4 Things That Stood Out In IberiaBank's Q3 Earnings Miss

The firm downgraded shares of IberiaBank from Outperform to Neutral, saying the discounted valuation of the shares relative to comparably sized peers is justified, given that core profitability improvements have veered off track.

The firm also lowered its price target from $97 to $78.

At time of writing, shares of IberiaBank were down 1.72 percent at $74.15. This is on top of the 5.9-percent decline recorded last Friday in reaction to the quarterly results.

Analyst Bryce Rowe viewed the earnings miss as multi-faceted, with a few standout aspects.

• Rowe noted that excluding purchase accounting, net interest income totaled $199.5 million compared to the $211.6 million estimate.
• Core net interest margin contracted 17 basis points sequentially, with core loan yield slipping 12 basis points and cost of interest-bearing deposits climbing five basis points.
• Fee income slipped 4.6 percent sequentially due to weaker mortgage banking business, even as the results included two months of Sabadell fee income.
• Operating expenses were slightly higher-than-expected.

For the fourth quarter, Baird noted that the company's guidance suggested operating earnings per share of $1.27 compared to its previous guidance of $1.50, with lower NIM, lower fees and higher expenses accounting for the toned-down expectations.

As such, Baird lowered its 2018 earnings per share estimate by 9 percent to $5.45 and its 2018 pre-provision earnings per share estimate by 18 percent to $7.81. The firm blamed weaker core NIM and fee income for the predicament.

The firm said it expects IberiaBank to announce its 2018 guidance in December.