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IBERIABANK Corporation Reports Second Quarter Results

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IBERIABANK Corporation Reports Second Quarter Results

PR Newswire

LAFAYETTE, La., July 20, 2018 /PRNewswire/ -- IBERIABANK Corporation (NASDAQ:IBKC), holding company of the 131-year-old IBERIABANK (www.iberiabank.com), reported financial results for the second quarter ended June 30, 2018. For the quarter, the Company reported net income available to common shareholders of $74.2 million, or $1.30 diluted earnings per common share ("EPS"). On a non-GAAP basis, EPS excluding non-core revenues and non-core expenses ("Core EPS") in the second quarter of 2018 was $1.71 per common share, compared to $1.10 in the year-ago period, an increase of 55% (refer to press release supplemental tables for a reconciliation of GAAP to non-GAAP metrics).

Daryl G. Byrd, President and Chief Executive Officer, commented, "Our strong financial performance this quarter is the result of solid franchise momentum, growth in loans and deposits, and a pickup in our fee income businesses. Building upon the client growth we have achieved, and managing expenses remain our fundamental objectives and key to successfully achieving earnings expectations for 2018 and beyond.

We are proud of our diversified franchise, and we have the right team and platforms in place to drive outstanding client growth amongst favorable economic conditions. We remain laser-focused on delivering sustainable, profitable returns for our shareholders, and we believe that our 2018 financial performance will position us to achieve or exceed our 2020 Strategic Goals," Byrd continued.

Highlights for the second quarter of 2018 and at June 30, 2018:

On a linked quarter basis, both GAAP and Core EPS significantly improved, driven by increases in loan interest income as a result of higher loan yields and a seasonal improvement in our fee income businesses in the second quarter. Merger-related expenses, branch closure expenses and an adjustment to provisional tax amounts comprised the majority of the variance between GAAP and Core EPS. Return metrics and efficiency ratios significantly improved in the current quarter primarily as a result of revenue growth.


For the three months ended


GAAP


Non-GAAP Core


2Q18

1Q18


2Q18

1Q18

Earnings Per Common Share

$

1.30


$

1.10



$

1.71


$

1.37


Return on Average Assets

1.01

%

0.92

%


1.32

%

1.13

%

Return on Average Common Equity

7.87

%

6.79

%


10.30

%

8.45

%

Return on Average Tangible Common Equity

N/A

N/A


16.70

%

13.83

%

Efficiency Ratio

63.5

%

67.9

%


56.6

%

61.1

%

Tangible Efficiency Ratio (TE)

N/A

N/A


54.3

%

58.8

%

 

  • Revenue growth and cost containment relative to the linked quarter produced positive operating leverage multiples of 3.8 on a GAAP basis and 5.4 on a Core basis.
  • The Company's reported and cash net interest margins improved 9 and 7 basis points on a linked quarter basis, to 3.76% and 3.49%, respectively, primarily driven by $7.4 million (or $0.10 impact to EPS after-tax, 11 basis points impact to reported net interest margin) of higher recoveries and incremental accelerated accretion on acquired loans, as well as rising short-term interest rates.
  • Non-interest income in 2Q18 increased $9.4 million, or 21%, on a linked quarter basis, primarily as a result of seasonal growth in the Company's fee income businesses, including increases in mortgage income and title revenue.
  • Non-interest expense increased $8.6 million on a linked quarter basis, primarily due to increased salary and employee benefits expenses and branch closure expenses. 2Q18 non-interest expense included $14.3 million in pre-tax merger-related expense ($0.20 impact to EPS after-tax), compared to $16.2 million ($0.23 impact to EPS after-tax) in 1Q18.
  • Total loan growth was $369.7 million, or 1.7% (6.8% annualized rate), in 2Q18.
  • Total deposits increased $459.3 million, or 2.0% (8.0% annualized rate), in 2Q18.
  • Credit metrics remain stable. Net charge-offs were $11.7 million, of which $4.2 million was covered by specific reserves recorded in prior periods.
  • Income tax expense was impacted by a $6.6 million (or $0.12 impact to EPS) write-down of deferred tax assets associated with the finalization of the accounting for the Sabadell acquisition and the related impact of the Tax Cuts and Jobs Act (the "Tax Act") on those adjustments.
  • Integration and assimilation of both Sabadell and Gibraltar remain on track and performing in-line with original expectations.  
  • 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 common stock. During 2Q18, the Company repurchased 400,000 common shares at a weighted average price of $76.67 per common share.

 

Table A - Summary Financial Results

(Dollars in thousands, except per share data)













For the Three Months Ended


6/30/2018



3/31/2018


% Change


6/30/2017


% Change

GAAP BASIS:











Income available to common shareholders

$

74,175




$

60,023



23.6



$

51,069



45.2


Earnings per common share - diluted

1.30




1.10



18.2



0.99



31.3













Average loans and leases, net of unearned income

$

21,830,720




$

20,181,390



8.2



$

15,284,007



42.8


Average total deposits

23,155,871




21,777,634



6.3



17,160,848



34.9


Net interest margin (TE) (1)

3.76


%


3.67


%



3.71


%













Total revenues (2)

$

310,053




$

277,455



11.7



$

237,481



30.6


Total non-interest expense (2)

196,877




188,296



4.6



145,380



35.4


Efficiency ratio (2)

63.5


%


67.9


%



61.2


%


Return on average assets

1.01




0.92





0.96




Return on average common equity

7.87




6.79





6.08















NON-GAAP BASIS (3):











Core revenues (2)

$

310,050




$

277,514



11.7



$

237,422



30.6


Core non-interest expense (2)

175,445




169,457



3.5



139,242



26.0


Core earnings per common share - diluted

1.71




1.37



24.8



1.10



55.5


Core tangible efficiency ratio (TE) (1) (2) (4)

54.3


%


58.8


%



57.2


%


Core return on average assets

1.32




1.13





1.06




Core return on average common equity

10.30




8.45





6.75




Core return on average tangible common equity

16.70




13.83





8.86




Net interest margin (TE) - cash basis (1)

3.49




3.42





3.45





(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)  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 $2.1 million and had no impact on net income.

(3)  See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

(4)  Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis where applicable.

Operating Results

The Company's reported and cash net interest margins increased 9 and 7 basis points on a linked quarter basis, to 3.76% and 3.49%, respectively, primarily as a result of increased recoveries and discount accretion on the acquired loan portfolio, as well as rising short-term interest rates. Absent the non-recurring items associated with the acquired loan portfolio, margin would have been essentially flat with the linked quarter, due to a combination of lower yields on loans acquired from Gibraltar and increased deposit costs.

Net interest income increased $23.2 million, or 10%, on a linked quarter basis. Average loans increased $1.6 billion, or 8%, and the associated taxable-equivalent yield increased 19 basis points. All other average earning assets decreased by $20.2 million from the linked quarter. The yield on total earning assets was 20 basis points higher at 4.46% compared to 4.26% in the linked quarter.

Average interest-bearing deposits increased $860.9 million, or 6%, and the average cost of interest-bearing deposits rose 15 basis points to 89 basis points on a linked quarter basis. Total average interest-bearing liabilities increased by $918.7 million, or 5%, while the average cost of interest-bearing liabilities rose 16 basis points to 102 basis points. The total cost of interest-bearing liabilities rose primarily due to an upward repricing of indexed deposits, promotional deposit pricing, and increases in the average rate paid on short-term and long-term FHLB advances. The total cost of funding in 2Q18 was 75 basis points, compared to 63 basis points in 1Q18.

The Company's provision for loan losses decreased 5% to $7.6 million and covered net charge-offs in 2Q18 by 65% compared to 186% in 1Q18. The overall decline in provision was mainly attributable to recoveries on acquired loans that reduced the required ALLL for that portfolio.  Net charge-offs totaled $11.7 million in 2Q18, compared to $4.3 million in 1Q18, due primarily to the charge-off of one large legacy loan, which was specifically reserved for in a prior period, as well as lower legacy recoveries. Annualized net charge-offs remain at relatively low levels, equating to 21 basis points of average loans in 2Q18.

In 2Q18, non-interest income increased $9.4 million compared to 1Q18, primarily as a result of seasonal growth in the Company's fee income businesses, including an increase of $4.1 million in mortgage income and an increase of $1.8 million in title revenue. In addition, trust department income increased by $0.8 million, or 24%, over 1Q18.

Non-interest expense increased $8.6 million on a linked quarter basis, primarily due to increased salary and employee benefits expenses and branch closure expenses. During 2Q18, non-interest expense included $14.3 million in merger and conversion-related expenses, $1.8 million in compensation-related expenses, and $5.4 million in branch closure and other impairment expenses that are considered non-core items by management.

Excluding these items, core non-interest expense increased $6.0 million, or 4%, primarily driven by an increase of $1.5 million in occupancy and equipment expenses attributable to the recently acquired Gibraltar locations, an increase of $1.3 million in the accrual for mortgage loan repurchase reserves and an increase of $1.0 million in CDI amortization resulting from the full-quarter impact of the Gibraltar acquisition.

On a linked quarter basis, the efficiency ratio improved to 63.5% from 67.9%, while the non-GAAP core tangible efficiency ratio improved to 54.3% from 58.8%. The Company continues to focus on cost containment and revenue enhancement efforts to deliver positive operating leverage in 2018.  Refer to Table A for a summary of financial results on both a GAAP and non-GAAP basis.

Income tax expense was impacted by a $6.6 million write-down of deferred tax assets associated with the finalization of the accounting for the Sabadell acquisition and the related adjustment to provisional amounts recorded upon enactment of the Tax Act, resulting in an effective tax rate of 28.8% for 2Q18, compared to 21.6% in 1Q18.

Table B - Summary Financial Condition Results

(Dollars in thousands, except per share data)

















As of and For the Three Months Ended



6/30/2018


3/31/2018


% Change


6/30/2017


% Change

PERIOD-END BALANCES:














Total loans and leases, net of unearned income

$

22,075,783




$

21,706,090




1.7



$

15,556,016




41.9



Total deposits

23,430,458




22,971,192




2.0



16,853,116




39.0
















ASSET QUALITY RATIOS:














Loans 30-89 days past due and still accruing as a percentage of total loans (1)

0.20

%



0.36

%





0.33

%





Loans 90 days or more past due and still accruing as a percentage of total loans (1)

0.04




0.04






0.01






Non-performing assets to total assets (1)(2)

0.54




0.64






0.91






Classified assets to total assets (3)

1.26




1.40






1.78



















CAPITAL RATIOS:














Tangible common equity ratio (Non-GAAP) (4) (5)

8.56

%



8.66

%





12.45

%





Tier 1 leverage ratio (6)

9.55




9.97






13.19






Total risk-based capital ratio (6)

12.37




12.48






16.74



















PER COMMON SHARE DATA:














Book value

$

67.06




$

66.38




1.0



$

66.08




1.5



Tangible book value (Non-GAAP) (4) (5)

43.75




42.91




2.0



51.33




(14.8)



Closing stock price

75.80




78.00




(2.8)



81.50




(7.0)



Cash dividends

0.38




0.38






0.36




5.6




(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.

(2)

Non-performing assets consist of non-accruing loans, accruing loans 90 days or more past due and other real estate owned, including repossessed assets. Refer to Table 5 for further detail.

(3)

Classified assets include commercial loans rated substandard or worse and non-performing mortgage and consumer loans and include acquired impaired loans accounted for under ASC 310-30. Classified assets were $379 million, $412 million and $387 million at June 30, 2018, March 31, 2018, and June 30, 2017, respectively.

(4)

See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

(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)

Regulatory capital ratios as of June 30, 2018 are preliminary.

Loans and Other Assets

Total loans increased $369.7 million, or 2%, to $22.1 billion at June 30, 2018. Period-end loan growth during 2Q18 was strongest in the Energy Group (reserve-based lending), the Corporate Asset Finance division (equipment financing business), and the New Orleans, Birmingham and Atlanta markets. The Company believes it is well-positioned for diversified loan growth based on our strategic presence in the South Florida, Atlanta and Texas markets, as well as other significant MSAs in the Southeastern United States.

Table C - Period-End Loans

(Dollars in thousands)



















As of and For the Three Months Ended








Linked Qtr Change


Year/Year Change


Mix


6/30/2018


3/31/2018


6/30/2017


$

%


Annualized


$

%


6/30/2018

3/31/2018

Legacy loans:

















Commercial(1)

$

11,500,907



$

11,094,464


$

10,055,791


406,443


3.7



14.7

%


1,445,116


14.4



73.7

%

74.4

%

Residential mortgage

1,534,294



1,280,580


970,961


253,714


19.8



79.5

%


563,333


58.0



9.8

%

8.6

%

Consumer

2,574,834



2,538,878


2,466,658


35,956


1.4



5.7

%


108,176


4.4



16.5

%

17.0

%

Total legacy loans

15,610,035



14,913,922


13,493,410


696,113


4.7



18.7

%


2,116,625


15.7



100.0

%

100.0

%


















Acquired loans:

















Balance at beginning of period

6,792,168



5,595,030


2,208,758


1,197,138


21.4





4,583,410


207.5





Loans acquired during the period



1,465,319



(1,465,319)


N/M









Net paydown activity

(326,420)



(268,181)


(146,152)


(58,239)


21.7





(180,268)


123.3





Total acquired loans

6,465,748



6,792,168


2,062,606


(326,420)


(4.8)





4,403,142


213.5





Total loans

$

22,075,783



$

21,706,090


$

15,556,016


369,693


1.7





6,519,767


41.9






(1) Includes equipment financing leases.

N/M= not meaningful

On an average balance and linked quarter basis, the investment portfolio increased $80.9 million, or 2%, in 2Q18, to $4.9 billion, mainly due to purchases of additional investment securities, partially offset by unfavorable market valuation on available-for-sale securities. Approximately 95% of the Company's investment portfolio is in available-for-sale securities, which experience unrealized losses as interest rates rise. On a period-end basis, the investment portfolio equated to $4.9 billion, or 16% of total assets, at June 30, 2018. The investment portfolio had an effective duration of 3.9 years at June 30, 2018, down from 4.2 years at March 31, 2018, and a $151.4 million unrealized loss at June 30, 2018, up from $129.9 million at March 31, 2018. The average yield on investment securities increased 4 basis points to 2.42% in 2Q18. The Company holds in its investment portfolio primarily government agency securities. Municipal securities comprised 9% of total investments at June 30, 2018.

Deposits and Funding

Total deposits increased $459.3 million, or 2%, to $23.4 billion at June 30, 2018. Deposit growth during 2Q18 was strongest in the Energy Group (reserve-based lending), the Dade, Florida market, and the Virtual Bank division (digital banking).

Table D - Period-End Deposits

(Dollars in thousands)








Linked Qtr Change


Year/Year Change


Mix


6/30/2018


3/31/2018


6/30/2017


$

%

Annualized


$

%


6/30/2018

3/31/2018

Non-interest-bearing

$

6,814,441



$

6,595,495



$

5,020,195



218,946


3.3


13.2

%


1,794,246


35.7



29.1

%

28.7

%

NOW accounts

4,453,152



4,500,181



3,089,482



(47,029)


(1.0)


(4.0)

%


1,363,670


44.1



19.0

%

19.6

%

Money market accounts

8,467,906



8,271,969



6,017,654



195,937


2.4


9.6

%


2,450,252


40.7



36.1

%

36.0

%

Savings accounts

850,425



874,741



797,859



(24,316)


(2.8)


(11.2)

%


52,566


6.6



3.6

%

3.8

%

Time deposits

2,844,534



2,728,806



1,927,926



115,728


4.2


16.8

%


916,608


47.5



12.2

%

11.9

%

Total deposits

$

23,430,458



$

22,971,192



$

16,853,116



459,266


2.0


8.0

%


6,577,342


39.0



100.0

%

100.0

%

Asset Quality

Non-performing assets ("NPAs") to total assets were 54 basis points in 2Q18, compared to 64 basis points in 1Q18 and 91 basis points in 2Q17, a 41% year-over-year decrease. Accruing loans past due 30 to 89 days equated to 0.20% of total loans at June 30, 2018, compared to 0.36% at March 31, 2018.

Net charge-offs totaled $11.7 million in 2Q18, compared to $4.3 million in 1Q18, due primarily to the charge-off of one large legacy loan in 2Q18, which was specifically reserved for in a prior period, compared to one large legacy loan recovery in 1Q18. Annualized net charge-offs equated to 21 basis points of average loans in 2Q18, a 12 basis points increase on a linked quarter basis, but remain at historically low levels.

Refer to Table 5 - Loans and Asset Quality Data for further information.

Capital Position

At June 30, 2018, the Company reported a non-GAAP tangible common equity ratio of 8.56%, down 10 basis points compared to March 31, 2018, and the preliminary Tier 1 leverage ratio was 9.55%, down 42 basis points compared to March 31, 2018. The Company's preliminary calculation of its total risk-based capital ratio at June 30, 2018, was 12.37%, down 11 basis points compared to March 31, 2018.

At June 30, 2018, book value per common share was $67.06, up $0.68 per share, compared to March 31, 2018. Tangible book value per common share was $43.75, up $0.84 per share, compared to March 31, 2018. Based on the closing stock price of the Company's common stock of $78.50 per share on July 19, 2018, this price equated to 1.17 times June 30, 2018 book value per common share and 1.79 times June 30, 2018 tangible book value per common share.

Dividends On Capital Stock. The declaration of dividends is at the discretion of the Board of Directors. The following details the recent dividend declarations:

Common Stock. On June 19, 2018, the Company declared a quarterly cash dividend of $0.38 per common share, consistent with the common dividend declared in March 2018. The dividend is payable on July 27, 2018, to shareholders of record as of June 29, 2018.

Preferred Stock. On June 19, 2018, the Company declared a quarterly cash dividend of $0.4125 per depositary share of Series C Preferred Stock that is payable on August 1, 2018.  On July 6, 2018, the Company declared a semi-annual cash dividend of $0.8281 per depositary share of Series B Preferred Stock that is payable on August 1, 2018.

Common Stock Repurchase Program. 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 common stock. This repurchase authorization equates to approximately 2% of total 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. During 2Q18, the Company repurchased 400,000 common shares, at a weighted average price of $76.67 per common share, of which 335,000 were repurchased under a prior Board-authorized plan. At June 30, 2018, there were approximately 1,073,500 remaining shares that may be repurchased under the plan authorized by the Board on May 10, 2018.

IBERIABANK Corporation

IBERIABANK Corporation is a regional financial holding company with offices in Louisiana, Arkansas, Tennessee, Alabama, Texas, Florida, Georgia, South Carolina, North Carolina, and New York offering commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, mortgage, and title insurance services.

The Company's common stock trades on the NASDAQ Global Select Market under the symbol "IBKC". The Company's Series B Preferred Stock and Series C Preferred Stock also trade on the NASDAQ Global Select Market under the symbols "IBKCP" and "IBKCO", respectively.  The Company's common stock market capitalization was approximately $4.4 billion, based on the NASDAQ Global Select Market closing stock price on July 19, 2018.

The following 10 investment firms currently provide equity research coverage on the Company:

  • Bank of America Merrill Lynch
  • FIG Partners, LLC
  • Hovde Group, LLC
  • Jefferies & Co., Inc.
  • Keefe, Bruyette & Woods, Inc.
  • Piper Jaffray & Co.
  • Raymond James & Associates, Inc.
  • Sandler O'Neill + Partners, L.P.
  • Stephens, Inc.
  • SunTrust Robinson-Humphrey

Conference Call

In association with this earnings release, the Company will host a live conference call to discuss the financial results for the quarter just completed. The telephone conference call will be held on Friday, July 20, 2018, beginning at 8:00 a.m. Central Time by dialing 1-888-317-6003. The confirmation code for the call is 2301786. A replay of the call will be available until midnight Central Time on July 27, 2018 by dialing 1-877-344-7529. The confirmation code for the replay is 10121508. The Company has prepared a PowerPoint presentation that supplements information contained in this press release. The PowerPoint presentation may be accessed on the Company's web site, www.iberiabank.com, under "Investor Relations" and then "Financial Information" and "Presentations."

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance.  Non-GAAP measures in this press release 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 the supplemental tables at the end of this release.  Please refer to the supplemental tables for these reconciliations.

Caution About Forward-Looking Statements

This press release contains "forward-looking statements," which may include forecasts of our financial results and condition, expectations for our operations and businesses, and our assumptions for those forecasts and expectations. Do not place undue reliance on forward-looking statements. Due to various factors, actual results may differ materially from our forward-looking statements. Factors that could cause our actual results to differ materially from our forward-looking statements are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors" and "Regulation and Supervision" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and in other documents subsequently filed by the Company with the Securities and Exchange Commission, available at the SEC's website, http://www.sec.gov, and the Company's website, http://www.iberiabank.com. To the extent that statements in this press release relate to future plans, objectives, financial results or performance by 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 are generally identified by use of words such as "may," "believe," "expect," "anticipate," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology.

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. All information is as of the date of this press release. 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.

Table 1 - IBERIABANK CORPORATION

FINANCIAL HIGHLIGHTS

(Dollars in thousands, except per share data)

















As of and For the Three Months Ended

INCOME DATA:

6/30/2018


3/31/2018


% Change


6/30/2017


% Change


Net interest income

$

256,113




$

232,889




10.0



$

183,643




39.5



Net interest income (TE) (1)

257,562




234,353




9.9



186,131




38.4



Total revenues (2)

310,053




277,455




11.7



237,481




30.6



Provision for loan losses

7,595




7,986




(4.9)



12,050




(37.0)



Non-interest expense (2)

196,877




188,296




4.6



145,380




35.4



Net income available to common shareholders

74,175




60,023




23.6



51,069




45.2
















PER COMMON SHARE DATA:














Earnings available to common shareholders - basic

$

1.31




$

1.11




18.0



$

1.00




31.0



Earnings available to common shareholders - diluted

1.30




1.10




18.2



0.99




31.3



Core earnings (Non-GAAP) (3)

1.71




1.37




24.8



1.10




55.5



Book value

67.06




66.38




1.0



66.08




1.5



Tangible book value (Non-GAAP) (3) (4)

43.75




42.91




2.0



51.33




(14.8)



Closing stock price

75.80




78.00




(2.8)



81.50




(7.0)



Cash dividends

0.38




0.38






0.36




5.6
















KEY RATIOS AND OTHER DATA (7):


















Net interest margin (TE) (1)

3.76

%



3.67

%





3.71

%





Efficiency ratio (2)

63.5




67.9






61.2






Core tangible efficiency ratio (TE) (Non-GAAP) (1) (2) (3) (4)

54.3




58.8






57.2






Return on average assets

1.01




0.92






0.96






Return on average common equity

7.87




6.79






6.08






Core return on average tangible common equity (Non-GAAP) (3)(4)

16.70




13.83






8.86






Effective tax rate

28.8




21.6






35.0






Full-time equivalent employees

3,543




3,726






3,190



















CAPITAL RATIOS:














Tangible common equity ratio (Non-GAAP) (3) (4)

8.56

%



8.66

%





12.45

%





Tangible common equity to risk-weighted assets (4)

10.18




10.27






14.32






Tier 1 leverage ratio (5)

9.55




9.97






13.19






Common equity Tier 1 (CET 1) ratio (5)

10.72




10.77






14.52






Tier 1 capital ratio (5)

11.27




11.32






15.24






Total risk-based capital ratio (5)

12.37




12.48






16.74






Common stock dividend payout ratio

28.9




36.0






36.2






Classified assets to Tier 1 capital (8)

13.9




15.3






13.9



















ASSET QUALITY RATIOS:


















Non-performing assets to total assets (6)

0.54

%



0.64

%





0.91

%





ALLL to loans and leases

0.62




0.67






0.94






Net charge-offs to average loans (annualized)

0.21




0.09






0.29






Non-performing assets to total loans and OREO (6)

0.74




0.87






1.27



















(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)

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 $2.1 million and had no impact on net income.

(3)

See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

(4)

Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis where applicable.

(5)

Regulatory capital ratios as of June 30, 2018 are preliminary.

(6)

Non-performing assets consist of non-accruing loans, accruing loans 90 days or more past due and other real estate owned, including repossessed assets. For purposes of this table, 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.

(7)

All ratios are calculated on an annualized basis for the periods indicated.

(8)

Classified assets include commercial loans rated substandard or worse and non-performing mortgage and consumer loans and include acquired impaired loans accounted for under ASC 310-30.

 

Table 2 - IBERIABANK CORPORATION

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share data)


















For the Three Months Ended






Linked Qtr Change








Year/Year Change


6/30/2018


3/31/2018


$

%


12/31/2017


9/30/2017


6/30/2017


$

%

Interest income

$

303,823



$

270,543



33,280


12.3



$

269,703



$

246,972



$

204,575



99,248


48.5


Interest expense

47,710



37,654



10,056


26.7



34,201



30,089



20,932



26,778


127.9


Net interest income

256,113



232,889



23,224


10.0



235,502



216,883



183,643



72,470


39.5


Provision for loan losses

7,595



7,986



(391)


(4.9)



14,393



18,514



12,050



(4,455)


(37.0)


Net interest income after provision for loan losses

248,518



224,903



23,615


10.5



221,109



198,369



171,593



76,925


44.8


Mortgage income

13,721



9,595



4,126


43.0



13,675



16,050



19,730



(6,009)


(30.5)


Service charges on deposit accounts

12,950



12,908



42


0.3



12,581



12,534



11,410



1,540


13.5


Title revenue

6,846



5,027



1,819


36.2



5,398



5,643



6,190



656


10.6


Broker commissions(1)

2,396



2,221



175


7.9



1,958



2,094



2,562



(166)


(6.5)


ATM/debit card fee income(1)

2,925



2,633



292


11.1



2,583



2,486



2,646



279


10.5


Income from bank owned life insurance

1,261



1,282



(21)


(1.6)



1,267



1,263



1,241



20


1.6


Gain (loss) on sale of available-for-sale securities

3



(59)



62


105.1



35



(242)



59



(56)


(94.9)


Trust department income

4,243



3,426



817


23.8



3,081



2,686



2,026



2,217


109.4


Other non-interest income(1)

9,595



7,533



2,062


27.4



11,764



8,329



7,974



1,621


20.3


Total non-interest income(1)

53,940



44,566



9,374


21.0



52,342



50,843



53,838



102


0.2


Salaries and employee benefits

107,445



104,586



2,859


2.7



104,387



106,970



86,317



21,128


24.5


Occupancy and equipment

19,931



20,047



(116)


(0.6)



19,211



19,139



16,292



3,639


22.3


Amortization of acquisition intangibles

6,111



5,102



1,009


19.8



4,642



4,527



1,651



4,460


270.1


Data processing(1)

9,309



12,393



(3,084)


(24.9)



11,416



12,300



6,713



2,596


38.7


Professional services

7,160



7,391



(231)


(3.1)



9,441



22,550



11,219



(4,059)


(36.2)


Credit and other loan related expense

5,190



4,618



572


12.4



3,170



7,532



3,780



1,410


37.3


Other non-interest expense(1)

41,731



34,159



7,572


22.2



29,798



27,744



19,408



22,323


115.0


Total non-interest expense(1)

196,877



188,296



8,581


4.6



182,065



200,762



145,380



51,497


35.4


Income before income taxes

105,581



81,173



24,408


30.1



91,386



48,450



80,051



25,530


31.9


Income tax expense

30,457



17,552



12,905


73.5



81,108



18,806



28,033



2,424


8.6


Net income

75,124



63,621



11,503


18.1



10,278



29,644



52,018



23,106


44.4


Less: Preferred stock dividends

949



3,598



(2,649)


(73.6)



949



3,598



949





Net income available to common shareholders

$

74,175



$

60,023



14,152


23.6



$

9,329



$

26,046



$

51,069



23,106


45.2


















Income available to common shareholders - basic

$

74,175



$

60,023



14,152


23.6



$

9,329



$

26,046



$

51,069



23,106


45.2


Less: Earnings allocated to unvested restricted stock

767



639



128


20.0



101



283



361



406


112.5


Earnings allocated to common shareholders

$

73,408



$

59,384



14,024


23.6



$

9,228



$

25,763



$

50,708



22,700


44.8


















Earnings per common share - basic

$

1.31



$

1.11



0.20


18.0



$

0.17



$

0.49



$

1.00



0.31


31.0


















Earnings per common share - diluted

1.30



1.10



0.20


18.2



0.17



0.49



0.99



0.31


31.3


Impact of non-core items (Non-GAAP) (2)

0.41



0.27



0.14


51.9



1.16



0.51



0.11



0.30


272.7


Earnings per share - diluted, excluding non-core items (Non-GAAP) (2)

$

1.71



$

1.37



0.34


24.8



$

1.33



$

1.00



$

1.10



0.61


55.5


















NUMBER OF COMMON SHARES OUTSTANDING (in thousands)
















Weighted average common shares outstanding - basic

55,931



53,616



2,315


4.3



53,287



52,424



50,630



5,301


10.5


Weighted average common shares outstanding - diluted

56,287



53,967



2,320


4.3



53,621



52,770



50,984



5,303


10.4


Book value shares (period end)

56,390



56,779



(389)


(0.7)



53,872



53,864



51,015



5,375


10.5


















(1)  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. On average, the adoption resulted in a reduction of non-interest income and non-interest expense of approximately $2.3 million on a quarterly basis, and had no impact on net income.

(2)  See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

 

Table 3 - IBERIABANK CORPORATION

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share data)









For the Six Months Ended






Change


6/30/2018


6/30/2017


$

%

Interest income

$

574,366



$

397,108



177,258


44.6


Interest expense

85,364



40,647



44,717


110.0


Net interest income

489,002



356,461



132,541


37.2


Provision for loan losses

15,581



18,204



(2,623)


(14.4)


Net interest income after provision for loan losses

473,421



338,257



135,164


40.0


Mortgage income

23,316



33,845



(10,529)


(31.1)


Service charges on deposit accounts

25,858



22,563



3,295


14.6


Title revenue

11,873



10,931



942


8.6


Broker commissions (1)

4,617



5,109



(492)


(9.6)


ATM/debit card fee income (1)

5,558



5,129



429


8.4


Income from bank owned life insurance

2,543



2,552



(9)


(0.4)


(Loss) gain on sale of available-for-sale securities

(56)



59



(115)


(194.9)


Trust department income

7,669



3,939



3,730


94.7


Other non-interest income (1)

17,128



14,835



2,293


15.5


Total non-interest income (1)

98,506



98,962



(456)


(0.5)


Salaries and employee benefits

212,031



168,170



43,861


26.1


Occupancy and equipment

39,978



32,313



7,665


23.7


Amortization of acquisition intangibles

11,213



3,421



7,792


227.8


Data processing (1)

21,702



13,074



8,628


66.0


Professional services

14,551



16,553



(2,002)


(12.1)


Credit and other loan related expense

9,808



8,306



1,502


18.1


Other non-interest expense (1)

75,890



42,339



33,551


79.2


Total non-interest expense (1)

385,173



284,176



100,997


35.5


Income before income taxes

186,754



153,043



33,711


22.0


Income tax expense

48,009



50,552



(2,543)


(5.0)


Net income

138,745



102,491



36,254


35.4


Less: Preferred stock dividends

4,547



4,548



(1)



Net income available to common shareholders

$

134,198



$

97,943



36,255


37.0









Income available to common shareholders - basic

$

134,198



$

97,943



36,255


37.0


Less: Earnings allocated to unvested restricted stock

1,409



707



702


99.3


Earnings allocated to common shareholders

$

132,789



$

97,236



35,553


36.6









Earnings per common share - basic

$

2.42



$

2.01



0.41


20.4









Earnings per common share - diluted

2.41



1.99



0.42


21.1


Impact of non-core items (Non-GAAP) (2)

0.68



0.14



0.54


385.7


Earnings per share - diluted, excluding non-core items (Non-GAAP) (2)

$

3.09



$

2.13



0.96


45.1









NUMBER OF COMMON SHARES OUTSTANDING (in thousands)







Weighted average common shares outstanding - basic

54,780



48,389



6,391


13.2


Weighted average common shares outstanding - diluted

55,133



48,751



6,382


13.1


Book value shares (period end)

56,390



51,015



5,375


10.5









(1)  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 $4.4 million and had no impact on net income.

(2)  See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

 

TABLE 4 - IBERIABANK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)
















PERIOD-END BALANCES




Linked Qtr Change








Year/Year Change

ASSETS

6/30/2018


3/31/2018


$


%


12/31/2017


9/30/2017


6/30/2017


$


%

Cash and due from banks

$

299,268



$

253,527



45,741



18.0



$

319,156



$

298,173



$

301,910



(2,642)



(0.9)


Interest-bearing deposits in other banks

428,120



310,565



117,555



37.9



306,568



583,043



167,450



260,670



155.7


Total cash and cash equivalents

727,388



564,092



163,296



28.9



625,724



881,216



469,360



258,028



55.0


Investment securities available for sale

4,650,915



4,542,486



108,429



2.4



4,590,062



4,736,339



4,009,299



641,616



16.0


Investment securities held to maturity

221,030



224,241



(3,211)



(1.4)



227,318



175,906



84,517



136,513



161.5


Total investment securities

4,871,945



4,766,727



105,218



2.2



4,817,380



4,912,245



4,093,816



778,129



19.0


Mortgage loans held for sale

78,843



110,348



(31,505)



(28.6)



134,916



141,218



140,959



(62,116)



(44.1)


Loans and leases, net of unearned income

22,075,783



21,706,090



369,693



1.7



20,078,181



19,795,085



15,556,016



6,519,767



41.9


Allowance for loan and lease losses

(136,576)



(144,527)



7,951



(5.5)



(140,891)



(136,628)



(146,225)



9,649



(6.6)


Loans and leases, net

21,939,207



21,561,563



377,644



1.8



19,937,290



19,658,457



15,409,791



6,529,416



42.4


Premises and equipment, net

326,213



329,454



(3,241)



(1.0)



331,413



330,800



318,167



8,046



2.5


Goodwill and other intangible assets

1,320,664



1,338,573



(17,909)



(1.3)



1,277,464



1,281,479



757,025



563,639



74.5


Other assets

861,902



801,880



60,022



7.5



779,942



771,220



601,609



260,293



43.3


Total assets

$

30,126,162



$

29,472,637



653,525



2.2



$

27,904,129



$

27,976,635



$

21,790,727



8,335,435



38.3




















LIABILITIES AND SHAREHOLDERS' EQUITY













Non-interest-bearing deposits

$

6,814,441



$

6,595,495



218,946



3.3



$

6,209,925



$

5,963,943



$

5,020,195



1,794,246



35.7


NOW accounts

4,453,152



4,500,181



(47,029)



(1.0)



4,348,939



3,547,761



3,089,482



1,363,670



44.1


Savings and money market accounts

9,318,331



9,146,710



171,621



1.9



8,520,365



9,165,417



6,815,513



2,502,818



36.7


Certificates of deposit

2,844,534



2,728,806



115,728



4.2



2,387,488



2,657,150



1,927,926



916,608



47.5


Total deposits

23,430,458



22,971,192



459,266



2.0



21,466,717



21,334,271



16,853,116



6,577,342



39.0


Short-term borrowings

595,000



375,000



220,000



58.7



475,000



975,008



250,000



345,000



138.0


Securities sold under agreements to repurchase

459,213



525,496



(66,283)



(12.6)



516,297



548,696



333,935


125,278



37.5


Trust preferred securities

120,110



120,110







120,110



120,110



120,110






Other long-term debt

1,318,504



1,329,192



(10,688)



(0.8)



1,375,725



1,007,474



547,133



771,371



141.0


Other liabilities

289,468



250,740



38,728



15.4



253,489



264,302



183,191



106,277



58.0


Total liabilities

26,212,753



25,571,730



641,023



2.5



24,207,338



24,249,861



18,287,485



7,925,268



43.3


Total shareholders' equity

3,913,409



3,900,907



12,502



0.3



3,696,791



3,726,774



3,503,242



410,167



11.7


Total liabilities and shareholders' equity

$

30,126,162



$

29,472,637



653,525



2.2



$

27,904,129



$

27,976,635



$

21,790,727



8,335,435



38.3


 

TABLE 4 Continued - IBERIABANK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



















AVERAGE BALANCES


Linked Qtr Change








Year/Year Change

ASSETS

6/30/2018


3/31/2018


$


%


12/31/2017


9/30/2017


6/30/2017


$


%

Cash and due from banks

$

296,907



$

308,319



(11,412)



(3.7)



$

307,328



$

277,968



$

277,047



19,860



7.2


Interest-bearing deposits in other banks

392,906



486,298



(93,392)



(19.2)



538,733



615,445



555,431



(162,525)



(29.3)


Total cash and cash equivalents

689,813



794,617



(104,804)



(13.2)



846,061



893,413



832,478



(142,665)



(17.1)


Investment securities available for sale

4,629,177



4,544,836



84,341



1.9



4,674,496



4,593,798



3,970,021



659,156



16.6


Investment securities held to maturity

222,764



226,229



(3,465)



(1.5)



191,067



114,895



85,516



137,248



160.5


Total investment securities

4,851,941



4,771,065



80,876



1.7



4,865,563



4,708,693



4,055,537



796,404



19.6


Mortgage loans held for sale

72,917



109,027



(36,110)



(33.1)



126,216



132,309



145,274



(72,357)



(49.8)


Loans and leases, net of unearned income

21,830,720



20,181,390



1,649,330



8.2



19,941,500



18,341,154



15,284,007



6,546,713



42.8


Allowance for loan and lease losses

(145,565)



(144,295)



(1,270)



0.9



(138,927)



(147,046)



(146,448)



883



(0.6)


Loans and leases, net

21,685,155



20,037,095



1,648,060



8.2



19,802,573



18,194,108



15,137,559



6,547,596



43.3


Premises and equipment, net

327,686



331,640



(3,954)



(1.2)



329,957



327,917



309,622



18,064



5.8


Goodwill and other intangible assets

1,338,420



1,281,598



56,822



4.4



1,277,293



1,047,355



757,528



580,892



76.7


Other assets

804,920



807,177



(2,257)



(0.3)



787,400



793,126



605,539



199,381



32.9


Total assets

$

29,770,852



$

28,132,219



1,638,633



5.8



$

28,035,063



$

26,096,921



$

21,843,537



7,927,315



36.3




















LIABILITIES AND SHAREHOLDERS' EQUITY













Non-interest-bearing deposits

$

6,795,878



$

6,278,507



517,371



8.2



$

6,176,347



$

5,601,071



$

4,992,598



1,803,280



36.1


NOW accounts

4,494,064



4,363,557



130,507



3.0



3,987,908



3,203,657



3,124,243



1,369,821



43.8


Savings and money market accounts

9,146,302



8,664,085



482,217



5.6



8,769,464



8,566,873



7,079,773



2,066,529



29.2


Certificates of deposit

2,719,627



2,471,485



248,142



10.0



2,444,403



2,413,727



1,964,234



755,393



38.5


Total deposits

23,155,871



21,777,634



1,378,237



6.3



21,378,122



19,785,328



17,160,848



5,995,023



34.9


Short-term borrowings

609,965



506,056



103,909



20.5



729,111



1,180,165



38,320



571,645



1,491.8


Securities sold under agreements to repurchase

427,508



477,862



(50,354)



(10.5)



494,757



439,077



314,090



113,418



36.1


Trust preferred securities

120,110



120,110







120,110



120,110



120,110






Other long-term debt

1,261,515



1,257,213



4,302



0.3



1,300,114



622,655



508,522



752,993



148.1


Other liabilities

281,820



275,869



5,951



2.2



264,790



273,163



200,673



81,147



40.4


Total liabilities

25,856,789



24,414,744



1,442,045



5.9



24,287,004



22,420,498



18,342,563



7,514,226



41.0


Total shareholders' equity

3,914,063



3,717,475



196,588



5.3



3,748,059



3,676,423



3,500,974



413,089



11.8


Total liabilities and shareholders' equity

$

29,770,852



$

28,132,219



1,638,633



5.8



$

28,035,063



$

26,096,921



$

21,843,537



7,927,315



36.3


 

Table 5 - IBERIABANK CORPORATION

LOANS AND ASSET QUALITY DATA

(Dollars in thousands)














Linked Qtr Change








Year/Year Change

LOANS

6/30/2018


3/31/2018


$


%


12/31/2017


9/30/2017


6/30/2017


$


%

Commercial loans and leases:


















Real estate- construction

$

1,183,367



$

1,199,625



(16,258)



(1.4)



$

1,240,396



$

1,298,282



$

1,100,504



82,863



7.5


Real estate- owner-occupied (1)

2,641,824



2,612,244



29,580



1.1



2,529,885



2,448,826



2,242,275



399,549



17.8


Real estate- non-owner occupied

5,467,113



5,437,082



30,031



0.6



5,167,949



5,020,778



3,839,777



1,627,336



42.4


Commercial and industrial (6)

5,512,416



5,325,682



186,734



3.5



5,135,067



5,016,437



4,195,096



1,317,320



31.4


  Total commercial loans and leases

14,804,720



14,574,633



230,087



1.6



14,073,297



13,784,323



11,377,652



3,427,068



30.1




















Residential mortgage loans

4,124,538



3,971,067



153,471



3.9



3,056,352



3,024,970



1,346,467



2,778,071



206.3




















Consumer loans:


















Home equity

2,410,617



2,421,186



(10,569)



(0.4)



2,292,275



2,320,233



2,158,948



251,669



11.7


Other

735,908



739,204



(3,296)



(0.4)



656,257



665,559



672,949



62,959



9.4


  Total consumer loans

3,146,525



3,160,390



(13,865)



(0.4)



2,948,532



2,985,792



2,831,897



314,628



11.1


  Total loans and leases

$

22,075,783



$

21,706,090



369,693



1.7



$

20,078,181



$

19,795,085



$

15,556,016



6,519,767



41.9















Allowance for loan and lease losses (2)

$

(136,576)



$

(144,527)



7,951



(5.5)



$

(140,891)



$

(136,628)



$

(146,225)



9,649



(6.6)


Loans and leases, net

21,939,207



21,561,563



377,644



1.8



19,937,290



19,658,457



15,409,791



6,529,416



42.4




















Reserve for unfunded commitments

(14,433)



(13,432)



(1,001)



7.5



(13,208)



(21,032)



(10,462)



(3,971)



38.0


Allowance for credit losses

(151,009)



(157,959)



6,950



(4.4)



(154,099)



(157,660)



(156,687)



5,678



(3.6)




















ASSET QUALITY DATA




















Non-accrual loans (3)

$

131,155



$

153,975



(22,820)



(14.8)



$

145,388



$

145,491



$

177,942



(46,787)



(26.3)


Other real estate owned and foreclosed assets

22,267



27,117



(4,850)



(17.9)



26,533



28,338



19,718



2,549



12.9


Accruing loans more than 90 days past due (3)

9,314



8,288



1,026



12.4



6,900



2,190



802



8,512



1,061.3


Total non-performing

assets (3)(4)

$

162,736



$

189,380



(26,644)



(14.1)



$

178,821



$

176,019



$

198,462



(35,726)



(18.0)




















Loans 30-89 days past due (3)

$

43,159



$

78,293



(35,134)



(44.9)



$

61,717



$

58,327



$

50,871



(7,712)



(15.2)




















Non-performing assets to total assets (3)(4)

0.54

%


0.64

%






0.64

%


0.63

%


0.91

%





Non-performing assets to total loans and OREO (3)(4)

0.74



0.87







0.89



0.89



1.27






ALLL to non-performing

loans (3)(5)

97.2



89.1







92.5



92.5



81.8






ALLL to non-performing

assets (3)(4)

83.9



76.3







78.8



77.6



73.7






ALLL to total loans

0.62



0.67







0.70



0.69



0.94
























Quarter-to-date charge-offs

$

13,618



$

9,116



4,502



49.4



$

12,526



$

30,460



$

12,189



1,429



11.7


Quarter-to-date recoveries

(1,968)



(4,813)



2,845



(59.1)



(2,425)



(1,644)



(1,289)



(679)



52.7


Quarter-to-date net charge-offs