I S Y O U R S T O R Y
A N N U A L R E P O R T 2 0 1 8
Financial Highlights
For the Year Ending December 31,
(Dollars in thousands, except per share data)
2018 2017 % Change
Income Data
Net Interest Income
Net Interest Income (TE) (1)
Net Income
Income Available to Common Shareholders—Basic
Earnings Allocated to Common Shareholders
Per Share Data
Earnings Per Common Share—Basic
Earnings Per Common Share—Diluted
Book Value Per Common Share (6)
Tangible Book Value Per Common Share (Non-GAAP) (2) (5) (6)
Cash Dividends
Number of Shares Outstanding
Basic Shares (Average)
Diluted Shares (Average)
Book Value Shares (Period-End)
$1,013,248 $808,846
819,154
142,413
133,318
132,108
1,019,008
370,249
361,154
357,571
25%
24%
160%
171%
171%
$6.50
6.46
71.61
47.61
1.56
$2.61
2.59
66.17
42.56
1.46
149%
149%
8%
12%
7%
55,008 50,640
55,360 50,992
53,872
54,796
9%
9%
2%
Key Ratios (7)
Return on Average Assets
Return on Average Common Equity
Return on Average Tangible Common Equity (Non-GAAP) (2) (5)
Net Interest Margin (TE) (1) (8)
Efficiency Ratio (3)
Tangible Efficiency Ratio (TE) (Non-GAAP) (1) (2) (3) (5)
Average Loans to Average Deposits
Non-performing Assets to Total Assets (4)
Allowance for Credit Losses to Total Loans
Net Charge-offs to Average Loans and Leases
Average Equity to Average Total Assets
Tier 1 Leverage Ratio
Common Stock Dividend Payout Ratio
Tangible Common Equity Ratio (Non-GAAP) (2) (5)
Tangible Common Equity to Risk-Weighted Assets (Non-GAAP) (2) (5)
1.25%
9.63%
15.48%
3.75%
62.01%
59.77%
94.4%
0.55%
0.69%
0.15%
13.13%
9.63%
24.18%
8.84%
10.43%
0.58%
3.95%
5.85%
3.64%
65.92%
63.85%
90.5%
0.64%
0.77%
0.33%
14.33%
9.35%
57.47%
8.61%
10.20%
(1) Fully taxable equivalent ("TE") calculations include the tax benefit associated with related income sources that are tax-exempt using a rate of 21% for 2018 and a rate of 35% for 2017.
(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 loans and assets include accruing loans 90 days or more past due. Non-performing loans 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.
(5) See Table 29 of Management's Discussion and Analysis of Financial Condition and Results of Operations for GAAP to Non-GAAP reconciliations.
(6) Shares used for book value purposes are net of shares held in treasury at the end of 2014.
(7) With the exception of end-of-period ratios, all ratios are based on average daily balances during the respective periods.
(8) 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 earning assets.
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; E. Stewart Shea III; and Rosa Sugrañes.
IBERIABANK Corporation is a financial holding company with total consolidated assets at December 31, 2018, of $30.8 billion. IBERIABANK Corporation
and its predecessor organizations have served clients for 132 years. The Corporation’s subsidiaries include IBERIABANK, Lenders Title Company, IBERIA
Capital Partners LLC, 1887 Leasing, LLC, IBERIA Asset Management, Inc., and IBERIA CDE, LLC.
I S Y O U R S T O R Y
The year 2018 was an important part of our 132-year journey. We were intensely focused on exceeding our
goals, which resulted in superior earnings and enhanced profitability for our shareholders.
As defined by our Mission Statement, our core responsibilities are to provide our associates a dynamic place to
work, to help our clients achieve their personal and professional goals, to ensure our communities thrive, and to
deliver outstanding results to our shareholders. We take those responsibilities very seriously each and every day.
Mission Statement
• Provide exceptional value-based client service
• Great place to work
• Growth that is consistent with high performance
• Shareholder-focused
• Strong sense of community
Our high-performance growth story is comprised of the relationships we have with our associates, clients,
communities, and shareholders. We hope you enjoy a glimpse into just a few of the extraordinary partnerships
we have with our clients on the following pages. It is our privilege to be a part of their stories of success.
Contents
2 President’s Letter To Shareholders
7 Chairman’s Letter To Shareholders
9 Client Testimonials
18 Financials
143 Corporate Information
RECORD EARNINGS PER SHARE
Core EPS
Reported EPS
President's Letter
to Shareholders
2008
2013 2018
IMPROVED PROFITABILITY
Core Adjustment
Reported ROA
Dear Shareholders,
The year 2018 was a great year. In fact, it was one of our best.
We achieved our goals for the year in delivering superior earnings and
enhanced profitability. Despite competitive headwinds and market
changes, we delivered above-market loan and deposit growth with
ever strengthening asset quality based on high-quality client selection.
Over the past several years, the Company has made substantial
investments in our organization as we have grown to become a
significant regional banking franchise in the Southeastern United
States. These investments are paying dividends as we continue to
produce high-quality earnings, steady balance sheet growth, and
increased product and services offerings, while maintaining excellent
credit quality.
In April 2018, we established and announced our 2020 Strategic
Goals, providing a framework from which to measure the Company’s
performance over the next several years. Improving the Company’s
financial results, growing earnings, and increasing efficiencies are
targets that can only be achieved by focusing on the details of
everyday banking decisions. By attracting and retaining high-quality
clients through best-in-class service in an efficient operating model,
we continue to produce sustainable and profitable growth for our
business and increased value for all of our stakeholders.
2020 STRATEGIC GOALS
2018
2008 2013 2018
2013
2008
2020 Goal
2018
STRONG RETURNS ON
TANGIBLE COMMON EQUITY
Core and Intangible
Adjustment
Reported ROACE
Core EPS Growth
>10%
Core Return On Average Assets
>1.30%
Core Return On Average Tangible
>15%
28%
1.30%
16.0%
Common Equity
Core Tangible Efficiency Ratio
<55%
53.8%
Roughly one year into our goals, we are very happy to have attained
these metrics for the full-year 2018 and for the last three consecutive
quarters of the year. Achieving these marks was the product of hard
work and dedication by all of our over 3,400 associates, and we know
that the real goal is to sustain this level of excellence as we continue
to grow our business in the future.
In March 2018, we completed our acquisition of Gibraltar Private
Bank & Trust, Co., a $1.6 billion asset bank based in Miami, Florida.
2018
2008 2013 2018
2013
2008
| 2 |
TOTAL LOANS
2008
2008
2013
2013
2018
2018
$ in billions
TOTAL DEPOSITS
Non-Interest Bearing
Interest Bearing
2008
2008
20132013
20182018
$ in billions
Announced in October 2017, both the transaction closing and the
branch and operating systems conversions took place in late March.
This move further solidified our position in the Southeast Florida market
and provided not only an increase in our loan and deposit bases in the
market, but also enhanced our wealth management platform.
As we have made other investments in South Florida in recent years, the
combination with Gibraltar provided us another point of leverage in an
ever-growing and important market. The transaction itself is one of our
most successful acquisitions to date as we have realized our financial
targets, outperformed in terms of gaining efficiencies, and have been
able to welcome new clients with excellent credit quality and future
growth potential.
GROWTH IN ASSETS
20082008
20132013
20182018
$ in billions
In 2018, our Company continued to focus on improving efficiencies and
operating leverage resulting in significantly enhanced profitability on
both a GAAP and Core basis.
• Grew assets, loans, and deposits by 10%, 12%, and 11%,
respectively.
• Reported GAAP and Core earnings per share increased 101% and
28%, respectively, as compared to 2017 and adjusted for the
impact of lower corporate tax rate due to the Tax Reform and Jobs
Act enacted in December 2017.
| 3 |
IMPROVING NET INTEREST MARGIN
et Interest Margin
Net Interest Margin
et Interest Margin (TE)
Net Interest Margin (TE)
Net Interest Margin - Cash Basis
et Interest Margin - Cash Basis
2008
2013
2018
$ in millions
STRONG CREDIT QUALITY
NPAs/Assets
2008 2013 2018
GAINING EFFICIENCIES
Core Tangible
Efficiency Ratio %
Efficiency Ratio %
• Income available to common shareholders of $361 million, an increase
of 171% for the year. Return on average assets of 1.30% and return on
average tangible common equity of 16.01%.
• Net interest income for the year was in excess of $1 billion with
the year’s net-interest margin equal to 3.75% and cash net interest
margin equal to 3.48%, an increase of 11 and 15 basis points,
respectively. Core revenues for the year were over $1.2 billion, an over
20% increase for the year.
We are pleased to continue to grow and deliver record results while not only
maintaining, but improving, our already stellar asset quality metrics. Our
teams of associates are well versed in assessing portfolio risk and bring to
each decision our conservative credit culture that is the foundation of our
lending businesses. The Company continues to focus on growth in markets
throughout the Southeast that we know well, have experience working in,
and that provide access to the right clients. By recruiting top talent and
delivering best-in-class service to our clients, we are well-positioned to
continue to grow our business.
• Improved already excellent asset quality measures, ending the year with
NPAs/Assets of 0.55% (a 9 basis points improvement), NCOs Average
Loans of 0.15% (an 18 basis points improvement), and Classified Loans/
Total Loans of 1.21% (an 80 basis points improvement). At year-end,
Classified Assets/Total Assets was less than 1%. A strong balance sheet
and excellent asset quality have always been strengths of our Company.
We consolidated operations and closed 38 branches, streamlined processes
to enhance our client experience, and invested in innovative technology, such
as new online and mobile platforms to meet clients’ increasing demands. At
year-end 2018, we operated 191 bank branches in 10 states.
• Revenues grew at a faster pace than expenses increased, thereby
increasing operating leverage and improving efficiency. Core tangible
efficiency ratio was 53.75% for 2018 and less than 51% in the fourth
quarter of 2018.
Our capital base is strong. As we have achieved record annual earnings in
2018 and for the last three consecutive quarters of the year, we have fortified
our equity base while continuing to manage our capital in the best interests
of shareholders. During the year, we increased the annual dividends paid on
common stock from $1.46 per share in 2017 to $1.56 per share in 2018, a 7%
increase in dividends per share and a 14% increase in total dividends paid
year-over-year. Our common dividend payout ratio for the year was 24%
in 2018. We have now paid a quarterly dividend to common shareholders
for the past 95 consecutive quarters and have not suspended or missed
any dividend, common or preferred, since our IPO and initial dividend
declaration in 1995.
The Company was also active repurchasing shares of our common stock in
2018. As the year began, stocks traded near share price highs and declined
throughout the year as the market for most industries and banking institutions
moved toward share price lows. We were no exception. The stock market
- bank stocks in particular - were impacted by disruptions and uncertainties
in the financial markets, which we believed provided an opportunity to buy
back shares in the open market at favorable prices. During the year, we
purchased almost two million of our common shares at a weighted average
price of $75.46 per share, or almost $149 million in total.
2008
2013
2018
| 4 |
LOANS BY STATE
DEPOSITS BY STATE
• Through a combination of common dividends and share
repurchases, we returned approximately 65% of earnings to
shareholders, while maintaining and exceeding our optimal capital
level targets.
It’s been 10 years since the start of the financial crisis. Proving out the
value of a diversified franchise, we powered through this challenging
cycle with fewer issues than many peers. While some markets were hit
early in the cycle, many continued to perform on all cylinders giving us
the ability to continue to create value for our shareholders.
A DECADE OF GROWTH
2008
2018
CAGR %
Assets (Bns)
Loans (Bns)
Deposits (Bns)
Market Cap (Bns)
Net Income (Mms)
$
$
$
$
$
5.6
3.8
4.0
0.8
39.9
$ 30.8
$ 22.5
$ 23.8
$
3.6
$ 370.2
19%
20%
20%
17%
25%
Commitment to our mission has never been stronger. We strive every
day to provide our associates, clients, and communities access to
opportunities. We pledge to attract, develop, and retain a diverse
workforce at all levels of our organization and have made good strides,
hiring a Chief Diversity Officer who is squarely focused on enhancing our
efforts. We believe that inclusive, high-performing teams empower our
associates to continually grow, be disciplined in execution, and deliver
maximum value to our shareholders.
Finally, I am so proud of the sincere and heartfelt effort our team makes to
care for our neighbors and neighborhoods, which was demonstrated by
the more than 15,000 hours our team invested in our communities during
the year. We continue to fulfill our commitment to improve the lives of
individuals, businesses, and the broader community through a record
number of mortgage grants, community development investments, and
community development loans.
Throughout our 132-year story, we’ve enjoyed many successes and
weathered countless storms. Through each of those experiences, we’ve
remained true to our brand of integrity and quality. The year 2018 is
now a part of our history that lays the groundwork for our future. Our
story is composed of the lives of our associates, our efforts to help our
clients succeed personally and professionally, the concern and care we
show for our communities, and the stellar results we strive to deliver to
our shareholders. Our story is your story. We are proud of our story of
strength and performance, and we thank you for being a part of it.
Sincerely,
Daryl G. Byrd
President and Chief Executive Officer
Notes: 'Other' market includes - Mortgage, Lenders Title,
Credit Card, and Other
| 5 |
Our Locations
Locations as of 12/31/18
Associates
3,441
Offices
329
Branches
191
States
12
| 6 |
Chairman's Letter
to Shareholders
Dear Shareholders,
On behalf of your Board of Directors, it is once again my pleasure to provide shareholders an update on your
Company. We had a very active and successful year, growing the franchise through acquisition and organic
means to over $30 billion in total assets, further solidifying our position as a significant regional banking
institution in the Southeast. We are very proud of our team for delivering record operating results for the
year.
Your Board of Directors is committed to the success of your Company. Throughout the year, we focused on
providing guidance and oversight and analyzing industry and economic trends. We remain actively engaged
in establishing performance expectations, setting compensation targets, analyzing risk, reviewing and
approving financial budgets, and monitoring performance. The current banking environment is complex and
ever-changing, and your Board is actively engaged in your Company’s success.
During 2018, the Board declared and paid $87 million in total common stock dividends and $9 million in total
dividends on our Series B and C preferred shares. We approved increases to our dividend on common stock
for the fourth year in a row and three times during the year. For the year 2018, our common share price traded
in a range between a high of $87.00 in late January to a low of $61.50 in late December. Over 95 million
shares were traded throughout the year, with an average daily trading volume of almost 380,000 shares at
a weighted-average price of $78.20 per share. We ended 2018 at $64.28 per share, approximately 17%
below the start of the year. Several factors impacted our stock price that had very little to do with our core
fundamentals, including slower economic growth forecasts, international weakness in certain economies,
increased tariffs on goods and services, rising political tensions, and the longest government shutdown in
history.
As our share price declined to what we believed to be discounted prices, management and the Board of
Directors took action to invest in an excellent financial opportunity and to repurchase shares of IBERIABANK
common stock throughout the year. In May, we authorized our 10th share repurchase plan for an estimated 2%
of outstanding common shares. As management was active in buybacks, we authorized another repurchase
plan in November, our 11th, of up to 5% of common shares outstanding.
Your management team continues to work diligently to enhance the Company’s performance, provide
detailed and transparent communication to investors, and enhance our shareholders' value. 2018 was a
record year in terms of financial performance at the same time the Company’s credit quality metrics improved
significantly, from already strong levels. High-quality results, a highly efficient company, and outstanding
credit quality metrics provide an excellent score card for our Company, capping off a terrific year.
As always, our Board of Directors believes that our shareholders are best served by focusing on long-term
value creation and sound management practices. Since bringing in current management in 1999, our shares
have outperformed most peers and market indices. As we saw this year, and I mentioned earlier, short-term
market volatility can significantly mask long-term value creation.
| 7 |
Since 1999, total shareholder return for our common shares, including reinvestment of dividends, is 821%,
or a 12% compounded annual rate of return. The table below provides a comparison of our Company’s
long-term performance to both peers and market indices.
Total
Shareholder
Return %
Compound
Annual
Growth %
IBKC
$20 - $50 Billion Peer Group
KBW Regional Bank Index
Nasdaq Bank Index
S&P Regional Bank Index
821%
449%
81%
201%
220%
12%
8%
3%
6%
6%
Source: Bloomberg, for the period of 12/31/1999 – 12/31/2018.
Total Shareholder Return includes reinvestment of dividends.
Every year I take this opportunity to recognize the 193 advisory board members who serve on our 19 advisory
boards across our franchise. Their commitment to our Company, personal time, and valued insight help us to
continue to serve our clients and communities well.
I want to welcome our newest Director, Rosa Sugrañes, who joined your Board during the year. A private
business owner originally from Spain and now a resident of Miami, Rosa brings extraordinary business
acumen, bank board experience, connectivity to South Florida, and a fresh perspective to our group.
During the year, we unexpectedly lost a very dear friend and valued Director, David Welch. David was an
extraordinary asset to your Board of Directors and Company for 13 years. He is so greatly missed.
Retired Director Miles Pollard also passed away during the year. Miles served on your Board of Directors from
2003 to 2016. He was the definition of a true gentleman and astute businessman. The world will truly not be
the same without him.
We also lost three outstanding advisory board members in 2018, Steve Stumpf from New Orleans, Tex
Kilpatrick from Monroe, Louisiana, and Phil Trenary from Memphis, Tennessee. We appreciate their generous
service to our Company.
Your Board of Directors remains dedicated to producing excellent performance and outstanding shareholder
returns. Sound management practices, the dedication of all associates, and rigorous oversight by your Board
continue to be the bedrock from which the Company enters 2019. We look forward to great things in the
year to come as I, and your Board of Directors, appreciate your continued support.
Sincerely,
William H. Fenstermaker
Chairman of the Board
| 8 |
Our Storyory
Booster
Boosting Success
As the Founder and President of Booster, I admire entrepreneurial and
creative thinkers. Our previous banking relationships never quite fit or allowed us
to grow like we knew we could. That all changed when we met IBERIABANK. As
elementary school fundraising experts, we love giving schools the results they
need through a remarkable “Fun Run” experience. Having innovative bankers on
the field catapulted our business to a whole new level, ultimately raising more
money for our schools.
Chris Carneal
Chris Carneal
Founder and CEO
Booster
Atlanta, Georgia
Headquartered in Atlanta,
Booster is a school
fundraising company on
a mission to change the
world. In cities nationwide,
Booster team members lead
their flagship program,
the Boosterthon Fun Run,
more than 3,000 times
per year. By making the
fundraising process
easier, more fun, and more
profitable, educators can
focus on what they do
best—educating the next
generation.
| 9 |
s ou Sto y
USTA
USTA Foundation, the
national charitable arm
of the United States Tennis
Association Incorporated
(USTA), brings together
the powerful combination
of tennis and education
to change lives of under-
resourced youth. USTAF
utilizes financial grants,
scholarship opportunities,
curricula, technical
assistance, and training to
make a lasting difference,
and with a primary
focus to develop and
ensure the sustainability
and effectiveness of the
National Junior Tennis &
Learning (NJTL) network.
A Perfect Match
The USTA Foundation is focused on strengthening grassroots tennis and education
programs in the Southern region of the United States, and IBERIABANK is a key
partner as we build the capacity of our National Junior Tennis & Learning chapters.
With IBERIABANK’s generous support, we are proud to provide quality programs
that lead to greater outcomes for under-resourced youth. The clear philanthropic
values of IBERIABANK certainly lead to an impactful investment in the community.
Daniel Faber
Daniel J. Faber
Executive Director
USTA Foundation
New York City, New York
| 10 |
Building Trust
The Meyers Group
is a privately
owned multi-family
and mixed-use
real estate firm
focused on strategic
investments, expert
development, quality
construction, and
comprehensive
property
management, and
concierge services.
Meyers Group,
LLC
IBERIABANK has clearly been amongst our most key relationships in the successful expansion of Meyers Group’s
real estate investment, development, and management business throughout Florida and West Texas. They have
shown us a true commitment and dedication across a broad spectrum of both our corporate and personal financial
needs, serving us as a most trusted financial resource.
Stuart Meyers
Stuart I. Meyers
Chairman and CEO
Meyers Group, LLC.
Coral Gables, Florida
| 11 |
Entrepreneurship is Always Brewing
Schilling Distributing
was founded in 1950
by Herbert E. Schilling
Sr. The first year
it distributed only
Budweiser in three
packages: 12-ounce
cans, 12-ounce bottles,
and quart bottles.
Anheuser-Busch was
their only supplier.
In 2019, Schilling
Distributing has 67
suppliers (36 beer, 16
non-alcoholic, and 15
wine and spirits). The
Company distributes
over 1,200 packages
from those suppliers.
Schilling
Distributing
Company
It has been an absolute pleasure to bank at IBERIABANK from the first day, eight years ago, when we switched banks.
The IBERIA team’s "Can-Do attitude and desire to please," are a joy to work with. They were able to address the daily
needs of our beverage distribution business with no problems. The administrative employees at Schilling have nothing
but praise for IBERIABANK!
I have been impressed with their ability to help me address all my latest and diverse business ventures. The diversification
includes iTA/Idealease which sells, rents, and leases trucks along with parts and service in Lafayette, Lake Charles, Slidell,
Harahan and Houma; and Acadiana Waste Services which is a garbage disposal company serving eight parishes in
Acadiana and in Beaumont, Texas and surrounding communities.
I truly appreciate the job the IBERIABANK team has done to help Schilling Distributing grow our Lafayette facility to over
170,000 square feet with annual sales of nearly four million cases. Coupled with that is their assistance in our successful
diversification into other businesses. I consider them a real partner!
Herbert Schilling II
Herbert Schilling II
President
Schilling Distributing Company
Lafayette, Louisiana
| 12 |
NOCHI
NOCHI’s mission is to
provide a seat at the table
for all people seeking to
develop their culinary
passion. At NOCHI, aspiring
professionals, locals,
and visitors from around
the world can study the
techniques to great cooking
and the elements that have
defined New Orleans’ unique
brand of hospitality—right
in the heart of the city.
Cooking Up Something Special
IBERIABANK’s leadership and commitment helped turn NOCHI into a reality after
many years of hard work by members of our community and industry who believed
in this project. I oftentimes say that NOCHI is a “we thing”— the collaborative
result of many key stakeholders working together under one shared vision – and we
are wildly grateful for IBERIABANK’s critical role in making this project possible.
— Ti Martin
The sophistication of IBERIABANK's capabilities were critical to NOCHI's complex
financing and operational launch, and the professionalism and high level of service
of the bank’s staff have laid the foundation for a strong long-term partnership.
— Carol Markowitz
Ti Martin & Carol Markowitz
Ti Martin, Co-Founder and Chair of the Board
Carol Markowitz, Executive Director
New Orleans Culinary & Hospitality Institute (NOCHI)
New Orleans, Louisiana
| 13 |
Mrs. Stratton's
Salads
Healthy Partnership
Around eight years ago, our company had an acquisition opportunity in the
Carolinas and while several other banks looked at the opportunity IBERIABANK
was the one bank that provided us with the best solution. Because of their hard
work and dedication we were able to make the acquisition and grow our company
to more than double in size. Since then we have moved all of our banking needs
to IBERIABANK and taken advantage of all the services they provide their clients.
Banking is more than just numbers and rates, it is relationships and you get that
with IBERIABANK.
George Bradford
George Bradford
Chief Executive Officer
Mrs. Stratton’s Salads
Birmingham, Alabama
A Birmingham,
Alabama-based
manufacturer of
fresh prepared wet
salads, upscale salads,
salsas, and dressings,
Mr. Stratton’s Salads
products can be
found in Alabama,
Mississippi, Georgia,
Tennessee, and Florida.
Products under the
Star brand are found
in the Carolinas and
Virginia.
| 14 |
Expanding Opportunities
Carrabba’s is a
family-owned and operated
neighborhood restaurant
that serves Italian-
American food. In 1986,
Johnny opened The Original
Carrabba’s on Kirby Drive
in Houston, TX, and a
second location in 1988. In
1993, Outback Steakhouse
created a joint venture
partnership opening over
250 Carrabba’s Italian Grill
Restaurants nationwide.
Johnny and his family
continue to own and operate
the two original Carrabba’s
locations. In 2012, the
family’s new fast-casual
concept, Mia’s Table,
opened one block behind
the Original Carrabba’s. In
2014, Grace’s, named after
Johnny’s grandmother,
Grace Mandola, became the
fourth family-owned and
operated restaurant for
the Carrabba family. Mia’s
Table has two locations
with more on the horizon.
Johnny Carrabba
Family of
Restaurants
Watching my grandfather and father run a family-owned grocery store in the East End of Houston was an experience
that has lasted me a lifetime. My father was the butcher, and my grandmother and mother ran the cash register.
One thing I remember distinctly was the personal relationship my family had with their banker. They were partners
and eager for the success of the business. As my father took over the grocery store, his relationship with the banker
continued like old friends. Years later, here I am with my own family-owned and operated neighborhood restaurant.
That relationship I observed as a young man has remained in my business and with my bank. Several years later,
IBERIABANK is my bank. My bankers are my bankers because of the bond and trust they have built with me.
Johnny Carrabba
Johnny Carrabba
President and CEO
Johnny Carrabba Family of Restaurants
Houston, Texas
| 15 |
Youth Empowerment
Founded in 2004, the
Youth Empowerment
Project (YEP) is a
non-profit
organization that
engages underserved
young people through
community-based
education, mentoring,
employment readiness,
and enrichment
programs to help
them develop skills
and strengthen ties to
family and community.
In 2018, YEP served
more than 1,200
participants in the
Greater New Orleans
region.
Youth
Empowerment
Project
The Youth Empowerment Project helps underserved young people by providing them with the opportunities, skills,
resources, and relationships they need to actualize their potential. For the past seven years, IBERIABANK has been
a key partner in YEP’s continued success. IBERIABANK has provided YEP with exceptional banking services; it
has invested deeply in YEP’s annual summer camp that serves children ages 7 to 12; it has become the presenting
sponsor for YEP Fest, our annual fundraising event; and IBERIABANK has provided us with caring and committed
volunteers. By providing sustained support to impactful organizations like YEP, IBERIABANK sets an example for
the important role that corporate philanthropy plays in creating and maintaining healthy communities.
Melissa Sawyer
Melissa Sawyer
Co-Founder, Executive Director and CEO
Youth Empowerment Project (YEP)
New Orleans, Louisiana
| 16 |
Capitol City
Produce
Since 1947, The Ferachi family
has grown the company
to become one of the most
respected and reliable
providers of produce in the
Gulf Coast region.
Growing Together
Once we completed our five-year growth planning, we wanted to align with
a nimble and aggressive financial institution similar to ourselves. After careful
review, we partnered with IBERIABANK and they have stood behind all of their
commitments allowing us to be the leading provider of Fresh Produce in Louisiana
and the Gulf Coast. As a result of the business relationship, I've benefited from an
outstanding personal relationship as well.
Paul Ferachi
Paul Ferachi
Chief Executive Officer
Capitol City Produce
Baton Rouge, Louisiana
| 17 |
Financials 2018
19
24
62
63
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
65
Financial Statements
| 18 |
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 Defined Terms for terms
used throughout this Report.
CAUTION ABOUT FORWARD-LOOKING STATEMENTS
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. The Company’s actual strategies and results in future periods may differ materially from those currently
expected due to various risks and uncertainties.
Forward-looking statements represent management’s beliefs, based upon information available at the time the statements are made,
with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to
numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ
materially from those expressed in or implied by such statements. Factors that could cause or contribute to such differences
include, but are not limited to: the level of market volatility, our ability to execute our growth strategy, including the availability
of future bank acquisition opportunities, our ability to execute on our revenue and efficiency improvement initiatives, unanticipated
delays, losses, business disruptions and diversion of management time related to the completion and integration of mergers and
acquisitions, 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, effects of low energy and commodity prices, effects of residential real estate prices and levels of home sales, our ability
to satisfy capital and liquidity standards, 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, competition
from competitors with greater financial resources than the Company, reputational risks and social factors, changes in government
regulations and legislation, increases in FDIC insurance assessments, geographic concentration of our markets, economic or
business conditions in our markets or nationally, rapid changes in the financial services industry, significant litigation, cyber-
security risks including dependence on our operational, technological, and organizational systems and infrastructure and those of
third party providers of those services, hurricanes and other adverse weather events, and valuation of intangible assets. 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,
www.sec.gov, and the Company’s website, www.iberiabank.com, under the heading “Investor Relations” and then “Financial
Information.” All information is as of the date of this Report. Except to the extent required by applicable law or regulation, the
Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.
1(cid:28)
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis is intended to assist readers in understanding the consolidated financial condition and
results of operations of the Company as of and for the period ended December 31, 2018. This discussion should be read in
conjunction with the consolidated financial statements, accompanying footnotes and supplemental financial data included
herein. Certain amounts in prior year presentations have been reclassified to conform to the current year presentation.
EXECUTIVE OVERVIEW
The Company is a $30.8 billion financial holding company with locations in Louisiana, Arkansas, Tennessee, Alabama, Texas,
Florida, Georgia, South Carolina, North Carolina, Mississippi, Missouri, and New York offering commercial, private banking,
consumer, small business, wealth and trust management, retail brokerage, mortgage, and title insurance services.
Highlights of the Company's performance for the year ended December 31, 2018 are discussed below and compared to the
results for the year ended December 31, 2017. Refer to subsequent sections of Management's Discussion and Analysis for
further detail. Results in 2018 were impacted by U.S. tax reform changes under the Tax Cuts and Jobs Act (the "Tax Act"),
which was signed into law on December 22, 2017, and the acquisitions of Sabadell United on July 31, 2017 and Gibraltar on
March 23, 2018.
2018 Summary Financial Results
•
•
•
•
•
•
•
•
Net income available to common shareholders for the year ended December 31, 2018 totaled $361.2 million, or $6.46
diluted EPS, compared to $133.3 million, or $2.59 diluted EPS, in 2017. Non-GAAP core EPS, which excludes
merger-related costs and other items disclosed in Table 29 - Non-GAAP Measures, was $6.69 in 2018 compared to
$4.47 in 2017.
Net interest income was $1.0 billion for 2018, a $204.4 million, or 25%, increase compared to 2017. The increase in
net interest income was primarily volume-related due to the Sabadell United and Gibraltar acquisitions, and was also
impacted by higher earning asset yields offset by higher funding costs, ultimately resulting in an 11 basis point
increase to net interest margin on a tax-equivalent basis to 3.75% from 3.64%.
Non-interest income in 2018 decreased $49.6 million, or 25%, to $152.6 million, primarily driven by $49.9 million in
losses on sales of available-for-sale securities and a decrease in mortgage income. This was partially offset by
increases in certain of the Company's fee income businesses.
Non-interest expense increased $56.5 million, or 8%, to $722.9 million at December 31, 2018, largely due to
acquisition-related increases in salaries and employee benefits expense, branch consolidation and closure expenses,
amortization of intangibles, net occupancy and equipment expenses, and other merger and conversion-related
expenses.
The Company recorded a provision for credit losses of $40.4 million for 2018, an $11.3 million, or 22%, decrease
from the provision recorded in 2017, primarily driven by an improvement in asset quality in 2018.
Income tax expense decreased $118.2 million, or 79%, to $32.3 million in 2018. Income tax expense was impacted by
a $65.3 million non-core, permanent net tax benefit recorded in the fourth quarter of 2018 as a result of deductions
claimed on the Company's 2017 income tax returns, partially offset by the repricing of its current and deferred income
tax position associated with the Tax Act. The reduction in income tax expense in 2018 was also impacted by $51.0
million in income tax expense recorded in the prior year related to the net impact of the remeasurement of deferred
taxes as a result of the Tax Act.
Total loans increased $2.4 billion, or 12%, in 2018, driven by $1.4 billion of loans acquired from Gibraltar and organic
growth.
Total deposits increased $2.3 billion, or 11%, in 2018, driven by $1.1 billion of deposits acquired from Gibraltar,
organic growth, and brokered deposit issuances.
2(cid:19)
•
•
Asset quality and credit metrics improved as non-performing loans and leases to total loans and leases decreased to
0.62% at December 31, 2018, from 0.76% at December 31, 2017. Classified assets to total assets were 0.98% at the
end of 2018 compared to 1.54% one year ago.
Shareholders' equity increased $359.5 million, or 10%, from year-end 2017, primarily from undistributed income to
common shareholders of $282.9 million, as well as the Company's issuance of 2.8 million shares of common stock in
March 2018 as part of consideration for the Gibraltar acquisition. This increase was partially offset by the repurchase
of 1,972,500 common shares, at a weighted average price of $75.46 per common share.
TABLE 1—KEY RATIOS
Earnings Per Common Share
Core Earnings Per Common Share (Non-GAAP)
Return on Average Assets
Core Return on Average Assets (Non-GAAP)
Return on Average Common Equity
Core Return on Average Common Equity (Non-GAAP)
Efficiency Ratio
Core Efficiency Ratio (Non-GAAP)
Net Interest Margin (TE)
$
$
Years Ended December 31,
2018
2017
2016
$
$
6.46
6.69
1.25%
1.30%
9.63%
9.97%
62.0%
55.9%
3.75%
$
$
2.59
4.47
0.58%
0.98%
3.95%
6.82%
65.9%
59.6%
3.64%
4.30
4.43
0.92%
0.95%
7.08%
7.29%
64.3%
62.0%
3.56%
Significant Transactions
2018 Acquisition
Acquisition of Gibraltar Private Bank & Trust Company ("Gibraltar")
On March 23, 2018, the Company acquired Gibraltar for total consideration of $214.7 million. The acquisition added $1.4
billion in loans and $1.1 billion in deposits, after fair value adjustments. Gibraltar operated eight offices in total, with seven
located in the Florida metropolitan statistical areas of Miami, Key West, and Naples and one in New York City. The Company
incurred acquisition and conversion (collectively, "merger-related") expenses of $30.3 million during 2018 related to the
acquisition of Gibraltar. The valuation of the Gibraltar acquisition was final as of December 31, 2018.
2017 Acquisition
Acquisition and Final Fair Value Estimates of Sabadell United Bank, N.A. ("Sabadell United")
On July 31, 2017, the Company acquired Sabadell United from Banco de Sabadell, S.A. for total consideration of $1.0 billion.
The acquisition added $4.0 billion in loans and $4.4 billion in deposits after fair value adjustments. The acquisition expanded
the Company's presence in Southeast Florida adding twenty-five offices serving the Miami metropolitan area and three offices
in Naples, Sarasota and Tampa. The Company incurred merger-related expenses of $0.9 and $41.0 million during 2018 and
2017, respectively, related to the acquisition of Sabadell United. The valuation of the Sabadell United acquisition was final as
of June 30, 2018.
(cid:21)(cid:20)
Detailed information regarding the 2018 and 2017 acquisitions is provided in Note 3, Acquisition Activity, to the consolidated
financial statements.The following table is a summary of the Company's acquisition activity during the years indicated:
TABLE 2—SUMMARY OF ACQUISITION ACTIVITY FROM 2014 TO 2018
(Dollars in millions)
Acquisition
Trust One Bank - Memphis Operations
Teche Holding Company
First Private Holdings, Inc.
Florida Bank Group, Inc.
Old Florida Bancshares, Inc.
Georgia Commerce Bancshares, Inc.
Sabadell United Bank, N.A.
SolomonParks Title & Escrow, LLC
Gibraltar Private Bank & Trust Co.
Total Acquisitions, 2014-2018
Enactment of U.S. Tax Reform
Total
Tangible
Assets
Acquired
Total
Loans and
Loans Held
for Sale
Acquired
Acquisition
Date
Total
Deposits
Acquired
Goodwill
Other
Intangible
Assets
2014
$
180.2
$
86.5
$
191.3
$
8.6
$
2014
2014
2015
2015
2015
2017
2018
2018
854.4
350.9
535.9
1,540.0
1,022.3
5,451.0
—
700.5
299.3
307.5
1,068.9
793.4
4,030.8
—
639.6
312.3
392.2
1,389.8
908.0
4,382.8
—
1,608.7
$ 11,543.4
1,447.5
$ 8,734.4
1,064.8
$ 9,280.8
$
80.4
26.3
17.4
100.8
86.7
441.0
3.4
64.3
828.9
$
2.6
7.4
0.5
4.5
6.8
6.7
66.6
0.2
18.5
113.8
On December 22, 2017, the Tax Cuts and Jobs Act (the" Tax Act") was signed into law. Under ASC 740, the effects of changes
in tax rates and laws are recognized in the period in which the new legislation is enacted. In the case of US federal income
taxes, the enactment date is the date the bill becomes law (i.e, upon presidential signature). Among other provisions, the most
significant to the Company is the reduction of the corporate income tax rate from 35% to 21%. With respect to the legislation,
the Company recognized a provisional one-time increase in tax expense of $51.0 million as of December 31, 2017 due to a
remeasurement of deferred tax assets and liabilities resulting from the decrease in the corporate income tax rate. During the
year ended December 31, 2018 the Company recognized a total adjustment of $6.6 million in income tax expense due to write
down of deferred tax assets associated with the finalization of the accounting for the Sabadell United acquisition and the related
impact of the Tax Act on those adjustments. This adjustment increased the year-to-date effective tax rate by 1.6% from 6.4% to
8.0%. Consistent with the guidance provided under ASC 740, the Company recorded impacts from enactment of the Tax Act in
the fourth quarter of 2017 subject to Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and
Jobs Act ("SAB 118"). SAB 118 provided a measurement period not to extend beyond one year of the enactment date to adjust
the accounting for certain elements of the tax reform. The Company filed its 2017 federal and state tax returns in the fourth
quarter of 2018, after which it was able to finalize deferred tax balances subject to the remeasurement under the Tax Act. The
accounting for the tax effects of the Tax Act was complete as of December 22, 2018.
Additionally, a $65.3 million non-core, permanent net tax benefit was recorded in the fourth quarter of 2018. This benefit was a
result of deductions claimed on the Company's 2017 income tax returns from the repricing of its current and deferred income
tax position associated with the Tax Act.
Capital Transactions
On March 23, 2018, the Company completed the acquisition of Gibraltar. Under the terms of the Agreement and Plan of
Merger, Gibraltar common shareholders received 1.9749 shares of IBERIABANK Corporation common stock for each
outstanding share of Gibraltar common stock. Based on the Company's closing common stock price of $77.00 per share on the
acquisition date, the aggregate value of the acquisition consideration paid at the time of closing was approximately $214.7
million.
(cid:21)(cid:21)
On May 9, 2018, the Company completed its then current stock repurchase program, which commenced in May 2016, under
which the Company repurchased a total of 537,506 shares at an average price per share of $68.94. On May 10, 2018, the Board
of Directors of the Company authorized the repurchase of up to 1,137,500 shares of the Company's outstanding common stock,
which was subsequently completed on November 5, 2018. During that time, the Company repurchased 1,137,500 shares of its
common stock at a weighted average price of $77.54 per share. On November 5, 2018, the Board of Directors authorized a new
repurchase plan of up to 2,765,000 shares of the Company's common stock. This repurchase authorization equated to
approximately 5% of total common shares outstanding. Stock repurchases under this program will be made from time to time
on the open market or in privately negotiated transactions at the discretion of the management of the Company. The timing of
these repurchases will depend on market conditions and other requirements. The Company currently anticipates the share
repurchase program will extend over a two-year time frame, or earlier if the shares have been repurchased. At December 31,
2018, there were approximately 2,265,000 remaining shares that may be repurchased under the current Board-approved plan.
During the fourth quarter of 2018, the Company repurchased 1,209,290 common shares, at a weighted average price of $72.61
per common share, of which 709,290 were repurchased under the completed Board-authorized plan and 500,000 were
repurchased under the current Board-authorized plan.
(cid:21)(cid:22)
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,
2018 vs. 2017
2018
2017
2016
2015
2014
$ Change % Change
Interest and dividend income
$1,221,629
$ 913,783
$ 716,939
$ 646,858
$ 504,815
Interest expense
Net interest income
Provision for credit losses
Net interest income after
provision for credit losses
Non-interest income
Non-interest expense
Income before income tax
expense
Income tax expense
Net income
Less: Preferred stock dividends
Net Income Available to
Common Shareholders
Earnings per common share –
basic
Earnings per common share –
diluted
Cash dividends per common
share
208,381
1,013,248
40,385
972,863
152,562
722,898
402,527
32,278
370,249
9,095
104,937
808,846
51,708
757,138
202,147
666,406
292,879
150,466
142,413
9,095
67,701
59,100
44,704
649,238
587,758
460,111
41,521
33,252
19,714
607,717
227,717
563,464
554,506
220,393
567,961
440,397
173,628
472,960
307,846
103,444
204,402
(11,323)
215,725
(49,585)
56,492
271,970
206,938
141,065
85,193
64,094
35,683
186,777
142,844
105,382
109,648
(118,188)
227,836
7,977
—
—
—
$ 361,154
$ 133,318
$ 178,800
$ 142,844
$ 105,382
227,836
$
6.50
$
2.61
$
4.32
$
3.69
$
3.31
6.46
1.56
2.59
1.46
4.30
1.40
3.68
1.36
3.30
1.36
3.89
3.87
0.10
2018
2017
2016
2015
2014
$ Change
% Change
As of December 31,
2018 vs. 2017
$30,833,015
$27,904,129
$21,659,190
$19,504,068
$15,757,904
2,928,886
(Dollars in thousands, except
per share data)
Balance Sheet Data
Total assets
Cash and cash
equivalents
Loans and leases, net
of unearned income
Goodwill and other
intangible assets, net
Deposits
Borrowings
Investment securities
4,991,025
4,817,380
3,535,313
2,899,214
2,275,813
690,453
625,724
1,362,126
510,267
548,095
22,519,815
20,078,181
15,064,971
14,327,428
11,441,044
2,441,634
1,324,269
1,277,464
759,823
765,655
548,130
46,805
23,763,431
21,466,717
17,408,283
16,178,748
12,520,525
2,296,714
2,649,033
2,487,132
1,138,089
667,064
1,248,996
Shareholders’ equity
4,056,277
3,696,791
2,939,694
2,498,835
1,852,148
Book value per
common share (3)
Tangible book value
per common share
(Non-GAAP)(3) (5)
71.61
66.17
62.68
58.87
55.37
5.44
47.61
42.56
45.80
40.35
39.08
5.05
(cid:21)(cid:23)
64,729
173,645
161,901
359,486
34
99
25
(22)
28
(25)
8
37
(79)
160
—
171
149
149
7
10
10
4
12
4
11
7
10
8
12
Key Ratios (4)
Return on average assets
As of and For the Years Ended December 31,
2018
2017
2016
2015
2014
1.25%
0.58%
0.92%
0.78%
0.72%
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
9.63
15.48
13.16
142.24
3.40
3.75
2.44
62.01
59.77
24.18
3.95
5.85
13.25
144.20
3.42
3.64
2.72
65.92
63.85
57.47
7.08
10.44
13.57
146.60
3.40
3.56
2.77
64.25
62.43
32.94
6.41
9.65
12.81
142.28
3.45
3.58
3.09
70.57
68.39
38.46
6.17
9.04
11.75
135.15
3.40
3.51
3.23
74.73
72.40
42.05
Asset Quality Data
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
0.55%
0.64%
1.16%
0.47%
0.58%
111.55
101.19
0.69
0.77
67.84
1.04
266.35
1.06
371.79
1.24
9.63%
9.35%
10.86%
9.52%
10.72
11.25
12.33
10.57
11.16
12.37
11.84
12.59
14.13
10.10
10.73
12.17
9.35%
N/A
11.17
12.30
(1) Certain balances and amounts have been restated for the effect of the adoption of ASU No. 2014-01 on January 1, 2015.
(2)
2018 data is impacted by the Company's acquisition of Gibraltar on March 23, 2018 and SolomonParks on January 12,
2018. 2017 data is impacted by the Company's acquisition of Sabadell United on July 31, 2017. 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. 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.
(3)
Shares used for book value purposes are net of shares held in treasury at the end of 2014.
(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)
(7)
(8)
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
earning assets.
Fully taxable equivalent ("TE") calculations include the tax benefit associated with related income sources that are tax-
exempt using a rate of 21% for 2018 and a rate of 35% for prior years, which approximates the marginal tax rate.
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 other real estate owned, including repossessed assets.
(cid:21)(cid:24)
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.
Accounting for Acquired Impaired Loans
The Company accounts for its acquisitions using the acquisition method of accounting. Accordingly, all acquired loans are
recorded at fair value on the acquisition date. 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.
At the time of acquisition, all acquired loans are evaluated for impairment. Acquired loans, including all covered loans, for
which at the time of acquisition the loan reflects credit deterioration since origination to the extent that it is probable that the
Company will be unable to collect all the contractually required payments are classified as purchased impaired loans (“acquired
impaired loans”). All other acquired loans are classified as purchased non-impaired loans (“acquired non-impaired loans”).
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 in 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, 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, 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.
Allowance for Acquired Impaired Loans
Over the life of the acquired impaired loans, the Company continues to estimate the amount and timing of cash flows expected
to be collected on either 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, as determined using effective interest rates, have changed. If the expected cash
flows have decreased, the Company recognizes a provision for credit losses in its consolidated statement of comprehensive
income. If the cash flows expected to be collected have increased, the Company adjusts the amount of accretable yield
recognized on a prospective basis over the respective loan’s or pool’s remaining life.
(cid:21)(cid:25)
Valuation of Goodwill, Intangible Assets and Other Purchase Accounting Adjustments
As previously mentioned, the Company accounts for acquisitions using the acquisition method of accounting. Under this
method, the Company records 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
as well as the appropriate amortization method of intangible assets is subjective. Any excess of consideration paid in the
acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill.
As discussed in Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements, goodwill is not
amortized, but is assessed for potential impairment at the 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.
Effective September 30, 2018, the Company elected to early adopt FASB ASU No. 2017-04, Intangibles-Goodwill and Other
(ASC 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, if the results of Step 1 indicate that the fair
value of the reporting unit is below its carrying amount (including goodwill), the Company will recognize a goodwill
impairment loss for the excess of the reporting unit’s carrying amount over its fair value, limited to the total amount of
goodwill allocated to that reporting unit.
As a result of the annual goodwill evaluation, the Company concluded goodwill was not impaired as of October 1, 2018.
Further, no events or changes in circumstances between October 1, 2018 and December 31, 2018 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 2018 and 2017, management concluded that for the IBERIABANK, Mortgage, 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 9, Goodwill and Other Acquired Intangible Assets, to the consolidated financial statements. For additional information on
the Company’s adoption of ASU No. 2017-04, Intangibles-Goodwill and Other (ASC 350): Simplifying the Test for Goodwill
Impairment, see Note 2, Recent Accounting Pronouncements, to the consolidated financial statements.
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 affect the Company’s tax positions, methods or
elections changes, or other facts and circumstances.
(cid:21)(cid:26)
RESULTS OF OPERATIONS
The Company reported net income available to common shareholders of $361.2 million, $133.3 million, and $178.8 million for
the years ended December 31, 2018, 2017, and 2016, respectively. EPS on a diluted basis was $6.46 for 2018, $2.59 for 2017,
and $4.30 for 2016.
The following discussion provides additional information on the Company’s operating results for the years ended December 31,
2018, 2017, and 2016, segregated by major income statement captions.
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 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 3.40%, 3.42%, and 3.40%, during the years ended December 31,
2018, 2017, and 2016, respectively. The Company’s net interest margin on a taxable equivalent basis, which is net interest
income (TE) as a percentage of average earning assets, was 3.75%, 3.64%, and 3.56%, respectively, for the same periods.
(cid:21)(cid:27)
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
2018
Average
Balance
Interest
Income/
Expense (2)
Yield/
Rate
(TE)(3)
Average
Balance
2017
Interest
Income/
Expense(2)
2016
Yield/
Rate
(TE)(3)
Average
Balance
Interest
Income/
Expense (2)
Yield/
Rate
(TE)(3)
(Dollars in thousands)
Earning Assets:
Loans(1):
Commercial loans and
leases
$ 14,633,814
$ 731,385
5.02% $ 12,252,823
$ 556,883
4.59% $ 10,529,830
$ 459,352
Residential mortgage loans
Consumer and other loans
3,946,390
3,061,891
183,690
171,587
4.65%
5.60%
2,032,710
2,884,239
Total loans and leases
21,642,095
1,086,662
5.04% 17,169,772
Mortgage loans held for sale
Investment securities(4)
83,087
3,748
4,900,457
117,771
FDIC loss share receivable
—
—
Other earning assets
573,949
13,448
4.51%
2.46%
—%
2.34%
144,658
4,347,581
7,646
813,032
90,845
155,219
802,947
4,679
96,194
—
9,963
4.47%
5.38%
1,236,640
2,894,584
4.71% 14,661,054
3.23%
2.31%
—%
1.23%
204,669
2,927,588
29,396
654,357
54,966
148,718
663,036
6,564
59,154
4,208
Total earning assets
27,199,588
1,221,629
4.51% 22,482,689
913,783
4.11% 18,477,064
716,939
4.42 %
4.44 %
5.14 %
4.56 %
3.21 %
2.14 %
0.64 %
3.93 %
(16,023)
(54.51)%
Allowance for loan and lease
losses
Non-earning assets
Total assets
Interest-bearing liabilities
Deposits:
NOW accounts
Savings and money market
accounts
Time deposits
Total interest-bearing
deposits(5)
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)
(141,880)
2,520,318
$ 29,578,026
(144,426)
2,142,393
$ 24,480,656
(147,520)
1,991,690
$ 20,321,234
$ 4,341,041
$
33,962
0.78% $ 3,390,268
$
16,385
0.48% $ 2,922,587
$
8,816
0.30 %
9,056,182
2,920,817
82,151
44,839
0.91%
1.54%
7,912,990
2,228,029
16,318,040
160,952
0.99% 13,531,287
1,052,088
1,392,148
14,682
32,747
1.40%
2.35%
905,755
854,425
42,353
21,095
79,833
7,557
17,547
0.54%
0.95%
6,578,622
2,141,399
0.59% 11,642,608
0.83%
2.05%
614,073
616,309
24,725
18,040
51,581
2,452
13,668
0.38 %
0.84 %
0.44 %
0.40 %
2.22 %
18,762,276
208,381
1.11% 15,291,467
104,937
0.69% 12,872,990
67,701
0.53 %
6,602,434
330,588
25,695,298
3,882,728
$ 29,578,026
$ 8,437,312
5,440,477
240,362
20,972,306
3,508,350
$ 24,480,656
$ 7,191,222
4,582,533
228,117
17,683,640
2,637,594
$ 20,321,234
$ 5,604,074
$ 1,013,248
3.40%
$ 808,846
3.42%
$ 649,238
3.40 %
$ 1,019,008
3.75%
$ 819,154
3.64%
$ 658,471
3.56 %
(1)
(2)
(3)
Total loans include non-accrual loans for all periods presented. Interest income in Table 4 above excludes approximately
$9.3 million, $9.5 million, and $11.9 million, in interest income that would have been recorded in 2018, 2017, and 2016,
respectively, if non-accrual loans (excluding acquired impaired loans) had been current in accordance with their
contractual terms.
Interest income includes loan fees of $3.5 million, $3.0 million, and $2.9 million for the years ended December 31, 2018,
2017, and 2016, respectively.
Taxable equivalent yields are calculated using a rate of 21% for 2018 and a rate of 35% for prior years, which
approximates the marginal tax rate.
(cid:21)(cid:28)
(4) Balances exclude unrealized gain or loss on securities available for sale and the impact of trade date accounting.
(5)
Total deposit costs for the years ended December 31, 2018, 2017, and 2016 were 0.70%, 0.42%, and 0.32%, respectively.
2018 vs. 2017
Net interest income increased $204.4 million, or 25%, to $1.0 billion in 2018 when compared to 2017. Net interest margin on a
tax-equivalent basis increased 11 basis points to 3.75% from 3.64% when comparing the periods.
Interest income increased $307.8 million in 2018 when compared to 2017. The primarily volume-driven increase in interest
income is a result of a $4.7 billion, or 21%, increase in average earning assets, primarily due to acquisitions. Average loans
increased $4.5 billion, or 26%, and average investment securities increased $0.6 billion, or 13% when compared to 2017. The
yield on average earning assets was 40 basis points higher at 4.51% compared to 4.11% in the prior year.
Interest expense increased $103.4 million in 2018 primarily due to an $81.1 million increase in interest expense on average
interest-bearing deposits. A 40 basis point increase in the rate paid during 2018 and growth of $2.8 billion in the average
balance of interest-bearing deposits, primarily related to the recent acquisitions, drove the increase in interest expense. In
addition, interest expense on the Company’s borrowings increased $22.3 million in 2018 as a result of an increase in average
short-term borrowings of $146.3 million and an increase in average long-term debt of $537.7 million. The cost of average
interest-bearing liabilities rose 42 basis points to 111 basis points compared to 69 basis points in the prior year.
The increase in both earning asset yields and funding costs were impacted by five FOMC interest rate increases of 25 basis
points each from December 2017 through December 2018.
2017 vs. 2016
Net interest income increased $159.6 million, or 25%, to $0.8 billion in 2017 when compared to 2016. Net interest margin on a
tax-equivalent basis increased 8 basis points to 3.64% from 3.56% when comparing the periods.
Interest income increased $196.8 million in 2017 when compared to 2016. This increase was primarily volume-related as a
result of the Sabadell United acquisition. Average loans increased $2.5 billion and average investment securities increased $1.4
billion when compared to 2016. The declining balance of the FDIC loss share receivable and the elimination of the negative
yield related to the amortization expense also contributed to a $16.0 million increase in interest income. The Company
terminated all FDIC loss share receivables in December of 2016 before acquiring an insignificant amount from Sabadell United
on July 31, 2017. The yield on average earning assets was 18 basis points higher at 4.11% compared to 3.93% in the prior year.
Interest expense on average interest-bearing liabilities increased $37.2 million in 2017 primarily due to a $28.3 million increase
in interest expense on average interest-bearing deposits. Growth of $1.9 billion in the average balance of interest-bearing
deposits, primarily related to the Sabadell United acquisition, and a 15 basis point increase in the rate paid during 2017 drove
the decrease in interest expense on average interest-bearing deposits. In addition, interest expense on the Company’s
borrowings increased $9.0 million in 2017 as a result of an increase in average short-term borrowings of $291.7 million and an
increase in average long-term debt of $238.1 million. The cost of average interest-bearing liabilities rose 16 basis points to 69
basis points compared to 53 basis points in the prior year.
(cid:22)(cid:19)
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 5—SUMMARY OF CHANGES IN NET INTEREST INCOME
2018 Compared to 2017
2017 Compared to 2016
Change Attributable To
Change Attributable To
Volume
Rate
Net Increase
(Decrease)
Volume
Rate
Net Increase
(Decrease)
(Dollars in thousands)
Earning assets:
Loans:
Commercial loans and leases $110,526
Residential mortgage loans
88,925
Consumer and other loans
Loans held for sale
Investment securities
FDIC loss share receivable
Other earning assets
10,280
(2,399)
12,844
—
(3,019)
$ 63,976
$ 174,502
$ 78,841
$ 18,690
$
97,531
3,920
6,088
1,468
8,733
—
6,504
92,845
16,368
(931)
21,577
—
3,485
35,576
(137)
(1,941)
30,824
6,814
1,277
303
6,638
56
6,216
9,209
4,478
35,879
6,501
(1,885)
37,040
16,023
5,755
Net change in income on earning
assets
Interest-bearing liabilities:
Deposits:
NOW accounts
Savings and money market
accounts
Time deposits
Borrowings
Net change in expense on
interest-bearing liabilities
Change in net interest spread
217,157
90,689
307,846
151,254
45,590
196,844
5,482
12,095
17,577
1,589
5,980
7,569
7,540
7,919
14,152
32,258
15,825
8,173
39,798
23,744
22,325
6,174
752
6,688
11,454
17,628
2,303
2,296
3,055
8,984
35,093
$182,064
68,351
$ 22,338
103,444
$ 204,402
15,203
$136,051
22,033
$ 23,557
37,236
$ 159,608
Provision for Credit Losses
The provision for credit losses represents the expense necessary to maintain the ACL at a level that in management's judgment
is appropriate to absorb probable losses inherent in the portfolio at the balance sheet date.
2018 vs. 2017
The Company recorded a provision for credit losses of $40.4 million for the year ended December 31, 2018, an $11.3 million,
or 22% decrease from the provision recorded for the same period of 2017. The decrease in the Company’s provision for credit
losses in 2018 was largely due to an improvement in asset quality, as both non-performing loans and classified loans as a
percentage of total loans declined when compared to 2017. In addition, net charge-offs were lower than in 2017. The
Company's provision in 2018 was also limited by asset resolutions and cash flow events on acquired loans that reduced the
required ALLL for that portfolio. The Company's provision for credit losses covered 124% of net charge-offs in 2018 compared
to 93% coverage in 2017.
2017 vs. 2016
The Company's provision for credit losses of $51.7 million for the year ended December 31, 2017 was $10.2 million higher
than the provision recorded for the same period of 2016. This increase was largely the result of an elevated level of charge-offs,
primarily from energy-related credits, as well as legacy loan growth, but was favorably impacted by lower reserves on impaired
loans. Net charge-offs were $22.1 million higher in 2017 than 2016.
(cid:22)(cid:20)
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, 2018 included non-interest income of $152.6 million
compared to $202.1 million and $227.7 million for the years ended December 31, 2017 and 2016, respectively. The decrease in
non-interest income in 2018 was primarily driven by losses on sales of available for sale securities. Non-interest income as a
percentage of total gross revenue (defined as total interest and non-interest income) was 11% in 2018, 18% in 2017, and 24% in
2016.
The following table illustrates the primary components of non-interest income.
TABLE 6—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
Trust department income
(Loss) gain on sale of available for sale
securities
Other non-interest income
2018 vs. 2017
2018
$ 46,424
2017
$ 63,570
2016
$ 83,853
52,803
24,149
9,195
10,295
12,540
15,981
47,678
21,972
9,161
10,199
10,904
9,705
44,135
22,213
14,391
10,008
11,245
7,174
2018 vs. 2017
2017 vs. 2016
$ Change % Change
(27)
(17,146)
11
5,125
2,177
34
96
1,636
6,276
10
—
1
15
65
$ Change % Change
(24)
(20,283)
8
3,543
(241)
(1)
(36)
(5,230)
2
191
(3)
(341)
35
2,531
(49,900)
31,075
$ 152,562
(148)
29,106
$202,147
2,001
32,697
$ 227,717
(49,752)
1,969
(49,585)
(33,616)
7
(25)
(2,149)
(3,591)
(25,570)
(107)
(11)
(11)
Non-interest income decreased $49.6 million in 2018 when compared to 2017. This decrease was primarily driven by $49.9
million in losses on sales of available for sale securities. The losses were primarily the result of the Company's restructuring of
its investment portfolio during the fourth quarter of 2018. The Company sold $1.0 billion of its securities at a loss and
subsequently purchased an additional $1.2 billion in higher yielding securities.
Non-interest income in 2018 was also impacted by a $17.1 million decrease in mortgage income. The majority of the decline in
mortgage income was volume-related, including a $374.5 million decrease in mortgage loan originations and a $378.3 million
decrease in sales volume. The volume-related decreases were partially due to reduced activity driven by the higher interest rate
environment. The Company's focus on originating mortgage loans has partially shifted with a mix of new products retained on
the balance sheet versus sold in the secondary market in 2017 and 2018.
The decreases in 2018 when compared to 2017 were partially offset by increases in trust department income, service charges on
deposit accounts, and title revenue, which were primarily driven by recent acquisitions.
2017 vs. 2016
Non-interest income decreased $25.6 million in 2017 when compared to 2016. This decrease was primarily driven by a $20.3
million decrease in mortgage income. The majority of the decline in mortgage income was volume-related, including a $615.7
million decrease in mortgage loan originations and a $603.9 million decrease in sales volume, while reduced margins in the
secondary market contributed to a smaller portion of the decline. The volume-related decreases were due to the loss of
mortgage production offices throughout the mortgage footprint, coupled with reduced activity due to higher interest rates.
Locked pipeline volume also decreased $53 million compared to 2016.
Non-interest income in 2017 was also impacted by a $5.2 million decrease in broker commissions, the result of lower
investment banking income and trading and research income. Trading and research income declined due to ICP's trading and
research desk closing in 2017. Other non-interest income decreased by $3.6 million primarily due to a $4.1 million decrease in
customer swap commission income.
(cid:22)(cid:21)
The decreases in 2017 when compared to 2016 were partially offset by increases in service charges on deposit accounts and
trust department income.
Non-interest Expense
The Company’s results for 2018 included non-interest expense of $722.9 million, an increase of $56.5 million when compared
to 2017. The increases in expenses when compared to 2017 are primarily driven by recent acquisitions. For the year, the
Company’s efficiency ratio was 62.0%, compared to 65.9% in 2017.
The following table illustrates the primary components of non-interest expense.
TABLE 7—NON-INTEREST EXPENSE
(Dollars in thousands)
Salaries and employee benefits
Net occupancy and equipment
Communication and delivery
Marketing and business development
Computer services expense
Professional services
Credit and other loan-related expense
Insurance
(Gain) loss on early termination of FDIC
loss share agreements
Travel and entertainment
Amortization of acquisition intangibles
Impairment of long-lived assets and other
losses
Other non-interest expense
2018 vs. 2017
2018
$ 414,741
2017
$ 379,527
2016
$ 331,686
$ Change % Change
9
35,214
$ Change % Change
14
47,841
2018 vs. 2017
2017 vs. 2016
77,246
15,951
18,371
39,680
28,698
19,088
25,274
70,663
14,252
13,999
36,790
48,545
18,411
21,815
65,797
12,383
12,332
25,091
19,153
13,840
17,270
(2,708)
10,035
21,678
—
17,798
11,287
12,590
8,481
8,415
27,780
12,246
6,111
27,064
$ 722,898
26,281
$ 666,406
25,107
$ 563,464
6,583
1,699
4,372
2,890
(19,847)
677
3,459
(2,708)
(1,252)
9,088
15,534
783
56,492
9
12
31
8
(41)
4
16
(100)
(11)
72
127
3
8
4,866
1,869
1,667
11,699
29,392
4,571
4,545
(17,798)
2,806
4,175
6,135
1,174
102,942
7
15
14
47
153
33
26
(100)
33
50
100
5
18
Salaries and employee benefits increased $35.2 million in 2018 when compared to 2017, primarily related to associates brought
over from the recent acquisitions, which increased compensation and related benefits expenses. In addition, merit raises, off
cycle pay increases, severance and retention expenses, incentive expense, and restricted stock grants contributed to the increase
in salaries and employee benefits between the periods.
Impairment of long-lived assets and other losses increased $15.5 million from 2017, primarily due to branch consolidations and
closures in 2018. Amortization of acquisition intangibles as well as net occupancy and equipment expenses also increased from
2017 due to recent acquisition activity.
The increases in non-interest expense in 2018 when compared to 2017 were partially offset by a decrease of $19.8 million in
professional services. This decrease was driven by $15.9 million of merger-related legal and professional expenses as a result
of the Sabadell United acquisition and the $11.7 million settlement of the HUD legal matter in 2017, offset by a $4.1 million
increase in consulting services primarily from tax-related consulting during 2018.
2017 vs. 2016
Salaries and employee benefits increased $47.8 million in 2017 when compared to 2016. This increase was driven by a $14.0
million increase in compensation expense related to acquired associates from Sabadell United, a $9.8 million increase in fringe
benefits including an increase in the Company's 401(k) match, increases in legacy headcount, merit raises, off-cycle increases
and restricted stock grants. The Company had 3,552 full-time equivalent employees at the end of 2017, an increase of 452, or
15%, from 2016. Professional services increased $29.4 million from 2016, primarily due to the Sabadell United acquisition, as
well as the HUD legal matter, which was settled on December 11, 2017, in the amount of $11.7 million.
(cid:22)(cid:22)
Computer services expense increased by $11.7 million when compared to 2016, due to acquisition-related computer service
expenses as well as the implementation of new software, including more cloud-based applications.
The increases in 2017 when compared to 2016 were offset by the $17.8 million loss incurred in December of 2016 to terminate
loss share agreements with the FDIC ahead of their contractual maturities.
Income Taxes
For the years ended December 31, 2018, 2017, and 2016, the Company recorded income tax expense of $32.3 million, $150.5
million, and $85.2 million, respectively, which resulted in an effective income tax rate of 8.0% in 2018, 51.4% in 2017, and
31.3% in 2016. Income tax expense in 2018 and 2017 was impacted by the passage of the Tax Act in December 2017.
Excluding adjustments related to the Tax Act, the effective tax rate would have been 22.6% in 2018 and 34.0% in 2017.
2018 vs. 2017
The difference between the Company's effective tax rate in 2018 and the U.S. statutory tax rate of 21% primarily relates to a
$65.3 million non-core, permanent net tax benefit recorded in the fourth quarter of 2018 as a result of deductions claimed on
the Company's 2017 income tax returns, partially offset by the repricing of its current and deferred income tax position
associated with the Tax Act. In addition, the Company recorded a $6.6 million expense related to the finalization of accounting
for the Sabadell United acquisition and its net impact from the remeasurement of deferred tax assets as a result of the Tax Act.
The effective tax rate was also impacted by state income taxes (net of federal income tax benefit), tax-exempt income, non-
deductible expenses, and the recognition of tax credits. The effective tax rate may vary significantly due to fluctuations in the
amount and source of pretax income, changes in amounts of non-deductible expenses, and timing of the recognition of tax
credits.
2017 vs. 2016
As discussed previously, the effective tax rate in 2017 was significantly impacted by tax reform. During 2017, the Company
recorded $51.0 million related to the estimated net impact from the remeasurement of deferred tax assets and liabilities as a
result of the passage of the Tax Act. The effective tax rate in 2017 was also impacted by the accrual for the HUD matter, as well
as the non-deductible portion of merger-related expenses related to the Sabadell United acquisition. In addition, the effective
tax rate in 2017 was impacted by our level of investment in tax credits and the increase in deductions from taxable income for
certain incentive-based expenses (restricted stock and certain stock options) as a result of the implementation of ASU No.
2016-09 during the first quarter of 2017. This ASU requires the Company to recognize the excess tax benefits/(shortfalls) of
exercised or vested awards as income tax benefit/(expense) through the income statement, whereas these excess tax benefits/
(shortfalls) were previously recognized in additional paid-in-capital on the balance sheet.
FINANCIAL CONDITION
EARNING ASSETS
The following discussion highlights the Company’s major categories of earning assets.
Loans and Leases
The Company had total loans and leases of $22.5 billion at December 31, 2018, an increase of $2.4 billion, or 12%, from
December 31, 2017. The increase was a result of $1.4 billion acquired in the first quarter of 2018 from Gibraltar and legacy
loan growth of $2.5 billion, partially offset by pay-downs and pay-offs on loans, primarily from prior period acquisitions.
(cid:22)(cid:23)
(4)
1
9
12
7
43
1
11
3
12
The major categories of loans and leases outstanding at December 31, 2018 and 2017 are presented in the following tables.
TABLE 8—SUMMARY OF LOANS AND LEASES
2018
2017
$ Change
% Change
Balance
Mix
Balance Mix
(Dollars in thousands)
Commercial loans and leases:
Real estate - construction
Real estate - owner-occupied
$ 1,196,366
2,395,822
5% $ 1,240,396
2,375,321
11
Real estate - non-owner occupied
Commercial and industrial (1)
Total commercial loans and leases
5,796,117
5,737,017
15,125,322
Residential mortgage loans
4,359,156
26
25
67
19
5,322,513
5,135,067
14,073,297
3,056,352
6%
12
26
26
70
15
(44,030)
20,501
473,604
601,950
1,052,025
1,302,804
Consumer loans:
Home Equity
Other
Total consumer loans
Total loans and leases
2,304,694
730,643
3,035,337
$ 22,519,815
2,292,275
10
656,257
4
14
2,948,532
100% $ 20,078,181
12
3
15
100%
12,419
74,386
86,805
2,441,634
(1)
Includes equipment financing leases
Loan Portfolio Components
The Company believes its loan portfolio is diversified by product and geography throughout its footprint. With the Gibraltar
acquisition, the Company added $1.4 billion of loans and expanded its presence in Southeast Florida and entered New York.
Excluding acquired loans, loan growth in 2018 was strongest in the the Energy Group (primarily reserve-based lending),
Corporate Asset Finance division (equipment financing business), and the New Orleans and Atlanta markets. Loans in the
Energy Group increased $480.6 million, or 112% since December 31, 2017. The Corporate Asset Finance division, which was
created in 2017, grew loans and leases by $234.3 million, or 87%, in 2018, while the New Orleans and Atlanta markets had
growth of $264.5 million and $118.8 million, respectively.
The Company’s loan to deposit ratio at December 31, 2018 and 2017 was 95% and 94%, respectively. The percentage of fixed-
rate loans to total loans decreased from 41% at the end of 2017 to 39% at December 31, 2018. 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 9—TOTAL LOANS BY LOAN TYPE
(Dollars in thousands)
Balance
Mix
Balance
Mix
Balance
Mix
Balance
Mix
Balance
Mix
2018
2017
2016
2015
2014
Commercial loans and leases:
Commercial real estate
$ 9,388,305
42 % $ 8,938,230
44 % $ 6,846,549
45 % $ 6,125,927
43 % $ 4,432,844
39 %
Commercial and industrial
5,737,017
Total commercial loans and
leases
15,125,322
25
67
5,135,067
14,073,297
26
70
4,060,032
10,906,581
28
73
4,072,928
10,198,855
29
72
3,381,238
7,814,082
30
69
Residential mortgage loans
4,359,156
19
3,056,352
15
1,267,400
8
1,195,319
8
1,080,297
9
Consumer loans:
Home equity
Other
Total consumer loans
2,304,694
730,643
3,035,337
10
4
14
2,292,275
656,257
2,948,532
12
3
15
2,155,926
735,064
2,890,990
14
5
19
2,066,167
867,087
2,933,254
14
6
20
1,601,105
945,560
2,546,665
14
8
22
Total loans and leases
$22,519,815
100% $20,078,181
100% $15,064,971
100% $14,327,428
100% $11,441,044
100%
(cid:22)(cid:24)
Commercial Loans
Total commercial loans and leases increased $1.1 billion, or 7% , from December 31, 2017. Commercial loans and leases
decreased to 67% of the total loan portfolio at December 31, 2018 compared to 70% at December 31, 2017, primarily due to a
mix-shift from the acquisition of a relatively large residential mortgage portfolio from Gibraltar. Unfunded commitments on
commercial loans and leases including approved loan commitments not yet funded were $6.0 billion at December 31, 2018, an
increase of $990.8 million, or 20%, when compared to the end of the prior year.
Commercial real estate loans include loans to commercial customers for medium-term financing of land and buildings or for
land development or construction of a building. These loans are repaid from revenues through operations of the businesses,
rents of properties, sales of properties and refinances. 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. The commercial real estate portfolio is
comprised of approximately 13% construction loans, 25% owner-occupied loans, and 62% non-owner-occupied loans as of
December 31, 2018, compared to 14%, 27%, and 59%, respectively, at December 31, 2017. Commercial real estate loans
increased $450.1 million, or 5%, during 2018, primarily from $291.6 million acquired from Gibraltar.
Commercial and industrial loans and leases represent loans to commercial customers to finance general working capital needs,
equipment purchases and leases 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, 2018, commercial and industrial loans and leases
totaled $5.7 billion, a $602.0 million, or 12% increase, from December 31, 2017, which includes approximately $36.1 million
in loans acquired from Gibraltar. Commercial and industrial loans and leases comprised 25% of the total portfolio at December
31, 2018 and 26% at December 31, 2017.
The following table details the Company’s commercial loans and leases by state. Other loans include primarily equipment
financing leases and corporate asset financing loans, which the Company does not classify by state.
TABLE 10—COMMERCIAL LOANS AND LEASES BY STATE OF ORIGINATION
(Dollars in thousands)
2018
2017
$ Change % Change
Louisiana
Florida
Alabama
Texas
Georgia
Arkansas
Tennessee
New York
South Carolina and North Carolina
$
3,521,596
$
3,472,648
4,756,957
1,289,146
2,310,642
1,078,983
711,484
584,119
44,026
92,800
4,671,023
1,238,482
1,961,832
1,023,600
704,283
576,538
—
20,246
48,948
85,934
50,664
348,810
55,383
7,201
7,581
44,026
72,554
Other
Total
735,569
15,125,322
$
404,645
14,073,297
$
330,924
1,052,025
1
2
4
18
5
1
1
100
358
82
7
(cid:22)(cid:25)
Residential Mortgage Loans
Residential mortgage loans consist of loans to consumers to finance a primary residence. 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. The residential mortgage loan portfolio is originated under terms and documentation that permit their sale in a secondary
market. The 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 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 $1.3 billion, or 43%, compared to December 31, 2017, primarily the result of
approximately $917.8 million in acquired Gibraltar residential mortgage loans, as well as private banking originations in 2018.
Consumer 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, 2018, $3.0 billion, or 14%, of the total loan portfolio was comprised of consumer loans, compared to $2.9 billion, or 15%,
at the end of 2017.
The majority of the consumer loan portfolio is comprised of home equity loans. 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. Home equity loans increased $12.4 million during the year to $2.3 billion at December 31, 2018.
Unfunded commitments related to home equity loans and lines were $1.0 billion at December 31, 2018, an increase of $113.4
million versus the prior year.
All other consumer loans, which consist of credit card loans, automobile loans and other personal loans, increased $74.4
million, or 11%, from December 31, 2017, primarily from an increase of $122.1 million in other personal loans, $25.2 million
of which was acquired from Gibraltar, partially offset by a decrease in indirect automobile loans, a product that is no longer
offered.
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.
Additional information on the Company’s consumer loan portfolio is presented in the following tables. For the purposes of
Table 12, 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 11—CONSUMER LOANS BY STATE OF ORIGINATION
(Dollars in thousands)
2018
2017
Louisiana
Florida
Alabama
Texas
Georgia
Arkansas
Tennessee
New York
South Carolina and North Carolina
$
1,072,628
$
1,119,462
956,159
268,998
126,562
142,067
216,817
78,013
46,146
214
805,453
277,601
131,942
131,910
237,627
89,383
—
4
Other
Total
127,733
3,035,337
$
155,150
2,948,532
$
$ Change % Change
(4)
19
(3)
(4)
8
(9)
(13)
100
(46,834)
150,706
(8,603)
(5,380)
10,157
(20,810)
(11,370)
46,146
210
(27,417)
86,805
5,250
(18)
3
(cid:22)(cid:26)
TABLE 12—CONSUMER LOANS BY CREDIT SCORE
(Dollars in thousands)
Above 720
660-720
Below 660
Total consumer loans
2018
1,708,417
666,132
660,788
3,035,337
$
$
2017
1,666,261
702,118
580,153
2,948,532
$
$
Loan Maturities
The following table sets forth the scheduled contractual maturities of the Company’s total loan portfolio at December 31, 2018,
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.
TABLE 13—LOAN MATURITIES BY LOAN TYPE
(Dollars in thousands)
Commercial real estate
Commercial and industrial
Residential mortgage
Consumer and other
Total
Mortgage Loans Held for Sale
One Year
or Less
1,591,718
$
1,446,497
34,728
319,868
One Through
Five Years
After
Five Years
$
4,873,656
$
2,922,931
$
3,195,288
288,550
552,627
1,095,232
4,035,878
2,162,842
Total
9,388,305
5,737,017
4,359,156
3,035,337
$
3,392,811
$
8,910,121
$ 10,216,883
$ 22,519,815
The Company sells 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 totaled $107.7 million at December 31, 2018, a decrease of $27.2 million, or 20%, from year-
end 2017, as there were lower volumes of originations for sale from reduced activity due to higher interest rates.
In 2018, the Company originated approximately $1.5 billion in mortgage loans, a 20% decrease from $1.8 billion in
originations in 2017.
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.
(cid:22)(cid:27)
Investment Securities
Investment securities increased by $173.6 million, or 4%, since December 31, 2017 to $5.0 billion at December 31, 2018.
Investment securities approximated 16% and 17% of total assets at December 31, 2018 and December 31, 2017, respectively.
The following table shows the carrying values of securities by category as of December 31 for the years indicated.
TABLE 14—CARRYING VALUE OF SECURITIES
(Dollars in thousands)
Balance
Mix
Balance
Mix
Balance
Mix
Balance
Mix
Balance
Mix
2018
2017
2016
2015
2014
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
$
998 — % $
40,615
1 % $ 212,358
6 % $ 252,083
9 % $ 315,553
14 %
178,888
4,507,109
96,584
4,783,579
4
90
2
96
274,204
4,161,905
113,338
4,590,062
6
86
2
95
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
1,751,615
77
1,495 —
2,158,853
95
— —
— —
— —
— —
10,000 —
188,684
4
206,736
18,762 —
207,446
4
20,582
227,318
4
1
5
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
$4,991,025
100% $4,817,380
100% $3,535,313
(cid:20)(cid:19)0% $2,899,214
100% $2,275,813
100%
All of the Company's mortgage-backed securities were issued by government-sponsored enterprises at December 31, 2018. 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, 2018, the
Company's investment portfolio did not contain any securities that are directly backed by subprime or Alt-A mortgages.
During November and December of 2018, the Company restructured portions of its investment portfolio selling approximately
$1.0 billion of securities at a pre-tax loss of approximately $49.8 million ($37.9 million after-tax) and subsequently purchased
$1.2 billion in securities during the quarter. The incremental yield on the purchased securities was 164 basis points.
(cid:22)(cid:28)
The following table summarizes activity in the Company’s investment securities portfolio during 2018 and 2017. There were no
transfers of securities between investment categories during 2018.
TABLE 15—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
Market value adjustment
Reclassification adjustments(1)
Available for
Sale
Held to
Maturity
2018
$ 4,590,062
2017
$ 3,446,097
$
2018
227,318
$
1,959,952
1,475,008
19,169
(1,085,382)
(635,183)
(26,216)
(1,865)
(36,958)
$ 4,783,579
964,123
(682,497)
(568,250)
(26,728)
(17,691)
—
$ 4,590,062
—
—
—
(16,841)
(3,031)
—
—
207,446
2017
89,216
148,234
—
—
(8,687)
(1,445)
—
—
227,318
Balance at end of period
(1) Adjustments related to the reclassification of certain equity investments in accordance with ASU 2016-01, adopted as of January 1, 2018.
$
$
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. 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, 2018 and 2017. Note 4,
Investment Securities, 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 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 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 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
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. The Company exercises judgment in determining the
risk classification of its commercial loans.
(cid:23)(cid:19)
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); or 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. 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.
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 currently or 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 "acquired 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 acquired 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 acquired 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 impaired 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 acquired impaired loan accounting. The Company believes that the presentation
of certain asset quality measures excluding acquired 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 acquired impaired
loans, as indicated within each table, and related amounts.
(cid:23)(cid:20)
The following table sets forth the composition of the Company’s non-performing assets and TDRs at December 31.
TABLE 16—NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS
(Dollars in thousands)
Non-accrual loans and leases:
Commercial
Mortgage
Consumer
2018
2017
2016
2015
2014
$ Change % Change
2018 vs. 2017
$ 85,112
$111,726
$202,481
$ 32,097
$ 10,083
(26,614)
30,396
21,676
17,387
16,275
13,733
12,288
14,783
9,469
56,349
915
57,264
34,131
91,395
38,441
15,614
11,139
36,836
1,340
38,176
53,947
92,123
1,430
13,009
5,401
(8,204)
(4,772)
(12,976)
3,861
(9,115)
(484)
(24)
75
33
(6)
(69)
(9)
15
(5)
(1)
Total non-accrual loans and leases
137,184
145,388
228,502
Accruing loans and leases 90 days or more past
due
2,128
6,900
1,385
Total non-performing loans and leases (1)
139,312
152,288
229,887
30,394
26,533
169,706
178,821
80,807
81,291
21,199
251,086
104,369
OREO and foreclosed property (2)
Total non-performing assets (1)
Performing troubled debt restructurings (3)
Total non-performing assets and
performing troubled debt
restructurings (1)
Non-performing loans and leases to total
loans (1) (4)
Non-performing assets to total assets (1) (4)
Non-performing assets and performing troubled
debt restructurings to total assets (1) (4)
Allowance for credit losses to non-performing
loans (4)
Allowance for credit losses to total loans (4)
$250,513
$260,112
$355,455
$129,836
$ 93,553
(9,599)
(4)
0.62%
0.55%
0.76%
0.64%
1.53%
1.16%
0.40%
0.47%
0.33%
0.58%
0.81%
0.93%
1.64%
0.67%
0.59%
111.55%
101.19%
67.84%
266.35%
371.78%
0.69%
0.77%
1.04%
1.06%
1.24%
(1) Non-performing loans and assets include accruing loans 90 days or more past due.
(2) OREO and foreclosed property at December 31, 2018, 2017, 2016, 2015, and 2014 include $9.0 million, $4.5 million,
(3)
$4.8 million, $8.1 million, and $11.6 million, respectively, of former bank properties held for development or resale.
Performing troubled debt restructurings for December 31, 2018, 2017, 2016, 2015 and 2014 exclude $61.5 million, $68.5
million, $138.9 million, $23.4 million, and $2.2 million, respectively, in troubled debt restructurings that meet non-
performing asset criteria.
(4) Non-performing loans 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 non-performing assets decreased $9.1 million, or 5%, compared to December 31, 2017, driven by a decrease in non-
performing loans and leases of $13.0 million, or 9%, offset by a $3.9 million, or 15%, increase in OREO and foreclosed
property.
The decrease in non-performing loans and leases was driven by decreases in both non-accrual loans and leases and accruing
loans and leases past due more than 90 days. A decrease in commercial non-performing loans was partially offset by an
increase in mortgage non-performing loans, which was a result of a larger mortgage loan portfolio after the Gibraltar
acquisition and a limited number of loans moving to non-accrual. The decrease in commercial non-accrual loans was primarily
related to payments and charge-offs of non-accrual loans since December 31, 2017. Non-performing loans were 0.62% of total
loans at December 31, 2018, 14 basis points lower than at December 31, 2017. Total non-performing assets were 0.55% of total
assets at December 31, 2018, 9 basis points lower than December 31, 2017. Including TDRs that are in compliance with their
modified terms, total non-performing assets and TDRs decreased $9.6 million during 2018.
The increase in OREO and foreclosed property from 2017 was primarily the result of an increase of $4.4 million in former
bank properties as closed branches were moved out of service and into former bank properties. The increase was partially offset
by the sale of OREO properties during the year.
(cid:23)(cid:21)
At December 31, 2018, the Company had $154.4 million of commercial assets classified as substandard, $27.7 million of
commercial assets classified as doubtful, and no commercial assets classified as loss. Accordingly, the aggregate of the
Company’s classified commercial assets was 0.59% of total assets and 1.20% of total commercial loans at December 31, 2018.
At December 31, 2017, classified commercial assets totaled $298.5 million, or 1.07% of total assets, and 2.12% of total
commercial loans.
In addition to the problem loans described above, there were $157.2 million of commercial loans classified as special mention
at December 31, 2018, 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, 2018 decreased $52.7 million, or
25%, from December 31, 2017, primarily from upgrades to a limited number of customer relationships during 2018 as overall
asset quality improved. As a percentage of total commercial loans, special mention commercial loans decreased 45 basis points
from December 31, 2017 to 1.04% at the end of 2018.
Past Due and Non-accrual Loans
Past due status is based on the contractual terms of loans. At December 31, 2018, total loans past due, including non-accrual
loans, were 0.87% of total loans, a decrease of 20 basis points from December 31, 2017. Additional information on past due
loans is presented in the following table.
TABLE 17—PAST DUE AND NON-ACCRUAL LOAN SEGREGATION (1)
(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
Total past due and non-accrual loans
$
December 31, 2018
December 31, 2017
Amount
% of
Outstanding
Balance
Amount
% of
Outstanding
Balance
$ Change
% Change
38,579
18,753
2,128
—
59,460
137,184
196,644
0.17 % $
0.08
0.01
—
0.26
0.61
0.87% $
36,818
24,899
5,986
914
68,617
145,388
214,005
0.18 %
0.12
0.03
0.01
0.34
0.73
1.07%
1,761
(6,146)
(3,858)
(914)
(9,157)
(8,204)
(17,361)
5
(25)
(64)
(100)
(13)
(6)
(8)
(1)
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 decreased $17.4 million from December 31, 2017 to $196.6 million at December 31,
2018. The change was due to both a $9.2 million decrease in accruing past due loans and a decrease of $8.2 million in non-
accrual loans. Of the total accruing past due loans, 96% were past due less than 60 days at December 31, 2018 compared to
90% at year-end 2017.
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, 2018 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” section of this MD&A and Note 1, Summary of Significant Accounting Policies, to the consolidated
financial statements for more information.
(cid:23)(cid:22)
The following tables set forth the activity in the Company’s allowance for credit losses.
TABLE 18—SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR CREDIT LOSSES
(Dollars in thousands)
Allowance for loan and lease losses at beginning of period
2018
$ 140,891
2017
$ 144,719
2016
$ 138,378
2015
$ 130,131
2014
$ 143,074
Provision charged to operations
Transfer of balance to OREO and other
Adjustment attributable to FDIC loss share
arrangements
39,472
(7,172)
51,111
934
44,424
(2,781)
30,908
(10,419)
19,060
(22,157)
—
—
(1,497)
(1,360)
(4,260)
Charge-offs:
Commercial
Residential mortgage
Consumer
Recoveries:
Commercial
Residential mortgage
Consumer
Net charge-offs
Allowance for loan and lease losses at end of period
(31,189)
(334)
(14,024)
(45,547)
9,005
121
3,801
12,927
(32,620)
140,571
(47,448)
(365)
(14,653)
(62,466)
(25,983)
(313)
(13,543)
(39,839)
(4,085)
(362)
(12,854)
(17,301)
(2,564)
(613)
(8,806)
(11,983)
2,286
437
3,870
6,593
2,643
180
3,211
6,034
2,325
95
3,999
6,419
3,066
246
3,085
6,397
(55,873)
140,891
(33,805)
144,719
(10,882)
138,378
(5,586)
130,131
Reserve for unfunded lending commitments at beginning of
period
Balance created in acquisition accounting
Provision for (Reversal of) unfunded lending commitments
Reserve for unfunded lending commitments at end of
period
Allowance for credit losses at end of period
13,208
709
913
11,241
1,370
597
14,145
—
(2,904)
11,801
—
2,344
11,147
—
654
14,830
$ 155,401
13,208
$ 154,099
11,241
$ 155,960
14,145
$ 152,523
11,801
$ 141,932
Allowance for loan and lease losses to non-performing
assets (1)
Allowance for loan and lease losses to total loans and
leases at end of period
Net charge-offs to average loans and leases
82.83%
78.79%
57.64%
151.41%
141.26%
0.62
0.15
0.70
0.33
0.96
0.23
0.97
0.08
1.14
0.05
(1) Non-performing assets include accruing loans 90 days or more past due. For purposes of this table, non-performing assets
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.
TABLE 19—ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES
Commercial
Residential mortgage
Consumer
Total allowance for credit losses
2018
2017
2016
2015
2014
% of
Loans
Reserve
%
75 % 67 %
% of
Loans
Reserve
%
77 % 70 %
% of
Loans
Reserve
%
76 % 72 %
% of
Loans
Reserve
%
73 % 72 %
% of
Loans
Reserve
%
70 % 69 %
9 % 19 %
6 % 15 %
8 %
8 %
8 %
8 %
7 %
9 %
16 % 14 %
23 % 22 %
16 % 20 %
100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
19 % 20 %
17 % 15 %
(cid:23)(cid:23)
The allowance for credit losses was $155.4 million at December 31, 2018, or 0.69% of total loans, $1.3 million higher than at
December 31, 2017. The allowance for credit losses as a percentage of loans was 0.77% at December 31, 2017. The decrease in
the allowance for credit losses as a percentage of loans and leases was primarily the result of the acquired Gibraltar loans, as
those acquired loans are recorded at estimated fair value as of the acquisition date, which includes an estimate of expected
losses in this portfolio, and as a result, no allowance for loan losses was established as of the acquisition date. Additionally,
recoveries on acquired loans during 2018 reduced the required allowance for credit losses for that portfolio. Also contributing
to the decrease in the allowance for credit losses was an overall improvement in asset quality.
Net charge-offs during 2018 were $32.6 million, or 0.15% of average loans and leases, as compared to net charge-offs of $55.9
million, or 0.33%, for 2017. The decrease in net charge-offs was the result of a $16.9 million decrease in gross charge-offs and
a $6.3 million increase in gross recoveries, primarily from one large commercial recovery of $3.3 million in 2018. The
provision for credit losses covered 124% and 93% of net charge-offs in 2018 and 2017, respectively.
At December 31, 2018 and 2017, the allowance for loan and lease losses covered 101% and 93% of total non-performing loans
and leases, respectively.
Cash and cash equivalents
Cash and cash equivalents totaled $690.5 million at December 31, 2018, an increase of $64.7 million, or 10%, from December
31, 2017. The increase in cash and cash equivalents was primarily driven by deposit growth during the year, partially offset by
additional investment security purchases and loan growth. Interest-bearing deposits at other institutions increased $89.7
million, or 29%, to $396.3 million at December 31, 2018, partially offset by a $25.0 million decrease in cash and due from
banks to $294.2 million at December 31, 2018.
Short-term investments held in interest-bearing deposits at other institutions 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 FRB and FHLB short-term rates. The Company’s cash
activity is further discussed in the “Liquidity and Other Off-Balance Sheet Activities” section below.
(cid:23)(cid:24)
15,066
(8,622)
(250)
—
6,194
55,649
9,112
3,861
(4,217)
35,094
154,148
253,647
259,841
8
N/M
(3)
—
3
33
12
15
(13)
31
90
43
33
2018
2017
2016
2015
2014
$ Change
% Change
2018 vs. 2017
Other Assets
The following table details other asset balances as of December 31:
TABLE 20—OTHER ASSETS COMPOSITION
(Dollars in thousands)
Other Earning Assets
FHLB stock, FRB stock, and
other equity securities
FDIC loss share receivable
Other interest-earning assets
Reverse repurchase agreements
Total other earning assets
Non-Earning Assets
Bank-owned life insurance
Accrued interest receivable
Other real estate owned
Derivative assets
$ 192,436
$ 177,370
$
93,718
$
66,008
$
74,130
—
6,910
—
199,346
8,622
7,160
—
193,152
—
6,660
1,268
101,646
39,878
5,660
—
111,546
69,627
5,412
—
149,169
226,219
170,570
160,875
131,575
122,573
84,933
30,394
27,048
75,821
26,533
31,265
52,124
21,200
38,886
76,592
47,863
34,131
30,486
37,696
53,947
32,903
141,951
139,326
Investment in tax credit entities
147,110
112,016
Other non-earning assets
Total non-earning assets
Total other assets
324,733
840,437
$1,039,783
170,585
586,790
$ 779,942
166,940
516,617
$ 618,263
152,181
538,187
$ 649,733
92,108
478,553
$ 627,722
The $154.1 million increase in other non-earning assets was primarily the result of a $124.1 million increase in net tax asset
balances at December 31, 2018 as a result of deductions claimed on the 2017 income tax returns associated with unrealized
losses on securities and loans and depreciation on real and personal property.
Bank-owned life insurance increased $55.6 million from the prior year primarily due to the purchase of additional BOLI
policies.
The $35.1 million increase in investment in tax credit entities was primarily related to the addition of $41.8 million in new
market tax credits in 2018, partially offset by a decrease in historic tax credits.
The $15.1 million increase in FHLB stock, FRB stock, and other equity securities was primarily the result of $18.7 million in
stock acquired from Gibraltar.
FUNDING SOURCES
Deposits, both those obtained from clients in its primary market areas and those acquired, 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, as well as on-line banking
services at www.iberiabank.com and www.virtualbank.com. 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 important funding sources 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 2018.
(cid:23)(cid:25)
Deposits
The Company’s ability to attract and retain customer deposits is critical to the Company’s continued success. Total deposits
increased $2.3 billion, or 11%, to $23.8 billion at December 31, 2018, driven by $1.1 billion of deposits acquired from
Gibraltar in March of 2018, brokered deposit issuances, and organic growth throughout the year. Deposit growth during 2018
was strongest in the Energy Group, the Atlanta market, and the Virtual Bank division (digital banking).
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 these deposits to decline over the beginning of 2019.
The following table sets forth the composition of the Company’s deposits as of December 31:
TABLE 21—DEPOSIT COMPOSITION BY PRODUCT
(Dollars in thousands)
2018
2017
2016
2015
2014
$ Change % Change
Non-interest-bearing
deposits
NOW accounts
Money market accounts
Savings accounts
Time deposits
Total deposits
$ 6,542,490
28 % $ 6,209,925
29 % $ 4,928,878
28 % $ 4,352,229
27 % $ 3,195,430
26 %
4,514,113
8,237,291
828,914
3,640,623
19
35
3
15
4,348,939
7,674,291
846,074
2,387,488
20
36
4
11
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
332,565
165,174
563,000
(17,160)
1,253,135
$23,763,431
100% $21,466,717
100% $17,408,283
100% $16,178,748
100% $12,520,525
100% 2,296,714
5
4
7
(2)
52
11
2018 vs. 2017
The following table details large-denomination time deposits by remaining maturity dates at December 31:
TABLE 22—REMAINING MATURITIES OF TIME DEPOSITS GREATER THAN $100,000
(Dollars in thousands)
2018
2017
2016
2015
2014
3 months or less
3 – 12 months
12 – 36 months
More than 36 months
58,730
Total time deposits greater than $100,000 $2,038,608
Short-term Borrowings
$ 326,621
16 % $ 317,197
22 % $ 241,128
21 % $ 228,336
16 % $ 204,041
19 %
1,086,521
566,736
53
28
3
753,423
319,864
77,036
51
22
5
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
100% $1,467,520
100% $1,135,763
100% $1,386,740
100% $1,080,799
100%
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 45.4 basis points.
Total short-term borrowings increased $491.6 million, or 50%, from December 31, 2017, to $1.5 billion at December 31, 2018.
An increase of $692.0 million in outstanding short-term FHLB advances was partially offset by a decrease of $200.4 million in
repurchase transactions. The increase in short-term FHLB advances was primarily due to additional advances made during
2018, causing the average rate on short-term borrowings to rise as new advances in 2018 had higher rates due to increases in
short-term market rates.
On an average basis, short-term borrowings increased $146.3 million, or 16%, from 2017, primarily due to additional short-
term FHLB advances held in 2018.
(cid:23)(cid:26)
Total short-term borrowings were 6% of total liabilities and 56% of total borrowings at December 31, 2018, compared to 4%
and 40%, respectively, at December 31, 2017. On an average basis, short-term borrowings were 4% of total liabilities and 43%
of total borrowings in 2018, compared to 4% and 51%, respectively, during 2017. For additional information, see Note 12,
Short-term Borrowings, in the Notes to the consolidated financial statements.
Long-term Debt
Long-term debt decreased $329.7 million, or 22%, to $1.2 billion at December 31, 2018, which included $405.1 million in
acquired long-term FHLB advances from Gibraltar which were immediately paid off upon acquisition during the first quarter of
2018. The Company made an additional $1.3 billion in repayments, partially offset by $922.0 million in new long-term FHLB
advances and $15.9 million of additional notes payable in 2018. On a period-end basis, long-term debt was 4% and 6% of total
liabilities at December 31, 2018 and 2017, respectively.
On average, long-term debt increased to $1.4 billion in 2018, $537.7 million, or 63%, higher than 2017, mainly due to higher
levels of long-term FHLB advances held by the Company throughout 2018 as compared to 2017. Average long-term debt was
5% of total liabilities during the current year, compared to 4% during 2017.
Long-term debt at December 31, 2018 included $986.0 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 $60.0 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 13, Long-term Debt, in the Notes to the consolidated financial statements.
CAPITAL RESOURCES
Shareholders' equity increased $359.5 million, or 10%, during 2018, primarily from undistributed income to common
shareholders of $282.9 million, as well as the Company's issuance of 2.8 million shares of common stock at a price of $77.00
per common share on March 23, 2018 as part of Gibraltar acquisition. The net increase to equity from the offering was $214.7
million. See Note 3, Acquisition Activity, to the consolidated financial statements for more information. Shareholders' equity
was negatively impacted by the repurchase of 1,972,500 common shares, at a weighted average price of $75.46 per common
share. Subsequent to year-end and through February 21, 2019, the Company repurchased 226,921 common shares for
approximately $17.5 million. See Note 15, Shareholders' Equity, Capital Ratios, and Other Regulatory Matters, to the
consolidated financial statements for more information on the Company's common stock repurchase activity.
The Company's dividend to common shareholders was $1.56 per common share in 2018 compared to $1.46 in 2017, a 7%
increase. On a year-to-date basis, the dividend payout ratio was 24.2% for the current year, down from 57.5% in the
comparable period of 2017.
(cid:23)(cid:27)
Regulatory Capital
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.
At December 31, 2018 and 2017, 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.
TABLE 23—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
2018 Well-
Capitalized
Minimums
N/A
December 31, 2018
December 31, 2017
Actual
Actual
9.63%
9.35%
5.00%
N/A
6.50%
N/A
8.00%
N/A
10.00%
9.38
10.72
10.95
11.25
10.95
12.33
11.58
9.10
10.57
10.86
11.16
10.86
12.37
11.55
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, 2018, the required minimum capital conservation buffer was 1.875%.
On January 1, 2019, the capital conservation buffer increased to the fully phased-in rate of 2.50%. At December 31, 2018, the
capital conservation buffers of the Company and IBERIABANK were 4.33% and 3.58%, respectively. Management believes
that at December 31, 2018, the Company and IBERIABANK would have met all capital adequacy requirements on a fully
phased-in basis if such requirements were then effective.
Capital ratios at December 31, 2018 were favorably impacted by the increase in undistributed income available to common
shareholders and by the common stock issued in the 2018 from the Gibraltar acquisition. Capital ratios at the end of 2018 were
negatively impacted by the Company's repurchase of 2.0 million common stock shares during the year.
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.
(cid:23)(cid:28)
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, 2018 totaled $2.5
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 $5.0 billion in the investment securities portfolio, $2.6 billion is
unencumbered and $2.4 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 consistent 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 11, Deposits, Note 12, Short-Term
Borrowings, and Note 13, 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, 2018, the Company had $2.2 billion of outstanding FHLB advances, $1.2
billion of which was short-term and $986.0 million was long-term. Additional FHLB borrowing capacity available at
December 31, 2018 amounted to $7.0 billion. At December 31, 2018, the Company also had various funding arrangements with
the Federal discount window and commercial banks providing up to $331.2 million in the form of federal funds and other lines
of credit. At December 31, 2018, 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, 2018 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:19)
At December 31, 2018, the Company’s unfunded loan commitments outstanding totaled $642.2 million. At the same date,
unused lines of credit, including credit card lines, amounted to $6.9 billion, as shown in the following table.
TABLE 24—COMMITMENT EXPIRATION PER PERIOD
(Dollars in thousands)
Unused lines of credit:
Real estate - construction
Real estate - owner-occupied
Real estate - non-owner occupied
Commercial and industrial
Mortgage
Consumer
Less than 1
year
1—3 Years
3—5 Years
Over 5 Years
Total
$ 240,225
$ 854,366
$
28,208
$
19,671
$1,142,470
32,021
144,964
1,502,541
98,837
941,301
59,240
169,709
997,953
3,033
160,334
6,324
34,748
9,667
5,339
107,252
354,760
761,499
48,685
3,310,678
10
32,267
863,056
657
102,537
732,364
1,866,266
816,383
6,883,963
Total unused lines of credit
2,959,889
2,244,635
Unfunded loan commitments
Standby letters of credit
642,162
—
—
—
642,162
202,333
$3,804,384
27,056
$2,271,691
11,047
$ 874,103
—
$ 816,383
240,436
$7,766,561
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, 2018 are shown in the following table.
TABLE 25—CONTRACTUAL OBLIGATIONS AND OTHER DEBT COMMITMENTS
(Dollars in thousands)
Operating leases
Time deposits
Short-term borrowings
Long-term debt
2019
21,750
$
$
2,504,515
1,482,882
2020
19,991
876,740
—
$
2021
16,921
159,877
—
$
2022
14,195
76,486
—
2023
$
9,182
$
2024 and
After
34,652
Total
$ 116,691
12,684
10,321
3,640,623
—
— 1,482,882
309,116
$4,318,263
233,465
$1,130,196
125,255
$ 302,053
10,581
$ 101,262
$
58,762
80,628
428,972
$ 473,945
1,166,151
$ 6,406,347
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 Company's 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.
(cid:24)(cid:20)
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.
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, 2018, 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 26—INTEREST RATE SENSITIVITY
Shift in Interest Rates
(in bps)
+200
+100
-100
-200
% Change in Projected
Net Interest Income
1.7%
1.2%
(3.7)%
(10.5)%
The influence of using the forward curve as of December 31, 2018 as a basis for projecting the interest rate environment would
approximate a 0.3% increase in net interest income over the next 12 months. The computations of interest rate risk shown
above are performed on a static 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 Federal Reserve Board (“FRB”), in an attempt to stimulate the overall
economy, has, among other things, kept interest rates low through its targeted federal funds rate. In December 2016, the FOMC
voted to raise the target federal funds rate for only the second time since 2006. The FOMC voted to raise the target federal
funds rate multiple times in both 2017 and 2018. The FOMC has now raised rates by two-and-a-quarter percentage points since
the financial crisis in 2008, a sign of its increased confidence in the health of the economy. While the FOMC continues to
observe sustained economic activity, strong labor market conditions, and stable inflation, it has signaled a pause in its recent
efforts to increase the federal funds rate. As a result, the potential for additional gradual increases in the federal funds rate in
2019 is uncertain. Additional increases in the federal funds rate and unwind of its balance sheet could cause overall interest
rates to rise, which may negatively impact the U.S. real estate markets and affect deposit growth and pricing. In addition,
deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers,
especially our business 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, and to a lesser extent Prime. Our net interest income may be reduced if more
interest-bearing liabilities than interest-earning assets reprice or mature during a period when interest rates are rising, or more
interest-earning assets than interest-bearing liabilities reprice or mature during a period when interest rates are declining.
In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling
banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee ("ARRC") has
proposed that the Secured Overnight Financing Rate ("SOFR") is the rate that represents best practice as the alternative to
LIBOR for use in derivatives and other financial contracts that are currently indexed to LIBOR. ARRC has proposed a paced
market transition plan to SOFR from LIBOR and organizations are currently working on industry wide and company specific
transition plans as it relates to derivatives and cash markets exposed to LIBOR. The Company has material contracts that are
indexed to LIBOR and is monitoring this activity and evaluating the related risks.
(cid:24)(cid:21)
The table below presents the Company’s anticipated repricing of loans and investment securities over the next four quarters.
TABLE 27—REPRICING OF CERTAIN EARNING ASSETS (1)
(Dollars in thousands)
Investment securities
Fixed rate loans
Variable rate loans
Total loans
1Q 2019
2Q 2019
3Q 2019
4Q 2019
Total less than
one year
$
181,109
$
171,356
$
187,433
$
166,309
$
706,207
850,652
10,504,373
650,607
415,429
613,697
307,481
566,375
2,681,331
284,904
11,512,187
11,355,025
$11,536,134
1,066,036
$ 1,237,392
921,178
$ 1,108,611
851,279
$ 1,017,588
14,193,518
$14,899,725
(1) Amounts include expected maturities, scheduled paydowns, expected prepayments, and loans subject to caps and 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 in commercial and consumer loan products, which typically have shorter terms than residential
mortgage loans. The majority of fixed-rate, long-term, agency-conforming residential loans are sold in the secondary market to
avoid bearing the interest rate risk associated with longer duration assets in the current rate environment. However, the Sabadell
and Gibraltar acquisitions brought a considerable amount of jumbo, non-agency-conforming residential mortgage loan
exposure onto the balance sheet, both fixed rate and variable rate in nature, which has increased the overall duration of the
portfolio. Considering all of this, as of December 31, 2018, $13.5 billion, or 60.0%, of the Company’s total loan portfolio had
variable interest rates, of which $2.5 billion, or 11%, had an expected repricing date beyond the next four quarters. The
Company had no significant concentration to any single borrower or industry segment at December 31, 2018.
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, 2018, 85% of the Company’s deposits were in transaction and limited-transaction accounts, compared to 89% at
December 31, 2017. Non-interest-bearing transaction accounts were 28% of total deposits at December 31, 2018, compared to
29% of total deposits at December 31, 2017.
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 28—REPRICING OF LIABILITIES (1)
(Dollars in thousands)
Time deposits
Short-term borrowings
Long-term debt
1Q 2019
2Q 2019
3Q 2019
4Q 2019
$
649,447
$
754,886
$
510,925
$
589,510
Total less
than one year
$ 2,504,768
1,462,882
210,821
$ 2,323,150
$
20,000
114,063
888,949
—
— 1,482,882
67,254
578,179
$
50,583
640,093
442,721
$ 4,430,371
$
(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 such derivative instruments to effectively manage interest rate risk. These derivative instruments of the Company
would modify net interest sensitivity to levels deemed appropriate.
(cid:24)(cid:22)
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
2019.
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:23)
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 29, 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).
(cid:24)(cid:24)
TABLE 29—RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
2018
2017
2016
(Dollars in thousands, except
per share amounts)
Net income
Less: Preferred stock
dividends
Income available to
common shareholders
(GAAP)
Pre-tax
After-tax
Per
share (2)
Pre-tax
After-tax
Per
share (2)
Pre-tax
After-tax
Per
share (2)
$ 402,527
$ 370,249
$ 6.63
$292,879
$ 142,413
$
2.77
$ 271,970
$ 186,777
$
4.49
—
9,095
0.17
—
9,095
0.18
—
7,977
0.19
$ 402,527
$ 361,154
$ 6.46
$292,879
$ 133,318
$
2.59
$ 271,970
$ 178,800
$
4.30
Non-interest income adjustments (1)(3):
Loss (gain) on sale of
investments
49,899
37,923
0.68
Other non-core non-interest
income
Total non-interest income
adjustments
415
316
—
50,314
38,239
0.68
148
—
148
97
—
97
—
—
—
(2,001)
(1,301)
(0.03)
—
—
—
(2,001)
(1,301)
(0.03)
Non-interest expense adjustments (1)(3):
Merger-related expense
31,295
23,919
0.44
40,971
28,566
0.55
4,290
3,261
0.05
3,025
1,966
0.04
3
782
2
—
508
0.01
Compensation-related
expense
Impairment of long-lived
assets, net of (gain) loss on
sale
(Gain) loss on early
termination of loss share
agreements
Litigation expense
Other non-core non-interest
expense
Total non-interest expense
adjustments
Income tax expense
(benefit) - impact of the Tax
Act
Income tax expense
(benefit) - other
Core earnings (Non-
GAAP)
Provision for credit losses (1)
Pre-provision earnings, as
adjusted (Non-GAAP)
(1)
10,837
8,236
0.15
6,961
4,525
0.09
(674)
(437)
(0.01)
(2,708)
(2,058)
(0.04)
—
—
—
—
—
11,692
11,405
—
0.22
17,798
11,569
—
—
0.28
—
(133)
(102)
0.01
844
603
0.01
2,752
1,788
0.04
43,581
33,256
0.61
63,493
47,065
0.91
20,661
13,430
0.32
—
—
(58,745)
(1.06)
173
—
—
—
51,023
0.99
(1,237)
(0.02)
—
—
—
—
(6,836)
(0.16)
496,422
40,385
374,077
30,692
6.69
356,520
51,708
230,266
33,610
4.47
290,630
41,521
184,093
26,989
4.43
$ 536,807
$ 404,769
$408,228
$ 263,876
$ 332,151
$ 211,082
Excluding preferred stock dividends, merger-related expense, and litigation expense, after-tax amounts are calculated
using a tax rate of 24% in 2018 and 35% in 2017 and 2016, which approximates the marginal tax rate.
(2) Diluted per share amounts may not appear to foot due to rounding.
(cid:24)(cid:25)
(Dollars in thousands)
Net interest income (GAAP)
Taxable equivalent benefit
Net interest income (TE) (Non-GAAP) (1)
Non-interest income (GAAP)(3)
Taxable equivalent benefit
Non-interest income (TE) (Non-GAAP) (1)(3)
Taxable equivalent revenues (Non-GAAP) (1)(3)
Securities losses (gains) and other non-interest income
Core taxable equivalent revenues (Non-GAAP) (1)(3)
Total non-interest expense (GAAP)(3)
Less: Intangible amortization expense
Tangible non-interest expense (Non-GAAP) (2)(3)
Less: Merger-related expense
Compensation-related expense
Impairment of long-lived assets, net of (gain) loss on sale
(Gain) loss on early termination of loss share agreements
Litigation expense
Other non-core non-interest expense
Core tangible non-interest expense (Non-GAAP) (2)(3)
Average assets (GAAP)
Less: Average intangible assets, net
Total average tangible assets (Non-GAAP) (2)
Total shareholders’ equity (GAAP)
Less: Goodwill and other intangibles
Preferred stock
Tangible common equity (Non-GAAP) (2)
Average shareholders’ equity (GAAP)
Less: Average preferred equity
Average common equity
Less: Average intangible assets, net
Average tangible common shareholders' equity (Non-GAAP) (2)
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)
Effect of non-core revenues and expenses
Core return on average common equity (Non-GAAP)
Effect of intangibles (2)
Core return on average tangible common equity (Non-GAAP) (2)
Efficiency ratio (GAAP)(3)
Effect of tax benefit related to tax-exempt income(3)
Efficiency ratio (TE) (Non-GAAP) (1)(3)
Effect of amortization of intangibles
(cid:24)(cid:26)
$
$
$
$
$
$
$
$
$
$
$
2018
1,013,248
5,760
1,019,008
152,562
1,677
154,239
1,173,247
50,314
1,223,561
722,898
21,678
701,220
31,295
4,290
10,837
(2,708)
—
(133)
657,639
29,578,026
1,307,156
28,270,870
4,056,277
1,315,462
132,097
2,608,718
3,882,728
132,097
3,750,631
1,307,156
2017
2016
$
$
$
$
$
$
$
$
$
$
$
808,846
10,308
819,154
202,147
2,736
204,883
1,024,037
148
1,024,185
666,406
12,590
653,816
40,971
3,025
6,961
—
11,692
844
590,323
24,480,656
957,209
23,523,447
3,696,791
1,271,807
132,097
2,292,887
3,508,350
132,097
3,376,253
957,209
$
$
$
$
$
$
$
$
$
$
$
649,238
9,233
658,471
227,717
2,822
230,539
889,010
(2,001)
887,009
563,464
8,415
555,049
3
782
(674)
17,798
—
2,752
534,388
20,321,234
759,749
19,561,485
2,939,694
755,765
132,097
2,051,832
2,637,594
112,598
2,524,996
759,749
$
2,443,475
$
2,419,044
$
1,765,247
1.25%
0.05
1.30%
9.63%
0.34
9.97%
6.04
16.01%
62.0%
(0.4)
61.6%
(1.9)
0.58%
0.40
0.98%
3.95%
2.87
6.82%
3.04
9.86%
65.9%
(0.8)
65.1%
(1.3)
0.92%
0.03
0.95%
7.08%
0.21
7.29%
3.45
10.74%
64.3%
(0.9)
63.4%
(1.0)
Effect of non-core items
Core tangible efficiency ratio (TE) (Non-GAAP) (1) (2)(3)
(6.0)
53.7%
(6.2)
57.6%
(2.2)
60.2%
Total assets (GAAP)
Less: Goodwill and other intangibles
Tangible assets (Non-GAAP) (2)
Tangible common equity ratio (Non-GAAP) (2)
Cash Yield:
Earning assets average balance (GAAP)
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)
$
$
$
$
$
$
30,833,015
$
27,904,129
$
21,659,190
1,315,462
1,271,807
755,765
29,517,553
$
26,632,322
$
20,903,425
8.84%
8.61%
9.82%
27,199,588
$
22,482,689
$
18,477,064
144,127
27,343,715
1,013,248
(68,755)
944,493
$
$
$
160,675
22,643,364
808,846
(63,866)
744,980
$
$
$
73,010
18,550,074
649,238
(32,575)
616,663
3.75%
(0.28)
3.47%
3.64%
(0.31)
3.33%
3.56%
(0.19)
3.37%
(1) Fully taxable-equivalent (TE) calculations include the tax benefit associated with related income sources that are tax-exempt
using a rate of 21% for 2018 and 35% for 2017 and 2016.
(2) Tangible calculations eliminate the effect of goodwill and acquisition-related intangibles and the corresponding amortization
expense on a tax-effected basis where applicable.
(3) Certain prior period amounts have been reclassified to conform to the net presentation requirements of ASU No. 2014-09,
Revenue from Contracts with Customers, which was adopted effective January 1, 2018. The adoption resulted in a reduction of
non-interest income and non-interest expense of approximately $8.9 million and $6.1 million in 2017 and 2016, respectively, and
had no impact on net income.
(cid:24)(cid:27)
TABLE 30 – QUARTERLY RESULTS OF OPERATIONS AND SELECTED CASH FLOW DATA (UNAUDITED)
(Dollars in thousands, except per share data)
Total interest and dividend income
Fourth Quarter
330,196
$
Third Quarter
317,067
$
Second Quarter
303,823
$
First Quarter
270,543
$
2018
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
(Loss) gain on sale of available for sale securities
Other non-interest income
Total non-interest expense
Income before income taxes
Income tax (benefit) expense
Net income
Less: Preferred stock dividends
Net income available to common shareholders
Less: 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
Total interest and dividend income
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Gain (loss) on sale of available for sale securities
Other non-interest income
Total non-interest expense
Income before income taxes
Income tax expense
Net income
Less: Preferred stock dividends
Net income available to common shareholders
Less: 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
65,175
265,021
13,094
251,927
(49,844)
50,813
168,989
83,907
(46,132)
130,039
949
129,090
1,214
127,876
2.33
2.32
0.41
$
$
$
$
57,842
259,225
11,384
247,841
—
53,087
169,062
131,866
30,401
101,465
3,599
97,866
908
96,958
1.74
1.73
0.39
$
$
$
$
47,710
256,113
7,696
248,417
3
53,937
196,776
105,581
30,457
75,124
949
74,175
767
73,408
1.31
1.30
0.38
$
$
$
$
37,654
232,889
8,211
224,678
(59)
44,625
188,071
81,173
17,552
63,621
3,598
60,023
639
59,384
1.11
1.10
0.38
$
$
$
$
2017
Fourth Quarter
269,703
$
Third Quarter
246,972
$
Second Quarter
204,575
$
First Quarter
192,533
$
34,201
235,502
12,825
222,677
35
52,308
183,634
91,386
81,108
10,278
949
9,329
101
9,228
0.17
0.17
0.37
$
$
$
$
30,089
216,883
21,459
195,424
(242)
51,085
197,817
48,450
18,806
29,644
3,598
26,046
283
25,763
0.49
0.49
0.37
$
$
$
$
20,932
183,643
10,852
172,791
59
53,779
146,578
80,051
28,033
52,018
949
51,069
361
50,708
1.00
0.99
0.36
$
$
$
$
19,715
172,818
6,572
166,246
—
45,124
138,378
72,992
22,519
50,473
3,599
46,874
346
46,528
1.01
1.00
0.36
$
$
$
$
(cid:24)(cid:28)
Glossary of Defined Terms
Term
ACL
Definition
Allowance for credit losses
Acquired loans
Loans acquired in a business combination
AFS
ALLL
AOCI
ASC
ASU
Securities available for sale
Allowance for loan and lease losses
Accumulated other comprehensive income (loss)
Accounting Standards Codification
Accounting Standards Update
Banco Sabadell
Banco de Sabadell, S.A.
Basel III
Global regulatory standards on bank capital adequacy and liquidity published by the BCBS
BOLI
CDE
C&I
CDI
CET1
CFPB
CRE
Bank owned life insurance
IBERIA CDE, LLC
Commercial and Industrial loans
Core deposit intangible assets
Common Equity Tier 1 Capital defined by Basel III capital rules
Consumer Financial Protection Bureau
Commercial Real Estate Loans
Company
IBERIABANK Corporation and Subsidiaries
Covered Loans
Acquired loans with loss protection provided by the FDIC
DOJ
Department of Justice
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
ECL
EPS
FASB
FDIC
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
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
Gibraltar
Georgia Commerce Bancshares, Inc.
Gibraltar Private Bank & Trust Co.
GSE
HTM
HUD
IAM
Government-sponsored enterprises
Securities held-to-maturity
U.S. Department of Housing and Urban Development
IBERIA Asset Management, Inc.
IBERIABANK
Banking subsidiary of IBERIABANK Corporation
ICP
MMDA
Mortgage
IBERIA Capital Partners, LLC
Money market deposits accounts
IBERIABANK Mortgage Division
Legacy loans
Loans that were originated directly or otherwise underwritten by the Company
LIBOR
LTC
London Interbank Borrowing Offered Rate
Lenders Title Company
Non-GAAP
Financial measures determined by methods other than in accordance with GAAP
(cid:25)(cid:19)
NOW
OCC
OCI
OFI
Negotiable order of withdrawal
Office of the Comptroller of the Currency
Other comprehensive income
Office of Financial Institutions
Old Florida
Old Florida Bancshares, Inc.
OMNI
OREO
OTTI
Parent
RRP
OMNI BANCSHARES, Inc.
Other real estate owned
Other than temporary impairment
IBERIABANK Corporation
Recognition and Retention Plan
Sabadell United
Sabadell United Bank, N.A.
SBA
SEC
Small Business Administration
Securities and Exchange Commission
SolomonParks
SolomonParks Title & Escrow, LLC
TE
Tax Act
Teche
TDR
Fully taxable equivalent
Tax Cuts and Jobs Act
Teche Holding Company
Troubled debt restructuring
Trust One-Memphis
Trust One Bank (Memphis Operations)
U.S.
VIE
United States of America
Variable interest entity
(cid:25)(cid:20)
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, 2018. 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, 2018, the Company’s internal control over financial reporting was effective
based on those criteria.
The Company’s independent registered public accounting firm has also issued an attestation report, which expresses an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018.
There was no change in the Company's internal control over financial reporting that occurred during the fourth quarter of 2018
that has materially affected, is likely to materially affect, the Company's internal control over financial reporting.
Daryl G. Byrd
President and Chief Executive Officer
Anthony J. Restel
Vice Chairman and Chief Financial Officer
(cid:25)(cid:21)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Board of Directors and Shareholders
IBERIABANK Corporation
Opinion on Internal Control over Financial Reporting
We have audited IBERIABANK Corporation and subsidiaries’ internal control over financial reporting as of December 31,
2018, 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). In our opinion, IBERIABANK
Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2018, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States
(PCAOB), the consolidated balance sheets of IBERIABANK Corporation and subsidiaries as of December 31, 2018 and 2017,
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, 2018, and the related notes and our report dated February 22, 2019 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s 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 are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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.
Definition and Limitations of Internal Control Over Financial Reporting
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.
New Orleans, Louisiana
February 22, 2019
(cid:25)(cid:22)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON THE CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors and Shareholders
IBERIABANK Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of IBERIABANK Corporation and subsidiaries (the Company)
as of December 31, 2018 and 2017, 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, 2018, and the related notes (collectively referred to as
the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2018, 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)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2018, 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 22, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2007.
New Orleans, Louisiana
February 22, 2019
(cid:25)(cid:23)
IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share data)
Assets
Cash and due from banks
Interest-bearing deposits in other banks
Total cash and cash equivalents
Securities available for sale, at fair value
Securities held to maturity (fair values of $204,277 and $227,964, respectively)
Mortgage loans held for sale, at fair value
Loans and leases, net of unearned income
Allowance for loan and lease losses
Loans and leases, net
Premises and equipment, net
Goodwill
Other intangible assets
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 and 13,750
shares issued and outstanding, respectively, including related surplus
Common stock, $1 par value - 100,000,000 shares authorized; 54,796,231 and 53,872,272
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,
2018
2017
$
294,186
$
396,267
690,453
319,156
306,568
625,724
4,783,579
4,590,062
207,446
107,734
22,519,815
(140,571)
22,379,244
300,507
1,235,533
88,736
227,318
134,916
20,078,181
(140,891)
19,937,290
331,413
1,188,902
88,562
1,039,783
$ 30,833,015
779,942
$ 27,904,129
$
6,542,490
$
6,209,925
17,220,941
23,763,431
1,482,882
1,166,151
364,274
26,776,738
15,256,792
21,466,717
991,297
1,495,835
253,489
24,207,338
132,097
132,097
54,796
53,872
2,869,416
2,787,484
1,042,718
(42,750)
4,056,277
$ 30,833,015
769,226
(45,888)
3,696,791
$ 27,904,129
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(cid:25)(cid:24)
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 credit losses
Net interest income after provision for credit 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
Trust department income
(Loss) 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
Computer services expense
Professional services
Credit and other loan related expense
Insurance
(Gain) loss on early termination of FDIC loss share agreements
Travel and entertainment
Amortization of acquisition intangibles
Impairment of long-lived assets and other losses
Other non-interest expense
Total non-interest expense
Income before income tax expense
Income tax expense
Net Income
Less: Preferred stock dividends
Net Income Available to Common Shareholders
$
(cid:25)(cid:25)
Year Ended December 31,
2017
2016
2018
$
1,086,662
3,748
$
802,947
4,679
$
663,036
6,564
107,137
10,634
—
13,448
1,221,629
113,996
2,117
44,839
14,682
32,747
208,381
1,013,248
40,385
972,863
46,424
52,803
24,149
9,195
10,295
12,540
15,981
(49,900)
31,075
152,562
414,741
77,246
15,951
18,371
39,680
28,698
19,088
25,274
(2,708)
10,035
21,678
27,780
27,064
722,898
402,527
32,278
370,249
9,095
361,154
$
87,359
8,835
—
9,963
913,783
57,283
1,455
21,095
7,557
17,547
104,937
808,846
51,708
757,138
63,570
47,678
21,972
9,161
10,199
10,904
9,705
(148)
29,106
202,147
379,527
70,663
14,252
13,999
36,790
48,545
18,411
21,815
—
11,287
12,590
12,246
26,281
666,406
292,879
150,466
142,413
9,095
133,318
$
52,150
7,004
(16,023)
4,208
716,939
32,396
1,145
18,040
2,452
13,668
67,701
649,238
41,521
607,717
83,853
44,135
22,213
14,391
10,008
11,245
7,174
2,001
32,697
227,717
331,686
65,797
12,383
12,332
25,091
19,153
13,840
17,270
17,798
8,481
8,415
6,111
25,107
563,464
271,970
85,193
186,777
7,977
178,800
Income Available to Common Shareholders - Basic
Less: 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:
$
$
$
$
$
$
$
361,154
3,583
357,571
6.50
6.46
1.56
$
$
$
133,318
1,210
132,108
2.61
2.59
1.46
178,800
1,872
176,928
4.32
4.30
1.40
370,249
$
142,413
$
186,777
Unrealized holding gains (losses) arising during the period (net of tax
effects of $10,870, $6,244, and $12,261, respectively)
Less: Reclassification adjustment for gains (losses) included in net
income (net of tax effects of $10,479, $52, and $700, 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 $1,174, $329, and
$231, respectively)
Less: Reclassification adjustment for gains (losses) included in net
income (net of tax effects of $52, $210, and $27, respectively)
Fair value of derivative instruments designated as cash flow hedges, net
of tax
Other comprehensive income (loss), net of tax
Comprehensive income
(40,895)
(11,596)
(22,771)
(39,421)
(1,474)
(96)
(11,500)
1,301
(24,072)
4,416
(196)
(611)
(390)
(328)
50
4,612
3,138
373,387
$
(221)
(11,721)
130,692
$
(378)
(24,450)
162,327
$
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(cid:25)(cid:26)
IBERIABANK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
Preferred Stock
Common Stock
(In thousands, except share and
per share data)
Shares
Amount
Shares
Amount
Additional
Paid-In
Capital
Retained
Earnings
Balance, December 31, 2015
8,000
$ 76,812
41,139,537
$ 41,140
$ 1,797,982
$ 584,486
—
—
—
—
—
—
—
—
—
—
—
—
186,777
—
(58,895)
(7,977)
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
Preferred stock issued
Common stock repurchases
Share-based compensation cost
—
—
—
—
—
—
—
—
—
—
—
—
264,605
3,593,750
5,750
55,285
—
—
—
—
—
(202,506)
—
264
3,594
—
(203)
—
7,756
275,648
—
(11,463)
14,523
—
—
—
—
—
Accumulated
Other
Comprehensive
Income (Loss)
$
Total
(1,585) $ 2,498,835
—
(24,450)
—
—
—
—
—
—
—
186,777
(24,450)
(58,895)
(7,977)
8,020
279,242
55,285
(11,666)
14,523
Balance, December 31, 2016
13,750
$ 132,097
44,795,386
$ 44,795
$ 2,084,446
$ 704,391
$
(26,035) $ 2,939,694
Net income
Other comprehensive income (loss)
Cash dividends declared, $1.46 per
share
Reclassification of AOCI to RE due
to Tax Act(1)
Preferred stock dividends
Common stock issued under
incentive plans, net of shares
surrendered in payment
Common stock issued
Common stock issued for
acquisitions
Share-based compensation cost
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
366,582
6,100,000
2,610,304
—
—
—
—
—
—
367
6,100
2,610
—
—
—
—
—
—
142,413
—
(76,615)
8,132
(9,095)
(882)
479,051
208,433
16,436
—
—
—
—
—
(11,721)
142,413
(11,721)
—
(76,615)
(8,132)
—
—
—
—
—
—
(9,095)
(515)
485,151
211,043
16,436
Balance, December 31, 2017
13,750
$ 132,097
53,872,272
$ 53,872
$ 2,787,484
$ 769,226
$
(45,888) $ 3,696,791
Cumulative-effect adjustment due to
the adoption of ASU 2016-01(2)
Net income
Other comprehensive income (loss)
Cash dividends declared, $1.56 per
share
Preferred stock dividends
Common stock issued under
incentive plans, net of shares
surrendered in payment
Common stock issued for
acquisitions
Common stock repurchases
Share-based compensation cost
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(345)
370,249
—
(87,317)
(9,095)
108,686
109
(3,335)
2,787,773
2,788
211,871
— (1,972,500)
(1,973)
(146,882)
—
—
—
20,278
—
—
—
—
—
—
3,138
—
—
—
—
—
—
(345)
370,249
3,138
(87,317)
(9,095)
(3,226)
214,659
(148,855)
20,278
Balance, December 31, 2018
13,750
$ 132,097
54,796,231
$ 54,796
$ 2,869,416
$1,042,718
$
(42,750) $ 4,056,277
(1) One-time reclassification from accumulated other comprehensive income ("AOCI") to retained earnings ("RE") for stranded tax effects resulting from
the Tax Cuts and Jobs Act (the "Tax Act"), enacted on December 22, 2017.
(2) Cumulative-effect adjustment to beginning retained earnings for fair value adjustments related to the reclassification of certain equity investments in
accordance with ASU 2016-01, adopted as of January 1, 2018.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(cid:25)(cid:27)
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, including amortization of
purchase accounting adjustments and market value adjustments
Provision for credit losses
Share-based compensation cost - equity awards
Loss (gain) on sale of OREO and long-lived assets, net of impairment
Loss (gain) on sale of available for sale securities
(Gain) loss on early termination of FDIC loss share agreements
Cash paid for early termination of FDIC loss share agreements
Deferred income tax expense (benefit)
Originations of mortgage loans held for sale
Proceeds from sales of mortgage loans held for sale
Realized and unrealized (gain) on mortgage loans held for sale, net
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, net of available for sale
securities acquired
Proceeds from maturities, prepayments and calls of held to maturity
securities
Purchases of held to maturity securities
Purchases of equity securities, net of equity securities acquired
Proceeds from sales of equity securities
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 dispositions of OREO
Cash paid for additional investment in tax credit entities
Cash received (paid) for acquisition of a business, net of cash paid
Purchase of bank owned life insurance policies
Other investing activities, net
Net Cash Used in Investing Activities
Cash Flows from Financing Activities
Increase (decrease) in deposits, net of deposits acquired
Net change in short-term borrowings, net of borrowings acquired
Proceeds from long-term debt, net of long-term debt acquired
Repayments of long-term debt
Cash dividends paid on common stock
Cash dividends paid on preferred stock
Net share-based compensation stock transactions
(cid:25)(cid:28)
Year Ended December 31,
2018
2017
2016
$
370,249
$
142,413
$
186,777
(7,534)
40,385
20,278
4,429
49,900
(2,708)
(5,637)
153,518
(1,469,847)
1,543,724
(45,338)
(204,998)
446,421
(4,113)
51,708
16,436
1,581
148
—
—
71,257
(1,844,358)
1,922,003
(62,438)
(30,991)
263,646
10,633
41,521
14,523
(3,298)
(2,001)
17,798
(6,502)
(16,654)
(2,460,033)
2,525,945
(74,486)
73,865
308,088
1,035,482
682,349
197,733
635,183
568,250
484,138
(1,959,952)
(1,475,008)
(1,384,525)
16,841
—
(30,904)
88,200
(949,953)
6,374
(13,730)
15,810
(18,818)
99,318
(50,000)
343
(1,125,806)
1,232,603
491,585
937,917
(1,672,033)
(84,782)
(9,095)
(3,226)
8,687
(148,234)
(71,684)
21,532
(976,488)
354
(37,763)
25,624
(16,401)
(490,435)
—
636
(1,908,581)
(323,257)
(38,377)
964,974
(97,259)
(72,772)
(9,095)
(832)
8,791
—
(31,530)
—
(704,025)
1,941
(12,840)
33,236
(19,208)
—
(24,058)
25,950
(1,424,397)
1,230,008
182,518
304,728
(15,025)
(56,793)
(7,028)
6,899
Payments to repurchase common stock
Net proceeds from issuance of common stock
Net proceeds from issuance of preferred stock
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 acquisitions
Supplemental Disclosures
Cash paid for:
Interest on deposits and borrowings, net of acquired
Income taxes, net
(148,855)
—
—
744,114
64,729
625,724
690,453
12,557
214,659
198,905
34,313
$
$
$
$
$
—
485,151
—
908,533
(736,402)
1,362,126
625,724
18,170
211,043
102,558
77,034
$
$
$
$
$
(11,666)
279,242
55,285
1,968,168
851,859
510,267
1,362,126
9,743
—
70,084
79,784
$
$
$
$
$
The accompanying Notes are an integral part of these Consolidated Financial Statements.
(cid:26)(cid:19)
IBERIABANK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
IBERIABANK Corporation is a financial holding company with locations in Louisiana, Arkansas, Tennessee, Alabama, Texas,
Florida, Georgia, South Carolina, North Carolina, Mississippi, Missouri, and New York offering commercial, private banking,
consumer, small business, wealth and trust management, retail brokerage, mortgage, and title insurance services. 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 Defined Terms 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
All significant intercompany balances and transactions have been eliminated in 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 variable interest entity (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 $230.2 million and $160.2 million at December
31, 2018 and 2017, 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, fair value, or proportional
amortization method of accounting. Prior to January 1, 2018, investments in entities that were not consolidated were 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 at cost less impairment plus or
minus changes resulting from observable price changes, which approximates fair value. Prior to January 1, 2018, investments
for which the Company did not hold such ability were accounted for under the cost method. Investments in qualified
affordable housing projects, which meet certain criteria, are accounted for under the proportional amortization method.
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 accounting for
acquired impaired loans, the allowance for credit losses, the valuation of goodwill and other intangible assets, and income
taxes.
CONCENTRATION OF CREDIT RISKS
Most of the Company’s business activity is with customers located in the southeastern United States. The Company’s lending
activity is concentrated in its market areas within those states. The Company has emphasized originations of commercial loans
and private banking loans, defined as loans to higher net worth 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 net realizable value of the collateral upon
default of the borrowers and guarantor support. The Company believes it does not have any excessive concentrations to any one
industry, loan type, or customer.
(cid:26)(cid:20)
BUSINESS COMBINATIONS
Assets and liabilities acquired in business combinations are recorded at their acquisition date fair values. 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. 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, 2018 and 2017, 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 are classified as AFS and recorded at fair value, with unrealized gains and
losses excluded from earnings and reported in OCI. Prior to January 1, 2018, equity securities with readily determinable fair
values were also 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 securities that are considered OTTI are recorded in earnings.
Prior to January 1, 2018, credit-related declines in the fair value of marketable equity securities that were considered OTTI
were 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.
Other equity securities primarily consist of stock acquired for regulatory purposes, such as Federal Home Loan Bank stock and
Federal Reserve Bank stock and are included in “other assets."
Gains or losses on securities sold are recorded on the trade date, using the specific identification method.
(cid:26)(cid:21)
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 19 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 consideration transferred for servicing rights under limited circumstances. Recourse conditions may include
prepayment, payment default, breach of representations or warranties, and documentation deficiencies. During 2018 and 2017,
an insignificant number of loans were returned to the Company. At December 31, 2018 and 2017, 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. 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.
All acquired loans are evaluated for impairment at the time of acquisition. At the time of acquisition, acquired loans that reflect
credit deterioration since origination to the extent that it is probable that the Company will be unable to collect all contractually
required payments are classified as purchased impaired loans (“acquired impaired loans”). All other acquired loans are
classified as purchased non-impaired loans (“acquired non-impaired loans”).
At the time of acquisition, acquired 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, primarily whether the loan was a mortgage, consumer, or
commercial loan,
the nature of the 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 for a variable rate loan, weighted average margin and
weighted average interest rate to estimate the expected cash flows for each loan pool.
(cid:26)(cid:22)
For acquired 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 acquired 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 acquired impaired loan or
loan pool. Increases in estimated cash flows above those expected at the time of 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, including prepayments, default rates and loss severity among other factors. 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 non-impaired loans. 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-owner-occupied, commercial real estate-non-owner occupied, and commercial and industrial. Classes within the
consumer and other loans portfolio segment include home equity, indirect automobile, credit card and 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 of 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 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:23)
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 acquired 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 and interest is not expected even if the loan is currently paying as agreed; or 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. Factors considered in determining the collection of the full contractual amount of principal and 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 the Company has 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.
Acquired impaired loans are placed on non-accrual status when the Company cannot reasonably estimate cash flows on a loan
or loan pool. Legacy and acquired 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 acquired impaired loans) 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 acquired impaired loans) 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 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 sustained repayment performance) and collection of contractually required principal and interest
associated with the debt is reasonably assured. Additionally, for a non-accrual TDR to be returned to accrual status, a current,
well-documented credit analysis is required and the borrower must have complied with all terms of the modification. 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 acquired impaired loans are considered to be impaired.
(cid:26)(cid:24)
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 in accordance with 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 contractually 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.
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 acquired non-impaired loans, and acquired 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 acquired impaired loans) 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 a collateral-dependent loan.
The allowance for loan losses for all non-impaired loans (excluding acquired impaired loans) 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 for commercial, Vantage or FICO score for residential mortgage and consumer, past due status for 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 acquired 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.
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.
(cid:26)(cid:25)
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.
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. For the annual October 1, 2018 impairment evaluation, management
elected to bypass the qualitative assessment for each respective reporting unit (IBERIABANK, Mortgage, 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, 2018. Further, no events or changes in circumstances between October 1, 2018 and
December 31, 2018 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 2018 and 2017, management concluded that for the IBERIABANK, Mortgage, and LTC
reporting units, goodwill was not impaired at any time during those periods.
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 primarily include core deposit intangibles, which are
amortized on a straight-line or accelerated basis, and a customer relationship intangible asset, which is 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 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.
(cid:26)(cid:26)
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 lower of the recorded
investment in the loan or its estimated fair value less costs to sell, generally when the Company has received physical
possession. 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.
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 collars, interest
rate floors, 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, regardless of whether a right of offset exists. Changes in the fair value 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 and ineffective portions 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. Prior to January 1, 2018, the ineffective portion of the gain or loss, if any, was reported in
earnings immediately in either "other income" or "other expense," respectively. 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. The Company has also designated interest rate collars and interest rate floors in a cash flow hedge to reduce
the risk of fluctuations in interest rates and thereby reduce the Company’s exposure to variability in cash flows from variable-
rate loans. The Company has concluded that the forecasted transactions are probable of occurring.
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.
The Company primarily utilizes these instruments, which the Company designates as cash flow hedges, to manage
interest rate risk by converting a portion of its variable-rate loans or debt to a fixed rate.
Interest rate collars Interest rate collars are agreements that create a range within which interest rates can fluctuate.
The interest rate collar protects against significant decreases in interest rates but limits the benefits when interest rates
increase. These instruments are designated as cash flow hedges and are used by the Company to manage interest rate risk
by reducing the variability in cash flows that can occur with variable-rate loans.
Interest rate floors Interest rate floors are agreements that protect against significant decreases in interest rates if
interest rates fall below a specified level over an agreed period of time. These instruments are designated as cash flow
hedges and are used by the Company to manage interest rate risk by reducing the variability in cash flows that can occur
with variable-rate loans.
(cid:26)(cid:27)
•
•
•
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. These off-balance sheet financial instruments are generally exercisable at the
market rate prevailing at the date the underlying transaction will be completed. Such financial instruments are recorded on the
funding date. At December 31, 2018 and 2017, the fair value of guarantees under commercial and standby letters of credit was
not material.
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 has the right to pledge or exchange the assets with no
conditions that constrain the transferee and provide more than a trivial benefit to the Company, and 3) the Company does not
maintain effective control over the transferred assets. If the transfer does 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 at the time of sale for the
right to service the loans sold. All servicing rights are identified by class and amortized over the remaining service life of the
loan.
(cid:26)(cid:28)
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
(Parent), IBERIABANK, and their respective 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 2014.
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."
Investments in qualified affordable housing projects that meet certain criteria are accounted for under the proportional
amortization method. Under this method, the expense associated with the investments is recognized in income tax expense
rather than non-interest expense. The Company has also elected to utilize the deferral method for investments that generate
investment tax credits. Under this approach, the investment tax credits are recognized as a reduction of the related asset rather
than income tax expense.
SHARE-BASED COMPENSATION PLANS
The Company issues stock options, restricted stock awards, restricted share units, and phantom stock 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. The majority
of the Company's share-based awards qualify for equity accounting and contain service conditions. The fair value of awards is
measured at the grant date and not subsequently remeasured. The Company accounts for share-based forfeitures as they occur.
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 stock awards are accounted for as liability awards and 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 stock award 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
The Company classifies repurchased shares as a reduction to issued shares of common stock and adjusts the stated value of
common stock and paid-in-capital.
(cid:27)(cid:19)
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.
Following is a description of the valuation methodologies used for financial instruments measured at fair value, 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 and are
classified within Level 1 of the fair value hierarchy.
Investment securities Securities are classified within Level 1 where quoted market prices are available in an active
market. If quoted market prices are unavailable, fair value is estimated using quoted prices of securities with similar
characteristics and the securities are classified within Level 2 of the fair value 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. Mortgage loans held for sale are
classified within Level 2 of the fair value hierarchy.
• Mortgage loans held for investment at fair value option The fair value of mortgage loans held for investment at fair
value option is determined by a third party using a discounted cash flow model using various assumptions about future
loan performance and market discount rates. Mortgage loans held for investment at fair value option are classified within
Level 3 of the fair value hierarchy.
•
Loans The fair values of mortgage loans are estimated using an exit price methodology that is based on present values
using interest rate that would be charged for a similar loan to a borrower with similar risk at December 31, 2018,
weighted for varying maturity dates and adjusted for a liquidity discount based on the estimated time period to complete
a sale transaction with a market participant. At December 31, 2017, the fair value of mortgage loans was estimated using
an entry value methodology.
Other loans and leases are valued based on present values using the interest rate that would be charged for a similar
instrument to a borrower with similar risk at December 31, 2018, applicable to each category of instruments, and
adjusted for a liquidity discount based on the estimated time period to complete a sale transaction with a market
participant. At December 31, 2017, the fair value of other loans and leases was estimated using an entry value
methodology.
At December 31, 2018 and 2017, mortgage and other loans and leases are classified within Level 3 of the fair value
hierarchy.
(cid:27)(cid:20)
•
•
•
•
•
•
Impaired loans Fair value measurements for impaired loans are determined using either a present value of expected
future cash flows discounted using the loan’s effective interest rate or the fair value of the collateral, if the loan is
collateral-dependent (Level 3 of the fair value hierarchy). Fair value of the collateral is determined by appraisals or
independent valuation less costs to sell. Impaired loans for which the fair value of the collateral is higher than the
recorded investment in the loan are not adjusted to fair value and therefore not recorded in the Company’s non-recurring
fair value measurements section of the Fair Value Measurements footnote.
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. Updated appraisals are obtained on at least an annual basis. OREO measured at fair value is classified within
Level 3 of the fair value hierarchy.
Derivative financial instruments Fair values of interest rate swaps, interest rate locks, interest rate collars, interest rate
floors, foreign exchange contracts, forward sales contracts, 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 value of non-interest-bearing deposits, NOW accounts, money market deposits and savings accounts
are the amounts payable on demand at the reporting date. Certificates of deposit and other time deposits are valued using
a discounted cash flow model based on the weighted-average rate at December 31, 2018 and 2017 for deposits with
similar remaining maturities. The Company evaluated the inputs to the fair value estimate and based on our use of
quoted prices for similar liabilities determined that the fair value of deposits should be classified within Level 2 of the
fair value hierarchy.
Short-term borrowings Securities sold under agreements to repurchase, which are classified as secured borrowings,
generally mature daily, are reflected at the amount of cash received in connection with the transaction, and are classified
within Level 1 of the fair value hierarchy. The carrying amounts of other short-term borrowings maturing within ninety
days approximate their fair values and are classified within Level 2 of the fair value hierarchy as similar instruments are
traded in active markets.
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 classified within Level 3 of the fair value hierarchy.
(cid:27)(cid:21)
NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS
Pronouncements adopted during the year ended December 31, 2018:
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 ASU clarifies 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.
Revenue from Contracts with Customers
The majority of the Company’s income streams (e.g., interest and dividend income and mortgage income) are accounted for in
accordance with GAAP literature outside the scope of ASC 606, Revenue from Contracts with Customers. Details regarding
income recognition for interest and non-interest streams can be found throughout Note 1 - Summary of Significant Accounting
Policies. Impairment losses recognized against certain receivables (e.g., NSF fees) and capitalized costs (e.g., sales
commissions) associated with contracts within the scope of ASC 606 are immaterial.
Non-interest income from service charges on deposit accounts, broker commissions, ATM/debit card fee income, credit card
and merchant-related income (e.g., interchange fees), and transactional income from traditional banking services (part of other
non-interest income) are the significant income streams within the scope of ASC 606 associated with the IBERIABANK
reportable segment. Non-interest income from title revenue is associated with the LTC reportable segment.
Recognition of Revenue from Contracts with Customers
The Company enters into various contracts with customers to provide traditional banking services, including asset
management, on a routine basis. The Company’s performance obligations are generally service-related and provided on a daily
or monthly basis. The Company does not typically have performance obligations which extend beyond a reporting period. The
performance obligations are generally satisfied upon completion of service (i.e., as services are rendered) and the fees are
collected at such time, or shortly thereafter. The fees are readily determinable and allocated individually to each service. It is
not typical for contracts to require significant judgment to determine the transaction price. Some contracts contain variable
consideration; however, the variable consideration is generally constrained (not estimable) as it is based on the occurrence or
nonoccurence of a contingent event (or another constraint in some circumstances). The Company generally records the variable
consideration when the contingent event occurs and the fee is determinable.
The Company provides some services for customers in which it acts in an agent capacity, but generally acts in a principal
capacity. Payment terms and conditions vary slightly amongst services; however, amounts are generally invoiced and due or
collected by the Company within 30 days, although some fees may be prepaid. The Company bills the customer periodically as
performance obligations are satisfied for most services. Therefore, revenue for services provided is generally recognized in the
amount invoiced (except in circumstances of prepayment) as that amount corresponds directly to the value of the Company’s
performance. In the normal course of business, the Company does not generally grant refunds for services provided. As such,
the Company does not establish provisions for estimated returns.
Title revenue associated with services provided by LTC, as well as broker commissions, ATM/debit card fee income, credit card
and merchant-related income (e.g., interchange fees), and transactional fees from traditional banking services generated within
IBERIABANK are generally recognized at the point-in-time the services are provided. The Company has determined this
recognition to be appropriate as, upon completion of services, the Company has completed its performance obligations, has a
present right to payment (or has collected the cash), and the customer is able to obtain (or has obtained) substantially all of the
benefits from the performance obligation (i.e., the provided services). Revenues from service charges on deposit accounts are
recognized at the end of the monthly service period (e.g., account service charges) or the date the performance obligation is
satisfied (e.g., NSF, stop payment, wire transfer, etc.), except for deposit account services performed by Treasury Management
which are recognized on a monthly basis, as these services are performed over that time. Asset management fees (e.g., trust
fees) are generally recognized at the end of the monthly service period, but fees are not collected until the beginning of the
subsequent month, although some contracts may have quarterly terms and/or be prepaid. NSF fees which are not initially paid
are subsequently recorded as a loan (along with the overdraft balance) and remain classified as such until the amount is paid or
charged-off (generally after 60 days).
(cid:27)(cid:22)
Adoption of ASC 606
The Company adopted ASC 606 as of January 1, 2018 for all contracts as of the effective date. Prior period amounts have been
reclassified to conform to current guidance requirements related to the net presentation of certain costs associated with
interchange fees and rewards programs. The reclassification of prior period amounts reduced non-interest income and non-
interest expense by approximately $8.9 million for the year ended December 31, 2017 and had no impact on net income. There
was no cumulative adjustment made to opening retained earnings as of January 1, 2018.
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, which impacts how the Company measures certain equity
investments and discloses and presents certain financial instruments through the application of the “exit price” methodology.
The Company adopted this ASU as of January 1, 2018. Under the new guidance, equity investments can no longer be classified
as trading or available for sale (AFS), and the related unrealized holding gains and losses can no longer be recognized in OCI.
Per the ASU, such equity investments should be measured at fair value with adjustments recognized in earnings at the end of
each reporting period. The Company’s portfolio of equity investments previously classified as AFS investment securities,
which were not material at the date of adoption, were reclassified to “other assets.” As these equity investments were
previously measured at fair value, the implementation of this ASU did not require any changes to the Company’s valuation
method for these equity investments. As a result of adopting this ASU, the Company recorded an immaterial cumulative-effect
adjustment to retained earnings for previously recorded fair value adjustments related to these equity investments. The
Company elected the practical expedient measurement alternative to prospectively account for other equity investments that do
not have readily determinable fair values at cost less impairment plus or minus observable price changes in orderly transactions
for an identical or similar investment of the same issuer.
The Company also modified its methodology for determining the estimated fair value for loans measured at amortized cost to
the “exit price” methodology as required by this ASU. The fair value disclosure for loans measured at amortized cost had
previously been determined using an “entry price” methodology. The Company’s “exit price” methodology estimates the fair
value of these loans based on the present value of the future cash flows using the interest rate that would be charged for a
similar loan to a borrower with similar risk at the indicated balance sheet date, adjusted for a liquidity discount based on the
estimated time period to complete a sale transaction with a market participant.
ASU No. 2016-15
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (ASC 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.
The Company retrospectively adopted this ASU effective January 1, 2018. The adoption of this ASU did not impact the
Company’s consolidated statements of cash flows.
ASU No. 2017-04
In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (ASC 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.
The Company elected to early adopt this ASU prospectively effective September 30, 2018. The Company completed its annual
impairment test as of October 1, 2018 in accordance with this ASU and concluded that goodwill was not impaired as of the
testing date.
ASU No. 2017-12
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (ASC 815): Targeted Improvements to
Accounting for Hedging Activities, which amends the hedge accounting model to enable entities to better portray the economics
of their risk management activities in the financial statements and enhance the transparency and understandability of hedge
results.
The Company elected to early adopt this ASU effective January 1, 2018. The modified-retrospective adoption of this ASU did
not impact the Company’s consolidated financial statements in the current or prior periods.
(cid:27)(cid:23)
ASU No. 2018-15
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic
350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract. The guidance requires customers in a cloud computing arrangement (i.e., hosting arrangement) that is a service
contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as
assets or expense as incurred. ASC 350-40 requires the capitalization of certain costs incurred only during the application
development stage (e.g., costs of integration with on-premises software, coding, configuration, and customization). ASC
350-40 also requires entities to expense costs during the preliminary project and post-implementation stages (e.g., costs of
project planning, training, maintenance after implementation, data conversion) as they are incurred. The accounting for the
service element of the arrangement is not affected by the ASU.
Capitalized implementation costs related to a hosting arrangement that is a service contract should be amortized over the term
of the hosting arrangement. Capitalized implementation costs and the related expense should be presented in the same line
item in the statement of financial position and income statement as the fees associated with the hosting element of the
arrangement. Capitalized implementation cost payments should be classified in the statement of cash flows in the same manner
as payments for the service component of the hosting arrangement (typically operating cash flows).
The Company elected to early adopt the guidance prospectively effective August 31, 2018. The adoption of the guidance did
not have a significant impact on the Company’s consolidated financial statements.
Pronouncements issued but not yet adopted:
ASU No. 2016-02, ASU No. 2018-11, and ASU No. 2018-20
In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842). This guidance requires lessees to recognize lease
assets (i.e., right of use assets) and liabilities on the balance sheet for leases that are classified as operating leases. The lessor
accounting model was relatively unchanged by this ASU. Additional guidance includes, but is not limited to, the elimination of
leveraged leases; modification to the definition of a lease; guidance on sale and leaseback transactions; and disclosure of
additional quantitative and qualitative information. ASU No. 2016-02 required lessees and lessors to recognize and measure
leases at the beginning of the earliest period presented using a modified retrospective approach.
In July 2018, the FASB issued ASU No. 2018-11, Leases (ASC 842): Targeted Improvements. This ASU includes an optional
transition method to apply ASU No. 2016-02 on a prospective basis as of the effective date, with a cumulative effect adjustment
to retained earnings in the period of adoption, instead of applying the guidance using a modified retrospective approach as
originally required under ASU No. 2016-02. ASU No. 2018-11 also provides lessors with a practical expedient by class of
underlying asset to not separate nonlease components from the associated lease component under certain circumstances and
clarifies which guidance (ASC 842 or ASC 606) to apply to combined lease and nonlease components.
In December 2018, the FASB issued ASU No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors. This
ASU permits lessors to elect to not evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs
and instead, exclude these taxes from the measurement of lease revenue and expense and provide certain disclosures. The ASU
adds further clarity regarding lessor recognition and measurement of (i) lessor costs paid directly by lessees to third parties on
the lessor’s behalf and lessor costs that are paid by the lessor and reimbursed by the lessee, and (ii) certain variable payments
that are allocated to the lease and non-lease components when changes in the facts and circumstances on which the variable
payment is based occur.
The Company elected the optional transition method and adopted ASU No. 2016-02, ASU No. 2018-11 and ASU No. 2018-20
effective January 1, 2019. The Company occupies certain banking offices and uses equipment under operating lease
agreements, which were historically not recognized on the consolidated balance sheets. As a result of adopting this ASU, the
Company anticipates recording a net increase to both assets and liabilities of approximately $100 million on January 1, 2019.
The Company also elected the package of practical expedients that do not require the reassessment of expired or existing
contracts’ lease classification, direct costs, or whether they are or contain leases. The Company did not elect the hindsight
practical expedient. The Company did not elect to account for lease and nonlease components as a single lease component.
The adjustment to retained earnings on January 1, 2019 as a result of adopting this ASU and the related impact on the
Company’s regulatory capital ratios was not significant.
(cid:27)(cid:24)
ASU No. 2016-13
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (ASC 326): Measurement of Credit
Losses on Financial Instruments. The guidance introduces 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 such as loans and held-to-maturity
securities, including certain off-balance sheet financial instruments such as loan commitments. The measurement of 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 must be grouped together when
estimating 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 guidance provides 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 ALLL with an offset (i.e., increase) to the cost basis of the related financial asset at acquisition.
ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods. The ASU
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 has established a cross-function implementation team and engaged third-party consultants who have jointly
developed a project plan to provide implementation oversight. The Company is in the process of developing and implementing
current expected credit loss models that satisfy the requirements of the ASU and continues to identify key interpretive issues.
The Company expects that this ASU will result in an increase to ALLL given the change to estimate losses over the full
remaining estimated life of the loan portfolio as well as the adoption of an allowance for debt securities. The extent of the
increase in the ALLL is not yet known and will depend on the composition of our loan and securities portfolios, finalization of
credit loss models, macroeconomic conditions and forecasts at the adoption date.
ASU No. 2018-13
In August 2018, the FASB released ASU No. 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework - Changes
to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure
requirements for fair value measurements.
The ASU No. 2018-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods, with
early adoption permitted.
The Company is currently evaluating the impact of the ASU. While adoption of this ASU will result in changes to existing
disclosures, it will not have any impact on our financial position or results of operation.
ASU No. 2018-16
In October 2018, the FASB released ASU No. 2018-16, Derivatives and Hedging (ASC 815): Inclusion of the Secured
Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting
Purposes, which permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting
purposes under ASC 815 in addition to the interest rates on direct Treasury obligations of the U.S. government (UST), the
London Interbank Offered Rate (LIBOR) swap rate, the OIS Rate based on the Fed Funds Effective Rate, and the Securities
Industry and Financial Markets Association (SIFMA) Municipal Swap Rate.
The required effective date of this ASU is dependent upon when an entity adopts the provisions of ASU No. 2017-12. The
Company adopted ASU No. 2018-16 effective January 1, 2019 on a prospective basis for qualifying new or redesignated
hedging relations as ASU No. 2017-12 had previously been adopted on January 1, 2018. The implementation of this ASU will
not have a significant impact on the Company’s consolidated financial statements.
(cid:27)(cid:25)
ASU No. 2018-17
In October 2018, the FASB released ASU No. 2018-17, Consolidation (ASC 810): Targeted Improvements to Related Party
Guidance for Variable Interest Entities, which improves the consistency of the application of the variable interest entity (VIE)
related party guidance for common control arrangements. This ASU requires reporting entities to consider indirect interests
held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its
entirety (as currently required in GAAP) when determining whether a decision-making fee is a variable interest.
ASU No. 2018-17 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those
fiscal years, and early adoption is permitted. The guidance should be applied retrospectively with a cumulative-effect
adjustment to retained earnings at the beginning of the earliest period presented.
The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.
(cid:27)(cid:26)
NOTE 3 –ACQUISITION ACTIVITY
The acquisitions discussed below qualify as business combinations. The Company accounts for business combinations under
the acquisition method in accordance with ASC Topic 805, Business Combinations. See Note 1, Summary of Significant
Accounting Policies, for a description of the Company's accounting for business combinations.
2018 Acquisitions
Acquisition of Gibraltar
The Company completed the acquisition of Gibraltar Private Bank & Trust Co. ("Gibraltar") on March 23, 2018. The
acquisition added $1.4 billion in loans and $1.1 billion in deposits, after fair value adjustments. Gibraltar operated eight offices
in total, with seven located in the Florida metropolitan statistical areas of Miami, Key West, and Naples and one in New York
City.
Under the terms of the Agreement and Plan of Merger, Gibraltar common shareholders received 1.9749 shares of
IBERIABANK Corporation common stock for each outstanding share of Gibraltar common stock. Based on the Company's
closing common stock price of $77.00 per share on March 23, 2018, the aggregate value of the acquisition consideration paid at
the time of closing was approximately $214.7 million.
During the first quarter of 2018, the Company recorded preliminary purchase price allocations related to Gibraltar. Throughout
the remainder of 2018, the Company continued to analyze the valuations assigned to the acquired assets and liabilities assumed.
Based on new information relating to events or circumstances existing at the acquisition date and revised valuations, the
Company updated estimated fair values increasing goodwill by $14.6 million to $64.3 million during the fourth quarter of
2018. This increase is primarily a result of a $17.8 million fair market value adjustment to the acquired loan portfolio. As of
December 31, 2018, the valuation of the Gibraltar acquisition was final. The following table summarizes the consideration paid
for Gibraltar's net assets and the fair value estimates of the identifiable assets acquired and liabilities assumed as of the
acquisition date.
Number of Shares
Amount
2,787,773
$
(Dollars in thousands)
Equity consideration
Common stock issued
Total equity consideration
Non-equity consideration
Cash
Total consideration paid
Fair value of net assets assumed including identifiable intangible assets
Goodwill
$
(Dollars in thousands)
Assets
Cash and cash equivalents
Investment securities
Equity securities
Loans
Core deposit intangible assets
Other assets
Total assets acquired
Liabilities
Deposit liabilities
Long-term borrowings
Deferred tax liability, net
Other liabilities
Total liabilities assumed
Gibraltar Fair Value
$
$
$
$
(cid:27)(cid:27)
214,659
214,659
7
214,666
150,414
64,252
102,575
19,169
27,519
1,447,475
18,529
12,005
1,627,272
1,064,803
405,107
1,761
5,187
1,476,858
Information regarding the allocation of goodwill recorded as a result of the acquisition to the Company's reportable segments is
provided in Note 9 "Goodwill and Other Acquired Intangible Assets." The goodwill recorded as a result of the acquisition is not
deductible for tax purposes.
The following is a description of the methods used to determine the fair values of significant assets acquired and liabilities
assumed presented above.
Cash and Cash Equivalents: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term
nature of these assets.
Investment Securities: Fair values for securities were based on quoted market prices from multiple bond dealers. The simple
average of the prices received was used to calculate the adjustments.
Equity Securities: The carrying amount of these securities is a reasonable estimate of fair value based on the short-term nature
of these assets.
Loans: Fair values for loans were based on a discounted cash flow methodology that considered factors including loan type,
classification status, remaining term of the loan, fixed or variable interest rate, amortization status and current discount rates.
The discount rates used for loans were based on current market rates for new originations of comparable loans and included
adjustments for any liquidity concerns. The discount rate did not include an explicit factor for credit losses, as that was included
as a reduction to the estimated cash flows.
Core Deposit Intangible Assets ("CDI"): The fair value for CDI was estimated based on a discounted cash flow methodology
that gave appropriate consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative
costs of funds, and the interest costs associated with the customer deposits. The CDI is being amortized over its estimated
useful life of approximately ten years utilizing an accelerated method.
Deposit Liabilities: The fair values used for the demand and savings deposits by definition equal the amount payable on
demand at the acquisition date. Fair values for time deposits were estimated using a discounted cash flow analysis, that applied
interest rates currently being offered to the contractual interest rates on such time deposits.
Long-term Borrowings: The carrying amount of long-term borrowings at the acquisition date approximated fair value, as the
Company immediately paid off the debt upon acquisition.
Acquisition of SolomonParks
On January 12, 2018, the Company's subsidiary, Lenders Title Company, acquired SolomonParks Title & Escrow, LLC
("SolomonParks"). Under the terms of the agreement, LTC paid $3.3 million in cash to acquire eight title offices in the
Nashville, Tennessee area, which resulted in goodwill of $3.4 million. In addition, the agreement provides for potential
additional cash consideration of up to $750 thousand based on gross revenues over a two-year period after the acquisition.
Information regarding the allocation of goodwill recorded as a result of these acquisitions to the Company's reportable
segments is provided in Note 9 "Goodwill and Other Acquired Intangible Assets." The goodwill recorded as a result of these
acquisitions is not deductible for tax purposes.
2017 Acquisition
Acquisition of Sabadell United
The Company completed the acquisition of Sabadell United Bank, N.A. ("Sabadell United") from Banco de Sabadell, S.A. ("Banco
Sabadell") on July 31, 2017. The acquisition added $4.0 billion in loans and $4.4 billion in deposits after fair value adjustments.
The acquisition expanded the Company's presence in Southeast Florida adding 25 offices serving the Miami metropolitan area
and three offices in Naples, Sarasota and Tampa.
Under the terms of the Stock Purchase Agreement, Banco de Sabadell, S.A. received $809.2 million in cash and 2,610,304
shares of IBERIABANK Corporation common stock in exchange for 100 percent of Sabadell United's common stock. The cash
consideration was financed through two public common stock offerings completed on December 7, 2016, and March 7, 2017.
(cid:27)(cid:28)
During the third quarter of 2017, the Company recorded preliminary purchase price allocations related to Sabadell United.
Throughout the remainder of 2017 and the first six months of 2018, the Company continued to analyze the valuations assigned
to the acquired assets and liabilities assumed. Based on new information relating to events or circumstances existing at the
acquisition date and revised valuations, the Company updated estimated fair values decreasing goodwill by $21.0 million to
$441.0 million during the first six months of 2018. This decrease was primarily a result of a change in the estimated fair value
of the acquired loans and deferred tax asset. The valuation of the Sabadell United acquisition was final as of June 30, 2018.
The following table summarizes the consideration paid for Sabadell United's net assets and the fair value estimates of
identifiable assets acquired and liabilities assumed as of the acquisition date. See Note 3, Acquisition Activity, in the 2017 10-K
for a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed
presented below.
(Dollars in thousands)
Equity consideration
Common stock issued
Total equity consideration
Non-equity consideration
Cash
Total consideration paid
Number of Shares
Amount
2,610,304
$
211,043
211,043
809,159
1,020,202
579,157
441,045
Fair value of net assets assumed including identifiable intangible assets
Goodwill
$
(Dollars in thousands)
Assets
Cash and cash equivalents
Investment securities
Loans
Core deposit intangible assets
Deferred tax asset, net
Other assets
Total assets acquired
Liabilities
Deposit liabilities
Short-term borrowings
Other liabilities
Total liabilities assumed
Sabadell United Fair Value
318,819
964,123
4,030,777
66,600
44,480
92,820
5,517,619
4,382,780
520,539
35,143
4,938,462
$
$
$
$
Information regarding the allocation of goodwill recorded as a result of the acquisition to the Company's reportable segments is
provided in Note 9 "Goodwill and Other Acquired Intangible Assets." The goodwill recorded as a result of the acquisition is not
deductible for tax purposes.
The Company’s consolidated financial statements as of and for the year ended December 31, 2018 include the operating results
of the acquired assets and liabilities assumed. Due to the system conversion of Sabadell United in October of 2017 and
subsequent streamlining and integration of the operating activities into those of the Company, historical reporting for the former
Sabadell United operations is impracticable and thus disclosure of the revenue from the assets acquired and income before
income taxes is impracticable for the period subsequent to acquisition.
(cid:28)(cid:19)
The following table presents unaudited pro forma information as if the acquisition occurred on January 1, 2016. The pro forma
information does not necessarily reflect the results of operations that would have occurred had the Company acquired Sabadell
United on January 1, 2016. Furthermore, cost savings and other business synergies related to the acquisition are not reflected in
the pro forma amounts.
Unaudited Pro Forma for Year
Ended December 31,
(Dollars in thousands)
2017
2016
Net interest income
$
924,348
$
Non-interest income
Net income
219,021
174,246
842,945
255,022
246,799
This pro forma information combines the historical consolidated results of operations of IBERIABANK and Sabadell United
for the periods presented and gives effect to the following non recurring adjustments:
Fair value adjustments: Pro forma adjustment to net interest income of $20.3 million and $38.8 million for the years ended
December 31, 2017 and 2016, respectively, to record estimated amortization of premiums and accretion of discounts on
acquired loans, securities, and deposits.
Sabadell United accretion / amortization: Pro forma adjustment to net interest income of $1.3 million and $4.1 million for the
years ended December 31, 2017 and 2016, respectively, to eliminate Sabadell United's amortization of premiums and accretion
of discounts on previously acquired loans, securities, FDIC indemnification asset, and deposits.
Sabadell United provision for loan losses: Pro forma adjustments were made to provision for loan losses of $6.4 million and
$5.9 million for the years ended December 31, 2017 and 2016, respectively, to eliminate the reversal (benefit) of Sabadell
United's release of provision for loan losses and to account for the provision for loan losses on new loans originated during the
periods presented.
Amortization of acquired intangibles: Pro forma adjustment to non-interest expense of $5.9 million and $10.1 million for the
years ended December 31, 2017 and 2016, respectively, to record estimated amortization of acquired intangible assets.
Other adjustments: Pro forma results also include adjustments related to the removal of benefit from release of reserve for
unfunded lending commitments, removal of FDIC clawback liability expense, adjustments to FDIC insurance and other
regulatory assessment expenses and related income tax effects.
(cid:28)(cid:20)
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, 2018
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U.S. Government-sponsored enterprise obligations
$
995
$
3
$
— $
998
Obligations of state and political subdivisions
177,566
2,045
(723)
178,888
Mortgage-backed securities:
Residential agency
Commercial agency
Other securities
Total securities available for sale
Securities held to maturity:
Obligations of state and political subdivisions
Mortgage-backed securities:
Residential agency
Total securities held to maturity
3,837,584
730,148
97,020
4,843,313
188,684
18,762
207,446
$
$
$
$
$
$
8,886
2,363
351
13,648
309
30
339
$
$
$
(57,073)
(14,799)
(787)
(73,382) $
3,789,397
717,712
96,584
4,783,579
(2,497) $
186,496
(1,011)
(3,508) $
17,781
204,277
(Dollars in thousands)
Securities available for sale:
December 31, 2017
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U.S. Government-sponsored enterprise obligations
$
41,003
$
18
$
(406) $
Obligations of state and political subdivisions
271,451
4,246
(1,493)
40,615
274,204
Mortgage-backed securities:
Residential agency
Commercial agency
Other securities
Total securities available for sale
Securities held to maturity:
Obligations of state and political subdivisions
Mortgage-backed securities:
Residential agency
Total securities held to maturity
3,675,367
546,105
114,005
4,647,931
206,736
20,582
227,318
$
$
$
$
$
$
1,233
228
247
5,972
1,530
41
1,571
$
$
$
(52,090)
(8,938)
(914)
(63,841) $
3,624,510
537,395
113,338
4,590,062
(275) $
207,991
(650)
(925) $
19,973
227,964
Securities with carrying values of $2.4 billion and $2.1 billion were pledged to support repurchase transactions, public funds
deposits and certain long-term borrowings at December 31, 2018 and 2017, respectively.
(cid:28)(cid:21)
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:
Obligations of state and political
subdivisions
Mortgage-backed securities:
Residential agency
Commercial agency
Other securities
Total securities available for sale
Securities held to maturity:
Obligations of state and political
subdivisions
Mortgage-backed securities:
Residential agency
Total securities held to maturity
(Dollars in thousands)
Securities available for sale:
U.S. Government-sponsored enterprise
obligations
Obligations of state and political
subdivisions
Mortgage-backed securities:
Residential agency
Commercial agency
Other securities
Total securities available for sale
Securities held to maturity:
Obligations of state and political
subdivisions
Mortgage-backed securities:
Residential agency
Total securities held to maturity
December 31, 2018
Less Than Twelve Months
Twelve Months or More
Total
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
$
(9) $
4,112
$
(714) $
30,268
$
(723) $
34,380
(816)
(43)
197,057
18,190
(94)
18,025
(962) $ 237,384
(56,257)
(14,756)
(693)
2,193,862
483,565
(57,073)
(14,799)
(787)
32,577
$ (72,420) $2,740,272
50,602
$ (73,382) $2,977,656
2,390,919
501,755
(3) $
2,059
$ (2,494) $ 151,699
$
(2,497) $ 153,758
—
(3) $
—
2,059
(1,011)
17,478
$ (3,505) $ 169,177
$
(1,011)
17,478
(3,508) $ 171,236
$
$
$
December 31, 2017
Less Than Twelve Months
Twelve Months or More
Total
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
Gross
Unrealized
Losses
Estimated
Fair Value
$
(254) $
29,744
$
(152) $
9,848
$
(406) $
39,592
(326)
31,601
(1,167)
68,609
(1,493)
100,210
(22,760)
2,366,569
(3,503)
(914)
310,769
75,302
$ (27,757) $2,813,985
1,061,588
(29,330)
(5,435)
—
164,470
—
$ (36,084) $1,304,515
3,428,157
(52,090)
(8,938)
(914)
475,239
75,302
$ (63,841) $4,118,500
$
$
(263) $
65,817
$
(12) $
3,031
$
(275) $
68,848
(2)
(265) $
333
66,150
$
(648)
(660) $
19,269
22,300
$
(650)
(925) $
19,602
88,450
(cid:28)(cid:22)
The Company assessed the nature of the unrealized losses in its portfolio as of December 31, 2018 and 2017 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.
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, 2018 or 2017.
At December 31, 2018, 488 debt securities had unrealized losses of 2.38% of the securities’ amortized cost basis. At December
31, 2017, 544 debt securities had unrealized losses of 1.52% 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
Mortgage-backed securities:
Residential agency
Commercial agency
Obligations of state and political subdivisions
U.S. Government-sponsored enterprise obligations
Other securities
Amortized Cost Basis
Mortgage-backed securities:
Residential agency
Commercial agency
Obligations of state and political subdivisions
U.S. Government-sponsored enterprise obligations
Other securities
Unrealized Loss
Mortgage-backed securities:
Residential agency
Commercial agency
Obligations of state and political subdivisions
U.S. Government-sponsored enterprise obligations
Other securities
(cid:28)(cid:23)
2018
2017
302
72
60
—
7
441
153
28
28
1
—
210
$
2,268,608
$
1,110,834
498,321
185,175
—
169,905
72,820
10,000
33,270
2,985,374
$
—
1,363,559
57,268
$
29,977
14,756
3,208
—
693
75,925
$
5,435
1,180
152
—
36,744
$
$
$
The amortized cost and estimated fair value of investment securities by maturity at December 31, 2018 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.
(Dollars in thousands)
Within one year or less
One through five years
After five through ten years
Over ten years
Securities Available for Sale
Securities Held to Maturity
Weighted
Average
Yield
Amortized
Cost
Estimated
Fair
Value
Weighted
Average
Yield
Amortized
Cost
Estimated
Fair
Value
3.84 % $
2,958
$
2.68
2.67
63,397
829,027
2,967
63,183
819,056
2.77 % $
1,309
$
2.47
2.56
6,303
42,827
2.94
3,947,931
2.89% $ 4,843,313
3,898,373
$ 4,783,579
2.62
2.60% $
157,007
207,446
$
1,313
6,291
42,571
154,102
204,277
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
2018
2017
2016
$
$
$
40
(49,940)
(49,900) $
$
1,651
(1,799)
(148) $
2,949
(948)
2,001
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 cost less impairment plus or minus any observable price changes, which
approximates fair value, with the exception of CRA and Community Development Investment Funds, which are recorded at fair
value. Other Equity Securities, which are presented in “other assets” on the consolidated balance sheets, are as follows:
(Dollars in thousands)
Federal Home Loan Bank (FHLB) stock
Federal Reserve Bank (FRB) stock
CRA and Community Development Investment Funds
Other investments
2018
2017
$
$
95,213
$
85,630
1,884
9,709
192,436
$
95,171
79,191
—
3,008
177,370
(cid:28)(cid:24)
NOTE 5 – LOANS AND LEASES
Loans and leases consist of the following at December 31:
(Dollars in thousands)
Commercial loans and leases:
Real estate - construction
Real estate - owner-occupied
Real estate - non-owner-occupied
Commercial and industrial (1)
2018
2017
$
1,196,366
$
2,395,822
5,796,117
5,737,017
15,125,322
1,240,396
2,375,321
5,322,513
5,135,067
14,073,297
Residential mortgage loans
4,359,156
3,056,352
Consumer loans:
Home equity
Other
Total
(1) Includes equipment financing leases
2,304,694
730,643
3,035,337
22,519,815
$
2,292,275
656,257
2,948,532
20,078,181
$
Net deferred loan origination fees were $30.2 million and $29.3 million at December 31, 2018 and 2017, respectively. Total
net discount on the Company's loans was $136.8 million and $159.3 million at December 31, 2018 and 2017, respectively,
of which $81.6 million and $94.7 million was related to non-impaired loans.
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, 2018 and 2017,
overdrafts of $9.2 million and $7.4 million, respectively, have been reclassified to loans.
Loans with carrying values of $7.6 billion and $6.6 billion were pledged as collateral for borrowings at December 31, 2018
and 2017, respectively.
(cid:28)(cid:25)
Aging Analysis
The following tables provide an analysis of the aging of loans and leases as of December 31, 2018 and 2017. 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.
December 31, 2018
Accruing
(Dollars in thousands)
Current or
less than 30
Days Past Due
30-59 Days
60-89 Days
> 90 Days
Real estate - construction
$
1,167,795
$
1,054
$
Real estate - owner-occupied
2,305,743
7,167
7,473
5,139
2,768
10,283
4,695
— $
—
360
1,320
13,063
2,409
1,601
Total Past
Due
Non-accrual
Loans
Acquired
Impaired
Loans
Total
— $
1,054
$
1,094
$
26,423
$
1,196,366
—
—
553
1,575
—
—
7,167
7,833
7,012
17,406
12,692
6,296
10,260
15,898
57,860
30,396
18,830
2,846
72,652
2,395,822
69,255
26,841
93,208
72,655
2,379
5,796,117
5,737,017
4,359,156
2,304,694
730,643
Real estate - non-owner-
occupied
Commercial and industrial
Residential mortgage
Consumer - home equity
Consumer - other
Total
5,703,131
5,645,304
4,218,146
2,200,517
719,122
$
21,959,758
$
38,579
$
18,753
$
2,128
$
59,460
$
137,184
$
363,413
$
22,519,815
(Dollars in thousands)
Current or
less than 30
Days Past Due
30-59 Days
60-89 Days
> 90 Days
Total Past
Due
Non-accrual
Loans
Acquired
Impaired
Loans
Total
Real estate - construction
$
1,197,766
$
269
$
— $
458
$
727
$
2,635
$
39,268
$
1,240,396
December 31, 2017
Accruing
Real estate - owner-occupied
2,243,923
Real estate - non-owner-
occupied
Commercial and industrial
Residential mortgage
Consumer - home equity
Consumer - other
Total
5,220,648
5,014,438
2,877,048
2,186,554
642,244
1,631
2,086
5,788
10,083
11,675
5,286
659
6,405
5,726
8,136
2,947
1,026
74
887
146
5,317
18
—
2,364
24,457
104,577
2,375,321
9,378
11,660
23,536
14,640
6,312
6,811
77,823
17,387
12,365
3,910
85,676
31,146
138,381
78,716
3,791
5,322,513
5,135,067
3,056,352
2,292,275
656,257
$
19,382,621
$
36,818
$
24,899
$
6,900
$
68,617
$
145,388
$
481,555
$
20,078,181
Acquired Loans
As discussed in Note 3, during 2017, the Company acquired loans with fair values of $4.0 billion from Sabadell United.
Certain loans that were acquired in the Sabadell United transaction were covered by loss share agreements between the
FDIC and Sabadell United. These FDIC loss share agreements were assumed in connection with the Company's acquisition
of Sabadell United, and afforded IBERIABANK loss protection. In 2018, the Company terminated its loss share
agreements with the FDIC. As a result, there were no covered loans at December 31, 2018. Covered loans were $158.6
million at December 31, 2017. Certain acquired loans from Sabadell United were to customers with addresses outside of the
United States. Foreign loans, denominated in U.S. dollars, totaled $202.6 million and $325.5 million at December 31, 2018
and 2017, respectively.
(cid:28)(cid:26)
During 2018, the Company acquired loans with fair values of $1.4 billion from Gibraltar. Of the total loans acquired, $1.4
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 $20.7 million were determined to exhibit deteriorated credit quality since origination under ASC
310-30. The tables below show the fair value estimates of loans acquired from Gibraltar for these two subsections of the
portfolio as of the acquisition date.
Acquired Non-Impaired Loans
(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
$
(Dollars in thousands)
Acquired Impaired Loans
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
$
1,593,408
(25,029)
1,568,379
1,426,756
29,929
(3,636)
26,293
(5,574)
20,719
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
$
$
2018
2017
2016
152,623
$
5,574
3,623
(47,962)
19,484
133,342
$
175,054
$
32,937
4,912
(56,337)
(3,943)
152,623
$
227,502
—
5,490
(68,211)
10,273
175,054
(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.
(cid:28)(cid:27)
Troubled Debt Restructurings
Information about the Company’s TDRs 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.
TDRs totaling $53.2 million, $70.5 million, and $222.4 million occurred during the years ended December 31, 2018, 2017,
and 2016, respectively, 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
2018
2017
2016
$
23,262
$
26,561
$
75,315
99
554
881
4,432
23,943
53,171
$
$
24
4,932
4,161
7,226
27,555
70,459
$
193
2,470
27,931
76,819
39,708
222,436
(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 $53.2 million of TDRs occurring during the year ended December 31, 2018, $31.5 million were on accrual status and
$21.7 million were on non-accrual status. Of the $70.5 million of TDRs occurring during the year ended December 31,
2017, $46.3 million were on accrual status and $24.2 million were on non-accrual status. Of the $222.4 million of TDRs
occuring during the year ended December 31, 2016, $85.9 million were on accrual status and $136.5 million were on non-
accrual status.
(cid:28)(cid:28)
The following table presents the end of period balance for loans modified in a TDR during the years ended December 31:
2018
2017
2016
(In thousands, except
number of loans)
Commercial real
estate - construction
Commercial real
estate - owner-
occupied
Commercial real
estate - non-owner-
occupied
Commercial and
industrial
Residential mortgage
Consumer - home
equity
Consumer - other
Total
Pre-
modification
Outstanding
Recorded
Investment
Post-
modification
Outstanding
Recorded
Investment
Number
of Loans
Pre-
modification
Outstanding
Recorded
Investment
Post-
modification
Outstanding
Recorded
Investment
Number
of Loans
Pre-
modification
Outstanding
Recorded
Investment
Post-
modification
Outstanding
Recorded
Investment
Number
of Loans
3
$
4,819
$
3,830
4
$
9,404
$
9,628
3
$
3,024
$
3,035
14
20
52
19
65
73
246
$
4,257
3,912
3,719
3,428
39,796
1,706
10,607
1,491
66,395
$
30,295
1,529
8,951
1,226
53,171
11
19
57
24
123
121
359
$
5,779
5,706
11,974
13,738
21,651
1,897
16,346
3,182
70,233
$
20,883
1,771
15,862
2,871
70,459
20
25
79
43
18,223
18,239
16,644
10,093
163,265
5,141
169,893
4,946
158
195
523
13,273
4,070
$ 223,640
12,568
3,662
$ 222,436
Information detailing TDRs that defaulted during the years ended December 31, 2018, 2017, and 2016 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 -
construction
Commercial real estate - owner-
occupied
Commercial real estate - non-
owner-occupied
Commercial and industrial
Residential mortgage
Consumer - home equity
Consumer - other
Total
2018
2017
2016
Number of
Loans
Recorded
Investment
Number of
Loans
Recorded
Investment
Number of
Loans
Recorded
Investment
— $
2
5
13
8
15
38
81
$
—
142
1,039
3,757
773
1,354
447
7,512
2
6
13
32
16
32
$
3,572
4,668
8,060
6,550
1,218
3,285
62
163
$
1,381
28,734
1
3
6
22
8
25
59
124
$
116
3,473
201
14,707
405
1,379
944
21,225
$
(cid:20)(cid:19)(cid:19)
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:
2018
2017
2016
$
140,891
$
144,719
$
138,378
39,472
51,111
42,927
—
39,472
—
(7,172)
(45,547)
12,927
140,571
$
—
51,111
—
934
(62,466)
6,593
140,891
$
1,497
44,424
(1,497)
(2,781)
(39,839)
6,034
144,719
13,208
$
11,241
$
14,145
709
1,370
—
913
14,830
155,401
$
$
597
13,208
154,099
$
$
(2,904)
11,241
155,960
(Dollars in thousands)
Allowance for credit losses
Allowance for loan and lease losses at beginning of
period
Provision for loan and lease losses before adjustment
attributable to FDIC loss share agreements
Adjustment attributable to FDIC loss share
arrangements
Net provision for loan and lease losses
Adjustment attributable to FDIC loss share
arrangements
Transfer of balance to OREO and other
Charge-offs
Recoveries
Allowance for loan and lease losses at end of period
Reserve for unfunded commitments at beginning of
period
Balance created in acquisition accounting
Provision for (Reversal of) unfunded lending
commitments
Reserve for unfunded commitments at end of period
Allowance for credit losses at end of period
$
$
$
$
(cid:20)(cid:19)(cid:20)
A summary of changes in the allowance for credit losses, by loan portfolio type, for the years ended December 31 is as follows:
Commercial
Real Estate
Commercial
and Industrial
Residential
Mortgage
Consumer
Total
2018
$
54,201
$
53,916
$
9,117
$
23,657
$
140,891
(829)
23,866
4,200
12,235
39,472
(2,256)
(1,611)
2,301
(812)
(29,578)
6,704
(106)
(334)
121
(3,998)
(14,024)
3,801
(7,172)
(45,547)
12,927
51,806
$
54,096
$
12,998
$
21,671
$
140,571
4,531
$
5,309
$
555
$
2,813
$
13,208
118
220
40
849
551
(240)
—
84
709
913
4,869
$
6,198
$
866
$
2,897
$
14,830
636
$
12,646
$
145
$
2,915
$
16,342
45,651
39,949
5,519
1,501
6,961
5,892
18,705
111,266
51
12,963
$
$
$
$
(Dollars in thousands)
Allowance for loan and lease losses at
beginning of period
Provision for (Reversal of) loan and
lease losses
Transfer of balance to OREO and
other
Charge-offs
Recoveries
Allowance for loan and lease losses at
end of period
Reserve for unfunded commitments at
beginning of period
Balance created in acquisition
accounting
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
Allowance on loans acquired with
deteriorated credit quality
Loans and leases, net of unearned
income:
Balance at end of period
$
9,388,305
$
5,737,017
$
4,359,156
$
3,035,337
$ 22,519,815
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
53,905
71,801
6,579
37,440
169,725
9,166,070
5,638,375
4,259,369
2,922,863
21,986,677
168,330
26,841
93,208
75,034
363,413
(cid:20)(cid:19)(cid:21)
(Dollars in thousands)
Allowance for loan and lease losses at
beginning of period
Provision for (Reversal of) loan and
lease losses
Transfer of balance to OREO and
other
Charge-offs
Recoveries
Allowance for loan and lease losses at
end of period
Reserve for unfunded commitments at
beginning of period
Balance created in acquisition
accounting
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
Allowance on loans acquired with
deteriorated credit quality
Loans and leases, net of unearned
income:
Commercial
Real Estate
Commercial
and Industrial
Residential
Mortgage
Consumer
Total
2017
$
49,231
$
60,939
$
11,249
$
23,300
$
144,719
10,433
31,891
(2,206)
10,993
51,111
$
$
$
$
853
(7,433)
1,117
54,201
3,207
253
1,071
4,531
1,588
30,360
22,253
$
$
$
$
(68)
(40,015)
1,169
53,916
4,537
783
(11)
5,309
12,736
38,944
2,236
$
$
$
$
2
(365)
437
9,117
657
327
(429)
555
172
3,141
5,804
$
$
$
$
147
(14,653)
3,870
23,657
2,840
7
(34)
2,813
2,856
17,210
3,591
$
$
$
$
934
(62,466)
6,593
140,891
11,241
1,370
597
13,208
17,352
89,655
33,884
Balance at end of period
$
8,938,230
$
5,135,067
$
3,056,352
$
2,948,532
$ 20,078,181
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
91,785
102,416
6,749
37,177
238,127
8,616,924
5,001,505
2,911,222
2,828,848
19,358,499
229,521
31,146
138,381
82,507
481,555
(cid:20)(cid:19)(cid:22)
(Dollars in thousands)
Allowance for loan and lease losses at
beginning of period
Commercial
Real Estate
Commercial
and Industrial
Residential
Mortgage
Consumer
Total
2016
$
51,372
$
49,355
$
11,789
$
25,862
$
138,378
Provision for loan and lease losses
1,958
32,296
824
9,346
44,424
Decrease in FDIC loss share
receivable
Transfer of balance to OREO and
other
Charge-offs
Recoveries
Allowance for loan and lease losses at
end of period
Reserve for unfunded commitments at
beginning of period
Reversal of provision for unfunded
commitments
Reserve for unfunded commitments
at end of period
Allowance on loans individually
evaluated for impairment
Allowance on loans collectively
evaluated for impairment
Allowance on loans acquired with
deteriorated credit quality
Loans and leases, net of unearned
income:
$
$
$
$
(34)
(50)
(1,090)
(323)
(1,497)
(868)
(4,338)
1,141
49,231
4,167
(960)
3,207
1,378
25,248
22,605
$
$
$
$
(519)
(21,645)
1,502
60,939
6,106
(1,569)
4,537
21,413
37,206
2,320
$
$
$
$
(141)
(313)
180
11,249
830
(173)
657
144
4,223
6,882
$
$
$
$
(1,253)
(13,543)
3,211
23,300
3,042
(202)
2,840
1,358
17,537
4,405
$
$
$
$
(2,781)
(39,839)
6,034
144,719
14,145
(2,904)
11,241
24,293
84,214
36,212
Balance at end of period
$
6,846,549
$
4,060,032
$
1,267,400
$
2,890,990
$ 15,064,971
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
61,006
220,995
4,312
16,467
302,780
6,504,875
3,806,305
1,140,136
2,780,689
14,232,005
280,668
32,732
122,952
93,834
530,186
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.
(cid:20)(cid:19)(cid:23)
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 higher based on currently existing facts, conditions, and values. Loans classified
as "Loss" have been identified as uncollectible and in most cases these loans will be charged off in the subsequent reporting
period. Loans classified as substandard, doubtful, and loss are collectively referred to as classified loans. Criticized loans
include all classified loans, as well as loans classified as special mention. Loans classified as “Pass” do not meet the criteria set
forth for special mention, substandard, doubtful, or loss classification and are not considered criticized or classified. Asset risk
classifications are determined at origination or acquisition and reviewed on an ongoing basis. Risk 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. Asset risk classifications for
commercial loans reflect the classification as of December 31, 2018 and 2017, respectively. Credit quality information in the
tables below includes total loans acquired (including acquired impaired loans) at the net loan balance, after the application of
premiums/discounts, at December 31, 2018 and 2017. Loan premiums/discounts 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.
Loan delinquency is the primary credit quality indicator that the Company utilizes to monitor consumer asset quality.
December 31, 2018
December 31, 2017
Pass
Special
Mention
Sub-
standard
Doubtful
Total
Pass
Special
Mention
Sub-
standard
Doubtful
Loss
Total
$ 1,182,554
$ 1,062
$ 12,740
$
10
$ 1,196,366
$ 1,189,490
$ 20,351
$ 30,541
$
14
$ — $ 1,240,396
2,328,999
25,526
41,297
—
2,395,822
2,234,151
82,114
56,590
2,466
—
2,375,321
5,687,963
78,009
26,512
3,633
5,796,117
5,258,638
19,311
42,702
1,744
118
5,322,513
5,586,482
52,632
73,853
24,050
5,737,017
4,882,554
88,149
128,961
35,403
—
5,135,067
(Dollars in
thousands)
Commercial
real estate -
construction
Commercial
real estate -
owner-
occupied
Commercial
real estate -
non-owner-
occupied
Commercial
and industrial
Total
$14,785,998
$157,229
$154,402
$ 27,693
$15,125,322
$13,564,833
$209,925
$258,794
$ 39,627
$ 118
$14,073,297
December 31, 2018
December 31, 2017
(Dollars in thousands)
Residential mortgage
Current
$ 4,290,152
$
Consumer - home equity
2,258,659
30+ Days
Past Due
69,004
46,035
Total
$ 4,359,156
Current
$ 2,962,043
$
2,304,694
2,250,205
30+ Days
Past Due
94,309
42,070
Total
$ 3,056,352
2,292,275
Consumer - other
Total
721,231
$ 7,270,042
9,412
$ 124,451
730,643
$ 7,394,493
645,498
$ 5,857,746
10,759
$ 147,138
656,257
$ 6,004,884
(cid:20)(cid:19)(cid:24)
Impaired Loans
Information on the Company’s investment in impaired loans, which include all TDRs and all other non-accrual loans evaluated
or measured individually for impairment for purposes of determining the ALLL, is presented in the following tables as of and
for the periods indicated.
(Dollars in thousands)
With no related allowance
recorded:
Commercial real estate -
construction
Commercial real estate -
owner-occupied
Commercial real estate -
non-owner-occupied
Commercial and
industrial
Residential mortgage
Consumer - home equity
With an allowance recorded:
Commercial real estate -
construction
Commercial real estate -
owner-occupied
Commercial real estate -
non-owner-occupied
Commercial and
industrial
Residential mortgage
Consumer - home equity
Consumer - other
Total
Total commercial loans and
leases
Total mortgage loans
Total consumer loans
December 31, 2018
Unpaid
Principal
Balance
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
496
807
590
2,422
46
39
1
196
294
795
225
1,202
273
7,386
5,601
271
1,514
$
10,261
$
9,262
$
— $
9,189
$
—
—
—
—
—
(11)
(520)
(105)
(12,646)
(145)
(2,427)
(488)
(16,342) $
(13,282) $
(145)
(2,915)
$
$
19,559
14,873
47,268
1,261
2,867
148
4,976
6,229
40,653
5,494
27,911
4,822
185,250
142,895
6,755
35,600
$
$
25,037
15,265
55,554
1,244
4,183
228
5,032
6,445
46,387
5,870
29,284
4,956
209,746
164,209
7,114
38,423
$
$
$
$
19,044
14,288
43,886
1,221
4,176
140
4,773
6,398
27,915
5,358
28,818
4,446
169,725
125,706
6,579
37,440
(cid:20)(cid:19)(cid:25)
(Dollars in thousands)
With no related allowance
recorded:
Commercial real estate -
construction
Commercial real estate -
owner-occupied
Commercial real estate -
non-owner-occupied
Commercial and
industrial
Residential mortgage
Consumer - home equity
Consumer - other
With an allowance recorded:
Commercial real estate -
construction
Commercial real estate -
owner-occupied
Commercial real estate -
non-owner-occupied
Commercial and
industrial
Residential mortgage
Consumer - home equity
Consumer - other
Total
Total commercial loans and
leases
Total mortgage loans
Total consumer loans
December 31, 2017
Unpaid
Principal
Balance
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
441
1,389
692
2,279
85
231
1
6
414
154
1,220
180
1,007
269
8,368
6,595
265
1,508
$
13,763
$
13,013
$
— $
9,104
$
—
—
—
—
—
—
(19)
(949)
(620)
(12,736)
(172)
(2,358)
(498)
(17,352) $
(14,324) $
(172)
(2,856)
$
$
53,282
15,127
92,312
2,044
5,747
11
197
13,498
6,196
42,874
4,861
23,546
4,455
273,254
232,590
6,905
33,759
$
$
50,867
15,370
103,013
2,004
5,906
75
238
13,314
6,051
35,306
5,179
27,189
5,354
283,629
237,922
7,183
38,524
$
$
$
$
44,482
14,975
70,254
2,001
5,634
75
156
13,287
5,872
32,162
4,748
26,575
4,893
238,127
194,201
6,749
37,177
(cid:20)(cid:19)(cid:26)
(Dollars in thousands)
With no related allowance
recorded:
Commercial real estate -
construction
$
Commercial real estate -
owner-occupied
Commercial real estate -
non-owner-occupied
Commercial and
industrial
With an allowance recorded:
Commercial real estate -
construction
Commercial real estate -
owner-occupied
Commercial real estate -
non-owner-occupied
Commercial and
industrial
Residential mortgage
Consumer - home equity
Consumer - other
Total
Total commercial loans and
leases
Total mortgage loans
Total consumer loans
$
$
December 31, 2016
Unpaid
Principal
Balance
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
38
$
38
$
— $
28
$
25,890
19,587
—
647
879
111,261
3,418
1,839
16,668
1,782
78,270
4,377
10,237
2,425
272,364
255,325
4,377
12,662
$
$
54
493
95
2,858
161
435
151
9,191
8,444
161
586
25,180
15,654
25,074
14,794
148,311
138,202
1,946
17,580
1,743
84,197
4,628
13,916
3,485
316,678
294,649
4,628
17,401
$
$
1,946
17,429
1,725
82,793
4,312
13,267
3,200
302,780
282,001
4,312
16,467
$
$
—
—
—
(649)
(640)
(89)
(21,413)
(144)
(993)
(365)
(24,293) $
(22,791) $
(144)
(1,358)
(cid:20)(cid:19)(cid:27)
NOTE 7 –TRANSFERS AND SERVICING OF FINANCIAL ASSETS (INCLUDING MORTGAGE BANKING
ACTIVITY)
Commercial Banking Activity
The unpaid principal balances of loans serviced for others were $1.6 billion and $1.3 billion at December 31, 2018 and 2017,
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, 2018 and 2017.
Mortgage Banking Activity
IBERIABANK through one of its reportable segments, Mortgage, 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. 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 from (transferred to) held for investment
Other
Balance at end of period
2018
134,916
$
2017
157,041
$
2016
166,247
1,469,847
(1,498,386)
1,058
299
107,734
$
1,844,358
(1,859,565)
(6,918)
—
134,916
$
2,460,033
(2,451,459)
(14,017)
(3,763)
157,041
$
$
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
Other losses
Servicing Rights
2018
2017
2016
$
$
6,490
(4,039)
42,887
1,339
(253)
46,424
$
$
(7,047) $
1,229
68,255
1,133
—
63,570
$
1,361
(6,640)
87,925
1,207
—
83,853
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, 2018
December 31, 2017
(Dollars in thousands)
Mortgage servicing rights $
Gross
Carrying Amount
13,612
Accumulated
Amortization
$
(4,806) $
Net
Carrying Amount
8,806
Gross
Carrying Amount
9,588
$
Accumulated
Amortization
$
(3,931) $
Net
Carrying Amount
5,657
In addition, there was an insignificant amount of non-mortgage servicing rights related to SBA loans as of December 31, 2018
and 2017.
(cid:20)(cid:19)(cid:28)
NOTE 8 – 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
2018
2017
$
81,194
$
241,284
137,469
459,947
(159,440)
300,507
$
$
89,137
261,994
129,866
480,997
(149,584)
331,413
Depreciation expense was $22.4 million, $21.0 million, and $20.8 million, for the years ended December 31, 2018, 2017, and
2016, respectively.
The Company actively engages in leasing office space available in buildings it owns. Leases have various terms, generally
ranging up to 5 years. Total lease income for the years ended December 31, 2018, 2017, and 2016 was $2.1 million, $2.4
million, and $2.8 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, 2018 and 2017 was $7.0 million and $6.9
million, respectively, with related accumulated depreciation of $2.7 million and $2.5 million, respectively.
The Company leases certain branch and corporate offices, land and ATM facilities through operating leases with terms that
range from less than one year 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, 2018, 2017, and 2016 totaled
$22.5 million, $19.1 million, and $16.6 million, respectively.
Minimum future annual rent commitments under lease agreements for the periods indicated are as follows:
(Dollars in thousands)
2019
2020
2021
2022
2023
2024 and thereafter
$
$
21,750
19,991
16,921
14,195
9,182
34,652
116,691
(cid:20)(cid:20)(cid:19)
NOTE 9 – GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
Goodwill
Changes to the carrying amount of goodwill by reporting unit for the years ended December 31, 2018 and 2017 are provided in
the following table.
(Dollars in thousands)
Balance, December 31, 2016
Goodwill acquired and adjustments during the year
Balance, December 31, 2017
Goodwill acquired and adjustments during the year
Balance, December 31, 2018
IBERIABANK
698,513
$
462,046
1,160,559
43,251
1,203,810
$
$
$
$
$
Mortgage
LTC
23,178
—
23,178
—
23,178
$
$
$
5,165
—
5,165
3,380
8,545
$
$
$
Total
726,856
462,046
1,188,902
46,631
1,235,533
On March 23, 2018, the Company completed its acquisition of Gibraltar. In connection with the acquisition, the Company
recorded $64.3 million of goodwill based on fair value estimates of the assets acquired and liabilities assumed in the business
combination as of December 31, 2018. On January 12, 2018, the Company's subsidiary, LTC, completed its acquisition of
SolomonParks. In connection with the acquisition, LTC recorded $3.4 million of goodwill based on fair value estimates. In
addition, measurement period adjustments to fair value estimates related to the acquisition of Sabadell United were updated
during 2018, reducing goodwill by $21.0 million. The accounting for the acquisitions of Gibraltar, SolomonParks and Sabadell
United was complete as of December 31, 2018. See Note 3 for additional information regarding these acquisitions.
The Company performed the required annual goodwill impairment test as of October 1, 2018. 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 intangible assets” on the Company's consolidated balance sheets totaling
$6.8 million on December 31, 2018 and $6.7 million at December 31, 2017. The increase in title plant assets was the result of
the SolomonParks acquisition during the first quarter of 2018. No events or changes in circumstances occurred during 2018 to
suggest the carrying value of the title plant was not recoverable.
Intangible assets subject to amortization
In connection with the acquisition of Gibraltar, the Company recorded $18.5 million of core deposit intangible assets. Core
deposit intangible assets are subject to amortization over a ten year period. In connection with the acquisition of SolomonParks,
the Company recorded $156 thousand of non-compete agreement intangible assets. Non-compete agreement intangible assets
are subject to amortization over a five year period. Definite-lived intangible assets had the following carrying values included
in “other intangible assets” on the Company’s consolidated balance sheets as of December 31:
2018
2017
Gross Carrying
Amount
$
136,183
Accumulated
Amortization
$
(63,213) $
Net Carrying
Amount
Gross Carrying
Amount
72,970
$
127,957
Accumulated
Amortization
$
(51,971) $
Net Carrying
Amount
(Dollars in thousands)
Core deposit intangible assets
Customer relationship intangible
asset
Non-compete agreement
Total
75,986
147
24
76,157
1,385
206
137,774
$
(1,323)
(72)
(64,608) $
62
134
73,166
$
1,143
63
129,163
$
(996)
(39)
(53,006) $
$
(cid:20)(cid:20)(cid:20)
The related amortization expense of intangible assets is as follows:
(Dollars in thousands)
Aggregate amortization expense for the years ended December 31:
2016
2017
2018
(Dollars in thousands)
Estimated amortization expense for the years ended December 31:
2019
2020
2021
2022
2023
2024 and thereafter
$
$
Amount
8,415
12,590
21,678
18,363
14,500
10,208
7,711
6,410
15,974
(cid:20)(cid:20)(cid:21)
NOTE 10 –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 utilized by the Company for its risk management
strategies include interest rate swap agreements, interest rate collars, interest rate floors, 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, regardless of
whether a right of offset exists.
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The
Company enters into interest rate swap agreements in a cash flow hedge to convert forecasted variable interest payments to a
fixed rate on its junior subordinated debt. In addition, the Company has entered into an interest rate collar and interest rate
floors and designated the instruments as cash flow hedges of the risk of fluctuations in interest rates, thereby reducing the
Company's exposure to variability in cash flows from variable-rate loans.
For cash flow hedges, the effective and ineffective portions 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. Prior to January 1, 2018, the ineffective portion of gain or loss, if
any, was reported in earnings immediately in either "other income" or "other expense," respectively. 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.
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:
(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:
Customer swaps - upstream
Customer swaps - downstream
Foreign exchange contracts
Forward sales contracts
Written and purchased options
Other contracts
Total derivatives not designated as
hedging instruments under ASC Topic
815
Total
Balance
Sheet
Location
Derivative Assets - Fair Value
December 31,
2018
December 31,
2017
Balance
Sheet
Location
Derivative Liabilities - Fair Value
December 31,
2018
December 31,
2017
Other
assets
Other
assets
Other
assets
Other
assets
Other
assets
Other
assets
Other
assets
$
$
$
$
$
3,469
3,469
$
$
Other
liabilities
—
—
Other
liabilities
Other
liabilities
Other
liabilities
Other
liabilities
Other
liabilities
Other
liabilities
474
$
12,318
16,946
8,128
18
630
5,490
21
23,579
27,048
$
$
7
136
10,654
22
31,265
31,265
$
$
$
$
$
— $
— $
—
—
191
$
3,873
17,812
12,318
18
750
3,310
43
7
279
8,656
21
22,124
22,124
$
$
25,154
25,154
(cid:20)(cid:20)(cid:22)
(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:
Customer swaps - downstream
Foreign exchange contracts
Forward sales contracts
Written and purchased options
Other contracts
Total derivatives not designated as
hedging instruments under ASC Topic
815
Total
Derivative Assets - Notional Amount
Derivative Liabilities - Notional Amount
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
$
$
408,500
408,500
$
$
—
—
701,257
1,202
1,140
229,333
50,527
644,282
574,182
268
82,347
278,638
29,755
$
$
1,903,112
2,311,612
$
$
1,609,472
1,609,472
$
$
$
$
$
— $
108,500
— $
108,500
701,257
$
919,653
1,202
143,179
140,645
85,623
574,182
644,282
268
142,578
165,198
86,744
1,991,559
1,991,559
$
$
1,613,252
1,721,752
Customer swaps - upstream
$
919,653
$
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 $85.6 million and $86.7 million at
December 31, 2018 and 2017, respectively. Assuming all underlying third party customers referenced in the swap contracts
defaulted at December 31, 2018 and December 31, 2017, 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, 2018, the Company was not required to post collateral due to the Company's derivative position at the balance
sheet date. At December 31, 2017, the Company was required to post $552 thousand in cash or securities as collateral for its
derivative transactions, which is included in "interest-bearing deposits in banks" on the Company’s consolidated balance sheets.
Effective January 3, 2017, the Chicago Mercantile Exchange and LCH.Clearnet Limited amended their rulebooks to legally
characterize variation margin payments for over-the-counter derivatives they clear as settlements of the derivatives' exposure
rather than collateral against the exposures. In light of changes to the aforementioned rulebooks, the Board of Governors of the
Federal Reserve System, the OCC and the FDIC issued guidance effective August 14, 2017, which is consistent with the SEC's
accounting guidance, that allows institutions to treat centrally-cleared derivatives as settled for purposes of the capital rule. At
December 31, 2018 and 2017, the Company was required to post $35.8 million and $5.1 million, respectively, in variation
margin payments for its derivative transactions, which is required to be netted against the fair value of the derivatives in "other
assets/other liabilities" on the 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, 2018. 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:23)
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 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 not designated as hedging
instruments
Written and purchased options
Total derivative liabilities subject to master netting
arrangements
December 31, 2018
Gross Amounts Not Offset in the
Balance Sheet
Derivatives
Collateral (1)
Net
Gross Amounts
Presented in the
Balance Sheet
$
3,469
$
— $
— $
3,469
17,420
3,285
(619)
—
—
—
16,801
3,285
24,174
$
(619) $
— $
23,555
$
18,003
3,285
(619) $
—
— $
—
17,384
3,285
21,288
$
(619) $
— $
20,669
$
$
$
(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 not designated as hedging
instruments
Written and purchased options
Total derivative assets subject to master netting
arrangements
Derivative liabilities
Interest rate contracts not designated as hedging
instruments
Total derivative liabilities subject to master netting
arrangements
December 31, 2017
Gross Amounts Not Offset in the
Balance Sheet
Derivatives
Collateral (1)
Net
Gross Amounts
Presented in the
Balance Sheet
$
$
$
$
20,446
$
8,610
(12,469) $
—
— $
—
7,977
8,610
29,056
$
(12,469) $
— $
16,587
16,191
16,191
$
$
(12,469) $
(552) $
3,170
(12,469) $
(552) $
3,170
(1)
Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.
During the years ended December 31, 2018 and 2017, 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, 2018, 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:24)
At December 31, 2018, 2017, and 2016, and for the years then ended, information pertaining to the effect of the hedging
instruments on the consolidated financial statements is as follows:
Amount of Gain (Loss) Recognized
in OCI, net of taxes
Total
Including
Component
Excluding
Component
Location of
Gain (Loss)
Reclassified
from
Accumulated
OCI into
Income
Amount of Gain (Loss) Reclassified
from Accumulated OCI into
Income, net of taxes
Total
Including
Component
Excluding
Component
For the Year Ended December 31,
Location of
Gain (Loss)
Recognized
in Income on
Derivatives
(Amount
Excluded
from
Effectiveness
Testing)
Amount of Gain (Loss) Recognized
in Income on Derivatives (Amount
Excluded from Effectiveness
Testing)
Total
Including
Component
Excluding
Component
2018
2018
2018
$ 4,416
$ 4,416
$
$
4,835
4,835
$
$
(419)
(419)
Interest
expense
$
$
(196) $
(150) $
(196) $
(150) $
(46)
(46)
Interest
expense
$
$
— $
— $
— $
— $
—
—
(Dollars in
thousands)
Derivatives in
ASC Topic 815
Cash Flow
Hedging
Relationships
Interest
rate
contracts
Total
Amount of
Gain (Loss)
Recognized in
OCI, net of
taxes
Location of
Gain (Loss)
Reclassified
from
Accumulated
OCI into
Income
Amount of
Gain (Loss)
Reclassified
from
Accumulated
OCI into
Income, net of
taxes
Location of Gain
(Loss)
Recognized in
Income on
Derivatives
(Amount
Excluded from
Effectiveness
Testing)
Amount of Gain
(Loss) Recognized in
Income on
Derivatives
(Amount Excluded
from Effectiveness
Testing)
For the Years Ended December 31,
2017
2016
2017
2016
2017
2016
$ (611) $ (328)
$ (611) $ (328)
Interest
expense
$ (390) $
$ (390) $
50
50
Interest expense
$
$
— $
— $
—
—
(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
2018
2017
2016
Other income
Other income
Mortgage income
Mortgage income
Other income
$
6,962
$
4,750
$
8,830
29
4,064
180
(24)
$ 11,211
43
(4,115)
(2,028)
51
$ (1,299) $
15
(1,731)
(327)
17
6,804
(cid:20)(cid:20)(cid:25)
NOTE 11 – 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
Time deposits
$
$
2018
6,542,490
4,514,113
8,237,291
828,914
2017
6,209,925
4,348,939
7,674,291
846,074
3,640,623
$ 23,763,431
2,387,488
$ 21,466,717
Total time deposits summarized by denomination at December 31 are as follows:
(Dollars in thousands)
Time deposits less than or equal to $250,000
Time deposits greater than $250,000
2018
2,522,660
1,117,963
3,640,623
$
$
A schedule of maturities of all time deposits as of December 31, 2018 is as follows:
(Dollars in thousands)
Years ending December 31,
2019
2020
2021
2022
2023
2024 and thereafter
2017
1,768,047
619,441
2,387,488
2,504,515
876,740
159,877
76,486
12,684
10,321
3,640,623
$
$
$
$
(cid:20)(cid:20)(cid:26)
NOTE 12 – 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
2018
1,167,000
315,882
1,482,882
$
$
$
$
2017
475,000
516,297
991,297
The levels of FHLB advances and securities sold under agreements to repurchase 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.
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
2018
2017
$
1,482,882
$
1,482,882
1,052,088
1.40%
2.12%
991,297
2,197,105
905,755
0.83%
0.82%
1(cid:20)(cid:27)
NOTE 13 – LONG-TERM DEBT
Long-term debt at December 31 is summarized as follows:
(Dollars in thousands)
IBERIABANK:
2018
2017
Federal Home Loan Bank advances, 0.864% to 7.040%
$
986,027
$
1,331,579
Notes payable - Investment fund contribution, 7 to 35 year term, 1.28% to 6.82% fixed, 7
to 30 year term, 1.28% to 6.82% fixed, respectively
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
60,014
44,146
1,046,041
1,375,725
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
1,166,151
$
120,110
1,495,835
$
(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 2.81% and 1.69% at December 31, 2018 and 2017, respectively.
Outstanding FHLB advances are a mix of bullet and amortizing structures. Amortizing FHLB advances are amortized over
periods ranging from 1.3 to 20.1 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, 2018 were
$7.0 billion under the blanket floating lien including $1.9 billion from pledges of investment securities. The weighted average
advance rate was 2.15% and 1.48% at December 31, 2018 and 2017, 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.
1(cid:20)(cid:28)
Advances and long-term debt at December 31, 2018 have maturities or call dates in future years as follows:
(Dollars in thousands)
2019
2020
2021
2022
2023
2024 and thereafter
$
$
309,116
233,465
125,255
10,581
58,762
428,972
1,166,151
1(cid:21)(cid:19)
NOTE 14 – INCOME TAXES
The provision for income tax expense consists of the following for the years ended December 31:
(Dollars in thousands)
Current expense (benefit)
Deferred expense (benefit)
Tax credits
Amortization on qualified affordable housing tax credits
Tax benefits attributable to items charged to equity and goodwill
2018
(115,195) $
153,518
(5,179)
—
(866)
32,278
$
2017
84,827
$
71,257
(10,845)
5,227
—
150,466
$
2016
103,335
(16,654)
(7,112)
4,185
1,439
85,193
$
$
There was a balance receivable of $208.0 million and $4.5 million for federal and state income taxes at December 31, 2018 and
2017, respectively. The provision for federal income taxes differs from the amount computed by applying the federal income
tax statutory rate of 21 percent for the year ended December 31, 2018 and 35 percent for the years ended December 31, 2017
and 2016 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 (1)
Effective tax rate
2018
84,531
2017
102,508
$
$
2016
95,189
$
(5,801)
6,464
12,459
(5,179)
—
(60,196)
32,278
$
(9,435)
9,605
6,970
(10,845)
5,227
46,436
150,466
$
(8,203)
3,250
4,770
(7,112)
4,185
(6,886)
85,193
8.0%
51.4%
31.3%
$
(1) The composition of other items resulting in a net tax benefit of $60.2 million for the year ended December 31, 2018 included
a $6.6 million expense related to the finalization of accounting for the Sabadell United acquisition and its net impact from the
remeasurement of deferred tax assets as a result of the passage of the Tax Cuts and Jobs Act (the "Tax Act"). In connection with
filing its 2017 income tax returns, the Company recorded a non-core, permanent net income tax benefit of $65.3 million as a
result of deductions claimed on the 2017 income tax returns associated with unrealized losses on securities and loans and
depreciation on real and personal property.
The composition of other items resulting in a net tax expense of $46.4 million for the year ending December 31, 2017 included
$51.0 million related to the estimated net impact from the remeasurement of deferred tax assets and liabilities as a result of the
passage of the Tax Act in December 2017. This was partially offset by $3.0 million related to equity based compensation, $1.0
million resulting from the reversal of a prior year deferred tax asset impairment, and a $600 thousand benefit due to a deferred
REIT distribution.
1(cid:21)(cid:20)
The net deferred tax asset (liability) at December 31 is as follows:
(Dollars in thousands)
Deferred tax asset:
NOL and credit carryforward
Allowance for credit losses
Deferred compensation
Basis difference in acquired assets and liabilities
Unrealized losses on loans and securities
OREO
Other
Deferred tax liability:
Unrealized gains on loans and securities
FHLB stock
Premises and equipment
Acquisition intangibles
Deferred loan costs
Basis difference in acquired assets and liabilities
Lease receivable
Other
2018
2017
$
42,837
$
38,571
5,482
9,228
—
32
19,395
115,545
(98,807)
—
(10,626)
(9,757)
(5,814)
(17,628)
(37,844)
(6,485)
(186,961)
(71,416) $
8,364
38,402
5,876
43,391
12,198
2,639
22,719
133,589
—
(300)
(3,723)
(8,151)
(3,114)
(31,309)
—
(4,885)
(51,482)
82,107
Net deferred tax (liability) asset
$
At December 31, 2018, the Company's cumulative net operating loss carryforwards were $45.0 million. These 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.
At December 31, 2018, the Company had recorded a net deferred tax liability position. The Company determined that the net
deferred tax asset at December 31, 2017 was more likely than not to be realized based on an assessment of all available positive
and negative evidence, and therefore, no valuation allowance was recorded.
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, 2018 and 2017, an immaterial amount of interest and penalty expense associated with
state filings was recorded. During the year ended December 31, 2016, the Company did not recognize any interest or penalties
in its consolidated financial statements.
1(cid:21)(cid:21)
On December 22, 2017, the Tax Act was signed into law. Under ASC 740, the effects of changes in tax rates and laws are
recognized in the period in which the new legislation is enacted. In the case of U.S. federal income taxes, the enactment date is
the date the bill becomes law (i.e., upon presidential signature). Among other provisions, the most significant to the Company
is the reduction of the corporate income tax rate from 35% to 21%. With respect to the legislation, the Company recognized a
provisional one-time increase in tax expense of $51.0 million as of December 31, 2017 due to a re-measurement of deferred tax
assets and liabilities resulting from the decrease in the corporate income tax rate. During the year ended December 31, 2018,
the Company recognized a total adjustment of $6.6 million in income tax expense due to the write-down of deferred tax assets
associated with the finalization of the accounting for the Sabadell United acquisition and the related impact of the Tax Act on
those adjustments. This adjustment increased the year-to-date effective tax rate by 1.6% from 6.4% to 8.0%. Consistent with
the guidance provided under ASC 740, the Company recorded impacts from enactment of the Tax Act in the fourth quarter of
2017 subject to Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118").
SAB 118 provided a measurement period not to extend beyond one year of the enactment date to adjust the accounting for
certain elements of the tax reform. The Company filed its 2017 federal and state tax returns in the fourth quarter of 2018, after
which it was able to finalize deferred tax balances subject to the remeasurement under the Tax Act. The accounting for the tax
effects of the Tax Act was complete as of December 22, 2018.
1(cid:21)(cid:22)
NOTE 15 – SHAREHOLDERS' EQUITY, CAPITAL RATIOS AND OTHER REGULATORY MATTERS
Preferred Stock
The following table presents a summary of the Company's non-cumulative perpetual preferred stock at December 31:
(Dollars in thousands)
Series B Preferred Stock
Series C Preferred Stock
Issuance
Date
Earliest
Redemption
Date
Annual
Dividend
Rate
Liquidation
Amount
Carrying
Amount
Carrying
Amount
2018
2017
8/5/2015
5/9/2016
8/1/2025
5/1/2026
6.625% $
80,000
$
76,812
$
76,812
6.600%
57,500
55,285
55,285
$
137,500
$ 132,097
$ 132,097
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 2018, the Company's Board of Directors authorized the repurchase of up to 1,137,500 shares of
IBERIABANK Corporation's outstanding common stock, which was completed on November 5, 2018. On November 5, 2018,
the Board of Directors authorized a new repurchase plan of up to 2,765,000 shares of the Company's 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 expires during the fourth quarter of 2020. The
program may be extended, modified, suspended, or discontinued at any time. During 2018, the Company repurchased
1,972,500 common shares, at a weighted average price of $75.46 per common share, of which 1,472,500 were repurchased
under previously completed plans. At December 31, 2018, there were approximately 2,265,000 remaining shares that may be
repurchased under the current Board-approved plan. Subsequent to year-end and through February 21, 2019, the Company
repurchased 226,921 common shares for approximately $17.5 million. The Company did not repurchase any common shares
during 2017.
On March 23, 2018, as part of the Gibraltar acquisition, the Company issued 2,787,773 shares of common stock. The aggregate
value of the acquisition consideration paid by the Company at the time of closing was approximately $214.7 million based on
the Company's closing common stock price of $77.00 per share on March 23, 2018. Gibraltar common shareholders received
1.9749 shares of IBERIABANK Corporation common stock for each outstanding share of Gibraltar common stock. Refer to
Note 3, Acquisition Activity, for further detail regarding the Gibraltar acquisition.
On December 7, 2016, the Company issued 3,593,750 shares of its common stock at a price of $81.50 per common share. On
March 7, 2017, the Company issued 6,100,000 shares of its common stock at a price of $83.00 per common share. Net
proceeds from the offerings, after deduction of underwriting discounts, commissions, and direct issuance costs, were $279.2
million and $485.2 million, respectively. The proceeds from these issuances were used to finance the cash portion of the
purchase price for the acquisition of Sabadell United. The acquisition, which closed on July 31, 2017, provided for Banco de
Sabadell, S.A. to receive 2,610,304 shares of the Company's common stock ($211.0 million based on the Company's closing
stock price of $80.85 on that date) and $809.2 million in cash from the two stock issuances. Banco de Sabadell, S.A. sold the
2.6 million shares received as part of acquisition proceeds early in the fourth quarter of 2017. Refer to Note 3, Acquisition
Activity, for further detail regarding the Sabadell United acquisition.
1(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.
Management believes that, as of December 31, 2018, the Company and IBERIABANK met all capital adequacy requirements
to which they are subject.
As of December 31, 2018, 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) (1)
Consolidated
IBERIABANK
Tier 1 Risk-Based Capital (1)
Consolidated
IBERIABANK
Total Risk-Based Capital (1)
Consolidated
IBERIABANK
Minimum
Well-Capitalized
Actual
Amount
Ratio
Amount
Ratio
Amount
Ratio
2018
$1,168,343
1,165,537
4.00%
N/A
N/A $2,812,863
4.00
$1,456,921
5.00
2,733,099
$1,125,405
1,122,712
4.50%
4.50
N/A
$1,621,695
N/A $2,680,766
2,733,099
6.50
$1,500,540
1,496,949
$2,000,720
1,995,932
6.00%
N/A
N/A $2,812,863
6.00
$1,995,932
8.00
2,733,099
8.00%
N/A
N/A $3,084,764
8.00
$2,494,915
10.00
2,888,500
9.63%
9.38
10.72%
10.95
11.25%
10.95
12.33%
11.58
Minimum
Well-Capitalized
Actual
Amount
Ratio
Amount
Ratio
Amount
Ratio
2017
$1,073,381
1,070,789
4.00%
N/A
N/A $2,509,496
4.00
$1,338,487
5.00
2,437,275
$1,011,732
1,009,553
4.50%
4.50
N/A
$1,458,243
N/A $2,377,398
2,437,275
6.50
$1,348,977
1,346,070
$1,798,635
1,794,760
6.00%
N/A
N/A $2,509,496
6.00
$1,794,760
8.00
2,437,275
8.00%
N/A
N/A $2,780,095
8.00
$2,243,450
10.00
2,591,374
9.35%
9.10
10.57%
10.86
11.16%
10.86
12.37%
11.55
1(cid:21)(cid:24)
(1) 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, 2018, the required minimum capital conservation buffer was 1.875%,
and will increase by 0.625% and be fully phased in on January 1, 2019 at 2.50%. At December 31, 2018, the capital
conservation buffers of the Company and IBERIABANK were 4.33% and 3.58%, 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 2019 without permission are limited
to 2019 earnings plus an additional $130.0 million.
Funds available for loans or advances by IBERIABANK to the Parent amounted to $288.9 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. See Note 13 to the consolidated financial statements for
additional information.
In addition, so long as any shares of Series B Preferred Stock or Series C Preferred Stock remain outstanding, the Company is
prohibited from paying dividends on common stock if the required payments on the Series B Preferred Stock and Series C
Preferred Stock have not been made.
1(cid:21)(cid:25)
NOTE 16 –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
Earnings allocated to common shareholders - basic
Weighted average common shares outstanding
Earnings per common share - basic
Earnings per common share - diluted
Earnings allocated to common shareholders - basic
Dividends and undistributed earnings allocated to unvested restricted
shares
Earnings 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,
2018
2017
2016
$
$
370,249
(9,095)
(3,583)
357,571
55,008
6.50
$
$
142,413
(9,095)
(1,210)
132,108
50,640
2.61
186,777
(7,977)
(1,872)
176,928
40,948
4.32
357,571
$
132,108
$
176,928
(49)
357,522
$
(1)
132,107
$
55,008
352
55,360
50,640
352
50,992
6.46
$
2.59
$
(37)
176,891
40,948
158
41,106
4.30
$
$
$
$
$
For the years ended December 31, 2018, 2017, and 2016, the calculations for basic shares outstanding exclude the weighted
average shares owned by the RRP of 564,973, 467,601, and 447,818, respectively.
The effects from the assumed exercises of 154,397, 71,260, and 155,969 stock options were not included in the computation of
diluted earnings per share for the years ended December 31, 2018, 2017, and 2016, respectively, because such amounts would
have had an antidilutive effect on earnings per common share.
1(cid:21)(cid:26)
NOTE 17 – 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, and phantom stock. 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, 2018, awards of 1,162,931 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, 2018, 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, 2015
Granted
Exercised
Forfeited or expired
Outstanding options, December 31, 2016
Granted
Exercised
Forfeited or expired
Outstanding options, December 31, 2017
Granted
Exercised
Forfeited or expired
Outstanding options, December 31, 2018
Exercisable options, December 31, 2016
Exercisable options, December 31, 2017
Exercisable options, December 31, 2018
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
(Dollars in
thousands)
Weighted
Average
Remaining
Contract Life
(in years)
$
$
$
$
$
56.99
48.65
55.39
$
3,597
59.49
55.38
84.78
55.45
68.46
58.24
82.02
53.07
68.30
61.41
56.66
55.77
56.75
2,098
1,242
$
5,148
5.2
$
4,222
3.9
Number of
Shares
813,777
160,624
(196,769)
(56,094)
721,538
80,557
(85,221)
(30,508)
686,366
97,620
(42,047)
(27,519)
714,420
415,376
455,010
501,815
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)
2018
2017
2016
1.8%
24.3%
2.7%
5.8
1.7%
25.0%
2.1%
5.8
2.8%
29.0%
1.4%
6.5
Weighted-average grant-date fair value
$
18.48
$
18.86
$
10.46
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.
1(cid:21)(cid:27)
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
2018
2017
2016
$
1,280
$
1,470
$
93
124
2,010
331
At December 31, 2018, there was $2.0 million of unrecognized compensation expense related to stock options that is expected
to be recognized over a weighted-average period of 2.8 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 five years). As of December 31, 2018 and 2017, unrecognized share-based compensation expense
associated with these awards totaled $27.1 million and $31.9 million, respectively. The unrecognized compensation expense
related to restricted stock awards at December 31, 2018 is expected to be recognized over a weighted-average period of 1.3
years.
Restricted share units
The Company issues 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
agreements. 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, Summary of Significant Accounting Policies, for further discussion of restricted share units with market or performance
conditions.
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
2018
2017
2016
$
18,998
$
14,966
$
12,513
3,990
2,809
4,380
The following table represents unvested restricted stock award and restricted share unit activity for the years ended
December 31:
Number of shares at beginning of period
Granted
Forfeited
Vested
Number of shares at end of period
2018
738,187
231,064
(72,217)
(196,406)
700,628
2017
543,261
421,198
(31,699)
(194,573)
738,187
2016
507,130
254,276
(28,855)
(189,290)
543,261
The weighted average grant date fair value of restricted stock awards and restricted share units granted was $80.98, $82.49, and
$48.84 for the years ended December 31, 2018, 2017, and 2016, respectively. The total fair value of restricted stock awards
and restricted share units vested during the years ended December 31, 2018, 2017, and 2016 was $16.3 million, $16.4 million,
and $10.7 million, respectively.
1(cid:21)(cid:28)
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 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 accumulated 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.
The following table represents compensation expense recorded for phantom stock 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
2018
2017
2016
$
8,141
$
10,756
$
12,933
The following table represents phantom stock award activity during the periods indicated:
(Dollars in thousands)
Balance, December 31, 2015
Granted
Forfeited share equivalents
Vested share equivalents
Balance, December 31, 2016
Granted
Forfeited share equivalents
Vested share equivalents
Balance, December 31, 2017
Granted
Forfeited share equivalents
Vested share equivalents
Balance, December 31, 2018
Number of share
equivalents (1)
Value of share
equivalents (2)
462,430
$
215,745
(42,051)
(163,294)
472,830
118,408
(34,968)
(162,426)
393,844
157,044
(63,276)
(134,205)
353,407
$
$
$
25,466
18,069
3,522
8,509
39,600
9,177
2,710
13,515
30,523
10,095
4,067
11,156
22,717
(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 $64.28, $77.50 and $83.75 on December 31, 2018, 2017, and 2016, 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 $3.7 million, $3.5 million, and $1.9 million for
the years ended December 31, 2018, 2017, and 2016, 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.
1(cid:22)(cid:19)
NOTE 18 – 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, 2018 and 2017, the fair value
of guarantees under commercial and standby letters of credit was $2.4 million and $2.1 million, respectively. This fair value
will decrease as the existing commercial and standby letters of credit approach their expiration dates.
At December 31, 2018 and 2017, respectively, the Company had the following financial instruments outstanding and related
reserves, whose contract amounts represent credit risk:
(Dollars in thousands)
Commitments to extend credit
Unfunded commitments under lines of credit
Commercial and standby letters of credit
Reserve for unfunded lending commitments
December 31, 2018
642,162
$
December 31, 2017
342,305
$
6,883,963
6,060,034
240,436
14,830
210,002
13,208
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 by the borrower. 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,
Allowance for Credit Losses and Credit Quality, for additional information related to the Company’s reserve for 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 claims 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.
1(cid:22)(cid:20)
In July of 2016, the Company 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 Company's FHA-related policies and practices. After the
Company complied with the subpoena, attorneys from the Department of Justice (“DOJ”) informed the Company in late March
of 2017 that a civil qui tam suit had been filed against the Company in federal court involving the subject matter of the HUD
subpoena. The HUD lawsuit was settled on December 11, 2017 in the amount of $11.7 million. On February 2, 2018,
IBERIABANK filed a lawsuit in the United States District Court for the Eastern District of Louisiana (New Orleans) against
Illinois Union Insurance Company and Travelers Casualty and Surety Company of America in an effort to recover the $11.7
million it paid to settle the HUD matter. IBERIABANK filed that lawsuit to recover the insurance proceeds to which it claims
to be entitled under certain Bankers’ Professional Liability insurance policies issued by defendants Illinois Union and Travelers.
More specifically, IBERIABANK alleges that the insurers have failed to honor their obligations under the policies to pay
IBERIABANK’s losses in connection with the $11.7 million settlement of disputed allegations relating to IBERIABANK’s
professional services in connection with certain mortgage loans insured by the FHA. The judge in the federal lawsuit granted a
motion for summary judgment thereby dismissing the case. The Company is considering whether to appeal or not.
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 and available insurance coverage, the Company’s management believes that it has
established appropriate legal reserves. Any incremental 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 and reported as of December 31, 2018 is not material.
1(cid:22)(cid:21)
NOTE 19 – FAIR VALUE MEASUREMENTS
Recurring fair value measurements
The following table presents information about the Company's assets and liabilities that are measured at fair value on a
recurring basis as of December 31, 2018 and 2017 and their classification within the fair value hierarchy. 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
Mortgage loans held for investment, at fair value option
Derivative instruments
Total
Liabilities
Derivative instruments
Total
Assets
Securities available for sale
Mortgage loans held for sale
Mortgage loans held for investment, at fair value option
Derivative instruments
Total
Liabilities
Derivative instruments
Total
Level 1
Level 2
Level 3
Total
December 31, 2018
— $
4,783,579
$
— $
4,783,579
—
—
107,734
—
—
— $
27,048
4,918,361
— $
— $
22,124
22,124
$
$
$
—
3,143
—
3,143
$
107,734
3,143
27,048
4,921,504
— $
— $
22,124
22,124
Level 1
Level 2
Level 3
Total
December 31, 2017
— $
4,590,062
$
— $
4,590,062
—
—
134,916
—
—
— $
31,265
4,756,243
— $
— $
25,154
25,154
$
$
$
—
14,953
—
14,953
$
134,916
14,953
31,265
4,771,196
— $
— $
25,154
25,154
$
$
$
$
$
$
$
$
During 2018 and 2017, there were no transfers between the Level 1 and Level 2 fair value categories.
1(cid:22)(cid:22)
Non-recurring fair value measurements
The Company holds certain assets that are measured at fair value, but only in certain circumstances, such as impairment. The
following table presents information about the Company's assets that are measured at fair value and still held as of December
31, 2018 and 2017 for which a non-recurring fair value adjustment was recorded during the years then ended. See Note 1,
Summary of Significant Accounting Policies, for a description of how fair value measurements are determined.
(Dollars in thousands)
Assets
Impaired loans
OREO, net
Total
(Dollars in thousands)
Assets
Impaired loans
OREO, net
Total
Level 1
Level 2
Level 3
Total
December 31, 2018
$
$
$
$
— $
—
— $
— $
—
— $
65,914
6,433
72,347
Level 1
Level 2
Level 3
December 31, 2017
— $
—
— $
— $
—
— $
71,210
7,748
78,958
$
$
$
$
65,914
6,433
72,347
Total
71,210
7,748
78,958
The tables above exclude the initial measurement of assets and liabilities that were acquired as part of the business
combinations disclosed in Note 3, Acquisition Activity. 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, deposits,
property, and equipment) or Level 3 fair value measurements (loans, core deposit intangible assets, and debt). Refer to Note 3,
Acquisition Activity, for further detail.
The Company did not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring
basis as of December 31, 2018 and 2017.
Fair value option
The Company has elected the fair value option for 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 also has a portion 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 at
December 31, 2018 and 2017, respectively.
The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for
mortgage loans held for sale and mortgage loans held for investment measured at fair value:
(Dollars in thousands)
Mortgage loans held for sale, at fair value
Aggregate
Fair Value
$ 107,734
Aggregate
Unpaid
Principal
$ 104,345
Mortgage loans held for investment, at fair value
3,143
3,595
Aggregate
Fair Value
Less Unpaid
Principal
$
3,389
(452)
Aggregate
Fair Value
$ 134,916
Aggregate
Unpaid
Principal
$ 131,276
Aggregate
Fair Value
Less Unpaid
Principal
$
3,640
14,953
16,306
(1,353)
December 31, 2018
December 31, 2017
1(cid:22)(cid:23)
Interest income on mortgage loans held for sale and mortgage loans held for investment at fair value option is recognized based
on contractual rates and is reflected in interest income on loans held for sale in the consolidated statements of comprehensive
income. The following table details net gains (losses) resulting from the change in fair value of loans that were recorded in
mortgage income in the consolidated statements of comprehensive income for the years ended December 31, 2018, 2017 and
2016. 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.
(Dollars in thousands)
Fair value option
Net Gains (Losses) Resulting From Changes in Fair Value
For the Years Ended December 31,
2018
2017
2016
Mortgage loans held for sale, at fair value
$
Mortgage loans held for investment, at fair value
(251) $
(1,542)
$
944
(204)
(2,512)
(1,149)
1(cid:22)(cid:24)
NOTE 20 – 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, except for loans, amended upon implementation of ASU 2016-01, Financial
Statements - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. See Note
2, Recent Accounting Pronouncements, in this Report for a description of how the fair value measurement is determined for
loans beginning January 1, 2018.
(Dollars in thousands)
Measurement
Category
Fair Value
Financial Assets
December 31, 2018
Carrying
Amount
Fair Value
Level 1
Level 2
Level 3
Securities available for sale
$ 4,783,579
$ 4,783,579
$
— $ 4,783,579
$
Mortgage loans held for sale
107,734
107,734
Mortgage loans held for
investment, at fair value option
Derivative instruments
3,143
27,048
3,143
27,048
Financial Liabilities
Derivative instruments
22,124
22,124
—
—
—
—
107,734
—
27,048
22,124
Amortized Cost
Financial Assets
Cash and cash equivalents
$
690,453
$
690,453
$ 690,453
$
— $
Securities held to maturity
207,446
204,277
—
204,277
—
—
3,143
—
—
—
—
Loans and leases, carried at
amortized cost, net of unearned
income and allowance for loan
and lease losses
Financial Liabilities
Deposits
22,376,101
22,088,236
—
— 22,088,236
—
—
23,763,431
23,752,139
— 23,752,139
Short-term borrowings
1,482,882
1,482,882
315,882
1,167,000
Long-term debt
1,166,151
1,154,062
—
— 1,154,062
1(cid:22)(cid:25)
—
—
—
—
—
—
—
—
(Dollars in thousands)
Measurement
Category
Fair Value
Financial Assets
December 31, 2017
Carrying
Amount
Fair Value
Level 1
Level 2
Level 3
Securities available for sale
$ 4,590,062
$ 4,590,062
$
— $ 4,590,062
$
Mortgage loans held for sale
134,916
134,916
Mortgage loans held for
investment, at fair value option
Derivative instruments
14,953
31,265
14,953
31,265
Financial Liabilities
Derivative instruments
25,154
25,154
—
—
—
—
134,916
31,265
25,154
—
14,953
Amortized Cost
Financial Assets
Cash and cash equivalents
$
625,724
$
625,724
$ 625,724
$
— $
Securities held to maturity
227,318
227,964
—
227,964
Loans and leases, carried at
amortized cost, net of unearned
income and allowance for loan
and lease losses
Financial Liabilities
Deposits
19,922,337
19,811,904
—
— 19,811,904
Short-term borrowings
991,297
991,297
516,297
475,000
21,466,717
21,460,782
— 21,460,782
Long-term debt
1,495,835
1,476,899
—
— 1,476,899
The fair value estimates presented herein are based upon pertinent information available to management as of December 31,
2018 and 2017. 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 these dates
and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.
1(cid:22)(cid:26)
NOTE 21 – RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company may execute transactions with various related parties. 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, 2018 and 2017. There were no outstanding loans to such related parties classified as non-accrual, past due, or
troubled debt restructurings at December 31, 2018.
Deposits from related parties held by the Company were not material at December 31, 2018 and 2017.
1(cid:22)(cid:27)
NOTE 22 – 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, Mortgage, 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 Mortgage 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:
•
•
•
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 (reversal of) credit losses
Mortgage income
Title revenue
Other non-interest income (expense)
Allocated expenses (income)
Non-interest expense
Income (loss) before income tax expense
Income tax expense (benefit)
Net income (loss)
Total loans, leases, and loans held for sale, net of
unearned income
Total assets
Total deposits
Average assets
IBERIABANK
1,215,668
$
$
208,381
1,007,287
40,429
—
—
81,588
(13,437)
660,804
401,079
32,436
$
$
$
368,643
$ 22,493,809
30,645,000
23,754,512
29,400,755
Year Ended December 31, 2018
Mortgage
LTC
Consolidated
5,958
$
—
5,958
(44)
46,424
—
(95)
9,847
43,021
(537)
(52)
(485) $
3
—
3
—
—
24,149
496
3,590
19,073
1,985
(106)
2,091
$
1,221,629
208,381
1,013,248
40,385
46,424
24,149
81,989
—
722,898
402,527
32,278
$
370,249
133,740
$
— $ 22,627,549
162,599
8,919
153,717
25,416
—
23,554
30,833,015
23,763,431
29,578,026
1(cid:22)(cid:28)
(Dollars in thousands)
Interest and dividend income
Interest expense
Net interest income
Provision for (reversal of) credit losses
Mortgage income
Title revenue
Other non-interest income (expense)
Allocated expenses (income)
Non-interest expense
Income (loss) before income tax expense
Income tax expense (benefit)
Net income (loss)
Total loans, leases, 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 credit losses
Mortgage income
Title revenue
Other non-interest income
Allocated expenses (income)
Non-interest expense
Income before income tax expense
Income tax expense
Net income
Total loans, leases, and loans held for sale, net of
unearned income
Total assets
Total deposits
Average assets
IBERIABANK
906,521
$
$
104,937
801,584
51,797
—
—
116,659
(13,293)
575,865
303,874
156,407
147,467
$
$ 20,028,840
27,672,906
21,462,776
24,228,436
$
$
IBERIABANK
707,676
$
$
64,068
643,608
41,433
405
—
121,647
(13,972)
480,898
257,301
79,565
$
$
$
177,736
$ 15,004,360
21,319,267
17,402,742
19,959,261
Year Ended December 31, 2017
Mortgage
LTC
Consolidated
7,260
$
—
7,260
(89)
63,570
—
(42)
10,041
73,587
(12,751)
(5,771)
(6,980) $
2
—
2
—
—
21,972
(12)
3,252
16,954
1,756
(170)
1,926
$
$
913,783
104,937
808,846
51,708
63,570
21,972
116,605
—
666,406
292,879
150,466
142,413
184,257
$
— $ 20,213,097
208,710
3,941
229,364
22,513
—
22,856
27,904,129
21,466,717
24,480,656
Year Ended December 31, 2016
Mortgage
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
41,521
83,853
22,213
121,651
—
563,464
271,970
85,193
$
186,777
— $ 15,222,012
24,866
—
26,060
21,659,190
17,408,283
20,321,234
1(cid:23)(cid:19)
NOTE 23 – 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
2018
2017
$
$
$
$
179,545
$
168,873
4,008,802
53,832
4,242,179
185,902
4,056,277
4,242,179
$
$
$
3,661,808
49,207
3,879,888
183,097
3,696,791
3,879,888
(Dollars in thousands)
Operating income
Condensed Statements of Income
Year Ended December 31
2018
2017
2016
Reimbursement of management expenses
$
83,262
$
76,177
$
65,104
Other income
Total operating income
Operating expenses
Interest expense
Salaries and employee benefits expense
Other expenses
Total operating expenses
Income (loss) before income tax benefit and increase in equity in
undistributed earnings of subsidiaries
Income tax expense
Income (loss) before equity in undistributed earnings of subsidiaries
Equity in undistributed earnings of subsidiaries
Net Income
Less: Preferred stock dividends
Net Income Available to Common Shareholders
$
245,213
328,475
6,008
55,436
28,963
90,407
238,068
799
237,269
132,980
370,249
9,095
361,154
$
146,796
222,973
5,168
55,013
32,965
93,146
129,827
3,123
126,704
15,709
142,413
9,095
133,318
$
829
65,933
3,948
45,623
19,566
69,137
(3,204)
530
(3,734)
190,511
186,777
7,977
178,800
1(cid:23)(cid:20)
Condensed Statements of Cash Flows
(Dollars in thousands)
Cash Flow from Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Year Ended December 31
2018
2017
2016
$
370,249
$
142,413
$
186,777
Depreciation and amortization
Net income of subsidiaries
Share-based compensation cost
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
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
Other financing activities, net
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
145
(377,974)
20,278
491
13,189
(7)
(52)
245,000
(1,500)
243,441
(84,782)
(9,095)
(3,226)
(148,855)
—
—
—
(245,958)
10,672
168,873
179,545
$
$
62
(160,206)
16,436
(4,256)
(5,551)
(809,159)
(105)
144,500
—
(664,764)
(72,772)
(9,095)
(832)
—
485,151
—
(56)
402,396
(267,919)
436,792
168,873
$
98
(190,511)
14,523
12,417
23,304
—
—
(6,000)
(749)
(6,749)
(56,793)
(7,028)
6,899
(11,666)
279,242
55,285
—
265,939
282,494
154,298
436,792
1(cid:23)(cid:21)
Corporate Information
144
Directors and Executive Officers
145
Presidents
146
Advisory Board Members
148
Corporate Information
149
Stock Information
| 143 |
Directors and Executive Officers
Board of Directors
William H. Fenstermaker
Chairman of the Board, IBERIABANK Corporation;
Chairman and Chief Executive Officer,
C.H. Fenstermaker and Associates, Inc.,
A Surveying, Mapping, Engineering and
Environmental Consulting Company
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
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,
A Stevedoring and Maritime Company
John E. Koerner III
Managing Member,
Koerner Capital, L.L.C.,
A Private Investment Company
Rick E. Maples
Senior Advisor,
Stifel Financial Corporation,
A Brokerage and Investment Banking Company
Rosa Sugrañes
Founder and Former CEO of Iberia Tiles
Executive Officers
Daryl G. Byrd
President and Chief Executive Officer
Michael J. Brown
Vice Chairman,
Chief Operating Officer
Jefferson G. Parker
Vice Chairman,
Director of Capital Markets, Energy Lending,
and Investor Relations
Fernando Perez-Hickman
Vice Chairman,
Director of Corporate Strategy
Anthony J. Restel
Vice Chairman,
Chief Financial Officer
Terry L. Akins
Senior Executive Vice President,
Chief Risk Officer
Elizabeth A. Ardoin
Senior Executive Vice President,
Director of Communications, Corporate Real Estate,
Human Resources, and Chief of Staff to the CEO
Robert M. Kottler
Executive Vice President,
Director of Retail, Small Business and Mortgage
M. Scott Price
Executive Vice President,
Chief Accounting Officer
Monica R. Sylvain, PhD
Executive Vice President,
Chief Diversity Officer
Robert B. Worley, Jr.
Executive Vice President,
Corporate Secretary and General Counsel
Nicolas Young
Executive Vice President,
Chief Credit Officer
| 144 |
Directors and Executive Officers
State Presidents
Samuel L. Erwin
North Carolina
South Carolina
Karl E. Hoefer
Louisiana
Texas
Gregory A. King
Alabama
Susan A. Martinez
North, West and Central Florida
Greg K. Smithers
Arkansas
Tennessee
Mark W. Tipton
Georgia
Mario Trueba
South Florida
Market Presidents
Lisa Armstrong
Dallas, Texas
Hunter G. Hill
New Orleans, Louisiana
R. Brandon Box
Fort Myers and Sarasota, Florida
Chris Howe
Northwest Arkansas
Ross Breunig
Central Florida
Ken R. Brown
Mobile, Alabama
W. Bryan Chapman
Energy Lending
Philip C. Earhart
Southwest Louisiana
Samuel L. Erwin
Greenville, South Carolina
John P. Everett III
Baton Rouge, Louisiana
David C. Gordley
Naples, Florida
Rodney L. Hall
Atlanta, Georgia
Michael A. Hallmark
Northeast Arkansas
Abel Harding
North Florida
Jay Harris
Greensboro, North Carolina
Dwight L. Hill
Florida Keys
Greg E. Kahmann
Northeast Louisiana and
Shreveport, Louisiana
Michael P. King
New York, New York
Ben Marmande
Houston, Texas
Alex Morton
Birmingham, Alabama
Nathan W. Raines
Memphis, Tennessee
Orlando Roche
Miami-Dade County, Florida
Martha “Marty” Lanahan
Tampa Bay, Florida
Eric E. Sanders
Huntsville, Alabama
N. Jerome Vascocu, Jr.
Acadiana Region, Louisiana
Debra L. Vasilopoulos
Palm Beach and
Broward Counties, Florida
Rotcher H. Watkins III
Charlotte, North Carolina
IBERIABANK Mortgage
IBERIA Capital Partners
Robert "Bob" M. Kottler
Executive Vice President and Division President
Ryan M. Atkins
Executive Vice President and Director of Mortgage Production
Nathan P. Vogt
Executive Vice President and Chief Operating Officer
Lenders Title Company
Beau J. Fast
President and Chief Executive Officer
Jefferson G. Parker
Vice Chairman
Director of Capital Markets, Energy Lending, and Investor Relations
IBERIA Civic Impact Partners
Clifton Worley
Executive Vice President
President
Ben Dupuy
Senior Vice President
Managing Director
| 145 |
Advisory Board Members
Alabama
Florida
Louisiana
Birmingham
W. Charles Mayer III, Chairman
George W. Bradford
J. David Brown III
Philip A. Currie
J. Michael “Mike” Kemp, Sr.
Sandra “Sandy” R. Killion
Tricia Kirk
C. Randall Minor
Steven “Steve” K. Mote
Michael A. Mouron
Margaret Ann Pyburn
David L. Silverstein
Mobile
Angus R. Cooper II, Chairman
Scott Hall Cooper
Robert T. Cunningham III
Brooks C. DeLaney
Michael L. Lapeyrouse
Charles Hamilton “Ham” McGuire
Paige B. Plash
Haymes S. Snedeker
Terrence J. "Ty" Thompson, Jr.
Selwyn H. Turner III
Arkansas
Central Arkansas
Albert B. Braunfisch
Byron M. Eiseman, Jr.
Robert M. Head
David E. Snowden, Jr.
Mark V. Williamson
Northeast Arkansas
Ralph P. Baltz
N. Ray Campbell
Jack N. Harrington
Kaneaster Hodges, Jr.
John M. Minor
Louise Runyan
Baton Rouge
John H. Bateman
Beau J. Box
Teri G. Fontenot
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
Matthew C. Saurage
William S. Slaughter III
J. Shawn Usher
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 S. “Bo” Ramsay
Gail S. Romero
Robert L. Wolfe, Jr.
New Iberia
Cecil C. Broussard, Co-Chairman
E. Stewart Shea III, Co-Chairman
Taylor Barras
Central Florida
Leigh Ann Horton
Craig T. Ustler
Jacksonville
Thomas “Tom” E. Gibbs, Chairman
Dane Grey
William “Tripp” Guilliford III
Gina M. Hill
Wayne "Marti" McCoy
Michael R. Munz
W. Hamilton Traylor
South Florida
Paul L. Maddock, Jr.
Juan Carlos Mas
Victor H. Mendelson
Mario Murgado
Aaron S. Podhurst
Rosa Sugrañes
Tampa Bay
N. Troy Fowler
Lewis S. Lee, Jr.
Robert Rothman
Georgia
Atlanta
Dr. Charles “Charlie” L. Brown III
Mark B. Chandler
John C. Gordon
H. C. “Buddy” Henry, Jr.
Peter F. Lauer
Richard “Rich” S. Novack
Gregory “Greg” S. Pope
Donal Ratigan
Mark C. West
John A. "Jay" Williams, Jr.
| 146 |
Benjamin “Ben” E. Marriner
William “Bill” B. Monk
Oliver G. “Rick” Richard II
Thomas “Tom” B. Shearman III
Marshall J. Simien, Jr.
William Gray Stream
Philip C. “Corey” Tarver
Tennessee
Memphis
James W. Gibson II
Sally Jones Heinz
R. Michael Kiser
Texas
Dallas
Daryl S. Kirkham, Chairman
Daniel H. Chapman
John W. Peavy III, Ph.D.
Houston
Bethany Andell
Dan Braun
David L. Ducote
Michael R. Dumas
Kennard McGuire
Scott Sanders
David Y. Stutts
Todd P. Sullivan
Ken Yang
Segev Zadok
Advisory Board Members
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
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
New Orleans
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
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.
Anthony Recasner, Ph.D.
James J. Reiss, Jr.
William Henry Shane
J. Benton Smallpage, Jr.
Robert M. Steeg
John “Jack” F. Stumpf, Jr.
Carroll W. Suggs
Phyllis M. Taylor
Ben B. Tiller
Steven W. Usdin
Northeast Louisiana
Malcolm E. Maddox, Chairman
Mary C. Biggs
Danny R. Graham
W. Bruce Hanks
Linda Singler Holyfield
John R. Hunter
Charles Marsala, Jr.
Joe E. Mitcham, Jr.
Virgil Orr, Ph.D.
Cindy J. Rogers
Jerry W. Thomas
Shreveport
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
Pat Yates
Southwest Louisiana
Kay C. Barnett
Keith F. DeSonier, M.D.
Julio R. Galan
Douglas “Doug” B. Gehrig
Thomas "Tom" G. Henning
Mary Shaddock Jones
Jonathan “Jon” P. Manns
| 147 |
Corporate Information
Corporate Headquarters
IBERIABANK Corporation
200 West Congress Street
Lafayette, LA 70501
337.521.4012
Corporate Mailing Address
P.O. Box 52747
Lafayette, LA 70505-2747
Internet Addresses
www.iberiabank.com
www.iberiabankmortgage.com
www.lenderstitlegroup.com
www.utla.com
www.iberiabankcreditcards.com
www.virtualbank.com
Annual Meeting
IBERIABANK Corporation Annual Meeting of Shareholders will be held on Tuesday, May 7, 2019 at 4:00 p.m., local
time, at the Windsor Court Hotel, located at 300 Gravier Street, New Orleans, Louisiana.
Shareholder Assistance
Shareholders requesting a change of address, records, or information about the Dividend Reinvestment Plan or lost
certificates should contact:
Investor Relations
Computershare
PO Box 30170
College Station, TX 77842-3170
800.368.5948
www.computershare.com/investor
Dividend Reinvestment Plan
IBERIABANK Corporation common shareholders may take advantage of our Dividend Reinvestment Plan. This
program provides a convenient, economical way for common 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. Shareholders may enroll in IBERIABANK Corporation's common stock Dividend Reinvestment Plan through
the Investor Center at www.computershare.com, or by completing an enrollment form. A summary of the plan and
enrollment forms are available from Computershare by calling (800) 368-5948.
For Information
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 Secretary, IBERIABANK
Corporation, 200 West Congress Street, Lafayette, Louisiana 70501. This and other information regarding
IBERIABANK Corporation and its subsidiaries may be accessed from our web sites. In addition, shareholders may
contact:
Daryl G. Byrd, President and CEO
337.521.4003
Jefferson G. Parker, Vice Chairman, Director of Capital Markets, Energy Lending, and Investor Relations
504.310.7314
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Stock Information
At January 31, 2019, IBERIABANK Corporation had approximately
2,507 common shareholders of record. This total does not reflect
shares held in nominee or "street name" accounts through various
firms. These tables 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.
Securities Listing
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.
2018
Dividends
High Low Closing Declared
Market Price
First Quarter
$87.55 $76.23 $78.00 $0.38
Second Quarter $84.00 $70.40 $75.80 $0.38
$87.50 $75.20 $81.35 $0.39
Third Quarter
$83.80 $60.82 $64.28 $0.41
Fourth Quarter
2017
Dividends
High Low Closing Declared
Market Price
First Quarter
$86.40 $73.60 $79.10 $0.36
Second Quarter $84.20 $74.40 $81.50 $0.36
$83.30 $69.60 $82.15 $0.37
Third Quarter
Dividend Restrictions
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 IBERIABANK must remain “well-capitalized” under prompt corrective action regulations. The
declaration and payment of dividends on the Company’s capital stock also is 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 also Note 13- Long-Term Debt, Note
15- Shareholders' Equity, Capital Ratios and Other Regulatory Matters, and Management’s Discussion and Analysis - Funding
Sources - Long-term Debt.
$83.75 $68.55 $77.50 $0.37
Fourth Quarter
Total Return Performance
Stock Performance Graph
The following graph and table, which were
prepared by S&P Global Intelligence (“S&P”),
compares the cumulative total return on our
Common Stock over a measurement period
(i) the
beginning December 31, 2013 with
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 S&P > $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 ©2019
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200 West Congress Street
La fay ett e, Lo uisiana 70501
337.521.4012
www.iberiabank.com