Associated Press
08.19.2004

Hibernia Corp., the holding company for Hibernia National Bank, said Thursday that it signed a letter of intent to sell its $10 billion, third-party residential mortgage servicing portfolio to a unit of Citigroup Inc.

The company did not disclose financial details of the deal, which it expects to close by Sept. 30.

Hibernia said it does not expect the sale to CitiMortgage Inc. to affect 2004 earnings, excluding any gain or expenses from the transaction. The company said it continues to expect to meet the high end of guidance for 8 percent to 10 percent earnings growth for the year, and may exceed that goal if the initial positive impact continues from its recent acquisition of Coastal Bancorp Inc.

Analysts surveyed by Thomson First Call have predicted 2004 earnings of $1.83 per share, up 9 percent from year-ago results.

The company said it expects to eliminate some positions at its mortgage-service center in Baton Rouge. The center employs about 80 people.

Hibernia said it will continue to service $2 billion of Hibernia-owned adjustable-rate mortgages and to own a $650 million portfolio that is serviced by others for Hibernia.

"We will now direct most of our mortgage banking efforts toward retail residential origination and release the servicing rights to others in the industry," mortgage banking president Paul Peters said in a statement.

Denver-based Matrix Bancorp Trading Inc. is acting as sales adviser to Hibernia.

Shares of Hibernia were down 13 cents, or less than 1 percent, at $25.88 in afternoon trading. Citigroup stock was down 40 cents, or less than 1 percent, at $45.24. Both companies trade on the New York Stock Exchange.