<PAGE>

HIBERNIA CORPORATION

Corporate Offices                           Mailing Address
313 Carondelet Street                       P.O. Box 61540
New Orleans, LA  70130                      New Orleans, LA  70161
504-533-3333                                Internet:
                                            http://www.hiberniabank.com

Stock Listing

The  common  stock of  Hibernia  Corporation  is  listed  on the New York  Stock
Exchange 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.   At  December  31,  1997,  Hibernia
Corporation had 13,700  shareholders  of record and 4,429  full-time  equivalent
employees.

<TABLE>
<CAPTION>
Hibernia Stock Price and Dividend Information

                                  1997                          1996
--------------------------------------------------------------------------------
                        Market Price (1) Dividend    Market Price (1) Dividend
                         High      Low   Declared     High       Low  Declared
--------------------------------------------------------------------------------
<S>                    <C>       <C>       <C>      <C>       <C>       <C>
First quarter .....    $14.75    $12.75    $ 0.08   $10.88    $10.00    $ 0.07
--------------------------------------------------------------------------------
Second quarter ....    $14.50    $12.38    $ 0.08   $11.88    $10.00    $ 0.07
--------------------------------------------------------------------------------
Third quarter .....    $17.19    $13.81    $ 0.08   $11.75    $10.00    $ 0.07
--------------------------------------------------------------------------------
Fourth quarter ....    $19.38    $16.63    $ 0.09   $13.50    $11.13    $ 0.08
--------------------------------------------------------------------------------
----------
(1) NYSE closing price
</TABLE>

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:

Chase Mellon Shareholder Services
Security Relations Department
85 Challenger Road, Overpeck Centre
Ridgefield, 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 Meetings

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 Chase Mellon  Shareholder  Services at the
address on this page  indicating  which names  should be removed.  This will not
affect dividend or proxy mailings.



<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)                     1997           1996           1995            1994            1993

------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>             <C>            <C>              <C>
Interest income ...................................   $  750,082     $  641,440      $  575,302     $  490,792       $  468,508
Interest expense ..................................      322,325        265,807         246,986        182,767          165,961
------------------------------------------------------------------------------------------------------------------------------------
Net interest income ...............................      427,757        375,633         328,316        308,025          302,547
Provision for possible loan losses ................          620        (12,417)          1,218        (17,759)          (2,658)
------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
    for possible loan losses ......................      427,137        388,050         327,098        325,784          305,205
------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
   Noninterest income .............................      142,713        117,850         105,703         96,386           92,029
   Securities gains (losses), net .................        2,718         (5,306)            227         (1,678)             819
------------------------------------------------------------------------------------------------------------------------------------
Noninterest income ................................      145,431        112,544         105,930         94,708           92,848
Noninterest expense ...............................      361,944        326,920         289,482        307,988          309,041
------------------------------------------------------------------------------------------------------------------------------------
Income before taxes ...............................      210,624        173,674         143,546        112,504           89,012
Income tax expense ................................       73,235         60,856          12,134          8,846           14,191
------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations .................      137,389        112,818         131,412        103,658           74,821
Cumulative effect of change in accounting for
   income taxes ...................................            -              -               -              -            3,556
------------------------------------------------------------------------------------------------------------------------------------
Net income ........................................   $  137,389     $  112,818      $  131,412     $  103,658       $   78,377
------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders ......   $  130,489     $  111,078      $  131,412     $  103,658       $   78,377
------------------------------------------------------------------------------------------------------------------------------------
Per common share information: (2)
   Income from continuing operations ..............   $     1.00     $     0.85      $     1.01     $     0.79       $     0.57
   Net income .....................................   $     1.00     $     0.85      $     1.01     $     0.79       $     0.60
   Net income - assuming dilution .................   $     0.98     $     0.84      $     1.00     $     0.78       $     0.60
   Tax-effected net income (3) ....................   $     1.00     $     0.85      $     0.72     $     0.56       $     0.47
   Cash dividends declared ........................   $     0.33     $     0.29      $     0.25     $     0.19       $     0.03
Average shares outstanding (000s) .................      130,795        130,161         130,276        130,991          130,419
Dividend payout ratio .............................        33.00%         34.12%          24.75%         24.05%            5.00%
------------------------------------------------------------------------------------------------------------------------------------
Selected year-end balances (in millions)
Loans .............................................   $  7,580.2     $  6,165.9      $  4,819.6     $  3,905.9       $  3,470.5
Deposits ..........................................      8,633.3        8,052.7         6,733.0        6,500.8          6,281.3
Debt ..............................................        506.5           57.2            36.1           23.5             42.0
Equity ............................................      1,050.3          951.9           779.9          647.6            604.1
Total assets ......................................     11,023.0        9,560.3         7,933.8        7,464.2          7,279.0
------------------------------------------------------------------------------------------------------------------------------------
Selected average balances (in millions)
Loans .............................................   $  6,751.3     $  5,407.4      $  4,343.9     $  3,644.2       $  3,349.6
Deposits ..........................................      8,138.5        7,089.5         6,528.9        6,345.0          6,121.8
Debt ..............................................         94.1           31.8            28.9           35.5             41.4
Equity ............................................        991.7          828.8           705.8          626.1            556.0
Total assets ......................................      9,969.4        8,417.7         7,650.3        7,345.7          7,038.7
------------------------------------------------------------------------------------------------------------------------------------
Selected ratios
Net interest margin (taxable-equivalent) ..........         4.75%          4.89%           4.69%          4.59%            4.69%
Return on assets ..................................         1.38%          1.34%           1.72%          1.41%            1.11%
Return on common equity ...........................        14.63%         13.83%          18.62%         16.56%           14.10%
Return on total equity ............................        13.85%         13.61%          18.62%         16.56%           14.10%
Efficiency ratio ..................................        62.45%         65.40%          65.66%         74.90%           76.98%
Average equity/average assets .....................         9.95%          9.85%           9.23%          8.52%            7.90%
Tier 1 risk-based capital ratio ...................        10.77%         12.03%          14.62%         15.48%           14.82%
Total risk-based capital ratio ....................        12.02%         13.29%          15.89%         16.76%           16.12%
Leverage ratio ....................................         8.54%          8.68%           9.64%          8.87%            7.73%
------------------------------------------------------------------------------------------------------------------------------------
Tax-effected net income and ratios excluding
  goodwill and core deposit intangible amortization
  and balances (3) (4)
Net income applicable to common shareholders ......   $  141,259     $  117,080      $   96,413     $   95,450       $   66,602
Net income per common share (2) ...................   $     1.08     $     0.90      $     0.74     $     0.73       $     0.51
Return on assets ..................................         1.51%          1.44%           1.26%          1.31%            0.95%
Return on common equity ...........................        18.87%         17.88%          14.07%         16.23%           13.06%
Efficiency ratio ..................................        60.31%         64.07%          64.95%         69.47%           75.68%
------------------------------------------------------------------------------------------------------------------------------------
----------------
(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 13 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."  To  make  certain
comparisons more  meaningful,  net income and earnings per common share for 1995
and prior years are adjusted on a pro forma,  tax-effected basis. Tax expense is
assumed  at an  effective  tax rate of 35%  rather  than  the  lower-than-normal
federal income tax rate actually incurred as the Company recognized deferred tax
benefits.  This discussion  should be read in conjunction  with the accompanying
tables and consolidated financial statements.


1997 Highlights


     Net income for 1997 totaled  $137.4  million,  a 22%  increase  compared to
     $112.8  million  for 1996.  Net income  per common  share for 1997 of $1.00
     increased 18% compared to $.85 for 1996,  and net income per common share -
     assuming  dilution  was $.98 for 1997,  an increase of 17% compared to $.84
     for 1996.

     Profitability,  loans and deposits  continued to  increase;  asset  quality
     remained  strong;  and the Company's  franchise was further enhanced by the
     expansion of its market through two completed mergers during 1997 and three
     pending mergers at December 31, 1997.

     Tangible  returns on assets (ROA) and common  equity  (ROCE) were 1.51% and
     18.87%, respectively, in 1997 compared to 1.44% and 17.88% in 1996.

     Loans grew 23% to $7.6 billion at December 31, 1997, with commercial  loans
     up 32%,  small  business loans up 15% and consumer loans up 18% from a year
     earlier.

     Asset quality  remained  strong with  nonperforming  assets as a percent of
     loans plus  foreclosed  assets and excess  bank-owned  property of 0.33% at
     December  31, 1997  compared to 0.40% a year  earlier.  The  year-end  1997
     reserve  coverage of  nonperforming  loans was 528% compared to 802% at the
     end of 1996.

     Net  interest  income  increased  $52.1  million in 1997  compared to 1996,
     primarily due to a $1.3 billion  increase in average loans. The increase in
     average  loans and the  shift in the mix of  earning  assets to loans  from
     lower-yielding  securities  were more than offset by the negative impact of
     declining  loan  yields,  the shift in the mix of  funding  sources  toward
     market rate funds and the decline in the percentage of noninterest  bearing
     funds supporting earning assets,  resulting in a 14-basis-point  decline in
     the net interest margin to 4.75% for 1997 from 4.89% in 1996.

     Operating efficiency continued to improve. In 1997 the efficiency ratio was
     62.45%  compared  to  65.40%  in 1996  and  65.66%  in 1995.  The  tangible
     efficiency ratio, which excludes the impact of amortization of goodwill and
     core deposit intangibles, was 60.31% in 1997 compared to 64.07% in 1996 and
     64.95% in 1995.

     Cash dividends per common share for 1997 increased to $.33, 14% higher than
     the 1996 cash  dividend  of $.29 per common  share and 32% higher  than the
     1995 cash dividend of $.25 per common share. The dividend payout ratios for
     1997,  1996 and 1995 were 33%, 34% and 25% (35% on a  tax-effected  basis),
     respectively.

     Hibernia  completed mergers in 1997 with two institutions that had combined
     assets of $254 million and a total of seven offices. Since the beginning of
     1994,  Hibernia has completed  mergers with 17 institutions  (comprising 19
     banks) with  combined  assets of $3.7 billion and 121 offices.  At December
     31, 1997 mergers were pending with three  institutions with combined assets
     of $1.2 billion and 28 offices.

Merger Activity

     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 Company completed four mergers with
Louisiana  financial  institutions  in 1995,  all of which were accounted for as
poolings of interests.

     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 goodwill and core deposit  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 26 and 47.


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 $9.2 billion in 1997,  compared to $7.8 billion in 1996 and $7.1
billion in 1995.  Average  earning  assets  increased  $1.4  billion in 1997 and
$667.2 million in 1996 due primarily to growth in the loan portfolio  (including
growth in the pooled  companies'  portfolios)  and the  effect of the  purchased
companies.

     Loan demand, which has been strong since the second half of 1993, continued
to improve  throughout  1997.  Loans as a percentage of average  earning  assets
increased to 73.4% in 1997,  compared to 69.2% in 1996 and 60.8% in 1995.  Total
securities  decreased to 23.9% of average  earning  assets in 1997 from 28.1% in
1996 and 37.3% in 1995.  The Company  funded the 1997 increase in earning assets
through  the  growth  in  interest-bearing  deposits  of $873.0  million,  other
interest-bearing   liabilities   of  $328.8   million  and   noninterest-bearing
liabilities of $187.0 million.

     Total  earning  assets at  December  31, 1997 were $10.1  billion,  up $1.5
billion from a year earlier due to a $1.4 billion (23%) 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,  while at the same time  achieving  yields that are
generally  higher than those available on alternative  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
formal  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  evaluate  such  factors 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  $1.3 billion in 1997 and $1.1 billion in 1996 as
all segments  experienced  significant  growth. The growth from new and existing
customers  accounted for approximately  $1.1 billion (82%) of the overall growth
in average loans in 1997,  with the remainder of the growth  resulting  from the
effect of the purchased companies.  The Company's efforts to achieve its goal of
becoming the best financial services provider 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 Hibernia to increase loans.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
TABLE 1 - COMPOSITION OF LOAN PORTFOLIO
--------------------------------------------------------------------------------------------------------------
December 31 ($ in millions)                                           1997                     1996
--------------------------------------------------------------------------------------------------------------
                                                               Loans       Percent      Loans       Percent
--------------------------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>     <C>              <C>
Commercial:
    Commercial and industrial .........................     $  1,089.2       14.4%   $    865.9       14.0%
    Services industry .................................          719.6        9.5         455.3        7.4
    Real estate .......................................          444.2        5.9         419.1        6.8
    Health care .......................................          251.7        3.3         227.3        3.7
    Transportation, communications and utilities ......          253.6        3.3         182.4        3.0
    Energy ............................................          279.0        3.7         143.2        2.3
    Other .............................................           54.2        0.7          46.0        0.7
--------------------------------------------------------------------------------------------------------------
          Total commercial ............................        3,091.5       40.8       2,339.2       37.9
--------------------------------------------------------------------------------------------------------------
Small Business:
    Commercial and industrial .........................          495.7        6.5         681.0       11.0
    Services industry .................................          309.9        4.1         183.2        3.0
    Real estate .......................................          179.0        2.4         118.9        1.9
    Health care .......................................           74.1        1.0          54.7        0.9
    Transportation, communications and utilities ......           38.0        0.5          24.3        0.4
    Energy ............................................           17.3        0.2           6.8        0.1
    Other .............................................          259.5        3.4         120.9        2.0
--------------------------------------------------------------------------------------------------------------
          Total small business ........................        1,373.5       18.1       1,189.8       19.3
--------------------------------------------------------------------------------------------------------------
Consumer:
    Residential mortgages:
        First mortgages ...............................        1,485.1       19.6       1,113.7       18.1
        Junior liens ..................................          129.4        1.7         121.2        2.0
    Indirect ..........................................          708.5        9.4         749.9       12.2
    Revolving credit ..................................          282.9        3.7         144.4        2.3
    Other .............................................          509.3        6.7         507.7        8.2
--------------------------------------------------------------------------------------------------------------
          Total consumer ..............................        3,115.2       41.1       2,636.9       42.8
--------------------------------------------------------------------------------------------------------------
Total loans ...........................................     $  7,580.2      100.0%   $  6,165.9      100.0%
--------------------------------------------------------------------------------------------------------------
</TABLE>

     Table 1 details  Hibernia's  commercial and small business loans classified
by repayment  source and consumer loans  classified by type. In 1997  commercial
loans grew $752.3  million  (32%),  small  business loans were up $183.7 million
(15%) and consumer loans increased  $478.3 million (18%).  The portfolio mix was
41.1%  consumer,  40.8%  commercial  and 18.1% small  business at year-end  1997
compared to 42.8%, 37.9% and 19.3%,  respectively,  at year-end 1996. Hibernia's
lending strategy is to maintain an appropriately balanced portfolio.

     Commercial  Loans.  The growth in the commercial  portfolio was distributed
among the services industry, up $264.3 million (58%); commercial and industrial,
up $223.3  million  (26%);  energy,  up $135.8  million  (95%);  transportation,
communications and utilities, up $71.2 million (39%); commercial real estate, up
$25.1  million  (6%);  and  health  care,  up $24.4  million  (11%).  Even  with
significant  growth in several  industries,  Hibernia's  loan portfolio is still
well diversified as evidenced by the portfolio percentages presented in Table 1.

     Expertise in specialized  industries,  including energy,  maritime,  health
care and commercial real estate,  allowed Hibernia's experienced team of lenders
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  offered new 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 the new markets it serves.

     Small  Business  Loans.   Hibernia  generally  categorizes  companies  with
revenues  of less than $10  million  as small  businesses.  The  small  business
portfolio  showed increases in the services  industry,  up $126.7 million (69%);
real estate,  up $60.1  million  (51%);  health care,  up $19.4  million  (35%);
transportation, communications and utilities, up $13.7 million (56%); energy, up
$10.5 million (154%); and other, up $138.6 million (115%).  These increases were
partially  offset by a decrease in the  commercial  and  industrial  category of
$185.3  million  (27%).  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- and medium-sized business
customers.

     Consumer Loans.  The increase in consumer loans to $3.1 billion at December
31, 1997, from $2.6 billion at December 31, 1996, resulted primarily from growth
in the residential mortgage and revolving credit portfolios. Increased marketing
efforts, new product development,  shortened application and approval processes,
and  extended  service  hours  designed to  maximize  the  effectiveness  of the
Company's  extensive  banking  office  network  were the major  factors  in this
growth.

     Loans  secured by mortgages on  residential  property and indirect  lending
(primarily through automobile dealerships) are the two largest components of the
consumer portfolio.

     Residential  mortgage loans increased  $379.6 million (31%) in 1997 and now
comprise  approximately  half of the consumer loan  portfolio.  It is Hibernia's
practice to retain  adjustable-rate  mortgages  originated and to securitize and
sell  fixed-rate  mortgage  loans  originated,  while  generally  retaining  the
associated   servicing   rights.   At  December  31,  1997   Hibernia   serviced
approximately $2.6 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 $1.0 billion in loan  originations  during 1997,  a 112%  increase  from
1996.

     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 a homeowner's
residence.

     Although  still a significant  part of the consumer  portfolio,  Hibernia's
indirect  lending  portfolio  declined  during 1997 by $41.4 million (6%).  This
decline was primarily the result of management's  decision to decrease  emphasis
on  indirect  lending  because  of  competitive   market  factors  resulting  in
unacceptable profitability in portions of the portfolio.

     SECURITIES. At the end of 1997, securities totaled $2.1 billion, a decrease
of $103.6 million,  or 4.6%, from the end of 1996. The decrease is primarily due
to a reduction in  mortgage-backed  securities of $211.1  million as a result of
contractual  payments and  prepayments  of  principal.  The proceeds  from these
principal  reductions  were  used to fund  loans  as the mix of  earning  assets
continued to change.  Of total  securities  at December  31, 1997,  88% are debt
securities of the U.S.  government or its agencies.  Most securities held by the
Company qualify as pledgable securities and are used to collateralize repurchase
agreements and public fund deposits. The composition of the securities portfolio
is shown in Table 2.

     During 1996 Hibernia restructured its portfolio of securities available for
sale to enhance future interest income and improve its net interest margin. This
restructuring  resulted  in the sale of almost $200  million of  adjustable-rate
mortgage-backed  securities  and the purchase of a similar amount of obligations
of states and political subdivisions and mortgage-backed securities.

     On December 29, 1995, in accordance with the Financial Accounting Standards
Board Special Report "A Guide to  Implementation  of Statement 115 on Accounting
for Certain  Investments  in Debt and Equity  Securities,"  the Company chose to
reclassify  all of its  securities  held to maturity to the  available  for sale
portfolio.  This  reclassification  gives the  Company  greater  flexibility  in
managing the portfolio for income,  interest-rate  risk and liquidity.  Although
net unrealized gains or losses in the available for sale portfolio are reflected
as a separate  component  of equity,  these gains or losses are not  included in
regulatory  capital for purposes of computing  capital  adequacy  ratios.  It is
anticipated  that future purchases of securities will be classified as available
for sale.

     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 or 1995.  Hibernia  classifies  its
trading account assets as short-term investments.

     Average  securities  available  for  sale  in 1997  of  $2.2  billion  were
virtually  unchanged from 1996. Average securities  available for sale increased
$1.4 billion in 1996 reflecting the transfer of securities from held to maturity
and the  addition  of the  securities  available  for sale  attributable  to the
purchased  companies,  partially  offset  by  the  decrease  in  mortgage-backed
securities previously  described.  Average securities held to maturity decreased
$1.9  billion  from  1995 to  1996  due to the  transfer  of  securities  to the
available for sale portfolio.

     Maturities  and yields of securities at year-end 1997 are detailed in Table
3.  Mortgage-backed  securities are classified according to contractual maturity
without consideration of principal amortization or projected prepayments.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
TABLE 2 - COMPOSITION OF SECURITIES AVAILABLE FOR SALE
--------------------------------------------------------------------------------------------------
December 31  ($ in millions)                                   1997         1996        1995
--------------------------------------------------------------------------------------------------
<S>                                                        <C>          <C>          <C>
U.S. Treasuries ......................................     $    330.4   $    391.7   $    377.2
U.S. government agencies:
     Mortgage-backed securities ......................        1,110.3      1,321.4      1,610.2
     Other ...........................................          456.6        347.9        266.2
States and political subdivisions ....................          192.5        139.7         90.9
Other ................................................           57.6         48.5         56.7
Derivative financial instruments .....................            --           1.8          0.1
--------------------------------------------------------------------------------------------------
          Total ......................................     $  2,147.4   $  2,251.0   $  2,401.3
--------------------------------------------------------------------------------------------------
</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, 1997 ($ 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 ..................   $  275.1    7.06%  $  55.3    6.14%  $   --      -- %  $   --      -- %  $  330.4    6.59%
----------------------------------------------------------------------------------------------------------------------------------
U.S. government agencies:
    Mortgage-backed securities (2)       16.1    6.27      54.9    7.00     241.8    7.25     797.5    6.77    1,110.3    7.20
----------------------------------------------------------------------------------------------------------------------------------
    Other ........................      168.9    5.71      73.5    6.53     179.7    6.96      34.5    6.12      456.6    5.04
----------------------------------------------------------------------------------------------------------------------------------
States and political subdivisions         3.7    5.33      32.8    5.15      36.7    5.09     119.3    5.36      192.5    5.19
----------------------------------------------------------------------------------------------------------------------------------
Other ............................       56.6    5.28       1.0    6.85       --      --        --      --        57.6    5.31
----------------------------------------------------------------------------------------------------------------------------------
       Total .....................   $  520.4    6.39%  $ 217.5    6.34%  $ 458.2    6.97%  $ 951.3    6.57%  $2,147.4    6.42%
----------------------------------------------------------------------------------------------------------------------------------
----------------
(1)  Yield computations are based on market values.
(2)  Mortgage-backed securities are classified according to contractual maturity
     without consideration of principal amortization or projected prepayments.
</TABLE>

     At December  31, 1997 the  available  for sale  portfolio  included  $430.8
million of  adjustable-rate  securities,  primarily  mortgage-backed  securities
whose  yields  are tied to a  cost-of-funds  index.  In much the same  manner as
Hibernia's  cost of funds adjusts to new market rates over a period of time, the
rates on these  securities  may not fully  reflect  a change in market  interest
rates for more than a year.

     The average  repricing  period of total securities at December 31, 1997 was
3.9 years,  compared to 2.7 years at December 31,  1996.  The  repricing  period
increased  due to an  increased  level of  investment  in bonds  of  states  and
political subdivisions, which have longer maturities, and 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. 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 a doubt
concerning full collectibility of both principal and interest.

     Nonperforming assets totaled $25.2 million at year-end 1997, a $0.2 million
(1%) increase from the prior year.  Nonperforming  assets totaling $25.0 million
at December  31, 1996 were down $1.9 million  (7%) from  December 31, 1995.  The
composition of nonperforming assets and certain key asset quality ratios for the
past five years are illustrated in Table 4.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
TABLE 4 - NONPERFORMING ASSETS
-----------------------------------------------------------------------------------------------------
December 31 ($ in thousands)                  1997        1996        1995        1994        1993
-----------------------------------------------------------------------------------------------------
<S>                                       <C>         <C>         <C>         <C>         <C>
Nonaccrual loans ......................   $ 20,356    $ 16,080    $ 17,717    $ 22,379    $ 93,097
Restructured loans ....................         --          --          --       6,024       3,348

    Nonperforming loans ...............     20,356      16,080      17,717      28,403      96,445
Foreclosed assets .....................      2,452       5,209       6,155      10,480      19,048
Excess bank-owned property ............      2,360       3,670       2,946          --          --
-----------------------------------------------------------------------------------------------------
    Total nonperforming assets ........   $ 25,168    $ 24,959    $ 26,818    $ 38,883    $115,493
-----------------------------------------------------------------------------------------------------
Accruing loans past due 90 days or more   $  4,839    $  5,538    $  2,926    $  4,409    $  5,032
Reserve for possible loan losses ......   $107,540    $129,039    $151,367    $156,896    $187,368
Nonperforming assets/loans plus
    foreclosed assets and excess
    bank-owned property ...............       0.33%       0.40%       0.56%       0.99%       3.31%
Reserve for possible loan losses/loans        1.42%       2.09%       3.14%       4.02%       5.40%
Reserve for possible loan losses/
    nonperforming loans ...............      528.3%      802.5%      854.4%      552.4%      194.3%
Net loans charged off/average loans ...       0.33%       0.29%       0.16%       0.35%       0.69%
-----------------------------------------------------------------------------------------------------
</TABLE>

     Table 5  details  nonperforming  loan  activity  during  1997 by loan  type
(commercial  real  estate,  other  commercial,  small  business  and  consumer).
Payments and loans returned to performing  status  accounted for a $27.4 million
reduction  in  nonperforming  loans.  Charge-offs  of  nonperforming  loans  and
transfers to  foreclosed  assets  totaled $9.0  million,  while $40.7 million in
loans were transferred to nonperforming status in 1997.

<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, 1996   $  2,310    $  1,841    $  9,390    $  2,539    $ 16,080
Additions ..............................        598      22,992      12,924       4,189      40,703
Charge-offs - gross ....................       (283)     (3,264)     (1,905)       (221)     (5,673)
Transfers to foreclosed assets .........       (700)         --        (374)     (2,240)     (3,314)
Returned to performing status ..........         --        (810)     (1,030)         --      (1,840)
Payments ...............................     (1,726)    (15,676)     (7,833)       (365)    (25,600)
-------------------------------------------------------------------------------------------------------
Nonperforming loans at December 31, 1997   $    199    $  5,083    $ 11,172    $  3,902    $ 20,356
-------------------------------------------------------------------------------------------------------
</TABLE>

     In addition to the  nonperforming  loans discussed  above,  there are $19.4
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 $4.8 million at year-end 1997,
$8.9 million at year-end 1996 and $9.1 million at year-end 1995. Improvements in
commercial  real  estate and  general  economic  conditions,  which  allowed for
favorable dispositions, were the primary factors in the declines.

     As  of  January  1,  1995,  the  Company  adopted  Statement  of  Financial
Accounting  Standards  (SFAS) No. 114,  "Accounting  for  Impairment of a Loan,"
which,  as it relates to  in-substance  foreclosures,  requires  that a creditor
continue to follow loan  classification on the balance sheet unless the creditor
receives physical  possession of the collateral.  At December 31, 1997 and 1996,
the recorded  investment in loans that were considered to be impaired under SFAS
No.  114 was $17.0  million  and  $14.5  million,  respectively,  with a related
reserve for possible loan losses of $2.6 million and $1.5 million, respectively.
These loans are included in nonaccrual loans in Table 4.

     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, 1997 the Company's nonperforming asset ratio was 0.33%,
compared to 0.40% at year-end 1996 and 0.56% at year-end 1995.  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 1997 totaled $22.1
million,  a $6.4 million increase from $15.8 million in 1996. Net charge-offs as
a  percentage  of average  loans were 0.33% in 1997,  0.29% in 1996 and 0.16% in
1995.

     The  level of  accruing,  delinquent  loans  (over 30 days  past  due) as a
percentage  of total  loans was 0.8% at December  31,  1997  compared to 1.2% at
year-end 1996 and 1.1% at year-end 1995. The commercial loan  delinquency  ratio
decreased  in 1997 to 0.2% from 0.8% at the end of 1996.  Delinquencies  in 1996
included one large loan which was  subsequently  collected  without  significant
loss to the Company.  The small business loan delinquency ratio declined in 1997
to 1.0% from 1.3% at the end of 1996,  and the consumer loan  delinquency  ratio
decreased to 1.3% from 1.6%.


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 loss experience
and trends in delinquencies and nonaccrual loans. The unallocated reserve serves
to compensate generally for the uncertainty in estimating loan losses, including
the  possibility  of changes in risk  ratings of loans and in  specific  reserve
allocations.

<TABLE>
<CAPTION>
-----------------------------------------------------------------
TABLE 6 - LOAN LOSS RESERVE ACTIVITY
-----------------------------------------------------------------
Year Ended December 31
($ in thousands)              1997         1996         1995
-----------------------------------------------------------------
<S>                      <C>          <C>          <C>
Balance at beginning
  of year ............   $ 129,039    $ 151,367    $ 156,896
  Loans charged off ..     (43,942)     (35,147)     (25,416)
  Recoveries .........      21,823       19,380       18,669
-----------------------------------------------------------------
Net loans
  charged off ........     (22,119)     (15,767)      (6,747)
-----------------------------------------------------------------
Provision for possible
  loan losses ........         620      (12,417)       1,218
Addition due to
  purchased
  companies ..........          --        5,856           --
-----------------------------------------------------------------
Balance at end
  of year ............   $ 107,540    $ 129,039    $ 151,367
-----------------------------------------------------------------
</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 the low level of nonperforming  loans and strong reserve coverage of
nonperforming loans,  Hibernia recorded no provision in 1997. However, a nominal
provision  for  possible  loan  losses  was  recorded  by  certain of the pooled
companies, compared to a $12.4 million negative provision recorded in 1996 and a
$1.2 million provision recorded by certain of the pooled companies in 1995.

     The  year-end  1997 reserve of $107.5  million  provided  528%  coverage of
nonperforming  loans  compared to $129.0  million with 802% coverage at year-end
1996 and $151.4  million with 854% coverage at year-end 1995. As a percentage of
total loans,  the reserve for possible loan losses amounted to 1.42% at December
31, 1997  compared to 2.09% and 3.14% at year-end  1996 and 1995,  respectively.
Even though the reserve for possible loan losses has declined over the last five
years in total and as a percentage  of loans,  the present  level is  considered
adequate to absorb future potential loan losses.

     During 1998 the Company expects to begin recording a provision for possible
loan losses to maintain an adequate reserve level.  Factors such as loan growth,
the future  collectibility  of 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, 1997 reserve for possible loan losses is
presented in Table 7.

<TABLE>
<CAPTION>
-----------------------------------------------------------------
TABLE 7 - ALLOCATION OF RESERVE
FOR POSSIBLE LOAN LOSSES
-----------------------------------------------------------------
                                   Reserve for            % of
December 31, 1997                     Possible           Total
($ in millions)                    Loan Losses         Reserve
-----------------------------------------------------------------
<S>                                   <C>                 <C>
Commercial real estate loans          $    2.9            2.7%
Other commercial loans .....              18.9           17.6
Small business loans .......              10.1            9.4
Consumer loans .............              52.2           48.5
Unallocated reserve ........              23.4           21.8
-----------------------------------------------------------------
    Total ..................          $  107.5          100.0%
-----------------------------------------------------------------
</TABLE>

Funding Sources

Deposits

     Deposits  are the  Company's  primary  source of  funding  for its  earning
assets.  Hibernia  offers a variety of  products  designed to attract and retain
customers,  with the primary  focus on core  deposits.  Summaries of  Hibernia's
average deposit rates and deposit composition are presented in Table 8 and Table
9, respectively.

<TABLE>
<CAPTION>
--------------------------------------------------------------
TABLE 8 - AVERAGE DEPOSIT RATES
-----------------------------------------------------------------
                                    1997       1996       1995
-----------------------------------------------------------------
<S>                                <C>        <C>        <C>
NOW accounts .............         3.05%      2.80%      2.21%
Money market
  deposit accounts .......         2.51       2.37       2.65
Savings accounts .........         2.98       2.12       2.20
Other consumer
  time deposits ..........         5.24       5.51       5.63
Public fund certificates
  of deposit of
  $100,000 or more .......         5.51       5.40       5.90
Certificates of deposit
  of $100,000 or more ....         5.19       5.14       4.89
Foreign time deposits ....         5.30       5.41       5.76
-----------------------------------------------------------------
    Total interest-bearing
      deposits ...........         4.28%      4.27%      4.32%
-----------------------------------------------------------------
</TABLE>

     Average  deposits  totaled  $8.1  billion  in 1997,  a $1.0  billion  (15%)
increase from 1996. Approximately half of this increase was due to the effect of
the purchased  companies,  with the remainder resulting from Hibernia's emphasis
on attracting new deposits and expanding current banking  relationships  through
outstanding  service  and the  success of new  products  such as the Tower Super
SavingsSM  account  (which  offers  liquidity  and a rate  indexed to the 90-day
Treasury bill auction discount rate) and the 7-day certificate of deposit.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
TABLE 9  -  DEPOSIT COMPOSITION
------------------------------------------------------------------------------------------------------------
                                              1997                    1996                    1995
------------------------------------------------------------------------------------------------------------
                                       Average       % of      Average       % of      Average       % of
($ in millions)                       Balances   Deposits     Balances   Deposits     Balances   Deposits
------------------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>     <C>             <C>     <C>             <C>
Demand, noninterest-bearing ...     $  1,449.7      17.8%   $  1,273.7      18.0%   $  1,174.4      18.0%
NOW accounts ..................          356.9       4.4         339.0       4.8         663.4      10.1
Money market deposit accounts .        1,583.5      19.4       1,484.2      20.9       1,156.2      17.7
Savings accounts ..............          681.3       8.4         410.9       5.8         389.6       6.0
Other consumer time deposits ..        2,601.1      32.0       2,374.6      33.5       2,174.4      33.3
------------------------------------------------------------------------------------------------------------
        Total core deposits ...        6,672.5      82.0       5,882.4      83.0       5,558.0      85.1
------------------------------------------------------------------------------------------------------------
Public fund certificates of
    deposit of $100,000 or more          957.2      11.8         870.7      12.3         717.9      11.0
Certificates of deposit of
    $100,000 or more ..........          410.6       5.0         294.6       4.1         217.9       3.4
Foreign time deposits .........           98.2       1.2          41.8       0.6          35.1       0.5
------------------------------------------------------------------------------------------------------------
        Total deposits ........     $  8,138.5     100.0%   $  7,089.5     100.0%   $  6,528.9     100.0%
------------------------------------------------------------------------------------------------------------
</TABLE>

     Average core  deposits  were up $790.1  million to $6.7 billion or 82.0% of
total deposits.  Approximately 60% of the growth in core deposits was due to the
effect of the purchased  companies.  All core deposit types showed strong growth
during 1997 with demand deposit  accounts up $176.0 million (14%),  NOW accounts
up $17.9  million  (5%),  money market  deposit  accounts up $99.3 million (7%),
savings  accounts up $270.4  million  (66%) and other  consumer time deposits up
$226.5 million (10%). The significant  growth in savings accounts was the result
of the successful introduction of the Tower Super SavingsSM account in the first
quarter of 1997.

     In addition,  average noncore  deposits  increased $258.9 million (21%), of
which approximately 26% was due to the effect of the purchased companies. Public
fund  certificates of deposit of $100,000 or more increased $86.5 million (10%),
other large-denomination  certificates of deposit increased $116.0 million (39%)
and foreign deposits increased $56.4 million (135%). The increase in public fund
deposits was due, in part, to greater access in new markets (through mergers) to
public agency funds, as well as increases in funds from existing  relationships.
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.

     At December 31, 1997 total  deposits were $8.6 billion,  up $580.6  million
(7%) from  December 31, 1996.  This increase in deposits was not impacted by the
effect of the  purchased  companies  because  the  purchase  trans-actions  were
completed prior to December 31, 1996.

     Average  deposits for 1996 increased  $560.6 million compared to 1995, with
approximately half of the increase due to the effect of the purchased companies.
NOW account average balances for 1996 were down $324.4 million compared to 1995,
and money market  average  deposits  were up $328.0  million in 1996 compared to
1995. 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  account.  As needed,  funds are moved from the money  market  account to
cover items  presented for payment to the customer's NOW account up to a maximum
of six transfers per  statement  cycle.  The effect of the Reserve Money Manager
account on average  balances  was $533.5  million in 1996 and $103.5  million in
1995 (reducing NOW account average  balances and increasing money market deposit
account average balances).

     Net of this effect,  NOW account  average  balances were up $105.6  million
(14%) in 1996  compared  to 1995,  and  money  market  deposit  account  average
balances were down $102.0 million (10%).  Approximately  half of the increase in
average NOW accounts  was due to the effect of the  purchased  companies.  Other
consumer time deposits  increased $200.2 million (9%), with less than a third of
the increase resulting from the effect of the purchased  companies.  New deposit
products  successfully  introduced  during  1996,  such as the 7-day CD, with an
attractive  rate and  short  maturity,  and the  Celebration  CD were the  major
factors in the increase in other consumer time 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  $328.8  million (93%) to $681.3  million in 1997
compared to 1996.

     Average  federal  funds  purchased  were $246.7  million  during  1997,  an
increase of $197.2 million from 1996. Fluctuations in short-term borrowings stem
from differences in the timing of the expansion of lending opportunities and the
growth  of  other   funding   sources   (deposits  and  proceeds  from  maturing
securities).  Average  repurchase  agreements  increased  $69.3  million in 1997
compared to 1996.  This increase  resulted  primarily  from treasury  management
products which "sweep" funds from commercial customers' deposit accounts.

     The Company's debt at December 31, 1997,  which totaled $506.5 million,  is
comprised  primarily of advances from the Federal Home Loan Bank of Dallas.  The
average rate on debt during 1997 was 5.94%  compared to 6.06% during 1996.  Debt
increased $449.4 million from December 31, 1996 as Hibernia locked in attractive
fixed rates to fund its growing loan portfolio. At December 31, 1997 the Company
is  committed to borrow an  additional  $200 million over the next two months in
anticipation  of  continuing  loan  growth.  When  borrowed,  the  rate  on this
additional  three-year  debt  will  range  from  6.19% to 6.21%.  The  Company's
reliance on borrowings, while higher than a year ago, is still 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 prepayment speeds 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 change 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, 1997, the Company would expect an increase in net income of $14.8 million in
the event of an  immediate  200-basis-point  increase  in  interest  rates and a
decrease  in  net  income  of  $20.0  million  in  the  event  of  an  immediate
200-basis-point decrease in interest rates. In addition, the Company projects an
increase  in net income of $11.4  million  and a decrease in net income of $15.3
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,  1997.  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, 1997                           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 .........................  $ 2,945,357   $ 131,052    $ 129,478    $  896,338    $ 2,765,228   $   712,798    $ 7,580,251
    Securities available for sale .    2,147,405          --           --            --             --            --      2,147,405
    Other earning assets ..........      393,915          --           --            --             --            --        393,915
------------------------------------------------------------------------------------------------------------------------------------
        Total earning assets ......    5,486,677     131,052      129,478       896,338      2,765,228       712,798     10,121,571
------------------------------------------------------------------------------------------------------------------------------------
Funding sources:
    NOW accounts ..................      413,953          --           --            --             --            --        413,953
    Money market deposit accounts .    1,621,628          --           --            --             --            --      1,621,628
    Savings accounts ..............      778,149          --           --            --             --            --        778,149
    Other interest-bearing deposits    1,639,363     303,450      269,490     1,203,750        623,153       159,680      4,198,886
    Short-term borrowings .........      700,247          --           --            --             --            --        700,247
    Debt ..........................           73          73           73       300,642        203,448         2,239        506,548
    Noninterest-bearing sources ...           --          --           --            --             --     1,902,160      1,902,160
------------------------------------------------------------------------------------------------------------------------------------
        Total funding sources .....    5,153,413     303,523      269,563     1,504,392        826,601     2,064,079     10,121,571
------------------------------------------------------------------------------------------------------------------------------------
Repricing/maturity gap:
    Period ........................  $   333,264   $(172,471)   $(140,085)   $ (608,054)   $ 1,938,627   $(1,351,281)
    Cumulative ....................  $   333,264   $ 160,793    $  20,708    $ (587,346)   $ 1,351,281   $        --
------------------------------------------------------------------------------------------------------------------------------------
Gap/total earning assets:
    Period ........................         3.3%      (1.7)%       (1.4)%        (6.0)%          19.2%       (13.4)%
    Cumulative ....................         3.3%       1.6 %        0.2 %        (5.8)%          13.4%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Although the Gap analysis indicates that 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  34%  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, 1997 these deposits totaled $663.1 million,  of which  approximately  $166.9
million had been repriced. Of the remaining $496.2 million, approximately $470.9
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 individual 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  $100.0 million at the end of 1997.
There were no deposit-related interest rate swaps at the end of 1996.

     Derivative  financial  instruments,  including  interest rate swaps,  caps,
floors and options,  were  entered into by one of the pooled  companies to hedge
against  exposure  to  changes  in  interest  rates on the  market  value of the
securities  available  for sale  portfolio.  At December  31, 1996 the  notional
amount of these  derivatives  was $176.0  million  compared to $478.5 million at
December 31, 1995. The fair value of these  derivatives of $1.8 million and $0.1
million  at  December  31,  1996 and 1995,  respectively,  was  included  in the
securities available for sale portfolio.  These derivative financial instruments
were liquidated  during the first quarter of 1997 with no material impact on the
financial condition or operating results of the Company.

     Derivative financial instruments are also held or issued by the Company for
trading purposes to provide  Hibernia  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 $224.3  million at year-end 1997,  $209.9
million at year-end 1996 and $318.9 million at year-end 1995.  Hibernia's credit
exposure to  derivative  financial  instruments  held for trading  totaled  $0.9
million at December 31, 1997, $0.9 million at December 31, 1996 and $0.1 million
at December 31, 1995.

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 19.88% in 1997,  compared to 21.02% in 1996
and 21.00% in 1995.  Table 11 details the components of the net interest  margin
for the past five years.

     The net  interest  margin  of 4.75% in 1997  compares  to 4.89% in 1996 and
4.69% in 1995. The decline in the net interest  margin in 1997 was the result of
a decline  in loan  yields to 8.87%  from  9.09% in 1996,  a shift in the mix of
funding  sources  toward  market  rate  funds  and the  decline  in the level of
noninterest-bearing  funds supporting  earning assets.  The change in the mix of
funding  sources and the decline in the level of  noninterest-bearing  funds are
evidenced  by the  increase in the cost of funds  supporting  earning  assets to
3.50% in 1997 from 3.40% in 1996.  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 1997 loans amounted to
73.4% of average earning assets compared to 69.2% in 1996.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
TABLE 11 - NET INTEREST MARGIN (taxable-equivalent)
----------------------------------------------------------------------------------------------------------------
                                                            1997       1996       1995       1994       1993
----------------------------------------------------------------------------------------------------------------
<S>                                                         <C>        <C>        <C>        <C>        <C>
Yield on earning assets ...........................         8.25%      8.29%      8.15%      7.25%      7.21%
Rate on interest-bearing liabilities ..............         4.37       4.31       4.38       3.37       3.15
----------------------------------------------------------------------------------------------------------------
    Net interest spread ...........................         3.88       3.98       3.77       3.88       4.06
Contribution of noninterest-bearing funds .........         0.87       0.91       0.92       0.71       0.63
----------------------------------------------------------------------------------------------------------------
    Net interest margin ...........................         4.75%      4.89%      4.69%      4.59%      4.69%
----------------------------------------------------------------------------------------------------------------
Noninterest-bearing funds supporting earning assets        19.88%     21.02%     21.00%     21.06%     20.11%
----------------------------------------------------------------------------------------------------------------
</TABLE>

     The  20-basis-point  increase in the margin from 1995 to 1996 was primarily
the result of a change in the mix of earning assets, as loans comprised 69.2% of
all earning  assets in 1996 compared to 60.8% in 1995,  and a  seven-basis-point
decline in total funding costs, as deposit costs decreased five basis points and
the cost of other interest-bearing liabilities decreased 53 basis points.


Results of Operations

     The Company earned $137.4  million,  or $1.00 per common share, in 1997. In
1996 net income was $112.8 million, or $.85 per common share. Fully tax-effected
net income in 1995 was $93.3 million,  or $.72 per common share.  Net income per
common share - assuming  dilution  was $.98,  $.84 and $.71  (tax-effected)  for
1997, 1996 and 1995, respectively.

     Operating  results  improved in 1997 because of a $54.9 million increase in
taxable-equivalent  net interest income resulting from a higher level of earning
assets, a $24.9 million  increase in noninterest  income  (excluding  securities
transactions)  and $2.7  million in  securities  gains in 1997  compared to $5.3
million in securities  losses in 1996.  These  favorable  effects were partially
offset by a $0.6 million  provision for possible loan losses taken by certain of
the pooled companies in 1997 compared to a $12.4 million  negative  provision in
1996, and a $35.0 million increase in noninterest  expense. In addition,  income
tax expense increased $12.4 million in 1997 compared to 1996.

     The  improvement  in 1996 from 1995 was due to a $46.8 million  increase in
taxable-equivalent   net  interest  income,  a  $12.1  million   improvement  in
noninterest  income  (excluding  securities  transactions)  and a $12.4  million
negative  provision  for possible loan losses in 1996 compared to a $1.2 million
provision in 1995.  Partially  offsetting these favorable effects,  1996 results
included $5.3 million in securities  losses, an increase in noninterest  expense
of $37.4 million and a $48.7 million  higher income tax expense due primarily to
1995  benefiting from a  lower-than-normal  effective tax rate due to previously
unrecognized deferred tax benefits.


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
TABLE 12  -  INTEREST-EARNING ASSET COMPOSITION
--------------------------------------------------------------------------------------------
(Percentage of average balances)        1997       1996       1995       1994       1993
--------------------------------------------------------------------------------------------
<S>                                     <C>        <C>        <C>        <C>        <C>
Loans ..........................        73.4%      69.2%      60.8%      53.1%      50.8%
Securities available for sale ..        23.9       28.1       11.3       14.3       14.3
Securities held to maturity ....          --         --       26.0       29.6       29.2
--------------------------------------------------------------------------------------------
   Total securities ............        23.9       28.1       37.3       43.9       43.5
--------------------------------------------------------------------------------------------
Short-term investments .........         2.7        2.7        1.9        3.0        5.7
--------------------------------------------------------------------------------------------
   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 $54.9 million,
or  14.4%,   to  $436.9   million   in  1997  from   $382.0   million  in  1996.
Taxable-equivalent   net   interest   income   in  1995  was   $335.2   million.
Taxable-equivalent  net interest income  increased in 1997 over 1996 and in 1996
over 1995  primarily  as the  result of the  change in the mix and the growth of
earning assets.

     As   indicated   in   Table   13,   the   change   in   volumes   increased
taxable-equivalent  net  interest  income in 1997 by $67.9  million  compared to
1996. A $119.4 million increase in taxable-equivalent interest income due to the
growth in loans was  partially  offset by a $54.0  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 $13.1
million.  Taxable-equivalent interest income on loans declined $12.6 million due
to changes in rates caused by the competitive lending environment,  and interest
expense  increased  $2.5  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)
--------------------------------------------------------------------------------------------------------------------
                                                1997 Compared to 1996                 1996 Compared to 1995
--------------------------------------------------------------------------------------------------------------------
                                                        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:
    Loans ............................   $ 119,438   $ (12,587)   $ 106,851   $  96,843    $  (7,456)   $  89,387
    Securities available for sale ....          49       1,624        1,673      91,559           33       91,592
    Securities held to maturity ......           -           -            -    (118,561)           -     (118,561)
    Short-term investments ...........       2,441         410        2,851       3,968         (752)       3,216
--------------------------------------------------------------------------------------------------------------------
        Total ........................     121,928     (10,553)     111,375      73,809       (8,175)      65,634
--------------------------------------------------------------------------------------------------------------------
Interest paid on:
    NOW accounts .....................         519         875        1,394      (8,401)       3,264       (5,137)
    Money market deposit accounts ....       2,426       2,071        4,497       8,018       (3,435)       4,583
    Savings accounts .................       7,177       4,398       11,575         457         (295)         162
    Other consumer time deposits .....      12,069      (6,589)       5,480      11,076       (2,839)       8,237
    Public fund certificates of
        deposit of $100,000 or more ..       4,749         959        5,708       8,467       (3,799)       4,668
    Certificates of deposit
        of $100,000 or more ..........       6,016         132        6,148       3,918          570        4,488
    Foreign deposits .................       2,989         (46)       2,943         370         (127)         243
    Federal funds purchased ..........      10,988         237       11,225        (290)        (319)        (609)
    Repurchase agreements ............       3,366         523        3,889       3,179       (1,092)       2,087
    Long-term debt ...................       3,698         (39)       3,659         180          (81)          99
--------------------------------------------------------------------------------------------------------------------
        Total ........................      53,997       2,521       56,518      26,974       (8,153)      18,821
--------------------------------------------------------------------------------------------------------------------
Taxable-equivalent
    net interest income ..............   $  67,931   $ (13,074)   $  54,857   $  46,835    $     (22)   $  46,813
--------------------------------------------------------------------------------------------------------------------
----------
(1)  Change due to mix (both rate and volume) has been  allocated  to volume and
     rate changes in  proportion  to the  relationship  of the  absolute  dollar
     amounts to the changes in each.
 </TABLE>

     In addition,  net interest  income for 1997 was negatively  impacted by the
funding  cost of a  transaction  designed  to utilize an expiring  capital  loss
carryforward.  The $2.2 million in income  associated  with this  transaction is
recorded as a securities gain in noninterest  income rather than in net interest
income.

     For  1996   compared  to  1995,   the  change  in  net  volumes   increased
taxable-equivalent  net  interest  income by $46.8  million.  This  increase was
primarily   the   result  of   growth  in  loans   adding   $96.8   million   to
taxable-equivalent  interest income, partially offset by a decline in securities
reducing taxable-equivalent interest income by $27.0 million, and an increase in
interest-bearing  funds increasing interest expense by $27.0 million.  There was
virtually no change in  taxable-equivalent  net interest income  attributable to
interest rates as the decrease in yields on earning assets (primarily loans) was
offset by lower rates paid on interest-bearing liabilities.



Noninterest Income

     Noninterest  income  totaled  $145.4  million  in 1997  compared  to $112.5
million in 1996 and $105.9 million in 1995. Excluding  securities  transactions,
noninterest income was up $24.9 million (21%) in 1997 compared to 1996.

     Nonrecurring  items in both 1997 and 1996 impact  comparisons  from year to
year. 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.  In 1996,  nonrecurring  items 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.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TABLE 14 - NONINTEREST INCOME
--------------------------------------------------------------------------------------------------------------------
                                                                                      Percent Increase (Decrease)
--------------------------------------------------------------------------------------------------------------------
                                                                                             1997        1996
($ in thousands)                                   1997          1996           1995    over 1996   over 1995
--------------------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>            <C>              <C>         <C>
Service charges on deposits .............     $  71,798     $  59,488      $  50,074        20.7%       18.8%
Trust fees ..............................        14,757        13,404         12,506        10.1         7.2
Other service, collection and
    exchange charges:
    Mortgage loan servicing fees ........         8,540         7,969          8,127         7.2        (1.9)
    Retail investment service fees ......        12,070         8,659          6,197        39.4        39.7
    ATM fees ............................         8,670         6,952          5,535        24.7        25.6
    Other ...............................        13,728        11,067          8,998        24.0        23.0
--------------------------------------------------------------------------------------------------------------------
          Total other service, collection
              and exchange charges ......        43,008        34,647         28,857        24.1        20.1
--------------------------------------------------------------------------------------------------------------------
Other income:
    Gain on divestiture of
        banking offices .................            --            --          2,361          --      (100.0)
    Gain on sales of business lines .....            --           517          3,402      (100.0)      (84.8)
    Other income ........................        13,150         9,794          8,503        34.3        15.2
--------------------------------------------------------------------------------------------------------------------
          Total other income ............        13,150        10,311         14,266        27.5       (27.7)
--------------------------------------------------------------------------------------------------------------------
Securities gains (losses), net ..........         2,718        (5,306)           227         N/M         N/M
--------------------------------------------------------------------------------------------------------------------
          Total noninterest income ......     $ 145,431     $ 112,544      $ 105,930        29.2%        6.2%
--------------------------------------------------------------------------------------------------------------------
--------------
N/M = Not meaningful
</TABLE>

     Net of the  nonrecurring  items and  securities  transactions,  noninterest
income  was up $24.4  million  (21%),  with  approximately  25% of the  increase
resulting from income related to the purchased  companies.  The major categories
contributing  to the increase in  noninterest  income were  services  charges on
deposits,  up $12.3 million;  retail  investment  service fees, up $3.4 million;
debit/credit card fees, up $2.1 million; ATM fees, up $1.7 million;  trust fees,
up $1.4 million; and gains on the sale of mortgage loans, up $1.3 million.

     Service charges on deposits  increased $12.3 million (21%) to $71.8 million
in 1997 compared to 1996. The purchased  companies  accounted for  approximately
40% of this  increase.  The  remainder of the growth was primarily the result of
increases in fee-generating deposit balances.

     Trust fees were $14.8 million in 1997,  up $1.4 million  (10%)  compared to
1996; and retail  investment  service fees were $12.1  million,  up $3.4 million
(39%) due to the expanded  availability  of investment  and  brokerage  services
throughout the Hibernia banking office network.  Approximately 30% of the growth
in trust fees was due to the effect of the  purchased  companies.  The purchased
companies had virtually no retail investment service operations.

     ATM fees  increased  $1.7 million (25%) to $8.7 million in 1997 compared to
1996 due to the  continued  growth of the ATM network and  expansion of services
offered by Hibernia through ATMs. Hibernia's  CheckMateSM debit card and Capital
Access(C)  credit card were introduced in 1996 and  contributed  $4.6 million of
income in 1997, an increase of $2.1 million (87%) compared to 1996.

     Gains on sales of mortgage  loans were up $1.3 million in 1997  compared to
1996 due to the significant  increase in volume in mortgage loans originated and
sold.

     In 1997 Hibernia recorded $2.7 million in securities gains compared to $5.3
million  in  securities  losses  in 1996.  The  gains  recognized  in 1997  were
primarily the result of the  completion of a transaction  designed to utilize an
expiring  capital loss  carryforward.  The losses in 1996 were the result of the
restructuring of the securities  available for sale portfolio which was designed
to enhance future earnings and improve the net interest margin.

     Excluding  securities  transactions and  nonrecurring  items in both years,
noninterest  income in 1996 increased  $16.6 million (17%) compared to 1995. The
nonrecurring  items  in  1995  included  a  $2.4  million  gain  related  to the
divestiture of three banking  offices in Northwest  Louisiana in connection with
Hibernia's  merger with Pioneer  Bancshares  Corporation,  a $0.6 million fee to
amend the terms of a large  commercial  credit  and gains  from the sales of the
Company's  student loan  portfolio and municipal  bond  administration  business
totaling  $1.8  million and $1.6  million,  respectively.  The  increase in 1996
noninterest  income was  primarily  the  result of growth in service  charges on
deposits, retail investment service fees and ATM fees.


Noninterest Expense

     Noninterest  expense  totaled  $361.9  million in 1997  compared  to $326.9
million in 1996 and $289.5  million in 1995.  Excluding  certain  merger-related
expenses for both years and nonrecurring items in 1996,  noninterest  expense in
1997 would have been $358.6  million,  a $43.3 million (14%) increase over 1996.
Merger-related  expenses  were $3.3  million and $4.3  million in 1997 and 1996,
respectively.  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.  Approximately  45% of the
$43.3  million  increase  in  noninterest  expense  in 1997 was due to  expenses
related to the purchased  companies.  The major  categories  contributing to the
increase in noninterest income were staff costs, up $16.3 million;  amortization
of intangibles,  up $6.3 million;  advertising and promotional expenses, up $3.3
million; and data processing, up $2.2 million.

     Staff costs,  which  represent  approximately  50% of noninterest  expense,
increased $16.3 million (10%) in 1997 compared to 1996. However, after adjusting
for the  effect of the  purchased  companies,  merger-related  expenses  and the
addition  to the  reserve  for health care  benefits  during  1996,  staff costs
increased $11.6 million (7%).  Higher accruals for performance  based incentives
and bonuses and normal merit increases were other major factors  contributing to
the increase in staff costs.

     Occupancy and  equipment  expense  increased  $1.9 million (3%) in 1997, or
$2.6 million (5%)  excluding  the effect of the  purchased  companies,  the $4.0
million asset write-down and merger-related  expenses. The increase in occupancy
and equipment is primarily due to depreciation and maintenance  expenses related
to the  Company's  investment  in new  technology  designed to improve  customer
service and enhance employee efficiency.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
TABLE 15 - NONINTEREST EXPENSE
-----------------------------------------------------------------------------------------------------------
                                                                                 Percent Increase (Decrease)
-----------------------------------------------------------------------------------------------------------
                                                                                         1997       1996
($ in thousands)                             1997          1996            1995     over 1996  over 1995
-----------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>               <C>         <C>
Salaries ...........................    $ 153,017      $ 136,498      $ 118,286         12.1%       15.4%
Benefits ...........................       28,080         28,276         21,179         (0.7)       33.5
-----------------------------------------------------------------------------------------------------------
    Total staff costs ..............      181,097        164,774        139,465          9.9        18.1
-----------------------------------------------------------------------------------------------------------
Occupancy, net .....................       30,823         27,531         26,955         12.0         2.1
Equipment ..........................       27,815         29,178         22,058         (4.7)       32.3
-----------------------------------------------------------------------------------------------------------
    Total occupancy and equipment ..       58,638         56,709         49,013          3.4        15.7
-----------------------------------------------------------------------------------------------------------
Data processing ....................       22,952         20,711         19,731         10.8         5.0
Telecommunications .................       10,593          8,975          7,123         18.0        26.0
Advertising and promotional expenses       13,144          9,815          7,506         33.9        30.8
Postage ............................        7,576          6,378          5,433         18.8        17.4
Stationery and supplies ............        7,333          6,827          6,554          7.4         4.2
Professional fees ..................        5,852          7,636          7,876        (23.4)       (3.0)
State taxes on equity ..............        6,100          6,000          4,491          1.7        33.6
Regulatory expense .................        2,455          1,323          8,762         85.6       (84.9)
Loan collection expense ............        4,037          2,494          2,149         61.9        16.1
Foreclosed property expense, net ...       (3,219)        (1,735)          (693)        85.5       150.4
Amortization of intangibles ........       13,747          7,441          3,709         84.7       100.6
Other ..............................       31,639         29,572         28,363          7.0         4.3
-----------------------------------------------------------------------------------------------------------
    Total noninterest expense ......    $ 361,944      $ 326,920      $ 289,482         10.7%       12.9%
-----------------------------------------------------------------------------------------------------------
Efficiency ratio (1) ...............       62.45%         65.40%         65.66%
-----------------------------------------------------------------------------------------------------------
Tangible efficiency ratio (2) ......       60.31%         64.07%         64.95%
-----------------------------------------------------------------------------------------------------------
-------------
(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>

     Data  processing  expenses  increased  $2.2 million  (11%) in 1997, or $1.4
million (7%) excluding the effect of the purchased  companies and merger-related
expenses. The increase in data processing expenses is primarily due to continued
improvements in technology and increased transaction volume related to growth in
the Company's customer base.  Telecommunications expenses increased $1.6 million
(18%)  in  1997   compared  to  1996  as  Hibernia   continued  to  enhance  its
communication  capability to better serve customers.  Data line expenses related
to  the   Company's   growing   banking   office  and  ATM  networks   increased
telecommunications expenses.

     Advertising and promotional  expenses totaled $13.1 million in 1997, a $3.3
million (34%) increase compared to 1996.  Excluding the effects of the purchased
companies and  merger-related  expenses,  advertising and  promotional  expenses
increased  $2.6  million  (27%).  This  increase  is  primarily  related  to the
introduction  of new products,  such as the Tower Super SavingsSM  account,  the
Capital Access(C) credit card and the Hibernia Equity PrimeLine(R) loan.

     Professional fees in 1997 decreased $1.8 million (23%) compared to 1996, or
$1.1  million  (18%)  excluding  the  effect  of  the  purchased  companies  and
merger-related  expenses.  Regulatory  expenses  increased $1.1 million (86%) in
1997  compared to 1996.  The higher  regulatory  expenses are the result of $1.0
million in  assessments  to fund interest on bonds of the Financing  Corporation
(FICO bonds).

     Amortization of intangibles,  a noncash expense, was $13.7 million in 1997,
an increase of $6.3 million (85%) compared to 1996.  This increase is due to the
goodwill and core deposit  intangibles  created by the 1996  acquisition  of the
purchased  companies.  These two mergers  resulted in goodwill of $120.1 million
and core deposit intangibles of $18.5 million. The goodwill will be amortized on
a straight-line  basis over 25 years, while the core deposit intangibles will be
amortized on an  accelerated  basis over 10 years.  Excluding  the effect of the
increased amortization associated with these purchase transactions, amortization
of intangibles increased $0.2 million in 1997.

     Loan collection  expense in 1997 totaled $4.0 million, a $1.5 million (62%)
increase  compared to 1996. This increase  reflects growth in the loan portfolio
and continued  efforts to collect  problem loans.  Foreclosed  property  expense
decreased $1.5 million in 1997 compared to 1996,  primarily as a result of gains
recorded n the sale of several significant properties in 1997.

     Noninterest  expense in 1997 included  charges  incurred in connection with
the Company's  efforts to ensure that its systems are year 2000  compliant.  The
Company expects to continue incurring charges related to this project;  however,
these  costs  have not been  material  to date  and are not  expected  to have a
material  impact on the  Company's  earnings in the future.  The majority of the
costs associated with these efforts is the responsibility of the Company's third
party  data  processor  which  also  provides  many  of the  Company's  software
applications.  In  addition,  a  portion  of the  Company's  costs is  likely to
constitute a reassignment of existing internal resources and, therefore,  is not
expected to be incremental.

     A team comprised of Hibernia employees and representatives of the Company's
third  party data  processor  was formed in early 1997 to address  all year 2000
issues.  The team's plan is to achieve year 2000  compliance  for all  mainframe
application systems, local area network application systems and departmental and
vendor  application  systems by the end of 1998.  In  addition,  the  Company is
discussing  year 2000 issues and their potential  impact on business  operations
with many of its customers and suppliers.

     Noninterest expense increased $37.4 million (13%) in 1996 compared to 1995.
Excluding the effect of the purchased companies, merger-related expenses of $4.3
million in 1996 and $7.0 million in 1995, and  nonrecurring  items totaling $7.3
million  in 1996  previously  discussed,  noninterest  expense  increased  $32.8
million  (12%) in 1996.  Other  significant  increases  in  noninterest  expense
included  staff  costs,  up $20.4  million;  occupancy  and  equipment,  up $1.9
million;  and  advertising  and  promotional  expenses,  up $2.8 million.  These
increases  were  partially  offset by a decrease in  regulatory  expense of $7.4
million   resulting   from  the  virtual   elimination   of  FDIC  premiums  for
well-capitalized banks in 1996.

     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 62.45% in 1997 compares  favorably to 65.40% in 1996 and 65.66% in 1995.  The
tangible efficiency ratio, which excludes the impact of amortization of goodwill
and core  deposit  intangibles,  was 60.31% in 1997,  down 376 basis points from
64.07% in 1996 and down 464 basis points from 64.95% in 1995.


Income Taxes

     The Company  recorded a $73.2  million  provision  for income taxes in 1997
compared  to $60.9  million in 1996 and $12.1  million in 1995.  During 1995 the
Company recorded federal income taxes at a lower-than-normal  effective tax rate
due to previously unrecognized deferred tax benefits.

     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.

     Net future deductible temporary differences at December 31, 1997 were $87.4
million.  The reserve for possible loan losses  represents $107.5 million of the
future deductible temporary differences. The provisions for possible loan losses
which  contributed to the reserve have been  recognized as expense for financial
reporting  purposes but are 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 $30.6  million.  These  benefits  are  recorded  as a  deferred  tax asset at
December 31, 1997.


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% in 1997,  34% in 1996
and 25 % (35% on a  tax-effected  basis) in 1995, as the Company seeks a balance
between shareholder return and earnings retention requirements.

     Shareholders'  equity totaled  $1,050.3 million at the end of 1997 compared
to $951.9  million at the end of 1996 and $779.9 million at the end of 1995. The
$98.4 million (10%) increase in 1997 was primarily due to current-year  earnings
totaling  $137.4  million and a $4.2  million  increase in  unrealized  gains on
securities available for sale, partially offset by $42.7 million in dividends on
common  stock,  $6.9 million in dividends on preferred  stock and a $4.1 million
increase  in  unearned  compensation  related to the  Company's  employee  stock
ownership  plan.  The  $172.0  million  (22%)  increase  in 1996  reflected  the
Company's  $112.8  million  in  earnings  and the  issuance  of $100  million of
preferred stock on September 30, 1996.  These increases were partially offset by
common  dividends  totaling $37.3  million,  preferred  dividends  totaling $1.7
million  and an $8.3  million  decrease  due to the change in  unrealized  gains
(losses) on securities available for sale.

     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  a weight to measure  their  level of risk.  The total  risk-based
capital  ratio for the Company was 12.02% at year-end 1997 compared to 13.29% at
year-end 1996.  Leverage  ratios were 8.54% and 8.68% at year-end 1997 and 1996,
respectively.

     The two mergers  completed  during 1996 that were accounted for as purchase
transactions  enabled  Hibernia to leverage its capital,  acquiring  assets (and
earnings  capacity)  without  increasing  equity.  As  a  result,  leverage  and
risk-based capital ratios declined in 1996 but still significantly  exceeded the
standards  required for  designation of an  institution  as well  capitalized by
regulators. Table 16 shows the calculation of capital ratios for the Company for
the past five years.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
TABLE 16 - CAPITAL
--------------------------------------------------------------------------------------------------------------
($ in millions)                             1997           1996           1995           1994           1993
--------------------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>            <C>            <C>            <C>
Risk-based capital:
    Tier 1 ....................     $      895.4    $     789.2    $     744.0    $     652.0    $     546.0
    Total .....................            999.4          871.8          808.7          705.9          593.8

Assets:
    Quarterly average assets(1)         10,487.2        9,096.1        7,714.4        7,350.6        7,067.1
    Net risk-adjusted assets ..          8,315.1        6,559.4        5,088.7        4,211.0        3,683.4

Ratios:
    Tier 1 risk-based capital .           10.77%         12.03%         14.62%         15.48%         14.82%
    Total risk-based capital ..           12.02%         13.29%         15.89%         16.76%         16.12%
    Leverage ..................            8.54%          8.68%          9.64%          8.87%          7.73%
--------------------------------------------------------------------------------------------------------------
-------------
(1)Excluding SFAS No. 115 adjustment and disallowed intangibles.
</TABLE>


     The Fixed/Adjustable Rate Noncumulative Preferred Stock issued on September
30, 1996 is nonconvertible and qualifies as Tier 1 capital. The issuance allowed
Hibernia to maintain its strong  capital  ratios and enhanced its ability to act
when future  opportunities  arise. 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 remaining  $150 million in securities  included in this
shelf  registration  provide Hibernia with the flexibility to quickly modify its
capital structure to meet competitive and market conditions.


Liquidity

     Liquidity is a measure of 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  $7.0  billion in core
deposits at  year-end  1997,  up $345.7  million  (5%) from $6.7  billion a year
earlier. As previously mentioned in the discussion of borrowings, Hibernia has a
large base of treasury management-related repurchase agreements as 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  1997  increased  to 87.8%
compared to 76.6% at year-end 1996 and 71.6% at year-end 1995.  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,  21.9% of Hibernia's
loans and securities  were funded by net large  liabilities  (total  liabilities
less  short-term  investments)  at year-end  1997,  up 382 basis points from the
prior year level of 18.1%.

     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,  and its membership in the Federal Home Loan
Bank further  augments  liquidity by  providing a readily  accessible  source of
funds at competitive rates. In addition,  a substantial portion of the Company's
$1.5 billion  residential  first mortgage  portfolio and $708.5 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, 1997
the Parent Company had $141.8 million in available funds. During 1997 the Parent
Company  received  $47.2 million in dividends  from its bank  subsidiaries.  The
Parent  Company paid $42.7 million in dividends to its common  shareholders  and
$6.9  million in dividends  to its  preferred  shareholders  and  increased  its
investment in two of its subsidiaries by a total of $28.0 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 increase in cash
and cash  equivalents in 1997 of $157.0 million.  Net cash provided by financing
activities totaled $1,353.5 million, as total deposits increased $580.7 million,
short-term  borrowings increased $368.5 million and debt totaling $500.0 million
was issued.  Net cash provided by operating  activities  totaled  $153.9 million
after adjusting 1997 net income for noncash items.  These increases to cash were
partially offset by net cash used in investing  activities of $1,350.3  million,
as loans (net of sales)  increased  $1.4  billion and  purchases  of  securities
available for sale totaled $617.1  million,  partially  offset by $727.8 million
from the sales and maturities of securities available for sale.

     Cash and cash  equivalents  increased $239.2 million in 1996. Cash provided
by financing  activities  totaled $522.6  million,  as total deposits  increased
$433.7  million,  excluding  the  impact  of the  purchased  companies,  and the
issuance  of  preferred  stock  provided  net  cash of $98.0  million.  Net cash
provided by operating activities totaled $181.4 million after adjusting 1996 net
income for noncash items.  These increases to cash were partially  offset by net
cash used in investing  activities  of $494.8  million,  as loans (net of sales)
increased  $0.9  billion,  excluding  the  impact  of the  purchased  companies,
partially  offset  by $532.4  million  in net cash  provided  from  activity  in
securities available for sale, excluding the impact of the purchased companies.

     Cash and cash  equivalents  decreased $108.7 million in 1995. This decrease
was the result of cash used in investing  activities of $572.2 million, as loans
(net of sales)  increased  $1.1 billion,  partially  offset by a net decrease in
securities of $396.2 million.  Both operating and financing  activities provided
cash during  1995,  with  operations  providing  $134.5  million  and  financing
activities providing $328.9 million, primarily from an increase in deposits.

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

Hibernia Corporation and Subsidiaries                             1997                                      1996
------------------------------------------------------------------------------------------------------------------------------------

($ 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 ............................ $ 198,946  $ 191,606  $ 183,304  $ 176,226  $ 175,843  $ 159,748  $ 154,794  $ 151,055
Interest expense ...........................    88,930     82,403     77,267     73,725     72,596     66,799     63,631     62,781
------------------------------------------------------------------------------------------------------------------------------------
Net interest income ........................   110,016    109,203    106,037    102,501    103,247     92,949     91,163     88,274
Provision for possible loan losses .........       451         51         59         59        (19)   (13,495)       622        475
------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
    for possible loan losses ...............   109,565    109,152    105,978    102,442    103,266    106,444     90,541     87,799
------------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
   Noninterest income ......................    37,979     35,610     36,526     32,598     32,198     29,039     28,828     27,785
   Securities gains (losses), net ..........     2,346          1        356         15        165     (5,584)        46         67
------------------------------------------------------------------------------------------------------------------------------------
Noninterest income .........................    40,325     35,611     36,882     32,613     32,363     23,455     28,874     27,852
Noninterest expense ........................    91,405     91,392     92,067     87,080     86,237     90,897     75,686     74,100
------------------------------------------------------------------------------------------------------------------------------------
Income before taxes ........................    58,485     53,371     50,793     47,975     49,392     39,002     43,729     41,551
Income tax expense .........................    20,137     18,495     17,970     16,633     17,601     13,692     14,980     14,583
------------------------------------------------------------------------------------------------------------------------------------
Net income ................................. $  38,348  $  34,876  $  32,823  $  31,342  $  31,791  $  25,310  $  28,749  $  26,968
------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders $  36,623  $  33,151  $  31,098  $  29,617  $  30,051  $  25,310  $  28,749  $  26,968
------------------------------------------------------------------------------------------------------------------------------------
Per common share information: (2)
   Net income .............................. $    0.28  $    0.25  $    0.24  $    0.23  $    0.23  $    0.19  $    0.22  $    0.21
   Net income - assuming dilution .......... $    0.27  $    0.25  $    0.23  $    0.22  $    0.23  $    0.19  $    0.22  $    0.21
   Cash dividends declared ................. $    0.09  $    0.08  $    0.08  $    0.08  $    0.08  $    0.07  $    0.07  $    0.07
Average shares outstanding (000s) ..........   131,103    130,801    130,604    130,668    130,475    130,229    130,015    129,919
Dividend payout ratio ......................     32.14%     32.00%     33.33%     34.78%     34.78%     36.84%     31.82%     33.33%
------------------------------------------------------------------------------------------------------------------------------------
Selected quarter-end balances (in millions)
Loans ...................................... $ 7,580.2  $ 7,107.8  $ 6,685.9  $ 6,321.8   $6,165.9   $5,840.0  $ 5,327.0  $ 5,052.9
Deposits ...................................   8,633.3    8,208.4    8,198.2    8,169.3    8,052.7    7,592.7    6,837.2    6,812.0
Debt .......................................     506.5      109.8       12.7       13.1       57.2       24.3       33.3       36.8
Equity .....................................   1,050.3    1,018.6      985.7      956.4      951.9      918.5      795.8      787.5
Total assets ...............................  11,023.0   10,200.4    9,926.2    9,641.8    9,560.3    9,046.8    8,085.3    8,056.7
------------------------------------------------------------------------------------------------------------------------------------
Selected average balances (in millions)
Loans ...................................... $ 7,337.5  $ 6,920.7  $ 6,515.0  $ 6,217.7  $ 6,015.3  $ 5,478.5  $ 5,192.0  $ 4,936.5
Deposits ...................................   8,309.2    8,168.0    8,106.2    7,966.6    7,754.6    7,052.7    6,803.2    6,740.7
Debt .......................................     254.4       57.1       12.9       50.1       37.6       27.8       32.6       29.2
Equity .....................................   1,033.2    1,003.0      969.7      959.8      936.6      802.5      786.9      788.4
Total assets ...............................  10,641.7   10,027.2    9,675.2    9,520.7    9,256.7    8,372.4    8,060.4    7,972.6
------------------------------------------------------------------------------------------------------------------------------------
Selected ratios
Net interest margin (taxable-equivalent) ...      4.53%      4.79%      4.87%      4.83%      4.92%      4.88%      4.93%      4.83%
Annualized return on assets ................      1.44%      1.39%      1.36%      1.32%      1.37%      1.21%      1.43%      1.35%
Annualized return on common equity .........     15.70%     14.68%     14.30%     13.78%     14.37%     12.63%     14.61%     13.68%
Annualized return on total equity ..........     14.85%     13.91%     13.54%     13.06%     13.58%     12.62%     14.61%     13.68%
Efficiency ratio ...........................     60.81%     62.11%     63.56%     63.43%     62.92%     73.58%     62.27%     62.95%
Average equity/average assets ..............      9.71%     10.00%     10.02%     10.08%     10.12%      9.59%      9.76%      9.89%
Tier 1 risk-based capital ratio ............     10.77%     11.33%     11.69%     12.05%     12.03%     12.70%     13.87%     14.30%
Total risk-based capital ratio .............     12.02%     12.58%     12.94%     13.31%     13.29%     13.96%     15.13%     15.57%
Leverage ratio .............................      8.54%      8.74%      8.75%      8.69%      8.68%      9.57%      9.72%      9.61%
------------------------------------------------------------------------------------------------------------------------------------
Tax-effected net income and ratios excluding
  goodwill and core deposit intangible
  amortization and balances (3)
Net income applicable to common shareholders $  39,121  $  35,706  $  33,911  $  32,521  $  33,049  $  26,733  $  29,553  $  27,745
Net income per common share (2) ............ $    0.30  $    0.27  $    0.26  $    0.25  $    0.25  $    0.21  $    0.23  $    0.21
Annualized return on assets ................      1.56%      1.51%      1.50%      1.46%      1.53%      1.29%      1.47%      1.40%
Annualized return on common equity .........     19.71%     18.76%     18.70%     18.25%     19.26%     14.59%     15.40%     14.42%
Efficiency ratio ...........................     58.91%     60.11%     61.32%     60.98%     60.35%     72.31%     61.61%     62.29%
------------------------------------------------------------------------------------------------------------------------------------
(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 13 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 $38.3  million  in the fourth  quarter of
1997, a 21% increase from $31.8 million in the fourth  quarter of 1996 and a 10%
increase from $34.9 million in the third quarter of 1997.  Net income per common
share of $.28 for the  fourth  quarter of 1997  increased  $.05 from $.23 in the
fourth quarter of 1996 and $.03 from the third-quarter  1997 amount of $.25. Net
income per common share - assuming  dilution  was $.27 in the fourth  quarter of
1997  compared  to $.23 and $.25 for the  fourth  quarter  of 1996 and the third
quarter of 1997, respectively.

     Net interest income, on a taxable-equivalent  basis, totaled $112.3 million
in the fourth  quarter of 1997 compared to $104.9  million in the fourth quarter
of 1996 and $111.5 million in the third quarter of 1997. Net interest income for
the fourth  quarter of 1997 was  negatively  impacted by the  funding  cost of a
transaction designed to utilize an expiring capital loss carryforward.  The $2.2
million in income  associated with this  transaction is recorded as a securities
gain in noninterest income rather than in net interest income.

     The  fourth-quarter  1997  increase in net interest  income over the fourth
quarter  of 1996 was  primarily  the result of the growth in loans both in total
and as a percentage of average  earning  assets.  Average loans  increased  $1.3
billion  over the fourth  quarter of 1996 to $7.3  billion,  or 74.4% of average
earning assets compared to 70.8% of average earning assets in the fourth quarter
of 1996.  Loans increased  $416.8 million in the fourth quarter of 1997 compared
to the third  quarter of 1997.  The net  interest  spread of 3.65% in the fourth
quarter of 1997 was down 38 basis points from the fourth quarter of 1996 and was
down 27 basis  points  from the third  quarter  of 1997.  The  average  yield on
earning assets was 8.11%, down 20 basis points compared to the fourth quarter of
1996 and the third  quarter of 1997.  The average rate paid on  interest-bearing
liabilities  increased  by 18 basis  points from the fourth  quarter of 1996 and
seven basis points from the third quarter of 1997 to 4.46% in the fourth quarter
of 1997.

     The net interest  margin  decreased 39 basis points from the fourth quarter
of 1996 to 4.53% for the fourth  quarter of 1997.  A  26-basis-point  decline in
loan  yields  and a  49-basis-point  decline  in  securities  yields  led to the
20-basis-point  decrease in the yield on earning  assets.  At the same time,  an
increase in market rate funds,  such as short-term  borrowings,  the Tower Super
SavingsSM account and foreign deposits, led to an 18-basis-point increase in the
cost   of   interest-bearing    funds.   In   addition,    the   percentage   of
noninterest-bearing  funds (primarily demand deposits and shareholders'  equity)
supporting  earning  assets in the  fourth  quarter of 1997  decreased  86 basis
points compared to the fourth quarter of 1996.

     Compared to the third  quarter of 1997 the net interest  margin was down 26
basis points. A  seven-basis-point  decrease in loan yields and a 66-basis-point
decrease in securities yields resulted in a 20-basis-point decrease in the yield
on  earning  assets,  and  an  increase  in  market  rate  funds  resulted  in a
seven-basis-point  increase  in the  cost of  funds.  Table 17  illustrates  the
components of the net interest margin on a quarterly basis for 1997 and 1996.

     Average earning assets  increased $1.4 billion (16%) to $9.9 billion in the
fourth quarter of 1997 from $8.5 billion in the fourth quarter of 1996.  Average
earning  assets were up $597.8  million  (6%)  compared to the third  quarter of
1997. Average loans increased $1.3 billion (22%) over the fourth quarter of 1996
and increased  $416.8  million (6%) over the third  quarter of 1997.  Period-end
loans grew $472.4 million, 27% on an annualized basis, during the fourth quarter
of 1997. Average securities for the fourth quarter of 1997 totaled $2.2 billion,
virtually  unchanged  from the fourth quarter of 1996 and up $133.0 million (6%)
from the third quarter of 1997.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
TABLE 17 - NET INTEREST MARGIN  (taxable-equivalent)
--------------------------------------------------------------------------------------------------------------------------
                                                     1997                                        1996
--------------------------------------------------------------------------------------------------------------------------
                                    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 ....         8.11%      8.31%      8.34%      8.25%      8.31%      8.31%      8.32%      8.22%
Rate on interest-bearing
    liabilities ............         4.46       4.39       4.34       4.28       4.28       4.31       4.30       4.34
--------------------------------------------------------------------------------------------------------------------------
        Net interest spread          3.65       3.92       4.00       3.97       4.03       4.00       4.02       3.88
Contribution of noninterest-
    bearing funds ..........         0.88       0.87       0.87       0.86       0.89       0.88       0.91       0.95
--------------------------------------------------------------------------------------------------------------------------
        Net interest margin          4.53%      4.79%      4.87%      4.83%      4.92%      4.88%      4.93%      4.83%
--------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing funds/
    earning assets .........        19.81%     19.68%     19.90%     20.18%     20.67%     20.25%     21.14%     22.13%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

     Average  deposits  increased  $554.6  million  (7%) to $8.3  billion in the
fourth quarter of 1997 from $7.8 billion in the fourth quarter of 1996.  Average
deposits were up $141.2 million (2%) from the third quarter of 1997.

     Noninterest income, excluding securities  transactions,  was $38.0 million,
up $5.8 million  (18%) from the fourth  quarter of 1996 and up $2.4 million (7%)
from the third quarter of 1997. Service charges on deposits,  income from retail
investment  services and securities  trading income were the major categories of
noninterest  income that increased in the fourth quarter of 1997 compared to the
fourth  quarter of 1996. The  securities  trading income  resulted from a single
transaction related to a tax planning strategy.  Service charges on deposits and
securities  trading income were the major categories of noninterest  income that
increased in the fourth  quarter of 1997  compared to the third quarter of 1997.
Securities gains totaling $2.3 million were recognized during the fourth quarter
of 1997  primarily  as a result of the  Company's  completion  of a  transaction
designed to utilize an expiring capital loss carryforward.

     Noninterest expense of $91.4 million in the fourth quarter of 1997 was $5.2
million (6%) higher than $86.2  million  reported in the fourth  quarter of 1996
and virtually unchanged from the third quarter of 1997. The increase compared to
the fourth  quarter of 1996 was  primarily  due to an  increase  in staff  costs
resulting from higher accruals for performance  based incentives and bonuses and
normal merit increases.

     The  Company's  efficiency  ratio was 60.81% in the fourth  quarter of 1997
compared  to 62.92%  and  62.11%  in the  fourth  quarter  of 1996 and the third
quarter of 1997, respectively. The tangible efficiency ratio, which excludes the
impact of amortization of goodwill and core deposit  intangibles,  was 58.91% in
the fourth  quarter of 1997 compared to 60.35% in the fourth quarter of 1996 and
60.11% in the third quarter of 1997.


<PAGE>
<TABLE>
<CAPTION>
Consolidated Average Balances, Interest and Rates
------------------------------------------------------------------------------------------------------------------------------------
Hibernia Corporation and Subsidiaries
Taxable-equivalent basis (1)                                          1997                                    1996
(Average balances $ 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 ...........................    $   2,687.3    $ 237,691       8.84 %    $ 1,971.9    $  181,092     9.18%
    Small business loans .......................        1,226.8      116,114       9.46        1,058.0        99,811     9.43
    Consumer loans .............................        2,837.2      244,827       8.63        2,377.5       210,878     8.87
------------------------------------------------------------------------------------------------------------------------------------
        Total loans (2).........................        6,751.3      598,632       8.87        5,407.4        491,78     9.09
------------------------------------------------------------------------------------------------------------------------------------
    Securities available for sale ..............        2,195.9      146,646       6.68        2,195.2       144,973     6.60
    Securities held to maturity ................              -            -          -              -             -        -
------------------------------------------------------------------------------------------------------------------------------------
        Total securities .......................        2,195.9      146,646       6.68        2,195.2       144,973     6.60
------------------------------------------------------------------------------------------------------------------------------------
    Short-term investments .....................          252.2       13,916       5.52          207.7        11,065     5.33
------------------------------------------------------------------------------------------------------------------------------------
        Total interest-earning assets ..........        9,199.4    $ 759,194       8.25 %      7,810.3    $  647,819     8.29%
------------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ...............         (119.4)                                (145.2)
Noninterest-earning assets:
    Cash and due from banks ....................          392.7                                  347.3
    Other assets ...............................          496.7                                  405.3
------------------------------------------------------------------------------------------------------------------------------------
        Total noninterest-earning assets .......          889.4                                  752.6
------------------------------------------------------------------------------------------------------------------------------------
        Total assets ...........................    $   9,969.4                              $  8,417.7
====================================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest-bearing deposits:
        NOW accounts ...........................    $     356.9    $  10,892       3.05 %    $   339.0     $   9,498     2.80%
        Money market deposit accounts ..........        1,583.5       39,680       2.51        1,484.2        35,183     2.37
        Savings accounts .......................          681.3       20,297       2.98          410.9         8,722     2.12
        Other consumer time deposits ...........        2,601.1      136,236       5.24        2,374.6       130,756     5.51
        Public fund certificates of deposit
            of $100,000 or more ................          957.2       52,734       5.51          870.7        47,026     5.40
        Certificates of deposit
            of $100,000 or more ................          410.6       21,295       5.19          294.6        15,147     5.14
        Foreign time deposits ..................           98.2        5,204       5.30           41.8         2,261     5.41
------------------------------------------------------------------------------------------------------------------------------------
            Total interest-bearing deposits ....        6,688.8      286,338       4.28        5,815.8       248,593     4.27
------------------------------------------------------------------------------------------------------------------------------------
    Short-term borrowings:
        Federal funds purchased ................          246.7       13,771       5.58           49.5         2,546     5.14
        Repurchase agreements ..................          340.5       16,631       4.88          271.2        12,742     4.70
    Debt .......................................           94.1        5,585       5.94           31.8         1,926     6.06
------------------------------------------------------------------------------------------------------------------------------------
        Total interest-bearing liabilities .....        7,370.1    $ 322,325       4.37 %      6,168.3     $ 265,807     4.31%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
    Demand deposits ............................        1,449.7                                1,273.7
    Other liabilities ..........................          157.9                                  146.9
------------------------------------------------------------------------------------------------------------------------------------
        Total noninterest-bearing liabilities ..        1,607.6                                1,420.6
------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity .....................          991.7                                  828.8
------------------------------------------------------------------------------------------------------------------------------------
            Total liabilities and
                shareholders' equity ...........    $   9,969.4                              $ 8,417.7
====================================================================================================================================
SPREAD AND NET YIELD
Interest rate spread ...........................                                    3.88 %                                3.98%
Cost of funds supporting interest-earning assets                                    3.50 %                                3.40%
Net interest income/margin .....................                   $ 436,869        4.75 %                  $ 382,012     4.89%
====================================================================================================================================
----------------
(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)                                         1995                                1994
(Average balances $ in millions,                       Average                                Average
interest $ in thousands)                               Balance     Interest         Rate      Balance    Interest    Rate
------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>           <C>               <C>
ASSETS
Interest-earning assets:
    Commercial loans ...........................    $   1,630.9   $ 158,003         9.69 %
    Small business loans .......................          868.2      84,400         9.72
    Consumer loans .............................        1,844.8     159,991         8.67
------------------------------------------------------------------------------------------------------------------------------
        Total loans (2).........................        4,343.9     402,394         9.26     $ 3,644.2   $318,614    8.74 %
------------------------------------------------------------------------------------------------------------------------------
    Securities available for sale ..............          808.8      53,381         6.60         980.0     56,553    5.77
    Securities held to maturity ................        1,856.1     118,561         6.39       2,032.0    114,162    5.62
------------------------------------------------------------------------------------------------------------------------------
        Total securities .......................        2,664.9     171,942         6.45       3,012.0    170,715    5.67
------------------------------------------------------------------------------------------------------------------------------
    Short-term investments .....................          134.3       7,849         5.85         205.1      8,267    4.03
------------------------------------------------------------------------------------------------------------------------------
        Total interest-earning assets ..........        7,143.1   $ 582,185         8.15 %     6,861.3   $497,596    7.25 %
------------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ...............         (155.9)                                (182.3)
Noninterest-earning assets:
    Cash and due from banks ....................          330.8                                  326.5
    Other assets ...............................          332.3                                  340.2
------------------------------------------------------------------------------------------------------------------------------
        Total noninterest-earning assets .......          663.1                                  666.7
------------------------------------------------------------------------------------------------------------------------------
        Total assets ...........................    $   7,650.3                              $ 7,345.7
==============================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest-bearing deposits:
        NOW accounts ...........................    $     663.4   $  14,635         2.21 %   $   743.8   $ 13,345    1.79 %
        Money market deposit accounts ..........        1,156.2      30,600         2.65       1,214.0     30,346    2.50
        Savings accounts .......................          389.6       8,560         2.20         421.2      9,001    2.14
        Other consumer time deposits ...........        2,174.4     122,519         5.63       1,935.4     84,118    4.35
        Public fund certificates of deposit
            of $100,000 or more ................          717.9      42,358         5.90         652.1     27,324    4.19
        Certificates of deposit
            of $100,000 or more ................          217.9      10,659         4.89         221.7      8,446    3.81
        Foreign time deposits ..................           35.1       2,018         5.76          17.1        794    4.65
------------------------------------------------------------------------------------------------------------------------------
            Total interest-bearing deposits ....        5,354.5     231,349         4.32       5,205.3    173,374    3.33
------------------------------------------------------------------------------------------------------------------------------
    Short-term borrowings:
        Federal funds purchased ................           54.8       3,155         5.76          39.2      1,566    4.00
        Repurchase agreements ..................          205.2      10,655         5.19         136.4      4,667    3.42
    Debt .......................................           28.9       1,827         6.33          35.5      3,161    8.90
------------------------------------------------------------------------------------------------------------------------------
        Total interest-bearing liabilities .....        5,643.4   $ 246,986         4.38 %     5,416.4   $182,768    3.37 %
------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
    Demand deposits ............................        1,174.4                                1,139.7
    Other liabilities ..........................          126.7                                  163.5
------------------------------------------------------------------------------------------------------------------------------
        Total noninterest-bearing liabilities ..        1,301.1                                1,303.2
------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity .....................          705.8                                  626.1
------------------------------------------------------------------------------------------------------------------------------
            Total liabilities and
                shareholders' equity ...........    $   7,650.3                              $ 7,345.7
==============================================================================================================================
SPREAD AND NET YIELD
Interest rate spread ...........................                                    3.77 %                           3.88 %
Cost of funds supporting interest-earning assets                                    3.46 %                           2.66 %
Net interest income/margin .....................                  $ 335,199         4.69 %               $314,828    4.59 %
==============================================================================================================================
----------------
(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.)
--------------------------------------------------------------------------------------------------------------
                                                                                                     5-Year
Hibernia Corporation and Subsidiaries                                                               Compound
Taxable-equivalent basis (1)                                         1993                         Growth Rate
(Average balances $ 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).........................       $ 3,349.6  $   291,889        8.71%         11.0 %
--------------------------------------------------------------------------------------------------------------
    Securities available for sale ..............           944.4       60,081        6.36          20.5
    Securities held to maturity ................         1,920.0      111,703        5.82        (100.0)
--------------------------------------------------------------------------------------------------------------
        Total securities .......................         2,864.4      171,784        6.00          (0.6)
--------------------------------------------------------------------------------------------------------------
    Short-term investments .....................           377.8       11,732        3.11         (14.1)
--------------------------------------------------------------------------------------------------------------
        Total interest-earning assets ..........         6,591.8    $ 475,405        7.21%           6.2
--------------------------------------------------------------------------------------------------------------
Reserve for possible loan losses ...............          (209.7)                                  (12.9)
Noninterest-earning assets:
    Cash and due from banks ....................           297.9                                     4.5
    Other assets ...............................           358.7                                    (0.9)
--------------------------------------------------------------------------------------------------------------
        Total noninterest-earning assets .......           656.6                                     1.3
--------------------------------------------------------------------------------------------------------------
        Total assets ...........................    $    7,038.7                                     6.1 %
==============================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest-bearing deposits:
        NOW accounts ...........................    $      688.8    $  12,072        1.75%         (12.5)%
        Money market deposit accounts ..........         1,204.0       29,742        2.47            3.1
        Savings accounts .......................           401.2        8,952        2.23           12.2
        Other consumer time deposits ...........         1,906.3       77,112        4.05            3.9
        Public fund certificates of deposit
            of $100,000 or more ................           634.9       20,921        3.30            7.7
        Certificates of deposit
            of $100,000 or more ................           233.5        7,961        3.41           10.6
        Foreign time deposits ..................             5.0          149        2.98          113.8
--------------------------------------------------------------------------------------------------------------
            Total interest-bearing deposits ....         5,073.7      156,909        3.09            4.0
--------------------------------------------------------------------------------------------------------------
    Short-term borrowings:
        Federal funds purchased ................            35.8        1,063        2.97           17.9
        Repurchase agreements ..................           115.6        3,356        2.90           24.4
    Debt .......................................            41.4        4,631       11.18           (6.5)
--------------------------------------------------------------------------------------------------------------
        Total interest-bearing liabilities .....         5,266.5    $ 165,959        3.15%           4.8
--------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
    Demand deposits ............................         1,048.1                                     7.6
    Other liabilities ..........................           168.1                                    (5.4)
--------------------------------------------------------------------------------------------------------------
        Total noninterest-bearing liabilities ..         1,216.2                                     5.8
--------------------------------------------------------------------------------------------------------------
Total shareholders' equity .....................           556.0                                    22.9
--------------------------------------------------------------------------------------------------------------
            Total liabilities and
                shareholders' equity ...........    $    7,038.7                                    6.1 %
==============================================================================================================
SPREAD AND NET YIELD
Interest rate spread ...........................                                     4.06%
Cost of funds supporting interest-earning assets                                     2.52%
Net interest income/margin .....................                   $  309,446        4.69%
==============================================================================================================
-------------
(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

Nonperforming Asset Ratio Bar Graph     See MD&A Table 4

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


Annual Common Dividends 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



<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, 1997 and 1996, 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, 1997.  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, 1997 and 1996, and the consolidated
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  1997,  in  conformity  with  generally  accepted
accounting principles.




/s/ Ernst & Young, LLP

New Orleans, Louisiana
January 13, 1998



<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets

Hibernia Corporation and Subsidiaries
December 31 ($ in thousands)                                             1997              1996
----------------------------------------------------------------------------------------------------
<S>                                                              <C>               <C>
Assets
  Cash and due from banks ..................................     $    529,724      $    572,182
  Short-term investments ...................................          393,915           194,410
  Securities available for sale ............................        2,147,405         2,250,952
  Securities held to maturity ..............................                -                 -
  Loans, net of unearned income ............................        7,580,251         6,165,903
      Reserve for possible loan losses .....................         (107,540)         (129,039)
----------------------------------------------------------------------------------------------------
          Loans, net .......................................        7,472,711         6,036,864
----------------------------------------------------------------------------------------------------
  Bank premises and equipment ..............................          173,906           176,649
  Customers' acceptance liability ..........................              144               135
  Other assets .............................................          305,233           329,128
----------------------------------------------------------------------------------------------------
          Total assets .....................................     $ 11,023,038      $  9,560,320
----------------------------------------------------------------------------------------------------

Liabilities
  Deposits:
      Demand, noninterest-bearing ..........................     $  1,620,713      $  1,596,170
      Interest-bearing .....................................        7,012,616         6,456,576
----------------------------------------------------------------------------------------------------
          Total deposits ...................................        8,633,329         8,052,746
----------------------------------------------------------------------------------------------------
  Short-term borrowings ....................................          700,247           331,796
  Liability on acceptances .................................              144               135
  Other liabilities ........................................          132,456           166,510
  Debt .....................................................          506,548            57,192
----------------------------------------------------------------------------------------------------
          Total liabilities ................................        9,972,724         8,608,379
----------------------------------------------------------------------------------------------------
Shareholders' equity Preferred Stock, no par value:
    Authorized - 100,000,000  shares;  2,000,000 Series A
     issued and outstanding at December 31, 1997 and 1996,
     respectively ..........................................          100,000           100,000
  Class A Common Stock, no par value:
    Authorized - 200,000,000 shares; issued 133,000,857 and
    132,200,373 at December 31, 1997 and 1996, respectively           255,362           253,825
  Surplus ..................................................          385,095           376,683
  Retained earnings ........................................          314,600           226,848
  Treasury stock at cost: 50,000 shares at December 31, 1996                -              (569)
  Unrealized gains on securities available for sale ........           12,644             8,472
  Unearned compensation ....................................          (17,387)          (13,318)
----------------------------------------------------------------------------------------------------
          Total shareholders' equity .......................        1,050,314           951,941
----------------------------------------------------------------------------------------------------
          Total liabilities and shareholders' equity .......     $ 11,023,038      $  9,560,320
----------------------------------------------------------------------------------------------------
------------
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)        1997           1996           1995
------------------------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>            <C>
Interest income
    Interest and fees on loans .............................     $ 594,775      $ 487,918      $ 398,117
    Interest on securities available for sale ..............       141,391        142,457         52,226
    Interest on securities held to maturity ................             -              -        117,110
    Interest on short-term investments .....................        13,916         11,065          7,849
------------------------------------------------------------------------------------------------------------
        Total interest income ..............................       750,082        641,440        575,302
------------------------------------------------------------------------------------------------------------
Interest expense
    Interest on deposits ...................................       286,338        248,593        231,349
    Interest on short-term borrowings ......................        30,402         15,288         13,810
    Interest on debt .......................................         5,585          1,926          1,827
------------------------------------------------------------------------------------------------------------
        Total interest expense .............................       322,325        265,807        246,986
------------------------------------------------------------------------------------------------------------
Net interest income ........................................       427,757        375,633        328,316
    Provision for possible loan losses .....................           620        (12,417)         1,218
------------------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses       427,137        388,050        327,098
------------------------------------------------------------------------------------------------------------
Noninterest income
    Service charges on deposits ............................        71,798         59,488         50,074
    Trust fees .............................................        14,757         13,404         12,506
    Other service, collection and exchange charges .........        43,008         34,647         28,857
    Gain on divestiture of banking offices .................             -              -          2,361
    Gain on sale of business lines .........................             -            517          3,402
    Other operating income .................................        13,150          9,794          8,503
    Securities gains (losses), net .........................         2,718         (5,306)           227
------------------------------------------------------------------------------------------------------------
        Total noninterest income ...........................       145,431        112,544        105,930
------------------------------------------------------------------------------------------------------------
Noninterest expense
    Salaries and employee benefits .........................       181,097        164,774        139,465
    Occupancy expense, net .................................        30,823         27,531         26,955
    Equipment expense ......................................        27,815         29,178         22,058
    Data processing expense ................................        22,952         20,711         19,731
    Foreclosed property expense, net .......................        (3,219)        (1,735)          (693)
    Amortization of intangibles ............................        13,747          7,441          3,709
    Other operating expense ................................        88,729         79,020         78,257
------------------------------------------------------------------------------------------------------------
        Total noninterest expense ..........................       361,944        326,920        289,482
------------------------------------------------------------------------------------------------------------
Income before income taxes .................................       210,624        173,674        143,546
Income tax expense .........................................        73,235         60,856         12,134
------------------------------------------------------------------------------------------------------------
Net income .................................................     $ 137,389      $ 112,818      $ 131,412
------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders ...............     $ 130,489      $ 111,078      $ 131,412
------------------------------------------------------------------------------------------------------------
Net income per common share ................................     $    1.00      $    0.85      $    1.01
------------------------------------------------------------------------------------------------------------
Net income per common share - assuming dilution ............     $    0.98      $    0.84      $    1.00
------------------------------------------------------------------------------------------------------------
-------------
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)
---------------------------------------------------------------------------------------------------------------------------------
                                            Preferred        Common                    Retained
                                                Stock         Stock      Surplus       Earnings          Other         Total
---------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>        <C>           <C>            <C>             <C>           <C>
Balances at December 31, 1994 ........           $ -   $   252,572   $   371,057    $    53,008    $   (29,041)   $   647,596
Net income for 1995 ..................             -             -             -        131,412              -        131,412
Issuance of common stock:
   Dividend Reinvestment Plan ........             -           170           477              -              -            647
   Stock Option Plan .................             -            81           214              -             94            389
   Retirement Security Plan ..........             -             -           (32)             -            798            766
   Restricted stock awards ...........             -            52          (122)             -          1,902          1,832
Cash dividends declared:
   Common ($.25 per share) ...........             -             -             -        (28,343)             -        (28,343)
   By pooled companies prior to merger             -             -             -         (3,609)             -         (3,609)
Acquisition of treasury stock ........             -             -             -              -           (563)          (563)
Purchase of common shares by ESOP ....             -             -             -              -        (16,044)       (16,044)
Allocation of ESOP shares ............             -             -           338              -          1,654          1,992
Change in unrealized gains (losses)
   on securities available for sale ..             -             -             -              -         43,438         43,438
Other ................................             -             -          (212)           564              -            352
---------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1995 ........             -       252,875       371,720        153,032          2,238        779,865
---------------------------------------------------------------------------------------------------------------------------------
Net income for 1996 ..................             -             -             -        112,818              -        112,818
Issuance of common stock:
   Dividend Reinvestment Plan ........             -           276         1,310              -              -          1,586
   Stock Option Plan .................             -           282           844              -            483          1,609
   Retirement Security Plan ..........             -           383         1,862              -              -          2,245
   Restricted stock awards ...........             -             9            44              -             11             64
   By pooled companies prior to merger             -             -         2,138              -              -          2,138
Issuance of preferred stock ..........       100,000             -        (2,000)             -              -         98,000
Cash dividends declared:
   Common ($.29 per share) ...........             -             -             -        (34,916)             -        (34,916)
   Preferred ($.87 per share) ........             -             -             -         (1,740)             -         (1,740)
   By pooled companies prior to merger             -             -             -         (2,346)             -         (2,346)
Acquisition of treasury stock ........             -             -             -              -           (880)          (880)
Purchase of common shares by ESOP ....             -             -             -              -           (306)          (306)
Allocation of ESOP shares ............             -             -           774              -          1,378          2,152
Change in unrealized gains (losses)
   on securities available for sale ..             -             -             -              -         (8,339)        (8,339)
Other ................................             -             -            (9)             -              -             (9)
---------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1996 ........       100,000       253,825       376,683        226,848         (5,415)       951,941
---------------------------------------------------------------------------------------------------------------------------------
Net income for 1997 ..................             -             -             -        137,389              -        137,389
Issuance of common stock:
   Dividend Reinvestment Plan ........             -           418         2,693              -            477          3,588
   Stock Option Plan .................             -         1,068         4,457              -            166          5,691
   Retirement Security Plan ..........             -            44           265              -              -            309
   Restricted stock awards ...........             -             7            45              -              -             52
   Director compensation .............             -             -            32              -            225            257
Cash dividends declared:
   Common ($.33 per share) ...........             -             -             -        (42,109)             -        (42,109)
   Preferred ($3.45 per share) .......             -             -             -         (6,900)             -         (6,900)
   By pooled companies prior to merger             -             -             -           (628)             -           (628)
Acquisition of treasury stock ........             -             -             -              -           (299)          (299)
Purchase of common shares by ESOP ....             -             -             -              -         (5,021)        (5,021)
Allocation of ESOP shares ............             -             -           920              -            952          1,872
Change in unrealized gains (losses)
   on securities available for sale ..             -             -             -              -          4,172          4,172
---------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1997 ........   $   100,000   $   255,362   $   385,095    $   314,600    $    (4,743)   $ 1,050,314
---------------------------------------------------------------------------------------------------------------------------------
----------------
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)                                            1997          1996            1995
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>            <C>            <C>
Operating activities
  Net income ............................................................   $   137,389    $   112,818    $   131,412
  Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for possible loan losses .............................           620        (12,417)         1,218
         Amortization of intangibles and deferred charges ...............        13,280          7,449          3,709
         Depreciation and amortization ..................................        26,458         27,148         19,857
         Premium amortization, net of discount accretion ................         2,023          4,870          8,443
         Realized securities (gains) losses, net ........................        (2,718)         5,306           (227)
         Gains on sales of assets .......................................        (4,027)        (2,714)        (8,892)
         Provision for losses on foreclosed and other assets ............         1,313          1,263          1,705
         Decrease (increase) in deferred income tax asset ...............        14,520          7,253        (23,434)
         Increase in interest receivable and other assets ...............        (2,796)        (5,374)        (5,960)
         (Decrease) increase in interest payable and other liabilities ..       (32,167)        35,753          6,710
-------------------------------------------------------------------------------------------------------------------------
       Net cash provided by operating activities ........................       153,895        181,355        134,541
-------------------------------------------------------------------------------------------------------------------------
Investing activities
  Purchases of securities held to maturity ..............................             -              -       (160,123)
  Purchases of securities available for sale ............................      (617,089)      (314,964)      (142,881)
  Proceeds from maturities of securities held to maturity ...............             -              -        435,511
  Proceeds from maturities of securities available for sale .............       523,254        561,156        142,770
  Proceeds from sales of securities available for sale ..................       204,511        286,193        120,967
  Net increase in loans ######### .......................................    (1,601,042)    (1,232,593)    (1,142,620)
  Proceeds from sales of loans ..........................................       508,495        310,896        195,619
  Purchases of loans ....................................................      (347,229)       (15,205)      (104,345)
  Acquisitions, net of cash acquired of $181,913 ........................             -        (68,779)             -
  Purchases of premises, equipment and other assets .....................       (35,656)       (30,528)       (26,409)
  Proceeds from sales of foreclosed assets and excess bank-owned property        14,147          7,831          6,675
  Proceeds from divestiture of banking offices, net of $1,069 cash sold .             -              -        (13,709)
  Proceeds from sales of business lines .................................             -            517        115,647
  Proceeds from sales of premises, equipment and other assets ...........           310            707            726
-------------------------------------------------------------------------------------------------------------------------
       Net cash used by investing activities ............................    (1,350,299)       (494,769)      (572,172)
-------------------------------------------------------------------------------------------------------------------------
Financing activities
  Net increase in domestic deposits .....................................       464,217        408,149        256,656
  Net increase in foreign time deposits .................................       116,502         25,549         11,462
  Net increase in short-term borrowings .................................       368,451         31,965         93,120
  Proceeds from issuance of debt ........................................       500,000        120,743         55,970
  Payments on debt ......................................................       (50,644)      (100,982)       (43,362)
  Proceeds from issuance of preferred stock .............................             -         98,000              -
  Proceeds from issuance of common stock ................................         9,897          7,642          3,634
  Purchase of common stock by ESOP ......................................        (5,021)          (306)       (16,044)
  Dividends paid ........................................................       (49,652)       (37,262)       (31,952)
  Acquisition of treasury stock .........................................          (299)          (880)          (563)
-------------------------------------------------------------------------------------------------------------------------
       Net cash provided by financing activities ........................     1,353,451        552,618        328,921
-------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents ........................       157,047        239,204       (108,710)
  Cash and cash equivalents at beginning of year ........................       766,592        527,388        636,098
-------------------------------------------------------------------------------------------------------------------------
       Cash and cash equivalents at end of year .........................   $   923,639    $   766,592    $   527,388
-------------------------------------------------------------------------------------------------------------------------
Supplemental disclosures Cash paid during the year for:
   Interest expense .....................................................   $   325,591    $   260,381    $   240,968
   Income taxes .........................................................   $    55,695    $    49,539    $    30,788
 Non-cash investing and financing activities:
   Loans and bank premises and equipment transferred to foreclosed
      assets and excess bank-owned property .............................   $     7,338    $     4,761    $     5,052
   Acquisitions:
      Cash paid for acquisitions (including transaction costs) .........    $         -    $   250,692    $         -
      Fair value of assets acquired ....................................    $         -    $ 1,1353,451   $         -
      Fair value of liabilities assumed ................................    $         -    $   932,143    $         -
-------------------------------------------------------------------------------------------------------------------------
---------------
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.
         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 is a licensed Small Business
Investment  Company formed in 1995 to provide 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 a separate  component of
shareholders' equity.
         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  in  accordance  with  Statement  of  Financial
Accounting  Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of
a Loan." 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.  In
accordance with SFAS No. 114, 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.

Net Income Per Common Share
         In February  1997,  the  Financial  Accounting  Standards  Board (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.

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 a separate component of
shareholders' equity.
         In  addition,   the  Company  may  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
1996 and 1995 have been reclassified to conform with the 1997 presentation.
Recent Accounting Pronouncements
         In June 1996, the FASB issued SFAS No. 125,  "Accounting  for Transfers
and Servicing of Financial Assets and  Extinguishments  of  Liabilities,"  which
requires an entity to recognize the  financial and servicing  assets it controls
and the  liabilities it has incurred and to cease to recognize them as financial
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 is not  expected  to have a material
impact on the  financial  condition  or operating  results of the  Company.  The
Company will apply the new rules prospectively to transactions when required.
         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
will not have an impact on the financial  condition or operating  results of the
Company. The Company will adopt the provisions of SFAS No. 130 in 1998.
         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 it 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  will not have an impact on the  financial  condition or
operating results of the Company.  The Company will adopt the provisions of SFAS
No. 131 in 1998.


Note 2
Mergers
         The  Company   completed   mergers   with  four   Louisiana   financial
institutions  in 1995, all of which were accounted for as poolings of interests.
In 1996, the Company completed mergers with five financial institutions,  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.  The
Company completed mergers with American Bank (American),  STABA Bancshares, Inc.
(STABA),  Progressive  Bancorporation,  Inc.  (Progressive) and Bank of St. John
(St.  John) in  1995;  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;
and Executive Bancshares,  Inc. (Executive) and Unicorp Bancshares - Texas, Inc.
(Unicorp)  in 1997.  It should be noted that the  merger  with  Texarkana  was a
holding  company only  merger,  and Hibernia  National  Bank of Texas  (formerly
Texarkana National Bank) is a wholly-owned subsidiary of the Parent Company.
         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>
American ..     March 1, 1995         2,098,968 shares     4.82:1       Pooling of interests
STABA .....     May 1, 1995           2,180,133 shares     18.33:1      Pooling of interests
Progressive     July 1, 1995          2,488,249 shares     4.05:1       Pooling of interests
St. John ..     July 1, 1995          3,338,700 shares     11.13:1      Pooling of interests
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
------------------------------------------------------------------------------------------------
------------
(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 merged  companies  accounted for as poolings of interests for
the years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                  Hibernia      1996
                               (originally      Pooled            1997 Pooled Companies
($ in thousands)                  reported)  Companies(1)  Executive     Unicorp        Total
--------------------------------------------------------------------------------------------------
Year ended December 31, 1996
--------------------------------------------------------------------------------------------------
<S>                              <C>          <C>          <C>          <C>          <C>
Net interest income ........     $366,217          $ -     $  4,109     $  5,307     $375,633

Net income .................     $109,950          $ -     $    767     $  2,101     $112,818
--------------------------------------------------------------------------------------------------
                                                                                     --------
--------------------------------------------------------------------------------------------------
Year ended December 31, 1995
--------------------------------------------------------------------------------------------------
Net interest income ........     $299,760     $ 20,996     $  3,553     $  4,007     $328,316

Net income .................     $123,859     $  5,026     $    813     $  1,714     $131,412
--------------------------------------------------------------------------------------------------
------------
(1)Results  of operations  for the year ended  December 31, 1996 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.  The following table
presents  unaudited  pro forma  information  giving  effect to the  purchases of
Calcasieu and St. Bernard as if the  transactions  had occurred at the beginning
of each period presented.  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.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
($ in thousands, except per-share data)                  Year Ended December 31
--------------------------------------------------------------------------------
                                                           1996            1995
--------------------------------------------------------------------------------
<S>                                                 <C>             <C>
Interest and noninterest income ...............     $   799,413     $   748,195

Net income ....................................     $   102,033     $   128,532

Net income per common share ...................     $      0.78     $      0.99

Net income per common share - assuming dilution     $      0.77     $      0.98
--------------------------------------------------------------------------------
</TABLE>

         In January 1998 Hibernia consummated a merger with Northwest Bancshares
of Louisiana, Inc. (Northwest) accounted for as a pooling of interests,  wherein
Hibernia issued  1,508,019 shares of Class A Common Stock valued at $28,464,000,
based on a per-share  market value of $18.875.  At December 31, 1997,  Northwest
had five branches with total assets of $101,152,000.
         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.  These mergers are expected
to be  consummated in the first quarter of 1998 and are expected to be accounted
for as poolings of interests. The following table contains information regarding
institutions with which Hibernia has entered into definitive merger agreements.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
($ in thousands)                      December 31, 1997        Estimated Consideration
------------------------------------------------------------------------------------------------
                                    Number         Total   Hibernia Shares  Value of Shares
Institution                     of Offices        Assets     to Be Issued   to Be Issued*
------------------------------------------------------------------------------------------------
<S>                                    <C>    <C>            <C>            <C>
ArgentBank ...............             18     $  805,410     13,317,236     $  251,363
Firstshares of Texas, Inc.              5        283,652      3,690,616         69,660
------------------------------------------------------------------------------------------------
             Total .......             23     $1,089,062     17,007,852     $  321,023
------------------------------------------------------------------------------------------------
------------
*Based on the December 31, 1997 market value of $18.875 per share.
</TABLE>


Note 3
Short-Term Investments
         The following is a summary of short-term investments.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
($ in thousands)                                             December 31
-------------------------------------------------------------------------------
                                                         1997         1996
-------------------------------------------------------------------------------
<S>                                                  <C>          <C>
Federal funds sold and securities purchased
    under agreements to resell .................     $355,498     $190,455
Interest-bearing time deposits in domestic banks        2,474        3,955
Trading account assets .........................       35,943            -
-------------------------------------------------------------------------------
  Total short-term investments .................     $393,915     $194,410
-------------------------------------------------------------------------------
</TABLE>

Note 4
Securities
         The Company adopted SFAS No. 115,  "Accounting for Certain  Investments
in Debt and Equity  Securities,"  effective  December 31, 1993.  On November 15,
1995, the FASB issued a Special Report,  "A Guide to Implementation of Statement
115 on  Accounting  for  Certain  Investments  in Debt  and  Equity  Securities"
(Guide). In accordance with the Guide,  Hibernia chose to reclassify  securities
from held to maturity to available for sale.  At December 31, 1995,  the date of
transfer,  the amortized  cost of those  securities was  $1,665,664,000  and net
unrealized gains included in shareholders' equity were $21,522,000.
         A summary of securities classified as available for sale follows.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
($ in thousands)                                                December 31, 1997
--------------------------------------------------------------------------------------------------------------
                                            Amortized           Fair     Unrealized     Unrealized
Type                                             Cost          Value          Gains         Losses
--------------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>            <C>
  U.S. Treasuries ....................     $  328,189     $  330,344     $    2,158     $        3
  U.S. government agencies:
     Mortgage-backed securities ......      1,101,306      1,110,343         16,778          7,741
     Other ...........................        454,762        456,641          2,440            561
   States and political subdivisions .        186,326        192,521          6,555            360
   Other .............................         57,369         57,556            188              1
--------------------------------------------------------------------------------------------------------------
     Total securities available for sale   $2,127,952     $2,147,405     $   28,119     $    8,666
--------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
($ in thousands)                                                 December 31, 1996
------------------------------------------------------------------------------------------------------
                                            Amortized           Fair     Unrealized     Unrealized
Type                                             Cost          Value          Gains         Losses
------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>            <C>
  U.S. Treasuries ....................     $  386,078     $  391,642     $    5,609     $       45
  U.S. government agencies:
     Mortgage-backed securities ......      1,316,686      1,321,419         16,085         11,352
     Other ...........................        347,411        347,934          1,942          1,419
   States and political subdivisions .        137,670        139,636          2,511            545
   Other .............................         48,323         48,506            188              5
   Derivative financial instruments ..          1,765          1,815            967            917
------------------------------------------------------------------------------------------------------
     Total securities available for sale   $2,237,933     $2,250,952     $   27,302     $   14,283
------------------------------------------------------------------------------------------------------
</TABLE>

         The  following is a summary of realized  gains and losses from the sale
of securities available for sale for the years ended December 31, 1997, 1996 and
1995.

<TABLE>
<CAPTION>

----------------------------------------------------------------------
($ in thousands)                            Year Ended December 31
----------------------------------------------------------------------
                                        1997        1996        1995
----------------------------------------------------------------------
<S>                                  <C>         <C>          <C>
Realized gains .................     $ 2,718     $   307      $ 1,790
Realized losses ................           -      (5,613)      (1,563)
----------------------------------------------------------------------
     Net realized gains (losses)     $ 2,718     $(5,306)     $   227
----------------------------------------------------------------------
</TABLE>


         Securities with carrying values of $2,050,120,000 and $2,014,885,000 at
December 31, 1997 and 1996,  respectively,  were either pledged to secure public
and trust deposits or sold under repurchase agreements.

<TABLE>
<CAPTION>
($ in thousands)                                December 31
-------------------------------------------------------------------
                                            1997           1996
-------------------------------------------------------------------
<S>                                   <C>            <C>
U.S. Treasuries .................     $  322,811     $  371,559
U.S. government agencies:
   Mortgage-backed securities ...      1,101,837      1,261,158
   Other ........................        448,178        323,894
States and political subdivisions        172,766         58,274
Other ...........................          4,528              -
-------------------------------------------------------------------
     Total pledged securities ...     $2,050,120     $2,014,885
===================================================================
</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, 1997
-------------------------------------------------------------------
                                        Amortized           Fair
                                             Cost          Value
-------------------------------------------------------------------
<S>                                    <C>            <C>
Due in 1 year or less ............     $  518,631     $  520,422
Due after 1 year through 5 years .        214,780        217,499
Due after 5 years through 10 years        451,761        458,163
Due after 10 years ...............        942,780        951,321
-------------------------------------------------------------------
    Total ........................     $2,127,952     $2,147,405
-------------------------------------------------------------------
</TABLE>

         One of the pooled companies entered into various  derivative  financial
instruments to hedge against exposure to changes in interest rates on the market
value of its securities available for sale portfolio. Notional principal amounts
are used to express the volume of the various derivative financial  instruments,
but the  amounts  subject  to credit  risk are much  smaller.  These  derivative
financial  instruments were liquidated  during the first quarter of 1997 with no
material impact on the financial condition or operating results of the Company.
         The following table summarizes the notional amounts, amortized cost and
estimated fair value of the derivative  financial  instruments held to hedge the
available  for sale  portfolio at December  31,  1996.  The Company has included
deferred  gains and losses  relating to sold,  settled or terminated  derivative
financial  instruments in amortized cost. The fair value of these instruments is
included in the available for sale portfolio.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
($ in thousands)                                 December 31, 1996
--------------------------------------------------------------------------------
                                  Notional Amount Amortized Cost  Fair Value
--------------------------------------------------------------------------------
<S>                                      <C>          <C>           <C>
Interest rate swaps, caps and floors     $176,000     $  2,322      $  1,815
U.S. Treasury put and call options .            -     $   (206)            -
Treasury note short positions ......            -     $   (351)            -
--------------------------------------------------------------------------------
</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.
<TABLE>
<CAPTION>
------------------------------------------------------------------
($ in thousands)                               December 31
------------------------------------------------------------------
                                             1997          1996
------------------------------------------------------------------
<S>                                    <C>            <C>
Commercial:
    Commercial and industrial ....     $1,089,199     $  865,855
    Services industry ............        719,648        455,323
    Real estate ..................        444,188        419,081
    Health care ..................        251,724        227,315
    Transportation, communications
        and utilities ............        253,617        182,417
    Energy .......................        278,988        143,214
    Other ........................         54,170         45,959
------------------------------------------------------------------
        Total commercial .........      3,091,534      2,339,164
==================================================================
Small Business:
    Commercial and industrial ....        495,646        681,012
    Services industry ............        309,916        183,192
    Real estate ..................        178,980        118,898
    Health care ..................         74,134         54,697
    Transportation, communications
        and utilities ............         38,048         24,300
    Energy .......................         17,314          6,834
    Other ........................        259,487        120,915
------------------------------------------------------------------
        Total small business .....      1,373,525      1,189,848
------------------------------------------------------------------
Consumer:
    Residential mortgages:
        First mortgages ..........      1,485,109      1,113,744
        Junior liens .............        129,357        121,200
    Indirect .....................        708,549        749,861
    Revolving credit .............        282,876        144,435
    Other ........................        509,301        507,651
------------------------------------------------------------------
        Total consumer ...........      3,115,192      2,636,891
------------------------------------------------------------------
        Total loans ..............     $7,580,251     $6,165,903
==================================================================
</TABLE>
         The following is a summary of nonperforming  loans,  foreclosed  assets
and excess bank-owned property.
<TABLE>
<CAPTION>
-----------------------------------------------------------
($ in thousands)                        December 31
-----------------------------------------------------------
                                      1997        1996
-----------------------------------------------------------
<S>                                <C>         <C>
Nonaccrual loans .............     $20,356     $16,080
Restructured loans ...........           -           -
-----------------------------------------------------------
   Nonperforming loans .......      20,356      16,080
-----------------------------------------------------------
Foreclosed assets ............       2,452       5,209
Excess bank-owned property ...       2,360       3,670
-----------------------------------------------------------
    Total nonperforming assets     $25,168     $24,959
-----------------------------------------------------------
</TABLE>

         At December  31, 1997 and 1996 the  recorded  investment  in loans that
were  considered  to  be  impaired  under  SFAS  No.  114  was  $17,034,000  and
$14,476,000,   respectively.   Included  in  the  1997  and  1996  amounts  were
$15,111,000  and  $10,334,000,  respectively,  of  impaired  loans for which the
related  reserve  for  possible  loan  losses  was  $2,560,000  and  $1,453,000,
respectively.  At December 31, 1997 and 1996 impaired  loans that did not have a
reserve  for  possible  loan  losses  amounted  to  $1,923,000  and  $4,142,000,
respectively. The average recorded investment in impaired loans during the years
ended  December  31,  1997,  1996  and  1995  was   approximately   $16,464,000,
$15,818,000  and  $18,827,000,   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, 1997,  1996 and 1995,  the
Company recognized  interest income on impaired loans of $1,199,000,  $2,296,000
and $2,126,000, respectively.
         Interest  income in the amount of $1,898,000  for 1997,  $3,151,000 for
1996 and $3,897,000 for 1995 would have been recorded on nonperforming  loans if
they had  been  classified  as  performing.  The  Company  recorded  $1,199,000,
$2,296,000 and $2,126,000 of interest income on nonperforming loans during 1997,
1996 and 1995, respectively.
         The following is a summary of activity in the reserve for possible loan
losses.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
($ in thousands)                                           Year Ended December 31
----------------------------------------------------------------------------------------
                                                 1997           1996           1995
----------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>
Balance at beginning of year ..........     $ 129,039      $ 151,367      $ 156,896
    Loans charged off .................       (43,942)       (35,147)       (25,416)
    Recoveries ........................        21,823         19,380         18,669
----------------------------------------------------------------------------------------
      Net loans charged off ...........       (22,119)       (15,767)        (6,747)
----------------------------------------------------------------------------------------
    Provision for possible loan losses            620        (12,417)         1,218
    Addition due to purchased companies             -          5,856              -
----------------------------------------------------------------------------------------
Balance at end of year ................     $ 107,540      $ 129,039      $ 151,367
----------------------------------------------------------------------------------------
</TABLE>


Note 6
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  $45,325,000 and $72,778,000
at December 31, 1997 and 1996,  respectively.  The change  during 1997  reflects
$199,372,000 in loan advances and  $226,825,000 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 the  director  had the ability to
significantly influence the other entity.
         Securities sold to related parties under repurchase agreements amounted
to $7,290,000 and $3,004,000 at December 31, 1997 and 1996, respectively.

Note 7
Bank Premises and Equipment
         The  following  tables  detail bank  premises and equipment and related
depreciation and amortization expense.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
($ in thousands)                                            December 31
-----------------------------------------------------------------------------
                                                        1997          1996
-----------------------------------------------------------------------------
<S>                                                <C>            <C>
Land .........................................     $  34,089      $  34,422
Bank premises ................................       151,226        139,634
Leasehold improvements .......................        29,265         36,001
Furniture and equipment ......................       141,552        137,147
-----------------------------------------------------------------------------
                                                     356,132        347,204
Less accumulated depreciation and amortization      (182,226)      (170,555)
-----------------------------------------------------------------------------
Total ........................................     $ 173,906      $ 176,649
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
($ in thousands)                                            Year Ended December 31
-------------------------------------------------------------------------------------------------
                                                                 1997        1996        1995
-------------------------------------------------------------------------------------------------
<S>                                                           <C>         <C>         <C>
Provisions for depreciation and amortization included in:
        Occupancy expense ...............................     $ 8,418     $ 6,880     $ 5,869
        Equipment expense ...............................      16,204      19,233      12,344
-------------------------------------------------------------------------------------------------
Total ...................................................     $24,622     $26,113     $18,213
=================================================================================================
</TABLE>

         In March  1995,  the FASB  issued  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.


Note 8
Deposits
         At December  31, 1997 time  deposits  with a remaining  maturity of one
year or more  amounted to  $918,581,000.  Maturities of all time deposits are as
follows: 1998 - $3,092,656,000;  1999 - $687,981,000; 2000 - $80,717,000; 2001 -
$13,701,000; 2002 - $49,376,000; and thereafter $86,806,000.
         Domestic  certificates  of  deposit of  $100,000  or more  amounted  to
$1,469,784,000 and  $1,349,185,000 at December 31, 1997 and 1996,  respectively.
Interest  on  these  certificates  amounted  to  $74,029,000,   $62,173,000  and
$53,017,000 in 1997, 1996 and 1995, respectively.
         Foreign  deposits,  which are deposit  liabilities of the Cayman Island
office of Hibernia  National Bank,  amounted to $187,517,000  and $71,015,000 at
December 31, 1997 and 1996,  respectively.  Interest expense on foreign deposits
amounted to  $5,204,000,  $2,261,000  and  $2,018,000  for 1997,  1996 and 1995,
respectively.


Note 9
Short-Term Borrowings
         The following is a summary of short-term borrowings.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
($ in thousands)                                           December 31
------------------------------------------------------------------------------
                                                       1997         1996
------------------------------------------------------------------------------
<S>                                                <C>          <C>
Federal funds purchased ......................     $310,640     $ 31,909
Securities sold under agreements to repurchase      331,866      299,887
Federal Reserve Bank treasury, tax and
  loan account ...............................       57,741            -
------------------------------------------------------------------------------
  Total ......................................     $700,247     $331,796
------------------------------------------------------------------------------
</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 for 1997, 1996 and 1995.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
($ in thousands)                                 December 31
------------------------------------------------------------------------------
                                       1997          1996          1995
------------------------------------------------------------------------------
<S>                                <C>           <C>           <C>
Outstanding at December 31 ...     $700,247      $331,796      $265,126
Maximum month-end outstandings     $929,048      $363,496      $359,582
Average daily outstandings ...     $587,207      $320,654      $259,647
Average rate during the year .          5.2%          4.8%          5.3%
Average rate at year end .....          5.7%          5.0%          4.8%
------------------------------------------------------------------------------
</TABLE>

Note 10
Debt
         The following is a summary of outstanding debt.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
($ in thousands)                                    December 31
------------------------------------------------------------------------------
                                                  1997         1996
------------------------------------------------------------------------------
<S>                                           <C>          <C>
Federal Home Loan Bank callable advances      $300,000          $ -
Federal Home Loan Bank long-term advances      206,548        7,654
Federal Home Loan Bank short-term advance            -       42,202
Other ...................................            -        7,336
------------------------------------------------------------------------------
  Total .................................     $506,548     $ 57,192
==============================================================================
</TABLE>

         The Federal Home Loan Bank (FHLB) advances are secured by the Company's
investment in FHLB stock, which totaled  $31,920,000 and $28,863,000 at December
31, 1997 and 1996, 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 2007.  Callable  advances of $100,000,000  accrue interest at a rate of 4.72%
and $200,000,000 accrue interest at a rate of 4.82%. The FHLB may demand payment
on the callable  advances at  quarterly  intervals  beginning  in June 1998.  If
called prior to maturity,  replacement  funding will be offered by the FHLB at a
then-current  floating  rate.  The FHLB long-term  advances  accrue  interest at
contractual  rates  of  4.64%  to  8.36%,  are due in  monthly  installments  of
approximately  $1,125,000,  including  interest,  and are  scheduled to amortize
through various dates between 1998 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.  The FHLB
short-term advance accrued interest at 5.77%, was secured by two commercial real
estate notes receivable and required monthly interest payments.  This short-term
advance matured in March 1997.
         At December 31, 1997 the Company had  committed to borrow an additional
$200,000,000  from the FHLB at rates  that  range  from  6.19% to  6.21%.  These
borrowings will be drawn in the first quarter of 1998 and mature in 2001.
         Maturities   of  debt  are  as  follows:   1998  -  $859,000;   1999  -
$100,840,000;  2000 -  $100,853,000;  2001 -  $1,014,000;  2002 - $741,000;  and
thereafter - $302,241,000.

Note 11
Other Assets and Other Liabilities
         The following are summaries of other assets and other liabilities.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
($ in thousands)                                           December 31
------------------------------------------------------------------------------
                                                        1997         1996
------------------------------------------------------------------------------
<S>                                                 <C>          <C>
Other assets:
    Accrued interest receivable ...............     $ 70,820     $ 64,802
    Deferred income taxes .....................       30,593       47,328
    Foreclosed assets and excess
      bank-owned property .....................        4,812        8,879
    Mortgage servicing rights .................       12,030        6,214
    Goodwill ..................................      130,405      137,644
    Core deposit intangibles ..................       11,878       16,580
    Other .....................................       44,695       47,681
------------------------------------------------------------------------------
      Total other assets ......................     $305,233     $329,128
==============================================================================

Other liabilities:
    Accrued interest payable ..................     $ 32,254     $ 35,520
    Trade accounts payable and
      accrued liabilities .....................       68,531       73,100
    Trade date securities purchases not settled            -       17,416
    Reserve for future rental payments
      under sale/leaseback ....................       20,505       20,667
    Other .....................................       11,166       19,807
------------------------------------------------------------------------------
      Total other liabilities .................     $132,456     $166,510
==============================================================================
</TABLE>

         Amortization   expense   relating  to  goodwill   totaled   $7,714,000,
$4,783,000 and $3,107,000 for the years ended December 31, 1997,  1996 and 1995,
respectively. Accumulated amortization relating to goodwill at December 31, 1997
and 1996 totaled $48,792,000 and $41,078,000, respectively. Amortization expense
relating to core deposit  intangibles  totaled $4,702,000 and $1,877,000 in 1997
and  1996,  respectively.  Accumulated  amortization  relating  to core  deposit
intangibles  totaled  $6,579,000  and  $1,877,000 at December 31, 1997 and 1996,
respectively.

Note 12
Preferred and Common Stock
         The Company has authorized 100,000,000 shares of no par value preferred
stock.   At  December  31,  1997  and  1996,   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.
         The Company has authorized  200,000,000  shares of no par value Class A
Common  Stock.  At  December  31,  1997,  133,000,857  shares  were  issued  and
outstanding.   At  December  31,  1996,   132,200,373  shares  were  issued  and
132,150,373  shares were outstanding.  The Company held 50,000 shares of Class A
Common Stock in treasury at December 31, 1996.

Note 13
Net Income Per Common Share Data
         The following sets forth the computation of net income per common share
and net income per common share - assuming dilution.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
($ in thousands, except per-share data)                                Year Ended December 31
------------------------------------------------------------------------------------------------------------
                                                               1997              1996             1995
------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>              <C>
Numerator:
    Net income ....................................     $    137,389     $    112,818     $    131,412
    Preferred stock dividends .....................            6,900            1,740                -
------------------------------------------------------------------------------------------------------------
    Numerator for net income per common share .....          130,489          111,078          131,412
    Effect of dilutive securities .................                -                -                -
------------------------------------------------------------------------------------------------------------
    Numerator for net income per common
        share - assuming dilution .................     $    130,489     $    111,078     $    131,412
------------------------------------------------------------------------------------------------------------
Denominator:
    Denominator for net income per common
        share (weighted average shares outstanding)      130,795,276      130,160,581      130,275,835
    Effect of dilutive securities:
        Stock options .............................        2,204,500        1,337,904          777,431
        Purchase warrants .........................          174,376          160,200          148,075
        Restricted stock awards ...................          151,255                -                -
------------------------------------------------------------------------------------------------------------
    Denominator for net income per common
        share - assuming dilution .................      133,325,407      131,658,685      131,201,341
------------------------------------------------------------------------------------------------------------
Net income per common share .......................     $       1.00     $       0.85     $       1.01
------------------------------------------------------------------------------------------------------------
Net income per common share - assuming dilution ...     $       0.98     $       0.84     $       1.00
------------------------------------------------------------------------------------------------------------
</TABLE>

         The weighted average shares outstanding  exclude  1,782,937,  1,681,835
and 1,358,201 average common shares in 1997, 1996 and 1995,  respectively,  held
by the Hibernia  Employee Stock Ownership Plan (discussed in Note 15) which have
not been  committed  to be  released.  The common  shares  issued in all mergers
accounted for as poolings of interests  consummated  in 1997,  1996 and 1995 are
considered  to be  outstanding  as of  January  1, 1995,  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 1997 there were 129,501  antidilutive options outstanding with
exercise  prices  ranging from $16.30 to $18.80,  during 1996 there were 203,131
antidilutive  options  outstanding  with exercise  prices ranging from $11.56 to
$18.80 and during 1995 there were 208,131  antidilutive options outstanding with
exercise prices ranging from $10.63 to $18.80.

Note 14
Employee Benefit Plans
         The Company maintains a defined-contribution benefit plan under Section
401(k) of the  Internal  Revenue  Code,  the  Retirement  Security  Plan  (RSP).
Substantially  all employees who have completed one year of service are eligible
to  participate  in the RSP.  Under the RSP,  employees  contribute a portion of
their  compensation,  with the  Company  matching a certain  portion of employee
contributions.  The  matching  contributions  are  invested in Hibernia  Class A
Common Stock and are charged to employee benefits expense. At December 31, 1997,
the RSP owned  approximately  2,167,000 shares of Hibernia Class A Common Stock.
The Company's contributions to the RSP totaled $4,729,000 in 1997, $4,942,000 in
1996 and $2,955,000 in 1995.
         The Company  maintains  incentive  pay and bonus  programs  for certain
employees. Costs of these programs were $20,422,000, $17,166,000 and $10,727,000
for the years ended December 31, 1997, 1996 and 1995, 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 achieves certain
predetermined  performance  goals during the  three-year  period from January 1,
1995 through  December 31, 1997,  the Company will award Hibernia Class A Common
Stock to certain members of management who contributed to that achievement.  The
number of shares to be issued under the  1995-1997  Plan will be  determined  in
early 1998.  Compensation  expense of $6,390,000,  $3,148,000 and $1,619,000 was
recorded in 1997, 1996 and 1995,  respectively,  relating to the 1995-1997 Plan.
The Company is currently  developing a new performance share awards plan for the
three-year  period from January 1, 1998 through December 31, 2000. This new plan
is expected to be similar to the 1995-1997 Plan.
         Certain of the pooled  companies  had adopted  retention  agreements to
encourage  certain  officers and other key employees of the pooled  companies to
continue their employment through the consummation of a merger. These agreements
were executed primarily to maintain stability within the organization and reduce
the risk of loss of key employees  prior to legal merger.  Compensation  expense
related to these agreements  totaled  $34,000,  $997,000 and $1,195,000 in 1997,
1996 and 1995, respectively.


Note 15
Employee Stock Ownership Plan
         During 1995, the Company  instituted an employee  stock  ownership plan
(ESOP) in which  substantially  all  employees  participate.  The  ESOP,  with a
guarantee of the Parent Company,  borrowed funds from Hibernia  National Bank to
purchase  Hibernia  Class A Common Stock.  The ESOP is expected to acquire up to
$30,000,000 of Hibernia Class A Common Stock in open-market purchases,  of which
$8,629,000  remains for future  purchases at December 31, 1997.  At December 31,
1997 and 1996, the ESOP owned  approximately  2,431,000 and 2,036,000  shares of
Hibernia  Class  A  Common  Stock  and had an  outstanding  debt  obligation  of
$17,387,000 and $13,318,000,  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 1997,  1996 and 1995  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 Company  accounts  for the ESOP in  accordance  with  Statement  of
Position  93-6,  "Employers'  Accounting for Employee  Stock  Ownership  Plans."
Accordingly,  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 price of
the  shares,  and the  shares  become  outstanding  for  net  income  per  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 $3,014,000,  $2,882,000 and $2,395,000 relating
to the ESOP was recorded during 1997, 1996 and 1995, respectively. The ESOP held
618,000 and 440,000 allocated shares and 1,813,000 and 1,596,000 suspense shares
at December  31,  1997 and 1996,  respectively.  The fair value of the  suspense
shares  at  December  31,  1997  and  1996  was  $34,237,000  and   $21,145,000,
respectively.


Note 16
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.
         The following  summarizes the option activity in the plans during 1997,
1996 and 1995. During 1997 the 1987 Stock Option Plan was terminated; therefore,
at December  31, 1997 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, 1994 ......................        175,553       1,374,882       1,550,435      $    7.32
Granted (weighted-average fair value $2.41 per share)              -          10,000          10,000           8.31
Canceled ............................................         (7,500)         (1,474)         (8,974)          5.25
Exercised ...........................................         (5,625)        (22,422)        (28,047)          4.82
------------------------------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1997 ......................        141,803       1,241,739       1,383,542      $    7.10
------------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                                                                          Weighted-
                                                                                                            Average
                                                                                                           Exercise
                                                           Incentive  Non-Qualified           Total          Price
------------------------------------------------------------------------------------------------------------------------

Long-Term Incentive Plan:
<S>                                                        <C>            <C>             <C>            <C>
Outstanding, December 31, 1994 ......................         12,598      2,518,548       2,531,146      $    7.71
Granted (weighted-average fair value $2.09 per share)              -      1,458,200       1,458,200           6.98
Canceled ............................................              -       (208,150)       (208,150)          7.43
Exercised ...........................................              -        (22,150)        (22,150)          7.23
------------------------------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1997 ......................              -      1,918,393       1,918,393      $    7.55
------------------------------------------------------------------------------------------------------------------------
Available for Grant, December 31, 1997 ..............                                     1,205,891
------------------------------------------------------------------------------------------------------------------------

1993 Directors' Stock Option Plan:
Outstanding, December 31, 1994 ......................            -      155,000       155,000      $    7.60
Granted (weighted-average fair value $2.41 per share)            -       80,000        80,000           8.13
Exercised ...........................................            -       (2,500)       (2,500)          7.31
------------------------------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------------------------------
Exercisable, December 31, 1997 ......................            -      116,250       116,250      $    7.86
------------------------------------------------------------------------------------------------------------------------
Available for Grant, December 31, 1997 ..............                                 642,500
------------------------------------------------------------------------------------------------------------------------
</TABLE>

         In addition to the above option activity in the plans, 7,900, 5,755 and
264,347  shares of restricted  stock were awarded under the Long-Term  Incentive
Plan during the years ended December 31, 1997, 1996 and 1995, respectively.

         The following table presents the weighted-average  remaining life as of
December  31,  1997 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
--------------------------------------------------------------------------------------------------------
            Exercise                                Weighted-    Weighted-                 Weighted-
          Price Range                    Number      Average      Average        Number     Average
           Per Share                 of Options    Exercise      Remaining   of Options    Exercise
                                                     Price         Life                      Price
--------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>        <C>            <C>           <C>

1987 Stock Option Plan:
  $4.19 to $5.31 .................       578,375     $ 4.45     4.24 years       578,375     $ 4.45
  $7.19 to $8.75 .................       672,666     $ 7.24     5.30 years       672,666     $ 7.24
  $14.94 to $18.80 ...............       132,501     $17.96     0.90 years       132,501     $17.96
--------------------------------------------------------------------------------------------------------

Long-Term Incentive Plan:
  $6.63 to $8.81 .................     2,895,995     $ 7.47     6.41 years     1,913,393     $ 7.54
  $10.19 to $10.63 ...............     1,378,300     $10.20     8.22 years         5,000     $10.63
  $12.63 to $14.38 ...............     1,474,315     $13.43     9.08 years             -          -
--------------------------------------------------------------------------------------------------------

1993 Directors' Stock Option Plan:
  $7.31 to $8.13 .................       150,000     $ 7.83     6.45 years       111,250     $ 7.75
  $10.44 to $13.00 ...............       140,000     $11.72     8.83 years         5,000     $10.44
--------------------------------------------------------------------------------------------------------
</TABLE>


         The following pro forma  information  was  determined as if the Company
had  accounted  for  stock  options  issued  in 1997,  1996 and 1995  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 1997, 1996 and 1995,  respectively:
risk-free interest rates of 6.67%, 6.44% and 7.74%;  expected dividend yields of
2.39%, 2.74% and 3.41%;  expected  volatility factors of the market price of the
Hibernia  Class A Common Stock of 23%, 23% and 29%; 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 1997, 1996 and 1995 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)                       December 31
-----------------------------------------------------------------------------------------------------------------------
                                 1997                             1996                            1995
-----------------------------------------------------------------------------------------------------------------------
                      As Reported       Pro Forma     As Reported      Pro Forma      As Reported       Pro Forma
-----------------------------------------------------------------------------------------------------------------------
<S>                     <C>             <C>             <C>             <C>             <C>             <C>
Net income ........     $ 137,389       $ 135,326       $ 112,818       $ 111,690       $ 131,412       $ 130,887
Net income per
  common share ....     $    1.00       $    0.98       $    0.85       $    0.84       $    1.01       $    1.00
Net income per
  common share -
  assuming dilution     $    0.98       $    0.96       $    0.84       $    0.84       $    1.00       $    1.00
-----------------------------------------------------------------------------------------------------------------------
</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 components of income tax expense are as follows.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
($ in thousands)                                            Year Ended December 31
-------------------------------------------------------------------------------------------
                                                      1997          1996          1995
-------------------------------------------------------------------------------------------
<S>                                               <C>           <C>           <C>
Current tax expense:
     Federal income tax .....................     $ 54,880      $ 52,456      $ 30,339
     State income tax .......................        3,882         3,648         3,710
-------------------------------------------------------------------------------------------
Total current tax expense ...................       58,762        56,104        34,049
-------------------------------------------------------------------------------------------
Deferred tax expense (benefit):
     Federal income tax .....................       17,790         1,435        14,636
     Change in deferred tax valuation reserve       (3,317)        3,317       (36,551)
-------------------------------------------------------------------------------------------
Total deferred tax expense (benefit) ........       14,473         4,752       (21,915)
-------------------------------------------------------------------------------------------
Income tax expense ..........................     $ 73,235      $ 60,856      $ 12,134
-------------------------------------------------------------------------------------------
Shareholders' equity:
     Change in unrealized gains (losses)
        on securities available for sale ....     $  2,262      $ (4,397)     $ 18,526
     Change in deferred tax valuation reserve            -             -        (8,380)
-------------------------------------------------------------------------------------------
Total shareholders' equity ..................     $  2,262      $ (4,397)     $ 10,146
===========================================================================================
</TABLE>


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

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------
($ in thousands)                                                                Year Ended December 31
------------------------------------------------------------------------------------------------------------------------
                                                         1997                    1996                  1995
------------------------------------------------------------------------------------------------------------------------
                                                  Amount       Rate      Amount      Rate       Amount      Rate
------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>      <C>           <C>      <C>           <C>
Tax expense based on federal statutory rate     $ 73,718      35.0 %   $ 60,786      35.0 %   $ 50,241      35.0 %
Tax-exempt interest .......................       (5,404)     (2.6)      (3,859)     (2.2)      (4,286)     (3.0)
State income tax, net of federal benefit ..        2,523       1.2        2,371       1.4        2,411       1.7
Goodwill ..................................        2,681       1.3        1,657       0.9        1,088       0.8
Benefit from change in deferred tax
  valuation reserve .......................            -         -            -         -      (36,551)     (25.5)
Other .....................................         (283)     (0.1)         (99)     (0.1)        (769)     (0.5)
------------------------------------------------------------------------------------------------------------------------
Income tax expense ........................     $ 73,235      34.8 %   $ 60,856      35.0 %   $ 12,134      8.5 %
========================================================================================================================
</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 at December 31, 1997 and 1996, are detailed
in the following table.

<TABLE>
<CAPTION>

--------------------------------------------------------------------
($ in thousands)                                  December 31
--------------------------------------------------------------------
                                               1997         1996
--------------------------------------------------------------------
<S>                                        <C>          <C>
Deferred tax assets:
    Reserve for possible loan losses .     $ 37,639     $ 44,994
    Sale/leaseback ...................        7,409        7,527
    Loan fees ........................        2,934        1,596
    Foreclosed assets ................           62        2,528
    Capital loss carryforward ........           97        3,317
    Other ............................       17,830       19,911
--------------------------------------------------------------------
Total deferred tax assets ............       65,971       79,873
--------------------------------------------------------------------
Deferred tax liabilities:
    Net unrealized gains on securities
       available for sale ............        6,809        4,547
    Depreciation .....................       10,463       10,326
    Core deposit intangibles .........        3,905        5,489
    Discounts on securities ..........        1,316           71
    Other ............................       12,885        8,795
--------------------------------------------------------------------
Total deferred tax liabilities .......       35,378       29,228
--------------------------------------------------------------------
Deferred tax assets, net of
  deferred tax liabilities ...........       30,593       50,645
Deferred tax valuation reserve .......            -       (3,317)
--------------------------------------------------------------------
Total net deferred tax asset .........     $ 30,593     $ 47,328
====================================================================
</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
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  $12,171,000,  $10,975,000  and
$10,529,000 in 1997, 1996 and 1995, respectively.
         The future  minimum  rental  commitments  at December 31, 1997, for all
long-term  operating  leases  are  as  follows:  1998  -  $10,305,000;   1999  -
$9,619,000;  2000 -  $8,932,000;  2001 -  $8,740,000;  2002  -  $8,551,000;  and
thereafter - $47,337,000.



Note 19
Other Operating Expense
         The following is a summary of other operating expense.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
($ in thousands)                               Year Ended December 31
----------------------------------------------------------------------------
                                            1997        1996        1995
----------------------------------------------------------------------------
<S>                                      <C>         <C>         <C>
Advertising and promotional expenses     $13,144     $ 9,815     $ 7,506
Telecommunications .................      10,593       8,975       7,123
Postage ............................       7,576       6,378       5,433
Stationery and supplies ............       7,333       6,827       6,554
State taxes on equity ..............       6,100       6,000       4,491
Professional fees ..................       5,852       7,636       7,876
Loan collection expense ............       4,037       2,494       2,149
Regulatory expense .................       2,455       1,323       8,762
Other ..............................      31,639      29,572      28,363
----------------------------------------------------------------------------
    Total other operating expense ..     $88,729     $79,020     $78,257
============================================================================
</TABLE>

Note 20
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
------------------------------------------------------------------
                                         1997            1996
------------------------------------------------------------------
<S>                                 <C>            <C>
Investment in bank subsidiaries     $  912,232     $  801,169
Other assets ..................        156,504        183,907
------------------------------------------------------------------
    Total assets ..............     $1,068,736     $  985,076
==================================================================
Other liabilities .............     $    1,035     $   13,973
Debt ..........................         17,387         19,162
Shareholders' equity ..........      1,050,314        951,941
------------------------------------------------------------------
    Total liabilities and
      shareholders' equity ....     $1,068,736     $  985,076
==================================================================
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Income Statements
--------------------------------------------------------------------------------
($ in thousands)                                 Year Ended December 31
--------------------------------------------------------------------------------
                                            1997         1996           1995
--------------------------------------------------------------------------------
<S>                                    <C>           <C>           <C>
Equity in undistributed net income
    of subsidiaries ..............     $  81,945     $  75,345     $  57,144
Dividends from bank subsidiaries .        47,183        35,215        70,201
Other income .....................        12,054         6,037         3,685
--------------------------------------------------------------------------------
    Total income .................       141,182       116,597       131,030
--------------------------------------------------------------------------------
Interest expense .................           351           375           405
Other expense ....................           651         2,249         3,471
--------------------------------------------------------------------------------
    Total expense ................         1,002         2,624         3,876
--------------------------------------------------------------------------------
Income before taxes ..............       140,180       113,973       127,154
Income tax expense (benefit) .....         2,791         1,155        (4,258)
--------------------------------------------------------------------------------
Net income .......................     $ 137,389     $ 112,818     $ 131,412
--------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Statements of Cash Flows
------------------------------------------------------------------------------------------
($ in thousands)                                           Year Ended December 31
------------------------------------------------------------------------------------------
                                                     1997          1996           1995
------------------------------------------------------------------------------------------
<S>                                             <C>            <C>            <C>
Operating activities
    Net income ............................     $ 137,389      $ 112,818      $ 131,412
    Equity in undistributed
      net income of subsidiaries ..........       (81,945)       (75,345)       (57,144)
    Realized securities (gains) losses, net        (1,305)             -              -
    Other adjustments .....................        (8,146)         1,826        (10,856)
------------------------------------------------------------------------------------------
Net cash provided by
        operating activities ..............        45,993         39,299         63,412
------------------------------------------------------------------------------------------
Investing activities
    Investment in subsidiaries ............       (28,000)       (11,747)          (100)
    Purchases of securities available
       for sale ...........................      (120,000)             -           (484)
    Proceeds from sales of securities
       available for sale .................       121,305              -            453
    Maturities of securities
       available for sale .................             -              -          1,600
    Net decrease (increase) in loans ......           834          2,206        (10,867)
------------------------------------------------------------------------------------------
Net cash used by investing activities .....       (25,861)        (9,541)        (9,398)
------------------------------------------------------------------------------------------
Financing activities
    Issuance of debt ......................             -          4,776              -
    Payments on debt ......................        (5,843)        (1,903)        (4,247)
    Purchase of treasury stock ............          (299)          (880)          (563)
    Dividends paid ........................       (49,652)       (37,262)       (31,952)
    Issuance of preferred stock ...........             -         98,000              -
    Issuance of common stock ..............         9,897          7,642          3,634
------------------------------------------------------------------------------------------
Net cash provided (used) by
         financing activities .............       (45,897)        70,373        (33,128)
------------------------------------------------------------------------------------------
    Increase (decrease) in cash
      and cash equivalents ................       (25,765)       100,131         20,886
Cash and cash equivalents
  at beginning of year ....................       167,614         67,483         46,597
------------------------------------------------------------------------------------------
Cash and cash equivalents
  at end of year ..........................     $ 141,849      $ 167,614      $  67,483
------------------------------------------------------------------------------------------
</TABLE>

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, demand 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   $107,540,000   and   $129,039,000  at  December  31,  1997  and  1996,
respectively.
         The fair value estimates  presented are based on information  available
to management as of December 31, 1997 and 1996. 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 are held for trading
purposes.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
($ in thousands)                                              December 31
------------------------------------------------------------------------------------------------
                                                    1997                         1996
------------------------------------------------------------------------------------------------
                                          Carrying           Fair       Carrying           Fair
                                            Amount          Value         Amount          Value
------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>            <C>
Assets
    Cash and short-term investments     $  923,639     $  923,639     $  766,592     $  766,592
    Securities available for sale .     $2,147,405     $2,147,405     $2,250,952     $2,250,952
    Commercial loans ..............     $3,091,534     $3,103,489     $2,339,164     $2,349,641
    Small business loans ..........     $1,373,525     $1,379,149     $1,189,848     $1,196,386
    Consumer loans ................     $3,115,192     $3,117,221     $2,636,891     $2,599,659
Liabilities
    Demand deposits ...............     $1,620,713     $1,620,713     $1,596,170     $1,596,170
    Interest-bearing deposits .....     $7,012,616     $7,029,864     $6,456,576     $6,483,111
    Short-term borrowings .........     $  700,247     $  700,247     $  331,796     $  331,796
    Debt ..........................     $  506,548     $  505,302     $   57,192     $   58,292
------------------------------------------------------------------------------------------------
</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
-------------------------------------------------------------------------------------
                                        1997                          1996
-------------------------------------------------------------------------------------
                             Contract           Fair        Contract           Fair
                               Amount          Value          Amount          Value
-------------------------------------------------------------------------------------

<S>                        <C>            <C>             <C>            <C>
Commitments
  to extend credit ...     $2,996,993     $  (27,193)     $1,803,997     $  (16,908)
-------------------------------------------------------------------------------------

Letters of credit and
  financial guarantees     $  187,239     $   (1,386)     $  132,413     $     (969)
-------------------------------------------------------------------------------------
</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. However, to meet the needs of customers, the Company also serves as the
counterparty for certain transactions.
         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,  1997 and 1996 was  $884,000  and  $913,000,
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
----------------------------------------------------------------------------------------------------------------------
                                         1997         1996          1997         1996          1997         1996
----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>           <C>           <C>           <C>
Interest rate swaps
    Assets .....................     $124,700     $ 56,099     $    880      $    881      $    796      $    993
    Liabilities ................     $ 56,178     $ 46,099     $   (398)     $   (515)     $   (434)     $   (726)
Options, caps and floors held ..     $ 21,700     $ 53,687     $      5      $     32      $     19      $    (35)
Options, caps and floors written     $ 21,700     $ 54,062     $     (6)     $    (36)     $    (22)     $     30
----------------------------------------------------------------------------------------------------------------------
</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 a 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  $100,000,000  at
December  31,  1997 was entered  into  during 1997 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 2,
1998.
         At December  31,  1996,  the Company was party to several  contracts to
manage the interest rate risk of securities  available for sale, as discussed in
Note 4.


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, 1997 and 1996,  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.
     The  Company's  and the  Banks'  actual  capital  amounts  and  ratios  are
presented in the following table.
<TABLE>
<CAPTION>
($ in thousands)                     Tier 1                   Total
                               Risk-Based Capital       Risk-Based Capital           Leverage
----------------------------------------------------------------------------------------------------
                                 Amount     Ratio        Amount     Ratio        Amount     Ratio
----------------------------------------------------------------------------------------------------
<S>                            <C>          <C>        <C>          <C>        <C>           <C>
December 31, 1997
    Hibernia Corporation .     $895,387     10.77%     $999,370     12.02%     $895,387      8.54%
    Hibernia National Bank     $699,974      8.77%     $799,875     10.01%     $699,974      7.12%
    Hibernia National Bank
      of Texas ...........     $ 58,657     18.71%     $ 61,341     19.57%     $ 58,657      9.21%

December 31, 1996
    Hibernia Corporation .     $789,244     12.03%     $871,817     13.29%     $789,244      8.68%
    Hibernia National Bank     $583,784      9.41%     $661,952     10.67%     $583,784      6.91%
    Hibernia National Bank
      of Texas ...........     $ 55,039     15.20%     $ 59,154     16.34%     $ 55,039      8.50%
----------------------------------------------------------------------------------------------------
</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.  In 1998, the Banks
will have available to pay dividends to the Parent Company,  without approval of
the OCC,  approximately  $157,059,000,  plus net retained profits earned in 1998
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 $15,863,000 in 1997 and $19,929,000 in 1996.


Note 23
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.