IBERIABANK Corporation Reports Fourth Quarter Results

LAFAYETTE, La.Jan. 25, 2012/PRNewswire/ -- IBERIABANK Corporation (NASDAQ: IBKC), holding company of the 124-year-old IBERIABANK (www.iberiabank.com), reported operating results for the fourth quarter ended December 31, 2011.  For the quarter, the Company reported income available to common shareholders of $17 millionand fully diluted earnings per share ("EPS") of $0.59.  The Company completed the acquisitions of OMNI BANCSHARES, Inc. ("OMNI") and Cameron Bancshares, Inc. ("Cameron") on May 31, 2011.  Financial statements reflect the impact of those acquisitions beginning on that date.  The conversions of branch and operating systems of OMNI and Cameron were successfully completed over the weekends of June 18-19and July 9-10, respectively.  The Company incurred pre-tax acquisition and conversion costs in the fourth quarter of 2011 equal to $4 million, or $0.10per share on an after-tax basis.  Excluding the acquisition and conversion costs, EPS in the fourth quarter of 2011 was $0.69per share. The average analyst estimate for EPS for the fourth quarter of 2011 as reported in First Call was $0.65per share.

Daryl G. Byrd, President and Chief Executive Officer commented, "Our Company continues to demonstrate tremendous growth and balance sheet strength during this challenging economic period.  Our stellar asset quality ratios continued to show significant improvement throughout the year."  Byrd continued, "We are very proud of our investments and many accomplishments in 2011, and we are optimistic regarding our Company's prospects for 2012.  With great excitement, we will be celebrating our institution's 125th anniversary on March 12, 2012."

Highlights for the Fourth Quarter of 2011 and December 31, 2011:

• Loan growth of $262 million, or 5%, between quarter-ends (18% annualized rate), excluding loans, OREO, and other assets covered under FDIC loss share agreements ("Covered Assets").
• Core deposit growth (excluding time deposits) of $280 million, or 4% (17% annualized growth), compared to September 30, 2011.
• Continued asset quality strength; Nonperforming assets ("NPAs"), excluding Covered Assets and impaired loans marked to fair value that were acquired in the OMNI and Cameron acquisitions, equated to 0.87% of total assets at December 31, 2011, compared to 0.89% at September 30, 2011.  On that basis, loans past due 30 days or more declined 11%, and restructured loans declined 4% during the fourth quarter of 2011.
• For the year of 2011, net charge-offs excluding Covered Assets were $8 million, or 0.13% of average loans, compared to $27 million, or 0.60% of average loans in 2010.
• Despite the significant improvement in asset quality measures in the legacy and FDIC Covered Assets, the Company incurred net impairment associated with Covered Assets totaling $2 million, or $0.04per share on an after-tax basis.  During the fourth quarter of 2011, the Company also wrote-down four properties formerly used for banking purposes totaling $1 million, or $0.02per share on an after-tax basis.
• Capital ratios remain strong; At December 31, 2011, the Company's tangible common equity ratio was 9.52%, tier 1 leverage ratio was 10.45%, and total risk based capital ratio was 16.21%.
• At the time of acquisition of OMNI and Cameron, the Company used preliminary estimates to determine the fair values of assets acquired and liabilities assumed.  In accordance with generally accepted accounting principles, acquirers have one year to complete analysis on facts and circumstances that existed at acquisition date and refine those estimates.  During the fourth quarter of 2011, the Company performed further analysis that included a refinement of future estimated cash flows, review of loan types, refinement of discounts, losses given default, and underlying collateral values.  As a result, the Company increased the original amount of goodwill recorded on Cameron at June 30, 2011by $20 millionand reduced loan interest income in the third quarter of 2011 by $1.5 million.  The majority of the $20 millionincrease in goodwill on Cameron was associated with interest rate mark adjustments.
• As a result of the OMNI and Cameron adjustments to loan interest income, the tax-equivalent net interest margin for the third quarter of 2011, was initially reported as 3.62%, was subsequently adjusted to 3.58%. The margin in the fourth quarter of 2011 was 3.62%.

Balance Sheet Summary

Total assets increased $271 million, or 2%, since September 30, 2011, to $11.8 billionat December 31, 2011.  Over this period, total loans increased $218 million, or 3%; investment securities decreased $59 million, or 3%; and total deposits increased $99 million, or 1%.  Total shareholders' equity increased $11 million, or 1%, since September 30, 2011, to $1.5 billionat December 31, 2011.

Investments

Total investment securities decreased $59 millionduring the fourth quarter of 2011, or 3%, to $2.0 billionat December 31, 2011.  As a percentage of total assets, the investment portfolio declined from 18% at September 30, 2011, to 17% at December 31, 2011.  The investment portfolio had a modified duration of 2.8 years at December 31, 2011, compared to 2.6 years at September 30, 2011.  The unrealized gain in the investment portfolio increased from $42 millionat September 30, 2011to $46 millionat December 31, 2011.  Based on projected prepayment speeds and other assumptions, at December 31, 2011, the portfolio was expected to generate approximately $542 millionin cash flows, or about 27% of the portfolio, over the next 12 months. The average yield on investment securities declined 15 basis points on a linked quarter basis, to 2.57% in the fourth quarter of 2011.  The Company holds in its investment portfolio primarily government agency and municipal securities.  Municipal securities comprised only 11% of the total investment portfolio at December 31, 2011.  The Company holds no sovereign debt or foreign derivative exposure and has an immaterial exposure to accelerated bond premium amortization.

Loans

In the fourth quarter of 2011, total loans increased $218 million, or 3%.  The loan portfolio associated with the FDIC-assisted acquisitions decreased $44 million, or 3%, compared to September 30, 2011.  Excluding loans associated with the FDIC-assisted transactions, total loans increased $262 million, or 5%, over that period (18% annualized rate).  On that basis, commercial and business banking loans grew$250 million, or 6% (23% annualized rate), and consumer loans increased $55 million, or 4% (18% annualized rate), while mortgage loans declined $43 million, or 14%, over that period.  Between the times at which the acquisitions were completed and December 31, 2011, loans acquired in FDIC-assisted acquisitions decreased by approximately $559 million, or 30%.

Of the $7.4 billiontotal loan portfolio at December 31, 2011, $1.3 billion(net of discounts), or 18% of total loans, were Covered Assets, which provide considerable protection against credit risk.  Approximately $74 millionof the impaired loans from OMNI and Cameron at the time of acquisition were marked to estimated fair values.  

Period-End Loan Volumes($ in Millions)

Loans
	12/31/10	3/31/11	6/30/11	9/30/11	12/31/11
Commercial	$ 3,123

On a linked quarter basis, the yield on average total loans (non-FDIC loans and FDIC covered loans, net of the FDIC indemnification asset) increased four basis points to 5.02%.  The increase in this yield was primarily driven by the improvement in the yield on the FDIC covered loans, as the non-FDIC covered loan yield declined eight basis points.  The loan yield on FDIC covered loans net of the FDIC indemnification asset was 5.33%, an improvement of 40 basis points on a linked quarter basis.  The primary reason for the yield improvement in FDIC covered loans was positive adjustments that will occur from time to time.

Non-Covered and Net Covered Loan Portfolio Volumes And Yields ($ in Millions)

	4Q 2010		1Q 2011		2Q 2011		3Q 2011		4Q 2011
	Avg Bal	Yield	Avg Bal	Yield	Avg Bal	Yield	Avg Bal	Yield	Avg Bal	Yield
Non Covered Loans	$ 4,333	4.94%	$ 4,506	4.89%	$ 5,004	4.92%	$ 5,743	4.99%	$ 5,874	4.91%
FDIC Covered Loans	$ 1,466	10.67%	$ 1,546	14.20%	$ 1,490	10.89%	$ 1,422	7.82%	$ 1,351	16.14%
FDIC Indemnification Asset	900	-3.75%	709	-12.37%	666	-10.88%	627	-1.63%	593	-19.31%
Net Covered Loans	$ 2,366	5.14%	$ 2,254	5.74%	$ 2,156	4.08%	$ 2,048	4.93%	$ 1,944	5.33%

The Company projects the prospective yield and average balance on the net covered loan portfolio in the first quarter of 2012 to approximate the level reported for the third quarter of 2011, based on current FDIC loss share accounting assumptions and estimates.

Commercial real estate loans totaled $3.3 billionat December 31, 2011, of which approximately $0.7 billion, or 22%, were Covered Assets.  In addition, these Covered Assets were purchased at substantial discounts.  

At December 31, 2011, approximately 12% of the Company's direct consumer loan portfolio (net of discounts) was Covered Assets and impaired loans marked to fair value.  The remaining legacy consumer portfolio maintained favorable asset quality.  The average credit score of the legacy consumer loan portfolio borrower was 723, and consumer loans past due 30 days or more were 0.88% of total consumer loans at December 31, 2011(compared to 0.55% at September 30, 2011).  At December 31, 2011, legacy home equity loans totaled $509 million, with 1.11% past due 30 days or more (0.81% at September 30, 2011).  Legacy home equity lines of credit totaled $340 million, with 0.44% past due 30 days or more (0.25% at September 30, 2011).  Annualized net charge-offs in this portfolio were 0.03% of total consumer loans in the fourth quarter of 2011 (0.38% in the third quarter of 2011).  The weighted average loan-to-value at origination for this portfolio over the last three years was 67%.

The indirect automobile loan portfolio totaled $262 millionat December 31, 2011, up $2 million, or 1%, compared to this portfolio at September 30, 2011.  At December 31, 2011, this portfolio equated to 4% of total loans and had 1.08% in loans past due 30 days or more (including nonaccruing loans), compared to 0.96% at September 30, 2011.  Annualized net charge-offs in the indirect loan portfolio equated to approximately 0.38% of average loans in the fourth quarter of 2011, compared to 0.20% in the third quarter of 2011.  Approximately 79% of the indirect automobile portfolio was loans to borrowers in the Acadiana region of Louisiana, which currently experiences a relatively favorable unemployment rate (4.9% in November 2011, the 23rd lowest unemployment rate of 372 MSAs in the United States).

Asset Quality

The Company's credit quality statistics are significantly affected by the FDIC-assisted acquisitions.  However, the loss share arrangements with the FDIC and acquisition discounts are expected to provide substantial protection against losses on those Covered Assets.  Under loss share agreements in connection with the FDIC-assisted acquisitions, the FDIC will cover 80% of the losses on the disposition of loans and OREO up to $1.2 billion, or $965 million(the Company covered the remaining $241 millionat acquisition).  In addition, the FDIC will cover 95% of losses that exceed a $970 millionthreshold level.  The Company received a discount of approximately $515 millionon the purchase of assets in the transactions.

The majority of assets acquired in the four FDIC-assisted transactions completed in 2009 and 2010 are Covered Assets.  Total NPAs at December 31, 2011, were $873 million, down $74 million, or 8%, compared to September 30, 2011.  Excluding $788 millionin NPAs which were Covered Assets or acquired impaired loans marked to fair value, NPAs at December 31, 2011were $85 million, up $1 million, or 1%, compared to September 30, 2011.  On that basis, NPAs were 0.87% of total assets at December 31, 2011, compared to 0.89% of assets at September 30, 2011and 0.91% one year ago.

Summary Asset Quality Statistics

($ thousands)		IBERIABANK Corp.
		4Q10*	1Q11*	2Q11**	3Q11**	4Q11**
Nonaccruals		$    49,496	$    60,034	$    56,434	$    70,833	$                  60,303
OREO & Foreclosed		18,496	17,056	18,461	12,301	21,382
90+ Days Past Due		1,455	454	2,191	1,149	3,580
Nonperforming Assets		$    69,447	$    77,544	$    77,085	$    84,283	$                  85,265
NPAs/Assets		0.91%	1.01%	0.84%	0.89%	0.87%
NPAs/(Loans + OREO)		1.55%	1.68%	1.36%	1.47%	1.41%
LLR/Loans		1.40%	1.45%	1.28%	1.34%	1.24%
Net Charge-Offs/Loans		0.96%	-0.06%	0.13%	0.12%	0.31%
* Excludes the impact of all FDIC-assisted acquisitions
** Excludes the impact of all FDIC-assisted acquisitions and acquired impaired loans from OMNI and Cameron

Excluding the FDIC-assisted transactions and impaired loans acquired at fair value, loans past due 30 days or more (including nonaccruing loans) decreased $14 million, or 15%, and represented 1.37% of total loans at December 31, 2011, compared to 1.68% of total loans at September 30, 2011.  On that basis, loans past due 30-89 days at December 31, 2011totaled $19 million, or 0.32% of total loans (compared to 0.44% of total loans at September 30, 2011), and troubled debt restructurings at December 31, 2011, totaled $28 million, or 0.46% of total loans (compared to 0.50% of loans at September 30, 2011).  Substantially all of the troubled debt restructurings were included in the NPAs at December 31, 2011.   The Company reported classified assets excluding Covered Assets totaling $206 millionat December 31, 2011, or 1.75% of total assets (compared to $197 million, or 1.71% of total assets, at September 30, 2011).  Since year-end 2011, approximately $14 millionin classified assets have paid-off in full, including an $11 millionloan which was past due and the Company's second largest classified asset.

Loans Past Due
Loans Past Due 30 Days Or More And Nonaccruing Loans As % Of Loans Outstanding
	12/31/10	3/31/11	6/30/11	9/30/11	12/31/11

The Company reported net charge-offs of $5 millionin the fourth quarter of 2011, compared to $2 millionon a linked quarter basis.  The ratio of net charge-offs to average loans was 0.29% in the fourth quarter of 2011 (0.31% excluding Covered Assets and impaired loans acquired at fair value), compared to 0.10% in the third quarter of 2011.  The Company recorded a $4 millionloan loss provision in the fourth quarter of 2011, down $2 million, or 30%, on a linked quarter basis. The loan loss provision in the fourth quarter was related to organic loan growth, partially offset by reduced provision associated with the improvement in asset quality.  

At December 31, 2011, the allowance for loan losses was 2.62% of total loans, compared to 2.45% at September 30, 2011.  In accordance with generally accepted accounting principles, the Covered Assets and OMNI and Cameron acquired loans were preliminarily marked to market at acquisition, including estimated loan impairments.  Excluding FDIC covered assets and impaired loans that were marked to fair value, the Company's ratio of loan loss reserves to loans decreased from 1.34% at September 30, 2011, to 1.24% at December 31, 2011. Excluding the Covered Assets and all other acquired loans, the Company's ratio of loan loss reserve to loans decreased from 1.51% at September 30, 2011to 1.39% at December 31, 2011.  Management considered the loan loss reserve adequate to absorb credit losses inherent in the loan portfolio at December 31, 2011.

Deposits

During the fourth quarter of 2011, total deposits increased $99 million, or 1%.  Noninterest bearing deposits climbed $70 million, or 5% (20% annualized rate); NOW accounts increased $189 million, or 11% (45% annualized rate); savings and money market deposits increased $21 million, or 1% (3% annualized rate); and time deposits decreased $181 million, or 7%.

Period-End Deposit Volumes ($ in Millions)

Average noninterest bearing deposits increased $87 million, or 6%, and interest-bearing deposits wererelatively stable on a linked quarter basis.  The rate on average interest bearing deposits in the fourth quarter of 2011 was 0.80%, a decreaseof 10 basis points on a linked quarter basis.

Other Interest Bearing Liabilities

On a linked quarter basis, average long-term debt decreased $9 million, or 2%, and the cost of the debt increased 21 basis points to 2.84%.  The Company had $192 millionof short-term borrowings at December 31, 2011.  The cost of average interest bearing liabilities was 0.90% in the fourth quarter of 2011, a decrease of eight basis points on a linked quarter basis. For the month of December 2011, the average cost of interest bearing liabilities was 0.87%.

Capital Position

The Company maintains strong capital ratios.  The equity-to-assets ratio was 12.61% at December 31, 2011, compared to 12.81% at September 30, 2011, and 13.00% one year ago.  At December 31, 2011, the Company reported a tangible common equity ratio of 9.52%, compared to 9.64% at September 30, 2011and 10.65% one year ago.  The Company's Tier 1 leverage ratio was 10.45%, compared to 10.42% at September 30, 2011and 11.24% one year ago.  The Company's total risk-based capital ratio at December 31, 2011was 16.21%, compared to 16.62% at September 30, 2011and 19.74% one year ago.

Regulatory Capital Ratios
At December 31, 2011
		Well				IBERIABANK
Capital Ratio		Capitalized		IBERIABANK		Corporation
Tier 1 Leverage		5.00%		9.00%		10.45%
Tier 1 Risk Based		6.00%		12.88%		14.94%
Total Risk Based		10.00%		14.14%		16.21%

On May 31, 2011, the Company acquired both OMNI and Cameron. At the time of these acquisitions, the Company used preliminary estimates ("provisional amounts") to determine the fair values of many of the assets acquired and liabilities assumed.  The Company disclosed in previous press releases and Form 10-Q filings that the estimates used to determine the fair value of the acquired loans were provisional amounts and might change as additional analysis of future cash flows was performed.

The period of time subsequent to the acquisition date for the Company  to obtain the information necessary to measure all aspects of the business combinations  in accordance with ASC 805 (i.e., to measure and recognize all aspects of the business combinations  at acquisition-date fair values) is limited to one year.  During this period, the Company may adjust any provisional amounts made for the business combinations based on any additional information subsequently obtained regarding their fair values as of the acquisition date.

During the fourth quarter, the Company performed further analysis of the facts and circumstances that existed at the acquisition date.  This analysis included a refinement of the future estimated cash flows, review of loan types, and a refinement of discounts, losses given default and underlying collateral values.

As a result of this analysis, it was determined that the provisional amounts assigned to certain asset values of OMNI and Cameron initially estimated as of the acquisition date should be adjusted. The adjustments were performed retrospectively, as if they had existed at acquisition date. The Company increased the original amount of goodwill recorded in the fiscal quarter ended June 30, 2011 by $20.7 million.  Due to the change in provisional amounts of loans relating to this change in goodwill, the associated loan interest income was reduced by $1.5 millionin the fiscal quarter ended September 30, 2011.  These changes have been reported in the quarterly comparative balance sheet, income statement and tables included in this press release.

These refinements to the OMNI and Cameron acquisition estimates reduced book value per share at September 30, 2011from $50.19as originally reported to $50.16as adjusted, and tangible book value per share at September 30, 2011from $37.12as originally reported to $36.41as adjusted.  At December 31, 2011, book value per share was $50.48and tangible book value per share was $36.80.  Based on the closing stock price of the Company's common stock of $54.35per share on January 24, 2012, this price equated to 1.08 times December 31, 2011book value and 1.48 times December 31, 2011tangible book value per share.

On December 12, 2011