IBERIABANK Corporation Reports Earnings per Share Increase of 8%

LAFAYETTE, La., Jan. 24, 2013 /PRNewswire/ -- IBERIABANK Corporation (NASDAQ: IBKC), holding company of the 125-year-old IBERIABANK (www.iberiabank.com), reported operating results for the fourth quarter ended December 31, 2012.  For the quarter, the Company reported income available to common shareholders of $23 million and fully diluted earnings per share ("EPS") of $0.79, up 8% compared to the third quarter of 2012.  During the fourth quarter of 2012, the Company incurred total non-operating costs of $3 million on a pre-tax basis, or $0.06 per share on an after-tax basis, and non-operating income of $2 million on a pre-tax basis, or $0.05 per share on an after-tax basis.  On an operating basis, EPS in the fourth quarter of 2012 was $0.80 per share (non-GAAP; refer to press release supplemental table), down $0.03 per share, or 4%, compared to the third quarter of 2012.

Daryl G. Byrd, President and Chief Executive Officer, commented, "We finished 2012 with extraordinary client growth, a fairly stable margin, and favorable operating results in our new businesses and expanded operations.  During 2012, our loan growth excluding FDIC-assisted loans was $1.4 billion, or 22%, and our total deposit growth was $1.5 billion, or 16%.  Importantly, the mix of deposits improved considerably, and our asset quality, capital, and liquidity positions remain stout.  We are extremely pleased with the client development opportunities throughout our footprint and future growth prospects."

Highlights for the Fourth Quarter of 2012 and December 31, 2012:

  • Increased net interest income and slight decline in net interest margin during the quarter.  Tax equivalent net interest income improved $3 million, and the net interest margin declined three basis points on a linked quarter basis to 3.55%.  Total tax-equivalent revenues increased approximately $7 million, or 5%, while total noninterest expenses increased $4 million, or 3%, on a linked quarter basis.
  • Loan growth of $315 million, or 4%, between quarter-ends (18% annualized rate), excluding loans and other assets covered under FDIC loss share agreements ("Covered Assets").  On that basis and excluding loans that were acquired from Florida Gulf Bancorp, Inc. ("Florida Gulf") on July 31, 2012, loans increased $1.1 billion, or 19%, over the past year.
  • Total deposit growth of $835 million, or 8% (34% annualized growth), during the quarter, and $1.2 billion, or 13%, over the past year (each excluding the Florida Gulf acquisition).
  • Noninterest bearing deposits climbed $116 million, or 6%, between September 30, 2012 and December 31, 2012, and $425 million, or 29%, over the past year (excluding the Florida Gulf acquisition).  Since year-end 2010, noninterest bearing deposits grew $1.1 billion, or 124%, and increased from 11% of total deposits at December 31, 2010, to 18% at December 31, 2012.
  • The loan loss provision in the fourth quarter of 2012 totaled $5 million, compared to $4 million in the third quarter of 2012.  Net charge-offs declined to $89,000 in the fourth quarter of 2012, or an annualized 0.00% of average loans, compared to $2 million in the third quarter of 2012, or an annualized 0.10% of average loans.
  • Continued legacy asset quality strength: Nonperforming assets ("NPAs"), excluding Covered Assets and impaired loans acquired in acquisitions, equated to 0.85% of total assets at December 31, 2012, compared to 0.81% at September 30, 2012.  On that basis, loans past due 30 days or more declined three basis points to 1.27% of total loans at December 31, 2012.  Classified assets excluding Covered Assets decreased $16 million, or 7%, during the fourth quarter, and decreased from 2.28% of total assets at September 30, 2012, to 1.99% at December 31, 2012.
  • Capital ratios remained strong. At December 31, 2012, the Company's tangible common equity ratio was 8.66%, tier 1 common ratio was 11.74%, and total risk based capital ratio was 14.19%.

Table A - Summary Financial Results


For Quarter Ended:

%/Basis Point


12/31/2011

9/30/2012

12/31/2012

Change

Net Income ($ in thousands)

$      17,357

$       21,234

$      23,208

9%








Per Share Data:






Fully Diluted Earnings 

$          0.59

$            0.73

$          0.79

8%


Operating Earnings (Non-GAAP)

0.67

0.83

0.80

-4%


Pre-provision Operating Earnings  (Non-GAAP)

0.77

0.92

0.91

-2%


Tangible Book Value 

36.80

37.07

37.34

1%








Key Ratios:






Return on Average Assets

0.59%

0.69%

0.73%

4

bps

Return on Average Common Equity

4.65%

5.56%

6.02%

46

bps

Return on Average Tangible Common Equity (Non-GAAP)

6.72%

7.91%

8.62%

71

bps

Net Interest Margin (TE)*

3.62%

3.58%

3.55%

(3)

bps

Tangible Efficiency Ratio (TE)* (Non-GAAP)

75.2%

74.3%

73.2%

(110)

bps

Tangible Common Equity Ratio (Non-GAAP)

9.52%

9.01%

8.66%

(35)

bps

Tier 1 Leverage Ratio

10.45%

10.01%

9.70%

(31)

bps

Tier 1 Common Ratio (Non-GAAP)

13.55%

12.04%

11.74%

(30)

bps

Total Risk Based Capital Ratio

16.21%

14.54%

14.19%

(35)

bps

Net Charge-Offs to Average Loans**

0.31%

0.11%

0.01%

(10)

bps

Nonperforming Assets to Total Assets**

0.86%

0.81%

0.85%

4

bps







* Fully taxable equivalent basis.






** Excluding FDIC Covered Assets and acquired impaired loans.




Refer to press release supplemental table for a reconciliation of GAAP and non-GAAP measures.

Operating Results

On a linked quarter basis, average earning assets increased $480 million, or 4%.  The average earning asset yield declined eight basis points, while the cost of interest bearing liabilities decreased four basis points. As a result, the tax-equivalent net interest spread and the net interest margin declined four and three basis points, respectively.  Tax-equivalent net interest income increased $3 million, or 3%, as the benefit of strong growth in average earning assets more than offset the slightly lower net interest spread in the fourth quarter of 2012.

Table B - Quarterly Average Yields/Cost (Taxable Equivalent Basis)


For Quarter Ended:

%/Basis Point


12/31/2011

9/30/2012

12/31/2012

Change

Investment Securities

2.57%

2.22%

2.09%

(13)

bps

Covered Loans, net of loss share receivable

5.33%

5.42%

5.55%

13

bps

Noncovered Loans

4.91%

4.55%

4.52%

(3)

bps

Loans & Loss Share Receivable

5.02%

4.71%

4.70%

(1)

bps

Mortgage Loans Held For Sale

3.21%

3.21%

2.96%

(25)

bps

Other Earning Assets

0.68%

0.85%

0.61%

(24)

bps

  Total Earning Assets

4.36%

4.14%

4.06%

(8)

bps







Interest Bearing Deposits

0.80%

0.58%

0.53%

(5)

bps

Short-Term Borrowings

0.27%

0.21%

0.21%

(0)

bps

Long-Term Borrowings

2.84%

3.10%

3.17%

7

bps

  Total Interest Bearing Liabilities

0.90%

0.69%

0.65%

(4)

bps

Net Interest Spread

3.46%

3.45%

3.41%

(4)

bps

Net Interest Margin

3.62%

3.58%

3.55%

(3)

bps







* Earning asset yields are shown on a fully taxable equivalent basis.









Movement in the net interest margin was tempered during the fourth quarter as the covered loan yield (net of loss share receivable) improved 13 basis points, offsetting the three basis point decline in the yield on non-covered loans.  In addition, the 13 basis point decline in average investment yield was partially offset by a five basis point decline in the cost of interest bearing deposits, and an increase in average noninterest bearing deposits of $155 million, or 9%, on a linked quarter basis.  For the first quarter of 2013, the Company projects the prospective yield on the covered loan portfolio net of the FDIC indemnification asset to approximate the level experienced in the fourth quarter of 2012 and projects the average balance of the net covered loan portfolio to decline approximately $50 million, based on current FDIC loss share accounting assumptions and estimates.

The Company recorded a $5 million loan loss provision in the fourth quarter of 2012, up less than $1 million, or 20%, on a linked quarter basis. The increase in provision was primarily attributable to loans covered under FDIC loss share agreements and acquired impaired loans, partially offset by lower required reserves on the legacy loan portfolio and acquired performing portfolio due to improved asset quality.  The Company reported net charge-offs of $89,000 in the fourth quarter of 2012, or 0.00% of average loans on an annualized basis.  Excluding Covered Assets and acquired impaired loans, net charge-offs were 0.01% of average loans in the fourth quarter of 2012.

Aggregate noninterest income increased $4 million, or 8%, on a linked quarter basis.  The primary changes in noninterest income on a linked quarter basis were increased IBERIA Capital Partners revenues of $1.2 million, higher service charge revenues of $0.3 million, or 5%, and a $2.2 million gain associated with the redemption of a business investment acquired in the acquisition of OMNI Bancshares, Inc.  Assets under management at IBERIA Wealth Advisors were $955 million at December 31, 2012.  Mortgage and title insurance income were relatively stable on a linked quarter basis.

In the fourth quarter of 2012, the Company originated $677 million in residential mortgage loans, down $30 million, or 4%, on a linked quarter basis.  Client loan refinancing opportunities accounted for approximately 47% of mortgage loan applications in the fourth quarter of 2012, compared to 45% in the third quarter of 2012 and approximately 40% between December 31, 2012, and January 11, 2013.  The Company sold $627 million in mortgage loans during the fourth quarter of 2012, down $50 million, or 7%, on a linked quarter basis.  Margins on the sale of mortgage loans edged slightly lower on a linked quarter basis.  The mortgage origination pipeline was approximately $241 million at December 31, 2012, compared to $297 million at September 30, 2012, and approximately $256 million at January 11, 2013.  Mortgage loan repurchases and make-whole payments were approximately $0.2 million in the fourth quarter of 2012, unchanged from the third quarter of 2012. 

Noninterest expense increased $3.6 million, or 3%, on a linked quarter basis.  One-time acquisition and conversion costs associated with the Florida Gulf transaction in the fourth quarter of 2012 were $1.2 million, or $0.03 per share, down $1.8 million on a linked quarter basis.  One-time acquisition and conversion costs are projected to be immaterial in the first quarter of 2013.  The Company also incurred pre-tax costs associated with multiple internal projects to improve long-term earnings, efficiency, risk posture, and growth prospects totaling $1.4 million, or $0.03 per share, in line with expectations.  Excluding acquisition and non-operating expenses, other changes in noninterest expense on a linked quarter basis were:

  • Increased salaries and benefits costs of $1.4 million, or 2% (due primarily to a $0.3 million increase in health care costs, $0.4 million associated with recently added revenue producers in Houston, and $0.2 million for the additional month impact of Florida Gulf personnel); 
  • Increased occupancy and equipment expense of $0.9 million, or 7% (due primarily to $0.4 million in seasonal property tax payments and $0.2 million for the additional month impact of Florida Gulf branches);
  • Increased donations, marketing, and business development expense of $2.3 million, or 111% ($1.2 million in costs associated with multiple loan and deposit campaigns and $0.7 million in business development contributions); and
  • Increased FDIC insurance premium of $0.4 million, or 17% (resulting from the Florida Gulf acquisition and organic balance sheet growth); partially offset by
  • Decreased mortgage commissions of $0.3 million, or 4%; and
  • Decreased credit and loan-related expense of $0.5 million, or 9%.

Loans

In the fourth quarter of 2012, total loans increased $269 million, or 3%.  The loan portfolio associated with FDIC-assisted acquisitions decreased $46 million, or 4%, compared to September 30, 2012.  Excluding loans associated with FDIC-assisted transactions, total loans increased $315 million, or 4%, over that period (18% annualized rate).  Legacy commercial loans increased $205 million, or 4%, legacy consumer loans increased $86 million, or 5%, and legacy mortgage loans increased $24 million, or 9%, during the quarter.  Loan growth during the fourth quarter of 2012 was strongest in the Houston, Memphis, Birmingham, and Naples markets.  Loans and commitments originated during the fourth quarter of 2012 totaled $1.2 billion, with 53% fixed rate and 47% floating rate.  Energy-related loans outstanding totaled $576 million at December 31, 2012, equal to approximately 7% of total loans.

Table C - Period-End Loans ($ in Millions)


Period-End Balances ($ Millions)




















9/30/2012



% Change 


Mix


12/31/11

Excluding Acquired

FGB

Total

12/31/12


Year/Year

Qtr/Qtr

Annualized


9/30/12

12/31/12














Commercial

$     4,504

$     5,093

$   145

$     5,237

$     5,442


21%

4%

16%


64%

64%

Consumer

1,288

1,560

28

1,588

1,674


30%

5%

22%


19%

20%

Mortgage

262

222

43

266

290


10%

9%

36%


3%

3%

Non-FDIC Loans

$     6,054

$     6,875

$   216

$     7,091

$     7,406


22%

4%

18%


86%

87%

Covered Assets

1,334

1,139

-

1,139

1,093


-18%

-4%

-16%


14%

13%

Total Loans

$     7,388

$     8,014

$   216

$     8,230

$     8,499


15%

3%

13%


100%

100%














Deposits

Total deposits increased $835 million, or 8%, from September 30, 2012 to December 31, 2012 (34% annualized growth). Noninterest bearing deposits increased $116 million, or 6%, and equated to 18% of total deposits at December 31, 2012. NOW accounts increased $484 million, or 24%, and money market and savings account volume increased $312 million, or 8% at December 31, 2012. Deposit growth in the fourth quarter was driven by commercial and retail client growth, seasonal deposits, and low-cost wholesale deposits. By year-end 2012, the Company received an influx of approximately $140 million in seasonal client deposits (primarily NOW accounts), the duration of which is expected to be less than 90 days. The Company assumed $170 million in short-term wholesale deposits at December 31, 2012 ($73 million on average during the fourth quarter of 2012 at a cost of 0.23%). Deposit growth excluding the estimated seasonal and wholesale deposits was $525 million, or 5% (21% annualized rate). Deposit growth during the fourth quarter of 2012 was strongest in the New Orleans, Houston, Birmingham, Lafayette, and Little Rock markets.

Table D - Period-End Deposits ($ in Millions)


Period-End Balances ($ Millions)




















9/30/2012



% Change 


Mix


12/31/11

Excluding Acquired

FGB

Total

12/31/12


Year/Year

Qtr/Qtr

Annualized


9/30/12

12/31/12














Noninterest

$     1,485

$     1,794

$     58

$     1,852

$     1,968


32%

6%

25%


19%

18%

NOW Accounts

1,877

1,997

42

2,039

2,523


34%

24%

95%


21%

24%

Savings/MMkt

3,381

3,652

139

3,791

4,103


21%

8%

33%


38%

38%

Time Deposits

2,546

2,184

47

2,231

2,154


-15%

-3%

-14%


22%

20%

Total Deposits

$     9,289

$     9,627

$   286

$     9,913

$    10,748


16%

8%

34%


100%

100%














On an average balance and linked quarter basis, noninterest bearing deposits increased $155 million, or 9%, and interest-bearing deposits increased $455 million, or 6%.  The rate on average interest bearing deposits in the fourth quarter of 2012 was 0.53%, a decrease of five basis points on a linked quarter basis.  Approximately $1.5 billion in time deposits are scheduled to re-price over the next 12 months at a weighted average cost of 0.74%.  An additional $0.3 billion in time deposits are scheduled to re-price the following 12 months at a weighted average cost of 1.27%.  During the fourth quarter of 2012, new and re-priced time deposits were booked at an average cost of 0.54%. The Company experienced a time deposit retention rate of 90% in 2012 with an average 46 basis point reduction in rate.

Other Assets And Funding

The Company significantly improved its liquidity position in the fourth quarter of 2012.  Total cash and equivalents increased $348 million, or 56%, to $1.0 billion.  The investment portfolio equated to $1.9 billion, or 15% of total assets at December 31, 2012, down slightly compared to 16% at September 30, 2012.  The investment portfolio had a modified duration of 2.8 years at December 31, 2012, up slightly compared to 2.7 years at September 30, 2012.  The unrealized gain in the portfolio decreased from $51 million at September 30, 2012, to $44 million at December 31, 2012.  The average yield on investment securities declined 13 basis points on a linked quarter basis to 2.09% in the fourth quarter of 2012.  The Company holds in its investment portfolio primarily government agency and municipal securities.  Municipal securities comprised only 11% of total investments at December 31, 2012.  The Company holds no sovereign debt or derivative exposure to foreign counterparties.

As a result of strong deposit growth, the Company paid off all overnight borrowings during the fourth quarter.  Long-term debt (including trust preferred securities) decreased $6 million, or 1%, between quarter-ends.  On a linked quarter basis, average long-term debt decreased $15 million, or 3%, and the cost of debt increased seven basis points to 3.17%.  The cost of average interest bearing liabilities was 0.65% in the fourth quarter of 2012, a decrease of four basis points on a linked quarter basis. For the month of December 2012, the average cost of interest bearing liabilities was 0.63%.

Asset Quality

Excluding $568 million in NPAs which were Covered Assets or acquired impaired loans marked to fair value, NPAs at December 31, 2012 were $99 million, up $10 million, or 11%, compared to September 30, 2012.  The increase in NPAs was primarily attributable to three loan relationships, of which the Company anticipates no material loss associated with the ultimate resolution of those loans.  NPAs equated to 0.85% of total assets at December 31, 2012, compared to 0.81% of assets at September 30, 2012.  Loans past due 30 days or more (including nonaccruing loans) increased $2 million, or 3%, and represented 1.27% of total loans at December 31, 2012, down compared to 1.30% at September 30, 2012.  Classified assets declined $16 million, or 7% during the fourth quarter of 2012.

Table E - Asset Quality Summary
Excludes the impact of all FDIC-assisted acquisitions and impaired loans



For Quarter Ended:


% or Basis Point Change

     ($ thousands)


12/31/2011

9/30/2012

12/31/2012


Year/Year

Qtr/Qtr









Nonperforming Assets


$   83,884

$   88,454

$   98,510


17%

11%

Past Due Loans


83,338

91,016

93,358


12%

3%

Classified Assets


205,920

247,923

231,586


12%

-7%









Nonperforming Assets/Assets


0.86%

0.81%

0.85%


(1) bps

4 bps

NPAs/(Loans + OREO)


1.39%

1.26%

1.34%


(5) bps

8 bps

Classified Assets/Total Assets


2.10%

2.28%

1.99%


(11) bps

(29) bps

(Past Dues & Nonaccruals)/Loans


1.38%

1.30%

1.27%


(11) bps

(3) bps









Provision For Credit Losses


$    2,620

$    1,735

$       362


-86%

-79%

Net Charge-Offs/(Recoveries)


4,622

1,923

91


-98%

-95%

Provision Less Net Charge-Offs


$   (2,002)

$      (188)

$       271


-114%

-244%









Net Charge-Offs/Average Loans


0.31%

0.11%

0.01%


(30)

(10)

Reserve For Credit Losses/Loans


1.24%

1.13%

1.08%


(16)

(5)









Excluding Covered Assets and acquired impaired loans, troubled debt restructurings at December 31, 2012, totaled $18 million, or 0.24% of total loans (compared to 0.31% of loans at September 30, 2012).  All but $2 million of the troubled debt restructurings were included in NPAs at December 31, 2012.

Capital Position

The Company maintains favorable capital strength.  At December 31, 2012, the Company reported a tangible common equity ratio of 8.66%, down 35 basis points compared to September 30, 2012.  At that date, the Company's preliminary Tier 1 leverage ratio was 9.70%, down 31 basis points compared to September 30, 2012.  The Company's preliminary total risk-based capital ratio at December 31, 2012 was 14.19%, down 35 basis points compared to September 30, 2012.  The declines in these capital ratios were the result of strong organic balance sheet growth.

On October 26, 2011, the Company announced a share repurchase program totaling 900,000 shares of common stock. No shares were repurchased under this program during the fourth quarter of 2012.  A total of 46,692 shares remain under the currently authorized share repurchase program.

At December 31, 2012, book value per share was $51.88, up $0.44 per share compared to September 30, 2012. Tangible book value per share was $37.34, up $0.27 per share compared to September 30, 2012.  Based on the closing stock price of the Company's common stock of $51.75 per share on January 24, 2013, this price equated to 1.00 times December 31, 2012 book value and 1.39 times December 31, 2012 tangible book value per share.

On December 10, 2012, the Company declared a quarterly cash dividend of $0.34 per share. This dividend level equated to an annualized dividend rate of $1.36 per share and an indicated dividend yield of 2.63%.

IBERIABANK Corporation

IBERIABANK Corporation is a financial holding company with 278 combined offices, including 184 bank branch offices and one LPO in Louisiana, Arkansas, Tennessee, Alabama, Texas, and Florida, 21 title insurance offices in Arkansas and Louisiana, mortgage representatives in 62 locations in 12 states, nine locations with representatives of IBERIA Wealth Advisors in four states, and one IBERIA Capital Partners, LLC office in New Orleans.  Since September 30, 2012, the Company opened seven bank branch offices in the New Orleans, Birmingham, Houston, Baton Rouge, and Naples markets.

The Company's common stock trades on the NASDAQ Global Select Market under the symbol "IBKC."  The Company's market capitalization was approximately $1.5 billion, based on the NASDAQ closing stock price on January 24, 2013.

The following 11 investment firms currently provide equity research coverage on IBERIABANK Corporation:

  • FIG Partners, LLC
  • Jefferies & Co., Inc.
  • Keefe, Bruyette & Woods
  • Oppenheimer & Co., Inc.
  • Raymond James & Associates, Inc.
  • Robert W. Baird & Company
  • Stephens, Inc.
  • Sterne, Agee & Leach
  • Stifel Nicolaus & Company
  • SunTrust Robinson-Humphrey
  • Wunderlich Securities

Conference Call

In association with this earnings release, the Company will host a live conference call to discuss the financial results for the quarter just completed. The telephone conference call will be held on Friday, January 25, 2013, beginning at 9:00 a.m. Central Time by dialing 1-800-230-1059. The confirmation code for the call is 276812.  A replay of the call will be available until midnight Central Time on February 1, 2013 by dialing 1-800-475-6701. The confirmation code for the replay is 276812.  The Company has prepared a PowerPoint presentation that supplements information contained in this press release.  The PowerPoint presentation may be accessed on the Company's web site, www.iberiabank.com, under "Investor Relations" and then "Presentations."

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.  Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release.  Refer to press release supplemental table for this reconciliation.

Forward Looking Statements

To the extent that statements in this press release and the accompanying PowerPoint presentation relate to future plans, objectives, financial results or performance of IBERIABANK Corporation, these statements are deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, which are based on management's current information, estimates and assumptions and the current economic environment, are generally identified by the use of the words "plan", "believe", "expect", "intend", "anticipate", "estimate", "project" or similar expressions. IBERIABANK Corporation's actual strategies and results in future periods may differ materially from those currently expected due to various risks and uncertainties.