A N N U A L R E P O R T 2 0 1 6
Ahead
of the
Curve
FINAN CIAL HI GHLI GHTS
(Dollars in thousands, except per share data)
IN C O ME DATA
For the Year Ending December 31,
2016 2015 % Change
Net Interest Income
Net Interest Income (TE) (1)
Net Income
Earnings Available to Common Shareholders—Basic
Earnings Allocated to Common Shareholders
$649,238 $587,758
596,362
142,844
142,844
141,164
658,701
186,777
178,800
176,928
10%
10%
31%
25%
25%
PE R S HARE DATA
Earnings Per Common Share—Basic
Earnings Per Common Share—Diluted
Book Value Per Common Share
Tangible Book Value Per Common Share (Non-GAAP) (2)
Cash Dividends
$4.32
4.30
62.68
45.80
1.40
$3.69
3.68
58.87
40.35
1.36
NUMBER OF SHARES OUTSTANDING
Basic Shares (Average)
Diluted Shares (Average)
Book Value Shares (Period-End)
KE Y RATIOS
40,948
38,214
41,106 38,310
41,140
44,795
17%
17%
6%
14%
3%
7%
7%
9%
Return on Average Assets
Return on Average Common Equity
Return on Average Tangible Common Equity (Non-GAAP) (2)
Net Interest Margin (TE) (1)
Efficiency Ratio (3)
Tangible Efficiency Ratio (TE) (Non-GAAP) (1) (2) (3)
Average Loans to Average Deposits
Non-performing Assets to Total Assets (4)
Allowance for Loan Losses to Loans
Net Charge-offs to Average Loans
Average Equity to Average Total Assets
Tier 1 Leverage Ratio
Common Stock Dividend Payout Ratio
Tangible Common Equity Ratio (Non-GAAP) (2)
Tangible Common Equity to Risk-Weighted Assets (2)
0.92%
7.08%
10.44%
3.53%
64.2%
62.4%
90.4%
1.16%
0.96%
0.23%
12.98%
10.86%
32.9%
9.82%
11.62%
0.78%
6.41%
9.65%
3.55%
70.6%
68.6%
87.6%
0.47%
0.97%
0.08%
12.29%
9.52%
38.5%
8.86%
9.95%
(1) Fully taxable equivalent (TE) calculations include the tax benefit associated with related income sources that are tax-exempt using a rate of 35%, which approximates the marginal tax rate.
(2) Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis where applicable.
(3) The efficiency ratio represents non-interest expense as a percentage of total revenues. Total revenues are the sum of net interest income and non-interest income.
(4) Non-performing assets include non-accruing loans and accruing loans 90 days or more past due, but exclude non-accrual and past due acquired impaired loans accounted for under ASC
310-30 that are currently accruing income.
Directors of IBERIABANK Corporation are: Elaine D. Abell; Harry V. Barton, Jr.; Ernest P. Breaux, Jr.; Daryl G. Byrd; John N. Casbon; Angus R. Cooper II; William H.
Fenstermaker; John E. Koerner III; Rick E. Maples, Jr.; E. Stewart Shea III; and David H. Welch, Ph.D.
IBERIABANK Corporation is a financial holding company with consolidated assets at December 31, 2016, of $21.7 billion. IBERIABANK Corporation and its predecessor
organizations have served clients for 130 years. The Corporation’s subsidiaries include IBERIABANK, Lenders Title Company, IBERIA Wealth Advisors, IBERIA Capital
Partners, IB Aircraft Holdings, and IBERIA CDE.
“No great thing is
created suddenly.”
- Epictetus, Greek Philosopher, c. 55-135 AD
Ahead of the Curve
The phrase “ahead of the curve” is used to describe when one is in an advanced position compared to others or
one who is changing before competitors, be it in a technological, responsive, or leadership sense. The phrase first
appeared with regularity in print during the Nixon presidency and is generally assumed to have initially referred to
placement relative to mathematical curves, such as being on the right-hand side of the Bell curve that is used in
statistics (suggesting one is above average) or on charts displaying time-to-adopt of new technologies (suggesting
one is an early adopter of new technology).
According to the Oxford English Dictionary, however, the phrase was actually adapted from the phrase “staying
ahead of the power curve,” first used in 1926 in reference to the mathematics of flight. Aviators target optimal
power, airspeed, and positioning to ensure safe and efficient flight. Many bankers and investors learned similar
lessons of discipline, safe flight, and avoiding stall speed during the recent financial crisis.
Set forth below is our Mission Statement, which has remained constant since we adopted it 17 years ago. It has
served as a guiding principle of discipline, safety, and performance as we face challenges and opportunities – just
as we did in 2016.
MI SS IO N STATEMENT
• Provide exceptional value-based client service
• Great place to work
• Growth that is consistent with high performance
• Shareholder focused
• Strong sense of community
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5
7
9
10
13
14
16
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18
141
President’s Letter to Shareholders
Chairman’s Letter to Shareholders
Client Growth
Assimilating Prior Acquisitions
Diversified Business Model
Efficiency
Profitability
Position of Strength
Preparing for Our Future
Financials
Corporate Information
President’s Letter
TO SHAREH OL DERS
Dear Shareholders,
We recently completed a very active year of focus,
change, and opportunity. The outcomes associated
with many of the activities and events that occurred
during the year were as we expected, while others
were somewhat of a surprise. These activities and
events generally led to favorable outcomes for
our shareholders, including improved financial
operating performance in 2016 and enhanced
long-term growth prospects. Overall, I was very
pleased with our team’s achievements throughout
the year, our active engagement to reduce the risk
posture of our Company, and the unique position
we occupy within the financial services industry. As
exhibited throughout 2016, we are ahead of the
industry curve in areas such as risk management,
efficiency improvements, balance sheet strength,
and planting seeds for future growth.
Risk Management. To stay ahead of the curve, we
made tremendous investments over the last several
years in risk management processes, systems,
and talent to assist us in better understanding
and proactively managing the risks we face. As
an outgrowth of those efforts, over the last two
years we engaged in a “risk-off trade” to reduce
our energy-related and indirect automobile loans,
along with tightening our credit standards in select
markets impacted by energy price volatility.
Since year-end 2014, the cumulative decline in
risk-off loans was $797 million, with estimated
opportunity costs of $6 million in 2015 and $15
million in 2016. We believe the avoidance of
potential future loss exposures vastly outweighed
that were
the near-term
sacrificed in this risk-off trade.
foregone revenues
Over the last several years, we placed great focus
on identifying, communicating, and reducing our
energy-related exposures. On June 30, 2014,
approximately 8.4% of our total loan portfolio was
composed of energy-related loans when the price
of oil was trading at $105 per barrel. About that
time, we began a proactive “risk-off” reduction of
our energy exposure given what we perceived was
an over-extended market. By year-end 2015, our
energy exposure declined to 4.8% of total loans.
By late January 2016, the price of oil dropped
below $27 per barrel. Despite our preemptive
risk off efforts, the market price of our common
stock declined precipitously. By year-end 2016,
the price of oil rebounded above $54 per barrel,
while our energy-related loans further declined
to 3.7% of total loans, and our common stock
price rebounded to all-time highs. We believe we
took prudent steps, which while costly in the short
term, provided appropriate long-term benefit to
our shareholders.
After seven years of participating in the loss-share
programs associated with our FDIC-assisted
acquisitions, we
terminated 12 outstanding
loss-share agreements in 2016. These agreements
provided for the sharing of both losses and
recoveries with the FDIC over the agreements’
terms. While the losses from these loans have
diminished considerably, in 2016 we experienced
$10 million in recoveries, of which $8 million, or
81%, was reimbursed to the FDIC. As a result of
these negotiated terminations, we will no longer
be required to share in recoveries with the FDIC
as we have in the past.
Efficiency Improvements. Throughout 2016,
we focused on growing revenues and holding
down expenses, which resulted in improved
profitability to the benefit of our shareholders. In
2016, revenues increased $75 million, or 9%, and
expenses declined $4 million, or 1%, compared
to 2015. Over that period, our efficiency ratio
improved from 71% to 64% (a lower ratio
is better), and our non-Generally Accepted
Accounting Principles (“non-GAAP”) core tangible
efficiency ratio improved from 65% to 60%, and
we thus achieved the long-term target we set five
years ago. While our total assets increased 11%
between year-ends 2015 and 2016, our number
of full-time equivalent associates declined by
2%. As a result of our balance sheet expansion,
relatively stable margin, and improved efficiency,
our earnings grew $36 million, or 25%, and
our earnings per common share climbed 17%,
compared to 2015. Book value per common
share increased 6% and tangible book value per
2 / ANNUAL REPORT 2016
common share climbed 14% over that period.
In addition to these increases, our common
shareholders also benefitted from an expansion
in the price trading multiples on our common
stock by year-end 2016. Overall, we experienced
a very favorable improvement in our financial
performance in 2016 with record core financial
results.
Balance Sheet Strength. Despite the risk-off
trades and continued reduction of the acquired
loan portfolios in 2016, average loans grew
$1.4 billion, or 10%, compared to 2015, and
year-end 2016 loans increased $738 million, or
5%, compared to the prior year-end. In addition,
we experienced phenomenal client deposit growth
in 2016. Average deposit growth increased $1.1
billion, or 7%, while year-end deposit growth
increased $1.2 billion, or 8%. Approximately half
of the deposit growth in 2016 was composed of
low-cost, non-interest-bearing deposits. This may
be a result of our building and solidifying core
banking relationships with many of our commercial
clients, as we now hold their primary operating
accounts.
As a result of the exceptional deposit growth
in 2016, we experienced a significant increase
in liquidity on our balance sheet. Cash,
cash-equivalents, and liquid securities increased
by $1.3 billion between year-ends 2015 and 2016
and equated to 16% of total assets at year-end
2016, up from 11% one year prior. We remain
very asset-sensitive, implying that an increase in
interest rates would be beneficial to our income
over the next 12 months. We believe we are
well-positioned for rising interest rates.
internal capital
Throughout much of 2016,
generation (from our income earned less dividends
paid to shareholders) was sufficient to support our
balance sheet growth. As a result, we did not need
to raise capital from external sources to support
our growth. As the year progressed, however, we
decided to opportunistically enter capital-driven
transactions to take advantage of favorable market
conditions that we believe bode well for our
shareholders over the long-term.
Early in 2016, the price of our common stock
suffered as a result of perceived risk in our
energy-related loan portfolio, while the cost for
our Company to issue preferred stock remained
favorably low. In May 2016, our Board of Directors
authorized the repurchase of up to 950,000 shares
of our common stock. To support the common stock
purchase, we also authorized our second preferred
stock offering, with net proceeds totaling $55
million. In June 2016, we repurchased 202,506
shares, or 21% of the authorized repurchase
program, at a weighted average cost of $57.61
per share.
As our earnings improved throughout the year,
investor interest in asset-sensitive banks came
back into favor, and the price of our common
stock gained considerably. In early December,
our common stock price reached all-time highs.
As a result of the favorable market conditions
and perceived growth opportunities, we further
bolstered our capital position through the issuance
and sale of 3.6 million common shares in an
underwritten public offering. This resulted in net
proceeds totaling $280 million and at a price of
$81.50 per share, a price that was 31% higher
than the weighted average price at which our
common stock traded throughout 2016. As a result
of the capital raise, net of shares repurchased,
and the improvement in our share price in 2016,
our market capitalization increased $1.5 billion,
or 66%, between year-ends 2015 and 2016.
We believe our capital raises in 2016 were very
well-timed.
Preparing for the Future. In March 2017, our
bank marked the 130th anniversary since its
founding in 1887. Our longevity and success
continue to be driven by serving our clients
and communities well, recruiting and retaining
carefully managing
high-quality associates,
3
risk, capitalizing on opportunities, planting and
cultivating seeds for future growth, and delivering
favorable long-term shareholder returns.
In August 2016, certain markets in Louisiana
received up to 31 inches of rain within a three-day
period that caused extensive flooding. This flooding
was considered to be a once-in-a-thousand year
event. Fortunately, our Company and the vast
majority of our clients avoided the devastating
impact of the storms. To assist associates, clients,
and communities in the recovery efforts, we
provided financial assistance, low-interest loans,
and other relief efforts. In addition, many of our
associates assisted colleagues, friends, families,
neighbors, and the broader community over
several months in the recovery and rebuilding
process.
In 2016, we were very active in community
development as well. For example, we invested
nearly $60 million
in various community
development projects, an increase of 8% compared
to 2015. We sponsored the National Community
Reinvestment Coalition’s Annual Conference, one
of the nation’s largest gatherings of community
non-profits, policymakers, government officials,
small businesses, banks, and academia, all coming
together to create a just economy. We were also
a significant contributor to Step Up For Students,
which provides scholarships to give disadvantaged
families the freedom to choose the best learning
options for their children. Finally, as an innovative
investment, we purchased a less-than-5% stake in
New Orleans-based Liberty Financial Services, one
of the nation’s largest African-American-owned
banks, which provides viable banking solutions
to various underserved communities in a very
high-quality manner. We recognize that we must
continuously invest in our communities given our
Company can only be successful to the extent that
the communities we serve are successful.
In December 2016, we entered the vibrant
Greenville market in Upstate South Carolina by
hiring Samuel Erwin as South Carolina Regional
President. Considered to be one of the nation’s
top markets for economic growth, Upstate South
Carolina is a 10-county area with a population
of approximately 1.4 million people and 23
universities and colleges. We are excited to have
Sam join our team and look forward to building
out a dynamic presence in South Carolina.
In March 2017, we announced an agreement to
acquire Miami-based Sabadell United Bank, N.A.,
a subsidiary of Spain-based Banco de Sabadell,
S.A. At December 31, 2016, Sabadell United
Bank had $5.8 billion in total assets and 25 bank
branches. This proposed acquisition will provide us
entrance into the center of the Miami Metropolitan
Statistical Area, a market with a population of
more than six million people. Upon the completion
of that pending transaction, the scale and strength
of our Company would be enhanced and our
relative ranking within our industry would continue
to grow. When we announced our change of
strategic direction in 1999, we had $1.3 billion
in total assets, and we ranked as the 248th largest
bank holding company in the U.S. With the
addition of Sabadell United Bank, we would grow
on a pro forma basis to $27.4 billion in assets and
become the 40th largest bank holding company in
the nation.
In summary, we experienced a wave of activity in
2016 and early 2017 that we believe will benefit
our Company and our shareholders for many
years. During 2016, we exhibited great discipline
by reducing our risk posture via our risk-off trade
that sacrificed near-term income, while at the
same time growing our sources of revenue in a
high-quality manner and holding our cost structure
in check. We made favorable investments in our
Company, opportunistically repurchased shares
and raised external capital, and we positioned our
Company for future increases in interest rates. We
delivered record financial operating results and
planted a few new flags for future growth. It was
an exciting year of focus, change, and opportunity.
Our industry is changing, and we believe we are
well-positioned to be ahead of the curve.
On behalf of our leadership team and associates,
we thank you for your continued support of our
Company.
Sincerely,
Daryl G. Byrd
President and Chief Executive Officer
4 / ANNUAL REPORT 2016
Chairman’s Letter
TO T HE SH ARE HOLD E RS
Dear Shareholders,
Your Board of Directors was actively engaged throughout 2016 in its fiduciary responsibilities to the Company’s
constituents – our shareholders, clients, regulators, communities, and associates. We recognize the important
roles that we serve in aligning these varying interests. We also ensure that appropriate levels of risk oversight,
goal setting, plan execution, corporate governance, and incentive compensation are designed to achieve
desired outcomes. Mind you, this is no easy task. During 2016, we actively engaged appropriate outside
parties to stay abreast of industry changes, opportunities, and challenges. We also engaged third parties
to help us benchmark to appropriate industry standards and provide the Board with unbiased, independent
insight regarding important topics, such as executive compensation, industry trends, and acquisitions. Finally,
over the last several years members of the Compensation Committee of the Board participated in direct
institutional investor outreach to gain unfiltered feedback regarding the Company’s performance, direction,
and shareholder expectations. We have found this feedback and insight to be very helpful as we help guide
this Company’s direction.
Based on shareholder feedback and consultant input, the Compensation Committee refined the Company’s
corporate governance policies and executive compensation programs over the last several years. Actions
taken included more closely aligned executive pay and performance, greater transparency of clearly defined
performance goals and metrics for annual incentives, increased ownership guidelines, adoption of policies
regarding anti-pledging, and future change in control agreements, which require double-triggers and exclude
excise tax provisions. In addition, annual incentives placed greater weight on operating earnings and asset
quality measures, and less on balance sheet growth. Long-term incentives shifted to higher performance-based
weighting rather than time-based metrics. As a result of these significant actions taken by the Compensation
Committee, our shareholders overwhelmingly supported our 2016 Say-on-Pay vote.
Shareholder value advanced on many fronts in 2016. The cresting of energy-related concerns assisted in the
improvement in the price of bank stocks during the year, as did an increase in short-term interest rates and the
discussion surrounding the perceived impact of potential future reductions in corporate and personal income
tax rates. Of potentially equal or greater influence was the Company’s improved financial performance and
actions taken to improve shareholder value.
During 2016, the Board authorized the repurchase of up to 950,000 shares of the Company’s common stock,
of which $12 million was expended to acquire 202,506 shares; 747,494 common shares remain outstanding
under that program. In September 2016, the Board approved a 6% increase in cash dividends on common
stock, equivalent to approximately $4 million in additional cash dividends paid on an annualized basis.
Despite this increase in cash dividends, the common stock dividend payout ratio declined from 38% in 2015
to 33% in 2016. The aggregate amount of cash dividends paid to common and preferred shareholders totaled
$67 million in 2016, a 22% increase compared to 2015.
Importantly for our shareholders, the price of our common stock gained $28.68 per common share during
2016, an improvement of 52% compared to year-end 2015. Our common stock attained an all-time high
of $91.10 per share in early December 2016, before settling at $83.75 at year-end 2016. A longer-term
view since the change of strategic direction our leadership announced in late 1999 provides even more
interesting results. For the 17-year period between year-ends 1999 and 2016, and assuming the reinvestment
of dividends over that time frame, the total return on our Company’s common stock was 1,051%, or a 15%
annualized return. While those measures are clearly outstanding, as evidenced in the chart on the next page,
our shareholder returns compared to alternative investments over that period are particularly compelling.
5
TOTA L RETURN TO SHAREHO LD ER S
December 31, 1999 to December 31, 2016
Including Reinvestment of Dividends into Company Stock
Total Annualized
Return
Return
Apple, Inc.
IBERIABANK Corp.
NIKE, Inc.
Amazon.com, Inc.
3M Company
United Technologies Corp.
McDonald’s Corp.
Berkshire Hathaway, Inc.
The Walt Disney Co.
Johnson & Johnson
Goldman Sachs Group, Inc.
JPMorgan Chase & Co.
Procter & Gamble Co.
The Coca-Cola Co.
ExxonMobil Corp.
Oracle Corp.
Bank of America Corp.
Wal-Mart Stores, Inc.
Intel Corp.
American Express Co.
General Electric Co.
3,364%
1,051%
927%
885%
450%
372%
358%
345%
340%
279%
202%
176%
139%
120%
65%
49%
39%
34%
27%
6%
3%
23%
15%
15%
14%
11%
10%
9%
9%
9%
8%
7%
6%
5%
5%
9%
2%
2%
2%
1%
1%
0%
Our shareholder performance was earned through the development and execution of a sound business model,
unique strategic positioning, discipline, opportunistic investing, and keen business acumen. We also have
gained excellent insight and advice over the years from our Board of Directors and local Advisory Boards.
In accordance with good corporate governance practice, our Board has a mandatory retirement policy at the
age of 76. Miles Pollard, a young man at heart, retired from the Board in 2016 after serving with us for 13
years. We thank Miles for his many years of loyalty and service to our Company and shareholders, and we
will miss his sage counsel. During the year, Rick E. Maples joined the Board after retiring from Stifel, Nicolaus
and Company, Inc., where he served for 31 years. We are delighted to have Rick as a member of our Board.
Unfortunately, we also had to bid farewell to some very close friends and Advisory Board members who passed
away in 2016, including Bill Rucks, Bob Lowe, and Billy Blake. These gentlemen served our Advisory Boards
very well and for many years. We are honored to have worked with them and will miss them greatly.
I am very proud of our leadership team, the more than 3,000 associates who serve our clients in a high-quality
manner, our 218 Advisory Board members who serve on our 19 Advisory Boards in seven states, and my 10
fellow Board members who tirelessly serve our shareholders.
On behalf of the Board of Directors of your Company, we thank you for the opportunity to continue to serve
you.
Sincerely,
William H. Fenstermaker
Chairman of the Board
6 / ANNUAL REPORT 2016
Client Growth
Client growth at our Company was more measured in 2016 compared to prior years, though still quite favorable
compared to the banking industry. Between year-ends 2015 and 2016, the commercial banking industry in the U.S.
grew assets, loans, and investments at a 5% rate and deposits at a slightly higher rate of 6%. Over that period, our
total assets and investments grew at well more than twice the industry rates.
IBERIA BAN K CORPO RATIO N
Period-End Compared to 12/31/15
12/31/16 $ Change % Change
U.S. Commercial
Banks % Change
($ in Billions)
Assets
Investments
Loans
Deposits
$ 21.7
3.5
15.1
17.4
$ 2.2
0.6
0.7
1.2
11%
22%
5%
8%
5%
5%
5%
6%
Source: SNL Financial
Loan Volume. While our loan growth of 5% matched
the industry’s rate of growth over that period, our loan
growth was tempered by several factors, including
reductions in acquired, energy-related, and indirect
automobile loans. Over time, these countervailing forces
are anticipated to diminish considerably.
First, throughout 2016, we continued to resolve problem
assets that were marked to fair value at acquisition, while
loans that fit our credit profile were renewed or refinanced
during the year. As a result, during 2016, loans acquired
in FDIC-assisted and live-bank acquisitions declined
$767 million, or 24%. At its peak in November 2009,
acquired loans accounted for 30% of our total loan
portfolio. By year-end 2015, the figure dropped to 22%
and declined further to 16% of total loans at year-end
2016.
Second, over the last several years, we made great strides
reducing our energy-related loan and commitment
exposure. As a result, energy-related loans declined
$120 million, or 18%, from the start to the end of 2016.
At December 31, 2016, total energy-related loans
equated to $561 million, or less than 4% of total loans,
down from a peak of greater than 8% of total loans.
Third, for more than 20 years, we successfully provided
indirect automobile loans to select automobile dealers
in our footprint. In fact, at its peak in 2002, indirect
automobile loans composed 23% of our loan portfolio.
After many years of limited growth, we decided two years
ago to exit the indirect automobile lending business.
We concluded the compliance risk associated with that
business in general had become unbalanced relative
to potential returns generated by the business on a
risk-adjusted basis. As a result, our indirect automobile
loans outstanding declined from $397 million, or over
3% of total loans at year-end 2014, to $131 million, or
less than 1% of total loans at year-end 2016. Indirect
automobile loans declined $115 million, or 47%, during
2016.
Loan Originations and Renewals. We achieved
outstanding loan production levels in 2016. We attained
record loan originations and renewals of $3.8 billion,
up 10% compared to 2015. Originations and renewals
combined with loan commitments totaled $5.2 billion,
up 7% compared to 2015, also a record level for our
Company. Midway through the year, our commercial
loan pipeline hit $1 billion, reaching another record
level.
We originate mortgage loans with the intent to sell the
loans to outside investors via our secondary marketing
operations. In 2016, we originated $2.5 billion in
mortgage loans, just shy of the record production level
set in 2015. As shown in the following chart, loans
originated to be held on our balance sheet and loans
to be sold to investors totaled a record $6.3 billion, an
increase of $357 billion, or 6%, compared to 2015.
7
LOA N ORIG IN ATI ON VOLU ME S
)
s
n
o
i
l
l
i
B
n
i
$
(
l
s
e
m
u
o
V
n
o
i
t
a
n
g
i
r
i
O
On Balance Sheet
Mortgage Production
Note: The figures in the chart above may not total due to rounding.
Deposit Volumes. Deposit growth in 2016 well exceeded
industry results. Total deposits increased $1.2 billion, or
8%, between year-ends 2015 and 2016, including record
quarterly deposit growth of $886 million during the fourth
quarter of 2016. The mix of deposit growth was also very
impressive – approximately half of the deposit growth in
2016 was composed of low-cost, non-interest-bearing
deposits. Although no acquisitions were completed in
2016, approximately 62% of our deposit growth in 2016
was the result of new clients added during the year and
38% of the deposit growth was associated with expanded
balances of continuing deposit relationships.
We launched two deposit campaigns in 2016 that were
broad-based across many markets and very well received.
Competitive disruptions that were occurring in several
markets at the time of the campaigns provided support
for the campaigns’ success. We also received a significant
influx late in the year of seasonal and temporary deposits
that are expected to diminish over time.
The significant inflow of deposits, particularly in the last
half of 2016, resulted in a tremendous increase in our
liquidity position. We placed some of that excess liquidity
into short-term investments, and parked the remainder
in cash-like investments until deployed at a later date
when loan origination volumes accelerate. As a result,
our investment portfolio grew $636 million, or 22%,
between year-ends 2015 and 2016. Similarly, cash and
cash equivalents increased $852 million, or 167%, over
that period. This excess liquidity temporarily compressed
our net interest margin, particularly in the second half of
2016.
8 / ANNUAL REPORT 2016
Assimilating Prior Acquisitions
The three acquisitions that were announced in 2015 were closed, converted, and assimilated in that year. The
targeted expense savings were generally achieved as initially projected. We are very pleased with the expense and
revenue synergies and the favorable growth prospects associated with those acquisitions.
A significant portion of the loan and deposit growth that we achieved in 2016 was concentrated in markets in
which our recent acquisitions occurred, including the Atlanta, Orlando, Tampa, and Dallas markets. These four
markets delivered $589 million in loan growth and $508 million of deposit growth between year-ends 2015
and 2016. These levels of growth equated to 80% and 41%, respectively, of our total loan and deposit growth
during the year.
St. Louis
Trust One Bank
CapitalSouth Bank
ANB Financial
Pocahontas Bancorp
Northeast
rtheast
Arkansas
ansas
North Central
Arkansas
Northwest
Arkansas
Memphis
First Private Bank
Georgia Commerce Bank
Central Arkansas/
Little Rock
Mississippi
Huntsville
Birmingham
Atlanta
Dallas
Shreveport
Pulaski Bank
Prattville
Columbus
Warner Robins
American Horizons Bank
Montgomery
Completed Acquired Branch Locations
American Horizons Bank
Alliance Bank
Pocahontas Bancorp
Pulaski Bank
ANB Financial
CapitalSouth Bank
Orion Bank
Century Bank
Sterling Bank
OMNI Bank
Cameron State Bank
Florida Gulf Bank
Trust One Bank
Teche Federal Bank
First Private Bank
Florida Bank
Old Florida Bank
Georgia Commerce Bank
Sabadell United Bank
De Novo Branch Locations
Teche Federal Bank
Houston
NE Louisiana/
Monroe
Alexandria
Alliance Bank
Opelousas
Lafayette
Baton Ro
Baton Rouge
Mobile
New Orleans/
Northshore
ke
Lake
s
harle
Charles
Acadia
Acadiana
M
Morgan
C
City
LBA Savings Bank
Houma
OMNI Bank
Cameron State Bank
Teche Federal Bank
Tallahassee
Jacksonville
DeLand
Orlando
Tampa
Florida Bank
Century Bank
Florida Gulf Bank
Bradenton
Sar
Sarasota
Cape Coral
Fort M
Fort Myers
Estero
N
Naples
Old Florida Bank
Sterling Bank
alm
West Palm
ach
Beach
Sabadell United Bank
Ft. Lauderdale
Orion Bank
Key West
Marathon
9
Diversified Business Model
Geographic Diversification. With the completed acquisitions, our franchise has become more geographically
diverse over time. Each of the 31 metropolitan statistical areas (“MSAs”) has different economic drivers and growth
characteristics with little correlation between markets. Unlike many of our competitors, we price our deposits
differently in each market to ensure optimal pricing from a growth and cost perspective. As shown in the charts that
follow, the geographic diversification of our loans and deposits would be further enhanced upon the completion of
the recently announced acquisition of Sabadell United Bank.
LOANS BY STAT E
FDIC & Acquired Impaired
Other
Georgia
Florida
Texas
Alabama
Tennessee
Arkansas
Louisiana
Notes: “Other” market includes Mortgage, Lenders Title, Credit Card, and Other.
“Pro Forma” includes Sabadell United Bank, based on total deposits at December 31, 2016.
10 / ANNUAL REPORT 2016
D EPOS ITS BY STAT E
FDIC & Acquired Impaired
Other
Georgia
Florida
Texas
Alabama
Tennessee
Arkansas
Louisiana
Notes: “Other” market includes Mortgage, Lenders Title, Credit Card, and Other.
“Pro Forma” includes Sabadell United Bank, based on total deposits at December 31, 2016.
Revenue Diversification. We made significant investments in various fee income businesses over the last decade in
an effort to reduce our reliance on spread-based income and diversify our sources of revenue. These businesses are in
varying stages of maturity, ranging from early stage to mature development. As shown in the following chart, sources
of fee income from a few of these businesses exhibited significant increases in revenues over the last several years.
FEE INC OME SOUR CE S
Treasury Management
Client Derivatives
SBA 504
SBA 7(a)
)
s
n
o
i
l
l
i
M
n
i
$
(
s
e
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n
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v
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R
11
Mortgage Loan Origination and Servicing. We originated $2.5 billion in residential mortgage loans in 2016,
down less than 1%, compared to the mortgage industry growth rate of 13%, as measured by the Mortgage Bankers
Association. Our loan refinancing levels were 20% of total originations, or less than half of the industry average
of 48%, in 2016. We sold $2.5 billion in loans to investors, an increase of less than 1% compared to 2015, and
a record level of annual sales. At year-end 2016, we retained $1.1 billion in loans serviced for the Company and
outside investors, an increase of 17% compared to one year prior. We reported only $4 million in mortgage servicing
rights at year-end 2016. Mortgage income totaled $84 million in 2016, an increase of $3 million, or 4%, compared
to 2015.
Title Insurance. Lenders Title Company (“LTC”) expanded into the New Orleans market during 2016. LTC
experienced a 5% increase in title insurance transactions and reported $22 million in revenues in 2016, down 3%
compared to 2015. Although down compared to the prior year, revenues in 2016 were the second highest level in
LTC’s history. LTC’s net income increased 20% in 2016 compared to 2015.
SBA Lending. Loans originated under Small Business Administration (“SBA”) programs increased in 2016.
IBERIABANK earned Preferred Lender Program status during the year, and loans originated under the SBA 7(a)
program increased 164% compared to 2015. Mercantile Capital’s SBA 504 program closed 42 transactions in 10
different states with total project costs for the transactions reaching a record level of $241 million.
Treasury Management. Treasury Management (“TM”) increased investments in products and capabilities, and our
sustained commitment to serve as the primary bank for our clients has enabled us to expand client relationships,
acquire new clients, and grow deposits. TM continued to be a key driver of revenue and deposit growth in 2016.
Led by an 18% increase in new clients, 31% expansion in service charge income, 24% increase in purchasing card
income, and 18% growth in wire and cash management income, TM’s net fee income grew 28% in 2016 compared
to 2015.
Client Derivatives. The Company provides a full range of interest rate hedging products that allow qualified clients
to lock in attractive long-term interest rates on certain commercial loans without increasing the Company’s exposure
to potential changes in interest rates. In 2016, we closed a record 103 client derivative transactions in 18 markets.
The number of transactions and net revenues from this activity more than doubled in 2016 compared to 2015.
Syndications. The Company has full-service syndication expertise that manages the Company’s agented loan
transactions throughout its footprint. The syndications team arranged $499 million in loans in eight markets
throughout the Company’s footprint and achieved record transaction fees in 2016.
Retail Brokerage. IBERIA Financial Services’ assets under management increased 9% during 2016, reaching
$1.5 billion at year-end 2016. As a result of a shift away from transaction-based to greater fee-based business
activity, revenues declined 15% compared to 2015. Advisory assets and associated fees increased 34% and 31%,
respectively, compared to 2015.
Institutional Brokerage. IBERIA Capital Partners (“ICP”) experienced reduced activity over the last two years as a
result of the general decline in energy prices. As energy prices recovered in the second half of 2016, ICP revenues
improved as well.
Wealth Management. IBERIA Wealth Advisors’ (“IWA”) assets under administration grew by 93% to $2.7 billion at
year-end 2016. IWA’s revenues and net income reached record levels in 2016.
12 / ANNUAL REPORT 2016
Efficiency
Over the last four years, we have been one of the
most active bank acquirers in the nation (by number of
transactions completed). We completed five live bank
acquisitions and the acquisition of a set of branches in
Memphis, with aggregate loans totaling $3.3 billion and
deposits of $3.8 billion, along with 62 bank branches in
multiple markets in Florida, Texas, Louisiana, Georgia,
and Tennessee.
Efficiency improvements extended to staffing as well.
total assets
Between year-ends 2012 and 2016,
increased by $8.5 billion, or 65%, while the number of
full-time equivalent employees increased by 403, or only
15%. The reduction in staffing as a result of the bank
branch consolidations combined with synergies gained
in the support functions resulted in significant expense
control during this period.
During this period we were also very focused on improving
the efficiency of our branch delivery system, our support
functions, and balance sheet. Between 2013 and 2015,
we executed
improvement
three distinct efficiency
programs that generated aggregate run-rate savings
of $50 million on a pre-tax basis. In 2016, we closed
or consolidated 19 bank branches and eight mortgage
locations and opened one bank branch, one title
insurance office, and four mortgage locations. The net
result of the 2016 initiatives was an additional $1 million
in pre-tax savings per quarter commencing in the second
quarter of 2016. In aggregate over the last four years,
we acquired 62 bank branches, closed or consolidated
60 bank branches, and opened 10 new bank branches.
Many of the newer branches were designed to be more
efficient and to target the underserved banking segments
within our communities. In summary, we closed nearly
as many bank branches as we acquired during this
period, and as a result, we were also one of the most
active consolidators of bank branches in the nation (on
a percentage of branches outstanding basis).
Our efficiency improvement efforts have focused on both
sides of the efficiency equation – improving revenues
and reducing or holding down costs. We have been very
successful on both fronts. Between 2013 and 2016, our
total revenues expanded $324 million, or 58%, while
total expenses increased only $94 million, or 20%, which
resulted in an improvement in our efficiency ratio from
85% in 2013 to 64% in 2016. Similarly, our non-GAAP
core tangible efficiency ratio over that period improved
from 75% to 60%.
The efficiency improvement in 2016 compared to 2015
was even more pronounced, as total revenues climbed
$75 million, or 9%, while total expenses declined $4
million, or less than 1%. Throughout 2016, the quarterly
efficiency ratio fluctuated between 61% and 71%, while
the non-GAAP core tangible efficiency ratio remained
very stable around 60% in each of the four quarters. The
achievement of our long-term core tangible efficiency
target of 60% is a testament to our corporate expense
discipline and the dedication and hard work of our team.
EFF IC IE NCY TRE ND ING
(Lower Ratio is Preferred)
13
Profitability
The growth in topline revenues over the last several years
was primarily the result of solid loan and deposit growth
combined with a fairly stable net interest margin and
growing and diversified sources of fee income.
In 2016, our total revenues were $883 million, up
9% compared to 2015, more than twice the industry’s
growth rate. For companies such as ours, total revenues
are simply a combination of net interest income, or the
spread we earn between our assets and liabilities, plus
non-interest income, which is fee income. In 2016
compared to 2015, our net interest income increased
$61 million, or 10%, compared to the banking industry
growth rate of 6%. The drivers of this improvement were
our average earning assets, which grew 11%, and our
net interest margin, which declined two basis points.
Over this period, our non-interest (or fee) income
increased $13 million, or 6%. These results were very
favorable compared to a decline of 1% in fee income
for the banking industry. Our decline in expenses of
less than 1% compared very favorably to the industry’s
expense growth rate of 1% year-over-year, thus showing
our success at controlling costs during the year.
As a result of our strong revenue growth and cost
containment efforts, net income to common shareholders
improved $36 million, or 25%, in 2016 compared to
2015. Earnings per common share on a fully diluted
basis (“EPS”) increased by 17% over this period, well
above industry results. As shown in the following charts,
our EPS results on a reported and core basis have
exhibited continuous improvement on each a quarterly
and annual basis and achieved record core financial
results during 2016.
EAR N INGS PER COMM ON S HARE
S
P
E
y
l
r
e
t
r
a
u
Q
Note: The sum of the quarterly figures in the chart above may not equal the annual figures due to rounding.
14 / ANNUAL REPORT 2016
CO RE EARNIN GS PE R CO MM ON SH AR E
S
P
E
e
r
o
C
y
l
r
e
t
r
a
u
Q
Note: The sum of the quarterly figures in the chart above may not equal the annual figures due to rounding.
Our return on average assets climbed to 0.92% on a reported basis and 0.95% on a core basis in 2016. As shown
in the following chart, the improvement in these metrics has been very consistent over the last six years.
RETU RN ON AVERAG E ASSE TS
(Reported and Core Basis)
Reported ROA
Non-Core Adjustment
Note: The sum of the quarterly figures in the chart above may not equal the annual figures due to rounding.
15
Position of Strength
Strength of a financial institution can be measured in various ways, such as asset quality, balance sheet liquidity,
capital ratios, ability to raise external capital at favorable pricing, depth and liquidity of trading in the financial
institution’s stock, market capitalization, earnings, sensitivity, and management. Our Company improved its position
of strength in each of these measures during 2016.
Asset Quality. On the asset quality front, we successfully managed the “conveyor belt” on which our energy-related
exposures are resolved. Energy issues crested in the second half of 2016, as evidenced by the declines in
energy-related non-performing assets (“NPAs”), classified and criticized loans, and quarterly loan loss provision.
Non-energy related asset quality remained very strong throughout 2016. At year-end 2016, non-energy NPAs as a
percentage of total assets were a very healthy 48 basis points.
Balance Sheet Liquidity. Our absolute level of liquidity was never stronger than it was at year-end 2016. At that
time, the aggregate amount of cash, cash equivalents, and unpledged securities totaled $3.4 billion, up $1.3 billion,
or 66%, compared to one year prior.
Preferred Stock Issuance. In May 2016, we executed our second issuance and sale of preferred stock, resulting in
$55 million in net proceeds. This security, along with our first preferred stock issuance that was sold in August 2015,
are each traded on NASDAQ, and at year-end 2016, traded at 6% and 7% premiums to par value, respectively.
Common Stock Issuance. We also recently completed two common stock offerings, each of which was among the
largest common stock sales in our Company’s history. First, in December 2016, we sold approximately 3.6 million
shares of common stock at $81.50 per common share, resulting in net proceeds of $280 million. The common
stock offering was well-oversubscribed, was sold to investors at a price of 1.8 times tangible book value at year-end
2016, and was favorably priced at a discount to the last trading price of only 3.5%. Second, in early March 2017,
we closed on a common stock sale of 6.1 million common shares at $83.00 per share, at a price discount to last
trade of less than a 1%. This common stock sale was also well-oversubscribed and resulted in net proceeds of
$506 million. Our ability to raise nearly $800 million in capital within 90 days at beneficial pricing is a testament
to investors’ favorable perception of our Company and its strategic direction. Upon completion of the March 2017
common stock sale, our market capitalization was $4.2 billion, an increase of 85% compared to $2.3 billion at
year-end 2015. The increase in market capitalization and 48% increase in our average daily trading volume in 2016
compared to 2015 are indicative of enhanced liquidity in our common stock and the depth of our trading market.
The chart below shows the decline in our common stock price in the early part of 2016, followed by the significant
increase in the following quarters of 2016.
IB KC CO MMON STOCK PRICE
Last Five Ye ar s O n A Q uar te r ly B as i s
Note: Bars indicate trading range for shares of IBERIABANK common stock for each quarter.
16 / ANNUAL REPORT 2016
Preparing for Our Future
The commercial banking industry is undergoing significant changes in many respects, including changes in interest
rate environment, competitive dynamics, consolidation, regulatory focus, technological advancements, and client
channel preferences, just to name a few. We believe our Company and its business model are well-suited for the
changes that are occurring in our industry.
Rising Interest Rates. We have maintained a short-duration asset base to position us well for rising interest rates.
At year-end 2016, a total of 56% of our loans floated with changes in interest rates and another 16% of our loans
were fixed-rate loans that mature within one year. Our investment portfolio is of relatively short duration with limited
extension risk.
Industry Consolidation. Our experience and favorable track record in M&A and our sizable investment in infrastructure
provide us with the opportunity to be well-positioned for continued industry consolidation, though we remain very
selective in our candidate selection process.
Industry Evolution. We believe we are also making the right investments to prepare us for the evolving technological
environment and changing client preferences regarding channel usage. We operate a “branch-lite” strategy, which
we believe provides the optimal positioning for current and future banking needs. As our client preferences change,
we change as well. Over the last three years, our ACH and wire amounts have nearly doubled in size. In addition, as
shown in the following chart, we are executing a significantly greater number of transactions for our clients while their
channel preferences are evolving.
During 2016, we also worked to enhance our operational workflows and improve our client experience. For example,
we launched a state-of-the-art mortgage origination platform, which is scalable, client focused, and supportive of our
digital efforts. In addition, we commenced the rollout of a credit workflow system which provides a comprehensive
management tool associated with the loan origination process for commercial and business banking clients. The
benefits of this new credit workflow system include an improved client experience, gained efficiencies, enhanced
mobile technology, increased client and prospect engagement, improved portfolio management, and an accelerated
process for credit underwriting, decision making, and closing time.
TRA NSACTION VOLUM E AND CH ANNE L USAG E
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(
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s
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a
r
T
l
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We recognize the importance of preparing for change and adopting change at an appropriate pace. We believe we
are uniquely positioned to continue to grow organically and participate in ongoing industry consolidation. The year
2016 was an interesting year of change and opportunity. To continue to enjoy success, we must remain focused and
stay appropriately ahead of the curve.
17
FINANCIALS 2016
19
21
64
65
67
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Selected Consolidated Financial
and Other Data
Management Report on Internal Control
Over Financial Reporting
Report of Independent Registered
Public Accounting Firm
Financial Statements
18 / ANNUAL REPORT 2016
This Annual Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking
statements, which may include forecasts of our financial results and condition, expectations for our operations and business,
and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results
may differ materially from our forward-looking statements due to several factors. Factors that could cause our actual results to
differ materially from our forward-looking statements are described in this Report, including in the “Forward-Looking
Statements” and “Risk Factors” sections, and in the “Regulation and Supervision” section of our Annual Report on Form 10-K
for the year ended December 31, 2016 (“2016 Form 10-K”).
When we refer to “the Company,” “we,” “our” or “us” in this Report, we mean IBERIABANK Corporation and Subsidiaries
(consolidated). When we refer to the “Parent,” we mean IBERIABANK Corporation. See the Glossary of Acronyms at the end
of this Report for terms used throughout this Report.
To the extent that statements in this Report relate to future plans, objectives, financial results or performance of the Company,
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 use of the words “may”, “plan”, “believe”, “expect”, “intend”,
“will”, “should”, “continue”, “potential”, “anticipate”, “estimate”, “predict”, “project” or similar expressions, or the negative of
these terms or other comparable terminology, including statements related to the expected timing of the closing of proposed
mergers, the expected returns and other benefits of the proposed mergers to shareholders, expected improvement in operating
efficiency resulting from the mergers, estimated expense reductions, the impact on and timing of the recovery of the impact on
tangible book value, and the effect of the mergers on the Company’s capital ratios. The Company’s actual strategies and results
in future periods may differ materially from those currently expected due to various risks and uncertainties.
Actual results could differ materially because of factors such as the level of market volatility, our ability to execute our growth
strategy, including the availability of future bank acquisition opportunities, unanticipated losses related to the integration of,
and refinements to purchase accounting adjustments for, acquired businesses and assets and assumed liabilities in these
transactions, adjustments of fair values of acquired assets and assumed liabilities and of deferred taxes in acquisitions, actual
results deviating from the Company’s current estimates and assumptions of timing and amounts of cash flows, credit risk of our
customers, actual results deviating from the Company's current estimates, assumptions of timing and the amount of cash flows,
our ability to satisfy new capital and liquidity standards such as those imposed by the Dodd-Frank Act and those adopted by the
Basel Committee and federal banking regulators, sufficiency of our allowance for loan losses, changes in interest rates, access
to funding sources, reliance on the services of executive management, competition for loans, deposits and investment dollars,
reputational risk and social factors, changes in government regulations and legislation, increases in FDIC insurance
assessments, geographic concentration of our markets and economic and business conditions in these markets, or nationally,
including the impact of oil and gas prices, rapid changes in the financial services industry, dependence on our operational,
technological, and organizational systems or infrastructure and those of third-party providers of those services, hurricanes and
other adverse weather events, and valuation of intangible assets. Those and other factors that may cause actual results to differ
materially from these forward-looking statements are discussed in the Company’s Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission (the “SEC”), available at the SEC’s website, http://www.sec.gov, and the
Company’s website, http://www.iberiabank.com, under the heading “Investor Relations.” All information in this discussion is
as of the date of this Report. The Company undertakes no duty to update any forward-looking statement to conform the
statement to actual results or changes in the Company’s expectations.
(cid:20)(cid:28)
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
EXECUTIVE OVERVIEW
The Company is a $21.7 billion bank holding company primarily concentrated in commercial banking in the southeastern
United States. We are shareholder and client-focused, expect high performance from our associates, believe in a strong sense of
community, and strive to make the Company a great place to work. The Company focuses on improving long-term shareholder
returns by setting challenging financial goals and executing on these goals even when faced with difficult economic and
regulatory environments. The Company believes that shareholder value is created by investing in our people to ensure that we
attract, develop, and retain talented team members, providing exceptional products and services to our customers in order to
grow our high-quality client base, and improving the efficiency of our operations through expense reduction and revenue
enhancement opportunities. Our Company has a growth strategy that includes both organic growth and growth through
acquisitions and we have successfully executed this strategy over the last decade. We are mindful of the risks associated with
growth and we recognize that a robust risk management process is essential to enhance and protect shareholder value. The
Company continues to invest in a comprehensive risk management structure to stay ahead of potential threats and challenges,
appropriately balancing risk with profitability and ensuring that our strategic goals deliver the intended results.
2016 Financial Performance
In 2016, the Company saw the full benefit from the prior year acquisitions, growing net revenues by $74.9 million, or 9%,
while also successfully containing expenses, which declined $3.6 million, or 1%, compared to 2015. We have grown our
balance sheet organically in 2016 by $2.2 billion, or 11%, to $21.7 billion, which included loan growth of $737.5 million, or
5%, and deposit growth of $1.2 billion, or 8%. Our expansion and subsequent growth into new market areas through prior
period acquisitions has helped us diversify and manage our credit risk exposure. We have strengthened our liquidity and capital
positions and have seen some downward pressure on net interest margin as a result, but expect that deployment of excess
liquidity and capital in 2017 into higher yielding assets will subsequently improve our profitability metrics. See the "2017
Outlook" section below for further discussion.
Highlights of the Company’s performance in 2016 include:
• Diluted EPS (GAAP) of $4.30, up 17% from $3.68 in 2015, and core diluted EPS (non-GAAP) of $4.43 compared to
core diluted EPS of $4.18 in 2015 (see Table 32 for reconciliation of GAAP to non-GAAP measures).
• Net interest income of $649.2 million, up 10% from $587.8 million in 2015, and net interest margin on a taxable
equivalent basis of 3.53%, compared to 3.55% in 2015.
• Non-interest income of $233.8 million, up 6% from $220.4 million in 2015.
• Non-interest expense of $566.7 million, a decrease of $3.6 million, or 1%, from 2015.
• Efficiency ratio of 64.2%, an improvement of 640 basis points, from 70.6% in 2015, and core tangible efficiency ratio
(non-GAAP) of 60.2%, compared to 64.5% in 2015.
• Return on average assets of 0.92% and core return on average assets (non-GAAP) of 0.95%, an increase of 14 basis
points and 7 basis points, respectively, compared to 2015.
• Net income of $186.8 million, up 31% from $142.8 million in 2015, and net income available to common
shareholders of $178.8 million, up 25% over 2015.
• Total loan growth of $737.5 million, or 5%, including intentional risk-related reductions of approximately $355
million in 2016 in the energy portfolio, energy-related markets, and indirect automobile lending business ($797
million cumulative reduction since the start of the "risk-off trade" at the beginning of 2015). Energy-related loans were
3.7% of total loans at December 31, 2016.
• Net charge-off ratio of 0.23% of average loans, an increase over 2015's ratio of 0.08% of average loans, as many of the
Company's energy-related problem credits have moved through a cycle of deterioration and resolution, as expected.
Excluding the energy portfolio, net charge-offs were 0.12% of average non-energy-related loans. Provision expense
was $44.4 million, an increase of $13.5 million, or 44%, over 2015.
(cid:21)(cid:19)
• Net deposit growth of $1.2 billion, or 8%, including non-interest bearing deposit growth of $576.6 million, or 13%.
•
•
Issued non-cumulative perpetual preferred stock, raising $55.3 million in net proceeds, and issued approximately 3.6
million shares of common stock, resulting in net proceeds of $279.2 million, further strengthening our capital position.
The Company's total risk-based capital ratio increased to 14.13% at December 31, 2016, from 12.17% at December
31, 2015 and IBERIABANK met the requirements to be categorized as "well-capitalized" under the regulatory
framework for prompt corrective action at December 31, 2016 and 2015.
Successfully terminated all loss share agreements associated with FDIC-assisted acquisitions. As a result of
this action, the Company recorded a $17.8 million pre-tax charge during the fourth quarter of 2016 to write-off the
balance of the FDIC loss share receivable, and will benefit from all future recoveries and be responsible for all future
losses and expenses related to the assets previously subject to these agreements.
TABLE 1—SELECTED FINANCIAL INFORMATION
(Dollars in thousands)
Key Ratios
Efficiency Ratio
Tangible efficiency ratio (TE) (Non-GAAP)
Return on average assets
Return on average assets, core basis (Non-GAAP)
Net interest margin (TE)
Non-interest income
Non-interest income, core basis (Non-GAAP)
Non-interest expense
Non-interest expense, core basis (Non-GAAP)
Years Ended December 31
2016
2015
2014
2013
2012
64.17%
62.37%
0.92%
0.95%
3.53%
70.57%
68.57%
0.78%
0.88%
3.55%
74.73%
72.53%
0.72%
0.81%
3.51%
84.50%
82.10%
0.50%
0.71%
3.38%
77.49%
74.89%
0.63%
0.67%
3.58%
$ 233,821
$ 220,393
$ 173,628
$ 168,958
$ 175,997
231,819
566,665
546,004
216,360
570,305
533,845
170,871
473,614
445,094
166,624
472,796
428,254
170,026
432,185
418,174
2017 Outlook
The Company's long-term financial goals are as follows:
• Return on Average Tangible Common Equity of 13% to 17% (core basis);
• Core Tangible Efficiency Ratio of less than 60%; and
• Legacy Asset Quality in the top 10% of our peers.
Our strong liquidity and capital positions will be both our greatest opportunity and challenge in 2017 as our margin
improvement will be dependent on our ability to deploy that excess liquidity and capital into higher yielding assets. In addition,
continued improvement in credit quality will be instrumental to a successful 2017.
Management's expectations for the Company in 2017 include the following:
• Consolidated loan growth in the high-single digit range, including growth from our recent expansion into the South
Carolina market;
• Easing of the risk-off trade, reducing barriers to loan growth;
• Deposit growth in the mid-single digit range;
•
Improvement in net interest margin as excess liquidity is deployed into higher yielding assets (timing of the reduction
in excess liquidity is the most important factor on the overall margin level for the year);
•
Improvement in consolidated credit metrics;
• Decline in provision expense from 2016 as credit conditions within the energy portfolio continue to improve;
(cid:21)(cid:20)
•
Slight increase in non-interest income as declines in the mortgage business are offset by other non-interest income
categories;
• Continued cost containment efforts on non-interest expense to reach our goal of a sustained core tangible efficiency
ratio below 60%;
• Effective tax rate of approximately 34%;
• EPS will continue to be pressured until excess liquidity and capital are deployed into higher yielding assets (i.e.,
currently excess liquidity and capital are earning the Fed Funds rate); and
• Realization of the full benefit from our modeled asset sensitive position if interest rates move higher (i.e., we believe
the next 25 basis point Fed Funds rate increase will result in approximately 5 cents of favorable quarterly EPS impact
in the full quarter post the raise).
(cid:21)(cid:21)
Significant Transactions
While there were no acquisitions in 2016, the Company saw the full benefit from the prior year acquisitions, growing revenues
by $74.9 million, or 9%, while also successfully containing expenses, which declined $3.6 million, or 1%, compared to 2015.
The balance sheet grew in 2016 by $2.2 billion, or 11%, to $21.7 billion, which included loan growth of $737.5 million, or 5%,
and deposit growth of $1.2 billion, or 8%. The Company will continue to execute its growth strategy, both organically and
through strategically sound acquisitions. Recently, the Company announced plans to expand into Greenville, South Carolina
with the addition of a Regional President for that market.
2015 Acquisitions
For over a decade, the Company has executed targeted acquisitions that were a strong strategic fit for the Company and
provided additional value to existing shareholders. These acquisitions have provided significant growth and allowed for
geographic, industry, and product diversification. In 2015, the Company further diversified its business, expanding its presence
in Florida and Georgia through the acquisitions of Florida Bank Group on February 28, 2015, Old Florida on March 31, 2015,
and Georgia Commerce on May 31, 2015.
The acquired assets and liabilities are presented in Note 3, Acquisition Activity, to the consolidated financial statements. The
following table is a summary of the Company's acquisition activity over the past five years:
TABLE 2—SUMMARY OF ACQUISITION ACTIVITY FROM 2012 TO 2016
(Dollars in millions)
Acquisition
Florida Gulf Bancorp, Inc.
Trust One Bank - Memphis Operations
Teche Holding Company
First Private Holdings, Inc.
Florida Bank Group, Inc.
Old Florida Bancshares, Inc.
Georgia Commerce Bancshares, Inc.
Total Acquisitions, 2012-2016
Total
Tangible
Assets
Acquired
Total
Loans and
Loans Held
for Sale
Acquired
Acquisition
Date
Total
Deposits
Acquired
Goodwill
Other
Intangible
Assets
2012
$
307.3
$
215.8
$
286.0
$
32.4
$
2014
2014
2014
2015
2015
2015
180.2
854.4
350.9
535.9
86.5
700.5
299.3
307.5
191.3
639.6
312.3
392.2
1,540.0
1,068.9
1,389.8
1,022.3
$ 4,791.0
793.4
$ 3,471.9
908.0
$ 4,119.2
$
8.6
80.4
26.3
17.4
100.8
86.7
352.6
$
—
2.6
7.4
0.5
4.5
6.8
6.7
28.5
Termination of loss share agreements with the FDIC
In conjunction with the acquisitions of certain assets and liabilities of six failed banks between 2009 and 2011, as well as the
acquisition of Georgia Commerce in 2015, the Company entered into or assumed arrangements with the FDIC that obligated
the FDIC to reimburse the Company for losses on certain loans associated with the FDIC-assisted transactions.
Effective December 20, 2016, the Company entered into an agreement with the FDIC to terminate the Company’s loss share
agreements ahead of their contractual maturities. Under the terms of the agreement, all rights and obligations of the Company
and the FDIC have been resolved and completed. The Company received a net payment of $6.5 million from the FDIC as
consideration for termination of the loss share agreements and subsequently derecognized the remaining FDIC indemnification
asset and associated assets and liabilities, resulting in a pre-tax loss of $17.8 million. The Company will benefit from all future
recoveries, and be responsible for all future losses and expenses related to the assets previously subject to the loss share
agreements.
Capital transactions
On May 9, 2016, the Company issued an aggregate of 2,300,000 depositary shares (the “Series C Depositary Shares”), each
representing a 1/400th ownership interest in a share of the Company’s 6.60% Fixed-to-Floating Non-Cumulative Perpetual
Preferred Stock, Series C, par value $1.00 per share, (“Series C Preferred Stock”), with a liquidation preference of $10,000 per
share of Series C Preferred Stock (equivalent to $25 per depositary share), which represents $57,500,000 in aggregate
liquidation preference. Net proceeds from the offering, after deduction of underwriting discounts, commissions, and direct
issuance costs were $55.3 million.
(cid:21)(cid:22)
On December 7, 2016, the Company issued an additional 3,593,750 shares of its common stock at a price of $81.50 per
common share. Net proceeds from the offering totaled $279.2 million.
FINANCIAL OVERVIEW
Selected consolidated financial and other data for the past five years is shown in the following tables.
TABLE 3—SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA(1,2)
(Dollars in thousands, except per share data)
Income Statement Data
Years Ended December 31
2016 vs. 2015
2016
2015
2014
2013
2012
$ Change % Change
Interest and dividend income
$ 716,939
$ 646,858
$ 504,815
$ 437,197
$ 445,200
Interest expense
67,701
59,100
44,704
46,953
63,450
Net interest income
649,238
587,758
460,111
390,244
381,750
Provision for loan losses
44,424
30,908
19,060
5,145
20,671
70,081
8,601
61,480
13,516
47,964
13,428
(3,640)
65,032
21,099
43,933
(7,977)
11%
15
10
44
9
6
(1)
31
33
31
100
25
17
17
3
Net interest income after
provision for loan losses
Non-interest income
Non-interest expense
Income before income tax
expense
Income tax expense
Net income
604,814
233,821
566,665
556,850
220,393
570,305
441,051
173,628
473,614
385,099
168,958
472,796
271,970
206,938
141,065
85,193
64,094
35,683
186,777
142,844
105,382
81,261
16,133
65,128
—
361,079
175,997
432,185
104,891
28,496
76,395
—
Preferred stock dividends
(7,977)
—
—
Net Income Available to
Common Shareholders
Earnings per common share –
basic
Earnings per common share –
diluted
Cash dividends per common
share
$ 178,800
$ 142,844
$ 105,382
$ 65,128
$ 76,395
35,956
$
4.32
$
3.69
$
3.31
$
2.20
$
2.59
4.30
1.40
3.68
1.36
3.30
1.36
2.20
1.36
2.59
1.36
0.63
0.62
0.04
(cid:21)(cid:23)
2016
2015
2014
2013
2012
$ Change
% Change
As of December 31
2016 vs. 2015
$21,659,190
$19,504,068
$15,757,904
$13,365,550
$13,129,678
$2,155,122
11%
1,362,126
510,267
548,095
391,396
970,977
851,859
167
(Dollars in thousands, except
per share data)
Balance Sheet Data
Total assets
Cash and cash
equivalents
Loans, net of unearned
income
Book value per
common share (3)
Tangible book value
per common share
(Non-GAAP)(3) (5)
Key Ratios (4)
Return on average assets
15,064,971
14,327,428
11,441,044
9,492,019
8,498,580
Investment securities
3,535,313
2,899,214
2,275,813
2,090,906
1,950,066
Goodwill and other
intangible assets, net
Deposits
Borrowings
759,823
765,655
548,130
425,442
429,584
17,408,283
16,178,748
12,520,525
10,737,000
10,748,277
1,138,089
667,064
1,248,996
961,043
726,422
Shareholders’ equity
2,939,694
2,498,835
1,852,148
1,530,346
1,529,868
737,543
636,099
(5,832)
1,229,535
471,025
440,859
62.68
58.87
55.37
51.38
51.88
3.81
5
22
(1)
8
71
18
6
45.80
40.35
39.08
37.15
37.34
5.45
14
As of and For the Years Ended December 31
2016
2015
2014
2013
2012
0.92%
0.78%
0.72%
0.50%
0.63%
Return on average common equity
Return on average tangible common equity (Non-GAAP) (5)
Equity to assets at end of period
Earning assets to interest-bearing liabilities at end of period
Interest rate spread (6)
Net interest margin (TE) (6) (7)
Non-interest expense to average assets
Efficiency ratio (8)
Tangible efficiency ratio (TE) (Non-GAAP) (5) (7) (8)
Common stock dividend payout ratio
7.08
10.44
13.57
146.60
3.37
3.53
2.79
64.17
62.37
32.94
6.41
9.65
12.81
142.28
3.41
3.55
3.10
70.57
68.57
38.46
6.17
9.04
11.75
135.15
3.40
3.51
3.24
74.73
72.53
42.05
4.26
6.17
11.45
132.74
3.26
3.38
3.64
84.60
82.10
62.11
5.05
7.21
11.65
124.93
3.43
3.58
3.57
77.49
74.89
52.50
Asset Quality Data (Legacy)
Non-performing assets to total assets at end of period (9)
Allowance for credit losses to non-performing loans at end
of period (9)
Allowance for credit losses to total loans at end of period
Consolidated Capital Ratios
Tier 1 leverage capital ratio
Common Equity Tier 1 (CET1)
Tier 1 risk-based capital ratio
Total risk-based capital ratio
1.20%
0.42%
0.41%
0.61%
0.69%
52.46
0.92
209.41
246.26
175.35
0.96
0.91
0.95
150.57
1.10
10.86%
9.52%
11.84
12.59
14.13
10.10
10.73
12.17
9.35%
N/A
11.17
12.30
9.70%
N/A
11.57
12.82
9.70%
N/A
12.92
14.19
(cid:21)(cid:24)
(1) Certain balances and amounts have been restated for the effect of the adoption of ASU No. 2014-01 on January 1, 2015.
(2) 2012 data is impacted by the Company’s acquisition of Florida Gulf on July 31, 2012. 2014 data is impacted by the
Company’s acquisitions of certain assets and liabilities of Trust One - Memphis on January 17, 2014, Teche on May 31,
2014, and First Private on June 30, 2014. 2015 data is impacted by the Company’s acquisitions of Florida Bank Group on
February 28, 2015, Old Florida on March 31, 2015, and Georgia Commerce on May 31, 2015.
(3) Shares used for book value purposes are net of shares held in treasury at the end of 2014, 2013, and 2012.
(4) With the exception of end-of-period ratios, all ratios are based on average daily balances during the respective periods.
(5) Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding
amortization expense on a tax-effected basis where applicable.
(6)
Interest rate spread represents the difference between the weighted average yield on earning assets and the weighted
average cost of interest-bearing liabilities. Net interest margin represents net interest income as a percentage of average
net earning assets.
(7) Fully taxable equivalent ("TE") calculations include the tax benefit associated with related income sources that are tax-
exempt using a rate of 35%, which approximates the marginal tax rate.
(8) The efficiency ratio represents non-interest expense as a percentage of total revenues. Total revenues are the sum of net
interest income and non-interest income.
(9) Non-performing loans consist of non-accruing loans and loans 90 days or more past due. Non-performing assets consist
of non-performing loans and repossessed assets.
The Company’s net income available to common shareholders for the year ended December 31, 2016 totaled $178.8 million, or
$4.30 per diluted share, compared to $142.8 million, or $3.68 per diluted share, for 2015. Key components of the Company’s
2016 performance are summarized below.
• Net interest income increased $61.5 million, or 10%, in 2016 when compared to 2015, a result of a $70.1 million, or 11%,
increase in interest and dividend income partially offset by a $8.6 million, or 15%, increase in interest expense. Net
interest income increases for 2016 are the result of a $1.8 billion increase in average earning assets offset by a one basis
point decrease in average yield on earning assets, a $903.5 million increase in average interest-bearing liabilities, and a
three basis point increase in funding costs when compared to 2015. Net interest margin on a tax-equivalent basis
decreased two basis points to 3.53% from 3.55% when comparing the periods, largely due to excess liquidity, as well as
excess capital currently invested in lower yielding cash and securities.
• The Company recorded a provision for loan losses of $44.4 million in 2016, $13.5 million higher than the provision
recorded in 2015. The increase in the provision was due primarily to the deterioration in credit quality in energy-related
loans, which accounted for almost 50% of the Company's net charge-offs in 2016, and to a lesser extent, legacy loan
growth ($1.5 billion, or 13%, growth since December 31, 2015). Net charge-offs were $33.8 million, or 0.23%, of average
loans in 2016, compared to $10.9 million, or 0.08%, in 2015. As of December 31, 2016, the total allowance for loan
losses as a percent of total loans was 0.96% compared to 0.97% at December 31, 2015.
• Non-interest income increased $13.4 million, or 6%, when compared to 2015, a result of a $3.2 million increase in
mortgage income, a $1.9 million increase in service charges, and a $1.5 million increase in credit card and merchant
related income. All other non-interest income categories also increased $9.7 million primarily due to increases in client
derivatives income, SBA loan income, and COLI income. These increases were partially offset by a $2.3 million decrease
in broker commissions.
• Non-interest expense decreased $3.6 million, or 1% in 2016. The primary reason for this decrease is the direct merger-
related and severance expenses incurred during 2015 resulting from the Company's three 2015 acquisitions, which was
partially offset by a $17.8 million loss incurred to terminate the Company's loss share agreements with the FDIC in
December of 2016.
• The Company paid a quarterly cash dividend of $0.36 per common share in the third and fourth quarters of 2016 and a
quarterly cash dividend of $0.34 per common share in the first and second quarters of 2016, resulting in dividends of
$1.40 for the year-to-date period compared to $1.36 in the prior year. The common stock dividend payout ratio was
32.9% in 2016, compared to 38.5% in 2015.
• Total assets at December 31, 2016 were $21.7 billion, up $2.2 billion, or 11%, from December 31, 2015. Total loan
growth of $737.5 million across many of the Company’s markets and a $851.9 million increase in total cash and cash
equivalents drove the increase in total assets. The increase in total cash and cash equivalents was attributable to increased
(cid:21)(cid:25)
deposits and capital raised from the common stock issuance during 2016. The excess liquidity and excess capital is
currently invested in cash equivalents until it is deployed into higher yielding assets.
• Total loans net of unearned income at December 31, 2016 were $15.1 billion, an increase of $737.5 million, or 5%, from
December 31, 2015. Loan growth during 2016 was driven by a $1.5 billion, or 13%, increase in legacy loans and a $766.9
million, or 24%, decrease in acquired loans.
• Total deposits increased $1.2 billion, or 8%, to $17.4 billion at December 31, 2016. Non-interest-bearing deposits
increased $576.6 million, or 13%, while interest-bearing deposits increased $652.9 million, or 6%. The year-over-year
growth in deposits is the result of the continued strengthening of legacy client relationships, deeper expansion into
markets from prior year acquisitions, and normal deposit campaigns. The Company's deposit balances generally increase
at the end of each year due to real estate tax collections by our municipal customers. These balances typically remain on
deposit with the Company for 45 to 60 days. Given the short-term nature of these seasonal funds, the deposit balances tied
to these seasonal flows are held in liquid investments until they are withdrawn from the Company. The Company
currently expects total deposits to decline during the first half of 2017.
•
Shareholders’ equity increased $440.9 million, or 18% from year-end 2015. The increase was driven by the issuances of
common stock and non-cumulative perpetual preferred stock in 2016, resulting in net proceeds of $279.2 million and
$55.3 million, respectively. In addition, undistributed net income of $119.9 million also contributed to the increase in
shareholders' equity. These increases were partially offset by a $24.5 million decrease in accumulated other
comprehensive income (net of tax), a result of the change in the net unrealized holding gain in the Company’s available
for sale investment portfolio at the end of 2016.
APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In preparing the consolidated financial statements and accompanying notes, management is required to apply significant
judgment to various accounting, reporting, and disclosure matters. The accounting principles and methods used by the
Company conform to GAAP and general banking accounting practices. The estimates and assumptions most significant to
the Company are summarized in the following discussion and are further analyzed in the notes to the consolidated financial
statements.
Allowance for Credit Losses
The allowance for credit losses has two components, the allowance for loan losses (contra asset) and the reserve for
unfunded commitments (liability). Further, the allowance for loan losses consists of (i) probable incurred credit losses for
legacy and acquired non-impaired loans and (ii) expected losses on acquired impaired loans.
Allowances for Legacy and Acquired Non-Impaired Loans
The legacy and acquired non-impaired ACL, which represent management’s estimate of probable losses inherent in the
Company’s legacy and acquired non-impaired loan portfolios, involve a high degree of judgment and complexity. The
Company’s policy is to establish reserves through provisions for credit losses on the consolidated statements of
comprehensive income for estimated losses on delinquent and other problem loans, as well as loans which have not yet
explicitly exhibited factors indicating credit weakness, when it is determined that losses have been incurred on such loans.
Management’s determination of the appropriateness of the legacy and acquired non-impaired ACL is based on various factors
requiring judgments and estimates, including management’s evaluation of the credit quality of the portfolio (determined
through the assignment of risk ratings, assessments of past due status, and scores from credit agencies), historical loss
experience, current economic conditions, the volume and type of lending conducted by the Company, composition of the
portfolio, the amount of the Company’s classified assets, seasoning of the loan portfolio, the status of past due principal and
interest payments, value of collateral, the ability to monetize guarantor support and other relevant factors. Estimates in which
management exercises significant judgment are the assessments of risk ratings, collateral values, projected principal and
interest cash flows and guarantor support on the Company’s commercial loan portfolio and the application of qualitative
adjustments to the quantitative measurements across all portfolios. Other changes in estimates included in the estimation of
the ACL may also have a significant impact on the consolidated financial statements. For further discussion of the ACL, see
Note 1, Summary of Significant Accounting Policies, and Note 6, Allowance for Credit Losses, to the consolidated financial
statements.
(cid:21)(cid:26)
Accounting for Acquired Impaired Loans and the Allowance for Acquired Impaired Loans
The Company accounts for its acquisitions under ASC Topic No. 805, Business Combinations, which requires the use of the
acquisition method of accounting. Accordingly, all acquired loans are recorded at fair value on the acquisition date applying
the fair value methodology prescribed in ASC Topic No. 820, Fair Value Measurement. No ACL related to the acquired loans
is recorded on the acquisition date, as the fair value of the loans acquired incorporates assumptions regarding credit risk. The
fair value measurements include estimates related to market interest rates and projections of future cash flows that incorporate
expectations of prepayments and the amount and timing of principal, interest and other cash flows, as well as any shortfalls
thereof.
Acquired loans are evaluated at acquisition and classified as purchased impaired (“acquired impaired”) or purchased non-
impaired (“acquired non-impaired”). Purchased impaired loans exhibit (in management’s judgment) credit deterioration since
origination to the extent that it is probable at the time of acquisition that the Company will be unable to collect all
contractually required payments, and includes all covered loans. All other acquired loans are classified as purchased non-
impaired.
Over the life of the purchased impaired loans, the Company continues to estimate the amount and timing of cash flows
expected to be collected on individual loans or on pools of loans sharing common risk characteristics. These expected cash
flow estimates are updated for new information on a quarterly basis. Once cash flow estimates are updated, the Company
evaluates whether the present value of these cash flows, determined using effective interest rates, have decreased and if so,
recognizes provisions for credit losses in its consolidated statement of comprehensive income. For increases in cash flows
expected to be collected, the Company adjusts the amount of accretable yield recognized on a prospective basis over the
respective loan’s or pool’s remaining life.
Valuation of Goodwill, Intangible Assets and Other Purchase Accounting Adjustments
As previously mentioned, the Company accounts for acquisitions in accordance with ASC Topic No. 805, Business
Combinations, which requires the use of the acquisition method of accounting. Under this method, the Company is required to
record the assets acquired, including identified intangible assets, and liabilities assumed, at their respective fair values, which
in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on
discounted cash flow analyses or other valuation techniques. The determination of the useful lives of intangible assets is
subjective, as is the appropriate amortization method for such intangible assets. In addition, business combinations typically
result in recording goodwill.
As discussed in Note 1 to the consolidated financial statements, the Company performs a goodwill evaluation at least annually
or whenever events or changes in circumstances indicate that it is more likely than not the fair value of a reporting unit is less
than its respective carrying amount. For the annual October 1, 2016 impairment evaluation, management elected to bypass the
qualitative assessment for each respective reporting unit (IBERIABANK, IMC, and LTC) and performed Step 1 of the
goodwill impairment test. Step 1 of the goodwill impairment test requires the Company to compare the fair value of each
reporting unit with its carrying amount, including goodwill. Accordingly, the Company determined the fair value of each
reporting unit and compared the fair value to each respective reporting unit’s carrying amount. The Company determined that
none of the reporting units’ fair values were below their respective carrying amounts. The Company concluded goodwill was
not impaired as of October 1, 2016. Further, no events or changes in circumstances between October 1, 2016 and December
31, 2016 indicated that it was more likely than not the fair value of any reporting unit had been reduced below its carrying
value.
Based on the testing performed in 2016 and 2015, management concluded that for the IBERIABANK, IMC, and LTC
reporting units, goodwill was not impaired at any time during those periods.
Goodwill impairment evaluations require management to utilize significant judgments and assumptions including, but not
limited to, the general economic environment and banking industry, reporting unit future performance (i.e., forecasts), events
or circumstances affecting a respective reporting unit (e.g., interest rate environment), and changes in the Company stock
price, amongst other relevant factors. Management’s judgments and assumptions are based on the best information available
at the time. Results could vary in subsequent reporting periods if conditions differ substantially from the assumptions utilized
in completing the evaluations.
For additional information on goodwill and intangible assets, see Note 1, Summary of Significant Accounting Policies, and
Note 10, Goodwill and Other Acquired Intangible Assets, to the consolidated financial statements.
(cid:21)(cid:27)
Income Taxes
In the ordinary course of business, we conduct transactions in various taxing jurisdictions (Federal, state, and local) that are
subject to complex income tax laws and regulations, which may differ by jurisdiction. The Company is often required to
exercise significant judgment regarding the interpretation of these tax laws and regulations, in which the Company’s anticipated
and actual liability could significantly vary based upon the taxing authority’s interpretation. Adjustments to current, accrued,
or deferred taxes may occur due to modifications in tax rates, newly enacted laws, resolution of items with taxing authorities,
alterations to interpretative statutory, judicial, and regulatory guidance that affects the Company’s tax positions, or other facts
and circumstances.
RESULTS OF OPERATIONS
The Company reported income available to common shareholders of $178.8 million, $142.8 million, and $105.4 million for the
years ended December 31, 2016, 2015, and 2014, respectively. EPS on a diluted basis was $4.30 for 2016, $3.68 for 2015, and
$3.30 for 2014.
The following discussion provides additional information on the Company’s operating results for the years ended December 31,
2016, 2015, and 2014, segregated by major income statement caption.
Net Interest Income/Net Interest margin
Net interest income is the difference between interest realized on earning assets and interest paid on interest-bearing liabilities
and is also the largest driver of core earnings. As such, it is subject to constant scrutiny by management. The rate of return and
relative risk associated with earning assets are weighed to determine the appropriateness and mix of earning assets.
Additionally, the need for lower cost funding sources is weighed against relationships with clients and future growth
opportunities. The Company’s net interest spread, which is the difference between the yields earned on average earning assets
and the rates paid on average interest-bearing liabilities, was 3.37%, 3.41%, and 3.40%, during the years ended December 31,
2016, 2015, and 2014, respectively. The Company’s net interest margin on a taxable equivalent (“TE”) basis, which is net
interest income (TE) as a percentage of average earning assets, was 3.53%, 3.55%, and 3.51%, respectively, for the same
periods.
(cid:21)(cid:28)
The following table sets forth information regarding (i) the total dollar amount of interest income from earning assets and the
resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average
rates; (iii) net interest income; (iv) net interest spread; and (v) net interest margin. Information is based on average daily
balances during the indicated periods. Investment security market value adjustments and trade-date accounting adjustments are
not considered to be earning assets and, as such, the net effect of these adjustments is included in non-earning assets.
TABLE 4—AVERAGE BALANCES, NET INTEREST INCOME AND INTEREST YIELDS / RATES
2016
Interest
Income/
Expense (2)
Average
Balance
Yield/
Rate
Average
Balance
2015
Interest
Income/
Expense (2)
Yield/
Rate
Average
Balance
2014
Interest
Income/
Expense (2)
Yield/
Rate
(Dollars in thousands)
Earning Assets:
Loans(1):
Commercial loans
$10,529,830
$
459,352
4.34 % $ 9,292,251
$
411,351
4.42 % $ 7,284,247
$
359,801
Residential mortgage loans
Consumer and other loans
1,236,640
2,894,584
54,966
4.44 %
1,165,524
53,948
4.63 %
869,510
148,719
5.14 %
2,815,554
141,667
5.03 %
2,310,339
Total loans
14,661,054
663,037
4.51 % 13,273,329
606,966
4.57 % 10,464,096
Loans held for sale
Investment securities
FDIC loss share receivable
Other earning assets
204,669
2,927,588
29,396
654,357
6,564
59,154
3.21 %
176,793
2.15 %
2,595,806
6,164
53,165
3.49 %
130,425
2.17 %
2,148,963
(16,024)
(53.62)%
4,208
0.64 %
52,494
553,629
(23,500)
(44.15)%
4,063
0.73 %
120,567
371,490
44,563
122,342
526,706
5,153
44,677
2,896
Total earning assets
18,477,064
716,939
3.89 % 16,652,051
646,858
3.90 % 13,235,541
504,815
4.95 %
5.13 %
5.30 %
5.04 %
3.95 %
2.23 %
0.78 %
3.85 %
(74,617)
(61.04)%
Allowance for loan losses
Non-earning assets
Total assets
Interest-bearing liabilities
Deposits:
NOW accounts
Savings and money market
accounts
Certificates of deposit
Total interest-bearing
deposits
Short-term borrowings
Long-term debt
Total interest-bearing
liabilities
Non-interest-bearing demand
deposits
Non-interest-bearing liabilities
Total liabilities
Shareholders’ equity
Total liabilities and
shareholders’ equity
Net earning assets
Net interest income/
Net interest spread
Net interest income (TE) /
Net interest margin (TE) (3)
(147,520)
1,991,690
$20,321,234
(130,808)
1,881,463
$18,402,706
(134,830)
1,531,283
$14,631,994
$ 2,922,587
8,816
0.30 % $ 2,620,570
6,903
0.26 % $ 2,240,137
6,006
0.27 %
6,578,622
2,141,399
11,642,608
614,073
616,309
24,725
18,039
51,580
2,453
13,668
0.38 %
6,274,498
0.84 %
2,260,237
21,063
19,137
0.34 %
4,616,026
0.85 %
1,889,858
0.44 % 11,155,305
47,103
0.42 %
8,746,021
0.39 %
2.18 %
426,011
388,220
797
11,200
0.18 %
2.85 %
782,033
335,211
12,802
14,282
33,090
1,364
10,250
0.28 %
0.76 %
0.38 %
0.17 %
3.02 %
12,872,990
67,701
0.52 % 11,969,536
59,100
0.49 %
9,863,265
44,704
0.45 %
4,582,533
228,117
17,683,640
2,637,594
$20,321,234
$ 5,604,074
3,996,821
175,315
16,141,672
2,261,034
$18,402,706
$ 4,682,515
2,916,509
144,861
12,924,635
1,707,359
$14,631,994
$ 3,372,276
$
$
649,238
3.37 %
658,701
3.53 %
$
$
587,758
3.41 %
596,362
3.55 %
$
$
460,111
3.40 %
468,720
3.51 %
(1)
(2)
(3)
Total loans include non-accrual loans for all periods presented. Interest income in Table 4 above excludes approximately
$11.9 million, $2.1 million and $1.8 million, in interest income that would have been recorded in 2016, 2015 and 2014,
respectively, if non-accrual loans (excluding acquired impaired loans) had been current in accordance with their
contractual terms.
Interest income includes loan fees of $2.9 million, $2.8 million, and $2.4 million for the years ended December 31, 2016,
2015, and 2014, respectively.
Taxable equivalent yields are calculated using a rate of 35%, which approximates the marginal tax rate.
(cid:22)(cid:19)
Net interest income increased $61.5 million, or 10%, to $649.2 million in 2016 when compared to 2015. The increase in net
interest income for 2016 is the result of a $1.8 billion increase in average earning assets offset by a one basis point decrease in
average yield on earning assets, a $903.5 million increase in average interest-bearing liabilities, and a three basis point increase
in funding costs when compared to 2015. Net interest margin on a tax-equivalent basis decreased two basis points to 3.53%
from 3.55% when comparing the periods, largely due to excess liquidity, as well as excess capital currently invested in lower
yielding cash and securities.
Average loans made up 79% and 80% of average earning assets in 2016 and 2015, respectively. Average loans increased $1.4
billion, or 10%, in 2016 as a result of the growth in the commercial legacy loan portfolio. Investment securities made up 16%
of average earning assets in both 2016 and 2015.
Average interest-bearing deposits made up 90% of average interest-bearing liabilities during 2016, compared to 93% during
2015. Average short-term borrowings made up 5% and 4% of average interest-bearing liabilities in 2016 and 2015, respectively.
Average long-term debt made up 5% and 3% of average interest-bearing liabilities in 2016 and 2015, respectively.
The following table sets forth information regarding average loan balances and average yields, segregated into the legacy and
acquired portfolios, for the periods indicated.
TABLE 5—AVERAGE LOAN BALANCES AND YIELDS
(Dollars in thousands)
Legacy loans
Acquired loans
Total loans
FDIC loss share receivables
Total loans and FDIC loss share
receivables
Years Ended December 31
2016
2015
2014
Average
Balance
$11,932,101
2,728,953
14,661,054
Average
Yield
4.03 % $10,354,265
Average
Balance
Average
Yield
3.95 % $ 8,860,141
Average
Balance
Average
Yield
4.00 %
6.68
4.51
2,919,064
13,273,329
6.84
4.57
1,603,955
10,464,096
10.54
5.04
29,396
(53.62)
52,494
(44.15)
120,567
(61.04)
$14,690,450
4.39% $13,325,823
4.38% $10,584,663
4.29%
(cid:22)(cid:20)
The following table displays the dollar amount of changes in interest income and interest expense for major components of
earning assets and interest-bearing liabilities. The table distinguishes between (i) changes attributable to volume (changes in
average volume between periods times the average yield/rate for the two periods), (ii) changes attributable to rate (changes in
average rate between periods times the average volume for the two periods), and (iii) total increase (decrease). Changes
attributable to both volume and rate are allocated ratably between the volume and rate categories.
TABLE 6—SUMMARY OF CHANGES IN NET INTEREST INCOME
2016 Compared to 2015
2015 Compared to 2014
Change Attributable To
Change Attributable To
Days (1)
Volume
Rate
Net Increase
(Decrease)
Days
Volume
Rate
Net Increase
(Decrease)
(Dollars in thousands)
Earning assets:
Loans:
Commercial loans
$ 1,254
$ 54,454
Residential mortgage loans
Consumer and other loans
Loans held for sale
Investment securities
FDIC loss share receivable
Other earning assets
Net change in income on
earning assets
Interest-bearing liabilities:
Deposits:
NOW accounts
Savings and money market
accounts
Certificates of deposit
Borrowings
Net change in expense on
interest-bearing liabilities
Change in net interest spread
—
—
—
—
(44)
—
3,213
4,801
920
7,174
11,831
926
$ (7,707) $
(2,195)
2,251
(520)
(1,185)
(4,311)
(781)
48,001
$ — $ 94,541
1,018
7,052
400
5,989
7,476
145
—
—
—
—
—
—
14,027
26,726
1,670
9,113
34,307
611
$ (42,991) $
(4,642)
(7,401)
(659)
(625)
16,810
556
51,550
9,385
19,325
1,011
8,488
51,117
1,167
1,210
83,319
(14,448)
70,081
— 180,995
(38,952)
142,043
—
—
—
44
847
1,066
1,913
1,464
(1,001)
6,072
2,198
(97)
(1,992)
3,662
(1,098)
4,124
—
—
—
—
1,004
(107)
897
7,196
3,007
774
1,065
1,848
(391)
8,261
4,855
383
44
$ 1,166
7,382
$ 75,937
1,175
$ (15,623) $
8,601
61,480
—
11,981
$ — $ 169,014
2,415
14,396
$ (41,367) $ 127,647
(1)
The change attributable to days reflects the impact of 366 days in 2016 versus 365 days in 2015 and 2014, and in which
the actual number of days impacts the yield calculation based on the respective accrual methods.
2016 vs. 2015
The $70.1 million increase in interest income in 2016 was largely driven by an increase in earning asset volume compared to
2015. Average loan balances increased $1.4 billion, or 10%, over 2015 due to a $1.6 billion, or 15%, increase in legacy loans
largely driven by commercial loan growth. The declining balance of the FDIC loss share receivable and related amortization
also contributed to a $7.5 million increase in interest income. The Company terminated all FDIC loss share receivables in
December of 2016.
During 2016, interest expense on interest-bearing liabilities increased $8.6 million, or 15%, partially due to a $4.5 million, or
10%, increase in interest expense on interest-bearing deposits. Growth of $487.3 million in the average balance of interest-
bearing deposits and a two basis point increase in the rate paid during 2016 drove the increase in interest expense on interest-
bearing deposits. In addition, interest expense on the Company’s borrowings also increased $4.1 million in 2016 as a result of
an increase in average long-term debt of $228.1 million and an increase in average short-term debt of $188.1 million.
2015 vs. 2014
For the year ended December 31, 2015, earning asset volume, both for acquired earning assets and organic growth, drove the
$142.0 million increase in interest income. Average loan balances increased $2.8 billion, or 27%, over 2014 and can be
attributed to legacy loan growth, as well as loans acquired from Florida Bank Group, Old Florida, and Georgia Commerce. The
(cid:22)(cid:21)
declining balance of the FDIC loss share receivable and related amortization also contributed $51.1 million to the increase in
interest income.
Between 2014 and 2015, interest expense on interest-bearing liabilities increased $14.4 million, or 32%, primarily due to a
$14.0 million, or 42%, increase in interest expense on interest-bearing deposits. The increase in interest expense on interest-
bearing deposits in 2015 included growth of $2.4 billion in the average balance and a four basis point increase in the rate paid
on interest-bearing deposits compared to 2014. Interest expense on the Company's borrowings increased $0.4 million as a result
of an increase in average long-term debt of $53.0 million when compared to 2014.
Provision for Loan Losses
Management of the Company formally assesses the ACL quarterly and will make provisions for loan losses and unfunded
lending commitments as necessary in order to maintain the appropriateness of the ACL at the balance sheet date. The provision
for loan losses exceeded net charge-offs by $10.6 million and $20.0 million for the year ended December 31, 2016 and
December 31, 2015, respectively.
2016 vs. 2015
On a consolidated basis, the Company recorded a provision for loan losses of $44.4 million for the year ended December 31,
2016, a $13.5 million increase from the provision recorded for the same period of 2015. The Company also recorded a reversal
of provision for unfunded lending commitments of $2.9 million during the current year, which is recorded in "credit and other
loan-related expense" in the Company's consolidated statements of comprehensive income. As a result, the Company’s total
provision for credit losses was $41.5 million in 2016, which is $8.3 million, or 25%, above the provision recorded in 2015. The
Company’s total provision for loan losses in 2016 was largely due to a $44.8 million provision recorded on legacy loans
resulting primarily from the downward migration of energy-related credits, due to general energy sector weakness, as well as
legacy loan growth of $1.5 billion, or 13%. Net charge-offs to average loans in the legacy portfolio were 0.28% as of December
31, 2016, compared to 0.10% as of December 31, 2015. Excluding energy-related loans and charge-offs, legacy net charge-offs
to average loans were 0.15% in 2016.
2015 vs. 2014
On a consolidated basis, the Company recorded a provision for loan losses of $30.9 million for the year ended December 31,
2015, an $11.8 million increase from the provision recorded for the same period of 2014. The Company also recorded a
provision for unfunded lending commitments of $2.3 million during 2015. As a result, the Company’s total provision for credit
losses was $33.2 million in 2015, which is $13.5 million, or 69%, above the provision recorded in 2014. The Company’s total
provision for loan losses in 2015 included a provision for changes in expected cash flows on the acquired loan portfolios of
$3.2 million and a $27.7 million provision recorded on legacy loans. The increase in provision was due primarily to legacy loan
growth of $1.5 billion, or 16%, from December 31, 2014, as well as higher net loan charge-offs and general energy sector
weakness. Net charge-offs to average loans in the legacy portfolio were 0.10% as of December 31, 2015, compared to 0.06%
as of December 31, 2014.
Refer to the "Asset Quality" section of MD&A and Note 6, Allowance for Credit Losses, to the consolidated financial
statements for additional information.
Non-interest Income
The Company’s operating results for the year ended December 31, 2016 included non-interest income of $233.8 million
compared to $220.4 million and $173.6 million for the years ended December 31, 2015 and 2014, respectively. The increase in
non-interest income from 2015 to 2016 was primarily a result of increases in mortgage income and other non-interest income,
partially offset by a decrease in broker commissions. Non-interest income as a percentage of total gross revenue (defined as
total interest and non-interest income) was 25% in both 2016 and 2015.
(cid:22)(cid:22)
The following table illustrates the primary components of non-interest income.
TABLE 7—NON-INTEREST INCOME
(Dollars in thousands)
Mortgage income
Service charges on deposit accounts
Title revenue
Broker commissions
ATM/debit card fee income
Credit card and merchant-related income
Income from bank owned life insurance
Gain on sale of available for sale securities
Trust income
Other non-interest income
2016
$ 83,853
2015
$ 80,662
2014
$ 51,797
$ Change % Change
4
3,191
$ Change % Change
56
28,865
2016 vs. 2015
2015 vs. 2014
44,135
22,213
15,338
14,240
12,171
5,241
2,001
7,174
42,197
22,837
17,592
13,989
10,675
4,356
1,575
6,974
35,573
20,492
18,783
12,023
9,718
5,473
771
6,019
1,938
(624)
(2,254)
251
1,496
885
426
200
27,455
$233,821
19,536
$220,393
12,979
$173,628
7,919
13,428
5
(3)
(13)
2
14
20
27
3
41
6
6,624
2,345
(1,191)
1,966
957
(1,117)
804
955
6,557
46,765
19
11
(6)
16
10
(20)
104
16
51
27
2016 vs. 2015
After record levels of mortgage production in 2015, mortgage income increased by $3.2 million in 2016. The increase in
mortgage income was primarily attributable to a $5.3 million increase in gains on sales and increases in servicing and other
income offset by a more unfavorable derivative valuation adjustment of $2.5 million. The Company originated $2.5 billion in
mortgage loans in 2016, down $4.6 million from 2015. The Company sold $2.5 billion in mortgage loans in 2016, up $23.7
million from 2015. In addition to the slight increase in sales volume, margin on sales was up 26 basis points in 2016 over 2015.
Other non-interest income increased $7.9 million, or 41%, in 2016, which included a $4.7 million, or 113%, increase in client
derivatives income, a $0.9 million, or 69%, increase in business banking loan income, as well as a $1.3 million, or 239%
increase in income from COLI assets (which is more than offset by an increase in salaries and benefits expense within non-
interest expense). These increases were partially offset by a $2.3 million, or 13%, decrease in broker commissions and a $0.6
million, or 3%, decrease in title revenue.
2015 vs. 2014
In 2015, strong mortgage production and sales resulted in a $28.9 million increase in mortgage income compared to 2014. The
Company originated $2.5 billion in mortgage loans in 2015, up $789.1 million, or 47% from 2014. The Company sold $2.5
billion in mortgage loans, up $799.1 million from 2014. Derivative valuation adjustments were more favorable in 2015 than
2014 by $5.3 million.
Other fluctuations in non-interest income from 2014 to 2015 included increases in service charges, title revenue, and ATM/
debit card fee income offset partially by decreases in broker commissions and BOLI income. Other non-interest income
increased $6.6 million, or 51%, in 2015 due to increases in commission income, gains on sales of fixed assets, and other
commercial loan income.
Non-interest Expense
The Company’s results for 2016 included non-interest expense of $566.7 million, a decrease of $3.6 million from 2015. The
primary reason for this decrease is the direct merger-related and severance expenses incurred during 2015 resulting from the
Company's three 2015 acquisitions, partially offset by the $17.8 million loss incurred to terminate the Company's loss share
agreements with the FDIC in December of 2016. Additionally, ongoing attention to expense control is part of the Company’s
corporate culture. For the year, the Company’s efficiency ratio was 64.2%, compared to 70.6% in 2015.
(cid:22)(cid:23)
The following table illustrates the primary components of non-interest expense.
TABLE 8—NON-INTEREST EXPENSE
(Dollars in thousands)
Salaries and employee benefits
Net occupancy and equipment
Communication and delivery
Marketing and business development
Data processing
Amortization of acquisition intangibles
Professional services
Credit and other loan-related expense
Insurance
Loss on early termination of loss share
agreements
Travel and entertainment
Other non-interest expense
2016 vs. 2015
2016 vs. 2015
2015 vs. 2014
2016
$ 331,686
2015
$ 322,586
2014
$ 259,086
65,797
12,383
12,332
25,091
8,415
19,153
10,937
17,270
17,798
8,481
68,541
13,506
13,176
34,424
7,811
22,368
16,653
16,670
—
9,525
59,571
12,029
11,707
27,249
5,807
18,975
13,692
14,359
—
9,033
37,322
$ 566,665
45,045
$ 570,305
42,106
$ 473,614
$ Change % Change
3
(4)
(8)
(6)
(27)
8
(14)
(34)
4
9,100
(2,744)
(1,123)
(844)
(9,333)
604
(3,215)
(5,716)
600
17,798
(1,044)
(7,723)
(3,640)
100
(11)
(17)
(1)
$ Change % Change
25
63,500
8,970
1,477
1,469
7,175
2,004
3,393
2,961
2,311
—
492
2,939
96,691
15
12
13
26
35
18
22
16
—
5
7
20
Data processing decreased $9.3 million, or 27%, from 2015, largely due to merger-related conversion expenses from the
Company's three 2015 acquisitions. Credit and other loan-related expense decreased $5.7 million, or 34%, from 2015, primarily
as a result of a decrease in the reserve for unfunded lending commitments due to a risk shift from higher-risk energy-related
commitments, which have decreased as these lines have funded or been curtailed, to lower-risk unfunded commitments. Net
occupancy and equipment expense decreased $2.7 million, or 4%, compared to 2015, mostly due to decreases of $1.5 million in
depreciation expense, as well as decreases in equipment rental, insurance, and utilities expenses. Other fluctuations are largely
due to acquisition and merger-related expenses incurred in 2015, none of which the Company incurred in 2016 as there were no
acquisitions in the current year.
The decreases in 2016 were offset by a pre-tax loss of $17.8 million incurred to terminate the Company's loss share agreements
with the FDIC ahead of their contractual maturities in December of 2016. The decreases in 2016 were also offset by a $9.1
million, or 3%, increase in salaries and employee benefits expense mostly due to a $6.0 million increase in commissions and
incentives in 2016. The Company had 3,100 full-time equivalent employees at the end of 2016, a decrease of 51, or 2%, from
2015.
2015 vs. 2014
In 2015, net occupancy and equipment expenses were up $9.0 million from 2014, primarily due to additional growth from
acquisitions in 2015, as the Company incurred security equipment monitoring costs, and increased rent expense and
depreciation from additional branches. Data processing increased $7.2 million in 2015, primarily due to increases in merger-
related computer services expense of $4.0 million, as well as the increased costs of strengthening the Company's cybersecurity.
Due to the continued growth of the Company, professional services expense in 2015 was $3.4 million higher than in 2014. The
$2.9 million, or 7%, increase in other non-interest expense in 2015 was primarily due to increases in ATM/debit card expense
(due to a higher volume of ATM/debit card transactions) and deposit insurance expense (due to deposit growth).
Salaries and employee benefits increased $63.5 million in 2015, primarily the result of increased staffing due to the growth of
the Company, specifically from the three completed acquisitions during 2015. The Company had 3,151 full-time equivalent
employees at the end of 2015, an increase of 394, or 14%, from 2014. The Company also had an increase of $8.8 million in
commissions and incentives and $6.6 million increase in phantom stock expense for grants in 2015 that contributed to the
overall increase in salaries and employee benefits.
(cid:22)(cid:24)
Income Taxes
For the years ended December 31, 2016, 2015, and 2014, the Company recorded income tax expense of $85.2 million, $64.1
million, and $35.7 million, respectively, which resulted in an effective income tax rate of 31.3% in 2016, 31.0% in 2015, and
25.3% in 2014.
The difference between the effective tax rate and the statutory federal and state tax rates relates to items that are non-taxable or
non-deductible, primarily the effect of tax-exempt income and various tax credits. The effective tax rates in 2016 and 2015
have increased primarily due to the increase in pre-tax income without a corresponding proportional increase in tax credits. In
addition, the effective tax rate has been negatively impacted by the post-merger effect of the 2015 acquisitions, which
contributed to the increase in the Company's state effective tax rate given the higher statutory tax rates in Florida and Georgia.
FINANCIAL CONDITION
EARNING ASSETS
Interest income associated with earning assets is the Company’s primary source of income. Earning assets are composed of
interest-earning or dividend-earning assets, including loans, securities, short-term investments, and loans held for sale. Earning
assets increased $2.2 billion, or 12%, during 2016. Major components of earning assets at December 31 are shown in the
following table:
TABLE 9—EARNING ASSETS COMPOSITION
(Ending Balances)
(Dollars in thousands)
Legacy Loans
Commercial Loans
Residential mortgage Loans
Consumer Loans
Total Legacy Loans
Acquired Loans
Total Loans, Net of Unearned Income
FDIC Loss Share Receivables
Investment Securities
Other Earning Assets
Total Earning Assets
2016
2015
Increase (Decrease)
$
9,377,399
$
8,133,341
$
1,244,058
854,216
2,463,309
694,023
2,363,156
12,694,924
11,190,520
2,370,047
3,136,908
15,064,971
14,327,428
—
39,878
3,535,313
1,323,417
2,899,214
506,532
160,193
100,153
1,504,404
(766,861)
737,543
(39,878)
697,665
636,099
816,885
15%
23
4
13
(24)
5
(100)
5
22
161
$ 19,923,701
$ 17,773,052
$
2,150,649
12%
Total Loans and FDIC Loss Share Receivables
15,064,971
14,367,306
The following discussion highlights the Company’s major categories of earning assets.
Loans
The Company had total loans of approximately $15.1 billion at December 31, 2016, an increase of $737.5 million, or 5%, from
December 31, 2015. Legacy loans increased $1.5 billion, or 13%, to $12.7 billion at December 31, 2016, while acquired loans
decreased $766.9 million, or 24%, to $2.4 billion at December 31, 2016. The growth in the legacy portfolio included increases
in commercial loans of $1.2 billion, or 15%, consumer loans of $100.2 million, or 4%, and mortgage loans of $160.2 million,
or 23%, over December 31, 2015 balances. With no additional acquisitions during 2016, the acquired portfolio decreased as
pay-downs and pay-offs occurred. In addition, acquired loans are transferred to the legacy portfolio as they are refinanced,
renewed, restructured, or otherwise underwritten to the Company's standards.
(cid:22)(cid:25)
The major categories of loans outstanding at December 31, 2016 and 2015 are presented in the following tables, segregated into
legacy and acquired loans.
(Dollars in
thousands)
Legacy
Commercial
Commercial
and
Industrial
$ 3,194,796
Real
Estate
$ 5,623,314
Acquired
1,178,952
Total loans $ 6,802,266
348,326
$ 3,543,122
TABLE 10—SUMMARY OF LOANS
December 31, 2016
Consumer and Other
Energy-
related
$ 559,289
1,904
$ 561,193
Residential
Mortgage
854,216
$
413,184
$ 1,267,400
Indirect
automobile
131,048
$
Home
Equity
$ 1,783,421
4
131,052
372,505
$ 2,155,926
$
Credit
Card
$ 82,524
468
$ 82,992
Other
$ 466,316
54,704
$ 521,020
Total
$ 12,694,924
2,370,047
$ 15,064,971
Commercial
Commercial
and
Industrial
$ 2,952,102
Real
Estate
$ 4,504,062
Legacy
December 31, 2015
Consumer and Other
Energy-
related
$ 677,177
Residential
Mortgage
694,023
$
Indirect
automobile
246,214
$
Home
Equity
$ 1,575,643
Acquired
1,569,449
Total loans $ 6,073,511
492,476
$ 3,444,578
3,589
$ 680,766
501,296
$ 1,195,319
$
84
246,298
490,524
$ 2,066,167
Credit
Card
$ 77,261
582
$ 77,843
Other
$ 464,038
Total
$ 11,190,520
78,908
$ 542,946
3,136,908
$ 14,327,428
Loan Portfolio Components
The Company believes its loan portfolio is diversified by product and geography throughout its footprint. From a market
perspective, total loan growth was seen primarily in the Atlanta, Tampa, Dallas, and Southeast Florida markets. Loans in the
Atlanta market increased $168.7 million, or 21%, during 2016, while loans in the Tampa market increased $165.6 million, or
46%. Dallas had year-to-date loan growth of $136.5 million, or 31%, and Southeast Florida experienced growth of $133.8
million, or 43%, since the end of 2015.
The Company’s loan to deposit ratio at December 31, 2016 and 2015 was 87% and 89%, respectively. The percentage of fixed-
rate loans to total loans decreased from 48% at the end of 2015 to 45% at December 31, 2016. The table below sets forth the
composition of the loan portfolio at December 31, followed by a discussion of activity by major loan type.
TABLE 11—TOTAL LOANS BY LOAN TYPE
(Dollars in thousands)
2016
2015
2014
2013
2012
Balance
Mix
Balance
Mix
Balance
Mix
Balance
Mix
Balance
Mix
Commercial loans:
Real estate
$ 6,802,266
45 % $ 6,073,511
42 % $ 4,361,779
38 % $ 3,786,501
40 % $ 3,578,363
42 %
Commercial and industrial
Energy-related
Total commercial loans
3,543,122
561,193
10,906,581
24
4
73
3,444,578
680,766
10,198,855
24
5
71
2,571,695
880,608
7,814,082
23
8
69
2,324,235
752,682
6,863,418
24
8
72
2,015,081
575,817
6,169,261
24
7
73
Residential mortgage loans:
1,267,400
8
1,195,319
8
1,080,297
9
586,532
6
477,204
5
Consumer and other loans:
Home equity
Indirect automobile
Other
Total consumer and other
loans
2,155,926
131,052
604,012
2,890,990
14
1
4
19
2,066,167
246,298
620,789
2,933,254
15
2
4
21
1,601,105
397,158
548,402
2,546,665
14
3
5
22
1,291,792
375,236
375,041
2,042,069
14
4
4
22
1,251,125
327,985
273,005
1,852,115
15
4
3
22
Total loans
$15,064,971
100% $14,327,428
100% $11,441,044
100% $ 9,492,019
100% $ 8,498,580
100%
(cid:22)(cid:26)
Commercial Loans
Total commercial loans increased $707.7 million, or 7%, from December 31, 2015, with $1.2 billion, or 15%, in legacy loan
growth and a decrease in acquired commercial loans of $536.3 million, or 26%. The Company continued to attract and retain
commercial customers in 2016 as commercial loans were 73% of the total loan portfolio at December 31, 2016, compared to
71% at December 31, 2015. Unfunded commitments on commercial loans including approved loan commitments not yet
funded were $4.0 billion at December 31, 2016, an increase of $489.7 million, or 14%, when compared to the end of the prior
year.
Commercial real estate loans include loans to commercial customers for long-term financing of land and buildings or for land
development or construction of a building. The commercial real estate portfolio is comprised of approximately 39% owner-
occupied and 61% non-owner-occupied loans as of December 31, 2016. These loans are repaid from revenues through
operations of the businesses, rents of properties, sales of properties and refinances. Commercial real estate loans increased
$728.8 million, or 12%, during the year, consisting of increases in legacy commercial real estate loans of $1.1 billion, or 25%,
offset by decreases in acquired commercial real estate loans of $390.5 million, or 25%. At December 31, 2016, commercial real
estate loans totaled $6.8 billion, or 45% of the total loan portfolio, compared to 42% at December 31, 2015. The Company’s
underwriting standards generally provide for loan terms of three to seven years, with amortization schedules of generally no
more than twenty-five years. Low loan-to-value ratios are generally maintained and usually limited to no more than 80% at the
time of origination.
Commercial and industrial loans represent loans to commercial customers to finance general working capital needs, equipment
purchases and other projects where repayment is derived from cash flows resulting from business operations. The Company
originates commercial business loans on a secured and, to a lesser extent, unsecured basis. The Company’s commercial
business loans may be term loans or revolving lines of credit. Term loans are generally structured with terms of no more than
three to seven years, with amortization schedules of generally no more than fifteen years. Commercial business term loans are
generally secured by equipment, machinery or other corporate assets. The Company also provides for revolving lines of credit
generally structured as advances upon perfected security interests in accounts receivable and inventory. Revolving lines of
credit generally have annual maturities. The Company obtains personal guarantees of the principals as additional security for
most commercial business loans. As of December 31, 2016, commercial and industrial loans totaled $3.5 billion, or 24% of the
total loan portfolio. This represents a $98.5 million, or 3%, increase from December 31, 2015.
The following table details the Company’s commercial loans by state.
TABLE 12—COMMERCIAL LOANS BY STATE OF ORIGINATION
(Dollars in
thousands)
December 31,
2016
Legacy
Louisiana
Florida
Alabama
Texas
Arkansas
Georgia
Tennessee
Other
Total
$3,133,872
$1,546,290
$1,157,914
$1,849,625
$639,053
$436,936
$ 540,479
$ 73,230
$ 9,377,399
Acquired
Total
193,059
$3,326,931
843,191
$2,389,481
19,050
$1,176,964
39,391
$1,889,016
— 395,299
$832,235
$639,053
12,868
$ 553,347
26,324
$ 99,554
1,529,182
$10,906,581
December 31,
2015
Legacy
$3,081,494
$ 947,812
$1,059,604
$1,812,055
$569,384
$125,493
$ 486,703
$ 50,796
$ 8,133,341
Acquired
Total
271,780
$3,353,274
1,079,000
$2,026,812
28,145
$1,087,749
40,854
$1,852,909
— 568,283
$693,776
$569,384
20,419
$ 507,122
57,033
$107,829
2,065,514
$10,198,855
Energy-related Loans
The Company’s loan portfolio included energy-related loans of $561.2 million at December 31, 2016, or 4% of total loans,
compared to $680.8 million at December 31, 2015, a decrease of $119.6 million, or 18%. At December 31, 2016, exploration
and production (“E&P”) loans accounted for 52% of energy-related loans and 56% of energy-related commitments. Midstream
companies accounted for 16% of energy-related loans and 19% of energy loan commitments, while service company loans
totaled 32% of energy-related loans and 25% of energy commitments.
The rapid and sustained decline in energy commodity prices that began in 2014 and culminated in early 2016 appears to be
slowly recovering. The financial condition of businesses and communities tied to the oil and gas industries remains unsettled.
While the vast majority of the Company's loan portfolio continues to have no exposure to these concerns, we took actions to
(cid:22)(cid:27)
mitigate the risks in the weakened economic environment by employing a risk-off strategy, reducing or exiting exposures in our
highest risk credits and strengthening certain underwriting standards.
During 2016, many of the Company's criticized (defined as special mention or worse) energy credits deteriorated and cycled
through resolution, as expected. Management has been closely monitoring these loans since the decline in commodities prices
in 2014. Although the level of criticized loans has significantly increased, the underlying collateral for these credits indicate no
increased risk of loss has occurred in 2016. In late 2016, energy prices increased as compared to early 2016 and have shown
some stabilization, and the Company expects that prices will remain stable or rise in the foreseeable future. The Company's
historical focus on sound client selection, conservative credit underwriting, proactive portfolio management, and market and
business diversification continue to serve the Company well. The strategic decision to expand into other markets across the
southeast allows the Company to drive growth and profitability to offset declining positions in impacted energy segments of
business. Based on the composition and detailed analysis of its energy portfolio at December 31, 2016, the Company believes
most of its energy exposure is in areas of lower credit risk; however, a deterioration in prices of energy commodities could lead
to increased losses in future periods.
Residential Mortgage Loans
Residential mortgage loans consist of loans to consumers to finance a primary residence. The vast majority of the residential
mortgage loan portfolio is comprised of non-conforming 1-4 family mortgage loans secured by properties located in the
Company's market areas and originated under terms and documentation that permit their sale in a secondary market. Larger
mortgage loans of current and prospective private banking clients are generally retained to enhance relationships, but also tend
to be more profitable due to the expected shorter durations and relatively lower servicing costs associated with loans of this
size. The Company does not originate or hold high loan-to-value, negative amortization, option ARM, or other exotic mortgage
loans in its portfolio. The Company makes insignificant investments in loans that would be considered sub-prime (e.g., loans
with a credit score of less than 620) in order to facilitate compliance with relevant Community Reinvestment Act regulations.
Total residential mortgage loans increased $72.1 million, or 6%, compared to December 31, 2015, primarily the result of
private banking originations.
Consumer and Other Loans
The Company offers consumer loans in order to provide a full range of retail financial services to customers in the communities
in which it operates. The Company originates substantially all of its consumer loans in its primary market areas. At
December 31, 2016, $2.9 billion, or 19%, of the total loan portfolio was comprised of consumer loans, compared to $2.9
billion, or 21%, at the end of 2015. Total consumer loans at December 31, 2016 decreased $42.3 million from December 31,
2015. Indirect automobile loans largely contributed to this decline with a decrease of $115.2 million, or 47%. In January 2015,
the Company announced it would exit the indirect automobile lending business. The Company concluded compliance risk
associated with these loans had become unbalanced relative to potential returns generated by the business on a risk-adjusted
basis.
Consistent with 2015, home equity loans comprised the largest component of the consumer loan portfolio at December 31,
2016. Home equity lending allows customers to borrow against the equity in their home and is secured by a first or second
mortgage on the borrower’s residence. Real estate market values at the time the loan is secured affect the amount of credit
extended. Changes in these values may impact the extent of potential losses. The balance of home equity loans increased $89.8
million during the year to $2.2 billion at December 31, 2016. The Company’s sales and marketing efforts in 2016 have also
contributed to the growth in legacy home equity loans since December 31, 2015. Unfunded commitments related to home
equity loans and lines were $804.8 million at December 31, 2016, an increase of $53.4 million versus the prior year. The
Company has approximately $905.9 million of loans with junior liens where the Company does not hold or service the
respective loan holding the senior lien. The Company believes it has appropriately reserved for these loans in its allowance for
credit losses.
The remainder of the consumer loan portfolio at December 31, 2016 consisted of credit card loans, direct automobile loans and
other personal loans, and comprised 4% of the total loan portfolio.
Overall, the composition of the Company's loan portfolio as of December 31, 2016 is consistent with the composition as of
December 31, 2015.
In order to assess the risk characteristics of the loan portfolio, the Company considers the current U.S. economic environment
and that of its primary market areas. See Note 6, Allowance for Credit Losses, to the consolidated financial statements for
credit quality factors by loan portfolio segment.
(cid:22)(cid:28)
Additional information on the Company’s consumer loan portfolio is presented in the following tables. For the purposes of
Table 16, unscoreable consumer loans have been included with loans with credit scores below 660. Credit scores reflect the
most recent information available as of the dates indicated.
TABLE 13—CONSUMER LOANS BY STATE OF ORIGINATION
(Dollars in
thousands)
December 31,
2016
Legacy
Acquired
Total
consumer
loans
December 31,
2015
Legacy
Acquired
Total
consumer
loans
Louisiana
Florida Alabama
Texas
Arkansas Georgia Tennessee
Other
Total
$1,033,358
$437,316
$ 264,293
$119,366
$ 266,443
$ 68,167
$
69,736
$ 204,630
$2,463,309
126,758
203,840
4,085
30,990
—
50,906
11,085
17
427,681
$1,160,116
$641,156
$ 268,378
$150,356
$ 266,443
$ 119,073
$
80,821
$ 204,647
$2,890,990
$1,023,813
$286,539
$ 246,837
$113,773
$ 274,740
$ 32,562
$
51,182
$ 333,710
$2,363,156
155,884
265,503
5,315
42,420
—
86,129
14,742
105
570,098
$1,179,697
$552,042
$ 252,152
$156,193
$ 274,740
$ 118,691
$
65,924
$ 333,815
$2,933,254
TABLE 14—CONSUMER LOANS BY CREDIT SCORE
Below 660
660-720
Above 720
Discount
Total
$ 526,479
$ 601,285
$ 1,335,545
$
— $ 2,463,309
169,980
$ 696,459
84,100
$ 685,385
195,324
$ 1,530,869
(21,723)
427,681
$ (21,723) $ 2,890,990
$ 427,938
$ 604,751
$ 1,330,467
$
— $ 2,363,156
122,619
$ 550,557
144,665
$ 749,416
334,023
$ 1,664,490
(31,209)
570,098
$ (31,209) $ 2,933,254
(Dollars in thousands)
December 31, 2016
Legacy
Acquired
Total consumer loans
December 31, 2015
Legacy
Acquired
Total consumer loans
Loan Maturities
The following table sets forth the scheduled contractual maturities of the Company’s total loan portfolio at December 31, 2016,
unadjusted for scheduled principal reductions, prepayments or repricing opportunities. Demand loans, loans having no stated
schedule of repayments and no stated maturity, and overdraft loans are reported as due in one year or less. The average life of a
loan may be substantially less than the contractual terms because of scheduled amortization and prepayments. Of the loans with
maturities greater than one year, approximately 80% of the balance of these loans bears a fixed rate of interest.
TABLE 15—LOAN MATURITIES BY LOAN TYPE
(Dollars in thousands)
Commercial real estate
Commercial and industrial
Energy-related
Residential mortgage
Consumer and other
Total
$
One Year
or Less
3,290,383
2,241,913
99,644
224,439
1,804,944
One Through
Five Years
After
Five Years
Discount
$
2,272,055
$
1,273,488
$
856,739
453,971
196,571
437,345
448,957
7,584
878,420
670,424
Total
6,802,266
3,543,122
(33,660) $
(4,487)
(6)
(32,030)
(21,723)
2,890,990
(91,906) $ 15,064,971
1,267,400
561,193
$
7,661,323
$
4,216,681
$
3,278,873
$
(cid:23)(cid:19)
Mortgage Loans Held for Sale
The Company continues to sell the majority of conforming mortgage loan originations in the secondary market rather than
assume the interest rate risk associated with these longer term assets. Upon the sale, the Company retains servicing on a limited
portion of these loans. Loans held for sale decreased $9.2 million, or 6%, to $157.0 million at December 31, 2016 compared to
year-end 2015. In 2016 and 2015, the Company originated approximately $2.5 billion in mortgage loans.
Loans held for sale have primarily been fixed-rate single-family residential mortgage loans under contracts to be sold in the
secondary market. In most cases, loans in this category are sold within thirty days of closing. Buyers generally have recourse to
return a purchased loan to the Company under limited circumstances. See Note 1 to the consolidated financial statements for
further discussion.
Investment Securities
Investment securities increased by $636.1 million, or 22%, since December 31, 2015 to $3.5 billion at December 31, 2016.
Investment securities approximated 16% and 15% of total assets at December 31, 2016 and December 31, 2015, respectively.
The following table shows the carrying values of securities by category as of December 31 for the years indicated.
TABLE 16—CARRYING VALUE OF SECURITIES
(Dollars in thousands)
2016
2015
2014
2013
2012
Balance
Mix
Balance
Mix
Balance
Mix
Balance
Mix
Balance
Mix
Securities available for sale:
U.S. Government-
sponsored enterprise
obligations
Obligations of states and
political subdivisions
Mortgage-backed
securities
Other securities
Securities held to
maturity:
U.S. Government-
sponsored enterprise
obligations
Obligations of states and
political subdivisions
Mortgage-backed
securities
$ 212,358
6 % $ 252,083
9 % $ 315,553
14 % $ 395,561
19 % $ 285,724
15 %
283,199
2,851,709
98,831
3,446,097
8
80
3
97
187,961
2,264,813
95,429
2,800,286
7
78
3
97
90,190
4
107,479
5
127,075
7
1,751,615
77
1,432,278
68
1,330,656
68
1,495 —
1,479 —
1,549 —
2,158,853
95
1,936,797
92
1,745,004
90
— —
— —
10,000 —
34,478
64,726
24,490
89,216
2
1
3
69,979
28,949
98,928
2
1
3
77,597
29,363
116,960
4
1
5
84,290
35,341
154,109
2
4
2
8
69,949
88,909
46,204
4
4
2
205,062
10
$ 3,535,313
100% $ 2,899,214
100% $ 2,275,813
100% $ 2,090,906
100% $ 1,950,066
100%
All of the Company's mortgage-backed securities were issued by government-sponsored enterprises at December 31, 2016. The
Company does not hold any Fannie Mae or Freddie Mac preferred stock, corporate equity, collateralized debt obligations,
collateralized loan obligations, or structured investment vehicles, nor does it hold any private label collateralized mortgage
obligations, subprime, Alt-A, sovereign debt, or second lien elements in its investment portfolio. At December 31, 2016, the
Company's investment portfolio did not contain any securities that are directly backed by subprime or Alt-A mortgages.
(cid:23)(cid:20)
The following table summarizes activity in the Company’s investment securities portfolio during 2016 and 2015. There were no
transfers of securities between investment categories during 2016.
TABLE 17—INVESTMENT PORTFOLIO ACTIVITY
(Dollars in thousands)
Balance at beginning of period
Purchases
Acquisitions
Sales, net of gains
Principal maturities, prepayments and calls, net of gains
Amortization of premiums and accretion of discounts
Unrealized gains (losses) (1)
Balance at end of period
Available for
Sale
Held to
Maturity
2016
$ 2,800,286
2015
$ 2,158,853
$
2016
98,928
$
2015
116,960
1,384,525
1,063,460
—
(195,732)
(484,138)
(21,811)
(37,033)
$ 3,446,097
309,485
(227,029)
(473,142)
(17,268)
(14,073)
$ 2,800,286
$
—
—
—
(8,791)
(921)
—
89,216
$
5,833
—
—
(22,939)
(926)
—
98,928
(1) The Company elected to opt out of the requirement to include the net unrealized gains or losses on the Company's available
for sale investment securities in regulatory capital in an effort to exclude the impact that changes in the Company's
unrealized gains or losses on its available for sale investment portfolio may have on regulatory capital and the related capital
ratios. See Note 16 to the consolidated financial statements for additional information.
Funds generated as a result of sales and prepayments of investment securities are used to fund loan growth and purchase other
securities. The Company continues to monitor market conditions and take advantage of market opportunities with appropriate
risk and return elements.
The Company assesses the nature of the unrealized losses in its investment portfolio at least quarterly to determine if there are
losses that are deemed other-than-temporary. In its analysis of these securities, management considers numerous factors to
determine whether there are instances where the amortized cost basis of the debt securities would not be fully recoverable
including, the length of time and extent to which the fair value of the securities was less than their amortized cost, whether
adverse conditions were present in the operations, geographic area or industry of the issuer, the payment structure of the
security, including scheduled interest and principal payments, including the issuer's failures to make scheduled payments, if
any, and the likelihood of failure to make such scheduled payments in the future, changes to the rating of the security by a
rating agency, and subsequent recoveries or additional declines in fair value after the balance sheet date.
Management believes it has considered these factors, as well as all relevant information available, when determining the
expected future cash flows of the securities in question. Based on its analysis, the Company concluded no declines in the
estimated fair value of the Company’s investment securities were deemed to be other-than-temporary at December 31, 2016 and
2015. Note 4 to the consolidated financial statements provides further information on the Company’s investment securities.
Asset Quality
The lending activities of the Company are governed by underwriting policies established by management and approved by the
Board Risk Committee of the Board of Directors. Commercial risk personnel, in conjunction with senior lending personnel,
underwrite the vast majority of commercial business and commercial real estate loans. The Company provides centralized
underwriting of substantially all residential mortgage, small business and consumer loans. Established loan origination
procedures require appropriate documentation, including financial data and credit reports. For loans secured by real property,
the Company generally requires property appraisals, title insurance or a title opinion, hazard insurance, and flood insurance,
where appropriate.
Loan payment performance is monitored and late charges are generally assessed on past due accounts. Delinquent and problem
loans are administered by functional teams of specialized risk officers. Risk ratings on commercial exposures (as described
below) are reviewed on an ongoing basis and are adjusted as necessary based on the obligor’s risk profile and debt capacity.
The central loan review department is responsible for independently assessing and validating risk ratings assigned to
commercial exposures through a periodic sampling process. All other loans are also subject to loan reviews through a similar
periodic sampling process. The Company exercises judgment in determining the risk classification of its commercial loans.
The Company utilizes an asset risk classification system in accordance with guidelines established by the FRB as part of its
efforts to monitor commercial asset quality. In connection with their examinations of insured institutions, both federal and state
(cid:23)(cid:21)
examiners also have the authority to identify problem assets and, if appropriate, reclassify them. There are three classifications
for problem assets: “substandard,” “doubtful” and “loss”, all of which are considered adverse classifications. Substandard
assets have one or more defined weaknesses and are characterized by the distinct possibility that the Company will sustain
some loss if the weaknesses are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional
characteristic that the weaknesses make collection or liquidation in full questionable, and there is a high probability of loss
based on currently existing facts, conditions and values. An asset classified as loss is considered not collectible and of such
little value that continuance as an asset of the Company is not warranted.
In the first quarter of 2016, the banking regulatory agencies issued interpretive guidance on the valuation of collateral
underlying E&P loans and how such valuations should impact the assessment of the inherent credit risk (and ultimately risk
ratings and charge-offs) in such loans. The Company's implementation of this guidance in the first quarter of 2016 contributed
to the increase in criticized assets within the Company's energy portfolio.
Commercial loans are placed on non-accrual status when any of the following occur: 1) the loan is maintained on a cash basis
because of deterioration in the financial condition of the borrower; 2) collection of the full contractual amount of principal or
interest is not expected (even if the loan is currently paying as agreed); 3) when principal or interest has been in default for a
period of 90 days or more, unless the loan is both well secured and in the process of collection; or 4) the borrower has filed or
is likely to file bankruptcy. Factors considered in determining the collection of the full contractual amount of principal or
interest include assessment of the borrower’s cash flow, valuation of underlying collateral, and the ability and willingness of
guarantors to provide credit support. Certain commercial loans are also placed on non-accrual status when payment is not past
due and full payment of principal and interest is expected, but we have doubt about the borrower’s ability to comply with
existing repayment terms. Consideration will be given to placing a loan on non-accrual due to the deterioration of the debtor’s
repayment ability, the repayment of the loan becoming dependent on the liquidation of collateral, an existing collateral
deficiency, the loan being classified as "Doubtful" or "Loss", the client filing for bankruptcy, and/or foreclosure being initiated.
Regarding all classes within the C&I and CRE portfolios, the determination of a borrower’s ability to make the required
principal and interest payments is based on an examination of the borrower’s current financial statements, industry,
management capabilities, and other qualitative factors.
When a loan is placed on non-accrual status, the accrual of interest income ceases and accrued but unpaid interest is generally
reversed against interest income.
Real estate acquired by the Company through foreclosure or by deed-in-lieu of foreclosure is classified as OREO, and is
recorded at the lesser of the related loan balance (the pro-rata carrying value for acquired loans) or estimated fair value less
costs to sell. Closed bank branches are also classified as OREO and recorded at the lower of cost or market value.
Under GAAP, certain loan modifications or restructurings are designated as TDRs. In general, the modification or restructuring
of a debt constitutes a TDR if the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants
a concession to the borrower that the Company would not otherwise consider under current market conditions. See Note 1,
Summary of Significant Accounting Policies, to the consolidated financial statements for further information.
(cid:23)(cid:22)
Non-performing Assets
The Company defines non-performing assets as non-accrual loans, accruing loans more than 90 days past due, OREO, and
foreclosed property. Management continually monitors loans and transfers loans to non-accrual status when warranted.
The Company accounts for loans formerly covered by loss sharing agreements with the FDIC, other loans acquired with
deteriorated credit quality, as well as all loans acquired with significant discounts that did not exhibit deteriorated credit quality
at acquisition, in accordance with ASC Topic 310-30. Collectively, all loans accounted for under ASC 310-30 are referred to as
"purchased impaired loans". Application of ASC Topic 310-30 results in significant accounting differences, compared to loans
originated or acquired by the Company that are not accounted for under ASC 310-30. See Note 1, Summary of Significant
Accounting Policies, to the consolidated financial statements for further details.
Due to the significant difference in accounting for purchased impaired loans, the Company believes inclusion of these loans in
certain asset quality ratios that reflect non-performing assets in the numerator or denominator (or both) results in significant
distortion to these ratios. In addition, because loan level charge-offs related to purchased impaired loans are not recognized in
the financial statements until the cumulative amounts exceed the original loss projections on a pool basis, the net charge-off
ratio for acquired loans is not consistent with the net charge-off ratio for other loan portfolios. The inclusion of these loans in
certain asset quality ratios could result in a lack of comparability across quarters or years, and could impact comparability with
other portfolios that were not impacted by purchased impaired loan accounting. The Company believes that the presentation of
certain asset quality measures excluding purchased impaired loans, as indicated below, and related amounts from both the
numerator and denominator provides better perspective into underlying trends related to the quality of its loan portfolio.
Accordingly, the asset quality measures in the tables below present asset quality information excluding purchased impaired
loans, as indicated within each table, and related amounts.
Total non-performing assets increased $159.7 million, or 175%, compared to December 31, 2015.
Legacy non-performing assets increased $163.9 million, or 241%, compared to December 31, 2015, as non-performing loans
increased $171.1 million, offset by a decrease in OREO of $7.2 million. Including TDRs that are in compliance with their
modified terms, total non-performing assets and TDRs increased $221.4 million over the past twelve months.
(cid:23)(cid:23)
The following table sets forth the composition of the Company’s legacy non-performing assets, including accruing loans past
due 90 or more days and TDRs, as of December 31.
TABLE 18—NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS
(LEGACY)
(Dollars in thousands)
Non-accrual loans:
Commercial
Energy-related
Mortgage
Consumer and credit card
Total non-accrual loans
Accruing loans 90 days or more past due
Total non-performing loans (1)
OREO and foreclosed property (2)
Total non-performing assets (1)
Performing troubled debt restructurings (3)
Total non-performing assets and troubled
debt restructurings (1)
Non-performing loans to total loans (1) (4)
Non-performing assets to total assets (1) (4)
Non-performing assets and troubled debt
restructurings to total assets (1) (4)
Allowance for credit losses to non-performing
loans (4) (5)
2016
2015
2014
2013
2012
$ Change % Change
2016 vs. 2015
$ 47,666
$ 22,201
$ 9,953
$ 24,471
$ 32,313
25,465
150,329
13,014
10,534
221,543
1,104
222,647
9,264
231,911
95,951
7,081
13,674
7,972
50,928
624
51,552
16,491
68,043
38,441
27
14,362
10,628
34,970
754
35,724
21,243
56,967
1,430
—
10,237
8,979
43,687
1,075
44,762
28,272
73,034
1,376
—
143,248
8,367
7,237
47,917
1,371
49,288
26,380
75,668
2,354
(660)
2,562
170,615
480
171,095
(7,227)
163,868
57,510
$327,862
$106,484
$ 58,397
$ 74,410
$ 78,022
$ 221,378
115
N/M
(5)
32
335
77
332
(44)
241
150
208
1.75%
1.20%
0.46%
0.42%
0.37%
0.41%
0.54%
0.61%
0.73%
0.69%
1.70%
0.65%
0.42%
0.62%
0.71%
52.46%
209.41%
246.26%
175.35%
150.57%
Allowance for credit losses to total loans (4) (5)
0.92%
0.96%
0.91%
0.95%
1.10%
(1) Non-performing loans and assets include accruing loans 90 days or more past due.
(2) OREO and foreclosed property at December 31, 2016, 2015, 2014, 2013, and 2012 include $4.8 million, $8.1 million,
(3)
(4)
(5)
$11.6 million, $9.2 million, and $9.2 million, respectively, of former bank properties held for development or resale.
Performing troubled debt restructurings for December 31, 2016, 2015, 2014, 2013 and 2012 exclude $136.8 million,
$23.4 million, $2.2 million, $18.5 million, $15.4 million, respectively, in troubled debt restructurings that meet non-
performing asset criteria.
Total loans, total non-performing loans, and total assets exclude acquired loans and assets discussed below.
The allowance for credit losses excludes the portion of the allowance related to acquired loans discussed below.
Non-performing legacy loans were 1.75% of total legacy loans at December 31, 2016, 129 basis points higher than at
December 31, 2015. The increase in legacy non-performing loans was due primarily to an increase of $143.2 million in energy-
related non-accrual loans. The majority of the increase in energy-related non-accrual loans is comprised of 13 relationships that
were deemed criticized in prior periods. The decline in energy prices has strained the cash flows of many energy companies.
We believe our underwriting policies on energy are conservative and focus on obtaining strong collateral to support the
underlying loans. Generally, our energy loans are senior credit facilities with well-secured collateral positions, and we do not
engage in subordinated, second lien, or mezzanine financing to energy companies. As such, despite the increase in non-
performing energy loans, we believe the risk of loss on these loans is mitigated by the respective collateral and related reserves.
Non-performing assets as a percentage of total assets increased over the past year primarily as a result of the challenges our
energy-related customers faced in 2016 as previously discussed. Legacy non-performing assets were 1.20% of total legacy
assets at December 31, 2016, 78 basis points above December 31, 2015. The allowance for credit losses as a percentage of non-
performing legacy loans was 52.46% at December 31, 2016 compared to 209.41% at December 31, 2015. The Company’s
allowance for credit losses as a percentage of legacy loans decreased four basis points from 2015 to 0.92% at December 31,
2016. The Company has considered the collateral support on these non-performing assets in determining the allowance for
credit losses.
(cid:23)(cid:24)
The Company had gross charge-offs on legacy loans of $38.0 million during the year ended December 31, 2016. Offsetting
these charge-offs were recoveries of $5.0 million. As a result, net charge-offs on legacy loans during 2016 were $33.0 million,
or 0.28% of average loans, as compared to net charge-offs of $10.1 million, or 0.10%, for 2015. Net charge-offs in 2016
included $16.2 million from a limited number of energy-related relationships.
At December 31, 2016, the Company had $319.7 million of legacy commercial assets classified as substandard, $28.9 million
of commercial assets classified as doubtful, and no commercial assets classified as loss. Accordingly, the aggregate of the
Company’s legacy classified commercial assets was 1.61% of total assets, 2.31% of total loans, and 2.75% of legacy loans. At
December 31, 2015, legacy classified commercial assets totaled $144.1 million, or 0.74% of total assets, 1.01% of total loans,
and 1.29% of legacy loans. As with non-classified assets, a reserve for credit losses has been recorded for substandard loans at
December 31, 2016 in accordance with the Company’s allowance for credit losses policy.
In addition to the problem loans described above, there were $138.2 million of legacy commercial loans classified as special
mention at December 31, 2016, which in management’s opinion were subject to potential future rating downgrades. Special
mention loans are defined as loans where known information about possible credit problems of the borrowers causes
management to have some doubt as to the ability of these borrowers to comply with the present loan repayment terms, which
may result in future disclosure of these loans as non-performing. Special mention loans at December 31, 2016 increased $33.4
million, or 32%, from December 31, 2015. The increase was attributable to both loan growth and a general deterioration in
credit quality, primarily as it relates to the Company's legacy energy-related loans.
As noted above, the asset quality of the Company’s energy-related loan portfolio has been impacted by sustained low
commodity prices. At December 31, 2016, $1.5 million of energy-related loans were past due greater than 30 days. Non-accrual
energy-related loans totaled $150.3 million at year-end 2016, compared to $8.5 million at year-end 2015. In 2016, the Company
has experienced $16.2 million in energy-related net charge-offs. There were no energy-related charge-offs in 2015.
Past Due and Non-accrual Loans
Past due status is based on the contractual terms of loans. At December 31, 2016, total acquired loans past due were 0.47% of
total acquired loans, an increase of 13 basis points from December 31, 2015. Total legacy past due loans (including non-accrual
loans) were 1.95% of total legacy loans at December 31, 2016 compared to 0.65% at December 31, 2015. Additional
information on past due loans is presented in the following table.
TABLE 19—PAST DUE AND NON-ACCRUAL LOAN SEGREGATION
(Dollars in thousands)
Accruing loans:
30-59 days past due
60-89 days past due
90-119 days past due
120 days past due or more
Non-accrual loans
Legacy
December 31, 2016
Acquired (1)
Total
Amount
% of
Outstanding
Balance
Amount
% of
Outstanding
Balance
Amount
% of
Outstanding
Balance
$
$
18,026
6,876
880
224
26,006
221,543
247,549
0.14 % $
0.05
0.01
—
0.20
1.75
1.95% $
2,586
1,381
250
32
4,249
6,958
11,207
0.11 % $
0.06
0.01
—
0.18
0.29
0.47% $
20,612
8,257
1,130
256
30,255
228,501
258,756
0.14 %
0.05
0.01
—
0.20
1.52
1.72%
(1) Acquired past due and non-accrual loan amounts exclude acquired impaired loans, even if contractually past due or if the
Company does not expect to receive payment in full, as the Company is currently accreting interest income over the
expected life of the loans.
(cid:23)(cid:25)
(Dollars in thousands)
Accruing loans:
30-59 days past due
60-89 days past due
90-119 days past due
120 days past due or more
Non-accrual loans
Legacy
December 31, 2015
Acquired (1)
Total
Amount
% of
Outstanding
Balance
Amount
% of
Outstanding
Balance
Amount
% of
Outstanding
Balance
$
13,839
0.12 % $
6,270
461
163
20,733
50,928
71,661
$
0.07
—
—
0.19
0.46
0.65% $
2,761
2,305
291
—
5,357
5,421
10,778
0.09 % $
16,600
0.11 %
0.07
0.01
—
0.17
0.17
0.34% $
8,575
752
163
26,090
56,349
82,439
0.06
0.01
—
0.18
0.39
0.57%
(1) Acquired past due and non-accrual loan amounts exclude acquired impaired loans, even if contractually past due or if the
Company does not expect to receive payment in full, as the Company is currently accreting interest income over the
expected life of the loans.
Total past due and non-accrual loans increased $176.3 million from December 31, 2015 to $258.8 million at December 31,
2016. The change was primarily due to an increase of $172.2 million in non-accrual loans of which $142.0 million of the
increase was energy-related.
Allowance for Credit Losses
The allowance for credit losses represents management’s best estimate of probable credit losses inherent at the balance sheet
date. Determination of the allowance for credit losses involves a high degree of complexity and requires significant judgment.
Several factors are taken into consideration in the determination of the overall allowance for credit losses. Based on facts and
circumstances available, management of the Company believes that the allowance for credit losses was appropriate at
December 31, 2016 to cover probable losses in the Company’s loan portfolio. However, future adjustments to the allowance
may be necessary, and the results of operations could be adversely affected, if circumstances differ substantially from the
assumptions used by management in determining the allowance for credit losses. See the “Application of Critical Accounting
Policies and Estimates” and Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements for
more information.
(cid:23)(cid:26)
The following tables set forth the activity in the Company’s allowance for credit losses.
TABLE 20—SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR CREDIT LOSSES
(Dollars in thousands)
Allowance for loan losses at beginning of period
Transfer of balance to OREO and other
Transfer of balance to the reserve for unfunded
commitments
Provision charged to operations
2016
$ 138,378
(2,781)
2015
$ 130,131
(10,419)
2014
$ 143,074
(22,157)
2013
$ 251,603
(43,802)
2012
$ 193,761
(42,090)
—
—
—
44,424
30,908
19,060
(9,828)
5,145
—
20,671
(Reversal of) provision recorded through the FDIC loss
share receivable
(1,497)
(1,360)
(4,260)
(56,085)
84,085
Charge-offs:
Commercial
Residential Mortgage
Consumer and other
Recoveries:
Commercial
Residential Mortgage
Consumer and other
Net charge-offs
Allowance for loan losses at end of period
Reserve for unfunded lending commitments at beginning of
period
Transfer of balance from the allowance for loan losses
(Reversal of) provision for unfunded lending commitments
Reserve for unfunded lending commitments at end of
period
Allowance for credit losses at end of period
Allowance for loan losses to non-performing assets (1)(2)
Allowance for loan losses to total loans at end of period (2)
Net charge-offs to average loans
(25,983)
(313)
(13,543)
(39,839)
(4,085)
(362)
(12,854)
(17,301)
(2,564)
(613)
(8,806)
(11,983)
(3,532)
(518)
(6,796)
(10,846)
(3,211)
(993)
(5,896)
(10,100)
2,643
180
3,211
2,325
95
3,999
3,066
246
3,085
3,768
771
2,348
3,293
38
1,945
6,034
(33,805)
144,719
6,419
(10,882)
138,378
6,397
(5,586)
130,131
6,887
(3,959)
143,074
5,276
(4,824)
251,603
14,145
—
(2,904)
11,801
—
2,344
11,147
—
654
—
9,828
1,319
—
—
—
11,241
$ 155,960
14,145
$ 152,523
11,801
$ 141,932
11,147
$ 154,221
—
$ 251,603
57.60%
151.40%
141.30%
99.40%
129.90%
0.96
0.23
0.97
0.08
1.14
0.05
1.51
0.04
2.96
0.06
(1) Non-performing assets include accruing loans 90 days or more past due. For purposes of this table, non-accrual and past
due loans exclude acquired impaired loans accounted for under ASC 310-30 that are currently accruing income.
(2)
The allowance for loan losses includes impairment reserves attributable to acquired impaired loans.
TABLE 21—ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES
Commercial
Residential Mortgage
Consumer and other
Total allowance for credit losses
2016
2015
2014
2013
2012
% of
Loans
Reserve
%
76 % 73 %
% of
Loans
Reserve
%
73 % 71 %
% of
Loans
Reserve
%
70 % 69 %
% of
Loans
Reserve
%
69 % 72 %
% of
Loans
Reserve
%
71 % 73 %
8 %
8 %
8 %
8 %
7 %
9 %
10 %
6 %
10 %
5 %
19 % 22 %
23 % 22 %
16 % 19 %
100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
19 % 21 %
21 % 22 %
The allowance for credit losses was $156.0 million at December 31, 2016, or 1.04% of total loans, $3.4 million higher than at
December 31, 2015. The allowance for credit losses as a percentage of loans was 1.06% at December 31, 2015.
(cid:23)(cid:27)
The allowance for credit losses on the legacy portfolio increased $8.9 million, or 8%, since December 31, 2015, primarily a
result of deterioration in credit quality in energy-related loans, which accounted for almost 50% of the Company's net charge-
offs in 2016, and to a lesser extent, legacy loan growth ($1.5 billion, or 13%, growth since December 31, 2015). The acquired
allowance for credit losses includes a reserve of $39.2 million for losses probable in the portfolio at December 31, 2016 above
estimated expected credit losses at acquisition, a decrease of $5.4 million, or 12%, from December 31, 2015.
At December 31, 2016 and 2015, the legacy allowance for loan losses covered 47% and 182% of total non-performing loans,
respectively. Including acquired non-impaired loans, the allowance for loan losses covered 63% of total non-performing loans
at December 31, 2016 and 242% at December 31, 2015.
FDIC Loss Share Receivable
As part of the FDIC-assisted acquisitions in 2009 and 2010, the Company recorded a receivable from the FDIC, which
represented the fair value of the expected reimbursable losses covered by the loss share agreements as of the acquisition dates.
The FDIC loss share receivable was written-off in December of 2016 when the Company entered into an agreement with the
FDIC to terminate the Company's loss share agreements prior to their contractual maturities. The Company received a net
payment of $6.5 million from the FDIC as consideration for this termination and subsequently derecognized the remaining
FDIC indemnification asset and associated assets and liabilities, resulting in a pre-tax loss of $17.8 million.
The Company will benefit from all future recoveries, and be responsible for all future losses and expenses related to the assets
previously subject to the loss share agreements. Amortization expense associated with the FDIC indemnification asset, which
was previously expected to be $8 million in 2017, will no longer be recognized and will positively impact the net interest
margin beginning in 2017.
Cash and cash equivalents
Cash and cash equivalents totaled $1.4 billion at December 31, 2016, an increase of $851.9 million, or 167%, from year-end
2015. Cash and due from banks increased $54.2 million to $295.9 million at December 31, 2016. Short-term investments
primarily result from excess funds invested overnight in interest-bearing deposit accounts at the FRB and the FHLB of Dallas.
These balances fluctuate daily depending on the funding needs of the Company and earn interest at the current FHLB and FRB
short-term rates. The balance in interest-bearing deposits at other institutions of $1.1 billion at December 31, 2016 increased
$797.6 million, or 297%, from December 31, 2015. The increase in total cash and cash equivalents was primarily attributable to
an inflow of deposits at the end of 2016 and the common and preferred stock issuances during 2016. The Company’s cash
activity is further discussed in the “Liquidity and Other Off-Balance Sheet Activities” section below.
(cid:23)(cid:28)
Other Assets
The following table details other asset balances as of December 31:
TABLE 22—OTHER ASSETS COMPOSITION
(Dollars in thousands)
Other Earning Assets
FHLB stock, FRB stock, and
other equity securities
Fed funds sold and financing
transactions
Other interest-earning assets (1)
Total reverse repurchase
agreement
Total other earning assets
Non-Earning Assets
Bank-owned life insurance
Core deposit intangibles
Title plant and other intangible
assets
Accrued interest receivable
Other real estate owned
Derivative market value
Investment in tax credit entities
Other non-earning assets
Total non-earning assets
Total other assets
2016
2015
2014
2013
2012
$ Change
% Change
2016 vs. 2015
$
93,718
$
66,008
$
74,130
$
53,773
$
46,216
27,710
—
6,660
1,268
101,646
—
5,660
—
71,668
—
5,412
—
79,542
—
3,412
—
57,185
4,875
3,412
—
54,503
160,875
131,575
21,836
30,044
122,573
19,595
104,203
100,556
14,622
19,122
7,072
52,124
21,200
38,886
76,592
7,224
47,863
34,131
30,486
7,511
37,696
53,947
32,903
7,439
32,143
99,173
30,076
7,660
32,183
121,536
42,119
141,951
139,326
132,487
137,508
170,998
549,583
$ 651,229
155,965
579,239
$ 650,907
95,606
509,157
$ 588,699
76,839
496,982
$ 554,167
50,532
511,216
$ 565,719
—
1,000
1,268
29,978
29,300
(8,208)
(152)
4,261
(12,931)
8,400
(65,359)
15,033
(29,656)
322
42
—
18
100
42
22
(27)
(2)
9
(38)
28
(46)
10
(5)
—
(1) Other interest-earning assets are composed primarily of trust preferred common securities.
• The $27.7 million, or 42%, increase in FHLB stock, FRB stock, and other equity securities was the result of $31.5
million in stock purchases, $5.8 million in stock sales, and approximately $0.5 million in stock dividends received
during 2016.
• Bank-owned life insurance increased $29.3 million, or 22%, from 2015 to 2016 primarily due to the purchase of $24.1
million in additional BOLI policies, and to a lesser extent, increases in cash surrender values of policies held.
• Core deposit intangibles decreased $8.2 million during the current year due to the amortization of core deposit
intangibles.
• The $65.4 million, or 46%, decrease in the investment in tax credit entities was primarily due to the unwind of certain
tax credit investments expiring during 2016.
• Other real estate includes all real estate, other than bank premises used in bank operations, which is owned or
controlled by the Company, including real estate acquired in settlement of loans and former bank premises no longer
used. The $12.9 million decrease in OREO from December 31, 2015 was a result of the sale of OREO properties,
including a $3.4 million decrease in former bank premises.
• The $15.0 million, or 10%, increase in other non-earning assets since December 31, 2015 was primarily the result of
an increase in deferred tax assets due to a tax benefit of $6.7 million in the fourth quarter of 2016 as a result of the
2015 tax return filing.
(cid:24)(cid:19)
FUNDING SOURCES
Deposits obtained from clients in its primary market areas are the Company’s principal source of funds for use in lending and
other business purposes. The Company attracts local deposit accounts by offering a wide variety of products, competitive
interest rates and convenient branch office locations and service hours. Increasing core deposits is a continuing focus of the
Company and has been accomplished through the development of client relationships and acquisitions. Short-term and long-
term borrowings are also an important funding source for the Company. Other funding sources include subordinated debt and
shareholders’ equity. Refer to the “Liquidity and Other Off-Balance Sheet Activities” section below for further discussion of the
Company’s sources and uses of funding. The following discussion highlights the major changes in the mix of deposits and other
funding sources during 2016.
Deposits
The Company’s ability to attract and retain customer deposits is critical to the Company’s continued success. The year-over-
year growth in deposits is the result of the continued strengthening of legacy client relationships, deeper expansion into markets
from prior year acquisitions, and normal deposit campaigns. The Company's deposit balances generally increase at the end of
any given year due to real estate tax collections by our municipal customers. These balances typically remain on deposit with
the Company 45 to 60 days. Given the short-term nature of these seasonal funds, the deposit balances tied to these seasonal
flows are held in liquid investments until they are withdrawn from the Company. The Company currently expects total deposits
to decline during the first half of 2017.
Total deposits increased $1.2 billion, or 8%, to $17.4 billion at December 31, 2016, from $16.2 billion at December 31, 2015.
Over the same period, non-interest-bearing deposits increased $576.6 million, or 13%, and equated to 28% and 27% of total
deposits at December 31, 2016 and 2015, respectively. Additionally, interest-bearing deposits also increased $652.9 million, or
6%, from December 31, 2015.
The following table sets forth the composition of the Company’s deposits as of December 31:
TABLE 23—DEPOSIT COMPOSITION BY PRODUCT
(Dollars in thousands)
2016
2015
2014
2013
2012
$ Change % Change
Non-interest-bearing
deposits
NOW accounts
Money market accounts
Savings accounts
Certificates of deposit and
other time deposits
Total deposits
$ 4,928,878
28 % $ 4,352,229
27 % $ 3,195,430
26 % $ 2,575,939
24 % $ 1,967,662
18 %
3,314,281
6,219,532
814,385
2,131,207
19
36
5
12
2,974,176
6,010,882
716,838
2,124,623
19
37
4
13
2,462,841
4,168,504
577,513
2,116,237
20
33
4
17
2,283,491
3,779,581
387,397
1,710,592
22
35
3
16
2,523,252
3,738,480
364,703
2,154,180
24
35
3
20
576,649
340,105
208,650
97,547
6,584
$17,408,283
100% $16,178,748
100% $12,520,525
100% $10,737,000
100% $10,748,277
100% 1,229,535
13
11
3
14
—
8
2016 vs. 2015
From a market perspective, total deposit growth on a percentage basis was seen primarily in the Tampa, Mobile, Huntsville,
Baton Rouge, and New Orleans markets. Tampa's customer deposits increased $246 million, or 94%, during 2016, while total
deposits in the Mobile market increased $94 million, or 42%, since the end of 2015. Huntsville had year-to-date customer
deposit growth of $47 million, or 32%. Baton Rouge and New Orleans experienced growth of $112 million, or 18%, and $243
million, or 15%, respectively.
The following table details large-denomination certificates of deposit by remaining maturity dates at December 31.
TABLE 24—REMAINING MATURITIES OF CDS $100,000 AND OVER
(Dollars in thousands)
2016
2015
2014
2013
2012
3 months or less
3 – 12 months
12 – 36 months
More than 36 months
$ 241,128
21 % $ 228,336
16 % $ 204,041
19 % $ 256,931
28 % $ 265,558
23 %
457,796
339,137
97,702
40
30
9
631,634
390,820
135,950
46
28
10
547,876
274,038
54,844
51
25
5
452,005
157,430
39,976
50
17
5
572,734
227,072
81,151
50
20
7
Total CDs $100,000 and over
$1,135,763
100% $1,386,740
100% $1,080,799
100% $ 906,342
100% $1,146,515
100%
(cid:24)(cid:20)
Short-term Borrowings
The Company may obtain advances from the FHLB of Dallas based upon its ownership of FHLB stock and certain pledges of
its real estate loans and investment securities, provided certain standards related to the Company’s creditworthiness have been
met. These advances are made pursuant to several credit programs, each of which has its own interest rate and range of
maturities. The level of short-term borrowings can fluctuate significantly on a daily basis depending on funding needs and the
source of funds chosen to satisfy those needs.
The Company also enters into repurchase agreements to facilitate customer transactions that are accounted for as secured
borrowings. These transactions typically involve the receipt of deposits from customers that the Company collateralizes with its
investment portfolio and have an average rate of 13.1 basis points.
The following table details the average and ending balances of repurchase transactions as of and for the years ended
December 31:
TABLE 25—REPURCHASE TRANSACTIONS
(Dollars in thousands)
Average balance
Ending balance
$
2016
282,180
334,136
$
2015
236,206
216,617
Total short-term borrowings increased $182.5 million, or 56%, from December 31, 2015, to $509.1 million at the end of 2016,
a result of increases of $65.0 million in FHLB advances outstanding and $117.5 million in repurchase agreements. On an
average basis, short-term borrowings increased $188.1 million, or 44%, from 2015, largely due to the increase in repurchase
agreements during 2016.
Total short-term borrowings were 3% of total liabilities and 45% of total borrowings at December 31, 2016 compared to 2%
and 49%, respectively, at December 31, 2015. On an average basis, short-term borrowings were 3% of total liabilities and 50%
of total borrowings in 2016, compared to 3% and 52%, respectively, during 2015.
The weighted average rate paid on short-term borrowings was 0.39% during 2016, up 21 basis points compared to 0.18% in
2015. For additional information on the Company’s short-term borrowings, see Note 13, Short-Term Borrowings, to the Notes
to the consolidated financial statements.
Long-term Debt
Long-term debt increased $288.5 million, or 85%, to $629.0 million from $340.4 million at December 31, 2015, largely due to
an increase in FHLB advances during the year. This change in long-term debt also includes a decrease in new market tax credit
notes payable associated with the unwind of certain tax credit investments during 2016. On a period-end basis, long-term debt
was 3% and 2% of total liabilities at December 31, 2016 and 2015, respectively.
On average, long-term debt increased to $616.3 million in 2016, $228.1 million, or 59%, higher than 2015, as the Company
took advantage of favorable rates on FHLB advances to fund loan growth and for other liquidity purposes in 2016. Average
long-term debt was 3% of total liabilities during the current year, compared to 2% during 2015.
Long-term debt at December 31, 2016 included $480.1 million in fixed-rate advances from the FHLB of Dallas that cannot be
prepaid without incurring substantial penalties. The remaining debt consisted of $120.1 million of the Company’s junior
subordinated debt and $28.7 million in notes payable on investments in new market tax credit entities. Interest on the junior
subordinated debt is payable quarterly and may be deferred at any time at the election of the Company for up to 20 consecutive
quarterly periods. During any deferral period, the Company is subject to certain restrictions, including being prohibited from
declaring dividends to its common shareholders. The junior subordinated debt is redeemable by the Company in whole or in
part. For additional information, see Note 14, Long-Term Debt, to the consolidated financial statements.
CAPITAL RESOURCES
On May 4, 2016, the Company's Board of Directors authorized the repurchase of up to 950,000 shares of IBERIABANK
Corporation's outstanding common stock. Stock repurchases under this program will be made from time to time, on the open
market or in privately negotiated transactions. The timing of these repurchases will depend on market conditions and other
requirements. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of
shares, and the program may be extended, modified, suspended, or discontinued at any time. During the second quarter of
2016, the Company repurchased 202,506 common shares at a weighted average price of $57.61 per common share.
(cid:24)(cid:21)
On May 9, 2016, the Company issued an aggregate 2,300,000 depositary shares each representing a 1/400th ownership interest
in a share of the Company's 6.60% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per
share, ("Series C Preferred Stock"), with a liquidation preference of $10,000 per share of Series C Preferred Stock (equivalent
to $25 per depositary share), which represents $57,500,000 in aggregate liquidation preference. Note 16 to the consolidated
financial statements provides additional information on the preferred stock issuance.
On December 7, 2016, the Company issued an additional 3,593,750 shares of its common stock at a price of $81.50 per
common share. Net proceeds from the offering, after deduction of underwriting discounts, commissions, and direct issuance
costs, were $279.2 million.
Federal regulations impose minimum regulatory capital requirements on all institutions with deposits insured by the FDIC. The
FRB imposes similar capital regulations on bank holding companies. Compliance with bank and bank holding company
regulatory capital requirements, which include leverage and risk-based capital guidelines, are monitored by the Company on an
ongoing basis. Under the risk-based capital method, a risk weight is assigned to balance sheet and off-balance sheet items based
on regulatory guidelines.
In July 2013, the U.S. banking regulatory agencies, including the FRB, approved a final rule to implement the revised capital
adequacy standards of the BCBS or Basel III, and to address relevant provisions of the Dodd-Frank Act. The Company and
IBERIABANK became subject to the new rules on January 1, 2015. The implementation of the BASEL III capital adequacy
standards included a one-time election to opt out of the requirement to include most components of accumulated other
comprehensive income, including the net unrealized gains or losses on the Company's available for sale investment securities,
in Common Equity Tier 1 (CET1) capital. The Company elected to opt out of the requirement in the first quarter of 2015 in an
effort to exclude the impact that changes in the Company's unrealized gain or loss on its available for sale investment portfolio
have on regulatory capital and the related capital ratios. Certain provisions of the new rules will be phased in from that date to
January 1, 2019. Additional information on the revised capital adequacy standards is included in Note 16 to the consolidated
financial statements.
At December 31, 2016 and 2015, the Company exceeded all required regulatory capital ratios, and the regulatory capital ratios
of IBERIABANK were in excess of the levels established for “well-capitalized” institutions, as shown in the following table
and chart.
TABLE 26—REGULATORY CAPITAL RATIOS
Ratio
Tier 1 Leverage
Entity
IBERIABANK Corporation
IBERIABANK
Common Equity Tier 1 (CET1)
IBERIABANK Corporation
Tier 1 risk-based capital
Total risk-based capital
IBERIABANK
IBERIABANK Corporation
IBERIABANK
IBERIABANK Corporation
IBERIABANK
2016 Well-
Capitalized
Minimums
N/A
December 31, 2016
December 31, 2015
Actual
Actual
10.86%
9.52%
5.00%
N/A
6.50%
N/A
8.00%
N/A
10.00%
9.21
11.84
10.67
12.59
10.67
14.13
11.56
9.03
10.10
10.16
10.73
10.16
12.17
11.08
The increase in IBERIABANK Corporation's CET1 ratio from December 31, 2015 was primarily driven by an increase in
regulatory capital from the additional common stock issued in 2016, as well as undistributed earnings in the current year.
Additionally, IBERIABANK Corporation's Tier 1 risk-based capital ratio and Total Risk-Based Capital Ratio increased from
December 31, 2015 as a result of the Company's issuance of additional preferred stock during 2016.
Beginning January 1, 2016, minimum capital ratios were subject to a capital conservation buffer. In order to avoid limitations
on distributions, including dividend payments, and certain discretionary bonus payments to executive officers, an institution
must hold a capital conservation buffer above its minimum risk-based capital requirements. This capital conservation buffer is
calculated as the lowest of the differences between the actual CET1 ratio, Tier 1 Risk-Based Capital Ratio, and Total Risk-
Based Capital ratio and the corresponding minimum ratios. At December 31, 2016, the required minimum capital conservation
buffer was 0.625%, and will increase in subsequent years by 0.625% until it is fully phased in on January 1, 2019 at 2.50%. At
December 31, 2016, the capital conservation buffers of the Company and IBERIABANK were 6.13% and 3.56%, respectively.
(cid:24)(cid:22)
Management believes that at December 31, 2016, the Company and IBERIABANK would have met all capital adequacy
requirements on a fully phased-in basis if such requirements were then effective. There can be no assurances that the Basel III
capital rules will not be revised before the expiration of the phase-in periods.
LIQUIDITY AND OTHER OFF-BALANCE SHEET ACTIVITIES
Liquidity refers to the Company’s ability to generate sufficient cash flows to support its operations and to meet its obligations,
including the withdrawal of deposits by customers, commitments to originate loans, and its ability to repay its borrowings and
other liabilities. Liquidity risk is the risk to earnings or capital resulting from the Company’s inability to fulfill its obligations as
they become due. Liquidity risk also develops from the Company’s failure to timely recognize or address changes in market
conditions that affect the ability to liquidate assets in a timely manner or to obtain adequate funding to continue to operate on a
profitable basis.
The primary sources of funds for the Company are deposits and borrowings. Other sources of funds include repayments and
maturities of loans and investment securities, securities sold under agreements to repurchase, and, to a lesser extent, off-balance
sheet borrowing availability. Certificates of deposit scheduled to mature in one year or less at December 31, 2016 totaled $1.3
billion. Based on past experience, management believes that a significant portion of maturing deposits will remain with the
Company. Additionally, the majority of the investment securities portfolio is classified as available-for-sale, which provides the
ability to liquidate unencumbered securities as needed. Of the $3.5 billion in the investment securities portfolio, $2.0 billion is
unencumbered and $1.5 billion has been pledged to support repurchase transactions, public funds deposits and certain long-
term borrowings. Due to the relatively short implied duration of the investment securities portfolio, the Company has
historically experienced significant cash inflows on a regular basis. Securities cash flows are highly dependent on prepayment
speeds and could change materially as economic or market conditions change. See Note 12, Deposits, Note 13, Short-Term
Borrowings, and Note 14, Long-Term Debt, to the consolidated financial statements for additional discussion related to the
Company’s funding requirements.
Scheduled cash flows from the amortization and maturities of loans and securities are relatively predictable sources of funds.
Conversely, deposit flows, prepayments of loan and investment securities, and draws on customer letters and lines of credit are
greatly influenced by general interest rates, economic conditions, competition, and customer demand. The FHLB of Dallas
provides an additional source of liquidity to make funds available for general requirements and also to assist with the variability
of less predictable funding sources. At December 31, 2016, the Company had $655.1 million of outstanding FHLB advances,
$175.0 million of which was short-term and $480.1 million was long-term. Additional FHLB borrowing capacity available at
December 31, 2016 amounted to $4.9 billion. At December 31, 2016, the Company also has various funding arrangements with
commercial banks providing up to $180.0 million in the form of federal funds and other lines of credit. At December 31, 2016,
there were no balances outstanding on these lines and all of the funding was available to the Company.
Liquidity management is both a daily and long-term function of business management. The Company manages its liquidity
with the objective of maintaining sufficient funds to respond to the predicted needs of depositors and borrowers and to take
advantage of investments in earning assets and other earnings enhancement opportunities. Excess liquidity is generally invested
in short-term investments such as overnight deposits. On a longer-term basis, the Company maintains a strategy of investing in
various lending and investment security products. The Company uses its sources of funds primarily to fund loan commitments
and meet its ongoing commitments associated with its operations. Based on its available cash at December 31, 2016 and current
deposit modeling, the Company believes it has adequate liquidity to fund ongoing operations. The Company has adequate
availability of funds from deposits, borrowings, repayments and maturities of loans and investment securities to provide the
Company additional working capital if needed.
In the normal course of business, the Company is a party to a number of activities that contain credit, market and operational
risk that are not reflected in whole or in part in the Company’s consolidated financial statements. Such activities include
traditional off-balance sheet credit-related financial instruments and commitments under operating leases. The Company
provides customers with off-balance sheet credit support through loan commitments, lines of credit, and standby letters of
credit. Many of the commitments are expected to expire unused or be only partially used; therefore, the total amount of
commitments does not necessarily represent future cash requirements. Based on its available liquidity and available borrowing
capacity, the Company anticipates it will continue to have sufficient funds to meet its current commitments.
(cid:24)(cid:23)
At December 31, 2016, the Company’s unfunded loan commitments outstanding totaled $355.6 million. At the same date,
unused lines of credit, including credit card lines, amounted to $4.9 billion, as shown in the following table.
TABLE 27—COMMITMENT EXPIRATION PER PERIOD
(Dollars in thousands)
Unused lines of credit
Unfunded loan commitments
Standby letters of credit
Less than 1
year
$2,554,176
355,558
1—3 Years
$1,556,992
3—5 Years
$ 284,642
Over 5 Years
$ 504,120
Total
$4,899,930
—
—
—
355,558
148,579
$3,058,313
11,656
$1,568,648
3,300
$ 287,942
25
$ 504,145
163,560
$5,419,048
The Company has entered into a number of long-term arrangements to support the ongoing activities of the Company. The
required payments under such leasing and other debt commitments at December 31, 2016 are shown in the following table.
TABLE 28—CONTRACTUAL OBLIGATIONS AND OTHER DEBT COMMITMENTS
(Dollars in thousands)
Operating leases
Certificates of deposit
Short-term borrowings
Long-term debt
2017
15,927
$
$
1,335,041
509,136
2018
14,981
507,162
—
$
2019
13,980
96,509
—
$
2020
12,742
83,623
—
$
2021
10,906
60,468
—
2022 and
After
37,527
$
48,404
—
Total
$ 106,063
2,131,207
509,136
55,516
$1,915,620
233,667
$ 755,810
97,042
$ 207,531
15,263
$ 111,628
55,564
$ 126,938
171,901
$ 257,832
628,953
$ 3,375,359
ASSET/LIABILITY MANAGEMENT, MARKET RISK AND COUNTERPARTY CREDIT RISK
The principal objective of the Company’s asset and liability management function is to evaluate the interest rate risk included
in certain balance sheet accounts, determine the appropriate level of risk given the Company’s business focus, operating
environment, capital and liquidity requirements, and performance objectives, establish prudent asset concentration guidelines
and manage the risk consistent with Board approved guidelines. Through such management, the Company seeks to reduce the
vulnerability of its operations to changes in interest rates. The Company’s actions in this regard are taken under the guidance of
the Asset and Liability Committee. The Asset and Liability Committee normally meets monthly to review, among other things,
the sensitivity of the Company’s assets and liabilities to interest rate changes, local and national market conditions, and interest
rates. In connection therewith, the Asset and Liability Committee generally reviews the Company’s liquidity, cash flow needs,
composition of investments, deposits, borrowings, and capital position.
The objective of interest rate risk management is to control the effects that interest rate fluctuations have on net interest income
and on the net present value of the Company’s earning assets and interest-bearing liabilities. Management and the Board are
responsible for managing interest rate risk and employing risk management policies that monitor and limit this exposure.
Interest rate risk is measured using net interest income simulation and asset/liability net present value sensitivity analyses. The
Company uses financial modeling to measure the impact of changes in interest rates on the net interest margin and to predict
market risk. Estimates are based upon numerous assumptions including the nature and timing of interest rate levels including
yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits,
reinvestment/replacement of asset and liability cash flows, and others. These analyses provide a range of potential impacts on
net interest income and portfolio equity caused by interest rate movements.
Included in the modeling are instantaneous parallel rate shift scenarios, which are utilized to establish exposure limits. These
scenarios are known as “rate shocks” because all rates are modeled to change instantaneously by the indicated shock amount,
rather than a gradual rate shift over a period of time that has traditionally been more realistic.
(cid:24)(cid:24)
The Company’s interest rate risk model indicates that the Company is asset sensitive in terms of interest rate sensitivity. Based
on the Company’s interest rate risk model at December 31, 2016, the table below illustrates the impact of an immediate and
sustained 100 and 200 basis point increase or decrease in interest rates on net interest income over the next twelve months.
TABLE 29—INTEREST RATE SENSITIVITY
Shift in Interest Rates
(in bps)
200
100
-100
-200
% Change in Projected
Net Interest Income
11.8%
6.1%
(7.9)%
(12.2)%
The influence of using the forward curve as of December 31, 2016 as a basis for projecting the interest rate environment would
approximate a 1.4% increase in net interest income over the next 12 months. The computations of interest rate risk shown
above are performed on a flat balance sheet and do not necessarily include certain actions that management may undertake to
manage this risk in response to unanticipated changes in interest rates and other factors to include shifts in deposit behavior.
The short-term interest rate environment is primarily a function of the monetary policy of the FRB. The principal tools of the
FRB for implementing monetary policy are open market operations, or the purchases and sales of U.S. Treasury and Federal
agency securities, as well as the establishment of a short-term target rate. The FRB’s objective for open market operations has
varied over the years, but the focus has gradually shifted toward attaining a specified level of the Federal funds rate to achieve
the long-run goals of price stability and sustainable economic growth. The Federal funds rate is the basis for overnight funding
and drives the short end of the yield curve. Longer maturities are influenced by the market’s expectations for economic growth
and inflation, but can also be influenced by FRB purchases and sales and expectations of monetary policy going forward.
The Federal Open Market Committee (“FOMC”) of the FRB, in an attempt to stimulate the overall economy, has, among other
things, kept interest rates low through its targeted Federal funds rate. On December 15, 2016, the FOMC voted to raise the
target Federal funds rate by 0.25%, almost a year to the day since the last increase on December 17, 2015. The FOMC expects
that economic conditions will evolve in a manner that will warrant only gradual increases in the Federal funds rate over the
next several years. As the FOMC increases the Federal funds rate, it is possible that overall interest rates could rise, which may
negatively impact the housing markets and the U.S. economic recovery. In addition, deflationary pressures, while possibly
lowering our operating costs, could have a significant negative effect on our borrowers, especially our commercial borrowers,
and the values of collateral securing loans, which could negatively affect our financial performance.
The Company’s commercial loan portfolio is also impacted by fluctuations in the level of one-month LIBOR, as a large portion
of this portfolio reprices based on this index. Our net interest income may be reduced if more interest-earning assets than
interest-bearing liabilities reprice or mature during a period when interest rates are declining, or more interest-bearing liabilities
than interest-earning assets reprice or mature during a period when interest rates are rising.
The table below presents the Company’s anticipated repricing of loans and investment securities over the next four quarters.
TABLE 30—REPRICING OF CERTAIN EARNING ASSETS (1)
(Dollars in thousands)
Investment securities
Fixed rate loans
Variable rate loans
Total loans
1Q 2017
2Q 2017
3Q 2017
4Q 2017
$
118,197
$
130,868
$
133,719
$
124,829
Total less
than one year
507,613
$
825,653
7,637,439
8,463,092
$ 8,581,289
$
569,777
180,173
749,950
880,818
$
540,577
116,660
657,237
790,956
480,480
2,416,487
82,328
8,016,600
562,808
687,637
10,433,087
$10,940,700
$
(1) Amounts include expected maturities, scheduled paydowns, expected prepayments, and loans subject to floors and exclude
the repricing of assets from prior periods, as well as non-accrual loans and market value adjustments.
As part of its asset/liability management strategy, the Company has seen greater levels of loan originations with adjustable or
variable rates of interest as well as commercial and consumer loans, which typically have shorter terms than residential
mortgage loans. The majority of fixed-rate, long-term residential loans are sold in the secondary market to avoid assumption of
the interest rate risk associated with longer duration assets in the current low rate environment. As of December 31, 2016, $8.3
(cid:24)(cid:25)
billion, or 55%, of the Company’s total loan portfolio had adjustable interest rates. The Company had no significant
concentration to any single borrower or industry segment at December 31, 2016.
The Company’s strategy with respect to liabilities in recent periods has been to emphasize transaction accounts, particularly
non-interest or low interest-bearing transaction accounts, which are significantly less sensitive to changes in interest rates. At
December 31, 2016, 88% of the Company’s deposits were in transaction and limited-transaction accounts, compared to 87% at
December 31, 2015. Non-interest-bearing transaction accounts were 28% of total deposits at December 31, 2016, compared to
27% of total deposits at December 31, 2015.
Much of the liquidity increase experienced in the past several years has been due to a significant increase in non-interest-
bearing demand deposits. The behavior of non-interest-bearing deposits and other types of demand deposits is one of the most
important assumptions used in determining the interest rate and liquidity risk positions. A loss of these deposits in the future
would reduce the asset sensitivity of the Company’s balance sheet as interest-bearing funds would most likely be increased to
offset the loss of this favorable funding source.
The table below presents the Company’s anticipated repricing of liabilities over the next four quarters.
TABLE 31—REPRICING OF LIABILITIES (1)
(Dollars in thousands)
Time deposits
Short-term borrowings
Long-term debt
1Q 2017
2Q 2017
3Q 2017
4Q 2017
$
422,686
$
382,205
$
333,197
$
195,094
Total less
than one year
$ 1,333,182
429,136
133,761
985,583
$
80,000
10,820
473,025
$
—
—
509,136
5,828
339,025
$
40,721
235,815
191,130
$ 2,033,448
$
(1) Amounts exclude the repricing of liabilities from prior periods.
As part of an overall interest rate risk management strategy, derivative instruments may also be used as an efficient way to
modify the repricing or maturity characteristics of on-balance sheet assets and liabilities. Management may from time to time
engage in interest rate swaps to effectively manage interest rate risk. The interest rate swaps of the Company would modify net
interest sensitivity to levels deemed appropriate.
IMPACT OF INFLATION OR DEFLATION AND CHANGING PRICES
The consolidated financial statements and related financial data presented herein have been prepared in accordance with GAAP,
which generally require the measurement of financial position and operating results in terms of historical dollars, without
considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, the majority of
the Company’s assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact
on the Company’s performance than does the effect of inflation. Although fluctuations in interest rates are neither completely
predictable nor controllable, the Company regularly monitors its interest rate position and oversees its financial risk
management by establishing policies and operating limits. Interest rates do not necessarily move in the same direction or in the
same magnitude as the prices of goods and services, since such prices are affected by inflation to a larger extent than interest
rates. Although not as critical to the banking industry as to other industries, inflationary factors may have some impact on the
Company’s growth, earnings, total assets and capital levels. Management does not expect inflation to be a significant factor in
2017.
Conversely, a period of deflation could affect our business, as well as all financial institutions and other industries. Deflation
could lead to lower profits, higher unemployment, lower production and deterioration in overall economic conditions. In
addition, deflation could depress economic activity, including loan demand and the ability of borrowers to repay loans, and
consequently impair earnings through increasing the value of debt while decreasing the value of collateral for loans.
Management believes the most significant potential impact of deflation on financial results relates to the Company's ability to
maintain a sufficient amount of capital to cushion against future losses. However, the Company would employ certain risk
management tools to maintain its balance sheet strength in the event a deflationary scenario were to develop.
(cid:24)(cid:26)
Non-GAAP Measures
This discussion and analysis included herein 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. Non-GAAP measures include but are not limited to descriptions such as core, tangible, and pre-tax pre-provision.
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 in management’s opinion can distort period-to-period
comparisons of the Company’s performance. Transactions that are typically excluded from non-GAAP performance measures
include realized and unrealized gains/losses on former bank owned real estate, realized gains/losses on securities, income tax
gains/losses, merger related charges and recoveries, litigation charges and recoveries, and debt repayment penalties.
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 presented in Table 32, with the exception of forward-looking information. The Company is unable to
estimate GAAP EPS guidance without unreasonable efforts due to the nature of one-time or unusual items that cannot be
predicted, and therefore has not provided this information under Regulation S-K Item 10(e)(1)(i)(B).
TABLE 32—RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
2016
2015
2014
(Dollars in thousands, except
per share amounts)
Net income
Preferred stock dividends
Income available to common
shareholders (GAAP)
Non-interest income
adjustments:
Gain on sale of
investments and other
non-interest income
Total non-core non-
interest income
Non-interest and other
expense adjustments:
Merger-related expense
Severance expense
Impairment of long-lived
assets, net of (gain) loss
on sale
Loss on early termination
of loss share agreements
Debt prepayment
Other non-core non-
interest expense
Total non-core non-
interest expense
Income tax benefits
Core earnings (Non-
GAAP)
Pre-tax
After-tax (1)
Per
share (2)
Pre-tax
After-tax (1)
Per
share (2)
Pre-tax
After-tax (1)
Per
share (2)
$ 271,970
$ 186,777
$
—
(7,977)
4.49
0.19
$ 206,938
$ 142,844
$
3.68
$ 141,065
$ 105,382
$
3.30
—
—
—
—
—
—
271,970
178,800
4.30
206,938
142,844
3.68
141,065
105,382
3.30
(2,002)
(1,301)
(0.03)
(4,033)
(2,621)
(0.07)
(2,757)
(2,319)
(0.07)
(2,002)
(1,301)
(0.03)
(4,033)
(2,621)
(0.07)
(2,757)
(2,319)
(0.07)
3
782
2
508
—
0.01
24,074
2,593
15,861
1,686
0.41
0.04
15,093
6,951
10,104
4,518
0.32
0.14
(674)
(437)
(0.01)
7,259
4,717
0.12
7,073
4,597
0.14
17,798
11,569
—
—
0.28
—
—
1,262
2,752
1,788
0.04
1,272
—
820
827
—
0.02
0.02
—
—
—
—
—
—
(597)
(388)
(0.01)
20,661
—
13,430
(6,836)
0.32
(0.16)
36,460
—
23,911
(2,041)
0.62
(0.05)
28,520
—
18,831
(2,959)
0.59
(0.09)
Provision for loan losses
44,424
28,875
290,629
184,093
4.43
0.71
239,365
30,908
162,093
20,090
4.18
0.52
166,828
19,060
118,935
12,389
3.72
0.39
Core pre-provision
earnings (Non-GAAP)
(1) After-tax amounts, excluding preferred stock dividends, are calculated using a tax rate of 35%, which approximates the
$ 182,183
$ 131,324
$ 212,968
$ 185,888
$ 270,273
$ 335,053
4.70
5.14
$
$
$
4.12
marginal tax rate.
(2) Diluted per share amounts may not appear to foot due to rounding.
(cid:24)(cid:27)
(Dollars in thousands)
Net interest income (GAAP)
Add: Effect of tax benefit on interest income
Net interest income (TE) (Non-GAAP)
Non-interest income (GAAP)
Add: Effect of tax benefit on non-interest income
Non-interest income (TE) (Non-GAAP) (1)
Non-interest expense (GAAP)
Less: Intangible amortization expense
Tangible non-interest expense (Non-GAAP) (2)
Net income (GAAP)
Add: Effect of intangible amortization, net of tax
Cash earnings (Non-GAAP)
Total assets (GAAP)
Less: Goodwill and other intangibles
Total tangible assets (Non-GAAP)
Average assets (Non-GAAP)
Less: Goodwill and other intangibles
Total average tangible assets (Non-GAAP)
Total shareholders’ equity (GAAP)
Less: Goodwill and other intangibles
Preferred stock
Total tangible common shareholders’ equity (Non-GAAP)
Average shareholders’ equity (Non-GAAP)
Less: Goodwill and other intangibles
Preferred stock
2016
2015
2014
$
$
$
$
$
$
$
$
$
$
$
$
$
$
649,238
9,463
658,701
233,821
2,822
236,643
566,665
8,415
558,250
186,777
5,470
192,247
21,659,190
755,765
20,903,425
20,321,234
759,749
19,561,485
2,939,694
755,765
132,097
2,051,832
2,637,594
759,749
112,598
$
$
$
$
$
$
$
$
$
$
$
$
$
$
587,758
8,604
596,362
220,393
2,346
222,739
570,305
7,811
562,494
142,844
5,077
147,921
$
$
$
$
$
$
$
460,111
8,609
468,720
173,628
2,947
176,575
473,614
5,807
467,807
105,382
3,775
109,157
19,504,068
$ 15,757,904
761,871
544,632
18,742,197
$ 15,213,272
18,402,706
$ 14,631,994
696,275
499,810
17,706,431
$ 14,132,184
2,498,835
$
1,852,148
761,871
76,812
1,660,152
2,261,034
696,275
31,506
$
$
544,632
—
1,307,516
1,707,359
499,810
—
Average tangible common shareholders’ equity (Non-GAAP)
$
1,765,247
$
1,533,253
$
1,207,549
Return on average assets (GAAP)
Effect of non-core revenues and expenses
Core return on average assets (Non-GAAP)
Return on average common equity (GAAP)
Add: Effect of intangibles
Effect of non-core items
Core return on average tangible common equity (Non-GAAP)
Efficiency ratio (GAAP)
Effect of tax benefit related to tax-exempt income
Efficiency ratio (TE) (Non-GAAP) (1)
Effect of amortization of intangibles
Effect of non-core items
Core tangible efficiency ratio (TE) (Non-GAAP) (1) (2)
Cash Yield:
0.92%
0.03
0.95%
7.08%
3.36
0.30
10.74%
64.17%
(0.9)
63.27%
(0.9)
(2.2)
0.78%
0.10
0.88%
6.41%
3.24
(0.14)
9.51%
70.57%
(1.0)
69.57%
(1.0)
(4.1)
0.72 %
0.09
0.81 %
6.17 %
2.87
(0.34)
8.70 %
74.73 %
(1.3)%
73.43 %
(0.9)
(4.1)
60.17%
64.47%
68.43 %
Earning assets average balance (GAAP)
$
18,477,064
$
16,652,051
$ 13,235,541
(cid:24)(cid:28)
Add: Adjustments
Earning assets average balance, as adjusted (Non-GAAP)
Net interest income (GAAP)
Add: Adjustments
Net interest income, as adjusted (Non-GAAP)
Yield, as reported
Add: Adjustments
Yield, as adjusted (Non-GAAP)
73,010
18,550,074
649,238
(32,575)
616,663
$
$
$
$
$
$
82,641
36,620
16,734,692
$ 13,272,161
587,758
(36,248)
551,510
$
$
460,111
(12,371)
447,740
3.53%
(0.19)
3.34%
3.55%
(0.24)
3.31%
3.51 %
(0.10)
3.41 %
(1) Fully taxable-equivalent (TE) calculations include the tax benefit associated with related income sources that are tax-exempt
using a rate of 35%, which approximates the marginal tax rate.
(2) Tangible calculations eliminate the effect of goodwill and acquisition-related intangibles and the corresponding amortization
expense on a tax-effected basis where applicable.
(cid:25)(cid:19)
TABLE 33 – QUARTERLY RESULTS OF OPERATIONS AND SELECTED CASH FLOW DATA (UNAUDITED)
(Dollars in thousands, except per share data)
Total interest and dividend income
Fourth Quarter
180,805
$
Third Quarter
180,504
$
Second Quarter
178,694
$
First Quarter
176,936
$
2016
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Gain on sale of available-for-sale securities
Other non-interest income
Loss on early termination of loss share agreements
Other non-interest expense
Income before income taxes
Income tax expense
Net income
Preferred stock dividends
Income available to common shareholders
Earnings allocated to unvested restricted stock
Earnings allocated to common shareholders
Earnings per share - basic
Earnings per share - diluted
Cash dividends declared per common share
Total interest and dividend income
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Gain on sale of available-for-sale securities
Other non-interest income
Non-interest expense
Income before income taxes
Income tax expense
Net income
Income available to common shareholders
Earnings allocated to unvested restricted stock
Earnings allocated to common shareholders
Earnings per share - basic
Earnings per share - diluted
Cash dividends declared per common share
19,140
161,665
5,169
156,496
4
53,234
17,798
133,772
58,164
13,034
45,130
(957)
44,173
(414)
43,759
1.05
1.04
0.36
$
$
$
$
$
$
$
$
17,087
163,417
12,484
150,933
12
59,809
—
138,139
72,615
24,547
48,068
(3,590)
44,478
(462)
44,016
1.08
1.08
0.36
$
$
$
$
2015
15,941
162,753
11,866
150,887
1,789
63,128
—
15,533
161,403
14,905
146,498
196
55,649
—
139,504
137,452
76,300
25,490
50,810
(854)
49,956
(540)
49,416
1.21
1.21
0.34
$
$
$
$
64,891
22,122
42,769
(2,576)
40,193
(460)
39,733
0.98
0.97
0.34
Fourth Quarter
176,651
$
Third Quarter
171,077
$
Second Quarter
160,545
$
First Quarter
138,585
$
15,491
161,160
11,711
149,449
6
52,497
138,975
62,977
18,570
44,407
44,407
(505)
43,902
1.08
1.08
0.34
$
$
$
$
15,960
155,117
5,062
150,055
280
57,198
144,968
62,565
20,090
42,475
42,475
(492)
41,983
1.04
1.03
0.34
$
$
$
$
14,868
145,677
8,790
136,887
903
60,610
153,209
45,191
14,355
30,836
30,836
(355)
30,481
0.79
0.79
0.34
$
$
$
$
12,781
125,804
5,345
120,459
386
48,513
133,153
36,205
11,079
25,126
25,126
(344)
24,782
0.75
0.75
0.34
$
$
$
$
(cid:25)(cid:20)
Glossary of Defined Terms
Term
ACL
Definition
Allowance for credit losses
Acquired loans
Loans acquired in a business combination
AFS
ALL
AOCI
ASC
ASU
Basel III
BCBS
Cameron
CDE
CET1
CFPB
CSB
Company
Covered Loans
Dodd-Frank Act
ECL
EPS
FASB
FDIC
Securities available-for-sale
Allowance for loan and lease losses
Accumulated other comprehensive income (loss)
Accounting Standards Codification
Accounting Standards Update
Global regulatory standards on bank capital adequacy and liquidity published by the BCBS
Basel Committee on Banking Supervision
Cameron Bancshares, Inc.
IBERIA CDE, LLC
Common Equity Tier 1 Capital defined by Basel III capital rules
Consumer Financial Protection Bureau
CapitalSouth Bank
IBERIABANK Corporation and Subsidiaries
Acquired loans with loss protection provided by the FDIC
Dodd-Frank Wall Street Reform and Consumer Protection Act
Expected credit losses
Earnings per common share
Financial Accounting Standards Board
Federal Deposit Insurance Corporation
First Private
FHLB
First Private Holdings, Inc
Federal Home Loan Bank
Florida Bank Group
Florida Bank Group, Inc
Florida Gulf
Florida Gulf Bancorp, Inc.
FOMC
FRB
GAAP
Federal Open Market Committee
Board of Governors of the Federal Reserve System
Accounting principles generally accepted in the United States of America
Georgia Commerce
Georgia Commerce Bancshares, Inc.
GSE
HTM
IAM
Government-sponsored enterprises
Securities held-to-maturity
IBERIA Asset Management, Inc.
IBERIABANK
Banking subsidiary of IBERIABANK Corporation
ICP
IFS
IMC
IWA
IBERIA Capital Partners, LLC
IBERIA Financial Services
IBERIABANK Mortgage Company
IBERIA Wealth Advisors
Legacy loans
Loans that were originated directly or otherwise underwritten by the Company
LIBOR
LIHTC
LTC
MSA
Non-GAAP
NPA
London Interbank Borrowing Offered Rate
Low-income housing tax credit
Lenders Title Company
Metropolitan statistical area
Financial measures determined by methods other than in accordance with GAAP
Non-performing asset
(cid:25)(cid:21)
OCI
Old Florida
OMNI
OREO
OTTI
Parent
PCD
RRP
RULC
SBA
SEC
TE
Teche
TDR
Other comprehensive income
Old Florida Bancshares, Inc.
OMNI BANCSHARES, Inc.
Other real estate owned
Other than temporary impairment
IBERIABANK Corporation
Purchased Financial Assets with Credit Deterioration
Recognition and Retention Plan
Reserve for unfunded lending commitments
Small Business Administration
Securities and Exchange Commission
Fully taxable equivalent
Teche Holding Company
Troubled debt restructuring
Trust One-Memphis
Trust One Bank (Memphis Operations)
U.S.
United States of America
(cid:25)(cid:22)
MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Board of Directors of
IBERIABANK Corporation
The management of IBERIABANK Corporation (the “Company”) is responsible for establishing and maintaining effective
internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance
to the Company’s management and Board of Directors regarding the preparation and fair presentation of the Company’s
financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control
over financial reporting includes self-monitoring mechanisms, and actions are taken to correct deficiencies as they are
identified.
All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect
misstatements in the Company’s financial statements, including the possibility of circumvention or overriding of controls.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of a change in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2016. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 Framework). Based on its assessment,
management believes that, as of December 31, 2016, the Company’s internal control over financial reporting is effective based
on those criteria.
The Company’s independent registered public accounting firm has also issued an attestation report on the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2016.
Daryl G. Byrd
President and Chief Executive Officer
Anthony J. Restel
Senior Executive Vice President and Chief Financial Officer
(cid:25)(cid:23)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
IBERIABANK Corporation
We have audited IBERIABANK Corporation and subsidiaries’ internal control over financial reporting as of December 31,
2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). IBERIABANK Corporation and
subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, IBERIABANK Corporation and subsidiaries maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2016, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of IBERIABANK Corporation and subsidiaries as of December 31, 2016 and 2015, and the
related consolidated statements of comprehensive income, shareholders’ equity and cash flows for each of the three years in the
period ended December 31, 2016 and our report dated February 21, 2017 expressed an unqualified opinion thereon.
New Orleans, Louisiana
February 21, 2017
(cid:25)(cid:24)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
IBERIABANK Corporation
We have audited the accompanying consolidated balance sheets of IBERIABANK Corporation and subsidiaries as of
December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, shareholders’ equity and cash
flows for each of the three years in the period ended December 31, 2016. 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 the standards of the Public Company Accounting Oversight Board (United States).
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 IBERIABANK Corporation and subsidiaries at December 31, 2016 and 2015, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S.
generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
IBERIABANK Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2016, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) and our report dated February 21, 2017 expressed an unqualified opinion thereon.
New Orleans, Louisiana
February 21, 2017
(cid:25)(cid:25)
IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share data)
Assets
Cash and due from banks
Interest-bearing deposits in banks
Total cash and cash equivalents
Securities available for sale, at fair value
Securities held to maturity (fair values of $89,932 and $100,961, respectively)
Mortgage loans held for sale, at fair value
Loans covered by loss share agreements
Non-covered loans, net of unearned income
Total loans, net of unearned income
Allowance for loan losses
Loans, net
FDIC loss share receivables
Premises and equipment, net
Goodwill
Other assets
Total Assets
Liabilities
Deposits:
Non-interest-bearing
Interest-bearing
Total deposits
Short-term borrowings
Long-term debt
Other liabilities
Total Liabilities
Shareholders’ Equity
Preferred stock, $1 par value - 5,000,000 shares authorized
Non-cumulative perpetual, liquidation preference $10,000 per share; 13,750 shares and
8,000 shares issued and outstanding, respectively, including related surplus
Common stock, $1 par value - 100,000,000 shares authorized; 44,795,386 and 41,139,537
shares issued and outstanding, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
December 31,
2016
2015
$
295,896
$
1,066,230
1,362,126
3,446,097
89,216
157,041
—
241,650
268,617
510,267
2,800,286
98,928
166,247
229,217
15,064,971
14,098,211
15,064,971
(144,719)
14,920,252
—
306,373
726,856
14,327,428
(138,378)
14,189,050
39,878
323,902
724,603
651,229
$ 21,659,190
650,907
$ 19,504,068
$
4,928,878
$
4,352,229
12,479,405
17,408,283
509,136
628,953
173,124
18,719,496
11,826,519
16,178,748
326,617
340,447
159,421
17,005,233
132,097
44,795
76,812
41,140
2,084,446
1,797,982
704,391
(26,035)
2,939,694
$ 21,659,190
584,486
(1,585)
2,498,835
$ 19,504,068
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(cid:25)(cid:26)
IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Dollars in thousands, except per share data)
Interest and Dividend Income
Loans, including fees
Mortgage loans held for sale, including fees
Investment securities:
Taxable interest
Tax-exempt interest
Amortization of FDIC loss share receivable
Other
Total interest and dividend income
Interest Expense
Deposits:
NOW and MMDA
Savings
Time deposits
Short-term borrowings
Long-term debt
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Non-interest Income
Mortgage income
Service charges on deposit accounts
Title revenue
Broker commissions
ATM/debit card fee income
Credit card and merchant-related income
Income from bank owned life insurance
Gain on sale of available for sale securities
Other non-interest income
Total non-interest income
Non-interest Expense
Salaries and employee benefits
Net occupancy and equipment
Communication and delivery
Marketing and business development
Data processing
Professional services
Credit and other loan related expense
Insurance
Loss on early termination of loss share agreements
Travel and entertainment
Other non-interest expense
Total non-interest expense
Income before income tax expense
Income tax expense
Net Income
Preferred stock dividends
Net Income Available to Common Shareholders
Year Ended December 31,
2015
2014
2016
$
663,037
6,564
$
606,966
6,164
$
526,706
5,153
52,150
7,004
(16,024)
4,208
716,939
32,396
1,145
18,039
2,453
13,668
67,701
649,238
44,424
604,814
83,853
44,135
22,213
15,338
14,240
12,171
5,241
2,001
34,629
233,821
331,686
65,797
12,383
12,332
25,091
19,153
10,937
17,270
17,798
8,481
45,737
566,665
271,970
85,193
186,777
(7,977)
178,800
$
47,380
5,785
(23,500)
4,063
646,858
38,815
5,862
(74,617)
2,896
504,815
27,226
740
19,137
797
11,200
59,100
587,758
30,908
556,850
80,662
42,197
22,837
17,592
13,989
10,675
4,356
1,575
26,510
220,393
322,586
68,541
13,506
13,176
34,424
22,368
16,653
16,670
—
9,525
52,856
570,305
206,938
64,094
142,844
—
142,844
$
18,483
325
14,282
1,364
10,250
44,704
460,111
19,060
441,051
51,797
35,573
20,492
18,783
12,023
9,718
5,473
771
18,998
173,628
259,086
59,571
12,029
11,707
27,249
18,975
13,692
14,359
—
9,033
47,913
473,614
141,065
35,683
105,382
—
105,382
$
(cid:25)(cid:27)
Income Available to Common Shareholders - Basic
Earnings Allocated to Unvested Restricted Stock
Earnings Allocated to Common Shareholders
Earnings per common share - Basic
Earnings per common share - Diluted
Cash dividends declared per common share
Comprehensive Income
Net Income
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period (net of tax
effects of $12,261, $4,374, and $13,202, respectively)
Reclassification adjustment for gains included in net income (net of
tax effects of $700, $551 and $270, respectively)
Unrealized gains (losses) on securities, net of tax
Fair value of derivative instruments designated as cash flow hedges:
Change in fair value of derivative instruments designated as cash
flow hedges during the period (net of tax effects of $231, $20 and $0,
respectively)
Reclassification adjustment for losses included in net income (net of
tax effects of $27, $0 and $0, respectively)
Fair value of derivative instruments designated as cash flow hedges, net
of tax
Other comprehensive income (loss), net of tax
Comprehensive income
$
$
$
$
$
$
$
178,800
(1,872)
176,928
4.32
4.30
1.40
$
$
$
142,844
(1,680)
141,164
3.69
3.68
1.36
105,382
(1,651)
103,731
3.31
3.30
1.36
186,777
$
142,844
$
105,382
(22,771)
(8,124)
24,517
(1,301)
(24,072)
(1,024)
(9,148)
(501)
24,016
(428)
50
38
—
—
—
(378)
(24,450)
162,327
$
38
(9,110)
133,734
$
—
24,016
129,398
$
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(cid:25)(cid:28)
(Dollars in thousands,
except share and per share
data)
Balance, December 31,
2013
Net income
Other comprehensive
income/(loss)
Cash dividends declared,
$1.36 per share
Reissuance of treasury stock
under incentive plans, net of
shares surrendered in
payment, including tax
benefit
Common stock issued for
acquisitions
Treasury stock issued for
recognition and retention
plans
Share-based compensation
cost
Balance, December 31,
2014
Net income
Other comprehensive
income/(loss)
Cash dividends declared,
$1.36 per share
Reclassification of treasury
stock under the LBCA (1)
Common stock issued under
incentive plans, net of shares
surrendered in payment,
including tax benefit
Common stock issued for
acquisitions
Share-based compensation
cost
Balance, December 31,
2015
Net income
Other comprehensive
income/(loss)
Cash dividends declared,
$1.40 per share
Preferred stock dividends
Common stock issued under
incentive plans, net of shares
surrendered in payment,
including tax benefit
Common stock issued
Common stock repurchases
Share-based compensation
cost
Balance, December 31,
2016
IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
Preferred Stock
Common Stock
Shares
Amount
Shares
Amount
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock at
Cost
Total
— $
— 31,917,385
$ 31,917
$ 1,178,284
$ 435,508
$
(16,491) $ (98,872) $ 1,530,346
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,242
3,345,516
3,346
211,319
—
—
—
—
(6,197)
11,985
105,382
—
—
24,016
(44,317)
—
—
—
—
—
—
—
—
—
—
—
—
105,382
24,016
(44,317)
6,829
10,071
—
214,665
6,197
—
—
11,985
— $
— 35,262,901
$ 35,263
$ 1,398,633
$ 496,573
$
7,525
$ (85,846) $ 1,852,148
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— (1,809,497)
(1,809)
(84,037)
—
—
211,729
212
2,201
7,474,404
7,474
467,279
—
—
—
—
—
13,906
142,844
—
—
(9,110)
(54,931)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
142,844
(9,110)
(54,931)
85,846
—
—
—
—
—
2,413
474,753
76,812
13,906
8,000
$ 76,812
41,139,537
$ 41,140
$ 1,797,982
$ 584,486
$
(1,585) $
— $ 2,498,835
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
264,605
3,593,750
(202,506)
264
3,594
—
(203)
7,756
275,648
—
(11,463)
—
—
14,523
186,777
—
—
(24,450)
(58,895)
(7,977)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
186,777
(24,450)
(58,895)
(7,977)
8,020
279,242
55,285
(11,666)
14,523
13,750
$ 132,097
44,795,386
$ 44,795
$ 2,084,446
$ 704,391
$
(26,035) $
— $ 2,939,694
(cid:26)(cid:19)
Preferred stock issued
5,750
55,285
—
Preferred stock issued
8,000
76,812
(1) Effective January 1, 2015, companies incorporated in Louisiana became subject to the Louisiana Business Corporation Act (“LBCA”), which eliminates
the concept of treasury stock and provides that shares reacquired by a company are to be treated as authorized but unissued. Refer to Note 1 for further
discussion.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(cid:26)(cid:20)
IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation, amortization, and accretion
Amortization of purchase accounting adjustments, net
Provision for loan losses
Share-based compensation cost - equity awards
Gain on sale of assets, net
Gain on sale of available for sale securities
Gain on sale of OREO, net
Impairment of FDIC loss share receivables and other long-lived assets
Amortization of premium/discount on securities, net
(Benefit) expense for deferred income taxes
Originations of mortgage loans held for sale
Proceeds from sales of mortgage loans held for sale
Realized and unrealized gains on mortgage loans held for sale, net
Tax benefit associated with share-based payment arrangements
Other operating activities, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities
Proceeds from sales of available for sale securities
Proceeds from maturities, prepayments and calls of available for sale
securities
Purchases of available for sale securities
Proceeds from maturities, prepayments and calls of held to maturity
securities
Purchases of held to maturity securities
Purchases of equity securities
Reimbursement of recoverable covered asset losses (to) from the FDIC
Increase in loans, net of loans acquired
Proceeds from sale of premises and equipment
Purchases of premises and equipment, net of premises and equipment
acquired
Proceeds from disposition of OREO
Cash paid for additional investment in tax credit entities
Cash received in excess of cash paid for acquisitions
Other investing activities, net
Net Cash Used in Investing Activities
Cash Flows from Financing Activities
Increase in deposits, net of deposits acquired
Net change in short-term borrowings, net of borrowings acquired
Proceeds from long-term debt
Repayments of long-term debt
Cash dividends paid on common stock
Cash dividends paid on preferred stock
Net share-based compensation stock transactions
(cid:26)(cid:21)
Year Ended December 31,
2016
2015
2014
$
186,777
$
142,844
$
105,382
5,332
(17,431)
44,424
14,523
(58)
(2,001)
(6,325)
20,883
22,732
(16,654)
(2,460,033)
2,525,945
(74,486)
(1,122)
64,460
306,966
15,457
(21,635)
30,908
13,906
(2,539)
(1,575)
(5,552)
6,954
18,195
4,551
(2,464,588)
2,516,936
(83,957)
(580)
26,798
196,123
15,791
7,536
19,060
11,985
(14)
(771)
(4,221)
6,437
13,793
(25,027)
(1,675,538)
1,720,443
(63,034)
(2,105)
(10,354)
119,363
197,733
228,604
61,702
484,138
(1,384,525)
473,142
(1,063,460)
8,791
—
(31,530)
(1,558)
(704,025)
1,941
(12,840)
33,236
(19,208)
—
3,450
(1,424,397)
1,230,008
182,518
304,728
(15,025)
(56,793)
(7,028)
6,899
22,939
(5,833)
(16,362)
(932)
(703,946)
13,309
(19,502)
55,025
(9,671)
425,581
30,134
(570,972)
968,746
(520,653)
63,198
(201,259)
(52,318)
—
1,915
488,699
(703,179)
36,182
—
(32,735)
5,734
(824,437)
5,129
(29,841)
84,429
(13,191)
188,803
19,950
(712,755)
641,026
110,298
54,637
(22,871)
(43,070)
—
7,966
Payments to repurchase common stock
Net proceeds from issuance of common stock
Net proceeds from issuance of preferred stock
Tax benefit associated with share-based payment arrangements
Net Cash Provided by Financing Activities
Net Increase (Decrease) In Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period
Supplemental Schedule of Non-cash Activities
Acquisition of real estate in settlement of loans
Common stock issued in acquisition
Supplemental Disclosures
Cash paid for:
Interest on deposits and borrowings
Income taxes, net
(11,666)
279,242
55,285
1,122
1,969,290
851,859
510,267
1,362,126
$
—
—
76,812
580
337,021
(37,828)
548,095
510,267
9,743
$
— $
21,690
474,753
70,084
79,784
$
$
58,556
53,476
$
$
$
$
$
$
$
$
$
$
—
—
—
2,105
750,091
156,699
391,396
548,095
27,050
214,665
43,210
52,094
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(cid:26)(cid:22)
IBERIABANK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The accompanying consolidated financial statements have been prepared in accordance with GAAP and practices generally
accepted in the banking industry. The consolidated financial statements include the accounts of the Company and its
subsidiaries.
When we refer to the “Company,” “we,” “our,” or “us” in this Report, we mean IBERIABANK Corporation and subsidiaries
(consolidated). When we refer to the “Parent,” we mean IBERIABANK Corporation. See the Glossary of Acronyms at the end
of this Report for terms used throughout this Report.
Reclassification
Certain amounts reported in prior periods have been reclassified to conform to the current period presentation. These
reclassifications did not have a material effect on previously reported consolidated financial statements.
PRINCIPLES OF CONSOLIDATION
The Company’s consolidated financial statements include all entities in which the Company has a controlling financial interest
under either the voting interest or variable interest model. The assessment of whether or not the Company has a controlling
interest (i.e., the primary beneficiary) in a VIE is performed on an on-going basis. All equity investments in non-consolidated
VIEs are included in "other assets" in the Company’s consolidated balance sheets. The Company’s maximum exposure to loss
as a result of its involvement with non-consolidated VIEs was approximately $84 million and $160 million at December 31,
2016 and 2015, respectively. The Company's maximum exposure to loss was equivalent to the carrying value of its investments
and any related outstanding loans to the non-consolidated VIEs.
Investments in entities that are not consolidated are accounted for under either the equity, cost, or proportional amortization
method of accounting. Investments for which the Company has the ability to exercise significant influence over the operating
and financing decisions of the entity are accounted for under the equity method. Investments for which the Company does not
hold such ability are accounted for under the cost method. Investments in qualified affordable housing projects, which meet
certain criteria, are accounted for under the proportional amortization method.
The consolidated financial statements include the accounts of the Company and its subsidiaries, IBERIABANK; Lenders Title
Company; IBERIA Capital Partners, LLC; 1887 Leasing, LLC; IBERIA Asset Management, Inc.; 840 Denning, LLC; and
IBERIA CDE, LLC. All significant intercompany balances and transactions have been eliminated in consolidation. All normal,
recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the financial statements
have been included.
NATURE OF OPERATIONS
The Company offers commercial and retail banking products and services to customers throughout locations in seven states
through IBERIABANK. The Company also operates mortgage production offices in 10 states through IMC and offers a full
line of title insurance and closing services throughout Arkansas and Louisiana through LTC and its subsidiaries. ICP provides
equity research, institutional sales and trading, and corporate finance services throughout the energy industry. 1887 Leasing,
LLC owns an aircraft used by management of the Company. IAM provides wealth management and trust services for
commercial and private banking clients. CDE is engaged in the purchase of tax credits.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP 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. Material estimates that are susceptible to significant change in the near term are the allowance for credit
losses, valuation of and accounting for acquired loans, goodwill and other intangibles, and income taxes.
CONCENTRATION OF CREDIT RISKS
Most of the Company’s business activity is with customers located within the states of Louisiana, Florida, Arkansas, Alabama,
Texas, Georgia, and Tennessee. The Company’s lending activity is concentrated in its market areas in those states. The
Company has emphasized originations of commercial loans and private banking loans, defined as loans to higher net worth
(cid:26)(cid:23)
clients. Repayments on loans are expected to come from cash flows of the borrower and/or guarantor. Losses on secured loans
are limited by the value of the collateral upon default of the borrowers and guarantor support. Concentrations in commercial
real estate have increased as a result of the Company's organic growth and recent acquisitions of banks with significant CRE
portfolios. Additionally, as the Company has executed its risk-off strategy over the past two years, CRE concentrations have
naturally increased as a percentage of the total portfolio. The Company does not have any excessive concentrations to any one
industry or customer.
BUSINESS COMBINATIONS
Assets and liabilities acquired in business combinations are recorded at their acquisition date fair values. In accordance with
ASC Topic 805, Business Combinations, the Company generally records provisional amounts at the time of acquisition based
on the information available to the Company. The provisional estimates of fair values may be adjusted for a period of up to one
year (“measurement period”) from the date of acquisition if new information is obtained about facts and circumstances that
existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that
date. Subsequent to the Company's early adoption of ASU No. 2015-16 during the third quarter of 2015, adjustments recorded
during the measurement period are recognized in the current reporting period.
Loans generally represent a significant portion of the assets acquired in the Company’s business acquisitions. If the Company
discovers that it has materially underestimated the credit losses expected in the loan portfolio based on information available at
the acquisition date within the measurement period, it will reduce or eliminate the gain and/or increase goodwill recorded on
the acquisition in the period the adjustment is recorded. If the Company determines that losses arose subsequent to the
acquisition date, such losses are reflected as a provision for credit losses.
CASH AND CASH EQUIVALENTS
For purposes of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as cash on
hand, interest-bearing deposits, and non-interest-bearing demand deposits at other financial institutions with original maturities
less than three months. IBERIABANK may be required to maintain average cash balances on hand or with the Federal Reserve
Bank to meet regulatory reserve and clearing requirements. At December 31, 2016 and 2015, IBERIABANK had sufficient
cash deposited with the Federal Reserve Bank to cover the required reserve balance.
INVESTMENT SECURITIES
Management determines the appropriate accounting classification of debt and equity securities at the time of acquisition and re-
evaluates such designations at least quarterly. Debt securities that management has the ability and intent to hold to maturity are
classified as HTM and carried at cost, adjusted for amortization of premiums and accretion of discounts using methods
approximating the interest method. Securities acquired with the intention of recognizing short-term profits or which are actively
bought and sold are classified as trading securities and reported at fair value, with unrealized gains and losses recognized in
earnings. Securities not classified as HTM or trading, including equity securities with readily determinable fair values, are
classified as AFS and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in OCI.
Credit-related declines in the fair value of debt and marketable equity securities that are considered OTTI are recorded in
earnings.
The Company evaluates its investment securities portfolio on a quarterly basis for indicators of OTTI. Declines in the fair value
of individual HTM and AFS securities below their amortized cost basis are reviewed to determine whether the declines are
other than temporary. In estimating OTTI losses, management considers 1) the length of time and the extent to which the fair
value has been less than the amortized cost basis, 2) the financial condition and near-term prospects of the issuer, 3) its intent to
sell and whether it is more likely than not that the Company would be required to sell those securities before the anticipated
recovery of the amortized cost basis, and 4) for debt securities, the recovery of contractual principal and interest.
For securities that the Company does not expect to sell, or it is not more likely than not it will be required to sell prior to
recovery of its amortized cost basis, the credit component of an OTTI is recognized in earnings and the non-credit component
is recognized in OCI. For securities that the Company does expect to sell, or it is more likely than not that it will be required to
sell prior to recovery of its amortized cost basis, both the credit and non-credit component of an OTTI are recognized in
earnings. Subsequent to recognition of OTTI, an increase in expected cash flows is recognized as a yield adjustment over the
remaining expected life of the security based on an evaluation of the nature of the increase.
Nonmarketable equity securities include stock acquired for regulatory purposes, such as Federal Home Loan Bank stock and
Federal Reserve Bank stock. These securities are accounted for at amortized cost, evaluated for impairment at least quarterly,
and included in "other assets".
(cid:26)(cid:24)
Gains or losses on securities sold are recorded on the trade date, using the specific identification method.
LOANS HELD FOR SALE
Loans and loan commitments which the Company does not have the intent and ability to hold for the foreseeable future or until
maturity or payoff are classified as loans held for sale at the time of origination or acquisition. Subsequent to origination or
acquisition, if the Company no longer has the intent or ability to hold a loan for the foreseeable future, generally a decision has
been made to sell the loan, and it is classified within loans held for sale. Unless the fair value option has been elected at
origination or acquisition, loans classified as held for sale are carried at the lower of cost or fair value. Amortization/accretion
of remaining unamortized net deferred loan fees or costs and discounts or premiums (if applicable) ceases when a loan is
classified as held for sale.
Loans held for sale primarily consist of fixed rate single-family residential mortgage loans originated and committed to be sold
in the secondary market. Mortgage loans originated and held for sale are recorded at fair value under the fair value option,
unless otherwise noted. For mortgage loans for which the Company has elected the fair value option, gains and losses are
included in mortgage income. For any other loans held for sale, net unrealized losses, if any, are recognized through a valuation
allowance that is recorded as a charge to non-interest income. See Note 20 for further discussion of the determination of fair
value for loans held for sale. In most cases, loans in this category are sold within thirty days and are generally sold with the
mortgage servicing rights released. Buyers generally have recourse to return a purchased loan or request reimbursement for the
loan premium or servicing rights under limited circumstances. Recourse conditions may include prepayment, payment default,
breach of representations or warranties, and documentation deficiencies. During 2016 and 2015, an insignificant number of
loans were returned to the Company. At December 31, 2016 and 2015, the recorded repurchase liability associated with
transferred loans was not material.
LOANS
Legacy (Loans originated or renewed and underwritten by the Company)
The Company originates mortgage, commercial, and consumer loans for customers. Loans that management has the intent and
ability to hold for the foreseeable future or until maturity or payoff are reported at the unpaid principal balances, less the ALL,
charge-offs, and unamortized net loan origination fees and direct costs, except for loans carried at fair value. Interest income is
accrued as earned over the term of the loans based on the principal balance outstanding. Loan origination fees, net of certain
direct origination costs, are deferred and recognized as an adjustment of the related loan yield.
Acquired (Loans acquired through Business Combinations)
Acquired loans are recorded at fair value on the acquisition date in accordance with ASC Topic 820, Fair Value Measurement,
consistent with the exit price concept on the date of acquisition. Credit risk assumptions and any resulting credit discounts are
included in the determination of fair value. Therefore, an ALL is not recorded at the acquisition date. The determination of fair
value includes estimates related to discount rates, expected prepayments, and the amount and timing of undiscounted expected
principal, interest, and other cash flows.
Acquired loans are evaluated at acquisition and classified as purchased impaired (“acquired impaired”) or purchased non-
impaired (“acquired non-impaired”). Purchased impaired loans reflect credit deterioration since origination to the extent that it
is probable at the time of acquisition that the Company will be unable to collect all contractually required payments. At the time
of acquisition, purchased impaired loans are accounted for individually or aggregated into loan pools with similar
characteristics, which include:
• whether the loan is performing according to contractual terms at the time of acquisition,
•
•
•
•
the loan type based on regulatory reporting guidelines, namely whether the loan was a mortgage, consumer, or
commercial loan,
the nature of collateral,
the interest rate type, whether fixed or variable rate, and
the loan payment type, primarily whether the loan is amortizing or interest-only.
From these pools, the Company uses certain loan information, including outstanding principal balance, estimated expected
losses, weighted average maturity, weighted average term to re-price (if a variable rate loan), weighted average margin, and
weighted average interest rate to estimate the expected cash flow for each loan pool.
(cid:26)(cid:25)
For purchased impaired loans, expected cash flows at the acquisition date in excess of the fair value of loans are recorded as
interest income over the life of the loans using a level yield method if the timing and amount of future cash flows is reasonably
estimable. For purchased non-impaired loans, the difference between the fair value and unpaid principal balance of the loan at
acquisition, referred to as a purchase premium or discount, is amortized or accreted to income over the estimated life of the
loans as an adjustment to yield.
Subsequent to acquisition, the Company performs cash flow re-estimations at least quarterly for each purchased impaired loan
and/or loan pool. Increases in estimated cash flows above those expected at acquisition are recognized on a prospective basis as
interest income over the remaining life of the loan and/or pool. Decreases in expected cash flows subsequent to acquisition
generally result in recognition of a provision for credit loss. The measurement of cash flows involves several assumptions and
judgments (i.e., prepayments, default rates, loss severity, etc.). All of these factors are inherently subjective and significant
changes in the cash flow estimations can result over the life of the loan.
Classification
The Company’s loan portfolio is disaggregated into portfolio segments for purposes of determining the ACL. The Company’s
portfolio segments include commercial, residential mortgage, and consumer and other loans, bifurcated between legacy and
acquired. The Company further disaggregates each commercial, residential mortgage, and consumer and other loans portfolio
segment into classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. Classes within
the commercial loan portfolio segment include commercial real estate-construction, commercial real estate-other, commercial
and industrial, and energy-related. Classes within the consumer and other loans portfolio segment include consumer-home
equity, consumer-indirect automobile, consumer-credit card, and consumer-other.
Troubled Debt Restructurings
The Company periodically grants concessions to its customers in an attempt to protect as much of its investment as possible
and minimize risk of loss. These concessions may include restructuring the terms of a loan to alleviate the burden of the
customer’s near-term cash requirements. In order to be classified as a TDR, the Company must conclude that the restructuring
constitutes a concession and the customer is experiencing financial difficulties. The Company defines a concession to the
customer as a modification of existing terms for economic or legal reasons that it would otherwise not consider. The concession
is either granted through an agreement with the customer or is imposed by a court or law. Concessions include modifying
original loan terms to reduce or defer cash payments required as part of the loan agreement, including but not limited to:
•
•
•
•
a reduction of the stated interest rate for the remaining original life of the loan,
extension of the maturity date or dates at a stated interest rate lower than the current market rate for new loans with
similar risk characteristics,
reduction of the face amount or maturity amount of the loan as stated in the agreement, or
reduction of accrued interest receivable on the loan.
In its determination of whether the customer is experiencing financial difficulties, the Company considers numerous indicators,
including, but not limited to:
• whether the customer is currently in default on its existing loan(s), or is in an economic position where it is probable the
customer will be in default on its loan(s) in the foreseeable future without a modification,
• whether the customer has declared or is in the process of declaring bankruptcy,
• whether there is substantial doubt about the customer’s ability to continue as a going concern,
• whether, based on its projections of the customer’s current capabilities, the Company believes the customer’s future cash
flows will be insufficient to service the loan, including interest, in accordance with the contractual terms of the existing
agreement for the foreseeable future, and
• whether, without modification, the customer cannot obtain sufficient funds from other sources at an effective interest rate
equal to the current market rate for a similar loan for a non-troubled debtor.
If the Company concludes that both a concession has been granted and the customer is experiencing financial difficulties, the
Company identifies the loan as a TDR. All TDRs are considered impaired loans.
(cid:26)(cid:26)
NON-ACCRUAL AND PAST DUE LOANS (INCLUDING LOAN CHARGE-OFFS)
Loans are generally considered past due when contractual payments of principal and interest have not been received within 30
days from the contractual due date. Residential mortgage loans are considered past due when contractual payments have not
been received for two consecutive payment dates.
Legacy and purchased non-impaired loans are placed on non-accrual status when any of the following occur: 1) the loan is
maintained on a cash basis because of deterioration in the financial condition of the borrower; 2) collection of the full
contractual amount of principal or interest is not expected (even if the loan is currently paying as agreed); 3) when principal or
interest has been in default for a period of 90 days or more, unless the loan is both well secured and in the process of collection;
or 4) the borrower has filed or is likely to file bankruptcy. Factors considered in determining the collection of the full
contractual amount of principal or interest include assessment of the borrower’s cash flow, valuation of underlying collateral,
and the ability and willingness of guarantors to provide credit support. Certain commercial loans are also placed on non-
accrual status when payment is not past due and full payment of principal and interest is expected, but we have doubt about the
borrower’s ability to comply with existing repayment terms. Consideration will be given to placing a loan on non-accrual due
to the deterioration of the debtor’s repayment ability, the repayment of the loan becoming dependent on the liquidation of
collateral, an existing collateral deficiency, the loan being classified as "Doubtful" or "Loss", the client filing for bankruptcy,
and/or foreclosure being initiated. Regarding all classes within the C&I and CRE portfolios, the determination of a borrower’s
ability to make the required principal and interest payments is based on an examination of the borrower’s current financial
statements, industry, management capabilities, and other qualitative measures.
Purchased impaired loans are placed on non-accrual status when the Company cannot reasonably estimate cash flows on a loan
or loan pool. Legacy and purchased non-impaired loans are evaluated for potential charge-off in accordance with the
parameters discussed in the following paragraph or when the loan is placed on non-accrual status, whichever is earlier.
Loans within the commercial portfolio (except for purchased impaired) are generally evaluated for charge-off at 90 days past
due, unless both well-secured and in the process of collection. Closed and open-end residential mortgage and consumer loans
(except for purchased impaired) are evaluated for charge-off no later than 120 days past due. Any outstanding loan balance in
excess of the fair value of the collateral less costs to sell is charged-off no later than 120 days past due for loans secured by real
estate. For non-real estate secured loans, in lieu of charging off the entire loan balance, loans may be written down to the fair
value of the collateral less costs to sell if repossession of collateral is assured and in process.
The accrual of interest, as well as the amortization/accretion of any remaining unamortized net deferred fees or costs and
discount or premium, is discontinued at the time the loan is placed on non-accrual status. All accrued but uncollected interest
for loans that are placed on non-accrual status is reversed through interest income. Cash receipts received on non-accrual loans
are generally applied against principal until the loan has been collected in full, after which time any additional cash receipts are
recognized as interest income (i.e., cost recovery method). However, interest may be accounted for under the cash-basis method
as long as the remaining recorded investment in the loan is deemed fully collectible.
Loans are returned to accrual status when the borrower has demonstrated a capacity to continue payment of the debt (generally
a minimum of six months of payment history) and collection of contractually required principal and interest associated with the
debt is reasonably assured. At such time, the accrual of interest and amortization/accretion of any remaining unamortized net
deferred fees or costs and discount or premium shall resume. Any interest income which was applied to the principal balance
shall not be reversed and subsequently will be recognized as an adjustment to yield over the remaining life of the loan.
IMPAIRED LOANS
For all classes within the commercial portfolio, all loans with an outstanding commitment balance above a specific threshold
are evaluated on a quarterly basis for potential impairment. Generally, residential mortgage and consumer loans within any
class are not individually evaluated on a regular basis for impairment. All TDRs, regardless of the outstanding balance amount
or portfolio classification, and all purchased impaired loans are considered to be impaired.
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to
collect the scheduled payments of principal and/or interest when due, according to the contractual terms of the loan agreement.
Factors considered by management in determining impairment include payment status, collateral value, and the likelihood of
collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and
payment shortfalls generally are not classified as impaired. Impairment losses are measured on a loan-by-loan basis for
commercial and certain residential mortgage or consumer loans, based on either the present value of expected future cash flows
discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is
collateral-dependent. This measurement requires significant judgment and use of estimates, and the actual loss ultimately
recognized by the Company may differ significantly from the estimates.
(cid:26)(cid:27)
ALLOWANCE FOR CREDIT LOSSES
The Company maintains the ACL at a level that management believes appropriate to absorb estimated probable credit losses
incurred in the loan portfolios (including unfunded commitments) as of the consolidated balance sheet date. The ACL consists
of the allowance for loan losses (contra asset) and the reserve for unfunded commitments (liability). The manner in which the
ACL is determined is based on 1) the accounting method applied to the underlying loans and 2) whether the loan is required to
be measured for impairment. The Company delineates between loans accounted for under the contractual yield method, legacy
and purchased non-impaired loans, and purchased impaired loans. Further, for legacy and acquired non-impaired loans, the
Company attributes portions of the ACL to loans and loan commitments that it measures individually, and groups of
homogeneous loans and loan commitments that it measures collectively for impairment.
Determination of the appropriate ACL involves a high degree of complexity and requires significant judgment regarding the
credit quality of the loan portfolio. Several factors are taken into consideration in the determination of the overall ACL,
including a qualitative component. These factors include, but are not limited to, the overall risk profiles of the loan portfolios,
net charge-off experience, the extent of impaired loans, the level of non-accrual loans, the level of 90 days past due loans, the
value of collateral, the ability to monetize guarantor support, and the overall percentage level of the allowance relative to the
loan portfolio, amongst other factors. The Company also considers overall asset quality trends, changes in lending practices and
procedures, trends in the nature and volume of the loan portfolio, including the existence and effect of any portfolio
concentrations, changes in experience and depth of lending staff, the Company’s legal, regulatory and competitive
environment, national and regional economic trends, data availability and applicability that might impact the portfolio or the
manner in which it estimates losses, and risk rating accuracy and risk identification.
The allowance for loan losses for all impaired loans (excluding purchased impaired) is determined on an individual loan basis,
considering the facts and circumstances specific to each borrower. The allowance is based on the difference between the
recorded investment in the loan and generally either the estimated net present value of projected cash flows or the estimated
value of the collateral associated with the loan, if the loan is deemed collateral-dependent. For non-impaired loans (excluding
purchased impaired), the allowance for loan losses is calculated based on pools of loans with similar characteristics. The pool-
level allowance is calculated through the application of PD (i.e., probability of default) and LGD (i.e., loss given default)
factors for each individual loan. PDs and LGDs are determined based on historical default and loss information for similar
loans. For purposes of establishing estimated loss percentages for pools of loans that share common risk characteristics, the
Company’s loan portfolio is segmented by various loan characteristics including loan type, risk rating (commercial), Vantage or
FICO score (residential mortgage and consumer), past due status (residential mortgage and consumer) and call report code. The
default and loss information is measured over an appropriate period for each loan pool and adjusted as deemed
appropriate. Qualitative adjustments are incorporated into the pool-level analysis to accommodate for the imprecision of certain
assumptions and uncertainties inherent in the calculation. See the "Loans" section of this Footnote for discussion of the
determination of the ACL for purchased impaired loans.
Certain inherent, but unconfirmed losses are probable within the loan portfolio. The Company’s current methodology for
determining the level of inherent losses is based on historical loss rates, current credit grades, specific allocation, and other
qualitative adjustments. In a stable or deteriorating credit environment, heavy reliance on historical loss rates and the credit
grade rating process results in model-derived reserves that tend to slightly lag behind portfolio deterioration. Similar lags can
occur in an improving credit environment whereby required reserves can lag slightly behind portfolio improvement. Given
these and other model limitations, qualitative adjustment factors may be incremental or decremental to the quantitative model
results. In periods prior to 2015, the Company estimated incurred losses on its Exploration and Production and its Oil Field
Services portfolios as an aggregate portfolio. Beginning in 2015, as the performance of these two portfolios began to diverge,
the Company disaggregated the analysis of incurred losses within these portfolios, which included modifying its LGD estimates
for the portfolios to more closely align with published historical industry data and other factors. Absent this change, the
Company would have recorded an additional $10.0 million, or 17 cents per share, in provision expense for the year ended
December 31, 2015.
The reserve for unfunded commitments is determined using similar methodologies described above for non-impaired loans.
The loss factors used in the reserve for unfunded commitments are equivalent to the loss factors used in the allowance for loan
losses, while also considering utilization of unused commitments.
FDIC LOSS SHARE RECEIVABLE
The Company entered into or assumed arrangements with the FDIC which obligated the FDIC to reimburse the Company for
losses on certain loans associated with FDIC-assisted transactions. The indemnification assets were recorded at fair value as of
the acquisition dates based on estimated cash flows to be received over the expected life of the acquired assets, not to exceed
the term of the indemnification agreements.
(cid:26)(cid:28)
Effective as of December 20, 2016, the Company entered into an agreement with the FDIC to terminate the Company’s twelve
loss share agreements ahead of their contractual maturities. Under the terms of the agreement, all rights and obligations of the
Company and FDIC have been resolved and completed. The Company received a net payment of $6.5 million from the FDIC
as consideration for termination of the loss share agreements and subsequently derecognized the remaining FDIC
indemnification asset of $20.4 million, along with other transaction related-adjustments (including tax impacts), resulting in a
net loss of $11.2 million.
PREMISES AND EQUIPMENT
Land is carried at cost. Buildings, furniture, fixtures, and equipment are carried at cost, less accumulated depreciation
computed on a straight-line basis over the estimated useful lives of 10 to 40 years for buildings and related improvements and
generally 3 to 20 years for furniture, fixtures, and equipment. Leasehold improvements are amortized over the lease term,
including any renewal periods that are reasonably assured, or the asset’s useful life, whichever is shorter. Premises and
equipment are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the
asset may not be recoverable.
SOFTWARE
Software is amortized on a straight-line basis over its estimated useful life. The estimated useful life of software is generally
three years, but can vary depending on the specific facts and circumstances. Software is evaluated for impairment whenever
events or changes in circumstances indicate that the carrying amount of the software may not be recoverable. Software is
recorded within "other assets" on the Company’s consolidated balance sheets with carrying amounts at December 31, 2016 and
2015 of $5.6 million and $6.2 million, respectively.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the consideration paid in a business combination over the fair value of the identifiable net
assets acquired. Goodwill is not amortized, but is assessed for potential impairment at a reporting unit level on an annual basis,
as of October 1st, or whenever events or changes in circumstances indicate that it is more likely than not the fair value of a
reporting unit is less than its respective carrying amount. As part of its testing, the Company may elect to first assess qualitative
factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If
the results of the qualitative assessment indicate that more likely than not a reporting unit’s fair value is less than its carrying
amount, the Company determines the fair value of the respective reporting unit (through the application of various quantitative
valuation methodologies) relative to its carrying amount to determine whether quantitative indicators of potential impairment
are present (i.e., Step 1). The Company may also elect to bypass the qualitative assessment and begin with Step 1. If the results
of Step 1 indicate that the fair value of the reporting unit may be below its carrying amount, the Company determines the fair
value of the reporting unit’s assets and liabilities, considering deferred taxes, and then measures impairment loss by comparing
the implied fair value of goodwill with the carrying amount of that goodwill (i.e., Step 2).
Title Plant
Costs incurred to construct a title plant, including the costs incurred to obtain, organize, and summarize historical information,
are capitalized until the title plant can be used to perform title searches. A purchased title plant, including a purchased
undivided interest in a title plant, is recorded at cost at the date of acquisition. For a title plant acquired separately or as part of a
business acquisition, cost is measured as the fair value of the consideration paid. Capitalized costs of a title plant are not
depreciated or charged to income unless circumstances indicate that the carrying amount of the title plant has been impaired.
Impairment indicators include a change in legal requirements or statutory practices, identification of obsolescence, or
abandonment of the title plant, among other indicators.
Capitalized storage and retrieval costs (e.g., costs to convert from one storage retrieval system to another or to modernize the
storage and retrieval systems) incurred after a title plant is operational are charged to expense in a systematic and rational
manner. Title plant is recorded within "other assets" on the Company’s consolidated balance sheets.
Intangible assets subject to amortization
The Company’s acquired intangible assets that are subject to amortization include (amongst other ancillary intangibles
described in Note 10) core deposit intangibles, amortized on a straight-line or accelerated basis, and a customer relationship
intangible asset, amortized on an accelerated basis, over average lives not to exceed 10 years. The Company reviews intangible
assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be
(cid:27)(cid:19)
recoverable. Impairment is identified if the sum of the undiscounted estimated future cash flows is less than the carrying value
of the asset. Intangible assets are recorded within "other assets" on the Company’s consolidated balance sheets.
OTHER REAL ESTATE OWNED
Other real estate owned includes all real estate, other than bank premises used in bank operations, owned or controlled by the
Company, including real estate acquired in settlement of loans. Properties are initially recognized at the recorded investment of
the loan (which is the pro-rata carrying value of loans accounted for in accordance with ASC Topic 310-30, Receivables -
Loans and Debt Securities Acquired with Deteriorated Credit Quality) or at estimated fair value less costs to sell, whichever is
less, generally when the Company has received physical possession (legal title is not required for non-consumer residential
property). The amount by which the recorded investment of the loan exceeds the fair value less costs to sell of the property is
charged to the ALL. Subsequent to foreclosure, the assets are carried at the lower of cost or fair value less costs to sell. Former
bank properties transferred to OREO are recorded at the lower of cost or market. Subsequent declines in the fair value of other
real estate are recorded as adjustments to the carrying amount through a valuation allowance. Revenue and expenses from
operations, gain or loss on sale, and changes in the valuation allowance are included in net expenses from foreclosed assets.
The Company included property write-downs of $3.4 million and $4.0 million in earnings for the years ended December 31,
2016 and 2015, respectively. OREO is recorded within "other assets" on the Company’s consolidated balance sheets.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company enters into various derivative financial instruments to manage interest rate risk, asset sensitivity, and other
exposures such as liquidity and credit risk, as well as to facilitate customer transactions. The primary types of derivatives
utilized by the Company for its risk management strategies include interest rate swap agreements, interest rate lock
commitments, forward sales commitments, and written and purchased options. All derivative instruments are recognized on the
consolidated balance sheets as "other assets" or "other liabilities" at fair value, regardless of whether a right of offset exists.
Changes in the fair value (i.e., gains or losses) of a derivative instrument are recorded based on whether it has been designated
and qualifies as part of a hedging relationship.
Interest rate swap and foreign exchange contracts are entered into by the Company to allow its commercial customers to
manage their exposure to market rate fluctuations. To mitigate the Company's exposure to the rate risk associated with
customer contracts, offsetting derivative positions are entered into with reputable counterparties. The Company manages its
credit risk, or potential risk of default, from the customer contracts through credit limit approval and monitoring procedures.
These contracts are not designated for hedge accounting (i.e., treated as economic hedges).
Derivatives Designated in Hedging Relationships
For cash flow hedges, the effective portion of the gain or loss related to the derivative instrument is initially reported as a
component of OCI and subsequently reclassified into earnings when the forecasted transaction affects earnings or when the
hedge is terminated. The ineffective portion of the gain or loss, if any, is reported in earnings immediately, in either "other
income" or "other expense", respectively. In applying hedge accounting for derivatives (ASC Topic 815-30 Derivatives and
Hedging - Cash Flow Hedges), the Company establishes and documents a method for assessing the effectiveness of the
hedging derivative and a measurement approach for determining the ineffective aspect of the hedge upon the inception of the
hedge.
Derivatives Not Designated in Hedging Relationships
For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are
recognized in earnings immediately.
Common Types of Derivatives
Interest rate swap agreements
Interest rate swaps are agreements to exchange interest payments based upon notional amounts. The exchange of payments
typically involves paying a fixed rate and receiving a variable rate or vice versa.
As part of its activities to manage interest rate risk (i.e., the exposure to the variability of future cash flows or other forecasted
transactions due to fluctuating market rates), the Company enters into interest rate contracts, which typically include interest
rate swap agreements. The Company primarily utilizes these instruments, which the Company designates as cash flow hedges,
to convert a portion of its variable-rate loans or debt to a fixed rate.
(cid:27)(cid:20)
Interest rate lock commitments
The Company enters into commitments to originate mortgage loans intended for sale whereby the interest rate on the
prospective loan is determined prior to funding (“rate lock”). A rate lock is provided to a borrower, subject to conditional
performance obligations, for a specified period of time that typically does not exceed 60 days. Rate lock commitments on
mortgage loans that are intended to be sold are recognized as derivatives. Accordingly, such commitments are recorded at fair
value as derivative assets or liabilities, with changes in fair value recorded in mortgage income on the consolidated statements
of comprehensive income.
Forward sales commitments
The Company uses forward sales commitments to protect the value of its rate locks and mortgage loans held for sale from
changes in interest rates and pricing between the origination of the rate lock and sale of these loans, as changes in interest rates
have the potential to cause a decline in value of rate locks and mortgage loans included in the held for sale portfolio. These
commitments are recognized as derivatives and recorded at fair value as derivative assets or liabilities, with changes in fair
value recorded in mortgage income on the consolidated statements of comprehensive income.
Equity-indexed certificates of deposit
IBERIABANK offers its customers a certificate of deposit that provides the purchaser a guaranteed return of principal at
maturity plus a potential return, which allows IBERIABANK to identify a known cost of funds. The rate of return is based on
the performance of a group of publicly traded stocks that represent a variety of industry segments. Because it is based on an
equity index, the rate of return represents an embedded derivative that is not clearly and closely related to the host instrument
and is to be accounted for separately. Accordingly, the certificate of deposit is separated into two components: a zero coupon
certificate of deposit (the host instrument) and a written option purchased by the depositor (an embedded derivative). The
discount on the zero coupon deposit is amortized over the life of the deposit, and the written option is carried at fair value on
the Company’s consolidated balance sheets, with changes in fair value recorded through earnings. IBERIABANK offsets the
risks of the written option by purchasing an option with terms that mirror the written option, which is also carried at fair value
on the Company’s consolidated balance sheets.
OFF-BALANCE SHEET CREDIT-RELATED FINANCIAL INSTRUMENTS
In the ordinary course of business, the Company executes various commitments to extend credit, including commitments under
commercial construction arrangements, commercial and home equity lines of credit, credit card arrangements, commercial
letters of credit, and standby letters of credit. Such financial instruments are recorded on the funding date.
TRANSFERS OF FINANCIAL ASSETS
Transfers of financial assets, or portions thereof which meet the definition of a participating interest, are accounted for as sales
when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when 1) the
assets have been legally isolated from the Company, 2) the transferee obtains the right, free of conditions that constrain it from
taking advantage of that right and provide the Company with more than a trivial benefit, to pledge or exchange the transferred
assets, and 3) the Company does not maintain effective control over the transferred assets. Should the transfer not satisfy all
three criteria, the transaction is recorded as a secured borrowing.
If the transfer is accounted for as a sale, the transferred assets are derecognized from the Company’s balance sheet and a gain or
loss on sale is recognized. If the transfer is accounted for as a secured borrowing, the transferred assets remain on the
Company’s balance sheet and the proceeds from the transaction are recognized as a liability.
Servicing Rights
The Company recognizes the rights to service mortgage and other loans as separate assets, which are recorded in "other assets"
in the consolidated balance sheets, when purchased or when servicing is contractually separated from the underlying loans by
sale with servicing rights retained.
For loan sales with servicing retained, a servicing right (generally an asset) is recorded at fair value for the right to service the
loans sold. All servicing rights are identified by class and subsequently accounted for under the amortization method.
INCOME TAXES
The Company and all subsidiaries file a consolidated Federal income tax return on a calendar year basis. The Company files
income tax returns in the U.S. Federal jurisdiction and various state and local jurisdictions through IBERIABANK Corporation
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(Parent), IBERIABANK, IMC, LTC, and their subsidiaries. In lieu of Louisiana state income tax, IBERIABANK is subject to
the Louisiana bank shares tax, portions of which are included in both "non-interest expense" and "income tax expense" in the
Company’s consolidated statements of comprehensive income. With few exceptions, the Company is no longer subject to U.S.
federal, state or local income tax examinations for years before 2012.
Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the
net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax
bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. The
measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence,
are not expected to be realized.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits, if applicable, in "non-interest
expense".
SHARE-BASED COMPENSATION PLANS
The Company issues stock options, restricted stock awards, restricted share units, performance units, and phantom awards
under various plans to directors, officers, and other key employees. Compensation cost for all awards is recognized on a
straight-line basis over the requisite service period, which is generally the vesting period, taking into account retirement
eligibility. For service awards with graded vesting, the Company recognizes compensation cost on a straight-line basis. The
majority of the Company's share-based awards qualify for equity accounting and contain service conditions. Under equity
accounting, the fair value of the award is measured at the grant date and not subsequently remeasured.
For awards that contain a market condition, the Company includes the market condition in the determination of the grant date
fair value of the award. Compensation cost for an award with a market condition is recognized regardless of whether the market
condition is satisfied, assuming the requisite service is met. The Company does not include performance conditions in the
determination of the grant date fair value of the award. Compensation cost for an award with a performance condition is not
recognized if the performance condition is not satisfied. Phantom awards and performance units, accounted for as liability
awards, are remeasured at each reporting period based on their fair value until the date of settlement. Compensation cost for
each reporting period until settlement is based on the change (or a portion of the change, depending on the percentage of the
requisite service that has been rendered at the reporting date) in the fair value of the phantom award and performance unit for
each reporting period.
Compensation expense relating to share-based awards is recognized in net income as part of “salaries and employee benefits”
on the consolidated statements of comprehensive income for employees and “professional services” for non-employee
directors. The exercise price for the options granted by the Company is not less than the fair market value of the underlying
stock at the grant date.
EARNINGS PER COMMON SHARE
Basic earnings per share represents income available to common shareholders divided by the weighted average number of
common shares outstanding during the period. Diluted earnings per share reflects additional common shares that would have
been outstanding if dilutive potential common shares, in the form of stock options or restricted stock units, had been issued, as
well as any adjustment to income that would result from the assumed issuance. Participating common shares issued by the
Company relate to unvested outstanding restricted stock awards, the earnings allocated to which are used in determining
income available to common shareholders under the two-class method. The two-class method allocates earnings for the period
between common shareholders and other participating securities holders. The participating awards receiving dividends are
allocated the same percentage of income as if they were outstanding shares.
SHARE REPURCHASES
Repurchases of the Company’s common stock are recorded at cost.
Effective January 1, 2015, companies incorporated in Louisiana became subject to the Louisiana Business Corporation Act
(which replaced the Louisiana Business Corporation Law). Provisions of the Louisiana Business Corporation Act eliminated
the concept of treasury stock and provide that shares reacquired by a company are to be treated as authorized but unissued
shares. As a result of this change in law, for the consolidated financial statements beginning with the quarterly period ended
March 31, 2015, the Company classifies shares previously classified as treasury stock as a reduction to issued shares of
common stock, and accordingly, adjusts the stated value of common stock and paid-in-capital.
(cid:27)(cid:22)
COMPREHENSIVE INCOME
Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income.
Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities and cash
flow hedges, are reported as a separate component of the shareholders’ equity section of the consolidated balance sheets, such
items, along with net income, are components of comprehensive income.
FAIR VALUE MEASUREMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. The Company estimates fair value based on the assumptions market participants would use when selling an asset or
transferring a liability and characterizes such measurements within the fair value hierarchy based on the inputs used to develop
those assumptions and measure fair value. The hierarchy requires the Company to maximize the use of observable inputs and
minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
• Level 1 - Quoted prices in active markets for identical assets or liabilities.
• Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and
liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or
other inputs that are observable or can be corroborated by observable market data.
• Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of
the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques
that use significant unobservable inputs.
A description of the valuation methodologies used for instruments measured at fair value follows, as well as the classification
of such instruments within the valuation hierarchy. The descriptions below are exclusive of assets or liabilities acquired in
business combinations, as all such instruments are required to initially be measured at fair value.
Cash and cash equivalents
The carrying amounts of cash and cash equivalents approximate their fair value.
Investment securities
Securities are classified within Level 1 where quoted market prices are available in an active market. Inputs include securities
that have quoted prices in active markets for identical assets. If quoted market prices are unavailable, fair value is estimated
using quoted prices of securities with similar characteristics, at which point the securities are classified within Level 2 of the
hierarchy.
Mortgage loans held for sale
Mortgage loans originated and held for sale are recorded at fair value under the fair value option, unless otherwise noted. When
determining the fair value of loans held for sale, the Company obtains quotes or bids on these loans directly from the
purchasing financial institutions (Level 2).
Loans
The fair values of mortgage loans are estimated based on present values using entry-value rates (the interest rate that would be
charged for a similar loan to a borrower with similar risk at the indicated balance sheet date) at December 31, 2016 and 2015,
weighted for varying maturity dates. Other loans are valued based on present values using entry-value interest rates at
December 31, 2016 and 2015 applicable to each category of loans, which are classified within Level 3 of the hierarchy.
Impaired loans
Loans are measured for impairment using the methods permitted by ASC Topic 310, Receivables. Fair value measurements are
used in determining impairment using either the loan’s observable market price (Level 1), if available, or the fair value of the
collateral, if the loan is collateral-dependent (Level 3). Fair value of the collateral is determined by appraisals or independent
valuation.
(cid:27)(cid:23)
Measuring the impairment of loans using the present value of expected future cash flows, discounted at the loan’s effective
interest rate, is not considered a fair value measurement under GAAP as the interest rate used to discount the cash flows does
not necessarily reflect current credit or market conditions for such loans.
Other real estate owned
Fair values of OREO are determined by sales agreement or appraisal and costs to sell are based on estimation per the terms and
conditions of the sales agreement or amounts commonly used in real estate transactions. Inputs include appraisal values on the
properties or recent sales activity for similar assets in the property’s market, and thus OREO measured at fair value is classified
within Level 3 of the hierarchy.
Derivative financial instruments
Fair values of interest rate swaps, interest rate locks, forward sales commitments, and written and purchased options are
estimated using prices of financial instruments with similar characteristics and thus are classified within Level 2 of the fair
value hierarchy.
Deposits
The fair values of NOW accounts, money market deposits and savings accounts are the amounts payable on demand at the
reporting date. Certificates of deposit are valued using a discounted cash flow model based on the weighted-average rate at
December 31, 2016 and 2015 for deposits with similar remaining maturities. The fair value of the Company’s deposits are
categorized within Level 3 of the fair value hierarchy.
Short-term borrowings
The carrying amounts of short-term borrowings maturing within ninety days approximate their fair values.
Long-term debt
The fair values of long-term debt are estimated using discounted cash flow analyses based on the Company’s current
incremental borrowing rates for similar types of borrowing arrangements. The fair value of the Company’s long-term debt is
categorized within Level 3 of the fair value hierarchy.
Off-balance sheet items
The Company has outstanding commitments to extend credit and standby letters of credit. These off-balance sheet financial
instruments are generally exercisable at the market rate prevailing at the date the underlying transaction will be completed. At
December 31, 2016 and 2015, the fair value of guarantees under commercial and standby letters of credit was not material.
NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS
ASU No. 2014-09
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which implements a common
revenue standard and clarifies the principles used for recognizing revenue. The amendments in the ASU clarify that an entity
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. As part of that principle, the
entity should identify the contract(s) with the customer, identify the performance obligation(s) of the contract, determine the
transaction price, allocate that transaction price to the performance obligation(s), and then recognize revenue when or as the
entity satisfies the performance obligation(s). The amendments also provide additional guidance/principles associated with
gross vs. net presentation (i.e., principal versus agency considerations).
The amendments in ASU No. 2014-09 will be effective for annual reporting periods beginning after December 15, 2017,
including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting
periods beginning after December 15, 2016, including interim reporting periods within that annual reporting period. The
amendments will be applied through the election of one of two retrospective methods.
The Company intends to adopt the amendments beginning January 1, 2018 through the modified-retrospective transition
method. Based on the Company’s preliminary scoping, walkthroughs, and contract reviews, it does not expect to recognize a
significant cumulative adjustment to equity upon implementation of the standard. Further, the Company does not expect a
significant impact to the Company’s consolidated statements of comprehensive income or consolidated balance sheets from
either a presentation or timing perspective, but is still analyzing some contracts (e.g., card interchange and rewards). The
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Company does anticipate additional disclosures will be presented in the notes to the consolidated financial statements following
adoption.
ASU No. 2015-02
In February 2015, the FASB issued ASU No. 2015-02, Consolidation - Amendments to the Consolidation Analysis, which
changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal
entities. The amendments in the guidance: 1) modify the evaluation of whether limited partnerships and similar legal entities
are variable interest entities or voting interest entities, 2) eliminate the presumption that a general partner should consolidate a
limited partnership, 3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that
have fee arrangements and related party relationships, and 4) provide a scope exception from consolidation guidance for certain
investment funds.
The Company adopted the amendment, effective January 1, 2016, through retrospective application on all existing agreements;
however, there was no resulting change to amounts reported in prior periods. Refer to Note 1 for current principles of
consolidation.
ASU No. 2015-05
In April 2015, the FASB issued new accounting guidance related to whether a cloud computing arrangement includes a
software license (ASU No. 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s
Accounting for Fees Paid in a Cloud Computing Arrangement). If a cloud computing arrangement includes a software license,
the customer should account for the software license element of the arrangement consistent with the acquisition of other
software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the
arrangement as a service contract.
The Company adopted the amendment prospectively on all arrangements entered into or materially modified beginning January
1, 2016, on an individual arrangement basis. The impact of the adoption of ASU 2015-05 was not material to the Company’s
consolidated financial statements.
ASU No. 2016-01
In January 2016, the FASB issued ASU No. 2016-01, Financial Statements - Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities. The amendments will not change the guidance for classifying and
measuring investments in debt securities or loans; however, the ASU will impact how entities measure certain equity
investments, recognize changes in the fair value of financial liabilities measured under the fair value option that are attributable
to instrument-specific credit risk, and disclose and present financial assets and liabilities in financial statements.
Specifically, the aforementioned amendments will require measurement of equity investments at fair value, with changes
recognized in net income, unless the investments qualify for the new practicability exception, the equity method of accounting,
or consolidation. For financial liabilities measured using the fair value option, any change in fair value caused by a change in
an entity’s own credit risk will be recognized separately in OCI, as opposed to earnings. The amendments will also require
entities to present financial assets and financial liabilities separately, grouped by measurement category and form of financial
asset in the statement of financial position or in the accompanying notes to the financial statements. Entities will also no longer
have to disclose the methods and significant assumptions for financial instruments measured at amortized cost, but will be
required to measure such instruments under the “exit price” notion for disclosure purposes.
ASU No. 2016-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,
2017. An entity will record a cumulative-effect adjustment to beginning retained earnings as of the beginning of the first
reporting period in which the guidance is adopted, with two exceptions. The amendments related to equity investments without
readily determinable fair values (including disclosure requirements) will be effective prospectively. The requirement to use the
exit price notion to measure the fair value of financial instruments for disclosure purposes will also be applied prospectively.
The Company does not expect a significant cumulative-effect adjustment to be recorded at adoption or any significant impact to
the consolidated financial statements associated with the accounting for its current equity investments. The Company does
anticipate financial statement disclosures to be impacted, specifically related to financial instruments measured at amortized
cost whose fair values are disclosed under the “entry price” notion, but is currently still in the process of determining the
impact.
ASU No. 2016-02
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The most significant amendment to existing GAAP
is the recognition of lease assets (i.e., right of use assets) and liabilities on the balance sheet for leases that are classified as
(cid:27)(cid:25)
operating leases by lessees. The lessor model remains similar to the current accounting model in existing GAAP. Additional
amendments include, but are not limited to, the elimination of leveraged leases; modification to the definition of a lease;
amendments on sale and leaseback transactions; and disclosure of additional quantitative and qualitative information.
ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal
years. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a
modified retrospective approach. The Company anticipates adopting the amendments on January 1, 2019. The Company is
currently assessing the practical expedients it may elect at adoption, but does not anticipate the amendments will have a
significant impact to the consolidated financial statements. Based on the Company’s preliminary analysis of its current
portfolio, the impact to the Company’s consolidated balance sheets is estimated to result in less than a 1% increase in assets and
liabilities. The adjustment to retained earnings is not expected to be material based on the transition guidance associated with
current sale-leaseback agreements. The Company also anticipates additional disclosures to be provided at adoption.
ASU No. 2016-09
In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting. The amendments will require recognition of excess tax benefits and deficiencies
associated with awards which vest or settle within income tax expense or benefit in the statement of comprehensive income,
with the tax effects treated as discrete items in the reporting period in which they occur. The ASU further requires entities to
recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. This will eliminate
the current APIC pool concept.
The amendments will also allow an accounting policy election to account for forfeitures as they occur, permit an entity to
withhold up to the maximum statutory tax rates in the applicable jurisdictions while still qualifying for equity classification,
and change the classification of certain cash flows associated with stock compensation.
ASU 2016-09 will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal
years. The transition method for implementing each amendment varies.
The Company expects to elect an accounting policy to account for forfeitures as they occur upon adoption. Based on the
Company's current stock valuation and estimated exercise activity associated with stock options, it anticipates an insignificant
reduction to income tax expense at adoption.
ASU No. 2016-13
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments. The amendments introduce an impairment model that is based on expected credit losses
(“ECL”), rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-
maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). The ECL should
consider historical information, current information, and reasonable and supportable forecasts, including estimates of
prepayments, over the contractual term. Financial instruments with similar risk characteristics may be grouped together when
estimating the ECL.
The ASU also amends the current AFS security impairment model for debt securities. The new model will require an estimate
of ECL when the fair value is below the amortized cost of the asset through the use of an allowance to record estimated credit
losses (and subsequent recoveries). Non-credit related losses will continue to be recognized through OCI.
In addition, the amendments provide for a simplified accounting model for purchased financial assets with a more-than-
insignificant amount of credit deterioration since their origination. The initial estimate of expected credit losses would be
recognized through an ALL with an offset (i.e., increase) to the cost basis of the related financial asset at acquisition.
ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods. The amendments
will be applied through a modified-retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as
of the beginning of the first reporting period in which the guidance is effective. A prospective transition approach is required
for debt securities for which OTTI had been recognized before the effective date. Amounts previously recognized in AOCI as
of the date of adoption that relate to improvements in cash flows expected to be collected should continue to be accreted into
income over the remaining life of the asset. Recoveries of amounts previously written off relating to improvements in cash
flows after the date of adoption should be recorded in earnings when received.
The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.
(cid:27)(cid:26)
ASU No. 2016-15
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash
Receipts and Cash Payments, in order to reduce current diversity in practice in how certain cash receipts and cash payments are
presented and classified in the statement of cash flows.
ASU 2016-15 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal
years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a
retrospective transition method to each period presented.
The Company is currently evaluating the impact of the ASU on the Company’s consolidated statement of cash flows. The
Company is not expecting to early adopt the ASU.
ASU No. 2017-01
In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a
Business, which introduces amendments that are intended to clarify the definition of a business to assist companies and other
reporting organizations with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or
businesses. The amendments are intended to narrow the current interpretation of a business.
ASU No. 2017-01 will be effective for annual reporting periods beginning after December 15, 2017, including interim
reporting periods within those periods. The amendments will be applied prospectively on or after the effective date. Early
application of the amendments in this ASU is allowed for transactions, including when a subsidiary or group of assets is
deconsolidated/derecognized, in which the acquisition date occurs before the issuance date or effective date of the amendments,
only when the transaction has not been reported in financial statements that have been issued or made available for issuance.
The Company is currently evaluating the effect of the ASU.
ASU No. 2017-04
In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for
Goodwill Impairment, which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from
the goodwill impairment test. Therefore, any carrying amount which exceeds the reporting unit’s fair value (up to the amount
of goodwill recorded) will be recognized as an impairment loss.
ASU No. 2017-04 will be effective for annual reporting periods beginning after December 15, 2019, including interim
reporting periods within those periods. The amendments will be applied prospectively on or after the effective date. Early
adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Based
on recent goodwill impairments tests, which did not require the application of Step 2, the Company does not expect the
adoption of this ASU to have an immediate impact.
(cid:27)(cid:27)
NOTE 3 –ACQUISITION ACTIVITY
2015 Acquisitions
During 2015, the Company expanded its presence in Florida and Georgia through acquisitions of Florida Bank Group, Inc. on
February 28, 2015, Old Florida Bancshares, Inc. on March 31, 2015, and Georgia Commerce Bancshares, Inc. on May 31,
2015.
The Company accounts for business combinations under the acquisition method in accordance with ASC Topic 805, Business
Combinations. Accordingly, for each transaction the purchase price is allocated to the fair value of the assets acquired and
liabilities assumed as of the date of acquisition. Upon receipt of final fair value estimates during the measurement period,
which must be within one year of the acquisition dates, the Company records any adjustments to the preliminary fair value
estimates in the reporting period in which the adjustments are determined. During the first quarter of 2016, the Company
finalized the purchase price allocations related to the Florida Bank Group and Old Florida acquisitions. During the second
quarter of 2016, the Company finalized the purchase price allocation related to the Georgia Commerce acquisition. The impact
of these adjustments during 2016 was a $2.3 million increase to goodwill, with an offsetting decrease to net deferred tax assets.
(cid:27)(cid:28)
The following tables summarize the consideration paid, allocation of purchase price to net assets acquired and resulting
goodwill for the aforementioned acquisitions.
Acquisition of Florida Bank Group, Inc.
(Dollars in thousands)
Equity consideration
Common stock issued
Total equity consideration
Non-Equity consideration
Cash
Total consideration paid
Number of Shares
Amount
752,493
$
47,497
47,497
42,988
90,485
73,043
17,442
Fair value of net assets assumed including identifiable intangible assets
Goodwill
$
(Dollars in thousands)
Assets
Cash and cash equivalents
Investment securities
Loans
Other real estate owned
Core deposit intangible
Deferred tax asset, net
Other assets
Total Assets
Liabilities
Interest-bearing deposits
Non-interest-bearing deposits
Borrowings
Other liabilities
Total Liabilities
As Acquired
Fair Value
Adjustments
As recorded by
the Company
$
$
$
$
72,982
107,236
312,902
498
—
18,151
29,817
541,586
282,417
109,548
60,000
1,898
453,863
$
$
$
$
—
136 (1)
(5,371) (2)
(75) (3)
4,489 (4)
8,569 (5)
(8,949) (6)
(1,201)
263 (7)
—
8,598 (8)
4,618 (9)
13,479
$
$
$
$
72,982
107,372
307,531
423
4,489
26,720
20,868
540,385
282,680
109,548
68,598
6,516
467,342
Explanation of certain fair value adjustments:
(1) The amount represents the adjustment of the book value of Florida Bank Group’s investments to their estimated fair
value on the date of acquisition.
(2) The amount represents the adjustment of the book value of Florida Bank Group's loans to their estimated fair values
based on acquisition date interest rates and expected cash flows, which includes estimates of expected credit losses
inherent in the portfolio.
(3) The adjustment represents the adjustment of Florida Bank Group's OREO to its estimated fair value less costs to sell on
the date of acquisition.
(4) The amount represents the fair value of the core deposit intangible asset created in the acquisition.
(5) The amount represents the net deferred tax asset recognized on the fair value adjustments of Florida Bank Group
acquired assets and assumed liabilities.
(6) The amount represents the adjustment of the book value of Florida Bank Group’s property, equipment, and other assets
to their estimated fair value at the acquisition date based on their appraised value.
(7) The amount represents the adjustment of the book value of Florida Bank Group's time deposits to their estimated fair
values at the date of acquisition.
(8) The amount represents the adjustment of the book value of Florida Bank Group’s borrowings to their estimated fair
value based on acquisition date interest rates and the credit characteristics inherent in the liability.
(9) The amount is necessary to record Florida Bank Group's rent liability at fair value.
(cid:28)(cid:19)
Acquisition of Old Florida Bancshares, Inc.
(Dollars in thousands)
Equity consideration
Common stock issued
Total equity consideration
Non-Equity consideration
Cash
Total consideration paid
Number of Shares
Amount
3,839,554
$
242,007
242,007
11,145
253,152
152,375
100,777
Fair value of net assets assumed including identifiable intangible assets
Goodwill
$
(Dollars in thousands)
Assets
Cash and cash equivalents
Investment securities
Loans held for sale
Loans
Other real estate owned
Core deposit intangible
Deferred tax asset, net
Other assets
Total Assets
Liabilities
Interest-bearing deposits
Non-interest-bearing deposits
Borrowings
Other liabilities
Total Liabilities
As Acquired
Fair Value
Adjustments
As recorded by
the Company
$
$
$
$
360,688
67,209
5,952
1,073,773
4,515
—
9,490
30,549
1,552,176
1,048,765
340,869
1,528
3,038
1,394,200
$
$
$
$
—
—
—
(10,822) (1)
1,449 (2)
6,821 (3)
4,388 (4)
(7,238) (5)
(5,402)
123 (6)
—
—
76 (7)
199
$
$
$
$
360,688
67,209
5,952
1,062,951
5,964
6,821
13,878
23,311
1,546,774
1,048,888
340,869
1,528
3,114
1,394,399
Explanation of certain fair value adjustments:
(1) The amount represents the adjustment of the book value of Old Florida's loans to their estimated fair values based on
acquisition date interest rates and expected cash flows, which includes estimates of expected credit losses inherent in
the portfolio.
(2) The adjustment represents the adjustment of Old Florida's OREO to its estimated fair value less costs to sell on the date
of acquisition.
(3) The amount represents the fair value of the core deposit intangible asset created in the acquisition.
(4) The amount represents the net deferred tax asset recognized on the fair value adjustment of Old Florida acquired assets
and assumed liabilities.
(5) The amount represents the adjustment of the book value of Old Florida’s property, equipment, and other assets to their
estimated fair value at the acquisition date based on their appraised value.
(6) The amount represents the adjustment of the book value of Old Florida's time deposits to their estimated fair values on
the date of acquisition.
(7) The adjustment is necessary to record Old Florida's rent liability at fair value.
(cid:28)(cid:20)
Acquisition of Georgia Commerce Bancshares, Inc
(Dollars in thousands)
Equity consideration
Common stock issued
Total equity consideration
Non-Equity consideration
Cash
Total consideration paid
Number of Shares
Amount
2,882,357
$
185,249
185,249
5,015
190,264
103,569
86,695
Fair value of net assets assumed including identifiable intangible assets
Goodwill
$
(Dollars in thousands)
Assets
Cash and cash equivalents
Investment securities
Loans held for sale
Loans
Other real estate owned
Core deposit intangible
Deferred tax asset, net
Other assets
Total Assets
Liabilities
Interest-bearing deposits
Non-interest-bearing deposits
Borrowings
Other liabilities
Total Liabilities
As Acquired
Fair Value
Adjustments
As recorded by
the Company
$
51,059
$
135,710
1,249
807,726
9,795
—
3,603
28,956
1,038,098
$
658,133
249,739
13,204
4,171
925,247
$
$
$
$
—
(807) (1)
—
(15,607) (2)
(4,207) (3)
6,720 (4)
5,452 (5)
(657) (6)
(9,106)
$
176 (7)
—
—
—
176
$
51,059
134,903
1,249
792,119
5,588
6,720
9,055
28,299
1,028,992
658,309
249,739
13,204
4,171
925,423
Explanation of certain fair value adjustments:
(1) The amount represents the adjustment of the book value of Georgia Commerce’s investments to their estimated fair
value on the date of acquisition.
(2) The amount represents the adjustment of the book value of Georgia Commerce's loans to their estimated fair value
based on acquisition date interest rates and expected cash flows, which includes estimates of expected credit losses
inherent in the portfolio.
(3) The adjustment represents the adjustment of Georgia Commerce's OREO to its estimated fair value less costs to sell on
the date of acquisition.
(4) The amount represents the fair value of the core deposit intangible asset created in the acquisition.
(5) The amount represents the net deferred tax asset recognized on the fair value adjustment of Georgia Commerce
acquired assets and assumed liabilities.
(6) The amount represents the adjustment of the book value of Georgia Commerce’s property, equipment, and other assets
to their estimated fair value at the acquisition date based on their appraised value.
(7) The amount represents the adjustment of the book value of Georgia Commerce's time deposits to their estimated fair
values at the date of acquisition.
There were no acquisitions during the year ended December 31, 2016.
(cid:28)(cid:21)
NOTE 4 – INVESTMENT SECURITIES
The amortized cost and fair values of investment securities, with gross unrealized gains and losses, consist of the following:
(Dollars in thousands)
Securities available for sale:
December 31, 2016
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U.S. Government-sponsored enterprise obligations
$
212,662
$
245
$
Obligations of state and political subdivisions
Mortgage-backed securities
Other securities
Total securities available for sale
Securities held to maturity:
Obligations of state and political subdivisions
Mortgage-backed securities
Total securities held to maturity
286,458
2,888,180
98,974
3,486,274
64,726
24,490
89,216
$
$
$
$
$
$
1,948
4,820
361
7,374
1,609
57
1,666
$
$
$
(549) $
(5,207)
(41,291)
(504)
(47,551) $
212,358
283,199
2,851,709
98,831
3,446,097
(133) $
(817)
(950) $
66,202
23,730
89,932
(Dollars in thousands)
Securities available for sale:
December 31, 2015
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U.S. Government-sponsored enterprise obligations
$
252,514
$
1,161
$
Obligations of state and political subdivisions
Mortgage-backed securities
Other securities
Total securities available for sale
Securities held to maturity:
Obligations of state and political subdivisions
Mortgage-backed securities
Total securities held to maturity
182,541
2,272,879
95,496
2,803,430
69,979
28,949
98,928
$
$
$
$
$
$
5,429
8,457
430
15,477
2,803
107
2,910
$
$
$
(1,592) $
(9)
(16,523)
(497)
(18,621) $
252,083
187,961
2,264,813
95,429
2,800,286
(101) $
(776)
(877) $
72,681
28,280
100,961
Securities with carrying values of $1.5 billion and $1.4 billion were pledged to secure public deposits and other borrowings at
December 31, 2016 and 2015, respectively.
(cid:28)(cid:22)
Information pertaining to securities with gross unrealized losses, aggregated by investment category and length of time that
individual securities have been in a continuous loss position, is as follows:
(Dollars in thousands)
Securities available for sale:
U.S. Government-sponsored enterprise
obligations
Obligations of state and political obligations
Mortgage-backed securities
Other Securities
Total securities available for sale
Securities held to maturity:
Obligations of state and political obligations
Mortgage-backed securities
Total securities held to maturity
(Dollars in thousands)
Securities available for sale:
U.S. Government-sponsored enterprise
obligations
Obligations of state and political obligations
Mortgage-backed securities
Other Securities
Total securities available for sale
Securities held to maturity:
Obligations of state and political obligations
Mortgage-backed securities
Total securities held to maturity
December 31, 2016
Less Than Twelve Months
Over Twelve Months
Total
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
$
(549) $ 150,554
$
— $
— $
(549) $ 150,554
(5,207)
148,059
(38,667)
2,191,563
(451)
36,484
$ (44,874) $ 2,526,660
—
(2,624)
(53)
—
98,912
(5,207)
(41,291)
(504)
148,059
2,290,475
3,850
$ (2,677) $ 102,762
40,334
$ (47,551) $2,629,422
$
$
(133) $
(330)
(463) $
10,602
12,288
22,890
$
$
— $
— $
(487)
10,960
(487) $ 10,960
$
(133) $
(817)
(950) $
10,602
23,248
33,850
December 31, 2015
Less Than Twelve Months
Over Twelve Months
Total
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
$
(1,214) $ 177,839
$
(378) $ 28,116
$
(1,592) $ 205,955
(9)
5,765
(11,737)
(488)
1,279,914
51,975
$ (13,448) $1,515,493
$
$
(9) $
(45)
(54) $
1,999
3,530
5,529
$
$
$
—
—
(4,786)
(9)
185,215
499
(5,173) $ 213,830
5,765
(9)
(16,523)
(497)
1,465,129
52,474
$ (18,621) $1,729,323
4,162
(92) $
(731)
17,573
(823) $ 21,735
$
$
(101) $
(776)
(877) $
6,161
21,103
27,264
The Company assessed the nature of the unrealized losses in its portfolio as of December 31, 2016 and 2015 to determine if
there are losses that should be deemed other-than-temporary. In its analysis of these securities, management considered
numerous factors to determine whether there were instances where the amortized cost basis of the debt securities would not be
fully recoverable, including, but not limited to:
• The length of time and extent to which the estimated fair value of the securities was less than their amortized cost,
• Whether adverse conditions were present in the operations, geographic area, or industry of the issuer,
• The payment structure of the security, including scheduled interest and principal payments, including the issuer’s failures
to make scheduled payments, if any, and the likelihood of failure to make scheduled payments in the future,
• Changes to the rating of the security by a rating agency, and
•
Subsequent recoveries or additional declines in fair value after the balance sheet date.
(cid:28)(cid:23)
Management believes it has considered these factors, as well as all relevant information available, when determining the
expected future cash flows of the securities in question. In each instance, management has determined the cost basis of the
securities would be fully recoverable. Management also has the intent to hold debt securities until their maturity or anticipated
recovery if the security is classified as available for sale. In addition, management does not believe the Company will be
required to sell debt securities before the anticipated recovery of the amortized cost basis of the security. As a result of the
Company's analysis, no declines in the estimated fair value of the Company's investment securities were deemed to be other-
than-temporary at December 31, 2016 or 2015.
At December 31, 2016, 397 debt securities had unrealized losses of 1.79% of the securities’ amortized cost basis. At December
31, 2015, 252 debt securities had unrealized losses of 1.10% of the securities’ amortized cost basis. The unrealized losses for
each of the securities related to market interest rate changes and not credit concerns of the issuers. Additional information on
securities that have been in a continuous loss position for over twelve months at December 31 is presented in the following
table.
(Dollars in thousands)
Number of securities
Issued by Fannie Mae, Freddie Mac, or Ginnie Mae
Issued by political subdivisions
Other
Amortized Cost Basis
Issued by Fannie Mae, Freddie Mac, or Ginnie Mae
Issued by political subdivisions
Other
Unrealized Loss
Issued by Fannie Mae, Freddie Mac, or Ginnie Mae
Issued by political subdivisions
Other
2016
2015
28
—
3
31
40
2
1
43
$
$
$
$
112,983
$
236,800
—
3,903
116,886
3,111
—
53
3,164
$
$
$
4,253
508
241,561
5,895
92
9
5,996
The Fannie Mae, Freddie Mac, and Ginnie Mae securities are rated AA+ by S&P and Aaa by Moodys.
The amortized cost and estimated fair value of investment securities by maturity at December 31, 2016 are presented 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.
Weighted average yields are calculated on the basis of the yield to maturity based on the amortized cost of each security.
Securities Available for Sale
Securities Held to Maturity
(Dollars in thousands)
Within one year or less
One through five years
After five through ten years
Over ten years
Weighted
Average
Yield
2.29 % $
1.65
2.25
Amortized
Cost
15,540
283,914
703,768
284,150
697,829
Estimated
Fair
Value
Weighted
Average
Yield
Amortized
Cost
Estimated
Fair
Value
$
15,477
2.59 % $
2,551
$
2.95
3.07
2.81
2.88% $
9,903
18,181
58,581
89,216
$
2,570
10,082
18,569
58,711
89,932
2.05
2,483,052
2.06% $ 3,486,274
2,448,641
$ 3,446,097
(cid:28)(cid:24)
The following is a summary of realized gains and losses from the sale of securities classified as available for sale. Gains or
losses on securities sold are recorded on the trade date, using the specific identification method.
(Dollars in thousands)
Realized gains
Realized losses
Years Ended December 31
2016
2015
2014
$
$
2,949
(948)
2,001
$
$
1,834
(259)
1,575
$
$
863
(92)
771
In addition to the gains above, the Company realized certain gains on calls of securities held to maturity that were not
significant to the consolidated financial statements.
Other Equity Securities
The Company accounts for the following securities at amortized cost, which approximates fair value, in “other assets” on the
consolidated balance sheets at December 31:
(Dollars in thousands)
Federal Home Loan Bank (FHLB) stock
Federal Reserve Bank (FRB) stock
Other investments
2016
2015
$
$
42,326
$
48,584
2,808
93,718
$
16,265
48,584
1,159
66,008
(cid:28)(cid:25)
NOTE 5 – LOANS
Loans consist of the following, segregated into legacy and acquired loans, for the periods indicated:
(Dollars in thousands)
Commercial loans:
Real estate
Commercial and industrial
Energy-related
December 31, 2016
Legacy Loans
Acquired Loans
Total
$
5,623,314
$
1,178,952
$
6,802,266
3,194,796
559,289
9,377,399
348,326
1,904
3,543,122
561,193
1,529,182
10,906,581
Residential mortgage loans:
854,216
413,184
1,267,400
Consumer and other loans:
Home equity
Indirect automobile
Other
Total
(Dollars in thousands)
Commercial loans:
Real estate
Commercial and industrial
Energy-related
1,783,421
131,048
372,505
4
2,155,926
131,052
548,840
2,463,309
$ 12,694,924
$
55,172
427,681
2,370,047
604,012
2,890,990
$ 15,064,971
December 31, 2015
Legacy Loans
Acquired Loans
Total
$
4,504,062
$
1,569,449
$
6,073,511
2,952,102
677,177
8,133,341
492,476
3,589
3,444,578
680,766
2,065,514
10,198,855
Residential mortgage loans:
694,023
501,296
1,195,319
Consumer and other loans:
Home equity
Indirect automobile
Other
Total
1,575,643
246,214
541,299
490,524
2,066,167
84
79,490
246,298
620,789
2,363,156
$ 11,190,520
$
570,098
3,136,908
2,933,254
$ 14,327,428
Between 2009 and 2011, the Company acquired certain assets and liabilities of six failed banks. Substantially all of the loans
and foreclosed real estate that were acquired through these transactions were covered by loss share agreements between the
FDIC and IBERIABANK, as well as FDIC loss share agreements assumed in connection with the Company's acquisition of
Georgia Commerce in 2015, which afforded IBERIABANK loss protection. In December of 2016, the Company terminated all
loss share agreements associated with FDIC-assisted acquisitions. Covered loans, which are included in the December 31, 2015
acquired loans table above, were $229.2 million at December 31, 2015 of which $191.7 million were residential mortgage and
home equity loans. As a result of the termination of the loss share agreements, there were no covered loans outstanding as of
December 31, 2016. Refer to Note 7 for additional information regarding the Company’s termination of its loss share
agreements.
Net deferred loan origination fees were $22.6 million and $18.7 million at December 31, 2016 and 2015, respectively. In
addition to loans issued in the normal course of business, the Company considers overdrafts on customer deposit accounts to be
loans and reclassifies these overdrafts as loans in its consolidated balance sheets. At December 31, 2016 and 2015, overdrafts
of $4.2 million and $5.1 million, respectively, have been reclassified to loans.
(cid:28)(cid:26)
Loans with carrying values of $4.5 billion and $3.9 billion were pledged as collateral for borrowings at December 31, 2016 and
2015, respectively.
Aging Analysis
The following tables provide an analysis of the aging of loans as of December 31, 2016 and 2015. Due to the difference in
accounting for acquired loans, the tables below further segregate the Company’s loans between loans originated, or renewed
and underwritten by the Company ("legacy loans") and acquired loans.
December 31, 2016
Legacy loans
Accruing
Current or
less than 30
days past
due
30-59 days
60-89 days
> 90 days
Total Past Due
Non-accrual
Loans
Total Loans
$
740,761
$
— $
— $
— $
— $
— $
740,761
1,861
3,999
—
2,012
5,249
2,551
199
2,155
351
870
1,526
1,577
1,430
405
99
618
—
—
—
1,104
—
—
—
—
2,212
4,869
1,526
4,693
6,679
2,956
298
2,773
16,439
31,227
150,329
13,014
4,882,553
3,194,796
559,289
854,216
7,979
1,783,421
1,038
624
893
131,048
82,524
466,316
(Dollars in thousands)
Commercial real estate -
Construction
Commercial real estate -
Other
4,863,902
Commercial and industrial
3,158,700
Energy-related
Residential mortgage
407,434
836,509
Consumer - Home equity
1,768,763
Consumer - Indirect
automobile
Consumer - Credit card
Consumer - Other
127,054
81,602
462,650
Total
$ 12,447,375
$
18,026
$
6,876
$
1,104
$
26,006
$
221,543
$ 12,694,924
December 31, 2015
Legacy loans
Accruing
Current or
less than 30
days past
due
30-59 days
60-89 days
> 90 days
Total Past Due
Non-accrual
Loans
Total Loans
$
635,560
$
801
$
— $
— $
801
$
120
$
636,481
2,687
1,208
15
1,075
3,549
2,187
394
1,923
793
739
—
2,485
870
518
113
752
95
87
—
442
—
—
—
—
3,575
2,034
15
4,002
4,419
2,705
507
2,675
15,422
3,867,581
6,659
7,081
13,674
2,952,102
677,177
694,023
5,628
1,575,643
1,181
394
769
246,214
77,261
464,038
(Dollars in thousands)
Commercial real estate -
Construction
Commercial real estate -
Other
3,848,584
Commercial and industrial
2,943,409
Energy-related
Residential mortgage
670,081
676,347
Consumer - Home equity
1,565,596
Consumer - Indirect
automobile
Consumer - Credit card
Consumer - Other
242,328
76,360
460,594
Total
$ 11,118,859
$
13,839
$
6,270
$
624
$
20,733
$
50,928
$ 11,190,520
(cid:28)(cid:27)
December 31, 2016
Acquired loans (1) (2)
Accruing
Current
or Less
Than 30
days past
due
30-59
days
60-89
days
> 90
days
Total Past
Due
Non-
accrual
Loans
Discount/
Premium
Acquired
Impaired
Loans
Total
Loans
$
26,714
$ — $
— $
— $
— $
1,946
$
(243) $
32,991
$
61,408
55
51
—
989
189
—
—
97
32
—
—
—
250
—
—
—
803
124
—
1,317
1,517
—
—
488
1,221
1,317
—
719
1,395
—
—
360
(3,649)
247,677
1,117,544
(837)
32,732
348,326
(6)
—
1,904
(1,835)
(5,237)
122,952
88,419
413,184
372,505
—
—
4
—
4
468
(1,004)
5,411
54,704
(Dollars in thousands)
Commercial real estate -
Construction
Commercial real estate -
Other
Commercial and industrial
Energy-related
Residential mortgage
871,492
314,990
1,910
290,031
716
73
—
328
Consumer - Home equity
286,411
1,078
Consumer - Indirect
automobile
Consumer - Credit Card
Consumer - Other
—
468
49,449
—
—
391
Total
$1,841,465
$ 2,586
$ 1,381
$
282
$
4,249
$
6,958
$
(12,811) $ 530,186
$ 2,370,047
December 31, 2015
Acquired loans (1) (2)
Accruing
Current
or Less
Than 30
days past
due
30-59
days
60-89
days
> 90
days
Total Past
Due
Non-
accrual
Loans
Discount/
Premium
Acquired
Impaired
Loans
Total
Loans
$
69,167
$ 180
$
117
$
— $
297
$
— $
(358) $
56,320
$ 125,426
861
623
—
7
622
—
—
468
705
—
—
940
416
—
—
127
—
—
—
—
1,566
623
—
947
291
1,329
—
—
—
—
—
595
1,491
1,154
170
1,109
1,291
—
—
206
(4,479)
(2,517)
2
(6,601)
(7,333)
—
—
354,757
1,444,023
50,762
1,231
140,580
114,130
65
582
492,476
3,589
501,296
490,524
84
582
(2,570)
6,292
78,908
(Dollars in thousands)
Commercial real estate -
Construction
Commercial real estate -
Other
1,090,688
Commercial and industrial
442,454
Energy-related
Residential mortgage
Consumer - Home equity
Consumer - Indirect
automobile
Consumer - Credit Card
Consumer - Other
2,186
365,261
381,107
19
—
74,385
Total
$2,425,267
$ 2,761
$ 2,305
$
291
$
5,357
$
5,421
$
(23,856) $ 724,719
$ 3,136,908
(1)
(2)
Past due and non-accrual information presents acquired loans at the gross loan balance, prior to application of discounts.
Past due and non-accrual loan amounts exclude acquired impaired loans, even if contractually past due or if the Company
does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of
the loans.
(cid:28)(cid:28)
Loans Acquired
As discussed in Note 3, during 2015, the Company acquired loans with fair values of $0.3 billion from Florida Bank Group,
$1.1 billion from Old Florida, and $0.8 billion from Georgia Commerce. Of the total $2.2 billion of loans acquired, $2.1 billion
were determined to have no evidence of deteriorated credit quality and are accounted for under ASC Topics 310-10 and 310-20.
The remaining $57.8 million were determined to exhibit deteriorated credit quality since origination under ASC 310-30. The
tables below show the balances acquired during 2015 for these two subsections of the acquired portfolio as of the acquisition
date.
(Dollars in thousands)
Contractually required principal and interest at acquisition
Expected losses and foregone interest
Cash flows expected to be collected at acquisition
Fair value of acquired loans at acquisition
Acquired Non-
Impaired Loans
2,384,114
$
(15,539)
2,368,575
2,105,466
$
(Dollars in thousands)
Contractually required principal and interest at acquisition
Non-accretable difference (expected losses and foregone interest)
Cash flows expected to be collected at acquisition
Accretable yield
Basis in acquired loans at acquisition
Acquired
Impaired Loans
76,445
$
(11,867)
64,578
(6,823)
57,755
$
The following is a summary of changes in the accretable difference for all loans accounted for under ASC 310-30 during the
years ended December 31:
(Dollars in thousands)
Balance at beginning of period
Additions
Transfers from non-accretable difference to accretable yield
Accretion
Changes in expected cash flows not affecting non-accretable differences (1)
Balance at end of period
2016
$ 227,502
2015
$ 287,651
—
6,823
5,490
(68,211)
10,273
$ 175,054
9,916
(80,479)
3,591
$ 227,502
2014
354,892
13,848
25,844
(103,233)
(3,700)
287,651
$
$
(1)
Includes changes in cash flows expected to be collected due to the impact of changes in actual or expected timing of
liquidation events, modifications, changes in interest rates and changes in prepayment assumptions.
Troubled Debt Restructurings
Information about the Company’s troubled debt restructurings ("TDRs") at December 31, 2016 and 2015 is presented in the
following tables. Modifications of loans that are accounted for within a pool under ASC Topic 310-30 are excluded as TDRs.
Accordingly, such modifications do not result in the removal of those loans from the pool, even if the modification of those
loans would otherwise be considered a TDR. As a result, all such acquired loans that would otherwise meet the criteria for
classification as a TDR are excluded from the tables below.
(cid:20)(cid:19)(cid:19)
TDRs totaling $222.4 million and $57.0 million occurred during the twelve months ended December 31, 2016 and December
31, 2015, respectively, through modification of the original loan terms. There were no TDRs that occurred during the twelve
months ended December 31, 2014 through modification of the original loan terms.
The following table provides information on how the TDRs were modified during the years ended December 31:
(Dollars in thousands)
Extended maturities
Interest rate adjustment
Maturity and interest rate adjustment
Movement to or extension of interest-rate only payments
Forbearance
Other concession(s) (1)
Total
2016
2015
$
75,315 $
15,594
193
2,470
27,931
76,819
39,708
222,436 $
$
—
23,374
241
122
17,710
57,041
(1) Other concessions may include covenant waivers, forgiveness of principal or interest associated with a customer
bankruptcy, or a combination of any of the above concessions.
Of the $222.4 million of TDRs occurring during the twelve months ended December 31, 2016, $85.9 million are on accrual
status and $136.5 million are on non-accrual status. Of the $57.0 million of TDRs occurring during the twelve months ended
December 31, 2015, $34.5 million were on accrual status and $22.5 million are on non-accrual status.
(cid:20)(cid:19)(cid:20)
The following table presents the end of period balance for loans modified in a TDR during the years ended December 31:
2016
Pre-
modification
Outstanding
Recorded
Investment
$
30,844
$
Number
of Loans
44
59
24
43
158
79
116
523
$
36,379
133,933
5,141
13,273
983
3,087
223,640
$
Post-
modification
Outstanding
Recorded
Investment
24,997
34,415
141,848
4,946
12,568
792
2,870
222,436
2015
Pre-
modification
Outstanding
Recorded
Investment
$
26,764
$
Number
of Loans
11
26
2
1
50
6
17
113
$
21,233
9,797
70
4,440
79
248
62,631
$
Post-
modification
Outstanding
Recorded
Investment
25,250
18,114
9,484
68
3,865
79
181
57,041
(In thousands, except number of
loans)
Commercial real estate
Commercial and industrial
Energy-related
Residential mortgage
Consumer - Home equity
Consumer - Indirect
Consumer - Other
Total
Information detailing TDRs that defaulted during the years ended December 31, 2016 and 2015 and were modified in the
previous twelve months (i.e., the twelve months prior to the default) is presented in the following table. The Company has
defined a default as any loan with a loan payment that is currently past due greater than 30 days, or was past due greater than
30 days at any point during the previous twelve months, or since the date of modification, whichever is shorter.
(In thousands, except number of loans)
Commercial real estate
Commercial and industrial
Energy-related
Residential mortgage
Consumer - Home Equity
Consumer - Indirect automobile
Consumer - Other
Total
December 31, 2016
December 31, 2015
Number of
Loans
Recorded
Investment
Number of
Loans
Recorded
Investment
$
9
21
2
8
25
37
22
124
$
467
12,996
5,034
405
1,379
338
606
21,225
6
$
22,075
20
1
—
20
6
9
62
$
8,970
3,120
—
1,547
79
2
35,793
(cid:20)(cid:19)(cid:21)
NOTE 6 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY
Allowance for Credit Losses Activity
A summary of changes in the allowance for credit losses for the years ended December 31 is as follows:
(Dollars in thousands)
Allowance for credit losses
Legacy Loans
Acquired Loans
Total
2016
Allowance for loan losses at beginning of period
$
93,808
$
44,570
$
138,378
Provision for (Reversal of) loan losses before benefit
attributable to FDIC loss share agreements
Adjustment attributable to FDIC loss share arrangements
Net provision for loan losses
Adjustment attributable to FDIC loss share arrangements
Transfer of balance to OREO and other
Loans charged-off
Recoveries
Allowance for loan losses at end of period
Reserve for unfunded commitments at beginning of period
Provision for (Reversal of) unfunded lending commitments
Reserve for unfunded commitments at end of period
Allowance for credit losses at end of period
44,791
—
44,791
—
(9)
(38,055)
5,034
105,569
14,145
(2,904)
11,241
116,810
$
$
$
$
$
$
$
$
(1,864)
1,497
(367)
(1,497)
(2,772)
(1,784)
1,000
39,150
$
— $
—
— $
$
39,150
42,927
1,497
44,424
(1,497)
(2,781)
(39,839)
6,034
144,719
14,145
(2,904)
11,241
155,960
Allowance for credit losses
Allowance for loan losses at beginning of period
Provision for loan losses before benefit attributable to FDIC
loss share agreements
Adjustment attributable to FDIC loss share arrangements
Net provision for loan losses
Adjustment attributable to FDIC loss share arrangements
Transfer of balance to OREO and other
Loans charged-off
Recoveries
Allowance for loan losses at end of period
Reserve for unfunded commitments at beginning of period
Provision for unfunded lending commitments
Reserve for unfunded commitments at end of period
Allowance for credit losses at end of period
Legacy Loans
Acquired Loans
Total
2015
$
76,174
$
53,957
$
130,131
27,711
—
27,711
—
—
(15,778)
5,701
93,808
11,801
2,344
14,145
107,953
$
$
$
$
$
$
$
$
1,837
1,360
3,197
(1,360)
(10,419)
(1,523)
718
44,570
$
29,548
1,360
30,908
(1,360)
(10,419)
(17,301)
6,419
138,378
— $
11,801
—
— $
$
44,570
2,344
14,145
152,523
(cid:20)(cid:19)(cid:22)
Allowance for credit losses
Allowance for loan losses at beginning of period
Provision for loan losses before benefit attributable to FDIC
loss share agreements
Adjustment attributable to FDIC loss share arrangements
Net provision for loan losses
Adjustment attributable to FDIC loss share arrangements
Transfer of balance to OREO and other
Loans charged-off
Recoveries
Allowance for loan losses at end of period
Reserve for unfunded commitments at beginning of period
Provision for unfunded lending commitments
Reserve for unfunded commitments at end of period
Allowance for credit losses at end of period
Legacy Loans
Acquired Loans
Total
2014
$
67,342
$
75,732
$
143,074
14,274
—
14,274
$
— $
—
(11,312)
5,870
76,174
11,147
654
11,801
87,975
$
$
$
$
$
$
$
$
$
$
526
4,260
4,786
$
(4,260) $
(22,157)
(671)
527
53,957
$
— $
—
— $
$
53,957
14,800
4,260
19,060
(4,260)
(22,157)
(11,983)
6,397
130,131
11,147
654
11,801
141,932
A summary of changes in the allowance for credit losses for legacy loans, by loan portfolio type, for the years ended
December 31 is as follows:
(Dollars in thousands)
Allowance for loan losses at beginning of
period
Provision for (Reversal of) loan losses
Transfer of balance to OREO and other
Loans charged off
Recoveries
Allowance for loan losses at end of period $
2016
Commercial
Real Estate
Commercial
and Industrial
Energy-
related
Residential
Mortgage
Consumer
Total
$
24,658
$
23,283
$ 23,863
$
3,947
$
18,057
$
93,808
4,042
—
(4,316)
1,024
25,408
$
15,476
—
(3,720)
395
35,434
14,776
—
(16,993)
840
$ 22,486
$
64
(9)
(313)
146
3,835
$
10,433
—
(12,713)
2,629
18,406
$
44,791
(9)
(38,055)
5,034
105,569
Reserve for unfunded commitments at
beginning of period
Provision for (Reversal of) unfunded
commitments
Reserve for unfunded commitments at end
of period
Allowance on loans individually evaluated
for impairment
Allowance on loans collectively evaluated
for impairment
Loans, net of unearned income:
Balance at end of period
Balance at end of period individually
evaluated for impairment
Balance at end of period collectively
evaluated for impairment
$
$
$
4,160
$
3,448
$
2,665
$
830
$
3,042
$
14,145
(954)
87
(1,662)
(173)
(202)
(2,904)
3,206
641
$
$
3,535
10,864
$
$
1,003
9,769
$
$
657
144
$
$
2,840
1,358
$
$
11,241
22,776
24,767
24,570
12,717
3,691
17,048
82,793
$ 5,623,314
$ 3,194,796
$ 559,289
$ 854,216
$2,463,309
$12,694,924
34,031
41,518
196,327
4,312
16,457
292,645
5,589,283
3,153,278
$ 362,962
849,904
2,446,852
12,402,279
(cid:20)(cid:19)(cid:23)
(Dollars in thousands)
Allowance for loan losses at beginning of
period
Provision for (Reversal of) loan losses
Loans charged off
Recoveries
Allowance for loan losses at end of period $
Commercial
Real Estate
Commercial
and Industrial
Energy-
related
Residential
Mortgage
Consumer
Total
2015
$
26,752
$
(1,466)
(2,525)
1,897
24,658
$
24,455
(103)
(1,276)
207
23,283
$
5,949
$
2,678
$
16,340
$
76,174
17,917
(3)
—
$ 23,863
$
1,493
(291)
67
3,947
$
9,870
(11,683)
3,530
18,057
$
27,711
(15,778)
5,701
93,808
Reserve for unfunded commitments at
beginning of period
Provision for (Reversal of) unfunded
commitments
Reserve for unfunded commitments at end
of period
Allowance on loans individually evaluated
for impairment
Allowance on loans collectively evaluated
for impairment
Loans, net of unearned income:
Balance at end of period
Balance at end of period individually
evaluated for impairment
Balance at end of period collectively
evaluated for impairment
$
$
$
3,370
$
3,733
$
1,596
$
168
$
2,934
$
11,801
790
(285)
1,069
4,160
1,246
$
$
3,448
272
$
$
2,665
2,122
$
$
662
830
1
108
2,344
$
$
3,042
352
$
$
14,145
3,993
23,412
23,011
21,741
3,946
17,705
89,815
$ 4,504,062
$ 2,952,102
$ 677,177
$ 694,023
$2,363,156
$11,190,520
28,857
20,086
13,020
70
4,608
66,641
4,475,205
2,932,016
$ 664,157
693,953
2,358,548
11,123,879
(Dollars in thousands)
Allowance for loan losses at beginning of
period
Provision for (Reversal of) loan losses
Loans charged off
Recoveries
Allowance for loan losses at end of period
Reserve for unfunded commitments at
beginning of period
Provision for (Reversal of) unfunded
commitments
Reserve for unfunded commitments at end
of period
Allowance on loans individually evaluated
for impairment
Allowance on loans collectively evaluated
for impairment
Loans, net of unearned income:
Balance at end of period
Balance at end of period individually
evaluated for impairment
Balance at end of period collectively
evaluated for impairment
Commercial
Real Estate
Commercial
and Industrial
Energy-
related
Residential
Mortgage
Consumer
Total
2014
$
22,872
$
20,839
$
2,171
(1,164)
2,873
26,752
3,071
299
3,370
20
$
$
$
$
4,971
(1,400)
45
24,455
1,814
1,919
3,733
407
$
$
$
$
$
$
$
$
$
2,546
$
14,207
$
67,342
6,878
(929)
—
—
5,949
3,043
(1,447)
566
(578)
144
2,678
72
96
$
$
7,495
(8,170)
2,808
16,340
3,147
(213)
$
$
1,596
$
168
$
2,934
— $
— $
3
14,274
(11,312)
5,870
76,174
11,147
654
11,801
430
$
$
$
$
26,732
24,048
5,949
2,678
16,337
75,744
$ 3,676,811
$ 2,452,521
$ 872,866
$ 527,694
$2,138,822
$9,668,714
7,036
3,965
—
—
699
11,700
3,669,775
2,448,556
872,866
527,694
2,138,123
9,657,014
(cid:20)(cid:19)(cid:24)
A summary of changes in the allowance for loan losses for acquired loans, by loan portfolio type, for the years ended
December 31 is as follows:
Commercial
Real Estate
Commercial
and
Industrial
Energy-
related
Residential
Mortgage
Consumer
Total
2016
(Dollars in thousands)
Allowance for loan losses at beginning of
period
Provision for (Reversal of) loan losses
Decrease in FDIC loss share receivable
Transfer of balance to OREO and other
Loans charged off
Recoveries
Allowance for loan losses at end of period
Allowance on loans individually evaluated
for impairment
$
$
$
25,979
$
2,819
$
(1,598)
(34)
(868)
(22)
117
23,574
737
$
$
1,645
(50)
(519)
(932)
267
3,230
780
$
$
125
(86)
—
—
—
—
39
$
7,841
$
759
(1,090)
(132)
—
34
7,412
$
$
7,806
(1,087)
(323)
(1,253)
(830)
582
4,895
$
$
44,570
(367)
(1,497)
(2,772)
(1,784)
1,000
39,150
— $
— $
— $
1,517
Allowance on loans collectively evaluated
for impairment
Loans, net of unearned income:
Balance at end of period
Balance at end of period individually
evaluated for impairment
Balance at end of period collectively
evaluated for impairment
Balance at end of period acquired with
deteriorated credit quality
22,837
2,450
39
7,412
4,895
37,633
$ 1,178,952
$ 348,326
$
1,904
$ 413,184
$ 427,681
$ 2,370,047
8,246
1,879
—
—
10
10,135
890,038
313,715
1,904
290,232
333,837
1,829,726
280,668
32,732
— 122,952
93,834
530,186
(Dollars in thousands)
Allowance for loan losses at beginning of
period
Provision for (Reversal of) loan losses
Increase (Decrease) in FDIC loss share
receivable
Transfer of balance to OREO and other
Loans charged off
Recoveries
Allowance for loan losses at end of period
Allowance on loans individually evaluated
for impairment
$
$
Allowance on loans collectively evaluated
for impairment
Loans, net of unearned income:
Commercial
Real Estate
Commercial
and
Industrial
Energy-
related
Residential
Mortgage
Consumer
Total
2015
$
29,949
$
$
6,484
$
2,182
757
(6,849)
(281)
221
25,979
$
$
3,265
(122)
(49)
(275)
—
—
2,819
$
$
51
74
—
—
—
—
125
$
2,126
(235)
(491)
(71)
28
7,841
$
14,208
(1,063)
$
53,957
3,197
(1,833)
(2,804)
(1,171)
469
7,806
(1,360)
(10,419)
(1,523)
718
44,570
86
$
$
— $
41
— $
— $
45
25,979
2,778
125
7,841
7,761
44,484
Balance at end of period
$ 1,569,449
$ 492,476
$
3,589
$ 501,296
$ 570,098
$ 3,136,908
Balance at end of period individually
evaluated for impairment
Balance at end of period collectively
evaluated for impairment
Balance at end of period acquired with
deteriorated credit quality
720
164
—
—
458
1,342
1,157,652
441,550
2,358
360,716
448,571
2,410,847
411,077
50,762
1,231
140,580
121,069
724,719
(cid:20)(cid:19)(cid:25)
(Dollars in thousands)
Allowance for loan losses at beginning of
period
Provision for loan losses
Increase (Decrease) in FDIC loss share
receivable
Transfer of balance to OREO and other
Loans charged off
Recoveries
Allowance for loan losses at end of period
Allowance on loans individually evaluated
for impairment
$
$
Allowance on loans collectively evaluated
for impairment
Loans, net of unearned income:
Balance at end of period
Balance at end of period individually
evaluated for impairment
Balance at end of period collectively
evaluated for impairment
Balance at end of period acquired with
deteriorated credit quality
Portfolio Segment Risk Factors
Commercial
Real Estate
Commercial
and
Industrial
Energy-
related
Residential
Mortgage
Consumer
Total
2014
$
42,026
$
6,641
$
— $ 10,889
$
16,176
$
75,732
665
227
(13,117)
—
148
29,949
$
536
509
(4,421)
—
—
3,265
$
51
—
—
—
—
51
1,296
2,238
4,786
(3,854)
(1,914)
(35)
102
6,484
$
(1,142)
(2,705)
(636)
277
14,208
$
(4,260)
(22,157)
(671)
527
53,957
$
— $
— $
— $
— $
— $
—
29,949
3,265
51
6,484
14,208
53,957
$
684,968
$ 119,174
$
7,742
$ 552,603
$ 407,843
$ 1,772,330
—
—
—
—
—
—
169,338
60,584
7,742
402,347
265,168
905,179
515,630
58,590
— 150,256
142,675
867,151
Commercial real estate loans include loans to commercial customers for long-term financing of land and buildings or for land
development or construction of a building. These loans are repaid through revenues from operations of the businesses, rents of
properties, sales of properties and refinances. Commercial and industrial loans represent loans to commercial customers to
finance general working capital needs, equipment purchases and other projects where repayment is derived from cash flows
resulting from business operations. The Company originates commercial business loans on a secured and, to a lesser extent,
unsecured basis.
Residential mortgage loans consist of loans to consumers to finance a primary residence. The vast majority of the residential
mortgage loan portfolio is comprised of non-conforming 1-4 family mortgage loans secured by properties located in the
Company's market areas and originated under terms and documentation that permit their sale in a secondary market.
Consumer loans are offered by the Company in order to provide a full range of retail financial services to its customers and
include home equity, credit card and other direct consumer installment loans. The Company originates substantially all of its
consumer loans in its primary market areas. Loans in the consumer segment are sensitive to unemployment and other key
consumer economic measures.
Credit Quality
The Company utilizes an asset risk classification system in accordance with guidelines established by the Federal Reserve
Board as part of its efforts to monitor commercial asset quality. “Special mention” loans are defined as loans where known
information about possible credit problems of the borrower cause management to have some doubt as to the ability of these
borrowers to comply with the present loan repayment terms and which may result in future disclosure of these loans as non-
performing. For assets with identified credit issues, the Company has two primary classifications for problem assets:
“substandard” and “doubtful.”
Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Company will
sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the
additional characteristic that the weaknesses make collection or liquidation in full satisfaction of the loan balance outstanding
questionable, which makes probability of loss based on currently existing facts, conditions, and values higher. Loans classified
as “Pass” do not meet the criteria set forth for special mention, substandard, or doubtful classification and are not considered
criticized. Asset risk classifications are determined at origination or acquisition and reviewed on an ongoing basis. Risk
(cid:20)(cid:19)(cid:26)
classifications are changed if, in the opinion of management, the risk profile of the customer has changed since the last review
of the loan relationship.
The Company’s investment in loans by credit quality indicator is presented in the following tables. The tables below further
segregate the Company’s loans between loans that were originated by the Company (legacy loans) and acquired loans. Loan
premiums/discounts in the tables below represent the adjustment of acquired loans to fair value at the acquisition date, as
adjusted for income accretion and changes in cash flow estimates in subsequent periods. Asset risk classifications for
commercial loans reflect the classification as of December 31, 2016 and 2015, respectively. Credit quality information in the
tables below includes total loans acquired (including acquired impaired loans) at the gross loan balance, prior to the application
of premiums/discounts, at December 31, 2016 and 2015.
Loan delinquency is the primary credit quality indicator that the Company utilizes to monitor consumer asset quality.
December 31, 2016
December 31, 2015
Legacy loans
(Dollars in
thousands)
Pass
Special
Mention
Sub-
standard
Doubtful
Total
Pass
Special
Mention
Sub-
standard
Doubtful
Total
Commercial
real estate -
Construction $ 734,687
Commercial
real estate -
Other
4,801,494
$
2,203
$
3,871
$ — $ 740,761
$ 634,889
$
160
$
1,432
$ — $ 636,481
26,159
54,900
— 4,882,553
3,806,528
21,877
37,001
2,175
3,867,581
Commercial
and
industrial
Energy-
related
Total
3,112,300
29,763
35,199
17,534
3,194,796
2,911,396
14,826
19,888
5,992
2,952,102
242,123
80,084
225,724
11,358
559,289
531,657
67,937
74,272
3,311
677,177
$8,890,604
$ 138,209
$ 319,694
$ 28,892
$9,377,399
$7,884,470
$ 104,800
$ 132,593
$ 11,478
$8,133,341
(Dollars in thousands)
Residential mortgage
Consumer - Home equity
Consumer - Indirect automobile
Consumer - Credit card
Consumer - Other
Total
Legacy loans
December 31, 2016
December 31, 2015
Current
$ 836,509
30+ Days
Past Due
$
17,707
Total
$ 854,216
Current
$ 676,347
30+ Days
Past Due
$
17,676
Total
$ 694,023
1,768,763
14,658
1,783,421
1,565,596
10,047
1,575,643
127,054
81,602
3,994
922
131,048
82,524
242,328
76,360
3,886
901
246,214
77,261
462,650
$3,276,578
$
3,666
40,947
466,316
$3,317,525
460,594
$3,021,225
$
3,444
35,954
464,038
$3,057,179
December 31, 2016
December 31, 2015
Acquired loans
Pass
Special
Mention
Sub-
standard
Doubtful
Loss
Premium/
(Discount)
Total
Pass
Special
Mention
Sub-
standard
Doubtful
Loss
Premium/
(Discount)
Total
$
46,498
$
459
$
3,118
$
2,574
$ — $
8,759
$
61,408
$ 104,064
$
1,681
$
8,803
$
771
$ — $
10,107
$ 125,426
1,090,063
19,284
49,136
1,457
323,154
1,910
1,416
—
27,749
—
494
—
23
—
—
(42,419)
1,117,544
1,395,884
26,080
79,119
6,124
111
(63,295)
1,444,023
(4,487)
348,326
473,241
8,376
16,510
(6)
1,904
2,166
55
170
1,206
1,198
43
—
(6,900)
492,476
—
3,589
$ 1,461,625
$
21,159
$
80,003
$
4,525
$
23
$
(38,153)
$ 1,529,182
$ 1,975,355
$ 36,192
$ 104,602
$
9,299
$ 154
$
(60,088)
$ 2,065,514
(Dollars in
thousands)
Commercial
real estate -
Construction
Commercial
real
estate - Other
Commercial
and industrial
Energy-related
Total
(cid:20)(cid:19)(cid:27)
December 31, 2016
December 31, 2015
Acquired loans
(Dollars in thousands)
Residential mortgage
Current
$ 424,300
30+ Days
Past Due
$20,914
Premium
(Discount)
$ (32,030) $ 413,184
Total
Current
$ 506,103
30+ Days
Past Due
$24,752
Consumer - Home equity
377,021
12,807
(17,323)
372,505
503,635
16,381
Consumer - Indirect
automobile
Consumer - Other
Total
Legacy Impaired Loans
12
—
(8)
4
72
12
58,141
$ 859,474
1,423
$35,144
(4,392)
55,172
$ (53,753) $ 840,865
79,732
$1,089,542
1,475
$42,620
Total
Premium
(Discount)
$ (29,559) $ 501,296
490,524
(29,492)
84
—
(1,717)
79,490
$ (60,768) $1,071,394
Information on the Company’s investment in legacy impaired loans, which include all TDRs and all other non-accrual loans
evaluated or measured individually for impairment purposes of determining the allowance for loan losses, is presented in the
following tables as of and for the periods indicated.
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate
Commercial and industrial
Energy-related
Consumer - Home equity
Consumer - Other
With an allowance recorded:
Commercial real estate
Commercial and industrial
Energy-related
Residential mortgage
Consumer - Home equity
Consumer - Indirect automobile
Consumer - Other
Total
Total commercial loans
Total mortgage loans
Total consumer loans
December 31, 2016
Unpaid
Principal
Balance
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
948
805
2,903
—
—
494
1,107
1,677
161
434
49
102
8,680
7,934
161
585
$
17,299
$
16,507
$
— $
21,133
$
—
—
—
—
(641)
(10,864)
(9,769)
(144)
(993)
(114)
(251)
15,492
114,623
—
—
16,771
29,333
47,469
4,377
10,227
956
1,469
$ (22,776) $ 261,850
$ (21,274) $ 244,821
4,377
$
$
(144)
(1,358)
12,652
14,202
152,424
13,189
143,239
—
—
17,688
28,829
53,967
4,627
13,906
1,037
—
—
17,524
28,329
53,088
4,312
13,257
758
2,447
$ 306,426
$ 284,409
4,627
2,442
$ 292,645
$ 271,876
4,312
17,390
16,457
(cid:20)(cid:19)(cid:28)
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate
Commercial and industrial
Energy-related
Consumer - Home equity
Consumer - Other
With an allowance recorded:
Commercial real estate
Commercial and industrial
Energy-related
Residential mortgage
Consumer - Home equity
Consumer - Other
Total
Total commercial loans
Total mortgage loans
Total consumer loans
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate
Commercial and industrial
Consumer - Home equity
With an allowance recorded:
Commercial real estate
Commercial and industrial
Consumer - Other
Total
Total commercial loans
Total mortgage loans
Total consumer loans
December 31, 2015
Unpaid
Principal
Balance
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
$
17,002
$
16,145
$
— $
15,864
$
14,571
14,340
—
730
66
12,765
5,748
13,046
70
3,859
130
67,987
63,132
70
4,785
$
$
—
730
66
12,712
5,746
13,020
70
3,683
129
66,641
61,963
70
4,608
$
$
—
—
—
—
(1,246)
(272)
(2,122)
(1)
(337)
(15)
(3,993) $
(3,640) $
(1)
(352)
$
$
18,839
—
533
66
12,985
5,975
13,899
70
2,453
30
70,714
67,562
70
3,082
$
$
315
1,148
—
22
5
530
313
454
5
73
3
2,868
2,760
5
103
December 31, 2014
Unpaid
Principal
Balance
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
$
7,615
$
6,680
$
— $
6,703
$
132
3,710
748
356
1,590
17
14,036
13,271
—
765
$
$
2,483
682
356
1,482
17
11,700
11,001
—
699
$
$
$
$
—
—
(20)
(407)
(3)
(430) $
(427) $
—
(3)
2,602
696
378
1,849
18
12,246
11,532
—
714
$
$
39
19
23
24
2
239
218
—
21
As of December 31, 2016 and 2015, the Company was not committed to lend a material amount of additional funds to any
customer whose loan was classified as impaired or as a troubled debt restructuring.
(cid:20)(cid:20)(cid:19)
NOTE 7 – LOSS SHARING AGREEMENTS AND FDIC LOSS SHARE RECEIVABLE
In conjunction with the acquisitions of certain assets and liabilities of six failed banks between 2009 and 2011, as well as the
acquisition of Georgia Commerce in 2015, the Company entered into or assumed arrangements with the FDIC that obligated
the FDIC to reimburse the Company for losses on certain loans associated with the FDIC-assisted transactions. The
indemnification assets were recorded at fair value as of the acquisition dates based on estimated cash flows to be received over
the expected life of the acquired assets, not to exceed the term of the indemnification agreements.
Effective as of December 20, 2016, the Company entered into an agreement with the FDIC to terminate the Company’s loss
share agreements ahead of their contractual maturities. Under the terms of the agreement, all rights and obligations of the
Company and the FDIC have been resolved and completed. The Company received a net payment of $6.5 million from the
FDIC as consideration for termination of the loss share agreements and subsequently derecognized the remaining FDIC
indemnification asset and associated assets and liabilities, resulting in a pre-tax loss of $17.8 million. The Company will
benefit from all future recoveries, and be responsible for all future losses and expenses related to the assets previously subject
to the loss share agreements.
The following is a summary of the year-to-date activity for the FDIC loss share receivables:
(Dollars in thousands)
Balance at beginning of period
Reversal of loan loss provision recorded on FDIC covered loans
Amortization
Submission of reimbursable losses to the FDIC
Impairment
Changes due to a change in cash flow assumptions on OREO and other changes
Balance at end of period
December 31
2016
2015
$
39,878
(1,497)
(16,024)
(1,945)
(20,402)
(10)
— $
69,627
(1,360)
(23,500)
(2,444)
—
(2,445)
39,878
$
$
(cid:20)(cid:20)(cid:20)
NOTE 8 –TRANSFERS AND SERVICING OF FINANCIAL ASSETS (INCLUDING MORTGAGE BANKING
ACTIVITY)
Commercial Banking Activity
The unpaid principal balances of loans serviced for others were $1.0 billion and $888.4 million at December 31, 2016 and
2015, respectively. Custodial escrow balances maintained in connection with the foregoing portfolio of loans serviced for
others, and included in demand deposits, were not significant at December 31, 2016 and 2015.
Mortgage Banking Activity
IBERIABANK through its subsidiary, IMC, originates mortgage loans for sale into the secondary market. The loans originated
primarily consist of residential first mortgages that conform to standards established by the GSEs, but can also consist of junior
lien loans secured by residential property. These sales are primarily to private companies that are unaffiliated with the GSEs on
a servicing-released basis. During 2016, $14.0 million of mortgage loans held for sale for which the fair value option was
elected were transferred from loans held for sale to loans held for investment. Changes to the carrying amount of mortgage
loans held for sale at December 31 are presented in the following table.
(Dollars in thousands)
Balance at beginning of period
Originations and purchases
Sales, net of gains
Mortgage loans transferred to held for investment
Other
Balance at end of period
$
$
2,460,033
(2,451,459)
(14,017)
(3,763)
157,041
$
2,464,588
(2,432,979)
—
(5,434)
166,247
2016
166,247
$
2015
140,072
$
2014
128,442
The following table details the components of mortgage income for the years ended December 31:
(Dollars in thousands)
Fair value changes of derivatives and mortgage loans held for sale:
Mortgage loans held for sale and derivatives
Derivative settlements, net
Gains on sales
Servicing and other income, net
Servicing Rights
2016
2015
$
$
1,361
(6,640)
87,925
1,207
83,853
$
$
2,216
(5,017)
82,671
792
80,662
Servicing rights are recorded at the lower of cost or market value in “other assets” on the Company's consolidated balance
sheets and amortized over the remaining servicing life of the loans, with consideration given to prepayment assumptions.
Mortgage servicing rights had the following carrying values as of the periods indicated:
December 31, 2016
December 31, 2015
(Dollars in thousands)
Mortgage servicing rights $
Gross
Carrying Amount
7,202
Accumulated
Amortization
$
(3,144) $
Net
Carrying Amount
4,058
Gross
Carrying Amount
6,104
$
Accumulated
Amortization
$
(2,320) $
Net
Carrying Amount
3,784
In addition, there was an insignificant amount of non-mortgage servicing rights related to SBA loans as of December 31, 2016
and no non-mortgage servicing rights as of December 31, 2015.
(cid:20)(cid:20)(cid:21)
1,675,538
(1,657,409)
—
(6,499)
140,072
2014
631
(8,743)
59,156
753
51,797
$
$
$
NOTE 9 – PREMISES AND EQUIPMENT
Premises and equipment consisted of the following at December 31:
(Dollars in thousands)
Land
Buildings
Furniture, fixtures and equipment
Total premises and equipment
Accumulated depreciation
Total premises and equipment, net
2016
2015
$
84,616
$
239,626
115,775
440,017
(133,644)
306,373
$
$
84,438
245,934
140,031
470,403
(146,501)
323,902
Depreciation expense was $20.8 million, $22.2 million, and $19.4 million, for the years ended December 31, 2016, 2015, and
2014, respectively.
The Company actively engages in leasing office space available in buildings it owns. Leases have different terms ranging from
monthly rental to 16 years. For the year ended December 31, 2016, income from these leases averaged $0.2 million per month.
Total lease income for the years ended December 31, 2016, 2015, and 2014 was $2.8 million, $2.4 million, and $1.6 million,
respectively. Income from leases is reported as a reduction in occupancy and equipment expense. The total allocated cost of the
portion of the buildings held for lease at December 31, 2016 and 2015 was $8.7 million and $8.2 million, respectively, with
related accumulated depreciation of $3.1 million and $2.6 million, respectively.
The Company leases certain branch and corporate offices, land and ATM facilities through operating leases with terms that
range from one to 50 years, some of which contain renewal options and escalation clauses under various terms. In addition,
some have early termination clauses. Rent expense for the years ended December 31, 2016, 2015, and 2014 totaled $16.6
million, $15.4 million, and $10.9 million, respectively.
Minimum future annual rent commitments under lease agreements for the periods indicated are as follows:
(Dollars in thousands)
2017
2018
2019
2020
2021
2022 and thereafter
$
$
15,927
14,981
13,980
12,742
10,906
37,527
106,063
NOTE 10 – GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
Goodwill
Changes to the carrying amount of goodwill by reporting unit for the years ended December 31, 2016 and 2015 are provided in
the following table.
(Dollars in thousands)
Balance, December 31, 2014
Goodwill acquired during the year
Balance, December 31, 2015
Goodwill adjustments during the year
Balance, December 31, 2016
IBERIABANK
489,183
$
207,077
696,260
2,253
698,513
$
$
$
$
$
IMC
LTC
Total
23,178
—
23,178
—
23,178
$
$
$
5,165
—
5,165
—
5,165
$
$
$
517,526
207,077
724,603
2,253
726,856
The goodwill adjustments during 2016 are the result of the finalization of fair value estimates related to the 2015 acquisitions
of Florida Bank Group, Old Florida, and Georgia Commerce during the respective measurement periods. See Note 3 for further
information on these acquisitions.
(cid:20)(cid:20)(cid:22)
The Company performed the required annual goodwill impairment test as of October 1, 2016. The Company’s annual
impairment test did not indicate impairment in any of the Company’s reporting units as of the testing date. Following the
testing date, management evaluated the events and changes that could indicate that goodwill might be impaired and concluded
that a subsequent test was not necessary.
Title Plant
The Company held title plant assets recorded in “other assets” on the Company's consolidated balance sheets totaling $6.7
million at both December 31, 2016 and 2015. No events or changes in circumstances occurred during 2016 to suggest the
carrying value of the title plant was not recoverable.
Intangible assets subject to amortization
Definite-lived intangible assets had the following carrying values included in “other assets” on the Company’s consolidated
balance sheets as of December 31:
2016
2015
Gross Carrying
Amount
$
74,001
Accumulated
Amortization
$
(52,165) $
Net Carrying
Amount
Gross Carrying
Amount
21,836
$
74,001
Accumulated
Amortization
$
(43,957) $
Net Carrying
Amount
(Dollars in thousands)
Core deposit intangibles
Customer relationship intangible
asset
Non-compete agreement
Other intangible assets
Total
$
1,348
63
—
75,412
$
(1,064)
(22)
—
(53,251) $
284
41
—
22,161
$
1,348
100
205
75,654
$
(984)
(79)
(114)
(45,134) $
The related amortization expense of intangible assets is as follows:
(Dollars in thousands)
Aggregate amortization expense for the years ended December 31:
2014
2015
2016
(Dollars in thousands)
Estimated amortization expense for the years ended December 31:
2017
2018
2019
2020
2021
2022 and thereafter
$
$
(cid:20)(cid:20)(cid:23)
30,044
364
21
91
30,520
Amount
5,807
7,811
8,415
6,733
5,740
5,019
3,513
1,066
90
NOTE 11 –DERIVATIVE INSTRUMENTS AND OTHER HEDGING ACTIVITIES
The Company enters into derivative financial instruments to manage interest rate risk, exposures related to liquidity and credit
risk, and to facilitate customer transactions. The primary types of derivatives used by the Company include interest rate swap
agreements, foreign exchange contracts, interest rate lock commitments, forward sales commitments, written and purchased
options and credit derivatives. All derivative instruments are recognized on the consolidated balance sheets as "other assets" or
"other liabilities" at fair value, as required by ASC Topic 815, Derivatives and Hedging.
For cash flow hedges, the effective portion of the gain or loss related to the derivative instrument is initially reported as a
component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects
earnings or when the hedge is terminated. The ineffective portion of the gain or loss is reported in earnings immediately. In
applying hedge accounting for derivatives, the Company establishes and documents a method for assessing the effectiveness of
the hedging derivative and a measurement approach for determining the ineffective aspect of the hedge upon the inception of
the hedge. The Company has designated interest rate swaps in a cash flow hedge to convert forecasted variable interest
payments to a fixed rate on its junior subordinated debt and has concluded that the forecasted transactions are probable of
occurring.
For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are
recognized in earnings immediately.
Information pertaining to outstanding derivative instruments is as follows:
Balance
Sheet
Location
Asset Derivatives Fair Value
December 31,
2016
December 31,
2015
Balance
Sheet
Location
Liability Derivatives Fair Value
December 31,
2016
December 31,
2015
(Dollars in thousands)
Derivatives designated as hedging
instruments under ASC Topic 815:
Interest rate contracts
Total derivatives designated as hedging
instruments under ASC Topic 815
Derivatives not designated as
hedging instruments under ASC
Topic 815:
Interest rate contracts
Foreign exchange contracts
Forward sales contracts
Written and purchased options
Other contracts
Total derivatives not designated as
hedging instruments under ASC Topic
815
Total
$
$
$
Other
assets
Other
assets
Other
assets
Other
assets
Other
assets
Other
assets
— $
— $
Other
liabilities
$
$
58
58
525
525
$
$
—
—
20,719
$
18,077
Other
liabilities
$
20,719
$
18,077
27
6,014
156
1,588
12,125
10,607
1
—
Other
liabilities
Other
liabilities
Other
liabilities
Other
liabilities
26
794
8,098
47
29,684
$
30,209
$
134
474
6,254
63
25,002
25,002
38,886
$
38,886
$
30,428
30,486
(cid:20)(cid:20)(cid:24)
(Dollars in thousands)
Derivatives designated as hedging
instruments under ASC Topic 815:
Interest rate contracts
Total derivatives designated as hedging
instruments under ASC Topic 815
Derivatives not designated as hedging
instruments under ASC Topic 815:
Interest rate contracts
Foreign exchange contracts
Forward sales contracts
Written and purchased options
Other contracts
Total derivatives not designated as
hedging instruments under ASC Topic
815
Total
Asset Derivatives Notional Amount
Liability Derivatives Notional Amount
December 31,
2016
December 31,
2015
December 31,
2016
December 31,
2015
$
$
— $
108,500
— $
108,500
$
$
108,500
108,500
$
$
—
—
$
1,033,955
$
590,334
$
1,033,955
$
590,334
4,474
229,181
289,115
8,784
4,392
223,841
328,210
—
4,474
120,567
154,170
106,518
4,392
173,430
181,949
43,169
$
$
1,565,509
1,565,509
$
$
1,146,777
1,255,277
$
$
1,419,684
1,528,184
$
$
993,274
993,274
The Company has entered into risk participation agreements with counterparties to transfer or assume credit exposures related
to interest rate derivatives. The notional amounts of risk participation agreements sold were $106.5 million and $43.2 million
at December 31, 2016 and December 31, 2015, respectively. Assuming all underlying third party customers referenced in the
swap contracts defaulted at December 31, 2016 and December 31, 2015, the exposure from these agreements would not be
material based on the fair value of the underlying swaps.
The Company is party to collateral agreements with certain derivative counterparties. Such agreements require that the
Company maintain collateral based on the fair values of individual derivative transactions. In the event of default by the
Company, the counterparty would be entitled to the collateral.
At December 31, 2016 and 2015, the Company was required to post $1.9 million and $10.9 million, respectively, in cash or
securities as collateral for its derivative transactions, which are included in "interest-bearing deposits in banks" on the
Company’s consolidated balance sheets. The Company does not anticipate additional assets will be required to be posted as
collateral, nor does it believe additional assets would be required to settle its derivative instruments immediately if contingent
features were triggered at December 31, 2016. The Company’s master netting agreements represent written, legally enforceable
bilateral agreements that (1) create a single legal obligation for all individual transactions covered by the master agreement and
(2) in the event of default, provide the non-defaulting counterparty the right to accelerate, terminate, and close-out on a net
basis all transactions under the agreement and to promptly liquidate or set-off collateral posted by the defaulting counterparty.
As permitted by U.S. GAAP, the Company does not offset fair value amounts recognized for the right to reclaim cash collateral
or the obligation to return cash collateral against recognized fair value amounts of derivatives executed with the same
counterparty under a master netting agreement.
(cid:20)(cid:20)(cid:25)
The following table reconciles the gross amounts presented in the consolidated balance sheets to the net amounts that would
result in the event of offset.
(Dollars in thousands)
Derivatives subject to master netting arrangements
Derivative assets
Interest rate contracts not designated as hedging
instruments
Written and purchased options
Total derivative assets subject to master netting
arrangements
Derivative liabilities
Interest rate contracts designated as hedging instruments
Interest rate contracts not designated as hedging
instruments
Total derivative liabilities subject to master netting
arrangements
December 31, 2016
Gross Amounts Not Offset in the
Balance Sheet
Derivatives
Collateral (1)
Net
Gross Amounts
Presented in the
Balance Sheet
$
$
$
20,719
$
8,085
(9,677) $
—
— $
—
11,042
8,085
28,804
$
(9,677) $
— $
19,127
525
$
— $
(181) $
344
20,719
(9,677)
(1,711)
9,331
$
21,244
$
(9,677) $
(1,892) $
9,675
(1)
Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.
(Dollars in thousands)
Derivatives subject to master netting arrangements
Derivative assets
Interest rate contracts designated as hedging instruments
Interest rate contracts not designated as hedging
instruments
Written and purchased options
Total derivative assets subject to master netting
arrangements
Derivative liabilities
Interest rate contracts designated as hedging instruments
Interest rate contracts not designated as hedging
instruments
Total derivative liabilities subject to master netting
arrangements
December 31, 2015
Gross Amounts Not Offset in the
Balance Sheet
Derivatives
Collateral (1)
Net
Gross Amounts
Presented in the
Balance Sheet
$
$
$
$
100
$
(43) $
— $
57
18,241
6,255
(119)
—
—
—
18,122
6,255
24,596
$
(162) $
— $
24,434
43
$
(43) $
— $
—
18,241
(119)
(10,877)
7,245
18,284
$
(162) $
(10,877) $
7,245
(1)
Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.
During the years ended December 31, 2016 and 2015, the Company has not reclassified into earnings any gain or loss as a
result of the discontinuance of cash flow hedges, because it was probable the original forecasted transaction would not occur by
the end of the originally specified term.
At December 31, 2016, the Company does not expect to reclassify a material amount from accumulated other comprehensive
income into interest income over the next twelve months for derivatives that will be settled.
(cid:20)(cid:20)(cid:26)
At December 31, 2016, 2015, and 2014, and for the years then ended, information pertaining to the effect of the hedging
instruments on the consolidated financial statements is as follows:
Location of
Gain (Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income net of taxes
(Effective Portion)
Amount of Gain (Loss)
Recognized in OCI net
of taxes (Effective
Portion)
Location of
Gain (Loss)
Recognized
in Income on
Derivative
(Ineffective
Portion and
Amount
Excluded
from
Effectiveness
Testing)
Amount of Gain (Loss)
Recognized in Income
on Derivative
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)
For the Years Ended December 31
2016
2015
2014
2016
2015
2014
2016
2015
2014
$
$
(428)
$ 38
$ —
(428)
$ 38
$ —
Interest
expense
$
$
50
50
$ — $ —
$ — $ —
Interest
expense
$ — $ — $
$ — $ — $
(1)
(1)
(Dollars in
thousands)
Derivatives in ASC
Topic 815 Cash Flow
Hedging
Relationships
Interest
rate
contracts
Total
Information pertaining to the effect of derivatives not designated as hedging instruments on the consolidated financial
statements as of December 31, is as follows:
(Dollars in thousands)
Interest rate contracts (1)
Foreign exchange contracts
Forward sales contracts
Written and purchased options
Other contracts
Total
(1) Includes fees associated with customer interest rate contracts.
Location of Gain (Loss)
Recognized in
Income on Derivatives
Amount of Gain (Loss) Recognized in
Income on Derivatives
2016
2015
2014
Other income
Other income
Mortgage income
Mortgage income
Other income
$
8,830
$
4,143
$
2,513
15
(1,731)
(327)
17
6,804
22
(2,947)
274
—
1,492
—
(3,225)
(5,739)
—
$ (6,451)
$
$
At December 31, additional information pertaining to outstanding interest rate swap agreements not designated as hedging
instruments is as follows:
(Dollars in thousands)
Weighted average pay rate
Weighted average receive rate
Weighted average maturity in years
Unrealized gain (loss) relating to interest rate swaps
2016
2015
2014
4.1%
2.5%
3.2%
0.9%
2.9%
0.4%
7.4 years
7.5 years
7.7 years
$
— $
— $
—
(cid:20)(cid:20)(cid:27)
NOTE 12 – DEPOSITS
Deposits at December 31 are summarized as follows:
(Dollars in thousands)
Non-interest-bearing deposits
Negotiable order of withdrawal (NOW)
Money market deposits accounts (MMDA)
Savings deposits
Certificates of deposit and other time deposits
$
$
2016
4,928,878
3,314,281
6,219,532
814,385
2015
4,352,229
2,974,176
6,010,882
716,838
2,131,207
$ 17,408,283
2,124,623
$ 16,178,748
Total time deposits summarized by denomination at December 31 are as follows:
(Dollars in thousands)
Time deposits less than $250,000
Time deposits greater than $250,000
2016
1,661,631
469,576
2,131,207
$
$
A schedule of maturities of all time deposits as of December 31, 2016 is as follows:
(Dollars in thousands)
Years ending December 31
2017
2018
2019
2020
2021
2022 and thereafter
NOTE 13 – SHORT-TERM BORROWINGS
Short-term borrowings at December 31 are summarized as follows:
(Dollars in thousands)
Federal Home Loan Bank advances
Securities sold under agreements to repurchase
2016
175,000
334,136
509,136
$
$
2015
1,456,804
667,819
2,124,623
1,335,041
507,162
96,509
83,623
60,468
48,404
2,131,207
2015
110,000
216,617
326,617
$
$
$
$
$
$
The levels of securities sold under agreements to repurchase and FHLB advances can fluctuate significantly on a day-to-day
basis, depending on funding needs and which sources are used to satisfy those needs. All such arrangements are considered
typical of the banking and brokerage industries and are accounted for as borrowings.
Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature daily and are
reflected at the amount of cash received in connection with the transaction. The Company may be required to provide
additional collateral based on the fair value of the underlying securities.
(cid:20)(cid:20)(cid:28)
Additional information on the Company’s short-term borrowings for the years indicated is as follows:
(Dollars in thousands)
Outstanding at December 31
Maximum month-end outstanding balance
Average daily outstanding balance
Average rate during the year
Average rate at year end
$
$
2016
509,136
807,993
614,073
0.39%
0.30%
2015
326,617
798,933
426,011
$
2014
845,742
1,034,741
782,033
0.18%
0.20%
0.17%
0.18%
NOTE 14 – LONG-TERM DEBT
Long-term debt at December 31 is summarized as follows:
(Dollars in thousands)
IBERIABANK:
Federal Home Loan Bank notes, 0.864% to 7.040%
Notes payable - Investment fund contribution, 7 to 40 year term, 0.50% to 3.60% fixed
IBERIABANK Corporation (junior subordinated debt):
Statutory Trust I, 3 month LIBOR (1), plus 3.25%, issued November 2002
Statutory Trust II, 3 month LIBOR (1), plus 3.15%, issued June 2003
Statutory Trust III, 3 month LIBOR (1), plus 2.00%, issued September 2004
Statutory Trust IV, 3 month LIBOR (1), plus 1.60%, issued October 2006
American Horizons Statutory Trust I, 3 month LIBOR (1), plus 3.15%, assumed January
2005
Statutory Trust V, 3 month LIBOR (1), plus 1.435%, issued June 2007
Statutory Trust VI, 3 month LIBOR (1), plus 2.75%, issued November 2007
Statutory Trust VII, 3 month LIBOR (1), plus 2.54%, issued November 2007
Statutory Trust VIII, 3 month LIBOR (1), plus 3.50%, issued March 2008
OMNI Trust I, 3 month LIBOR (1), plus 3.30%, assumed May 2011
OMNI Trust II, 3 month LIBOR (1), plus 2.79%, assumed May 2011
GA Commerce Trust II, 3 month LIBOR (1), plus 1.64%, assumed May 2015
2016
2015
$
480,118
$
136,628
28,725
508,843
83,709
220,337
10,310
10,310
10,310
15,464
6,186
10,310
12,372
13,403
7,217
8,248
7,732
8,248
10,310
10,310
10,310
15,464
6,186
10,310
12,372
13,403
7,217
8,248
7,732
8,248
120,110
628,953
$
120,110
340,447
$
(1) The interest rate on the Company’s long-term debt indexed to LIBOR is based on the 3-month LIBOR rate. The 3-month
LIBOR rate was 1.00% and 0.61% at December 31, 2016 and 2015, respectively.
Outstanding FHLB advances are a mix of bullet and amortizing structures. Amortizing FHLB advances are amortized over
periods ranging from 1.5 to 30 years, and have a balloon feature at maturity. Advances are collateralized by a blanket pledge of
eligible loans, subject to contractual adjustments which reduce the borrowing base, as well as a secondary pledge of FHLB
stock and FHLB demand deposits, the amount of which can exceed the amounts borrowed based on contractually required
adjustments. Total additional FHLB advances for both short-term borrowings and long-term debt at December 31, 2016 were
$4.9 billion under the blanket floating lien including $1.5 billion from pledges of investment securities. The weighted average
advance rate was 1.76% and 3.79% at December 31, 2016 and 2015, respectively.
Junior subordinated debt consists of a total of $120.1 million in Junior Subordinated Deferrable Interest Debentures of the
Company issued to statutory trusts that were funded by the issuance of floating rate capital securities of the trusts. The terms of
the junior subordinated debt are 30 years, and they are callable at par by the Company any time after 5 years. Interest is payable
quarterly and may be deferred at any time at the election of the Company for up to 20 consecutive quarterly periods. During a
deferral period, the Company is subject to certain restrictions, including being prohibited from declaring and paying dividends
to its common shareholders.
(cid:20)(cid:21)(cid:19)
As of January 1, 2015, 75% of the Company's junior subordinated debt was excluded from Tier 1 capital for regulatory
purposes. Effective January 1, 2016, the Company was subject to an additional 25% phase out of its junior subordinated debt
from Tier 1 capital. As a result, 100% of the Company's junior subordinated debt is excluded from Tier 1 capital (but included
in Tier 2 capital) at December 31, 2016.
Advances and long-term debt at December 31, 2016 have maturities or call dates in future years as follows:
(Dollars in thousands)
2017
2018
2019
2020
2021
2022 and thereafter
$
$
55,516
233,667
97,042
15,263
55,564
171,901
628,953
(cid:20)(cid:21)(cid:20)
NOTE 15 – INCOME TAXES
The provision for income tax expense consists of the following for the years ended December 31:
(Dollars in thousands)
Current expense
Deferred expense (benefit)
Tax credits
Amortization on qualified affordable housing tax credits
Tax benefits attributable to items charged to equity and goodwill
$
$
2016
103,335
(16,654)
(7,112)
4,185
$
67,025
$
4,551
(11,268)
2,023
1,439
85,193
$
1,763
64,094
$
2015
2014
69,612
(25,027)
(12,012)
1,005
2,105
35,683
There was a balance payable of $2 million and a balance receivable of $13 million for federal and state income taxes at
December 31, 2016 and 2015, respectively. The provision for federal income taxes differs from the amount computed by
applying the federal income tax statutory rate of 35 percent on income before income tax expense as indicated in the following
analysis for the years ended December 31:
(Dollars in thousands)
Federal tax based on statutory rate
Increase (decrease) resulting from:
Effect of tax-exempt income
Interest and other nondeductible expenses
State taxes, net of federal benefit
Tax credits
Amortization on qualified affordable housing tax credits
Other
Effective tax rate
2016
95,189
2015
72,428
2014
49,373
$
$
$
(8,203)
3,250
4,770
(7,112)
4,185
(6,886)
85,193
$
(6,919)
5,899
3,955
(11,268)
2,023
(2,024)
64,094
$
(7,064)
2,642
2,531
(12,012)
1,005
(792)
35,683
31.3%
31.0%
25.3%
$
The composition of other items resulting in a net tax benefit of $6.9 million for the year ending December 31, 2016 arose
principally from completion of a study concluding existence of $6.5 million net unrealized built-in gains on the 2015 Florida
Bank Group acquisition and $0.2 million of dividends on restricted stock. The Company recognized a $6.5 million deferred tax
asset, a portion of which was claimed on the 2015 income tax return filed in the fourth quarter of 2016.
(cid:20)(cid:21)(cid:21)
The net deferred tax asset at December 31 is as follows:
(Dollars in thousands)
Deferred tax asset:
NOL carryforward
Allowance for credit losses
Deferred compensation
Basis difference in acquired assets
Unrealized loss on securities available for sale
OREO
Other
Deferred tax liability:
Basis difference in acquired assets
Gain on acquisition
FHLB stock
Premises and equipment
Acquisition intangibles
Deferred loan costs
Investments acquired
Other
2016
2015
$
19,584
$
58,036
10,852
32,923
14,019
4,498
14,754
154,666
(13,150)
—
(270)
(6,132)
(8,134)
(4,702)
—
(9,196)
(41,584)
113,082
$
17,258
56,446
7,528
48,256
854
6,210
10,438
146,990
(31,975)
(212)
(122)
(1,658)
(7,648)
(4,610)
(167)
(16,694)
(63,086)
83,904
Net deferred tax asset
$
Net operating loss carryforwards arising from acquisitions during 2015 expire over a 20-year period and will be utilized subject
to annual Internal Revenue Code Section 382 limitations. No benefit was recognized at acquisition for net operating losses that
will expire unused due to the IRS limitations.
The Company determined that the net deferred tax asset is more likely than not to be realized based on an assessment of all
available positive and negative evidence and therefore no valuation allowance has been recorded as of December 31, 2016 or
2015.
Retained earnings at December 31, 2016 and 2015 included approximately $21.9 million accumulated prior to January 1, 1987
for which no provision for federal income taxes has been made. If this portion of retained earnings is used in the future for any
purpose other than to absorb bad debts, it will be added to future taxable income.
The Company does not believe it has any unrecognized tax benefits included in its consolidated financial statements. The
Company has not had any settlements in the current period with taxing authorities, nor has it recognized tax benefits as a result
of a lapse of the applicable statute of limitations.
During the years ended December 31, 2016, 2015, and 2014, the Company did not recognize any interest or penalties in its
consolidated financial statements, nor has it recorded a liability for interest or penalty payments.
(cid:20)(cid:21)(cid:22)
NOTE 16 – SHAREHOLDERS' EQUITY, CAPITAL RATIOS AND OTHER REGULATORY MATTERS
Preferred Stock
On August 5, 2015, the Company issued an aggregate of 3,200,000 depositary shares (the “Series B Depositary Shares”), each
representing a 1/400th ownership interest in a share of the Company’s 6.625% Fixed-to-Floating Non-Cumulative Perpetual
Preferred Stock, Series B, par value $1.00 per share, (“Series B Preferred Stock”), with a liquidation preference of $10,000 per
share of Series B Preferred Stock (equivalent to $25 per depositary share) which represents $80,000,000 in aggregate
liquidation preference.
On May 9, 2016, the Company issued an aggregate of 2,300,000 depositary shares (the “Series C Depositary Shares”), each
representing a 1/400th ownership interest in a share of the Company’s 6.60% Fixed-to-Floating Non-Cumulative Perpetual
Preferred Stock, Series C, par value $1.00 per share, (“Series C Preferred Stock”), with a liquidation preference of $10,000 per
share of Series C Preferred Stock (equivalent to $25 per depositary share), which represents $57,500,000 in aggregate
liquidation preference.
The following table presents a summary of the Company's non-cumulative perpetual preferred stock:
Issuance
Date
Earliest
Redemption
Date
Annual
Dividend
Rate
2016
2015
Liquidation
Amount
Carrying
Amount
Carrying
Amount
(Dollars in millions)
Series B Preferred Stock
Series C Preferred Stock
8/5/2015
5/9/2016
8/1/2025
5/1/2026
6.625% $
80,000
$
76,812
6.600%
57,500
55,285
$
137,500
$ 132,097
$
$
76,812
—
76,812
Dividends will accrue and be payable on the Series B Preferred Stock, if declared by the Company's Board of Directors, and
will be paid semi-annually, in arrears, at an annual rate equal to 6.625% for each period from the issuance date up to and
including August 1, 2025 and will be paid quarterly, in arrears, at an annual rate equal to three-month LIBOR plus 4.262% for
each period after August 1, 2025. The Company may redeem the Series B Preferred Stock at its option, subject to regulatory
approval, as described in the Company’s Registration Statement on Form 8-A, filed with the Securities and Exchange
Commission on August 5, 2015.
Dividends will accrue and be payable on the Series C Preferred Stock, if declared by the Company's Board of Directors, and
will be paid quarterly, in arrears, at an annual rate equal to (i) 6.600% for each period from the issuance date to May 1, 2026
and (ii) three-month LIBOR plus 4.920% for each period on or after May 1, 2026. The Company may redeem the Series C
Preferred Stock at its option, subject to regulatory approval, as described in the Company’s Registration Statement on Form 8-
A, filed with the Securities and Exchange Commission on May 9, 2016.
Common Stock
During the second quarter of 2016, the Company's Board of Directors authorized the repurchase of up to 950,000 shares of
IBERIABANK Corporation's outstanding common stock. Stock repurchases under this program will be made from time to
time, on the open market or in privately negotiated transactions. The timing of these repurchases will depend on market
conditions and other requirements. The share repurchase program does not obligate the Company to repurchase any dollar
amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time. During
2016, the Company repurchased 202,506 common shares at a weighted average price of $57.61 per common share.
On December 7, 2016, the Company issued an additional 3,593,750 shares of its common stock at a price of $81.50 per
common share. Net proceeds from the offering, after deduction of underwriting discounts, commissions, and direct issuance
costs, were $279.2 million.
(cid:20)(cid:21)(cid:23)
Regulatory Capital
The Company and IBERIABANK are subject to various regulatory capital requirements administered by the federal and state
banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated
financial statements. Under capital adequacy regulations and the regulatory framework for prompt corrective action, the
Company and IBERIABANK, as applicable, must meet specific capital guidelines that involve quantitative measures of their
assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts
and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other
factors.
On January 1, 2015, the Company and IBERIABANK became subject to revised capital adequacy standards of the BCBS to
address relevant provisions of the Dodd-Frank Act. Certain provisions of the new rules will be phased in from that date to
January 1, 2019.
The final rules:
• Required that non-qualifying capital instruments, including trust preferred securities and cumulative perpetual
preferred stock, must be fully phased out of Tier 1 capital by January 1, 2016,
• Established new qualifying criteria for regulatory capital, including new limitations on the inclusion of deferred tax
assets and mortgage servicing rights,
• Required a minimum ratio of common equity Tier 1 capital (“CET1”) to risk-weighted assets of 4.5%,
Increased the minimum Tier 1 capital to risk-weighted assets ratio requirements from 4% to 6%,
•
Implemented a new capital conservation buffer requirement for a banking organization to maintain a buffer composed
•
of CET1 capital in an amount greater than 2.5% above the minimum CET1 capital, Tier 1 capital and total risk-based
capital ratios in order to avoid limitations on capital distributions, including dividend payments, and certain
discretionary bonus payments to executive officers, with the buffer to be phased in beginning on January 1, 2016 at
0.625% and increasing annually until fully phased in at 2.5% by January 1, 2019. A banking organization with a buffer
of less than the required amount would be subject to increasingly stringent limitations on certain distributions and
payments as the buffer approaches zero, and
Increased capital requirements for past-due loans, high volatility commercial real estate exposures, and certain short-
term commitments and securitization exposures.
•
Management believes that, as of December 31, 2016 and 2015, the Company and IBERIABANK met all capital adequacy
requirements to which they are subject.
(cid:20)(cid:21)(cid:24)
As of December 31, 2016, the most recent notification from the FRB categorized IBERIABANK as well-capitalized under the
regulatory framework for prompt corrective action (the prompt corrective action requirements are not applicable to the
Company). To be categorized as well-capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and
Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that
management believes have changed that categorization. The Company’s and IBERIABANK’s actual capital amounts and ratios
as of December 31 are presented in the following table.
(Dollars in thousands)
Tier 1 Leverage
Consolidated
IBERIABANK
Common Equity Tier 1 (CET1) (1)
Consolidated
IBERIABANK
Tier 1 Risk-Based Capital (1)
Consolidated
IBERIABANK
Total Risk-Based Capital (1)
Consolidated
IBERIABANK
Tier 1 Leverage
Consolidated
IBERIABANK
Common Equity Tier 1 (CET1)
Consolidated
IBERIABANK
Tier 1 Risk-Based Capital
Consolidated
IBERIABANK
Total Risk-Based Capital
Consolidated
IBERIABANK
Minimum
Well-Capitalized
Actual
Amount
Ratio
Amount
Ratio
Amount
Ratio
2016
$ 818,440
4.00%
N/A
N/A $2,221,528
10.86%
816,152
4.00
1,020,190
5.00
1,878,703
9.21
$ 794,334
792,111
4.50%
4.50
N/A
1,144,160
N/A $2,089,431
1,878,703
6.50
$1,059,112
1,056,147
$1,412,149
1,408,197
6.00%
N/A
N/A $2,221,528
6.00
1,408,197
8.00
1,878,703
8.00%
N/A
N/A $2,493,988
8.00
1,760,246
10.00
2,034,663
11.84%
10.67
12.59%
10.67
14.13%
11.56
Minimum
Well-Capitalized
Actual
Amount
Ratio
Amount
Ratio
Amount
Ratio
2015
$ 751,798
749,226
4.00%
4.00
N/A
N/A $1,790,034
936,532
5.00
1,691,022
$ 750,616
748,667
4.50%
4.50
N/A
1,081,408
N/A $1,684,097
1,691,022
6.50
$1,000,822
6.00%
N/A
N/A $1,790,034
998,223
6.00
1,330,964
8.00
1,691,022
$1,334,429
1,330,964
8.00%
N/A
N/A $2,029,932
8.00
1,663,705
10.00
1,843,545
9.52%
9.03
10.10%
10.16
10.73%
10.16
12.17%
11.08
(1) Beginning January 1, 2016, minimum capital ratios are subject to a capital conservation buffer. In order to avoid limitations
on distributions, including dividend payments, and certain discretionary bonus payments to executive officers, an institution
must hold a capital conservation buffer above its minimum risk-based capital requirements. This capital conservation buffer is
calculated as the lowest of the differences between the actual CET1 ratio, Tier 1 Risk-Based Capital Ratio, and Total Risk-
Based Capital ratio and the corresponding minimum ratios. At December 31, 2016, the required minimum capital conservation
buffer was 0.625%, and will increase in subsequent years by 0.625% until it is fully phased in on January 1, 2019 at 2.50%. At
December 31, 2016, the capital conservation buffers of the Company and IBERIABANK were 6.13% and 3.56%, respectively.
Restrictions on Dividends, Loans and Advances
IBERIABANK is restricted under applicable laws in the payment of dividends to an amount equal to current year earnings plus
undistributed earnings for the immediately preceding year, unless prior permission is received from the Commissioner of
Financial Institutions for the State of Louisiana. Dividends payable by IBERIABANK in 2017 without permission will be
limited to 2017 earnings plus an additional $191.0 million.
(cid:20)(cid:21)(cid:25)
Funds available for loans or advances by IBERIABANK to the Parent amounted to $187.9 million. In addition, any dividends
that may be paid by IBERIABANK to the Parent would be restricted if IBERIABANK did not comply with the above-
described capital conservation buffer requirements and would be prohibited if the effect thereof would cause IBERIABANK’s
capital to be reduced below applicable minimum capital requirements.
During any deferral period under the Company’s junior subordinated debt, the Company would be prohibited from declaring
and paying dividends to preferred and common shareholders. In addition, so long as any shares of Series B Preferred Stock or
Series C Preferred Stock remain outstanding, we are prohibited from paying dividends on any of our common stock if the
required payments on our Series B Preferred Stock and Series C Preferred Stock have not been made. See Note 14 to the
consolidated financial statements for additional information.
NOTE 17 –EARNINGS PER SHARE
Share-based payment awards that entitle holders to receive non-forfeitable dividends before vesting are considered
participating securities that are included in the calculation of earnings per share using the two-class method. The two-class
method is an earnings allocation formula under which earnings per share is calculated for common stock and participating
securities according to dividends declared and participating rights in undistributed earnings. Under this method, all earnings,
distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to
receive dividends.
The following table presents the calculation of basic and diluted earnings per share for the periods indicated.
(In thousands, except per share data)
Earnings per common share - basic
Net income
Preferred stock dividends
Dividends and undistributed earnings allocated to unvested restricted
shares
Net income allocated to common shareholders - basic
Weighted average common shares outstanding
Earnings per common share - basic
Earnings per common share - diluted
Net income allocated to common shareholders - basic
Dividends and undistributed earnings allocated to unvested restricted
shares
Net income allocated to common shareholders - diluted
Weighted average common shares outstanding
Dilutive potential common shares
Weighted average common shares outstanding - diluted
Earnings per common share - diluted
For the Years Ended December 31,
2016
2015
2014
186,777
(7,977)
$
142,844
$
105,382
—
—
(1,872)
176,928
$
(1,680)
141,164
$
40,948
4.32
38,214
3.69
(1,651)
103,731
31,307
3.31
176,928
$
141,164
$
103,731
(37)
176,891
$
(48)
141,116
$
40,948
158
41,106
38,214
96
38,310
4.30
$
3.68
$
(34)
103,697
31,307
126
31,433
3.30
$
$
$
$
$
For the years ended December 31, 2016, 2015, and 2014, the calculations for basic shares outstanding exclude the weighted
average shares owned by the Recognition and Retention Plan (“RRP”) of 447,818; 607,608; and 625,555, respectively.
The effects from the assumed exercises of 155,969; 159,236; and 13,101 stock options were not included in the computation of
diluted earnings per share for the years ended December 31, 2016, 2015, and 2014, respectively, because such amounts would
have had an antidilutive effect on earnings per common share.
(cid:20)(cid:21)(cid:26)
NOTE 18 – SHARE-BASED COMPENSATION
The Company has various types of share-based compensation plans that permit the granting of awards in the form of stock
options, restricted stock, restricted share units, phantom stock and performance units. These plans are administered by the
Compensation Committee of the Board of Directors, which selects persons eligible to receive awards and determines the terms,
conditions and other provisions of the awards. At December 31, 2016, awards of 2,456,052 shares could be made under
approved incentive compensation plans. The Company issues shares to fulfill stock option exercises and restricted share units
and restricted stock awards vesting from available authorized common shares. At December 31, 2016, the Company believes
there are adequate authorized shares to satisfy anticipated stock option exercises and restricted share unit and restricted stock
award vesting.
Stock option awards
The Company issues stock options under various plans to directors, officers and other key employees. The option exercise price
cannot be less than the fair value of the underlying common stock as of the date of the option grant and the maximum option
term cannot exceed ten years.
The following table represents the activity related to stock options during the periods indicated:
Outstanding options, December 31, 2013
Granted
Exercised
Forfeited or expired
Outstanding options, December 31, 2014
Granted
Exercised
Forfeited or expired
Outstanding options, December 31, 2015
Granted
Exercised
Forfeited or expired
Outstanding options, December 31, 2016
Exercisable options, December 31, 2014
Exercisable options, December 31, 2015
Exercisable options, December 31, 2016
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(Dollars in
thousands)
Weighted
Average
Remaining
Contract Life
(in years)
$
$
$
$
$
$
53.47
65.31
48.57
$
4,612
60.38
55.92
62.50
51.71
66.52
56.99
48.65
55.39
59.49
55.38
55.92
56.54
56.66
1,516
3,597
$
20,583
6.0
$
11,366
4.4
Number of
Shares
1,072,829
77,434
(267,421)
(15,160)
867,682
82,001
(119,917)
(15,989)
813,777
160,624
(196,769)
(56,094)
721,538
562,752
546,842
415,376
(cid:20)(cid:21)(cid:27)
The following table represents weighted average remaining life as of December 31, 2016 for options outstanding within the
stated exercise prices:
Exercise Price Range Per Share
$36.48 to $47.50
$47.51 to $52.35
$52.36 to $54.82
$54.83 to $59.81
$59.82 to $62.82
$62.83 to $111.71
Total options
Options Outstanding
Options Exercisable
Number of
Options
147,913
151,527
116,558
68,683
154,506
82,351
721,538
Weighted Average
Exercise Price
$
$
47.27
51.56
53.39
56.33
61.32
67.83
55.38
Weighted Average
Remaining Life
8.9 years
4.9 years
4.6 years
3.7 years
5.7 years
7.1 years
6.0 years
Number of
Options
Weighted Average
Exercise Price
5,849
$
113,328
90,653
64,387
98,688
42,471
415,376
$
45.42
51.51
53.68
56.17
60.63
69.81
56.66
The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards. The following
weighted-average assumptions were used for option awards issued during the years ended December 31:
Expected dividends
Expected volatility
Risk-free interest rate
Expected term (in years)
2016
2015
2014
2.8%
29.0%
1.4%
6.5
2.2%
35.6%
2.0%
7.5
2.1%
35.8%
2.3%
7.5
Weighted-average grant-date fair value
$
10.46
$
19.57
$
21.26
The assumptions above are based on multiple factors, including historical stock option exercise patterns and post-vesting
employment termination behaviors, expected future exercise patterns and the expected volatility of the Company’s stock price.
The following table represents the compensation expense that is included in non-interest expense and related income tax
benefits in the accompanying consolidated statements of comprehensive income related to stock options for the years ended
December 31:
(Dollars in thousands)
Compensation expense related to stock options
Income tax benefit related to stock options
2016
2015
2014
$
2,010
$
1,861
$
331
317
2,053
375
At December 31, 2016, there was $2.1 million of unrecognized compensation cost related to stock options that is expected to be
recognized over a weighted-average period of 2.6 years.
Restricted stock awards
The Company issues restricted stock under various plans for certain officers and directors. The restricted stock awards may not
be sold or otherwise transferred until certain restrictions have lapsed. The holders of the restricted stock receive dividends and
have the right to vote the shares. The compensation expense for these awards is determined based on the market price of the
Company's common stock at the date of grant applied to the total number of shares granted and is recognized over the vesting
period (generally three to seven years). As of December 31, 2016 and 2015, unrecognized share-based compensation associated
with these awards totaled $16.0 million and $19.5 million, respectively. The unrecognized compensation cost related to
restricted stock awards at December 31, 2016 is expected to be recognized over a weighted-average period of 2.2 years.
Restricted share units
In 2015, the Company issued restricted share units to certain of its executive officers. Restricted share units vest after the end of
a three year performance period, based on satisfaction of the market and performance conditions set forth in the restricted share
unit agreement. Recipients do not possess voting or investment power over the common stock underlying such units until
vesting. The grant date fair value of these restricted share units is the same as the value of the corresponding number of shares
of common stock, adjusted for assumptions surrounding the market-based conditions contained in the respective agreements.
See Note 1 for further discussion of restricted share units with market or performance conditions.
(cid:20)(cid:21)(cid:28)
The following table represents the compensation expense that was included in non-interest expense and related income tax
benefits in the accompanying consolidated statements of comprehensive income related to restricted stock awards and restricted
share units for the years ended December 31:
(Dollars in thousands)
Compensation expense related to restricted stock awards and restricted
share units
Income tax benefit related to restricted stock awards and restricted share
units
2016
2015
2014
$
12,513
$
12,045
$
9,932
4,380
4,215
3,476
The following table represents unvested restricted stock award and restricted share unit activity for the years ended
December 31:
Balance at beginning of period
Granted
Forfeited
Earned and issued
Balance at end of period
2016
507,130
254,276
(28,855)
(189,290)
543,261
2015
506,289
207,575
(26,970)
(179,764)
507,130
2014
523,756
168,254
(18,171)
(167,550)
506,289
The weighted average grant date fair value of restricted stock awards and restricted share units granted was $48.84, $63.16, and
$65.11 for the years ended December 31, 2016, 2015, and 2014, respectively. The total fair value of restricted stock awards
and restricted share units vested during the years ended December 31, 2016, 2015, and 2014 was $10.7 million, $11.3 million,
and $10.9 million, respectively.
Phantom stock awards
The Company issues phantom stock awards to certain key officers and employees. The awards are subject to a vesting period of
five to seven years and are paid out in cash upon vesting. The amount paid per vesting period is calculated as the number of
vested “share equivalents” multiplied by the closing market price of a share of the Company’s common stock on the vesting
date. Share equivalents are calculated on the date of grant as the total award’s dollar value divided by the closing market price
of a share of the Company’s common stock on the grant date. Award recipients are also entitled to a “dividend equivalent” on
each unvested share equivalent held by the award recipient. A dividend equivalent is a dollar amount equal to the cash
dividends that the participant would have been entitled to receive if the participant’s share equivalents were issued in shares of
common stock. Dividend equivalents are reinvested as share equivalents that will vest and be paid out on the same date as the
underlying share equivalents on which the dividend equivalents were paid. The number of share equivalents acquired with a
dividend equivalent is determined by dividing the aggregate of dividend equivalents paid on the unvested share equivalents by
the closing price of a share of the Company’s common stock on the dividend payment date.
Performance units
In 2016 and 2015, the Company issued performance units to certain of its executive officers. Performance units are tied to the
value of shares of the Company's common stock, are payable in cash, and vest in increments of one-third per year after
attainment of one or more performance measures. The value of performance units is the same as the value of the corresponding
number of shares of common stock.
The following table indicates compensation expense recorded for phantom stock and performance units based on the number of
share equivalents vested at December 31 of the years indicated and the current market price of the Company’s stock at that
time:
(Dollars in thousands)
Compensation expense related to phantom stock and performance units
2016
2015
2014
$
12,933
$
12,109
$
5,496
(cid:20)(cid:22)(cid:19)
The following table represents phantom stock award and performance unit activity during the periods indicated.
(Dollars in thousands)
Balance, December 31, 2013
Granted
Forfeited share equivalents
Vested share equivalents
Balance, December 31, 2014
Granted
Forfeited share equivalents
Vested share equivalents
Balance, December 31, 2015
Granted
Forfeited share equivalents
Vested share equivalents
Balance, December 31, 2016
Number of share
equivalents (1)
Value of share
equivalents (2)
433,884
$
27,270
146,166
(22,800)
(81,903)
475,347
167,573
(34,681)
(145,809)
462,430
215,745
(42,051)
(163,294)
472,830
$
$
$
9,479
1,479
5,512
30,826
9,228
1,910
9,288
25,466
18,069
3,522
8,509
39,600
(1) Number of share equivalents includes all reinvested dividend equivalents for the years indicated.
(2)
Except for share equivalents at the beginning of each period, which are based on the value at that time, and vested share
payments, which are based on the cash paid at the time of vesting, the value of share equivalents is calculated based on
the market price of the Company’s stock at the end of the respective periods. The market price of the Company’s stock
was $83.75, $55.07 and $64.85 on December 31, 2016, 2015 and 2014, respectively.
401(k) defined contribution plan
The Company has a 401(k) Profit Sharing Plan covering substantially all of its employees. Annual employer contributions to
the Plan are set by the Board of Directors. The Company made contributions of $1.9 million, $1.7 million, and $1.5 million for
the years ended December 31, 2016, 2015, and 2014, respectively. The Plan provides, among other things, that participants in
the Plan be able to direct the investment of their account balances within the Profit Sharing Plan into alternative investment
funds. Participant deferrals under the salary reduction election may be matched by the employer based on a percentage to be
determined annually by the employer.
NOTE 19 – COMMITMENTS AND CONTINGENCIES
Off-balance sheet commitments
In the normal course of business, to meet the financing needs of its customers, the Company is a party to credit related financial
instruments, with risk not reflected in the consolidated financial statements. These financial instruments include commitments
to extend credit, standby letters of credit, and commercial letters of credit. Such commitments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The credit
policies used for these commitments are consistent with those used for on-balance sheet instruments. The Company’s exposure
to credit loss in the event of non-performance by its customers under such commitments or letters of credit represents the
contractual amount of the financial instruments as indicated in the table below. At December 31, 2016 and 2015, the fair value
of guarantees under commercial and standby letters of credit was $1.6 million and $1.5 million, respectively. These amounts
represent the unamortized fees associated with the guarantees and is included in “other liabilities” on the Company's
consolidated balance sheets. This fair value will decrease as the existing commercial and standby letters of credit approach their
expiration dates.
(cid:20)(cid:22)(cid:20)
At December 31, 2016 and 2015, respectively, the Company had the following financial instruments outstanding and related
reserves, whose contract amounts represent credit risk:
(Dollars in thousands)
Commitments to grant loans
Unfunded commitments under lines of credit
Commercial and standby letters of credit
Reserve for unfunded lending commitments
$
2016
355,558
4,899,930
163,560
11,241
2015
$
61,240
4,617,802
150,281
14,145
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established
in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a
fee. Since many of the commitments are expected to be drawn upon, the total commitment amounts generally represent future
cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral,
if any, is based on management’s credit evaluation of the customer.
Unfunded commitments under commercial lines of credit, revolving credit lines, and overdraft protection agreements are
commitments for possible future extensions of credit to existing customers. Many of these types of commitments do not contain
a specified maturity date and may not be drawn upon to the total extent to which the Company is committed. See Note 6 for
additional discussion related to the Company’s unfunded lending commitments.
Commercial and standby letters of credit are conditional commitments issued by the Company to guarantee the performance of
a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements,
including commercial paper issuance, bond financing, and similar transactions. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to customers. When necessary they are collateralized,
generally in the form of marketable securities and cash equivalents.
Legal proceedings
The nature of the business of the Company’s banking and other subsidiaries ordinarily results in a certain amount of claims,
litigation, investigations, and legal and administrative cases and proceedings, which are considered incidental to the normal
conduct of business. Some of these claims are against entities or assets of which the Company is a successor or acquired in
business acquisitions. The Company has asserted defenses to these litigations and, with respect to such legal proceedings,
intends to continue to defend itself vigorously, litigating or settling cases according to management’s judgment as to what is in
the best interest of the Company and its shareholders.
In July of 2016, a subsidiary of IBERIABANK received a subpoena from the Office of Inspector General of the U.S.
Department of Housing and Urban Development (“HUD”) requesting information on certain previously originated loans
insured by the Federal Housing Administration ("FHA") as well as other documents regarding the subsidiary's FHA-related
policies and practices. The Company is cooperating with HUD and is in the process of responding to the subpoena. Given the
current status of the matter, the Company is unable to determine if its submission of the information requested will result in an
additional information request by HUD and/or further proceedings by HUD or other government agencies.
The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest
information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably
estimated, the Company records a liability in its consolidated financial statements. These legal reserves may be increased or
decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of loss is not
estimable, the Company does not accrue legal reserves. While the outcome of legal proceedings is inherently uncertain, based
on information currently available, advice of counsel, and available insurance coverage, the Company’s management believes
that it has established appropriate legal reserves. Any liabilities arising from pending legal proceedings are not expected to have
a material adverse effect on the Company’s consolidated financial position, consolidated results of operations, or consolidated
cash flows. However, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to the
Company’s consolidated financial position, consolidated results of operations, or consolidated cash flows.
As of the date of this filing, the Company believes the amount of losses associated with legal proceedings that it is reasonably
possible to incur above amounts already accrued is not material.
(cid:20)(cid:22)(cid:21)
NOTE 20 – FAIR VALUE MEASUREMENTS
Recurring fair value measurements
The Company has segregated all financial assets and liabilities that are measured at fair value on a recurring basis into the most
appropriate level within the fair value hierarchy based on the inputs used to estimate the fair value at the measurement date in
the tables below. See Note 1, Summary of Significant Accounting Policies, for a description of how fair value measurements
are determined.
(Dollars in thousands)
Assets
Securities available for sale
Mortgage loans held for sale
Derivative instruments
Total
Liabilities
Derivative instruments
Total
Assets
Securities available for sale
Mortgage loans held for sale
Derivative instruments
Total
Liabilities
Derivative instruments
Total
Level 1
Level 2
Level 3
Total
December 31, 2016
— $
3,446,097
$
— $
3,446,097
—
—
— $
— $
— $
157,041
38,886
3,642,024
30,209
30,209
$
$
$
—
—
— $
— $
— $
157,041
38,886
3,642,024
30,209
30,209
Level 1
Level 2
Level 3
Total
December 31, 2015
— $
2,800,286
$
— $
2,800,286
—
—
— $
— $
— $
166,247
30,486
2,997,019
25,002
25,002
$
$
$
—
—
— $
— $
— $
166,247
30,486
2,997,019
25,002
25,002
$
$
$
$
$
$
$
$
During 2016 and 2015, there were no transfers between the Level 1 and Level 2 fair value categories.
Gains and losses (realized and unrealized) included in earnings (or accumulated other comprehensive income) during 2016
related to assets and liabilities measured at fair value on a recurring basis are reported in non-interest income or other
comprehensive income as follows:
(Dollars in thousands)
Total gains (losses) included in earnings
Change in unrealized gains (losses) relating to assets still held at December 31, 2016
Non-interest
income
Other
comprehensive
income (loss), net
of tax
$
5,567
$
—
—
(24,450)
(cid:20)(cid:22)(cid:22)
Non-recurring fair value measurements
The Company has segregated all assets and liabilities that are measured at fair value on a non-recurring basis into the most
appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in
the tables below.
(Dollars in thousands)
Assets
Loans
OREO, net
Total
(Dollars in thousands)
Assets
Loans
OREO, net
Total
Level 1
Level 2
Level 3
Total
December 31, 2016
$
$
$
$
— $
—
— $
— $
93,485
—
185
— $
93,670
Level 1
Level 2
Level 3
December 31, 2015
— $
—
— $
— $
—
— $
31,669
1,662
33,331
$
$
$
$
93,485
185
93,670
Total
31,669
1,662
33,331
The tables above exclude the initial measurement of assets and liabilities that were acquired as part of the acquisitions
completed in 2015. These assets and liabilities were recorded at their fair value upon acquisition in accordance with U.S.
GAAP and were not re-measured during the periods presented unless specifically required by U.S. GAAP. Acquisition date fair
values represent either Level 2 fair value measurements (investment securities, property, equipment, and debt) or Level 3 fair
value measurements (loans, OREO, deposits, and core deposit intangible assets).
In accordance with the provisions of ASC Topic 310, the Company records certain loans considered impaired at their estimated
fair value. A loan is considered impaired if it is probable the Company will be unable to collect all amounts due according to
the contractual terms of the loan agreement. Fair value is measured at the estimated fair value of the collateral for collateral-
dependent loans. Impaired loans with an unpaid principal balance of $125.5 million and $40.2 million were recorded at their
fair value at December 31, 2016 and December 31, 2015, respectively. These loans are net of reserves and charge-offs of $32.0
million and $8.5 million included in the Company's allowance for credit losses at December 31, 2016 and December 31, 2015,
respectively.
The Company did not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring
basis during the years ended December 31, 2016, 2015 and 2014.
Fair value option
The Company has elected the fair value option for certain originated residential mortgage loans held for sale, which allows for
a more effective offset of the changes in fair values of the loans and the derivative instruments used to hedge them without the
burden of complying with the requirements for hedge accounting. The Company has $12.7 million of mortgage loans held for
investment for which the fair value option was elected upon origination and continue to be accounted for at fair value.
The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for
mortgage loans held for sale measured at fair value:
(Dollars in thousands)
Mortgage loans held for sale, at fair value
December 31, 2016
December 31, 2015
Aggregate
Fair Value
$ 157,041
Aggregate
Unpaid
Principal
$ 153,801
Aggregate
Fair Value
Less Unpaid
Principal
$
3,240
Aggregate
Fair Value
$ 166,247
Aggregate
Unpaid
Principal
$ 161,083
Aggregate
Fair Value
Less Unpaid
Principal
$
5,164
Interest income on mortgage loans held for sale is recognized based on contractual rates and is reflected in interest income on
loans held for sale in the consolidated statements of comprehensive income. Net gains (losses) resulting from the change in fair
value of these loans that were recorded in mortgage income in the consolidated statements of comprehensive income totaled
$2.1 million and ($1.0 million) for the years ended December 31, 2016 and 2015, respectively. The changes in fair value are
mostly offset by economic hedging activities, with an insignificant portion of these changes attributable to changes in
instrument-specific credit risk.
(cid:20)(cid:22)(cid:23)
NOTE 21 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of a financial instrument is the current amount that would be exchanged between willing parties, other
than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there
are no quoted market prices for the Company’s various financial instruments. In cases where 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. Accordingly, the
fair value estimates may not be realized in an immediate settlement of the instrument. ASC Topic 825, Financial Instruments,
excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Consequently, the
aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
The carrying amount and estimated fair values, as well as the level within the fair value hierarchy, of the Company’s financial
instruments are included in the tables below. See Note 1, Summary of Significant Accounting Policies, for a description of how
fair value measurements are determined.
(Dollars in thousands)
Financial Assets
December 31, 2016
Carrying
Amount
Fair Value
Level 1
Level 2
Level 3
Cash and cash equivalents
$ 1,362,126
$ 1,362,126
$ 1,362,126
$
— $
3,535,313
3,536,029
— 3,536,029
—
—
Investment securities
Loans and loans held for sale, net of
unearned income and allowance for loan
losses
FDIC loss share receivables
Derivative instruments
Financial Liabilities
Deposits
Short-term borrowings
Long-term debt
Derivative instruments
(Dollars in thousands)
Financial Assets
15,077,293
15,066,055
—
38,886
—
38,886
—
—
—
157,041
14,909,014
—
38,886
—
—
$ 17,408,283
$ 16,762,475
$
— $
— $ 16,762,475
509,136
628,953
30,209
509,136
617,656
30,209
334,136
175,000
—
—
—
—
617,656
30,209
—
Carrying
Amount
Fair Value
Level 1
Level 2
Level 3
December 31, 2015
Cash and cash equivalents
$
510,267
$
510,267
$
510,267
$
— $
Investment securities
2,899,214
2,901,247
— 2,901,247
—
—
Loans and loans held for sale, net of
unearned income and allowance for loan
losses
FDIC loss share receivables
Derivative instruments
14,355,297
14,674,749
39,878
30,486
9,163
30,486
—
—
—
166,247
14,508,502
—
30,486
9,163
—
Financial Liabilities
Deposits
Short-term borrowings
Long-term debt
Derivative instruments
$ 16,178,748
$ 15,696,245
$
— $
— $ 15,696,245
326,617
340,447
25,002
326,617
309,847
25,002
216,617
110,000
—
—
—
—
309,847
25,002
—
The fair value estimates presented herein are based upon pertinent information available to management as of December 31,
2016 and 2015. Although management is not aware of any factors that would significantly affect the estimated fair value
amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and,
therefore, current estimates of fair value may differ significantly from the amounts presented herein.
(cid:20)(cid:22)(cid:24)
NOTE 22 – RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company may execute transactions with various related parties. These transactions are
consummated at terms equivalent to the prevailing market rates and terms at the time. Examples of such transactions may
include lending or deposit arrangements, transfers of financial assets, services for administrative support, and other
miscellaneous items.
The Company has granted loans to executive officers and directors and their affiliates. These loans, including the related
principal additions, principal payments, and unfunded commitments are not material to the consolidated financial statements at
December 31, 2016 and 2015. None of the related party loans were classified as non-accrual, past due, troubled debt
restructurings, or potential problem loans at December 31, 2016 and 2015, with the exception of the loan discussed below.
IBERIABANK and several other financial institutions have extended credit (the “Credit Facility”) under a multi-bank
syndicated credit facility to Stone Energy Corporation (the “Borrower"). One of the Company’s directors, David H. Welch, is
the Chairman, President and Chief Executive Officer of the Borrower. IBERIABANK holds approximately 6 percent of the
total commitments from twelve banks under the Credit Facility. On December 14, 2016, the Borrower filed for Chapter 11
Bankruptcy with the U.S. Bankruptcy Court in the Southern District of Texas. At the time of the filing, $341.5 million was
outstanding under the Credit Facility. Of this amount, approximately $20.3 million was outstanding and due to IBERIABANK.
At December 31, 2016 and as of the date of this Report, the outstanding amount due IBERIABANK under the Credit Facility
remained on non-accrual status. On February 15, 2017, Borrower’s Second Amended Joint Prepackaged Plan of
Reorganization (the “Plan”) was approved by the U.S. Bankruptcy Court. Pursuant to the Plan, banks under the Credit Facility
are to be allowed a claim in the aggregate principal amount of $341.5 million, which was the principal amount outstanding
under the Credit Facility at the time of the bankruptcy filing. The Plan further provides that banks under the Credit Facility are
to receive, on account of their prepetition claims, (i) their respective pro rata share of commitments and obligations owing with
respect to outstanding loans under a new 4-year Reserve Based Lending Facility (the “Exit Facility”), and (ii) their respective
pro rata share of prepetition cash as a partial repayment of such outstanding loans subject to re-borrowing to the extent
permitted and pursuant to the terms of the Exit Facility held by such banks. As proposed under the Plan, the Exit Facility will
differ from the Credit Facility with respect to the size of the facility and in certain other areas. These differences include, but
are not limited to (i) a reduction in the facility size to $200 million, (ii) a reduction in the borrowing base from $360 million to
$200 million, and (iii) both the facility size and borrowing base being subject to further, ratable, reduction in the event of
certain other occurrences. Definitive agreements with respect to the Exit Facility have yet to be finalized and so we are unable
to provide further information regarding the Exit Facility at this time. As confirmed, the Plan proposes a full recovery to the
banks under the Credit Facility of their prepetition claims, including IBERIABANK’s prepetition claim of approximately $20.3
million.
Deposits from related parties held by the Company were not material at December 31, 2016 and 2015.
NOTE 23 – BUSINESS SEGMENTS
Each of the Company’s reportable operating segments serves the specific needs of the Company’s customers based on the
products and services it offers. The reportable segments are based upon those revenue-producing components for which
separate financial information is produced internally and primarily reflect the manner in which resources are allocated and
performance is assessed. Further, the reportable operating segments are also determined based on the quantitative thresholds
prescribed within ASC Topic 280, Segment Reporting, and consideration of the usefulness of the information to the users of the
consolidated financial statements.
The Company reports the results of its operations through three reportable segments: IBERIABANK, IMC, and LTC. The
IBERIABANK segment represents the Company’s commercial and retail banking functions, including its lending, investment,
and deposit activities. IBERIABANK also includes the Company’s wealth management, capital markets, and other corporate
functions. The IMC segment represents the Company’s origination, funding, and subsequent sale of one-to-four family
residential mortgage loans. The LTC segment represents the Company’s title insurance and loan closing services.
Certain expenses not directly attributable to a specific reportable segment are allocated to segments based on pre-determined
methods that reflect utilization. Also within IBERIABANK are certain reconciling items that translate reportable segment
results into consolidated results. The following tables present certain information regarding our operations by reportable
segment, including a reconciliation of segment results to reported consolidated results for the periods presented. Reconciling
items between segment results and reported results include:
(cid:20)(cid:22)(cid:25)
• Elimination of interest income and interest expense representing interest earned by IBERIABANK on interest-bearing
checking accounts held by related companies, as well as the elimination of the related deposit balances at the
IBERIABANK segment;
• Elimination of investment in subsidiary balances on certain operating segments included in total and average segment
assets; and
• Elimination of intercompany due to and due from balances on certain operating segments that are included in total and
average segment assets.
(Dollars in thousands)
Interest and dividend income
Interest expense
Net interest income
Provision for loan losses
Mortgage income
Title revenue
Other non-interest income
Allocated expenses
Non-interest expense
Income before income tax expense
Income tax expense
Net income
Total loans and loans held for sale, net of unearned
income
Total assets
Total deposits
Average assets
(Dollars in thousands)
Interest and dividend income
Interest expense
Net interest income
Provision for loan losses
Mortgage income
Title revenue
Other non-interest income
Allocated expenses
Non-interest expense
Income before income tax expense
Income tax expense
Net income
Total loans and loans held for sale, net of unearned
income
Total assets
Total deposits
Average assets
Year Ended December 31, 2016
IMC
LTC
Consolidated
9,261
$
3,633
5,628
88
83,448
—
4
10,686
65,133
13,173
5,023
8,150
217,652
315,057
5,541
335,913
$
$
2
—
2
—
—
22,213
—
3,286
17,433
1,496
605
891
$
716,939
67,701
649,238
44,424
83,853
22,213
127,755
—
566,665
271,970
85,193
$
186,777
— $ 15,222,012
24,866
—
26,060
21,659,190
17,408,283
20,321,234
Year Ended December 31, 2015
IMC
LTC
Consolidated
7,062
$
2,878
4,184
—
79,696
—
(2)
12,036
57,784
14,058
5,581
8,477
188,012
256,888
4,917
230,819
$
$
3
—
3
—
—
22,837
(7)
4,217
17,363
1,253
507
746
$
646,858
59,100
587,758
30,908
80,662
22,837
116,894
—
570,305
206,938
64,094
$
142,844
— $ 14,493,675
27,095
—
25,671
19,504,068
16,178,748
18,402,706
IBERIABANK
707,676
$
$
64,068
643,608
44,336
405
—
127,751
(13,972)
484,099
257,301
79,565
$
$
$
177,736
$ 15,004,360
21,319,267
17,402,742
19,959,261
IBERIABANK
639,793
$
$
56,222
583,571
30,908
966
—
116,903
(16,253)
495,158
191,627
58,006
$
$
$
133,621
$ 14,305,663
19,220,085
16,173,831
18,146,216
(cid:20)(cid:22)(cid:26)
(Dollars in thousands)
Interest and dividend income
Interest expense
Net interest income
Provision for loan losses
Mortgage income
Title revenue
Other non-interest income
Allocated expenses
Non-interest expense
Income before income tax expense
Income tax expense
Net income
Total loans and loans held for sale, net of unearned
income
Total assets
Total deposits
Average assets
IBERIABANK
498,820
$
$
42,983
455,837
18,966
71
—
101,401
(11,602)
412,165
137,780
34,352
$
$
$
103,428
$ 11,415,973
15,537,731
12,515,329
14,430,768
Year Ended December 31, 2014
IMC
LTC
Consolidated
5,992
$
1,721
4,271
94
51,726
—
(61)
8,203
44,761
2,878
1,148
1,730
165,143
194,156
5,196
176,003
$
$
3
—
3
—
—
20,492
(1)
3,399
16,688
407
183
224
$
504,815
44,704
460,111
19,060
51,797
20,492
101,339
—
473,614
141,065
35,683
$
105,382
— $ 11,581,116
26,017
—
25,223
15,757,904
12,520,525
14,631,994
(cid:20)(cid:22)(cid:27)
NOTE 24 – CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS
Condensed financial statements of the Parent are shown below. The Parent has no significant operating activities.
Condensed Balance Sheets
(Dollars in thousands)
Assets
Cash in bank
Investments in subsidiaries
Other assets
Liabilities and Shareholders’ Equity
Liabilities
Shareholders’ equity
December 31
2016
2015
$
$
$
$
436,792
$
154,298
2,635,682
40,423
3,112,897
173,203
2,939,694
3,112,897
$
$
$
2,449,325
54,454
2,658,077
159,242
2,498,835
2,658,077
(Dollars in thousands)
Operating income
Condensed Statements of Income
Year Ended December 31
2016
2015
2014
Reimbursement of management expenses
$
65,104
$
Other income
Total operating income
Operating expenses
Interest expense
Salaries and employee benefits expense
Other expenses
Total operating expenses
829
65,933
3,948
45,623
19,566
69,137
Income (loss) before income tax benefit and increase in equity in
undistributed earnings of subsidiaries
Income tax expense (benefit)
Income (loss) before equity in undistributed earnings of subsidiaries
Equity in undistributed earnings of subsidiaries
Net Income
Preferred stock dividends
Net Income Available to Common Shareholders
(3,204)
530
(3,734)
190,511
186,777
(7,977)
178,800
$
$
59,255
(329)
58,926
3,393
41,689
17,492
62,574
(3,648)
800
(4,448)
147,292
142,844
—
142,844
$
46,433
437
46,870
3,224
31,981
14,576
49,781
(2,911)
(518)
(2,393)
107,775
105,382
—
105,382
$
(cid:20)(cid:22)(cid:28)
Condensed Statements of Cash Flows
Year Ended December 31
2016
2015
2014
$
186,777
$
142,844
$
105,382
98
(190,511)
14,523
—
(1,122)
12,417
22,182
—
—
—
(6,000)
(749)
(6,749)
(56,793)
(7,028)
6,899
(11,666)
279,242
55,285
1,122
267,061
282,494
154,298
436,792
$
416
(147,292)
13,906
(110)
(580)
82,105
91,289
(5,054)
12
(2)
5,000
—
(44)
(52,318)
—
1,915
—
—
76,812
580
26,989
118,234
36,064
154,298
$
595
(107,775)
11,985
—
(2,105)
(27,274)
(19,192)
4,783
—
(36)
(14,600)
—
(9,853)
(43,070)
—
7,966
—
—
—
2,105
(32,999)
(62,044)
98,108
36,064
(Dollars in thousands)
Cash Flow from Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Net income of subsidiaries
Share-based compensation cost
Gain on sale of assets
Tax benefit associated with share-based payment arrangements
Other operating activities, net
Net Cash Provided by (Used in) Operating Activities
Cash Flow from Investing Activities
Cash paid in excess of cash received for acquisitions
Proceeds from sale of premises and equipment
Purchases of premises and equipment
Return of capital from (Capital contributed to) subsidiary
Other investing activities, net
Net Cash (Used in) Investing Activities
Cash Flow from Financing Activities
Cash dividends paid on common stock
Cash dividends paid on preferred stock
Net share-based compensation stock transactions
Payments to repurchase common stock
Net proceeds from issuance of common stock
Net proceeds from issuance of preferred stock
Tax benefit associated with share-based payment arrangements
Net Cash Provided by (Used In) Financing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period
$
(cid:20)(cid:23)(cid:19)
C ORPORATE INFORMATION
142
Directors and Executive Officers
143
Presidents
144
Advisory Board Members
146
Corporate Information
147
Stock Information
141
Directors and Executive Officers
BOA RD OF DIR EC TORS
William H. Fenstermaker
Chairman of the Board, IBERIABANK Corporation;
Chairman and Chief Executive Officer,
C.H. Fenstermaker and Associates, Inc.
E. Stewart Shea III
Vice Chairman of the Board, IBERIABANK Corporation;
Private Investor
Elaine D. Abell
Attorney-at-Law;
President, Fountain Memorial Funeral Home and Cemetery
Harry V. Barton, Jr.
Owner of Barton Advisory Services, LLC
and Harry V. Barton CPA, LLC;
Registered Investment Advisor and Certified Public Accountant
Ernest P. Breaux, Jr.
Retired, Iberia Investment Group, L.L.C.,
Ernest P. Breaux Electrical, Inc.,
Equipment Tool Rental & Supply
Daryl G. Byrd
President and Chief Executive Officer,
IBERIABANK Corporation and IBERIABANK
John N. Casbon
Executive Vice President,
First American Title Insurance Company
Angus R. Cooper II
Chairman and Chief Executive Officer,
Cooper/T. Smith Corporation
John E. Koerner III
Managing Member,
Koerner Capital, L.L.C.
Rick E. Maples
Senior Advisor,
Stifel Financial Corporation
David H. Welch, Ph.D.
President and Chief Executive Officer,
Stone Energy Corporation
E XE CUT IVE OFFICERS
Daryl G. Byrd
President and Chief Executive Officer
Michael J. Brown
Vice Chairman,
Chief Operating Officer
Jefferson G. Parker
Vice Chairman,
Managing Director of Brokerage,
Trust, and Wealth Management
Elizabeth A. Ardoin
Senior Executive Vice President,
Director of Communications, Corporate Real Estate,
and Human Resources
John R. Davis
Senior Executive Vice President,
Director of Financial Strategy
Anthony J. Restel
Senior Executive Vice President,
Chief Financial Officer
J. Randolph Bryan
Executive Vice President,
Chief Risk Officer
Robert M. Kottler
Executive Vice President,
Director of Retail, Small Business, and Mortgage
H. Spurgeon Mackie, Jr.
Executive Vice President,
Chief Credit Officer
Robert B. Worley, Jr.
Executive Vice President,
Corporate Secretary and General Counsel
142 / ANNUAL REPORT 2016
STATE PRESIDENTS
Samuel L. Erwin
South Carolina
Karl E. Hoefer
Louisiana
Gregory A. King
Alabama
Susan A. Martinez
Florida
Greg K. Smithers
Arkansas and Tennessee
Mark W. Tipton
Georgia
Pete M. Yuan
Texas
Presidents
MAR KET PRE SID E NTS
Jennifer Brancaccio
Southeast Florida and Florida Keys
Ken R. Brown
Mobile, Alabama
W. Bryan Chapman
Energy Lending
Philip C. Earhart
Southwest Louisiana
Samuel L. Erwin
Greenville, South Carolina
David C. Gordley
Southwest Florida
Rodney L. Hall
Atlanta, Georgia
Abel Harding
North Florida
Hunter G. Hill
New Orleans, Louisiana
Paul E. Hutcheson, Jr.
Northeast Arkansas
James Phillip Jett, Jr.
Central Arkansas and
Northwest Arkansas
Carmen A. Jordan
Houston, Texas
Greg E. Kahmann
Northeast Louisiana and
Shreveport, Louisiana
Gregory A. King
Birmingham, Alabama
Daryl S. Kirkham
Dallas, Texas
Ben Marmande
Baton Rouge, Louisiana
Rick Pullum
Central Florida
Nathan Raines
Memphis, Tennessee
Michael J. Roth
Tampa Bay, Florida
Eric E. Sanders
Huntsville, Alabama
N. Jerome Vascocu, Jr.
Acadiana Region, Louisiana
IBE RIA BA NK M ORTGAGE COM PANY
William R. Edwards
President and Chief Executive Officer
LEND ERS TIT LE COMPAN Y
Beau J. Fast
President and Chief Executive Officer
IBER IA CAPI TAL PART NERS
Jefferson G. Parker
Managing Director of Brokerage, Trust, and Wealth Management
142 / ANNUAL REPORT 2016
143
Advisory Board Members
AL ABA MA
Gregory A. King
Alabama President
Birmingham
Gregory A. King
Market President
W. Charles Mayer III, Chairman
George W. Bradford
Philip A. Currie
Hewes Hull
J. Michael “Mike” Kemp, Sr.
Sandra “Sandy” R. Killion
Tricia Kirk
Steven “Steve” K. Mote
Michael A. Mouron
Margaret Ann Pyburn
Ed D. Robinson
Mobile
Ken R. Brown
Market President
Angus R. Cooper II, Chairman
M. Warren Butler
Scott Hall Cooper
Robert T. Cunningham III
Brooks C. DeLaney
Michael L. Lapeyrouse
Charles Hamilton “Ham” McGuire
S. Wesley Pipes V
Paige B. Plash
Haymes S. Snedeker
ARKANSAS
Greg K. Smithers
Arkansas President
Central Arkansas
James Phillip Jett, Jr.
Market President
Albert B. Braunfisch
Byron M. Eiseman, Jr.
Robert M. Head
Daniel “Dan” W. Rahn, M.D.
David E. Snowden, Jr.
Mark V. Williamson
Northeast Arkansas
Paul E. Hutcheson, Jr.
Market President
Ralph P. Baltz
N. Ray Campbell
Jack N. Harrington
Kaneaster Hodges, Jr.
Jennifer H. James
John M. Minor
Louise Runyan
Jeffrey Steven Rutledge
Brad F. Snider
FLORIDA
Susan A. Martinez
Florida President
Central Florida
Rick Pullum
Market President
Randy O. Burden, Chairman
Dennis L. Buhring
John O. Burden, Sr.
James P. Caruso
Steve Castino
Tracy S. Forrest
Leigh Ann Horton
Jason W. Searl
Douglas E. Starcher
Craig T. Ustler
Jacksonville
Abel Harding
Market President
Thomas “Tom” E. Gibbs, Chairman
Dane Grey
William “Tripp” Guilliford III
Gina Hill
Marty McCoy
Michael R. Munz
Charles B. Tomm
W. Hamilton Traylor
Southwest Florida
David C. Gordley
Market President
James “Jim” W. Moore, Chairman
Jay A. Brett
Kevin M. Burns
R. Ernest “Ernie” Hendry, D.D.S.
Lynn A. Kirby
Wayne R. Kirkwood
Stephen Machiz, M.D.
Howard E. Palen
F. John Reingardt
Trudi K. Williams
Tampa Bay
Michael J. Roth
Market President
N. Troy Fowler
Lewis S. Lee, Jr.
Robert Rothman
144 / ANNUAL REPORT 2016
GE ORG IA
Mark W. Tipton
Georgia President
Atlanta
Rodney L. Hall
Market President
Mark B. Chandler
Harald R. Hansen
H. C. “Buddy” Henry, Jr.
Richard “Rich” S. Novack
Gregory “Greg” S. Pope
Donal Ratigan
Mark C. West
Anthony L.“Lee” Wood, Jr.
LOU ISI AN A
Karl E. Hoefer
Louisiana President
Acadiana Region
N. Jerome Vascocu, Jr.
Market President
Lafayette
Elaine D. Abell, Chairperson
Bennett Boyd Anderson, Jr.
Charles Theodore “Ted” Beaullieu, Sr.
Edward F. Breaux, M.D.
James A. Caillier, Ed.D.
Richard D. Chappuis, Jr.
Todd G. Citron
Thomas J. Cox
Blake R. David
James “Jim” M. Doyle
Lester J. “Joey” Durel, Jr.
Bryan Evans
Charles T. Goodson
W. J. “Tony” Gordon III
Edward J. “E.J.” Krampe III
Frank X. Neuner, Jr.
Dwight “Bo” S. Ramsay
Gail S. Romero
Robert L. Wolfe, Jr.
New Iberia
Cecil C. Broussard, Co-Chairman
E. Stewart Shea III, Co-Chairman
Taylor Barras
John L. Beyt III, D.D.S.
Caroline C. Boudreaux
Martha B. Brown
Donelson “Don” T. Caffery, Jr.
J. L. Chauvin
George B. Cousin, M.D.
David D. Daly
J. David Duplantis
Ernest Freyou
Henry L. Friedman
Cecil A. Hymel II
Thomas “Tom” F. Kramer, M.D.
Edward P. Landry
Thomas R. Leblanc, Sr.
Patrick O. Little
John Jeffrey “Jeff” Simon
Baton Rouge
Ben Marmande
Market President
John H. Bateman
Beau J. Box
Teri G. Fontenot
John Paul Funes
Rhaoul Guillaume, Sr.
John C. Hamilton
G. Michael Hollingsworth
Robert B. McCall III
C. Brent McCoy
Julio A. Melara
Matthew L. Mullins
Eugene H. Owen
Stanley E. Peters, Jr., M.D.
Michael A. Polito
O. Miles Pollard, Jr.
Matthew C. Saurage
William S. Slaughter III
J. Shawn Usher
New Orleans
Hunter G. Hill
Market President
John N. Casbon, Co-Chairman
John E. Koerner III, Co-Chairman
Coleman E. Adler II
W. Thomas Allen
John D’Arcy Becker
Darryl D. Berger
Scott M. Bohn
Christian T. Brown
John D. Charbonnet
David T. Darragh
Cindy Brennan Davis
James P. Favrot
Paul H. Flower
Ruth “Ruthie” J. Frierson
Howard C. Gaines
John D. Georges
William F. Grace, Jr.
Gordon H. Kolb, Jr.
John “Jack” P. Laborde
William H. Langenstein III
Patricia “Pat” S. LeBlanc
E. Archie Manning III
Frank M. Maselli
Michael J. McNulty III
William M. Metcalf, Jr.
Jefferson G. Parker
R. Hunter Pierson, Jr.
Patrick J. Quinlan, M.D.
J. C. Rathborne
Anthony Recasner, Ph.D.
James J. Reiss, Jr.
William Henry Shane
J. Benton Smallpage, Jr.
Robert M. Steeg
John “Jack” F. Stumpf, Jr.
Stephen F. Stumpf
Carroll W. Suggs
Phyllis M. Taylor
Ben B. Tiller
Steven W. Usdin
Northeast Louisiana
Greg E. Kahmann
Market President
Malcolm E. Maddox, Chairman
Mary C. Biggs
Danny R. Graham
W. Bruce Hanks
Linda Singler Holyfield
Tex R. Kilpatrick
Charles Marsala, Jr.
Joe E. Mitcham, Jr.
Virgil Orr, Ph.D.
Cindy J. Rogers
Jerry W. Thomas
Shreveport
Greg E. Kahmann
Market President
Carlton Murray, Chairman
Harry L. Avant
Chris Campbell
Michael O. Fleming, M.D.
Frank Hood Goldsberry
Raymond J. Lasseigne
Kevin O’Brien Long
C. Scott Massey
Robert M. Mills
Roland B. Ricou
W. Harrison Smith
Southwest Louisiana
Philip C. Earhart
Market President
Kay C. Barnett
Kendall “Ken” Broussard
Keith F. DeSonier, M.D.
Douglas “Doug” B. Gehrig
Mary Shaddock Jones
Jonathan “Jon” P. Manns
Benjamin “Ben” E. Marriner
William “Bill” B. Monk
Oliver G. “Rick” Richard III
Thomas “Tom” B. Shearman III
145
Marshall J. Simien, Jr.
William Gray Stream
Philip C. “Corey” Tarver
T EN NE SS EE
Greg K. Smithers
Tennessee President
Memphis
Nathan Raines
Market President
J. Scott Fountain
James W. Gibson II
Sally Jones Heinz
Joel Kimbrough
R. Michael Kiser
McNeal McDonnell
Philip H. Trenary
T EXAS
Pete M. Yuan
Texas President
Dallas
Daryl S. Kirkham
Market President
Daniel H. Chapman, Chairman
Stephen S. Eppig
Terry Kelley
John W. Peavy III, Ph.D.
Ana L. Rodriguez
Houston
Carmen A. Jordan
Market President
James “Jim” Lykes, Chairman
Bethany Andell
Margaret Barradas
Dan Braun
David L. Ducote
Michael R. Dumas
Joseph Edmonds, M.D.
Stuart Goldman
Russell “Rusty” Hardin
Kennard McGuire
H. Benjamin “Ben” Samuels
Scott Sanders
Fredrick “Rick” Smith
David Y. Stutts
Todd P. Sullivan
Jerold “Jerry” Winograd
Ken Yang
Segev Zadok
C ORPORATE INFORMATION
CO RPORAT E HE ADQ UARTERS
IBERIABANK Corporation
200 West Congress Street
Lafayette, LA 70501
337.521.4012
CO RPORAT E MA ILIN G ADDR ES S
P.O. Box 52747
Lafayette, LA 70505-2747
ANNUAL M EE T IN G
IBERIABANK Corporation Annual Meeting of Shareholders
will be held on Tuesday, May 9, 2017 at 4:00 p.m., local
time, at the Windsor Court Hotel, located at 300 Gravier
Street, New Orleans, Louisiana.
DIVIDE ND R EI N VESTMEN T P LA N
IBERIABANK Corporation shareholders may take advantage
of our Dividend Reinvestment Plan. This program provides
a convenient, economical way for shareholders to increase
their holdings of the Company’s common stock. The
shareholder pays no brokerage commissions or service
charges while participating in the plan. A nominal fee
is charged at the time that an individual terminates plan
participation. This plan does not currently offer participants
the ability to purchase additional shares with optional cash
payments.
INTERNET ADDRESSES
www.iberiabank.com
www.iberiabankmortgage.com
www.iberiabankcreditcards.com
www.lenderstitlegroup.com
www.utla.com
www.lenderstitle.com
SHAREHOLDER ASSISTANCE
Shareholders requesting a change of address, records, or
information about the Dividend Reinvestment Plan or lost
certificates should contact:
Computershare
P.O. Box 30170
College Station, TX 77842-3170
800.368.5948
www.computershare.com/investor
in
the
IBERIABANK Corporation Dividend
To enroll
Reinvestment Plan, shareholders must complete an
enrollment form. A summary of the plan and enrollment
forms are available from Computershare at the address
provided under Shareholder Assistance.
FOR INF OR MAT IO N
Copies of the Company’s Annual Report on Form 10-K, including financial statements and financial statement schedules, will be
furnished to Shareholders without cost by sending a written request to Robert B. Worley, Jr., Secretary, IBERIABANK Corporation,
601 Poydras Street, 21st Floor, New Orleans, Louisiana 70130. This and other information regarding IBERIABANK Corporation
and its subsidiaries may be accessed from our websites.
In addition, shareholders may contact:
Daryl G. Byrd, President and CEO
337.521.4003
John R. Davis, Senior Executive Vice President
337.521.4005
146 / ANNUAL REPORT 2016
STOCK INFORMATION
As of January 31, 2017,
IBERIABANK Corporation had
approximately 2,710 shareholders of record. This total does not
reflect shares held in nominee or “street name” accounts through
various firms. The tables to the right are a summary of regular
quarterly cash dividends and market prices for the Company’s
common stock in the last two years. These market prices do not
reflect retail markups, markdowns, or commissions.
SECU RIT IE S L ISTIN G
IBERIABANK Corporation’s common stock trades on the NASDAQ
Global Select Market under the symbol “IBKC.” In local and
national newspapers, the Company is listed under “IBERIABANK.”
The Company’s Series B Preferred Stock and Series C Preferred
Stock trade on the NASDAQ Global Select market under the
symbols “IBKCP” and “IBKCO,” respectively.
2016
Dividends
High Low Closing Declared
Market Price
First Quarter
$54.60 $42.20 $51.27 $0.34
Second Quarter
$63.73 $47.87 $59.73 $0.34
Third Quarter
Fourth Quarter
$69.93 $56.28 $67.12 $0.36
$91.10 $62.66 $83.75 $0.36
2015
Market Price
Dividends
High Low Closing Declared
First Quarter
Second Quarter
$65.45 $54.34 $63.03 $0.34
$71.21 $61.13 $68.23 $0.34
Third Quarter
$69.99 $56.63 $58.21 $0.34
Fourth Quarter
$65.38 $52.27 $55.07 $0.34
DIVI DE ND R ESTR I CTIO NS
The majority of the Company’s revenue is from dividends declared
and paid to the Company by its subsidiary, IBERIABANK, which is
subject to laws and regulations that limit the amount of dividends
and other distributions it can pay. In addition, the Company and IBERIABANK are required to maintain capital at or above regulatory
minimums and to remain “well-capitalized” under prompt corrective action regulations. The declaration and payment of dividends
on the Company’s capital stock also are subject to contractual restrictions. While the Company has Series B Preferred Stock and
Series C Preferred Stock outstanding, the Company may not declare and pay a dividend on its common stock unless dividends on
all such outstanding preferred stock have been declared and paid in full or declared and a sum sufficient for the payment of those
dividends has been set aside. See Long-Term Debt (Note 14) and Shareholder’s Equity, Capital Ratios and Other Regulatory Matters
(Note 16) to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Result
of Operations – Funding Sources – Long-term Debt, for additional information.
TOTA L RE TURN P ERFO RM ANCE
TOTA L RETU RN PER FORMANCE
STOCK PERFORMANCE GRAPH
The graph and table shown here, which
were prepared by SNL Financial LC (“SNL”),
compares the cumulative total return on
our Common Stock over a measurement
period beginning December 31, 2011
with (i) the cumulative total return on the
stocks included in the National Association
of Securities Dealers,
Inc. Automated
Quotation (“NASDAQ”) Composite Index
and (ii) the cumulative total return on the
stocks included in the SNL greater than $10
Billion Bank Index. All of these cumulative
returns are computed assuming the quarterly
reinvestment of dividends paid during the
applicable period.
Source : SNL Financial, an offering of S&P Global Market Intelligence ©2017
147
200 West Congress Street
Lafayette, Louisiana 70501
337.521.4012
www.iberiabank.com