UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
Commission File Number 0-25756
IBERIABANK Corporation
(Exact name of registrant as specified in its charter)
Louisiana 72-1280718
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
1101 East Admiral Doyle Drive
New Iberia, Louisiana 70560
(Address of principal executive office) (Zip Code)
(337) 267-4458
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
The Registrant had 5,946,911 shares of common stock, $1.00 par value, which were
issued and outstanding as of August 12, 2002.
IBERIABANK CORPORATION AND SUBSIDIARY
TABLE OF CONTENTS
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 2
(As of June 30, 2002 and December 31, 2001)
Consolidated Statements of Income 3
(For the three and six months ended June 30, 2002 and 2001)
Consolidated Statements of Shareholders' Equity 4
(For the six months ended June 30, 2002 and 2001)
Consolidated Statements of Cash Flows 5
(For the six months ended June 30, 2002 and 2001)
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Part II. Other Information
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (unaudited)
(dollars in thousands)
June 30, December 31,
2002 2001
---------- ------------
Assets
Cash and due from banks $ 34,077 $ 35,945
Interest-bearing deposits in banks 18,622 15,736
---------- ----------
Total cash and cash equivalents 52,699 51,681
Investment securities:
Available for sale, at fair value 233,862 219,825
Held to maturity, fair values of $91,817 and
$102,116, respectively 90,023 102,082
Federal Home Loan Bank stock, at cost 5,684 5,600
Mortgage loans held for sale 2,419 15,867
Loans, net of unearned income 972,628 956,015
Allowance for loan losses (11,770) (11,117)
---------- ----------
Loans, net 960,858 944,898
Premises and equipment, net 18,978 19,455
Goodwill 35,401 35,401
Other assets 36,835 32,016
---------- ----------
Total Assets $1,436,759 $1,426,825
========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 144,341 $ 154,580
Interest-bearing 1,050,277 1,082,814
---------- ----------
Total deposits 1,194,618 1,237,394
Short-term borrowings 45,442 12,339
Long-term debt 42,615 31,437
Other liabilities 10,537 11,238
---------- ----------
Total Liabilities 1,293,212 1,292,408
---------- ----------
Shareholders' Equity:
Preferred stock, $1 par value - 5,000,000
shares authorized -- --
Common stock, $1 par value - 25,000,000
shares authorized; 7,380,671 shares issued 7,381 7,381
Additional paid-in capital 71,278 70,477
Retained earnings 95,227 88,306
Unearned compensation (3,183) (3,683)
Accumulated other comprehensive income 1,435 739
Treasury stock at cost - 1,365,921 and 1,392,626 shares (28,591) (28,803)
---------- ----------
Total Shareholders' Equity 143,547 134,417
---------- ----------
Total Liabilities and Shareholders' Equity $1,436,759 $1,426,825
========== ==========
See Notes to Consolidated Financial Statements
2
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(dollars in thousands, except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- ------------------
2002 2001 2002 2001
------- ------- ------- -------
Interest and Dividend Income:
Loans, including fees $17,658 $20,334 $35,598 $40,514
Mortgage loans held for sale, including fees 59 198 157 261
Investment securities:
Taxable interest 3,874 4,288 7,460 9,284
Tax-exempt interest 271 75 519 115
Federal Home Loan Bank dividends 42 73 83 184
Interest-bearing demand deposits 112 856 373 1,228
------- ------- ------- -------
Total interest and dividend income 22,016 25,824 44,190 51,586
------- ------- ------- -------
Interest Expense:
Deposits 6,303 11,437 13,323 23,180
Short-term borrowings 98 73 188 413
Long-term debt 677 804 1,290 1,751
------- ------- ------- -------
Total interest expense 7,078 12,314 14,801 25,344
------- ------- ------- -------
Net interest income 14,938 13,510 29,389 26,242
Provision for loan losses 1,798 896 2,998 1,610
------- ------- ------- -------
Net interest income after provision for loan losses 13,140 12,614 26,391 24,632
------- ------- ------- -------
Noninterest Income:
Service charges on deposit accounts 2,629 2,055 4,588 4,024
ATM fee income 419 373 787 723
Gain on sale of mortgage loans, net 431 623 796 890
Gain on sale of assets 391 -- 401 --
Gain on sale of investments, net -- 123 5 115
Other income 1,072 570 1,952 1,240
------- ------- ------- -------
Total noninterest income 4,942 3,744 8,529 6,992
------- ------- ------- -------
Noninterest Expense:
Salaries and employee benefits 5,986 5,426 11,654 10,256
Occupancy and equipment 1,361 1,401 2,724 2,777
Amortization of acquisition intangibles 75 792 157 1,590
Franchise and shares tax 373 367 746 645
Communication and delivery 626 625 1,261 1,241
Marketing and business development 272 276 514 504
Data processing 341 310 676 615
Printing, stationery and supplies 165 187 361 392
Other expenses 1,996 1,271 3,423 2,354
------- ------- ------- -------
Total noninterest expense 11,195 10,655 21,516 20,374
------- ------- ------- -------
Income before income tax expense 6,887 5,703 13,404 11,250
Income tax expense 2,246 2,116 4,376 4,172
------- ------- ------- -------
Net Income $ 4,641 $ 3,587 $ 9,028 $ 7,078
======= ======= ======= =======
Earnings per share - basic $ 0.81 $ 0.61 $ 1.58 $ 1.20
======= ======= ======= =======
Earnings per share - diluted $ 0.75 $ 0.58 $ 1.47 $ 1.15
======= ======= ======= =======
See Notes to Consolidated Financial Statements
3
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
(dollars in thousands)
Accumulated
Additional Other
Common Paid-In Retained Unearned Comprehensive Treasury
Stock Capital Earnings Compensation Income Stock Total
------ ---------- -------- ------------ ------------- -------- --------
Balance, December 31, 2000 $7,381 $69,231 $77,963 $(4,654) $(2,293) $(20,586) $127,042
Comprehensive income:
Net income 7,078 7,078
Change in unrealized loss on securities
available for sale, net of deferred taxes 2,358 2,358
--------
Total comprehensive income 9,436
Cash dividends declared, $.34 per share (2,059) (2,059)
Reissuance of treasury stock under stock
option plan, net of shares surrendered
in payment, 16,247 shares 48 76 124
Common stock released by ESOP trust 414 277 691
Common stock earned by participants of
recognition and retention plan trust,
including tax benefit 22 214 236
Treasury stock acquired at cost, 8,500 shares (200) (200)
------ ------- ------- ------- ------- -------- --------
Balance, June 30, 2001 $7,381 $69,715 $82,982 $(4,163) $ 65 $(20,710) $135,270
====== ======= ======= ======= ======= ======== ========
Balance, December 31, 2001 $7,381 $70,477 $88,306 $(3,683) $ 739 $(28,803) $134,417
Comprehensive income:
Net income 9,028 9,028
Change in unrealized gain on securities
available for sale, net of deferred taxes 896 896
Change in accumulated net loss on
cash flow hedges, net of deferred taxes (200) (200)
--------
Total comprehensive income 9,724
Cash dividends declared, $.36 per share (2,107) (2,107)
Reissuance of treasury stock under stock
option plan, net of shares surrendered in
payment, 26,705 shares 126 212 338
Common stock released by ESOP trust 621 259 880
Common stock earned by participants of
recognition and retention plan trust,
including tax benefit 54 241 295
------ ------- ------- ------- ------- -------- --------
Balance, June 30, 2002 $7,381 $71,278 $95,227 $(3,183) $ 1,435 $(28,591) $143,547
====== ======= ======= ======= ======= ======== ========
See Notes to Consolidated Financial Statements
4
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(dollars in thousands)
For the Six Months
Ended June 30,
--------------------
2002 2001
-------- ---------
Cash Flows from Operating Activities:
Net income $ 9,028 $ 7,078
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,737 3,251
Provision for loan losses 2,998 1,610
Noncash compensation expense 1,061 816
(Gain) Loss on sale of assets (401) 28
Gain on sale of investments (5) (115)
Amortization of premium/discount on investments 836 86
Current provision for deferred income taxes -- 349
Write-down of real estate owned 274 --
FHLB stock dividends (83) (184)
Net change in loans held for sale 13,448 (22,968)
Other, net (7,855) (746)
-------- --------
Net Cash Provided by (Used in) Operating Activities 21,038 (10,795)
-------- --------
Cash Flows from Investing Activities:
Activity in available for sale securities:
Sales 11,011 80,851
Maturities, prepayments and calls 74,152 19,725
Purchases (98,354) (28,459)
Activity in held to maturity securities:
Maturities, prepayments and calls 12,509 8,347
Purchases (635) (5,980)
Increase in loans receivable, net (25,203) (7,239)
Purchases of premises and equipment (1,039) (457)
Proceeds from FHLB stock redemption -- 2,673
Proceeds from disposition of real estate owned 1,549 760
Cash paid in excess of cash received on branch sale (5,999) --
-------- --------
Net Cash Provided by (Used in) Investing Activities (32,009) 70,221
-------- --------
Cash Flows from Financing Activities:
(Decrease) Increase in deposits (30,645) 94,518
Net change in short-term borrowings 33,103 (48,308)
Proceeds from issuance of long-term debt 12,000 --
Repayments of long-term debt (822) (13,917)
Dividends paid to shareholders (1,985) (1,996)
Payments to repurchase common stock -- (200)
Proceeds from sale of treasury stock for stock
options exercised 338 124
-------- --------
Net Cash Provided by (Used in) Financing Activities 11,989 30,221
-------- --------
Net Increase In Cash and Cash Equivalents 1,018 89,647
Cash and Cash Equivalents at Beginning of Period 51,681 34,541
-------- --------
Cash and Cash Equivalents at End of Period $ 52,699 $124,188
======== ========
Supplemental Schedule of Noncash Activities:
Acquisition of real estate in settlement of loans $ 832 $ 732
======== ========
Exercise of stock options with payment in
company stock $ 315 $ 383
======== ========
Supplemental Disclosures:
Cash paid for:
Interest on deposits and borrowings $ 15,777 $ 27,417
======== ========
Income taxes $ 4,850 $ 4,000
======== ========
See Notes to Consolidated Financial Statements
5
IBERIABANK CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q, and therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. All normal, recurring adjustments, which, in the
opinion of management, are necessary for a fair presentation of the financial
statements, have been included. These interim financial statements should be
read in conjunction with the audited financial statements and note disclosures
for IBERIABANK Corporation (the "Company") previously filed with the Securities
and Exchange Commission in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001.
Business
The principal business of the Company is conducted through its wholly owned
subsidiary, IBERIABANK (the "Bank"), headquartered in New Iberia, Louisiana. The
Bank operates 40 offices in its market areas located in south central Louisiana,
north Louisiana and the greater New Orleans area. The Bank provides a variety of
financial services to individuals and businesses throughout its service area.
Primary deposit products are checking, savings and certificate of deposit
accounts and primary lending products are consumer, commercial and mortgage
loans. The Bank offers also offers discount brokerage services through a wholly
owned subsidiary and insurance services to its clients though a joint venture
between the Bank and a Louisiana based insurance agency.
The Bank is subject to examination and regulation by the Office of Financial
Institutions of the State of Louisiana, which is the Bank's chartering authority
and primary regulator. The Bank is also subject to certain reserve requirements
established by the Federal Reserve Board ("FRB") and is a member of the Federal
Home Loan Bank of Dallas ("FHLB"). Through June 30, 2002, the Bank was subject
to regulation by the Federal Deposit Insurance Corporation ("FDIC"). Effective
July 1, 2002, upon becoming a member of the Federal Reserve Bank of Atlanta, the
Bank became subject to the regulations of this governing body. The FDIC
continues to insure the deposits of the Bank to the maximum extent permitted by
law.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, IBERIABANK, as well as all of the Bank's
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.
Note 2 - Recent Accounting Pronouncements
In April 2002, the Financial Accounting Standards Board ("FASB") issued
Statement No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13 and Technical Corrections. The Statement updates,
clarifies and simplifies existing accounting pronouncements on several specific,
specialized matters, including extinguishments of debt and sale-leaseback
transactions. The adoption of this statement is not expected to have a material
effect on the Company's financial position or results of operations.
6
In June 2002, the FASB issued Statement No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This Statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force ("EITF") No. 94-3. The principal difference
between this Statement and EITF 94-3 relates to its requirements for recognition
of a liability for a cost associated with an exit or disposal activity. This
Statement requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred, rather than at
the date of an entity's commitment to an exit plan. The provisions of this
statement are effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. The Company does not
currently have any activities that are subject to the provisions of this
statement.
Note 3 - Earnings Per Share
For the three months ended June 30, 2002, basic earnings per share were based on
5,727,497 weighted average shares outstanding and diluted earnings per share
were based on 6,202,216 weighted average shares outstanding. For the same
period, the calculations for both basic and diluted shares outstanding exclude:
(a) the weighted average unreleased shares owned by the Employee Stock Ownership
Plan ("ESOP") of 132,674; (b) the weighted average shares owned by the
Management Recognition Plan and Trust ("MRP") of 149,955; and (c) the weighted
average shares purchased in Treasury Stock of 1,370,545.
For the six months ended June 30, 2002, basic earnings per share were based on
5,708,297 weighted average shares outstanding and diluted earnings per share
were based on 6,139,441 weighted average shares outstanding. For the same
period, the calculations for both basic and diluted shares outstanding exclude:
(a) the weighted average unreleased shares owned by the Employee Stock Ownership
Plan ("ESOP") of 139,103; (b) the weighted average shares owned by the
Management Recognition Plan and Trust ("MRP") of 153,546; and (c) the weighted
average shares purchased in Treasury Stock of 1,379,725.
Note 4 - Goodwill and Other Intangible Assets
In June 2001, The Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard ("FAS") No. 142, Goodwill and Other Intangible
Assets. This statement addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes Accounting Principles Board
Opinion ("APB") No. 17, Intangible Assets. It addresses how intangible assets
that are acquired individually or with a group of other assets (but not acquired
in a business combination) should be accounted for in financial statements upon
their acquisition and subsequent to their acquisition. FAS 142 provides that
intangible assets with definite lives will be amortized and that intangible
assets with indefinite lives and goodwill will not be amortized, but rather will
be tested at least annually for impairment. Under this new accounting standard,
goodwill is no longer amortized, although amortization continued for existing
goodwill until the adoption of FAS 142. Under FAS 142, identifiable intangible
assets other than goodwill continue to be amortized over their estimated useful
lives to their estimated residual values, if any. They are reviewed for
impairment in accordance with FAS 144, Accounting for the Impairment or Disposal
of Long-Lived Assets.
The Company adopted the provisions of FAS 142 for its fiscal year beginning
January 1, 2002. In transitioning to the new accounting standard, the Company
was required to assess by the end of the second quarter of 2002 whether there
was an indication that goodwill was impaired at the date of adoption. During the
second quarter of 2002, the Company completed the first of the required
impairment tests of goodwill measured as of January 1, 2002. The results of
these tests did not indicate impairment on the Company's recorded goodwill. The
carrying amount of goodwill not subject to amortization that will be tested
annually for impairment totaled $35.4 million at January 1, 2002. Impairment
losses identified after the transition period are charged to operating expense.
All acquisitions by the Company to date have been accounted for under APB 16,
Business Combinations, which has been superseded by FAS 141 of the same name.
Upon adoption of FAS 141 and 142 at the beginning of this year, transitional
guidance provided in FAS 142 for intangibles created through these transactions
was followed. Accordingly, amortization of goodwill was discontinued resulting
in a reduction
7
of noninterest expense of $2.8 million before tax and $2.0 million after tax, or
$0.32 to $0.33 per diluted share on an annual basis. FASB announcements and
actions in November 2001, May 2002 and August 2002 concerning the applicability
of FAS 72, Accounting for Acquisitions of Certain Financial Institutions, to
certain banking acquisitions has resulted in a review by the Company of the
accounting for all previous acquisition transactions. At the present time, the
Company continues to believe the FAS 72 is not applicable to those acquisitions.
Until the issues surrounding the final resolution of FAS 72 are resolved, it
remains uncertain what the financial impact on the Company, if any, will be.
FASB is expected to issue a final statement in this regard prior to the end of
the year. The Company will continue to monitor developments related to this
issue.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The purpose of this discussion and analysis is to focus on significant changes
in the financial condition and results of operations of the Company and its
subsidiary during the first six months of the year. This discussion and analysis
highlights and supplements information contained elsewhere in this quarterly
report on Form 10-Q, particularly the preceding consolidated financial
statements and notes. This discussion and analysis should be read in conjunction
with the Company's 2001 annual report on Form 10-K.
SECOND QUARTER OVERVIEW
During the second quarter of 2002, the Company earned $4.6 million, or $.75 per
share on a diluted basis. This is a 29% increase over the $3.6 million, or $.58
per diluted share earned for the first quarter of 2001. In accordance with new
accounting standards issued in 2001, the amortization of goodwill ceased
completely beginning in 2002. The amortization of other intangible assets
purchased in business combinations continues. Earnings performance for the
current quarter was influenced by many factors, the key components of which are
summarized below.
.. Net interest income increased by $1.4 million, or 11%, for the three months
ended June 30, 2002 compared to the same period of 2001. The corresponding
net interest margin on a tax-equivalent basis improved to 4.58% from 4.10%.
This was largely attributable to the management of interest rates in a
declining rate environment coupled with an improved mix of earning assets
and interest-bearing liabilities.
.. Improvement in noninterest income of $1.2 million, or 32%, for the second
quarter of this year as compared to the same period of 2001, was mainly the
result of fee opportunities on deposit products and increased cash
surrender values on bank-owned life insurance policies.
.. Noninterest expense increased by $.5 million, or 5%, for the quarter ended
June 30, 2002 as compared to the same quarter last year. Compensation
expense was $.6 million higher from period to period. This was due in part
to the increasing cost of benefits expense and also management's commitment
to make strategic hires across the Company as opportunities are presented.
Other Real Estate Owned ("OREO") related charges also increased by $.4
million compared to the same quarter last year, largely the result of a
writedown of a specific OREO property. These increases were offset by the
quarterly impact of $.7 million from the discontinuance of goodwill
amortization in 2002.
.. The Company provided $1.8 million for possible loan losses for the three
months ended June 30, 2002 as compared to $.9 million for the same period
of 2001 to bring the Allowance for Loan Losses as a percent of average
loans to 1.21% at the end of the quarter. Net charge-offs for the second
quarter of 2002 were $1.5 million, or 0.50% of average loans on an
annualized basis compared to $1.3 million, or 0.42% a year earlier.
Nonperforming assets decreased $3.2 million during the second quarter of
this year and $4.4 million since the end of 2001.
8
FORWARD-LOOKING STATEMENTS
This Form 10-Q may contain certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Examples of
forward-looking statements include, but are not limited to, estimates with
respect to the financial condition, results of operations and business of the
Company that are subject to various factors which would cause actual results to
differ materially from the estimates. These factors include, but are not limited
to, general economic conditions, changes in interest rates, deposit flows, loan
demand, real estate values, and competition; changes in accounting principles,
policies, or guidelines; changes in legislation or regulation; and other
economic, competitive, governmental, regulatory, and technological factors
affecting the Company's operations, pricing, products and services.
FINANCIAL CONDITION
Earning Assets
Earning assets are composed of any interest or dividend-bearing asset, including
loans, securities, short-term investments and loans held for sale. Interest
income associated with earning assets is the Company's primary source of income.
At June 30, 2002, the total consolidated earning assets of the Company amounted
to $1.3 billion, an increase of $6.7 million, or 0.5%, from December 31, 2001.
Loans and Allowance for Possible Loan Losses - The loan portfolio, net of sale
of branch loans, increased $16.6 million, or 1.7%, to $972.6 million at June 30,
2002, compared to $956.0 million at December 31, 2001. The Company's loan to
deposit ratio at June 30, 2002 was 81.4% compared to 77.3% at December 31, 2001.
The following table sets forth the composition of the Company's loan portfolio
for the periods indicated.
Table 1 - Loan Portfolio Composition
June 30, December 31,
(dollars in thousands) 2002 2001
- -----------------------------------------------------------------
Residential mortgage loans:
Residential 1-4 family $180,670 $198,403
Construction 11,798 5,915
-------- --------
Total residential mortgage loans 192,468 204,318
-------- --------
Commercial loans:
Real estate 244,116 228,284
Business 133,512 117,530
Lease financing receivables 2,197 --
-------- --------
Total commercial loans 379,825 345,814
-------- --------
Consumer loans:
Indirect automobile 215,022 220,698
Home equity 119,308 114,056
Other 66,005 71,129
-------- --------
Total consumer loans 400,335 405,883
-------- --------
Total loans receivable $972,628 $956,015
======== ========
- -----------------------------------------------------------------
The increase in loans was due primarily to increases in commercial real estate
loans of $15.8 million, or 6.9%, and commercial business loans of $16.0 million,
or 13.6%. Growth in the commercial loan segment came primarily from traditional
commercial, private banking and institutional loans. These increases were
partially offset by a reduction in residential mortgage loans of $11.8 million,
or 5.8%, resulting from loans refinancing at fixed rates in the lower rate
environment and normal mortgage paydowns. Historically, the Company has sold the
majority of fixed rate mortgage loan originations and recognized the attendant
up front income rather than assume the rate risk associated with a longer term
asset. A decrease was also reflected in indirect automobile loans that were down
$5.7 million, or 2.6%,
9
during the first six months of this year. Indirect financing has slowed
considerably during the last three quarters as a result of reduced demand for
automobiles combined with the availability of other favorable financing
alternatives in the automobile industry. The Company continues to focus on
prime, or low risk, indirect paper. Also, the Company completed the sale of the
Morgan City, Louisiana branch office during the second quarter of this year. The
branch sale included approximately $5.4 million in total loans, of which $4.8
million were classified as consumer loans. Excluding the impact of this branch
sale, direct consumer loans would have increased by an annualized level of 5.3%.
Additionally, the Company has implemented several portfolio management policies
and procedures to identify credit exposures that do not meet risk profile
guidelines. During the first six months of 2002, several of these credits were
transitioned to other banks resulting in a reduction in the commercial loan
portfolio. This will be an ongoing process as changes occur within credits and
relative risk is reassessed.
Nonperforming assets, defined as nonaccrual loans, accruing loans past due 90
days or more and foreclosed property, amounted to $8.6 million, or 0.60% of
total assets at June 30, 2002, compared to $13.0 million, or 0.91% of total
assets at December 31, 2001. Based on the Company's normal loan loss reserve
analysis, the Company is adequately reserved for the risk of loss in the loan
portfolio at this time. The allowance for loan losses amounted to $11.8 million,
or 1.21% and 328.0% of total loans and total nonperforming loans, respectively,
at June 30, 2002 compared to 1.16% and 159.9%, respectively, at December 31,
2001. The following table sets forth the composition of the Company's
nonperforming assets, including accruing loans past due 90 days or more, as of
the dates indicated.
Table 2 - Nonperforming Assets and Troubled Debt Restructurings
June 30, December 31,
(dollars in thousands) 2002 2001
- ----------------------------------------------------------------------------
Nonaccrual loans:
Commercial, financial and agricultural $ 999 $ 4,088
Mortgage 235 122
Loans to individuals 1,324 1,053
------ -------
Total nonaccrual loans 2,558 5,263
Accruing loans 90 days or more past due 1,030 1,691
------ -------
Total nonperforming loans 3,588 6,954
Foreclosed property 5,019 6,009
------ -------
Total nonperforming assets 8,607 12,963
Performing troubled debt restructurings -- --
------ -------
Total nonperforming assets and
Troubled debt restructurings $8,607 $12,963
====== =======
Nonperforming loans to total loans * 0.37% 0.73%
Nonperforming assets to total assets * 0.60% 0.91%
Allowance for loan losses to nonperforming loans * 328.0% 159.9%
Allowance for loan losses to total loans 1.21% 1.16%
* Nonperforming loans and assets include accruing
loans 90 days or more past due.
- ----------------------------------------------------------------------------
Net charge-offs for the second quarter of this year were $1.5 million, or 0.50%
of average loans on an annualized basis as compared to $1.3 million for the same
quarter last year, or 0.42%. The largest factor contributing to the increase
related to a nonperforming loan on which a specific reserve had been placed at
the end of 2001. Early in the second quarter, the Company reached an agreement
to sell this debt at a
10
discount that was within the reserves previously established. This was a
significant contributing factor to the $4.4 million reduction in nonperforming
assets since the end of 2001.
The allowance for loan losses is maintained at an appropriate level based on
management's analysis of the potential risk in the loan portfolio. This is the
result of various factors, including historical experience, the volume and type
of lending conducted by the Company, the amount of the Company's classified
assets, seasoning of the loan portfolio, the status of past due principal and
interest payments, general economic conditions, particularly as they relate to
the Company's market area and other elements related to the collectibility of
the Company's loan portfolio. Although management of the Company believes that
the Company's allowance for loan losses was adequate at June 30, 2002 based on
facts and circumstances available, there can be no assurances that additions to
such allowance will not be necessary in future periods, which would adversely
affect the Company's results of operations.
Investment Securities - The Company's investment securities available for sale
increased $14.0 million, or 6.4%, to $233.9 million at June 30, 2002, compared
to $219.8 million at December 31, 2001. The increase was due primarily to
purchases of investment securities of $98.4 million and an increase of $1.4
million in the market value of the portfolio, which were partially offset by
sales of $11.0 million and principal amortizations, maturities and calls
totaling $74.2 million.
The Company's investment securities held to maturity decreased $12.1 million, or
11.8%, to $90.0 million at June 30, 2002, compared to $102.1 million at December
31, 2001. This decrease was due primarily to principal amortizations, maturities
and calls of $12.5 million, which was partially offset by purchases of
investment securities of $635,000.
Short-term Investments - Excess overnight funds are currently invested in an
interest-bearing deposit account at the Federal Home Loan Bank ("FHLB") of
Dallas, the total balance of which earns interest at the ending FHLB discount
rate. The balance in interest-bearing deposits at other institutions increased
$2.9 million to $18.6 million at June 30, 2002, compared to $15.7 million at
December 31, 2001.
Mortgage Loans Held for Sale - Loans held for sale decreased $13.4 million, or
84.8%, to $2.4 million at June 30, 2002 compared to $15.9 million at December
31, 2001. This group of loans has primarily been fixed rate single-family
residential mortgage loans under contract to be sold in the secondary market. In
most cases, loans in this category are sold within thirty days.
Funding Sources
The primary source of funding for the Company continues to be deposits with a
focus on increasing core deposits through the development of long-term
relationships. Other funding sources include short-term and long-term borrowings
and shareholders' equity. The following discussion highlights the major changes
in the mix during the first six months of the year.
Deposits - Deposits decreased in part due to the sale of a branch office during
the second quarter of this year that included deposits totaling approximately
$12.1 million. Excluding this transaction, deposits decreased by $30.7 million,
or 2.5% at June 30, 2002 compared to December 31, 2001. The decrease in deposits
was due primarily to a reduction of $41.7 million, or 7.8%, in certificate of
deposit accounts and a $9.7 million, or 6.3%, decrease in noninterest-bearing
checking accounts. These decreases were partially offset by increases of $11.6
million in interest-bearing checking account deposits and $9.1 million in
savings and money market accounts. Certificate of deposit reductions are
generally the result of less aggressive pricing on non-relationship accounts in
the current low rate environment and are not perceived by management as a
negative trend.
Short-term Borrowings - Short-term borrowings increased $33.1 million, or
268.3%, to $45.4 million at June 30, 3002, compared to $12.3 million at December
31, 2001. The Company's short-term borrowings at June 30, 2002 were comprised of
$35.0 million in FHLB advances with maturities of 30 days or less and $10.4
million of securities sold under agreements to repurchase. The level of
short-term borrowings can
11
fluctuate significantly on a daily basis depending on funding needs and which
source of funds are used to satisfy these needs.
Long-term Borrowings - At June 30, 2002, the Company's long-term borrowings were
comprised of fixed rate advances from FHLB of Dallas. Long-term borrowings
increased $11.2 million, or 35.6%, to $42.6 million at June 30, 2002, compared
to $31.4 million at December 31, 2001. This increase was due primarily to
borrowings of $12.0 million, which was partially offset by normal amortization
payments.
Shareholders' Equity - Shareholders' equity provides a source of permanent
funding, allows for future growth and provides the Company with a cushion to
withstand unforeseen adverse developments. Total shareholders' equity increased
$9.1 million, or 6.8%, to $143.5 million at June 30, 2002, compared to $134.4
million at December 31, 2001. The increase in shareholders' equity was the
result of the Company's net income of $9.0 million, $880,000 of common stock
released by the Company's Employee Stock Ownership Plan ("ESOP") trust, $295,000
of common stock earned by participants in the Company's Recognition and
Retention Plan trust, $338,000 from the reissuance of treasury stock for stock
options exercised, and a $696,000 increase in the tax-effected net unrealized
gain on securities available for sale, which is classified as accumulated other
comprehensive income after taxes. Such increases were partially offset by cash
dividends declared on the Company's common stock of $2.1 million. As of June 30,
2002, the Company has not repurchased any shares currently authorized under the
300,000 share repurchase program.
RESULTS OF OPERATIONS
The Company reported net income of $4.6 million for the three months ended June
30, 2002, compared to $3.6 million earned during the three months ended June 30,
2001, an increase of $1.0 million, or 29.4%. The Company's net interest income
increased $1.4 million, noninterest income increased $1.2 million, the provision
for loan losses increased $902,000, noninterest expense increased $540,000, and
income tax expense increased $130,000 during the three months ended June 30,
2002 compared to the second quarter of 2001.
For the six months ended June 30, 2002, the Company reported net income of $9.0
million, compared to $7.1 million earned during the same period of 2001, an
increase of $1.9 million, or 27.6%. The Company's net interest income increased
$3.1 million, noninterest income increased $1.5 million, the provision for loan
losses increased $1.4 million, noninterest expense increased $1.1 million, and
income tax expense increased $204,000 when comparing the first six months of
2002 to the same period of 2001.
Net Interest Income - Net interest income is the difference between interest
realized on earning assets net of interest paid on interest-bearing liabilities.
The Company's average interest rate spread, which is the difference between the
yields earned on earning assets and the rates paid on interest-bearing
liabilities, was 4.23% during the three months ended June 30, 2002, compared to
3.45% for the comparable period in 2001. The Company's net interest margin on a
taxable equivalent basis, which is net interest income as a percentage of
average earning assets, was 4.58% during the three months ended June 30, 2002,
compared to 4.10%, for the comparable period in 2001.
Net interest income increased $1.4 million, or 10.6%, to $14.9 million for the
three months ended June 30, 2002, compared to $13.5 million for the three months
ended June 30, 2001. The increase was due to a $5.2 million, or 42.5%, decrease
in interest expense, which was partially offset by a decrease of $3.8 million in
interest income. The decrease in interest income was the result of a 113 basis
point decrease in the yield earned on earning assets, which was partially offset
by a $9.8 million, or 0.7%, increase in the average balance of earning assets.
The decrease in interest expense was the result of a 191 basis point decrease in
the cost of interest-bearing liabilities, which was partially offset by a $13.5
million, or 1.2%, increase in the average balance of interest-bearing
liabilities.
For the six months ended June 30, 2002, net interest income increased $3.1
million, or 12.0%, to $29.4 million, compared to $26.2 million for the first six
months of 2001. The increase was due to a $10.5 million, or 41.6%, decrease in
interest expense, which was partially offset by a decrease of $7.4 million in
interest
12
income. The decrease in interest income was the result of a 117 basis
point decrease in the yield earned on earning assets, which was partially offset
by a $29.9 million, or 2.3%, increase in the average balance of earning assets.
The decrease in interest expense was the result of a 196 basis point decrease in
the cost of interest-bearing liabilities, which was partially offset by a $24.4
million, or 2.2%, increase in the average balance of interest-bearing
liabilities.
Management believes that the Company is not significantly affected by changes in
interest rates over an extended period of time. Under traditional measures of
interest rate gap positions, the Company is slightly liability sensitive. As of
June 30, 2002, the Company's financial model indicated that an immediate and
sustained 100 basis point rise in rates over the 12 months would approximate a
3.1% decrease in net interest income, while a 100 basis point decline in rates
over the same period would approximate a 1.2% increase in net interest income
from an unchanged rate environment. Computations of interest rate risk do not
necessarily include certain actions that management may undertake to manage this
risk in response to anticipated changes in interest rates.
The Company will continue to monitor investment opportunities and weigh the
associated risk/return. The Company has also engaged in an interest rate swap,
which is a form of a derivative financial instrument, to modify its indicated
net interest sensitivity to levels deemed to be appropriate. Through this
instrument, interest rate risk is managed by hedging with an interest rate swap
contract designed to pay fixed and receive floating interest. Additionally, less
aggressive repricing of the maturing certificate of deposit portfolio in the
current low rate environment has allowed the Company to reduce funding costs and
thereby offset the negative impact of FRB rate reductions.
Table 3 presents average balance sheets, net interest income and average
interest rates for the three and six-month periods ended June 30, 2002 and 2001.
13
Table 3 - Average Balances, Net Interest Income and Interest Yields / Rates
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest income of the Company from earning
assets and the resultant average yields; (ii) the total dollar amount of
interest expense on interest-bearing liabilities and the resultant average rate,
(iii) net interest income; (iv) net interest spread; and (v) net interest
margin. Information is based on average daily balances during the indicated
periods. Tax equivalent (TE) yields are calculated using a marginal tax rate of
35%.
Three Months Ended June 30,
-----------------------------------------------------------------
2002 2001
------------------------------- -------------------------------
Average Average
Average Yield/ Average Yield/
(dollars in thousands) Balance Interest Rate(1) Balance Interest Rate(1)
- ------------------------------------------------------ ---------- -------- ------- ---------- -------- -------
Earning assets:
Loans receivable:
Mortgage loans $ 191,648 $ 3,738 7.80% $ 267,166 $ 5,323 7.97%
Commercial loans (TE) 358,802 5,633 6.41 284,556 6,157 8.60
Consumer and other loans 399,159 8,256 8.30 392,765 8,854 9.04
Lease financing receivables 2,212 31 5.54 0 0
---------- ------- ---------- -------
Total loans 951,821 17,658 7.48 944,487 20,334 8.61
---------- ------- ---------- -------
Loans held for sale 4,897 59 4.82 9,695 198 8.17
Investment securities (TE) 338,978 4,145 5.06 276,565 4,363 6.37
Federal Home Loan Bank stock 5,643 42 2.99 6,729 73 4.35
Other earning assets 26,479 112 1.70 80,578 856 4.26
---------- ------- ---------- -------
Total earning assets 1,327,818 22,016 6.72 1,318,054 25,824 7.85
------- -------
Allowance for loan losses (11,244) (10,238)
Nonearning assets 122,599 98,989
---------- ----------
Total assets $1,439,173 $1,406,805
========== ==========
Interest-bearing liabilities:
Deposits:
NOW accounts $ 254,623 763 1.20 $ 199,020 896 1.81
Savings and money market accounts 319,624 1,106 1.39 286,876 2,125 2.97
Certificates of deposit 499,517 4,434 3.56 583,948 8,416 5.78
---------- ------- ---------- -------
Total interest-bearing deposits 1,073,764 6,303 2.35 1,069,844 11,437 4.29
Borrowings 50,681 719 5.61 48,007 824 6.79
Securities sold under agreements to repurchase 11,737 56 1.89 4,792 53 4.38
---------- ------- ---------- -------
Total interest-bearing liabilities 1,136,182 7,078 2.49 1,122,643 12,314 4.40
------- -------
Noninterest-bearing demand deposits 145,585 139,838
Noninterest-bearing liabilities 16,457 10,647
---------- ----------
Total liabilities 1,298,224 1,273,128
Shareholders' Equity 140,949 133,677
---------- ----------
Total liabilities and shareholders' equity $1,439,173 $1,406,805
========== ==========
Net earning assets $ 191,636 $ 195,411
========== ==========
Net interest spread $14,938 4.23% $13,510 3.45%
======= ==== ======= ====
Net interest margin (TE) 4.58% 4.10%
==== ====
Ratio of earning assets to interest-bearing liablities 116.87% 117.41%
========== ==========
Six Months Ended June 30,
-----------------------------------------------------------------
2002 2001
------------------------------- -------------------------------
Average Average
Average Yield/ Average Yield/
(dollars in thousands) Balance Interest Rate(1) Balance Interest Rate(1)
- ------------------------------------------------------ ---------- -------- ------- ---------- -------- -------
Earning assets:
Loans receivable:
Mortgage loans $ 195,209 $ 7,609 7.80% $ 275,057 $10,879 7.91%
Commercial loans (TE) 353,484 11,321 6.56 279,845 12,268 8.76
Consumer and other loans 398,744 16,637 8.41 384,783 17,367 9.10
Lease financing receivables 1,162 31 5.31 0 0
---------- ------- ---------- -------
Total loans 948,599 35,598 7.59 939,685 40,514 8.65
---------- ------- ---------- -------
Loans held for sale 5,436 157 5.78 6,696 261 7.80
Investment securities (TE) 326,988 7,979 5.22 294,489 9,399 6.43
Federal Home Loan Bank stock 5,623 83 2.98 7,361 184 5.04
Other earning assets 46,469 373 1.62 55,021 1,228 4.50
---------- ------- ---------- -------
Total earning assets 1,333,115 44,190 6.78 1,303,252 51,586 7.95
------- -------
Allowance for loan losses (11,192) (10,214)
Nonearning assets 122,632 99,421
---------- ----------
Total assets $1,444,555 $1,392,459
========== ==========
Interest-bearing liabilities:
Deposits:
NOW accounts $ 253,154 1,554 1.24 $ 191,045 1,762 1.86
Savings and money market accounts 318,049 2,286 1.45 281,015 4,582 3.29
Certificates of deposit 512,528 9,483 3.73 580,432 16,836 5.85
---------- ------- ---------- -------
Total interest-bearing deposits 1,083,731 13,323 2.48 1,052,492 23,180 4.44
Borrowings 46,212 1,360 5.85 61,303 2,084 6.76
Securities sold under agreements to repurchase 11,637 118 2.02 3,386 80 4.70
---------- ------- ---------- -------
Total interest-bearing liabilities 1,141,580 14,801 2.61 1,117,181 25,344 4.57
------- -------
Noninterest-bearing demand deposits 146,505 132,980
Noninterest-bearing liabilities 17,534 10,352
---------- ----------
Total liabilities 1,305,620 1,260,513
Shareholders' Equity 138,935 131,946
---------- ----------
Total liabilities and shareholders' equity $1,444,555 $1,392,459
========== ==========
Net earning assets $ 191,535 $ 186,071
========== ==========
Net interest spread $29,389 4.17% $26,242 3.38%
======= ==== ======= ====
Net interest margin (TE) 4.54% 4.03%
==== ====
Ratio of earning assets to interest-bearing liablities 116.78% 116.66%
========== ==========
- ----------
(1) Annualized
14
Provision For Loan Losses - Provisions for loan losses are charged to earnings
to bring the total allowance for loan losses to a level considered appropriate
by management. Management of the Company assesses the allowance for loan losses
on a quarterly basis and makes provisions for loan losses as deemed appropriate
in order to maintain the adequacy of the allowance for loan losses.
For the three months ended June 30, 2002, the provision for loan losses was $1.8
million as compared to $896,000 for the same period in 2001. For the six months
ended June 30, 2002, the provision for loan losses was $3.0 million as compared
to $1.6 million for the first six months of 2001. The higher provision is
attributable to loan growth and changes in the mix of loans from period to
period as well as net charge-offs to the previously established reserves. The
allowance for loan losses as a percentage of outstanding loans, net of unearned
income, was 1.21% at June 30, 2002, compared to 1.05% at June 30, 2001.
Noninterest Income - The Company's total noninterest income was $4.9 million for
the three months ended June 30, 2002, compared to $3.7 million for the same
period in 2001. Noninterest income increased $1.2 million, or 32.0%, for the
three months ended June 30, 2002, compared to the same period in 2001. The
increase was due primarily to a $574,000 increase in service charges on deposit
accounts, a $320,000 increase in earnings and cash surrender value of bank owned
life insurance, a $140,000 increase in brokerage fee commissions and a $46,000
increase in ATM fee income. All other net noninterest income increased $51,000.
These increases were offset by a $192,000 decrease in the gain on sale of
mortgage loans in the secondary market and a $123,000 decrease in gain on sale
of investment securities. Additionally, the Company completed the sale of the
Morgan City, Louisiana branch office during the second quarter of 2002. The
branch sale included approximately $5.4 million in loans and $12.1 million in
deposits. The Company recorded a gain of $382,000 associated with the sale of
this branch office during the second quarter of 2002.
For the six months ended June 30, 2002, the Company's total noninterest income
was $8.5 million, compared to $7.0 million for the same period in 2001.
Noninterest income increased $1.5 million, or 22.0%, for the six months ended
June 30, 2002, compared to the same period in 2001. The increase was due
primarily to a $564,000 increase in service charges on deposit accounts, a
$583,000 increase in earnings and cash surrender value of bank owned life
insurance, a $100,000 increase in brokerage fee commissions and a $64,000
increase in ATM fee income. All other net noninterest income increased $48,000.
These increases were offset by a $110,000 decrease in gain on sale of investment
securities and a $94,000 decrease in gain on sale of mortgage loans in the
secondary market. Additionally, the first six months of 2002 includes a $382,000
gain associated with the sale of the Morgan City branch office mentioned
previously.
Noninterest Expense - Noninterest expense includes costs related to salary and
employee benefits, occupancy and equipment, communication and delivery,
marketing and business development, amortization of acquisition intangibles and
other expenses. Noninterest expense increased $540,000, or 5.1%, for the three
months ended June 30, 2002, to $11.2 million, compared to $10.7 million for the
three months ended June 30, 2001. This increase is due in part to a $560,000
increase in salaries and employee benefits. Included in this increase were
$144,000 in salary expense partially attributable to improving overall staffing
across the state as opportunities arose, a $311,000 increase in hospitalization
expense and a $105,000 increase in the ESOP retirement contribution expense
caused by the increase in the average fair market value of the Company's common
stock. Other expense increases included $31,000 in data processing, $215,000 in
legal and professional expenses, and a $274,000 writedown of an OREO property.
Other net noninterest expenses increased by $239,000. Such increases were offset
by decreases of $40,000 in occupancy and equipment expense, $22,000 in printing,
stationery and supplies, and a pre-tax decrease of $717,000 from
non-amortization of goodwill as a result of adopting FAS 142.
For the six months ended June 30, 2002, noninterest expense increased $1.1
million, or 5.6%, to $21.5 million, compared to $20.4 million for the same
period in 2001. This increase is due in part to a $1.4 million increase in
salaries and employee benefits. Included in this increase were $621,000 in
salary expense, a $591,000 increase in hospitalization expense and a $186,000
increase in the ESOP retirement contribution expense caused by the increase in
the average fair market value of the Company's common stock. Other increases
included $101,000 in the franchise and share tax assessment, $61,000 in data
processing, $295,000 in legal and professional expenses, and a $274,000
writedown of an OREO property as previously mentioned. Other net noninterest
expenses increased by $530,000. Such increases were partially offset by
15
decreases of $53,000 in occupancy and equipment expense, $31,000 in printing,
stationery and supplies, and a pre-tax decrease of $1.4 million from
non-amortization of goodwill as a result of adopting FAS 142.
Income Tax Expense - Income tax expense increased $130,000, or 6.1%, for the
three months ended June 30, 2002 to $2.2 million, compared to $2.1 million for
the three months ended June 30, 2001. The effective tax rate for the three
months ended June 30, 2002 and 2001 was 32.6% and 37.1%, respectively. For the
six months ended June 30, 2002, income tax expense increased $204,000, or 4.9%,
to $4.4 million, compared to $4.2 million for the first six months of 2001. The
effective tax rate for the six months ended June 30, 2002 and 2001 was 32.6% and
37.1%, respectively. The increase in income tax expense was due primarily to the
increase in income before income taxes. The difference between the effective tax
rate and the statutory tax rate primarily relates to variances in items that are
either nontaxable or nondeductible, mainly the nondeductible portion of the ESOP
compensation expense, nontaxable portion of municipal investments and nontaxable
portion of bank owned life insurance policies. Additionally, prior to the
adoption of FAS 142 on January 1, 2002, a portion of the acquisition intangible
amortization was nondeductible.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity, represented by cash and cash equivalents, is a product
of its operating, investing and financing activities. The Company's primary
sources of funds are deposits, amortization, prepayments and maturities of
outstanding loans, investment securities and other short-term investments and
funds provided from operations. While scheduled payments from the amortization
of loans, maturing investment securities, and short-term investments are
relatively predictable sources of funds, deposit flows and loan and investment
security prepayments are greatly influenced by general interest rates, economic
conditions and competition. In addition, the Company obtains additional funds
through borrowings, which provide liquidity to meet lending requirements. The
Company has been able to generate sufficient cash through its deposits as well
as borrowings. At June 30, 2002, the Company had $77.6 million in outstanding
advances from the Federal Home Loan Bank of Dallas.
Liquidity management is both a daily and long-term function of business
management. 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 products. The Company uses its sources
of funds primarily to meet its ongoing commitments and fund loan commitments. At
June 30, 2002, the total approved loan commitments outstanding amounted to $18.9
million. At the same time, commitments under unused lines of credit, including
credit card lines, amounted to $181.0 million. Certificates of deposit scheduled
to mature in twelve months or less at June 30, 2002 totaled $368.4 million.
Based on past experience, management believes that a significant portion of
maturing deposits will remain with the Company. The Company anticipates it will
continue to have sufficient funds to meet its liquidity requirements.
At June 30, 2002, the Company and the Bank had regulatory capital that was in
excess of regulatory requirements. The Company's actual levels and current
requirements as of June 30, 2002 are detailed below:
Actual Capital Required Capital
------------------ -----------------
(dollars in thousands): Amount Percent Amount Percent
- ----------------------- -------- ------- ------- -------
Tier 1 Leverage $106,603 7.59% $56,147 4.00%
Tier 1 Risk-Based $106,603 10.59% $40,270 4.00%
Total Risk-Based $118,373 11.76% $80,539 8.00%
16
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk are presented at
December 31, 2001 in Item 7A of the Company's Annual Report on Form 10-K, filed
with the Securities and Exchange Commission on March 31, 2002. Management
believes there have been no material changes in the Company's market risk since
December 31, 2001.
17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities and Use of Proceeds
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on May 1, 2002.
1. With respect to the election of three directors to serve
three-year terms expiring in the year 2005 and until their
successors are elected and qualified, the following are the
number of shares voted for each nominee:
Broker
Nominees For Withheld Non-vote
------------------------------------------------------
Harry V. Barton, Jr. 4,682,976 47,563 None
Daryl G. Byrd 4,528,815 201,724 None
E. Stewart Shea III 4,687,515 43,024 None
2. With respect to the ratification of the appointment of Castaing,
Hussey & Lolan, LLC as the Company's independent auditors for the
fiscal year ending December 31, 2002, the following are the
number of shares voted:
Broker
For Against Abstain Non-vote
----------------------------------------
4,704,342 18,050 8,147 None
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 - Chief Executive Officer
Exhibit 99.2 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 - Chief Financial Officer
(b) Reports on Form 8-K
Not Applicable
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IBERIABANK Corporation
Date: August 14, 2002 By: /s/ Daryl G. Byrd
------------------------------------------------
Daryl G. Byrd
President and Chief Executive Officer
Date: August 14, 2002 By: /s/ Marilyn W. Burch
------------------------------------------------
Marilyn W. Burch
Executive Vice President and Chief Financial
Officer
19