.4       657,190        8.89
------------------------------------------------------------------------------------------------------------------------------------
    Securities available for sale ..............         2,619.6      167,004      6.38         2,693.6       178,216        6.62
    Securities held to maturity ................               -            -         -               -             -           -
------------------------------------------------------------------------------------------------------------------------------------
        Total securities .......................         2,619.6      167,004      6.38         2,693.6       178,216        6.62
------------------------------------------------------------------------------------------------------------------------------------
    Short-term investments .....................           237.3       13,942      5.88           309.9        17,131        5.53
------------------------------------------------------------------------------------------------------------------------------------
        Total interest-earning assets ..........        11,999.1   $  964,729      8.04%       10,398.9   $   852,537        8.20%
------------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ...............          (124.2)                                (134.2)
Noninterest-earning assets:
    Cash and due from banks ....................           442.1                                  438.1
    Other assets ...............................           575.4                                  545.0
------------------------------------------------------------------------------------------------------------------------------------
        Total noninterest-earning assets .......         1,017.5                                  983.1
------------------------------------------------------------------------------------------------------------------------------------
        Total assets ...........................     $  12,892.4                            $  11,247.8
====================================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest-bearing deposits:
        NOW accounts ...........................     $     323.6   $   10,788      3.33%    $     505.1   $    13,973        2.77%
        Money market deposit accounts ..........         1,970.0       49,907      2.53         1,745.6        44,788        2.57
        Savings accounts .......................         1,104.2       35,583      3.22           792.6        23,016        2.90
        Other consumer time deposits ...........         2,924.2      151,690      5.19         2,946.8       154,075        5.23
        Public fund certificates of deposit
            of $100,000 or more ................           992.1       53,053      5.35         1,014.3        55,775        5.50
        Certificates of deposit
            of $100,000 or more ................           582.3       30,731      5.28           507.3        26,416        5.21
        Foreign time deposits ..................           226.7       11,422      5.04            98.2         5,204        5.30
------------------------------------------------------------------------------------------------------------------------------------
            Total interest-bearing deposits ....         8,123.1      343,174      4.22         7,609.9       323,247        4.25
------------------------------------------------------------------------------------------------------------------------------------
    Short-term borrowings:
        Federal funds purchased ................           395.2       21,304      5.39           265.6        14,558        5.48
        Repurchase agreements ..................           395.7       18,934      4.78           340.5        16,631        4.88
    Debt .......................................           710.7       39,776      5.60            94.1         5,586        5.94
------------------------------------------------------------------------------------------------------------------------------------
        Total interest-bearing liabilities .....         9,624.7   $  423,188      4.40%        8,310.1   $   360,022        4.33%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
    Demand deposits ............................         1,803.1                                1,632.9
    Other liabilities ..........................           203.9                                  172.3
------------------------------------------------------------------------------------------------------------------------------------
        Total noninterest-bearing liabilities ..         2,007.0                                1,805.2
------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity .....................         1,260.7                                1,132.5
====================================================================================================================================
            Total liabilities and
                shareholders' equity ...........     $  12,892.4                            $  11,247.8
====================================================================================================================================
SPREAD AND NET YIELD
Interest rate spread ...........................                                   3.64%                                     3.87%
Cost of funds supporting interest-earning assets                                   3.53%                                     3.46%
Net interest income/margin .....................                   $  541,541      4.51%                  $   492,515        4.74%
====================================================================================================================================
----------------
(1)Based on the statutory income tax rate of 35%.
(2)Yield computations include nonaccrual loans in loans outstanding.
</TABLE>

<TABLE>
<CAPTION>
Consolidated Average Balances, Interest and Rates (Cont.)
------------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1)                                           1996                                    1995
------------------------------------------------------------------------------------------------------------------------------------
(Average balance $ in millions,                         Average                                Average
interest $ in thousands)                                Balance      Interest      Rate        Balance       Interest       Rate
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>             <C>      <C>           <C>                <C>
ASSETS
Interest-earning assets:
    Commercial loans ...........................     $   2,286.1   $  209,891      9.18%    $   1,890.8   $   182,003        9.63%
    Small business loans .......................         1,091.6      103,212      9.45           889.8        86,718        9.75
    Consumer loans .............................         2,543.9      225,806      8.88         1,986.6       172,697        8.69
------------------------------------------------------------------------------------------------------------------------------------
        Total loans (2).........................         5,921.6      538,909      9.10         4,767.2       441,418        9.26
------------------------------------------------------------------------------------------------------------------------------------
    Securities available for sale ..............         2,715.6      177,221      6.53         1,067.7        69,361        6.50
    Securities held to maturity ................               -            -         -         2,111.4       134,184        6.36
------------------------------------------------------------------------------------------------------------------------------------
        Total securities .......................         2,715.6      177,221      6.53         3,179.1       203,545        6.40
------------------------------------------------------------------------------------------------------------------------------------
    Short-term investments .....................           253.1       13,481      5.33           185.9        10,928        5.88
------------------------------------------------------------------------------------------------------------------------------------
        Total interest-earning assets ..........         8,890.3   $  729,611      8.20%        8,132.2   $   655,891        8.06%
------------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ...............          (159.5)                                (170.2)
Noninterest-earning assets:
    Cash and due from banks ....................           388.1                                  369.5
    Other assets ...............................           443.4                                  363.0
------------------------------------------------------------------------------------------------------------------------------------
        Total noninterest-earning assets .......           831.5                                  732.5
------------------------------------------------------------------------------------------------------------------------------------
        Total assets ...........................     $   9,562.3                            $   8,694.5
====================================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest-bearing deposits:
        NOW accounts ...........................     $     491.8   $   12,793      2.60%    $     807.3   $    17,894        2.22%
        Money market deposit accounts ..........         1,625.0       39,140      2.41         1,299.8        34,411        2.65
        Savings accounts .......................           493.1       10,795      2.19           470.9        10,666        2.27
        Other consumer time deposits ...........         2,673.1      146,280      5.47         2,432.6       135,420        5.57
        Public fund certificates of deposit
            of $100,000 or more ................           926.9       50,065      5.40           756.5        44,555        5.89
        Certificates of deposit
            of $100,000 or more ................           398.1       20,639      5.18           310.8        15,317        4.93
        Foreign time deposits ..................            41.8        2,261      5.41            35.1         2,018        5.75
------------------------------------------------------------------------------------------------------------------------------------
            Total interest-bearing deposits ....         6,649.8      281,973      4.24         6,113.0       260,281        4.26
------------------------------------------------------------------------------------------------------------------------------------
    Short-term borrowings:
        Federal funds purchased ................            51.2        2,643      5.16            55.2         3,184        5.77
        Repurchase agreements ..................           281.8       13,244      4.70           215.5        11,202        5.20
    Debt .......................................            32.2        1,969      6.11            29.6         1,893        6.40
------------------------------------------------------------------------------------------------------------------------------------
        Total interest-bearing liabilities .....         7,015.0   $  299,829      4.27%        6,413.3   $   276,560        4.31%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
    Demand deposits ............................         1,433.8                                1,327.7
    Other liabilities ..........................           162.8                                  136.4
------------------------------------------------------------------------------------------------------------------------------------
        Total noninterest-bearing liabilities ..         1,596.6                                1,464.1
------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity .....................           950.7                                  817.1
====================================================================================================================================
            Total liabilities and
                shareholders' equity ...........     $   9,562.3                            $   8,694.5
====================================================================================================================================
SPREAD AND NET YIELD
Interest rate spread ...........................                                   3.93%                                     3.75%
Cost of funds supporting interest-earning assets                                   3.37%                                     3.40%
Net interest income/margin .....................                   $  429,782      4.83%                  $   379,331        4.66%
====================================================================================================================================
----------------
(1)Based on the statutory income tax rate of 35%.
(2)Yield computations include nonaccrual loans in loans outstanding.
</TABLE>


<TABLE>
<CAPTION>

Consolidated Average Balances, Interest and Rates (Cont.)
----------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries                                                      
Taxable-equivalent basis (1)                                                1994
----------------------------------------------------------------------------------------------------------
                                                                                             5-Year    
                                                                                            Compound   
                                                                                           Growth Rate 
(Average balance $ in millions,                        Average                             For Average 
interest $ in thousands)                               Balance       Interest      Rate     Balances  
----------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>             <C>       <C> 
ASSETS
Interest-earning assets:
    Commercial loans
    Small business loans
    Consumer loans
----------------------------------------------------------------------------------------------------------
        Total loans (2).........................     $   4,002.6   $  349,818      8.74%       20.0%
----------------------------------------------------------------------------------------------------------
    Securities available for sale ..............         1,198.8       68,682      5.73        21.1
    Securities held to maturity ................         2,391.1      133,609      5.59      (100.0)
----------------------------------------------------------------------------------------------------------
        Total securities .......................         3,589.9      202,291      5.63        (5.2)
----------------------------------------------------------------------------------------------------------
    Short-term investments .....................           248.9       10,184      4.09       (12.2)
----------------------------------------------------------------------------------------------------------
        Total interest-earning assets ..........         7,841.4   $  562,293      7.17%        9.7%
----------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ...............          (198.0)                             (11.2)
Noninterest-earning assets:
    Cash and due from banks ....................           364.9                                5.8
    Other assets ...............................           373.6                                7.8
----------------------------------------------------------------------------------------------------------
        Total noninterest-earning assets .......           738.5                                6.9
----------------------------------------------------------------------------------------------------------
        Total assets ...........................     $   8,381.9                                9.9%
==========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest-bearing deposits:
        NOW accounts ...........................     $     890.1       16,370      1.84%      (17.2)%
        Money market deposit accounts ..........         1,379.5       34,226      2.48         7.5
        Savings accounts .......................           511.0       11,261      2.20        17.8
        Other consumer time deposits ...........         2,178.9       93,021      4.27         6.7
        Public fund certificates of deposit
            of $100,000 or more ................           687.8       28,723      4.18         8.1
        Certificates of deposit
            of $100,000 or more ................           306.3       11,642      3.80         9.8
        Foreign time deposits ..................            17.1          794      4.64       114.4
----------------------------------------------------------------------------------------------------------
            Total interest-bearing deposits ....         5,970.7      196,037      3.28         6.8
----------------------------------------------------------------------------------------------------------
    Short-term borrowings:
        Federal funds purchased ................            39.7        1,602      4.04        61.6
        Repurchase agreements ..................           144.1        4,933      3.42        25.8
    Debt .......................................            35.8        3,180      8.87        76.6
----------------------------------------------------------------------------------------------------------
        Total interest-bearing liabilities .....         6,190.3   $  205,752      3.32%        9.7
----------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
    Demand deposits ............................         1,285.4                                8.9
    Other liabilities ..........................           175.6                                2.8
----------------------------------------------------------------------------------------------------------
        Total noninterest-bearing liabilities ..         1,461.0                                8.1
----------------------------------------------------------------------------------------------------------
Total shareholders' equity .....................           730.6                               14.2
==========================================================================================================
            Total liabilities and
                shareholders' equity ...........     $   8,381.9                                9.9%
==========================================================================================================
SPREAD AND NET YIELD
Interest rate spread ...........................                                   3.85%
Cost of funds supporting interest-earning assets                                   2.62%
Net interest income/margin .....................                   $  356,541      4.55%
==========================================================================================================
-------------
(1)Based on the statutory income tax rate of 35%.
(2)Yield computations include nonaccrual loans in loans outstanding.
</TABLE>

<PAGE>
GRAPHIC MATERIAL INDEX

GRAPHIC DESCRIPTION                     CROSS REFERENCE
-------------------                     ---------------

Average Earning Asset Mix Pie Chart     See Consolidated Average Balances,
                                             Interest and Rates

Total Loans Bar Graph                   See Five-Year Consolidated Summary of
                                             Income and Selected Financial Data

Total Deposits Bar Graph                See Five-Year Consolidated Summary of
                                             Income and Selected Financial Data

Net Interest Income Bar Graph           See Consolidated Average Balances, 
                                             Interest and Rates

Efficiency Ratio Bar Graph              See Five-Year Consolidated Summary of
                                             Income and Selected Financial Data

Total Shareholders' Equity Bar Graph    See Five-Year Consolidated Summary of 
                                             Income and Selected Financial Data

Annual Common Dividends Bar Graph       See Five-Year Consolidated Summary of 
                                             Income and Selected Financial Data

<PAGE>

Report of Ernst & Young LLP, 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, 1998 and 1997, 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, 1998.  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  generally   accepted  auditing
standards.  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, 1998 and 1997, and the consolidated
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  1998,  in  conformity  with  generally  accepted
accounting principles.



/s/ Ernst & Young, LLP

New Orleans, Louisiana
January 12, 1999


<PAGE>
<TABLE>
<CAPTION>

Consolidated Balance Sheets

Hibernia Corporation and Subsidiaries
December 31 ($ in thousands)                                             1998                 1997
----------------------------------------------------------------------------------------------------------
<S>                                                                <C>                  <C>
Assets
  Cash and due from banks .................................        $    555,756         $    580,235
  Short-term investments ..................................             350,132              485,015
  Securities available for sale ...........................           2,676,311            2,628,164
  Loans, net of unearned income ...........................          10,006,182            8,286,492
      Reserve for possible loan losses ....................            (127,976)            (124,381)
----------------------------------------------------------------------------------------------------------
          Loans, net ......................................           9,878,206            8,162,111
----------------------------------------------------------------------------------------------------------
  Bank premises and equipment .............................             187,978              190,020
  Customers' acceptance liability .........................                 331                  144
  Other assets ............................................             362,817              342,495
----------------------------------------------------------------------------------------------------------
          Total assets ....................................        $ 14,011,531         $ 12,388,184
==========================================================================================================

Liabilities
  Deposits:
      Noninterest-bearing .................................        $  2,026,219         $  1,820,896
      Interest-bearing ....................................           8,576,787            7,993,522
----------------------------------------------------------------------------------------------------------
          Total deposits ..................................          10,603,006            9,814,418
----------------------------------------------------------------------------------------------------------
  Short-term borrowings ...................................           1,134,136              719,961
  Liability on acceptances ................................                 331                  144
  Other liabilities .......................................             150,268              151,032
  Debt ....................................................             805,689              506,548
----------------------------------------------------------------------------------------------------------
          Total liabilities ...............................          12,693,430           11,192,103
----------------------------------------------------------------------------------------------------------
Shareholders'  equity  
Preferred  Stock, no par value:
 Authorized - 100,000,000 shares; 2,000,000 Series A
 issued and outstanding at December 31, 1998
  and 1997, respectively ..................................             100,000              100,000
 Class A Common Stock, no par value:
  Authorized - 300,000,000  shares;  issued and  outstanding -
  156,400,398  and  155,079,094 at December 31, 1998 and
  1997, respectively ......................................             300,289              297,752
  Surplus .................................................             407,436              394,479
  Retained earnings .......................................             521,016              406,335
  Accumulated other comprehensive income ..................              27,111               14,902
  Unearned compensation ...................................             (37,751)             (17,387)
----------------------------------------------------------------------------------------------------------
          Total shareholders' equity ......................           1,318,101            1,196,081
----------------------------------------------------------------------------------------------------------
          Total liabilities and shareholders' equity ......        $ 14,011,531         $ 12,388,184
==========================================================================================================
-------------
See notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

Consolidated Income Statements

Hibernia Corporation and Subsidiaries
Year Ended December 31 ($ in thousands, except per-share data)       1998            1997            1996
-----------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>             <C>
Interest income
    Interest and fees on loans .............................      $ 779,401       $ 653,260       $ 535,016
    Interest on securities available for sale ..............        160,379         171,667         173,601
    Interest on short-term investments .....................         13,942          17,131          13,481
-----------------------------------------------------------------------------------------------------------------
        Total interest income ..............................        953,722         842,058         722,098
-----------------------------------------------------------------------------------------------------------------
Interest expense
    Interest on deposits ...................................        343,174         323,247         281,973
    Interest on short-term borrowings ......................         40,238          31,189          15,887
    Interest on debt .......................................         39,776           5,586           1,969
-----------------------------------------------------------------------------------------------------------------
        Total interest expense .............................        423,188         360,022         299,829
-----------------------------------------------------------------------------------------------------------------
Net interest income ........................................        530,534         482,036         422,269
    Provision for possible loan losses .....................         26,000           3,148         (12,127)
-----------------------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses        504,534         478,888         434,396
-----------------------------------------------------------------------------------------------------------------
Noninterest income
    Service charges on deposits ............................         85,567          78,132          64,982
    Trust fees .............................................         16,678          15,519          14,055
    Retail investment service fees .........................         17,231          12,070           8,659
    Mortgage loan origination and servicing fees ...........         15,235           9,642           8,131
    Other service, collection and exchange charges .........         28,446          22,636          18,898
    Other operating income .................................         16,100          13,273          11,128
    Securities gains (losses), net .........................          5,678           2,725          (5,152)
-----------------------------------------------------------------------------------------------------------------
        Total noninterest income ...........................        184,935         153,997         120,701
-----------------------------------------------------------------------------------------------------------------
Noninterest expense
    Salaries and employee benefits .........................        207,132         203,044         181,138
    Occupancy expense, net .................................         33,923          33,956          30,244
    Equipment expense ......................................         30,584          30,808          31,723
    Data processing expense ................................         28,808          26,181          22,813
    Advertising and promotional expense ....................         14,991          15,634          10,907
    Foreclosed property expense, net .......................           (999)         (3,235)         (1,786)
    Amortization of intangibles ............................         16,715          14,593           7,791
    Other operating expense ................................         85,430          88,273          76,985
-----------------------------------------------------------------------------------------------------------------
        Total noninterest expense ..........................        416,584         409,254         359,815
-----------------------------------------------------------------------------------------------------------------
Income before income taxes .................................        272,885         223,631         195,282
Income tax expense .........................................         94,256          78,835          67,389
-----------------------------------------------------------------------------------------------------------------
Net income .................................................      $ 178,629       $ 144,796       $ 127,893
=================================================================================================================
Net income applicable to common shareholders ...............      $ 171,729       $ 137,896       $ 126,153
=================================================================================================================
Net income per common share ................................      $    1.12       $    0.90       $    0.83
=================================================================================================================
Net income per common share - assuming dilution ............      $    1.10       $    0.89       $    0.82
=================================================================================================================
--------------
See notes to consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

Consolidated Statements of Changes in Shareholders' Equity

Hibernia Corporation and Subsidiaries
($ in thousands, except per-share data)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Accumulated
                                                                                                      Other
                                                 Preferred    Common                 Retained   Comprehensive          Comprehensive
                                                    Stock      Stock      Surplus    Earnings        Income     Other      Income
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>        <C>        <C>          <C>          <C>         <C>         <C>
Balances at December 31, 1995 .................   $      -   $295,265   $ 367,269    $ 234,158    $ 18,680    $(14,573)
Net income for 1996 ...........................          -          -           -      127,893           -           -    $ 127,893
Unrealized gains (losses) on securities,
  net of reclassification adjustments .........          -          -           -            -     (10,662)          -      (10,662)
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income ..........................                                                                            $117,231
------------------------------------------------------------------------------------------------------------------------------------
Issuance of preferred stock ...................    100,000          -      (2,000)           -           -           -
Issuance of common stock:
   Dividend Reinvestment Plan .................          -        276       1,310            -           -           -
   Stock Option Plan ..........................          -        282         844            -           -         483
   Retirement Security Plan ...................          -        383       1,862            -           -           -
   Restricted stock awards ....................          -          9          44            -           -          11
   By pooled companies prior to merger ........          -          -       2,163            -           -           -
Cash dividends declared:
   Preferred ($.87 per share) .................          -          -           -       (1,740)          -           -
   Common ($.29 per share) ....................          -          -           -      (34,916)          -           -
   By pooled companies prior to merger ........          -          -           -       (6,879)          -           -
Acquisition of treasury stock .................          -          -           -            -           -        (880)
Purchase of common shares by ESOP .............          -          -           -            -           -        (306)
Allocation of ESOP shares .....................          -          -         774            -           -       1,378
Other .........................................          -          -        (118)      (2,103)          -           -
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1996 .................    100,000    296,215     372,148      316,413       8,018     (13,887)
------------------------------------------------------------------------------------------------------------------------------------
Net income for 1997 ...........................          -          -           -      144,796           -           -    $ 144,796
Unrealized gains (losses) on securities,
  net of reclassification adjustments .........          -          -           -            -       6,884           -        6,884
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income ..........................                                                                            $151,680
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock:
   Dividend Reinvestment Plan .................          -        418       2,693            -           -         477
   Stock Option Plan ..........................          -      1,068       4,457            -           -         166
   Retirement Security Plan ...................          -         44         265            -           -           -
   Restricted stock awards ....................          -          7          45            -           -           -
   Director compensation ......................          -          -          32            -           -         225
   By pooled companies prior to merger ........          -          -      13,919            -           -           -
Cash dividends declared:
   Preferred ($3.45 per share) ................          -          -           -       (6,900)          -           -
   Common ($.33 per share) ....................          -          -           -      (42,109)          -           -
   By pooled companies prior to merger ........          -          -           -       (5,865)          -
Acquisition of treasury stock .................          -          -           -            -           -        (299)
Purchase of common shares by ESOP .............          -          -           -            -           -      (5,021)
Allocation of ESOP shares .....................          -          -         920            -           -         952
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1997 .................    100,000    297,752     394,479      406,335      14,902     (17,387)
------------------------------------------------------------------------------------------------------------------------------------
Net income for 1998 ...........................          -          -           -      178,629           -           -    $ 178,629
Unrealized gains (losses) on securities,
  net of reclassification adjustments .........          -          -           -            -      12,209           -       12,209
Comprehensive income ..........................                                                                            $190,838
Issuance of common stock:
   Stock Option Plan ..........................          -        949       4,189            -           -           -
   Restricted stock awards ....................          -        870       7,433            -           -           -
   Exercise of purchase warrants ..............          -        409         177            -           -           -
Cash dividends declared:
   Preferred ($3.45 per share) ................          -          -           -       (6,900)          -           -
   Common ($.375 per share) ...................          -          -           -      (56,647)          -           -
   By pooled companies prior to merger ........          -          -           -         (401)          -           -
Purchase of common shares by ESOP .............          -          -           -            -           -     (23,630)
Allocation of ESOP shares .....................          -          -         943            -           -       3,266
Other .........................................          -        309         215            -           -           -
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1998 .................   $100,000   $300,289   $ 407,436    $ 521,016    $ 27,111    $(37,751)
------------------------------------------------------------------------------------------------------------------------------------
----------------
See notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows

Hibernia Corporation and Subsidiaries
Year Ended December 31 ($ in thousands)                                            1998             1997             1996
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>              <C>              <C>
Operating activities
  Net income ............................................................     $   178,629      $   144,796      $   127,893
  Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for possible loan losses .............................          26,000            3,148          (12,127)
         Amortization of intangibles and deferred charges ...............          16,317           14,125            7,799
         Depreciation and amortization ..................................          27,710           28,869           29,207
         Premium amortization, net of discount accretion ................           4,155            2,747            5,197
         Realized securities (gains) losses, net ........................          (5,678)          (2,725)           5,152
         Gains on sales of assets, net ..................................            (122)          (3,251)          (2,742)
         Provision for losses on foreclosed and other assets ............             622            2,351            1,267
         Decrease in deferred income tax asset ..........................             689           12,342            7,487
         Increase in interest receivable and other assets ...............         (20,586)          (8,550)          (9,073)
         (Decrease) increase in interest payable and other liabilities ..          11,573           (2,187)          34,345
----------------------------------------------------------------------------------------------------------------------------------
       Net cash provided by operating activities ........................         239,309          191,665          194,405
----------------------------------------------------------------------------------------------------------------------------------
Investing activities
  Purchases of securities available for sale ............................      (1,815,620)        (845,733)        (588,869)
  Proceeds from maturities of securities available for sale .............       1,013,375          666,968          775,656
  Proceeds from sales of securities available for sale ..................         774,314          278,104          404,902
  Net increase in loans .................................................      (2,210,466)      (1,677,004)      (1,323,109)
  Proceeds from sales of loans ..........................................       1,496,851          509,456          310,896
  Purchases of loans ....................................................      (1,039,977)        (347,229)         (15,205)
  Acquisitions, net of cash acquired of $64,095 and $184,991 for the
    years ended December 31, 1997 and 1996, respectively ................               -           56,563          (73,861)
  Purchases of premises, equipment and other assets .....................         (45,744)         (33,466)         (31,606)
  Proceeds from sales of foreclosed assets and excess bank-owned property           7,219           14,758            8,083
  Proceeds from sales of premises, equipment and other assets ...........           1,259            1,101           (4,062)
----------------------------------------------------------------------------------------------------------------------------------
       Net cash used by investing activities ............................      (1,818,789)      (1,376,482)        (537,175)
----------------------------------------------------------------------------------------------------------------------------------
Financing activities
  Net increase in deposits ..............................................         788,656          602,038          488,727
  Net increase in short-term borrowings .................................         414,175          376,410           27,721
  Proceeds from issuance of debt ........................................         600,000          500,000          120,743
  Payments on debt ......................................................        (300,859)         (50,644)        (101,657)
  Proceeds from issuance of preferred stock .............................               -                -           98,000
  Proceeds from issuance of common stock ................................           5,724            9,539            7,578
  Purchase of common stock by ESOP ......................................         (23,630)          (5,021)            (306)
  Dividends paid ........................................................         (63,948)         (54,889)         (41,650)
  Acquisition of treasury stock .........................................               -             (299)            (880)
----------------------------------------------------------------------------------------------------------------------------------
       Net cash provided by financing activities ........................       1,420,118        1,377,134          598,276
----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents ........................        (159,362)         192,317          255,506
  Cash and cash equivalents at beginning of year ........................       1,065,250          872,933          617,427
----------------------------------------------------------------------------------------------------------------------------------
       Cash and cash equivalents at end of year .........................     $   905,888      $ 1,065,250      $   872,933
==================================================================================================================================

Supplemental disclosures Cash paid during the year for:
   Interest expense .....................................................     $   425,747      $   362,670      $   294,057
   Income taxes .........................................................     $    87,629      $    62,935      $    55,588
Non-cash investing and financing activities:
   Loans and bank premises and equipment transferred to foreclosed
      assets and excess bank-owned property .............................     $    13,143      $     7,714      $     4,761
   Acquisitions:
      Common stock issued ...............................................     $         -      $    13,968      $         -
      Fair value of assets acquired .....................................     $         -      $   161,762      $ 1,227,391
      Fair value of liabilities assumed .................................     $         -      $   140,262      $   968,539
==================================================================================================================================
----------------
See notes to consolidated financial statements.
</TABLE>

<PAGE>


Notes to Consolidated Financial Statements

Hibernia Corporation and Subsidiaries

Note 1
Summary of Significant Accounting Policies
         Hibernia  Corporation  (the Parent  Company),  through its wholly owned
subsidiaries,  Hibernia  National Bank and Hibernia  National Bank of Texas (the
Banks),  provides a broad array of financial  products  and services  throughout
Louisiana and East Texas.  The principal  products and services  offered include
retail, small business, commercial, international, mortgage and private banking;
leasing; venture capital;  corporate finance; treasury management and trust. The
Banks,  through  wholly owned  subsidiaries,  also provide  insurance  products,
retail  brokerage  and  alternative  investments,  including  mutual  funds  and
annuities. Effective January 1, 1999, Hibernia National Bank of Texas was merged
with and into Hibernia  National Bank in a transaction that was accounted for at
historical   cost  in  a  manner  similar  to  that  of  a   pooling-of-interest
transaction.
         The  accounting   principles  followed  by  Hibernia   Corporation  and
Subsidiaries  (the  Company  or  Hibernia)  and the  methods of  applying  those
principles  conform with  generally  accepted  accounting  principles  and those
generally practiced within the banking industry.

Consolidation
         The  consolidated  financial  statements  include  the  accounts of the
Parent  Company  and its wholly  owned  subsidiaries:  Hibernia  National  Bank,
Hibernia National Bank of Texas,  Hibernia Capital Corporation (HCC) and Zachary
Taylor Life Insurance Company (Zachary  Taylor).  HCC, a licensed Small Business
Investment  Company,  provides  equity  capital  and  long-term  loans  to small
businesses.  Zachary Taylor is currently inactive, and the Parent Company has an
agreement  with the Federal  Reserve  Bank  whereby  Zachary  Taylor will not be
actively  operated  as  an  insurance  company  without  Federal  Reserve  Board
approval.
         These  consolidated  financial  statements give  retroactive  effect to
mergers  accounted  for as poolings of  interests.  In addition,  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
         Cash  and  cash   equivalents   include   cash  and  due  from   banks,
interest-bearing  time  deposits  in  domestic  banks,  federal  funds  sold and
securities purchased under agreements to resell and trading account assets.

Securities
         Management determines the appropriate classification of debt 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.
         The amortized cost of debt 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,  and  declines  in value  judged  to be other  than
temporary, are included in net securities gains (losses). The cost of securities
sold is determined based on the specific identification method.

Loans
         Loans are stated at the principal  amounts  outstanding,  less unearned
income and the reserve for possible 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.
         Commercial  and small  business  loans are placed in nonaccrual  status
when, in management's opinion,  there is doubt concerning full collectibility of
both principal and interest.  All commercial and small business nonaccrual loans
are  considered  to be  impaired  when it is  probable  that all  amounts due in
accordance with the contractual terms will not be collected.  Consumer loans are
generally charged off when any payment of principal or interest is more than 120
days delinquent.  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 Possible Loan Losses
         The  reserve for  possible  loan  losses is  maintained  to provide for
possible  losses  inherent in the loan  portfolio.  The reserve related to loans
that are  identified  as impaired is based on discounted  cash flows,  using the
loan's initial effective  interest rate, or the fair value of the collateral for
certain collateral dependent loans.
         The reserve is based on management's  estimate of future losses; actual
losses  may  vary  from  the  current   estimate.   The   estimate  is  reviewed
periodically,  taking into  consideration the risk  characteristics  of the loan
portfolio,  past loss experience,  general economic conditions and other factors
which warrant  current  recognition.  As  adjustments  to the estimate of future
losses  become  necessary,  they are  reflected as a provision for possible loan
losses in  current-period  earnings.  Actual loan losses are  deducted  from and
subsequent recoveries are added to the reserve.

Bank Premises and Equipment
         Bank  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 30 years for buildings and 3 to 15 years for
equipment,  and over the  shorter of the lease terms or the  estimated  lives of
leasehold improvements.

Foreclosed Assets and Excess Bank-Owned Property
         Foreclosed  assets  include real estate and other  collateral  acquired
upon the default of loans and loans classified as in-substance  foreclosures.  A
loan is  classified  as  in-substance  foreclosure  when the  Company  has taken
possession  of  the  collateral   regardless  of  whether   formal   foreclosure
proceedings have taken place.  Foreclosed assets and excess bank-owned  property
are  recorded  at the fair value of the assets  less  estimated  selling  costs.
Losses arising from the initial  reduction of an outstanding loan amount to fair
value are deducted  from the reserve for possible  loan losses.  Losses  arising
from the transfer of bank premises and equipment to excess  bank-owned  property
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 current earnings.

Excess of Cost Over Fair Value of Net Assets Acquired
         The  excess  of  cost  over  the  fair  value  of net  assets  acquired
(goodwill) is being amortized using the straight-line  method over the estimated
periods benefited, generally 25 years.
         As events or changes in circumstances  warrant,  the Company  evaluates
the  realizability of goodwill by geographic region 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 exists,  write-downs to
realizable value are recorded.

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 tax. Hibernia  National Bank
of Texas is subject to Texas franchise tax.

Derivative Financial Instruments
         The  Company  may  enter  into  derivative  financial  instruments  for
purposes  other than  trading to assist in the  management  of its  exposure  to
interest  rate  risk.  Derivative  financial  instruments  used  for  asset  and
liability hedges are recorded using the accrual method of accounting. Under this
method  the  expected  differential  to be paid or  received  is  accrued in the
appropriate  income or expense caption on the income statement (i.e., hedge of a
loan in interest income,  hedge of a deposit or debt in interest  expense).  The
fair  value of these  instruments  and the  changes  in the fair  value  are not
recognized in the financial statements.  In addition, the Company may enter into
derivative  financial  instruments to manage its exposure to changes in interest
rates on the market value of its securities available for sale portfolio.  These
instruments  are recorded using the fair value method of accounting.  Under this
method, gains and losses are recognized, net of tax, in shareholders' equity and
are included in other comprehensive income.
         The Company may also enter into  derivative  financial  instruments for
trading purposes.  These instruments are recorded using the fair value method of
accounting.  Changes  in the fair value of these  instruments  are  recorded  in
noninterest income.

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.  Actual  results  could  differ from those
estimates.

Reclassification
         Certain items included in the  consolidated  financial  statements  for
1997 and 1996 have been  reclassified  to conform with the 1998 presentation.

Recent Accounting Pronouncements
         In March 1995, the Financial  Accounting  Standards Board (FASB) issued
Statement of Financial  Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed Of,"
which  requires  impairment  losses to be recorded on long-lived  assets used in
operations,  including  related  goodwill,  when  indicators of  impairment  are
present and the  undiscounted  cash flows  estimated  to be  generated  by those
assets are less than the assets' carrying  amounts.  SFAS No. 121 also addresses
the accounting  for  long-lived  assets that are expected to be disposed of. The
adoption  of SFAS No.  121 in the first  quarter of 1996 did not have a material
effect on the financial condition or operating results of the Company.
         In June 1996, the FASB issued SFAS No. 125,  "Accounting  for Transfers
and Servicing of Financial Assets and  Extinguishments of Liabilities." SFAS No.
125  requires an entity to  recognize  the  financial  and  servicing  assets it
controls and the liabilities it has incurred and to cease to recognize financial
and servicing  assets when control has been  surrendered in accordance  with the
criteria provided in SFAS No. 125.  Subsequently,  the FASB issued SFAS No. 127,
"Deferral of the  Effective  Date of Certain  Provisions of SFAS No. 125," which
deferred until January 1, 1998,  the  implementation  of certain  aspects of the
original  statement.  The adoption of SFAS No. 125 in the first  quarter of 1998
did not have a material impact on the financial  condition or operating  results
of the Company.
         In March 1998,  the  Accounting  Standards  Executive  Committee of the
American  Institute of Certified Public Accountants issued Statement of Position
(SOP) 98-1,  "Accounting for the Cost of Computer Software Developed or Obtained
for Internal  Use." SOP 98-1 is effective  for  financial  statements  for years
beginning  after  December 15, 1998. The adoption of SOP 98-1 is not expected to
have a material  impact on the financial  condition or operating  results of the
Company.
         In June 1998, the FASB issued SFAS No. 133,  "Accounting for Derivative
Instruments and Hedging Activities," which is effective for financial statements
for  years  beginning  after  June  15,  1999.  Because  of the  limited  use of
derivatives,  management  does not anticipate  that the adoption of SFAS No. 133
will have a material impact on the financial  condition or operating  results of
the Company.


Note 2
Mergers
         The Company  completed  mergers  with  five financial  institutions  in
1996,  two  in Louisiana  and  one in East Texas which  were  accounted  for  as
poolings  of  interests,  and  two in  Louisiana  which  were  accounted  for as
purchase transactions.  In 1997, the  Company completed  mergers  with two  East
Texas financial  institutions which were accounted for as poolings of interests.
In 1998, the Company completed mergers with four financial  institutions,  three
in Louisiana and one in East Texas, all of which were accounted  for as poolings
of  interests.  The Company  completed  mergers  with FNB Bancshares, Inc.(FNB),
Bunkie Bancshares,  Inc. (Bunkie), CM Bank  Holding  Company,  Inc. (Calcasieu),
St. Bernard Bank & Trust Co. (St.  Bernard) and  Texarkana National  Bancshares,
Inc. (Texarkana) in 1996;  Executive  Bancshares,  Inc. (Executive)  and Unicorp
Bancshares  - Texas,  Inc.  (Unicorp)  in  1997;  and  Northwest  Bancshares  of
Louisiana,  Inc. (Northwest),  ArgentBank (Argent),  Firstshares  of Texas, Inc.
(Firstshares) and Peoples Holding Corporation  (Peoples) in 1998.
         The  institutions  with  which  the  Company  merged  are  collectively
referred to as the "merged  companies."  The merged  companies  in  transactions
accounted  for  as  poolings  of  interests  are  referred  to  as  the  "pooled
companies,"  and  institutions  in  transactions  accounted for as purchases are
referred to as the "purchased companies."
         The  following  table  shows the  merger  date,  consideration  issued,
exchange ratio and accounting method for each merger.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Exchange
                                         Merger Date            Consideration(1)         Ratio                 Accounting Method
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                      <C>                      <C>                 <C>                    
FNB ............................       January 1, 1996          889,640 shares           92.00:1             Pooling of interests
Bunkie .........................       January 15, 1996         1,874,760 shares         170.34:1            Pooling of interests
Calcasieu ......................       August 26, 1996          $     201,700,000        N/A                 Purchase
St. Bernard ....................       October 1, 1996          $      46,600,000        N/A                 Purchase
Texarkana ......................       December 31, 1996        6,236,621 shares         8.20:1              Pooling of interests
Executive ......................       August 31, 1997          1,161,680 shares         15.85:1             Pooling of interests
Unicorp ........................       November 7, 1997         2,233,388 shares         1.60:1              Pooling of interests
Northwest ......................       January 1, 1998          1,508,019 shares         3.90:1              Pooling of interests
Argent .........................       February 1, 1998         13,317,236 shares        2.04:1              Pooling of interests
Firstshares ....................       March 15, 1998           3,690,615 shares         7.15:1              Pooling of interests
Peoples ........................       July 1, 1998             3,562,367 shares         9.50:1              Pooling of interests
------------------------------------------------------------------------------------------------------------------------------------
----------------
(1)All shares issued were Hibernia Class A Common Stock.
</TABLE>

         The  following  table  shows  the  key  components  of the  results  of
operations of the pooled companies.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                 Hibernia         1997
                                (originally     Pooled                     1998 Pooled Companies
($ in thousands)                 reported)   Companies(1)  Northwest      Argent      Firstshares       Peoples         Total
------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>            <C>       <C>            <C>            <C>            <C>            <C>     
Net interest income ..........    $427,757       $ -       $4,252         $29,507        $11,599        $8,921         $482,036

Net income ...................    $137,389       $ -       $  851         $   454        $ 2,291        $3,811         $144,796
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1996
------------------------------------------------------------------------------------------------------------------------------------
Net interest income ..........    $366,217       $9,416    $3,852         $24,449        $10,204        $8,131         $422,269

Net income ...................    $109,950       $2,868    $1,370         $ 7,738        $ 2,739        $3,228         $127,893
------------------------------------------------------------------------------------------------------------------------------------
----------------
(1)Results  of operations  for the year ended  December 31, 1997 are included in
Hibernia's results.
</TABLE>

     Under the purchase  method of  accounting,  the assets and  liabilities  of
Calcasieu  and St.  Bernard were adjusted to their  estimated  fair values as of
each  purchase  date.  The  excess  of cost  over the fair  value of net  assets
acquired was $120,126,000  and is being amortized on a straight-line  basis over
25 years. In addition, a core deposit intangible of $18,457,000 was recorded and
is being  amortized on an accelerated  basis over 10 years.  On an unaudited pro
forma basis,  after giving effect to the purchases of Calcasieu and St.  Bernard
as if the  transactions  had  occurred at the  beginning  of 1996,  interest and
noninterest  income  would have been  $888,228,000,  net income  would have been
$117,108,000,  and net income per common share and net income per common share -
assuming  dilution  would have been $.77 and $.76,  respectively.  The effect of
anticipated  savings resulting from the mergers has not been included in the pro
forma information. Unaudited pro forma information is not necessarily indicative
of future results.  
     Hibernia is a party to  definitive  merger agreements  with  two additional
financial  institutions, one in  Louisiana  and one  in  East  Texas, which  are
pending  certain  regulatory  and  shareholder approval. The Company anticipates
that  these  mergers  will be  consummated  in early  1999 and that they will be
accounted  for as poolings of  interests.  In  addition,  Hibernia has signed an
agreement  with Chase Bank of Texas,  N.A. to purchase the assets and assume the
liabilities  of its Beaumont,  Texas  operations.  This purchase  transaction is
expected to be consummated  in the second  quarter of 1999. The following  table
contains information regarding institutions with which Hibernia has entered into
definitive merger agreements and the pending purchase of the Beaumont operations
of the Chase Bank of Texas, N.A.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
($ in thousands)                                         December 31, 1998               Estimated Consideration
---------------------------------------------------------------------------------------------------------------------------
                                                        Number        Total                           Value of Shares
         Institution                                  of Offices     Assets           Consideration    to Be Issued*
---------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>       <C>               <C>                   <C>    
MarTex Bancshares, Inc. .........................         9        $  319,579        3,450,000 shares      $ 59,944
First Guaranty Bank .............................         6           276,663        4,021,517 shares        69,874
Beaumont operations of
     Chase Bank of Texas, N.A ...................         4           465,405        $ 87,000                  N/A
---------------------------------------------------------------------------------------------------------------------------
             Total ..............................        19        $1,061,647                              $129,818
---------------------------------------------------------------------------------------------------------------------------
---------------
*Based on the December 31, 1998 market value of $17.375 per share 
</TABLE>


Note 3
Short-Term Investments
         The following is a summary of short-term investments.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
($ in thousands)                                               December 31
                                                          1998             1997
-------------------------------------------------------------------------------------
<S>                                                     <C>             <C>    
Federal funds sold and securities purchased
    under agreements to resell .................        $348,991        $446,598
Interest-bearing time deposits in domestic banks           1,141           2,474
Trading account assets .........................               -          35,943
-------------------------------------------------------------------------------------
    Total short-term investments ...............        $350,132        $485,015
-------------------------------------------------------------------------------------
</TABLE>


Note 4
Securities
         The  following is a summary of  securities  classified as available for
sale.  The Company had no securities  classified as held to maturity  during the
three-year period ended December 31, 1998.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
($ in thousands)                                                 December 31, 1998
---------------------------------------------------------------------------------------------------------
                                             Amortized         Fair         Unrealized   Unrealized
Type                                            Cost           Value          Gains        Losses
---------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>          <C>   
  U.S. Treasuries ....................      $  250,430      $  254,538      $ 4,108      $    -
  U.S. government agencies:
     Mortgage-backed securities ......         959,765         971,114       14,394       3,045
     Bonds ...........................       1,118,077       1,134,231       18,035       1,881
   States and political subdivisions..         231,146         241,056       10,107         197
   Other .............................          75,184          75,372          188           -
---------------------------------------------------------------------------------------------------------
     Total securities available for sale    $2,634,602      $2,676,311      $46,832      $5,123
=========================================================================================================
</TABLE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
($ in thousands)                                               December 31, 1997
---------------------------------------------------------------------------------------------------------
                                             Amortized         Fair       Unrealized    Unrealized
Type                                            Cost           Value         Gains       Losses
---------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>          <C>    
  U.S. Treasuries ....................      $  430,601      $  433,802      $ 3,210      $     9
  U.S. government agencies:
     Mortgage-backed securities ......       1,287,369       1,296,852       18,074        8,591
     Bonds ...........................         578,669         581,950        4,506        1,225
   States and political subdivisions..         241,816         248,927        7,524          413
   Other .............................          66,659          66,633          318          344
---------------------------------------------------------------------------------------------------------
     Total securities available for sale    $2,605,114      $2,628,164      $33,632      $10,582
=========================================================================================================
</TABLE>

         The  following is a summary of realized  gains and losses from the sale
of securities  available for sale.  

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
($ in thousands)                                 Year Ended December 31
-------------------------------------------------------------------------------------
                                          1998            1997            1996
-------------------------------------------------------------------------------------
<S>                                     <C>             <C>             <C>    
Realized gains .................        $ 6,135         $ 2,840         $   463
Realized losses ................           (457)           (115)         (5,615)
-------------------------------------------------------------------------------------
     Net realized gains (losses)        $ 5,678         $ 2,725         $(5,152)
=====================================================================================
</TABLE>

         Securities  with carrying values of $2,541,050,000  and  $2,315,582,000
at  December  31,  1998 and  1997, respectively,  were pledged to secure  public
or trust  deposits or were sold under  repurchase agreements.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------
($ in thousands)                                   December 31
---------------------------------------------------------------------------
                                             1998              1997
---------------------------------------------------------------------------
<S>                                      <C>               <C>       
U.S. Treasuries .................        $  254,538        $  357,511
U.S. government agencies:
   Mortgage-backed securities ...           969,468         1,230,599
   Bonds ........................         1,130,546           527,178
States and political subdivisions           185,491           195,766
Other ...........................             1,007             4,528
---------------------------------------------------------------------------
     Total pledged securities ...        $2,541,050        $2,315,582
===========================================================================
</TABLE>

         The amortized  cost and estimated  fair value by maturity of securities
available for sale 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.

<TABLE>
<CAPTION>
($ in thousands)                                    December 31, 1998
---------------------------------------------------------------------------------
                                                Amortized           Fair
                                                   Cost             Value
---------------------------------------------------------------------------------
<S>                                            <C>               <C>       
Due in 1 year or less .................        $  180,286        $  181,334
Due after 1 year through 5 years ......           463,687           470,023
Due after 5 years through 10 years ....         1,036,374         1,055,974
Due after 10 years ....................           954,255           968,980
---------------------------------------------------------------------------------
    Total securities available for sale        $2,634,602        $2,676,311
=================================================================================
</TABLE>


Note 5
Loans
         The  following  is a summary of  commercial  and small  business  loans
classified by repayment source and consumer loans classified by type. The change
in small  business  commercial  and industrial and small business other balances
from 1997 to 1998 reflects the  reclassification  of pooled  companies' loans to
their appropriate category after converting to Hibernia's loan system.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
($ in thousands)                                                  December 31
-------------------------------------------------------------------------------------------
                                                            1998              1997
-------------------------------------------------------------------------------------------
<S>                                                     <C>                <C>
Commercial:
    Commercial and industrial ..................        $ 1,371,174        $1,089,199
    Services industry ..........................          1,055,589           719,648
    Real estate ................................            457,427           444,188
    Health care ................................            306,522           251,724
    Transportation, communications and utilities            211,986           253,617
    Energy .....................................            421,998           278,988
    Other ......................................             55,140            54,170
-------------------------------------------------------------------------------------------
        Total commercial .......................          3,879,836         3,091,534
-------------------------------------------------------------------------------------------
Small Business:
    Commercial and industrial ..................            678,700           981,290
    Services industry ..........................            440,194           309,916
    Real estate ................................            274,661           178,980
    Health care ................................            107,616            74,134
    Transportation, communications and utilities             82,175            38,048
    Energy .....................................             46,312            17,314
    Other ......................................            347,975           259,487
-------------------------------------------------------------------------------------------
        Total small business ...................          1,977,633         1,859,169
-------------------------------------------------------------------------------------------
Consumer:
    Residential mortgages:
        First mortgages ........................          2,195,882         1,591,222
        Junior liens ...........................            190,073           129,357
    Indirect ...................................            850,501           748,391
    Revolving credit ...........................            325,788           282,876
    Other ......................................            586,469           583,943
-------------------------------------------------------------------------------------------
        Total consumer .........................          4,148,713         3,335,789
-------------------------------------------------------------------------------------------
        Total loans ............................        $10,006,182        $8,286,492
===========================================================================================
</TABLE>

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

<TABLE>
<CAPTION>
($ in thousands)                            December 31
------------------------------------------------------------------
                                        1998           1997
------------------------------------------------------------------
<S>                                   <C>            <C>    
Nonaccrual loans .............        $40,152        $22,598
Restructured loans ...........              -              -
------------------------------------------------------------------
   Nonperforming loans .......         40,152         22,598
------------------------------------------------------------------
Foreclosed assets ............          9,618          2,577
Excess bank-owned property ...          2,648          2,360
------------------------------------------------------------------
    Total nonperforming assets        $52,418        $27,535
==================================================================
</TABLE>


         At  December  31,  1998 and 1997 the recorded  investment in loans that
were  considered  to be  impaired was $36,540,000 and $17,168,000, respectively.
Included  in  the  1998  and  1997  amounts  were  $33,226,000  and $15,111,000,
respectively, of impaired loans for which  the  related  reserve  for   possible
loan  losses  was  $9,798,000  and  $2,560,000, respectively.   At  December 31,
1998 and 1997 impaired  loans that did  not have a  reserve  for  possible  loan
losses  amounted  to  $3,314,000  and   $2,057,000,  respectively.  The  average
recorded investment in impaired loans during the years ended  December 31, 1998,
1997  and  1996  was   approximately   $26,911,000, $16,466,000 and $15,818,000,
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. For the years ended December 31, 1998,
1997 and 1996,  the Company  recognized  interest  income on  impaired  loans of
$1,682,000, $1,199,000 and $2,296,000, respectively.
         Interest  income in the amount of $3,274,000  for 1998,  $2,042,000 for
1997 and $3,242,000 for 1996 would have been recorded on nonperforming  loans if
they had  been  classified  as  performing.  The  Company  recorded  $1,682,000,
$1,199,000 and $2,296,000 of interest income on nonperforming loans during 1998,
1997 and 1996, respectively.
         The following is a summary of activity in the reserve for possible loan
losses.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
($ in thousands)                                             Year Ended December 31
-----------------------------------------------------------------------------------------------------
                                                    1998              1997             1996
-----------------------------------------------------------------------------------------------------
<S>                                              <C>               <C>               <C>      
Balance at beginning of year ............        $ 124,381         $ 143,566         $ 165,099
    Loans charged off ...................          (39,702)          (45,596)          (36,228)
    Recoveries ..........................           17,297            22,784            20,608
-----------------------------------------------------------------------------------------------------
      Net loans charged off .............          (22,405)          (22,812)          (15,620)
-----------------------------------------------------------------------------------------------------
    Provision for possible loan losses ..           26,000             3,148           (12,127)
    Addition due to purchase transactions                -               479             6,214
-----------------------------------------------------------------------------------------------------
Balance at end of year ..................        $ 127,976         $ 124,381         $ 143,566
=====================================================================================================
</TABLE>


Note 6
Bank Premises and Equipment
         The  following  tables  detail bank  premises and equipment and related
depreciation and amortization expense.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
($ in thousands)                                                      December 31
----------------------------------------------------------------------------------------
                                                          1998              1997
----------------------------------------------------------------------------------------
<S>                                                   <C>               <C>      
Land .........................................        $  37,422         $  37,327
Buildings ....................................          173,843           170,819
Leasehold improvements .......................           30,660            29,265
Furniture and equipment ......................          128,249           152,712
----------------------------------------------------------------------------------------
                                                        370,174           390,123
Less accumulated depreciation and amortization         (182,196)         (200,103)
----------------------------------------------------------------------------------------
Total bank premises and equipment ............        $ 187,978         $ 190,020
========================================================================================
</TABLE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------
($ in thousands)                         Year Ended December 31
----------------------------------------------------------------------------
                                   1998           1997           1996
----------------------------------------------------------------------------
<S>                              <C>            <C>            <C> 
Provisions for depreciation 
and amortization included in:
        Occupancy expense        $10,872        $ 9,335        $ 7,658
        Equipment expense         16,615         17,700         20,513
----------------------------------------------------------------------------
Total depreciation and
   amortization expense..        $27,487        $27,035        $28,171
============================================================================
</TABLE>


Note 7
Deposits
         At December  31, 1998 time  deposits  with a remaining  maturity of one
year or more  amounted to  $877,111,000.  Maturities of all time deposits are as
follows: 1999 - $3,655,353,000;  2000 - $647,942,000; 2001 - $63,575,000; 2002 -
$50,489,000; 2003 - $31,946,000; and thereafter $83,159,000.
         Domestic  certificates  of  deposit of  $100,000  or more  amounted  to
$1,709,755,000 and  $1,633,796,000 at December 31, 1998 and 1997,  respectively.
Interest  on  these  certificates  amounted  to  $83,784,000,   $82,191,000  and
$70,704,000 in 1998, 1997 and 1996, respectively.
         Foreign  deposits,  which are deposit  liabilities of the Cayman Island
office of Hibernia  National Bank,  amounted to $321,537,000 and $187,517,000 at
December 31, 1998 and 1997, respectively. These deposits are comprised primarily
of individual deposits of $100,000 or more. Interest expense on foreign deposits
amounted to  $11,422,000,  $5,204,000 and  $2,261,000  for 1998,  1997 and 1996,
respectively.


Note 8
Short-Term Borrowings
         The following is a summary of short-term borrowings.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
($ in thousands)                                               December 31
-------------------------------------------------------------------------------------
                                                          1998             1997
-------------------------------------------------------------------------------------
<S>                                                   <C>               <C>     
Federal funds purchased ......................        $  705,320        $317,554
Securities sold under agreements to repurchase           390,743         343,951
Federal Reserve Bank treasury, tax and
  loan account ...............................            38,073          58,456
-------------------------------------------------------------------------------------
    Total short-term borrowings ..............        $1,134,136        $719,961
=====================================================================================
</TABLE>

         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.  The  following  is a  summary  of
pertinent data related to short-term borrowings.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
($ in thousands)                                       December 31
-----------------------------------------------------------------------------------------
                                          1998             1997             1996
-----------------------------------------------------------------------------------------
<S>                                   <C>                <C>              <C>     
Outstanding at December 31 ...        $1,134,136         $719,961         $343,551
Maximum month-end outstandings        $1,134,136         $938,716         $377,189
Average daily outstandings ...        $  790,890         $606,102         $332,975
Average rate during the year..               5.1%             5.2%             4.8%
Average rate at year end .....               5.0%             5.7%             5.0%
=========================================================================================
</TABLE>


Note 9
Debt
         The following is a summary of outstanding debt.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
($ in thousands)                                       December 31
-------------------------------------------------------------------------------
                                                    1998           1997
-------------------------------------------------------------------------------
<S>                                              <C>             <C>     
Federal Home Loan Bank callable advances         $300,000        $300,000
Federal Home Loan Bank long-term advances         505,689         206,548
-------------------------------------------------------------------------------
    Total debt ..........................        $805,689        $506,548
===============================================================================
</TABLE>

         The Federal Home Loan Bank (FHLB) advances are secured by the Company's
investment in FHLB stock, which totaled  $43,032,000 and $34,897,000 at December
31, 1998 and 1997, respectively, and also by a blanket floating lien on portions
of the Company's residential loan portfolio.
         The FHLB callable advances require monthly interest payments and mature
in 2008.  Callable  advances of $100,000,000  accrue interest at a rate of 4.76%
and $200,000,000 accrue interest at a rate of 5.28%. The FHLB may demand payment
on the callable advances at quarterly intervals which began in December 1998 for
the  $100,000,000  advance  and which  begin in June  2003 for the  $200,000,000
advance. If called prior to maturity, replacement funding will be offered by the
FHLB at a  then-current  rate. The FHLB long-term  advances  accrue  interest at
contractual  rates  of  4.61%  to  8.36%,  are due in  monthly  installments  of
approximately  $2,539,000,  including  interest,  and are  scheduled to amortize
through various dates between 1999 and 2015. However, should the loans for which
the long-term  advances were obtained  repay at a faster rate than  anticipated,
the advances are to be repaid at a correspondingly faster rate.
         Maturities  of  debt  are  as  follows:   1999 -  $100,840,000;  2000 -
$100,853,000;   2001 -  $301,014,000;  2002 -  $741,000;  2003 -  $429,000;  and
thereafter - $301,812,000.


Note 10
Other Assets and Other Liabilities
         The following are summaries of other assets and other liabilities.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------
($ in thousands)                                      December 31
----------------------------------------------------------------------------
                                                 1998            1997
----------------------------------------------------------------------------
<S>                                           <C>             <C>
Other assets:
    Accrued interest receivable ......        $ 91,412        $ 82,750
    Foreclosed assets and excess
      bank-owned property ............          12,266           4,937
    Deferred income taxes ............          27,010          34,063
    Goodwill, net ....................         138,393         145,870
    Core deposit intangibles, net ....           9,650          13,497
    Mortgage servicing rights, net ...          31,111          12,029
    Other ............................          52,975          49,349
----------------------------------------------------------------------------
      Total other assets .............        $362,817        $342,495
----------------------------------------------------------------------------
Other liabilities:
    Accrued interest payable .........        $ 36,456        $ 39,015
    Trade accounts payable and
      accrued liabilities ............          73,867          75,454
    Reserve for future rental payments
      under sale/leaseback ...........          19,821          20,505
    Other ............................          20,124          16,058
----------------------------------------------------------------------------
      Total other liabilities ........        $150,268        $151,032
============================================================================
</TABLE>

         Amortization   expense   relating  to  goodwill   totaled   $8,168,000,
$8,331,000 and $5,133,000 for the years ended December 31, 1998,  1997 and 1996,
respectively. Accumulated amortization relating to goodwill at December 31, 1998
and 1997 totaled $45,005,000 and $36,837,000, respectively. Amortization expense
relating  to  core  deposit  intangibles  totaled  $3,847,000,   $4,931,000  and
$1,877,000  in  1998,  1997 and  1996,  respectively.  Accumulated  amortization
relating to core deposit  intangibles  totaled  $10,655,000  and  $6,808,000  at
December 31, 1998 and 1997, respectively.


Note 11
Preferred and Common Stock
         The Company has authorized 100,000,000 shares of no par value preferred
stock.   At  December  31,  1998  and  1997,   2,000,000   shares  of  Series  A
Fixed/Adjustable  Rate Noncumulative  Preferred Stock (Series A Preferred Stock)
were issued and  outstanding.  The Series A Preferred  Stock is  nonconvertible,
with a $50 per share  liquidation  preference and a 6.9% annual dividend through
October 1, 2001,  payable on the first  business day of each  calendar  quarter.
Beginning  October 1, 2001 the dividend rate is adjustable  but will not be less
than 7.4% nor greater than 13.4% per annum. Proceeds from the September 30, 1996
issuance totaled $98,000,000,  which is net of $2,000,000 in issuance costs. The
Series A Preferred Stock qualifies as Tier 1 capital for regulatory purposes and
is redeemable at Hibernia's  option (with prior Federal  Reserve Board approval)
at any time after October 1, 2001.
         In April 1998  shareholders  approved  an  amendment  to the  Company's
Articles of Incorporation to increase the number of authorized  shares of no par
value Class A Common Stock from 200,000,000 to 300,000,000 shares.


Note 12
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.  Under the RSP,  employees  contribute a portion of
their  compensation,  with  the  Company  matching  100% of the  first  5% of an
employee's  contribution.  The matching  contributions  are invested in Hibernia
Class A Common Stock and are charged to employee benefits  expense.  At December
31,  1998,  the RSP owned  approximately  2,602,000  shares of Hibernia  Class A
Common Stock. The Company's contributions to the RSP totaled $5,384,000 in 1998,
$4,973,000 in 1997 and $5,135,000 in 1996.
         The Company  maintains  incentive  pay and bonus  programs  for certain
employees. Costs of these programs were $25,412,000, $20,806,000 and $17,550,000
for the years ended December 31, 1998, 1997 and 1996, respectively.
         During 1995, the Company  established a plan  (1995-1997  Plan) for the
grant of performance share awards under its Long-Term Incentive Plan for certain
members of management. Under the 1995-1997 Plan, if the Company achieved certain
predetermined  performance  goals during the  three-year  period from January 1,
1995 through  December 31, 1997, the Company would award Hibernia Class A Common
Stock to certain  members of management who contributed to that  achievement.  A
total of 425,499  shares of Hibernia  Class A Common Stock,  net of personal tax
withholding,  was issued under the 1995-1997  Plan in the first quarter of 1998.
Compensation expense of $6,390,000 and $3,148,000 was recorded in 1997 and 1996,
respectively, relating to the 1995-1997 Plan.
         The Company  developed a new  performance  share awards plan (1998-2000
Plan) for the three-year  period from January 1, 1998 through December 31, 2000.
The  structure of the 1998-2000  Plan is similar to that of the 1995-1997  Plan.
Compensation  expense  of  $8,000,000  was  recorded  in  1998  relating  to the
1998-2000 Plan.


Note 13
Employee Stock Ownership Plan
         During 1995, the Company  instituted an employee  stock  ownership plan
(ESOP) in which substantially all employees participate. The ESOP was authorized
to  purchase  $30,000,000  of  Hibernia  Class A Common  Stock and to borrow the
needed  funds from  Hibernia  National  Bank,  with a guarantee  from the Parent
Company.  The ESOP  acquired  $30,000,000  of Hibernia  Class A Common  Stock in
open-market  transactions from March 1995 to May 1998. During 1998, the ESOP was
authorized to acquire an additional $15,000,000 of Hibernia Class A Common Stock
which was to be funded by an additional  borrowing from Hibernia  National Bank,
with a guarantee from the Parent Company. The additional $15,000,000 of Hibernia
Class A Common Stock was purchased on October 22, 1998.
          At December 31, 1998 and 1997, the ESOP owned approximately  3,874,000
and  2,431,000  shares of Hibernia  Class A Common Stock and had an  outstanding
debt obligation of $37,751,000  and  $17,387,000,  respectively.  The Banks make
annual  contributions  to the ESOP in an amount  determined  by their  Boards 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 1998, 1997 and 1996 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 employees.
         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
eliminate 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 $4,224,000,  $3,014,000 and $2,882,000 relating
to the ESOP was recorded during 1998, 1997 and 1996, respectively. The ESOP held
872,000 and 618,000 allocated shares and 3,002,000 and 1,813,000 suspense shares
at December  31,  1998 and 1997,  respectively.  The fair value of the  suspense
shares  at  December  31,  1998  and  1997  was  $52,168,000  and   $34,237,000,
respectively.


Note 14
Stock Options
         SFAS No. 123,  "Accounting for Stock-Based  Compensation," which became
effective  January 1,  1996,  established  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  the  company,  or the  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  Accounting  Principles
Board Opinion No. 25 (APB 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  non-qualified
options to various key employees  and  non-employee  directors.  The options are
granted at no less than the fair market value of the stock at the date of grant.
Options granted to directors upon inception of service as a director vest in six
months.  Until  October 1997 those  options  were  granted  under the 1987 Stock
Option  Plan;  after  October  1997 those  options  are  granted  under the 1993
Directors'  Stock Option Plan.  All other  options  granted under the 1987 Stock
Option Plan, the Long-Term  Incentive Plan and the 1993 Directors'  Stock Option
Plan become exercisable in the following increments: 50% after the expiration of
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.
         Options  granted  to  employees  and  directors,  other  than the chief
executive officer,  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.  Options  granted
under the Long-Term  Incentive  Plan and the 1993  Directors'  Stock Option Plan
generally  expire  10  years  from the date of grant  unless  the  holder  dies,
retires,  becomes  permanently  disabled or leaves the employ of the Company, at
which time the options  expire at various times ranging from 30 to 365 days. All
options vest immediately upon a change in control of the Company.
         The following  summarizes the option activity in the plans during 1998,
1997  and  1996.  During  1997,  the 1987  Stock  Option  Plan  was  terminated;
therefore,  there are no  shares  available  for  grant  under  this  plan.  The
termination did not impact options outstanding under the 1987 Stock Option Plan.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Weighted-
                                                                                                                      Average
                                                                                                                     Exercise
                                                             Incentive       Non-Qualified          Total              Price
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>              <C>                <C>               <C>
1987 Stock Option Plan:
Outstanding, December 31, 1995 ......................         162,428          1,360,986          1,523,414         $    7.40
Granted (weighted-average fair value $3.47 per share)               -              5,000              5,000             11.56
Canceled ............................................          (1,875)                 -             (1,875)             4.38
Exercised ...........................................               -            (22,398)           (22,398)             4.94
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1996 ......................         160,553          1,343,588          1,504,141              7.45
Canceled ............................................               -            (67,104)           (67,104)            16.37
Exercised ...........................................         (18,750)           (34,745)           (53,495)             5.47
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 ......................         141,803          1,241,739          1,383,542              7.10
Canceled ............................................               -            (42,625)           (42,625)            16.45
Exercised ...........................................         (91,640)           (19,777)          (111,417)             4.61
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1998 ......................          50,163          1,179,337          1,229,500         $    7.00
------------------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1998 ......................          50,163          1,179,337          1,229,500         $    7.00
====================================================================================================================================
</TABLE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    Weighted-
                                                                                                                     Average
                                                                                                                     Exercise
                                                              Incentive      Non-Qualified          Total             Price
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>            <C>                <C>               <C>    
Long-Term Incentive Plan:
Outstanding, December 31, 1995 ......................           12,598         3,746,448          3,759,046         $    7.45
Granted (weighted-average fair value $2.76 per share)                -         1,527,800          1,527,800             10.20
Canceled ............................................                -          (282,718)          (282,718)             8.10
Exercised ...........................................                -          (149,558)          (149,558)             7.53
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1996 ......................           12,598         4,841,972          4,854,570              8.27
Granted (weighted-average fair value $3.99 per share)                -         1,540,300          1,540,300             13.43
Canceled ............................................                -          (172,488)          (172,488)            10.92
Exercised ...........................................                -          (473,772)          (473,772)             7.31
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 ......................           12,598         5,736,012          5,748,610              9.65
Granted (weighted-average fair value $5.59 per share)                -         1,919,684          1,919,684             18.35
Canceled ............................................                -          (222,819)          (222,819)            13.81
Exercised ...........................................                -          (366,728)          (366,728)             7.99
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1998 ......................           12,598         7,066,149          7,078,747         $   11.97
------------------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1998 ......................           12,598         2,918,035          2,930,633         $    8.15
------------------------------------------------------------------------------------------------------------------------------------
Available for Grant, December 31, 1998 ..............                                             1,047,569
====================================================================================================================================

1993 Directors' Stock Option Plan:
Outstanding, December 31, 1995 ......................                -           232,500            232,500         $    7.79
Granted (weighted-average fair value $2.89 per share)                -            75,000             75,000             10.44
Canceled ............................................                -           (22,500)           (22,500)             7.56
Exercised ...........................................                -           (21,250)           (21,250)             7.70
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1996 ......................                -           263,750            263,750              8.57
Granted (weighted-average fair value $3.90 per share)                -            70,000             70,000             13.00
Exercised ...........................................                -           (43,750)           (43,750)             8.11
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 ......................                -           290,000            290,000              9.70
Granted (weighted-average fair value $7.14 per share)                -            75,000             75,000             21.57
Canceled ............................................                -           (10,000)           (10,000)            17.36
Exercised ...........................................                -           (20,000)           (20,000)             8.44
------------------------------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 1998 ......................                -           335,000            335,000         $   12.21
------------------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1998 ......................                -           181,250            181,250         $    9.34
------------------------------------------------------------------------------------------------------------------------------------
Available for Grant, December 31, 1998 ..............                                               577,500
====================================================================================================================================
</TABLE>

         In addition to the above option activity in the plans,  484,915,  7,900
and 5,755 shares of restricted stock were awarded under the Long-Term  Incentive
Plan during the years ended December 31, 1998, 1997 and 1996, respectively.
         The following table presents the weighted-average  remaining life as of
December  31,  1998 for  options  outstanding  for the 1987 Stock  Option  Plan,
Long-Term  Incentive Plan and the 1993  Directors'  Stock Option Plan within the
stated exercise price ranges.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                        Outstanding                          Exercisable
------------------------------------------------------------------------------------------------------------------------
                                                       Weighted-        Weighted-                      Weighted-
                                          Number        Average         Average         Number         Average
Exercise Price Range Per Share          of Options   Exercise Price  Remaining Life   of Options    Exercise Price
------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>             <C>             <C>             <C>  
1987 Stock Option Plan:
  $4.19 to $5.31 .................       467,958     $    4.43       3.24 years        467,958       $    4.43
  $7.19 to $8.75 .................       672,666     $    7.24       4.30 years        672,666       $    7.24
  $14.94 to $18.80 ...............        88,876     $   18.71       0.10 years         88,876       $   18.71
------------------------------------------------------------------------------------------------------------------------
Long-Term Incentive Plan:
  $6.88 to $8.81 .................     2,574,733     $    7.47       5.40 years      2,291,408       $    7.54
  $10.19 to $10.63 ...............     1,260,925     $   10.20       7.22 years        621,125       $   10.20
  $12.63 to $15.81 ...............     1,419,630     $   13.45       8.10 years          8,000       $   13.44
  $18.28 to $21.56 ...............     1,823,459     $   18.38       9.08 years         10,100       $   18.28
------------------------------------------------------------------------------------------------------------------------
1993 Directors' Stock Option Plan:
  $7.31 to $8.13 .................       135,000     $    7.83       5.47 years        123,750       $    7.80
  $10.44 to $13.00 ...............       130,000     $   11.72       7.83 years         47,500       $   10.98
  $19.50 to $21.72 ...............        70,000     $   21.56       9.30 years         10,000       $   20.61
========================================================================================================================
</TABLE>

         The following pro forma  information  was  determined as if the Company
had  accounted  for  stock  options  issued  in 1995 and  thereafter  using  the
fair-value-based  method  as  defined  in SFAS No.  123.  The fair  value of the
options was estimated  using a  Black-Scholes  option  valuation  model with the
following  weighted-average  assumptions for 1998, 1997 and 1996,  respectively:
risk-free interest rates of 5.66%, 6.67% and 6.44%;  expected dividend yields of
1.95%, 2.39% and 2.74%;  expected  volatility factors of the market price of the
Hibernia  Class A Common Stock of 24%, 23% and 23%; and an expected  life of the
options of 10 years.
         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,  option  valuation models require 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.
         For purposes of pro forma disclosures,  the estimated fair value of the
options granted in 1995 and thereafter is amortized to expense over the options'
vesting  period.  Since the Company's  options  generally  vest over a four-year
period,  the pro forma  disclosures  are not  indicative of future amounts until
SFAS No. 123 is applied to all outstanding, nonvested options.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
($ in thousands, except per-share data)                          Year Ended December 31
--------------------------------------------------------------------------------------------------------------------------
                                   1998                              1997                             1996
--------------------------------------------------------------------------------------------------------------------------
                        As Reported      Pro Forma       As Reported      Pro Forma        As Reported     Pro Forma
--------------------------------------------------------------------------------------------------------------------------
<S>                     <C>             <C>             <C>             <C>             <C>             <C>        
Net income ........     $   178,629     $   174,941     $   144,796     $   142,733     $   127,893     $   126,765
Net income per
  common share ....     $      1.12     $      1.09     $       .90     $       .89     $       .83     $       .82
Net income per
  common share -
  assuming dilution     $      1.10     $      1.08     $       .89     $       .87     $       .82     $       .81
--------------------------------------------------------------------------------------------------------------------------
</TABLE>


Note 15
Leases
         The  Company  leases its  headquarters,  operations  center and certain
other bank 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 30 years.
         Total rental  expense  (none of which  represents  contingent  rentals)
included in occupancy and equipment  expense was  $12,298,000,  $12,625,000  and
$11,255,000 in 1998, 1997 and 1996, respectively.
         Minimum  rental  commitments  for  long-term  operating  leases  are as
follows:  1999 - $10,098,000;   2000 - $10,021,000;  2001 - $9,674,000;   2002 -
$9,488,000; 2003 - $9,253,000; and thereafter - $44,508,000.


Note 16
Other Operating Expense
         The following is a summary of other operating expense.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
($ in thousands)                                 Year Ended December 31
------------------------------------------------------------------------------------
                                           1998           1997           1996
------------------------------------------------------------------------------------
<S>                                      <C>            <C>            <C>    
State taxes on equity ...........        $11,237        $ 7,578        $ 6,760
Telecommunications ..............         11,129         11,314          9,675
Postage .........................          6,951          6,916          7,024
Professional fees ...............          6,574         10,170          8,641
Stationery and supplies .........          5,501          6,006          6,482
Loan collection expense .........          4,771          4,037          2,552
Regulatory expense ..............          2,761          2,854          1,629
Other ...........................         36,506         39,398         34,222
------------------------------------------------------------------------------------
    Total other operating expense        $85,430        $88,273        $76,985
------------------------------------------------------------------------------------
</TABLE>


Note 17
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.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
($ in thousands)                                            Year Ended December 31
---------------------------------------------------------------------------------------------------
                                                       1998            1997            1996
---------------------------------------------------------------------------------------------------
<S>                                                  <C>            <C>              <C>
Current tax expense:
     Federal income tax .....................        $87,472        $ 62,323         $ 58,755
     State income tax .......................          6,181           3,882            3,648
---------------------------------------------------------------------------------------------------
Total current tax expense ...................         93,653          66,205           62,403
---------------------------------------------------------------------------------------------------
Deferred tax expense (benefit):
     Federal income tax .....................            603          15,947            1,669
     Change in deferred tax valuation reserve              -          (3,317)           3,317
---------------------------------------------------------------------------------------------------
Total deferred tax expense ..................            603          12,630            4,986
---------------------------------------------------------------------------------------------------
Income tax expense ..........................        $94,256        $ 78,835         $ 67,389
---------------------------------------------------------------------------------------------------
Shareholders' equity:
     Change in accumulated other
        comprehensive income ................        $ 6,450        $  3,566         $ (5,612)
===================================================================================================
</TABLE>

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

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
($ in thousands)                                                             Year Ended December 31
------------------------------------------------------------------------------------------------------------------------------------
                                                           1998                       1997                      1996
------------------------------------------------------------------------------------------------------------------------------------
                                                  Amount          Rate        Amount         Rate       Amount          Rate
------------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>              <C>       <C>              <C>       <C>              <C>  
Tax expense based on federal statutory rate      $ 95,510         35.0%     $ 78,271         35.0%     $ 68,349         35.0%
Tax-exempt interest .......................        (6,351)        (2.3)       (6,244)        (2.8)       (4,361)        (2.2)
State income tax, net of federal benefit ..         4,018          1.4         2,523          1.2         2,371          1.2
Goodwill ..................................         2,766          1.0         2,909          1.3         1,734          0.9
Other .....................................        (1,687)        (0.6)        1,376          0.6          (704)        (0.4)
------------------------------------------------------------------------------------------------------------------------------------
Income tax expense ........................      $ 94,256         34.5%     $ 78,835         35.3%     $ 67,389         34.5%
====================================================================================================================================
</TABLE>

         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.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
($ in thousands)                                    December 31
--------------------------------------------------------------------------
                                                1998           1997
--------------------------------------------------------------------------
<S>                                           <C>            <C>
Deferred tax assets:
    Reserve for possible loan losses..        $44,792        $43,533
    Sale/leaseback ...................          7,024          7,409
    Loan fees ........................          3,443          2,982
    Accrued expenses .................          9,675          9,648
    Deferred compensation ............          3,659          2,226
    Other ............................          8,047          6,351
--------------------------------------------------------------------------
Total deferred tax assets ............         76,640         72,149
--------------------------------------------------------------------------
Deferred tax liabilities:
    Net unrealized gains on securities
       available for sale ............         14,598          8,148
    Depreciation .....................         13,729         10,537
    Core deposit intangibles .........          2,601          3,884
    Mortgage servicing rights ........          4,764          2,159
    Other ............................         13,938         13,358
--------------------------------------------------------------------------
Total deferred tax liabilities .......         49,630         38,086
--------------------------------------------------------------------------
Deferred tax assets, net of
  deferred tax liabilities ...........        $27,010        $34,063
==========================================================================
</TABLE>

         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 18
Net Income Per Common Share Data
         In February 1997,  the FASB issued SFAS No. 128,  "Earnings per Share,"
which  requires  the  presentation  of both net income per common  share and net
income per common share - assuming dilution.  The Company adopted the provisions
of SFAS No. 128  effective  December 31,  1997.  The adoption did not impact the
Company's net income per common share.  However,  the Company had not previously
been required to present net income per common share - assuming dilution,  which
is now presented for all periods.
         The  following  sets  forth the  computation  of net income  per common
share and net income per common  share - assuming dilution.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
($ in thousands, except per-share data)                                   Year Ended December 31
---------------------------------------------------------------------------------------------------------------------
                                                                1998               1997                 1996
---------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                 <C>                 <C>  
Numerator:
    Net income ....................................        $    178,629        $    144,796        $    127,893
    Preferred stock dividends .....................               6,900               6,900               1,740
---------------------------------------------------------------------------------------------------------------------
    Numerator for net income per common share .....             171,729             137,896             126,153
    Effect of dilutive securities .................                   -                   -                   -
---------------------------------------------------------------------------------------------------------------------
    Numerator for net income per common
        share - assuming dilution .................        $    171,729        $    137,896        $    126,153
---------------------------------------------------------------------------------------------------------------------
Denominator:
    Denominator for net income per common
        share (weighted-average shares outstanding)         153,718,782         152,873,513         152,238,818
    Effect of dilutive securities:
        Stock options .............................           2,410,838           2,204,500           1,337,904
        Purchase warrants .........................                   -             174,376             160,200
        Restricted stock awards ...................              35,850             151,255                   -
---------------------------------------------------------------------------------------------------------------------
    Denominator for net income per common
        share - assuming dilution .................         156,165,470         155,403,644         153,736,922
---------------------------------------------------------------------------------------------------------------------
Net income per common share .......................        $       1.12        $       0.90        $       0.83
---------------------------------------------------------------------------------------------------------------------
Net income per common share - assuming dilution ...        $       1.10        $       0.89        $       0.82
=====================================================================================================================
</TABLE>

         The  weighted-average  shares outstanding exclude 2,224,254,  1,782,937
and 1,681,835 average common shares in 1998, 1997 and 1996,  respectively,  held
by the Hibernia ESOP  (discussed in Note 13) which have not been committed to be
released.  The common shares issued in all mergers  accounted for as poolings of
interests consummated in 1998, 1997 and 1996 are considered to be outstanding as
of the beginning of the earliest period presented.
         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 1998 there were 269,076  antidilutive options outstanding with
exercise  prices  ranging from $18.80 to $21.72,  during 1997 there were 129,501
antidilutive  options  outstanding  with exercise  prices ranging from $16.30 to
$18.80 and during 1996 there were 203,131  antidilutive options outstanding with
exercise prices ranging from $11.56 to $18.80.



Note 19
Comprehensive Income
         In June 1997,  the FASB issued SFAS No. 130,  "Reporting  Comprehensive
Income," which requires the presentation of comprehensive income and establishes
standards for reporting its components (revenue,  expenses, gains and losses) in
a full set of general-purpose financial statements. The adoption of SFAS No. 130
in 1998 had no impact on the  financial  condition or  operating  results of the
Company.
         The  following is a summary of the  components  of other  comprehensive
income.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                                                                Income
                                               Before         Tax Expense        After
($ in thousands)                             Income Taxes      (Benefit)     Income Taxes
-----------------------------------------------------------------------------------------------
Year ended December 31, 1998
-----------------------------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>   
Unrealized gains (losses) on securities
  available for sale, net .............        $ 17,812         $ 6,154         $ 11,658
Reclassification adjustment for net
  (gains) losses realized in net income             847             296              551
-----------------------------------------------------------------------------------------------
Other comprehensive income ............        $ 18,659         $ 6,450         $ 12,209
===============================================================================================

-----------------------------------------------------------------------------------------------
Year ended December 31, 1997
-----------------------------------------------------------------------------------------------
Unrealized gains (losses) on securities
  available for sale, net .............        $ 10,637         $ 3,631         $  7,006
Reclassification adjustment for net
  (gains) losses realized in net income            (187)            (65)            (122)
-----------------------------------------------------------------------------------------------
Other comprehensive income ............        $ 10,450         $ 3,566         $  6,884
===============================================================================================

-----------------------------------------------------------------------------------------------
Year ended December 31, 1996
-----------------------------------------------------------------------------------------------
Unrealized gains (losses) on securities
  available for sale, net .............        $(17,818)        $(6,152)        $(11,666)
Reclassification adjustment for net
  (gains) losses realized in net income           1,544             540            1,004
-----------------------------------------------------------------------------------------------
Other comprehensive income ............        $(16,274)        $(5,612)        $(10,662)
===============================================================================================
</TABLE>


Note 20
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. 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 related parties were  $22,008,000 and $45,325,000
at December 31, 1998 and 1997,  respectively.  The change  during 1998  reflects
$72,834,000 in loan advances and $96,151,000 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 $7,882,000 and $7,290,000 at December 31, 1998 and 1997, respectively.


Note 21
Financial Instruments and Derivative 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,   among  them:  core  deposit
intangibles,  loan servicing rights,  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   short-term    investments,
noninterest-bearing   deposits  and  short-term   borrowings   approximates  the
estimated fair value of these financial instruments. The estimated fair value of
securities,  interest rate agreements and other off-balance-sheet instruments is
based  on  quoted  market  prices,   dealer  quotes  and  prices  obtained  from
independent   pricing   services.   The   estimated   fair   value   of   loans,
interest-bearing  deposits and debt 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.
         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  possible  loan losses  which
totaled   $127,976,000   and   $124,381,000  at  December  31,  1998  and  1997,
respectively.
         The fair value estimates  presented are based on information  available
to management as of December 31, 1998 and 1997. 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.  At December 31, 1997,  $35,943,000 of
short-term  investments  included in the  following  table were held for trading
purposes. There were no trading account assets at December 31, 1998.

<TABLE>
<CAPTION>
($ in thousands)                                                December 31
---------------------------------------------------------------------------------------------------------
                                                    1998                            1997
---------------------------------------------------------------------------------------------------------
                                          Carrying         Fair          Carrying           Fair
                                           Amount         Value           Amount           Value
---------------------------------------------------------------------------------------------------------
<S>                                      <C>             <C>             <C>             <C>  
Assets
    Cash and short-term investments      $  905,888      $  905,888      $1,065,250      $1,065,250
    Securities available for sale..      $2,676,311      $2,676,311      $2,628,164      $2,628,164
    Commercial loans ..............      $3,879,836      $3,919,242      $3,091,534      $3,103,489
    Small business loans ..........      $1,977,633      $2,012,818      $1,859,169      $1,866,696
    Consumer loans ................      $4,148,713      $4,251,490      $3,335,789      $3,338,008
Liabilities
    Noninterest-bearing deposits ..      $2,026,219      $2,026,219      $1,820,896      $1,820,896
    Interest-bearing deposits .....      $8,576,787      $8,613,593      $7,993,522      $8,013,153
    Short-term borrowings .........      $1,134,136      $1,134,136      $  719,961      $  719,961
    Debt ..........................      $  805,689      $  814,875      $  506,548      $  505,302
---------------------------------------------------------------------------------------------------------
</TABLE>

         The Company issues financial instruments with off-balance-sheet risk in
the normal course of business to meet the  financing  needs of its customers and
to  reduce  exposure  to   fluctuations  in  interest  rates.   These  financial
instruments  include  commitments to extend credit,  letters of credit,  standby
letters of credit and interest rate contracts and involve,  to varying  degrees,
elements of credit and interest rate risk in excess of the amount  recognized on
the balance sheet.
         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. 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  reserve for
possible loan losses. Management does not anticipate any material losses related
to these instruments.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
($ in thousands)                                      December 31
----------------------------------------------------------------------------------------------
                                        1998                            1997
----------------------------------------------------------------------------------------------
                              Contract         Fair           Contract          Fair
                               Amount          Value           Amount           Value
----------------------------------------------------------------------------------------------
<S>                          <C>              <C>             <C>              <C>  
Commitments
  to extend credit ...       $3,805,638       $(34,748)       $3,092,271       $(28,119)
----------------------------------------------------------------------------------------------
Letters of credit and
  financial guarantees       $  225,949       $ (1,669)       $  193,479       $ (1,433)
==============================================================================================
</TABLE>

         The Company  maintains  trading  positions  in a variety of  derivative
financial  instruments.  These trading  activities  are  customer-oriented  and,
generally,  matched  trading  positions are  established to minimize risk to the
Company.  The credit exposure that results from interest rate contracts held for
trading  purposes  is limited  to the  current  fair  value of asset  derivative
positions,  which at December  31, 1998 and 1997 was  $3,993,000  and  $885,000,
respectively.   The  Company  manages  the  potential  credit  exposure  through
evaluation of the counterparty credit standing,  collateral agreements and other
contract provisions.  The potential credit exposure from future market movements
is estimated by using a statistical model that takes into consideration possible
changes in interest rates over time.
         The  amounts   disclosed  in  the   following   table   represent   the
end-of-period  notional and fair value of derivative financial  instruments held
or issued for trading  purposes  and the average  aggregate  fair value of those
instruments  during the year.  Net  trading  gains  recognized  in  earnings  on
interest rate contracts outstanding were immaterial for all years presented.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
($ in thousands)                         Notional Amount            Fair Value           Average Fair Value
-------------------------------------------------------------------------------------------------------------------
                                          December 31               December 31        Year Ended December 31
-------------------------------------------------------------------------------------------------------------------
                                       1998         1997         1998        1997        1998        1997
-------------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>          <C>        <C>          <C>
Interest rate swaps:
    Assets .....................     $227,180     $124,700     $ 3,993      $ 880      $ 3,284      $ 796
    Liabilities ................     $150,580     $ 56,178     $(2,805)     $(398)     $(2,117)     $(434)
Options, caps and floors held ..     $ 13,603     $ 21,700         $ -      $   5      $     3      $  19
Options, caps and floors written     $ 13,603     $ 21,700     $    (1)     $  (6)     $    (4)     $ (22)
===================================================================================================================
</TABLE>

         The Company also enters into interest rate contracts 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 an
interest-rate  contract.  Notional principal amounts express the volume of these
transactions, although the amounts potentially subject to credit and market risk
are much smaller.
         One  interest  rate swap with a  notional  amount  of  $125,000,000  at
December  31,  1998 was entered  into  during 1998 as a hedge  against a deposit
relationship  of the same maturity.  The  differential to be paid or received is
accrued as interest  rates change and is recognized as an adjustment to interest
expense on deposits.  The related  amount  payable or  receivable is included in
other assets or other liabilities. This interest rate swap matured on January 4,
1999.


Note 22
Regulatory Matters and Dividend Restrictions
         The  Company and the Banks 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 Banks 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
Banks'  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, 1998 and 1997,  the most recent  notifications  from
the OCC categorized the Banks 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  Banks'  categories.  On a pro forma  basis,  after  the  merger of
Hibernia National Bank of Texas, Hibernia National Bank's December 31, 1998 Tier
1 and total  risk-based  capital ratios and leverage ratio would be in excess of
the minimum levels required for designation as well capitalized.
         The  Company's  and the Banks'  actual  capital  amounts and ratios are
presented in the following table. 

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
($ in thousands)               Tier 1 Risk-Based Capital     Total Risk-Based Capital      Leverage
----------------------------------------------------------------------------------------------------------------
                                     Amount      Ratio        Amount       Ratio        Amount     Ratio
----------------------------------------------------------------------------------------------------------------
December 31, 1998
----------------------------------------------------------------------------------------------------------------
<S>                               <C>            <C>        <C>            <C>        <C>            <C>  
    Hibernia Corporation ....     $1,142,947     10.76%     $1,270,923     11.96%     $1,142,947     8.58%
    Hibernia National Bank ..     $  929,886      9.12%     $1,050,338     10.30%     $  929,886     7.39%
    Hibernia National Bank
      of Texas ..............     $   87,725     17.81%     $   93,899     19.06%     $   87,725     9.06%
================================================================================================================

----------------------------------------------------------------------------------------------------------------
December 31, 1997
----------------------------------------------------------------------------------------------------------------
    Hibernia Corporation ....     $1,021,812     11.26%     $1,135,403     12.51%     $1,021,812     8.65%
    Hibernia National Bank ..     $  802,219      9.34%     $  909,713     10.59%     $  802,219     7.38%
    Hibernia National Bank
      of Texas ..............     $   78,496     16.55%     $   82,702     17.43%     $   78,496     8.55%
================================================================================================================
</TABLE>

         Under current  FRB  regulations, each  of the Banks may lend the Parent
Company up to 10% of their capital and surplus.
         The  payment  of  dividends  by the  Banks  to the  Parent  Company  is
restricted  by various  regulatory  and  statutory  limitations.  On a pro forma
basis,  after the merger of Hibernia  National Bank of Texas,  Hibernia National
Bank would have  available  to pay  dividends  to the  Parent  Company,  without
approval  of the OCC,  approximately  $212,268,000,  plus net  retained  profits
earned in 1999 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 $20,993,000 in 1998 and $19,303,000 in 1997.


Note 23
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.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Balance Sheets
-------------------------------------------------------------------------
($ in thousands)                                December 31
-------------------------------------------------------------------------
                                           1998             1997
-------------------------------------------------------------------------
<S>                                    <C>               <C>       
Investment in bank subsidiaries        $1,191,729        $1,053,656
Other assets ..................           165,638           161,727
-------------------------------------------------------------------------
    Total assets ..............        $1,357,367        $1,215,383
-------------------------------------------------------------------------
Other liabilities .............        $    1,515        $    1,915
Debt (ESOP guarantee) .........            37,751            17,387
Shareholders' equity ..........         1,318,101         1,196,081
-------------------------------------------------------------------------
    Total liabilities and
      shareholders' equity ....        $1,357,367        $1,215,383
=========================================================================
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Income Statements
--------------------------------------------------------------------------------------
($ in thousands)                                 Year Ended December 31
--------------------------------------------------------------------------------------
                                          1998            1997            1996
--------------------------------------------------------------------------------------
<S>                                     <C>             <C>             <C>   
Equity in undistributed net income
    of subsidiaries ............        $125,366        $ 85,901        $ 85,262
Dividends from bank subsidiaries          50,000          51,130          40,585
Other income ...................           7,582          12,077           6,042
--------------------------------------------------------------------------------------
    Total income ...............         182,948         149,108         131,889
--------------------------------------------------------------------------------------
Interest expense ...............               -             351             418
Other expense ..................           2,748           1,419           2,374
--------------------------------------------------------------------------------------
    Total expense ..............           2,748           1,770           2,792
--------------------------------------------------------------------------------------
Income before income taxes .....         180,200         147,338         129,097
Income tax expense .............           1,571           2,542           1,204
--------------------------------------------------------------------------------------
Net income .....................        $178,629        $144,796        $127,893
======================================================================================
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Statements of Cash Flows
--------------------------------------------------------------------------------------------------------------
($ in thousands)                                                        Year Ended December 31
--------------------------------------------------------------------------------------------------------------
                                                                 1998            1997            1996
--------------------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>             <C> 
Operating activities
    Net income .........................................      $ 178,629       $ 144,796       $ 127,893
    Non-cash adjustment for equity in
      subsidiaries' undistributed net income ...........       (125,366)        (85,901)        (85,262)
    Realized securities (gains), net ...................         (3,778)         (1,305)              -
    Other adjustments ..................................          1,887          (8,313)          2,210
--------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities ..............         51,372          49,277          44,841
--------------------------------------------------------------------------------------------------------------
Investing activities
    Investment in subsidiaries .........................         (8,360)        (28,000)        (16,908)
    Purchases of securities available for sale .........       (205,513)       (120,000)              -
    Proceeds from sales of securities available for sale        206,697         121,305               -
    Net decrease (increase) in loans ...................         (6,430)            834           2,206
--------------------------------------------------------------------------------------------------------------
Net cash used by investing activities ..................        (13,606)        (25,861)        (14,702)
--------------------------------------------------------------------------------------------------------------
Financing activities
    Issuance of debt ...................................              -               -           4,776
    Payments on debt ...................................              -          (5,843)         (2,578)
    Issuance of preferred stock ........................              -               -          98,000
    Issuance of common stock ...........................         14,027           9,848           7,578
    Purchase of treasury stock .........................              -            (299)           (880)
    Dividends paid .....................................        (63,948)        (54,889)        (41,650)
--------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities .......        (49,921)        (51,183)         65,246
--------------------------------------------------------------------------------------------------------------
    Increase (decrease) in cash and cash equivalents ...        (12,155)        (27,767)         95,385
Cash and cash equivalents at beginning of year .........        146,756         174,523          79,138
--------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year ...............      $ 134,601       $ 146,756       $ 174,523
==============================================================================================================
</TABLE>


Note 24
Segment Information
         In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related  Information," which 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. Because SFAS No. 131 addresses
how  supplemental  financial  information  is  disclosed  in annual and  interim
reports,  its  adoption  in 1998 had no impact  on the  financial  condition  or
operating results of the Company.
         The  Company's  segment  information  is presented by line of business.
Each line of  business is a strategic  unit that  serves a  particular  group of
customers that have certain common characteristics, through various products and
services.  The  reportable  operating  segments are  Commercial  Banking,  Small
Business  Banking,  Consumer  Banking,  and  Investments  and Public Funds.  The
Commercial Banking and Small Business Banking segments provide business entities
with  comprehensive  products and services,  including loans,  deposit accounts,
leasing, treasury management and venture capital. The Commercial Banking segment
provides  products  and  services  to  larger  business  entities  and the Small
Business Banking segment provides  products and services to mid-size and smaller
business  entities.  The Consumer  Banking  segment  provides  individuals  with
comprehensive products and services, including mortgage and other loans, deposit
accounts,  trust  and  investment  management,   brokerage  and  insurance.  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  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.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                           Small                         Investments
                        Commercial        Business         Consumer       and Public                         Segment
 ($ in thousands)         Banking          Banking         Banking          Funds            Other            Total
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
December 31, 1998
----------------------------------------------------------------------------------------------------------------------------
<S>                     <C>              <C>              <C>              <C>              <C>            <C>        
Average loans ...       $3,487,700       $1,685,400       $3,922,400       $        -       $ 46,700       $ 9,142,200
Average assets ..       $3,550,200       $1,726,100       $6,642,300       $3,187,600       $452,800       $15,559,000
Average deposits        $  711,600       $1,215,700       $6,157,000       $1,527,700       $ 53,200       $ 9,665,200

----------------------------------------------------------------------------------------------------------------------------
December 31, 1997
----------------------------------------------------------------------------------------------------------------------------
Average loans ...       $2,613,300       $1,151,300       $3,573,100       $        -       $ 57,700       $ 7,395,400
Average assets ..       $2,654,000       $1,216,600       $6,776,800       $2,262,200       $479,700       $13,389,300
Average deposits        $  474,500       $  888,700       $6,234,000       $1,409,800       $ 28,400       $ 9,035,400
============================================================================================================================
</TABLE>

         The following  table  presents  condensed  income  statements  for each
segment.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                          Small                    Investments
                                        Commercial      Business       Consumer     and Public                     Segment
 ($ in thousands)                        Banking        Banking        Banking        Funds         Other           Total
--------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>            <C>           <C>           <C>      
Net interest income ...............     $ 120,710      $ 115,582      $ 249,550      $ 59,839      $(10,765)     $ 534,916
Provision for possible loan losses         10,450          5,638          9,618             -           294         26,000
--------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
  for possible loan losses ........       110,260        109,944        239,932        59,839       (11,059)       508,916
--------------------------------------------------------------------------------------------------------------------------------
Noninterest income ................        18,821         17,412        136,687         5,084        11,132        189,136
Noninterest expense ...............        46,967         79,826        282,769         7,216         2,437        419,215
--------------------------------------------------------------------------------------------------------------------------------
Income before income taxes ........        82,114         47,530         93,850        57,707        (2,364)       278,837
Income tax expense ................        28,740         16,636         32,848        20,197         3,190        101,611
--------------------------------------------------------------------------------------------------------------------------------
Net income ........................     $  53,374      $  30,894      $  61,002      $ 37,510      $ (5,554)     $ 177,226
================================================================================================================================

--------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1997
--------------------------------------------------------------------------------------------------------------------------------
Net interest income ...............     $  95,046      $  84,393      $ 262,393      $ 48,654      $ (4,520)     $ 485,966
Provision for possible loan losses          1,068            577          1,375             -           128          3,148
--------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
  for possible loan losses ........        93,978         83,816        261,018        48,654        (4,648)       482,818
--------------------------------------------------------------------------------------------------------------------------------
Noninterest income ................        16,193         13,591        114,898         2,064        10,963        157,709
Noninterest expense ...............        41,273         64,960        291,147         6,302         7,943        411,625
--------------------------------------------------------------------------------------------------------------------------------
Income before income taxes ........        68,898         32,447         84,769        44,416        (1,628)       228,902
Income tax expense ................        24,114         11,356         29,669        15,545         3,799         84,483
--------------------------------------------------------------------------------------------------------------------------------
Net income ........................     $  44,784      $  21,091      $  55,100      $ 28,871      $ (5,427)     $ 144,419
================================================================================================================================

--------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1996
--------------------------------------------------------------------------------------------------------------------------------
Net interest income ...............     $  78,280      $  61,476      $ 236,764      $ 45,469      $  4,143      $ 426,132
Provision for possible loan losses         (3,609)        (1,592)        (5,484)            -        (1,442)       (12,127)
--------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
  for possible loan losses ........        81,889         63,068        242,248        45,469         5,585        438,259
--------------------------------------------------------------------------------------------------------------------------------
Noninterest income ................        14,218         10,360         95,404        (5,183)        7,606        122,405
Noninterest expense ...............        37,707         51,030        258,102         5,598         9,731        362,168
--------------------------------------------------------------------------------------------------------------------------------
Income before income taxes ........        58,400         22,398         79,550        34,688         3,460        198,496
Income tax expense ................        20,440          7,839         27,843        12,141         4,706         72,969
--------------------------------------------------------------------------------------------------------------------------------
Net income ........................     $  37,960      $  14,559      $  51,707      $ 22,547      $ (1,246)     $ 125,527
================================================================================================================================
</TABLE>

         Each  segment's  balance  sheet is  adjusted to reflect its net funding
position.  Assets are  increased if excess funds are provided;  liabilities  are
increased if the funds are needed to support assets. Segment assets and deposits
are decreased for cash items in process of  collection,  which are  reclassified
from assets to deposits.
         The Consumer  Banking Segment  contains an intangible  asset related to
certain  mortgage  servicing  rights  associated with loans  originated and sold
before  January 1, 1995 and all loans  originated  and retained in the Company's
loan portfolio after  origination.  Noninterest income is adjusted for gains and
fees associated with these mortgage servicing rights and noninterest  expense is
adjusted for the  amortization  of these mortgage  servicing  rights.  Generally
accepted  accounting  principles does not allow the  capitalization of servicing
rights;   therefore,   they  are  not  currently  recorded  in  these  financial
statements.
         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 economic spread value  attributable to the various products of
the segment and indicates the historical  interest-rate risk taken by the entity
as  a  whole.   Interest   income  for   tax-exempt   loans  is  adjusted  to  a
taxable-equivalent  basis. Each segment is charged a provision for possible 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 category.
         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  statistical
information  or staff costs.  Indirect  costs,  such as management  expenses and
corporate  support,  are allocated to each segment based on various  statistical
information or staff costs. There are no significant intersegment revenues.
         The following is a  reconciliation  of segment  totals to  consolidated
totals.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                             Average           Average             Average
($ in thousands)                              Loans            Assets              Deposits
--------------------------------------------------------------------------------------------------
December 31, 1998
--------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>                  <C>       
Segment total .....................        $9,142,200        $ 15,559,000         $9,665,200
  Excess funds invested ...........                 -          (2,911,700)                 -
  Mortgage servicing rights .......                 -             (15,900)                 -
  Reclassification of cash items in
    process of collection .........                 -             261,000            261,000
--------------------------------------------------------------------------------------------------
Consolidated total ................        $9,142,200        $ 12,892,400         $9,926,200
==================================================================================================

--------------------------------------------------------------------------------------------------
December 31, 1997
--------------------------------------------------------------------------------------------------
Segment total .....................        $7,395,400        $ 13,389,300         $9,035,400
  Excess funds invested ...........                 -          (2,334,600)                 -
  Mortgage servicing rights .......                 -             (14,300)                 -
  Reclassification of cash items in
    process of collection .........                 -             207,400            207,400
--------------------------------------------------------------------------------------------------
Consolidated total ................        $7,395,400        $ 11,247,800         $9,242,800
==================================================================================================
</TABLE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                   Provision                                   Income Tax
                                   Net Interest   for Possible   Noninterest   Noninterest      Expense
($ in thousands)                       Income     Loan Losses       Income       Expense       (Benefit)      Net Income
------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1998
------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>            <C>           <C>            <C>            <C>            <C>      
Segment total .................     $ 534,916      $ 26,000      $ 189,136      $ 419,215      $ 101,611      $ 177,226
  Taxable-equivalent adjustment        (4,382)            -              -              -         (1,534)        (2,848)
  Mortgage servicing rights ...             -             -         (4,201)        (2,631)          (550)        (1,020)
  Income tax expense ..........             -             -              -              -         (5,271)         5,271
------------------------------------------------------------------------------------------------------------------------------
Consolidated total ............     $ 530,534      $ 26,000      $ 184,935      $ 416,584      $  94,256      $ 178,629
==============================================================================================================================

------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1997
------------------------------------------------------------------------------------------------------------------------------
Segment total .................     $ 485,966      $  3,148      $ 157,709      $ 411,625      $  84,483      $ 144,419
  Taxable-equivalent adjustment        (3,930)            -              -              -         (1,376)        (2,554)
  Mortgage servicing rights ...             -             -         (3,712)        (2,371)          (469)          (872)
  Income tax expense ..........             -             -              -              -         (3,803)         3,803
------------------------------------------------------------------------------------------------------------------------------
Consolidated total ............     $ 482,036      $  3,148      $ 153,997      $ 409,254      $  78,835      $ 144,796
==============================================================================================================================

------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1996
------------------------------------------------------------------------------------------------------------------------------
Segment total .................     $ 426,132      $(12,127)     $ 122,405      $ 362,168      $  72,969      $ 125,527
  Taxable-equivalent adjustment        (3,863)            -              -              -         (1,352)        (2,511)
  Mortgage servicing rights ...             -             -         (1,704)        (2,353)           227            422
  Income tax expense ..........             -             -              -              -         (4,455)         4,455
------------------------------------------------------------------------------------------------------------------------------
Consolidated total ............     $ 422,269      $(12,127)     $ 120,701      $ 359,815      $  67,389      $ 127,893
==============================================================================================================================
</TABLE>


Note 25
Contingencies
         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.