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 September 30, 2000
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) 365-2361
---------------------------------------------------------------
(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 6,438,737 shares of common stock, $1.00 par value, which were
issued and outstanding as of November 9, 2000.
IBERIABANK CORPORATION AND SUBSIDIARY
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets 3
(As of September 30, 2000 and December 31, 1999)
Consolidated Statements of Income (For the three and nine 4
months ended September 30, 2000 and 1999)
Consolidated Statements of Shareholders' Equity (For the 5
nine months ended September 30, 2000 and 1999)
Consolidated Statements of Cash Flows (For the nine 6
months ended September 30, 2000 and 1999)
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
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
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands, except share data)
ASSETS
------
September 30, December 31,
2000 1999
------------- -----------
Cash and due from banks $ 28,587 $ 39,443
Interest-bearing deposits in banks 4,450 8,270
----------- -----------
Total cash and cash equivalents 33,037 47,713
Investment securities:
Available for sale, at fair value 268,455 299,388
Held to maturity (fair value of $76,419 and $82,884, respectively) 78,921 85,493
Federal home loan bank stock, at cost 7,868 6,821
Loans held for sale 1,570 4,771
Loans, net of unearned income, less allowance for loan
losses of $9,626 and $8,749, respectively 933,486 834,129
Accrued interest receivable 7,804 8,017
Premises and equipment, net 21,970 25,957
Goodwill and acquisition intangibles 39,602 42,063
Other assets 8,171 9,226
----------- -----------
TOTAL ASSETS $ 1,400,884 $ 1,363,578
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Deposits:
Noninterest-bearing $ 124,283 $ 116,493
Interest-bearing 1,006,985 983,521
----------- -----------
Total deposits 1,131,268 1,100,014
Short-term borrowings 79,475 83,000
Accrued interest payable 3,376 5,385
Long-term debt 53,316 52,053
Other liabilities 9,225 5,937
----------- -----------
TOTAL LIABILITIES 1,276,660 1,246,389
----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock of $1 par value; 5,000,000 shares
authorized; -0- shares issued 0 0
Common stock of $1 par value; 25,000,000 shares authorized;
7,380,671 shares issued 7,381 7,381
Additional paid-in capital 69,180 68,749
Retained earnings 75,498 69,065
Unearned common stock held by ESOP (2,209) (2,649)
Unearned common stock held by RRP trust (2,735) (3,024)
Accumulated other comprehensive income (6,803) (7,124)
Treasury stock, at cost, 884,434 and 821,934 shares (16,088) (15,209)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 124,224 117,189
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,400,884 $ 1,363,578
=========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------------------- -----------------------------------
2000 1999 2000 1999
--------------- ---------------- ----------------- ---------------
INTEREST AND DIVIDEND INCOME:
Loans, including fees $ 20,859 $ 16,850 $ 58,825 $ 50,402
Investment securities:
Taxable interest and dividends 5,877 6,475 18,235 19,168
Tax-exempt interest 21 26 64 87
Interest-bearing demand deposits 83 8 214 986
--------------- ---------------- ----------------- ---------------
Total interest and dividend income 26,840 23,359 77,338 70,643
--------------- ---------------- ----------------- ---------------
INTEREST EXPENSE:
Deposits 11,314 10,011 32,795 30,443
Short-term borrowings 1,434 553 3,476 740
Long-term debt 947 894 2,591 2,367
--------------- ---------------- ----------------- ---------------
Total interest expense 13,695 11,458 38,862 33,550
--------------- ---------------- ----------------- ---------------
Net interest income 13,145 11,901 38,476 37,093
Provision for loan losses 811 288 1,896 923
--------------- ---------------- ----------------- ---------------
Net interest income after provision for loan losses 12,334 11,613 36,580 36,170
--------------- ---------------- ----------------- ---------------
NONINTEREST INCOME:
Service charges on deposit accounts 2,016 2,011 5,972 5,737
ATM fee income 329 283 959 780
Gain on sale of loans, net 97 573 155 1,056
Gain on sale of fixed assets 1,905 61 1,972 125
Gain (loss) on sale of investment securities (1,759) 0 (1,759) 0
Other income 634 672 2,186 2,094
--------------- ---------------- ----------------- ---------------
Total noninterest income 3,222 3,600 9,485 9,792
--------------- ---------------- ----------------- ---------------
NONINTEREST EXPENSE:
Salaries and employee benefits 4,859 5,331 14,759 15,670
Occupancy and equipment 1,390 1,430 4,139 4,116
Amortization of acquisition intangibles 813 843 2,461 2,551
Franchise and shares tax 358 324 1,112 935
Communication and delivery 601 670 1,932 1,991
Marketing and business development 196 284 861 869
Data processing 374 234 1,002 685
Printing, stationery and supplies 172 218 556 665
Other expenses 1,331 1,341 4,096 4,706
--------------- ---------------- ----------------- ---------------
Total noninterest expense 10,094 10,675 30,918 32,188
--------------- ---------------- ----------------- ---------------
Income before income tax expense 5,462 4,538 15,147 13,774
Income tax expense 2,036 1,751 5,646 5,300
--------------- ---------------- ----------------- ---------------
NET INCOME $ 3,426 $ 2,787 $ 9,501 $ 8,474
=============== ================ ================= ===============
EARNINGS PER SHARE - BASIC $ 0.56 $ 0.46 $ 1.56 $ 1.37
=============== ================ ================= ===============
EARNINGS PER SHARE - DILUTED $ 0.56 $ 0.45 $ 1.55 $ 1.35
=============== ================ ================= ===============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in thousands)
Unearned
Unearned Common Accumulated
Additional Common Stock Other Total
Common Paid-In Retained Stock Held Held By Comprehensive Treasury Shareholders'
Stock Capital Earnings By ESOP RRP Trust Income Stock Equity
----- ------- -------- ------- --------- ------ ----- ------
BALANCE, DECEMBER 31, 1998 $ 7,381 $ 68,021 $ 63,527 $ (3,267) $ (3,683) $ 349 $ (8,361) $ 123,967
Comprehensive income:
Net income 8,474 8,474
Change in unrealized gain (loss)
on securities available for sale,
net of deferred taxes (3,636) (3,636)
------------
Total comprehensive income 4,838
Cash dividends declared (2,965) (2,965)
Common stock released by ESOP trust 375 467 842
Common stock earned by participants of
recognition and retention plan trust,
including tax benefit 157 330 487
Treasury stock acquired at cost, 336,500 shares (7,045) (7,045)
Stock options exercised 1 15 16
--------- ---------- ---------- --------- ---------- ----------- ---------- ----------
BALANCE, SEPTEMBER 30, 1999 $ 7,381 $ 68,554 $ 69,036 $ (2,800) $ (3,353) $ (3,287) $ (15,391) $ 120,140
========= ========== ========== ========= ========== =========== ========== ==========
BALANCE, DECEMBER 31, 1999 $ 7,381 $ 68,749 $ 69,065 $ (2,649) $ (3,024) $ (7,124) $ (15,209) $ 117,189
Comprehensive income:
Net income 9,501 9,501
Change in unrealized gain (loss)
on securities available for sale,
net of deferred taxes 321 321
----------
Total comprehensive income 9,822
Cash dividends declared (3,068) (3,068)
Common stock released by ESOP trust 215 440 655
Common stock earned by participants of
recognition and retention plan trust,
including tax benefit 39 417 456
Common stock acquired by RRP trust 128 (128) 0
Compensation expense on stock option plans 49 49
Treasury stock acquired at cost, 62,500 shares (879) (879)
--------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
BALANCE, SEPTEMBER 30, 2000 $ 7,381 $ 69,180 $ 75,498 $ (2,209) $ (2,735) $ (6,803) $ (16,088) $ 124,224
========= ========== ========== ========== ========== =========== ========== ==========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
For the Nine Months Ended
September 30,
----------------------
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,501 $ 8,474
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 5,025 4,964
Provision for loan losses 1,896 923
Compensation expense recognized on RRP and stock options 505 373
Gain on sales of assets (2,021) (1,128)
Book value of equipment donated 0 120
Amortization of premium/discount on investments 467 852
Current provision for deferred income taxes 0 (4)
FHLB stock dividends (453) (355)
Net change in loans held for sale 3,201 16,113
Income reinvested on marketable equity security 0 (241)
ESOP compensation 509 956
Other, net 1,362 1,746
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 19,992 32,793
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Activity in available for sale securities:
Maturities, prepayments and calls 75,119 20,914
Purchases (43,744) (47,837)
Activity in held to maturity securities:
Maturities, prepayments and calls 6,457 44,840
Purchases 0 (52,161)
Increase in loans receivable, net (102,221) (61,695)
Proceeds from sale of premises and equipment 4,778 503
Purchases of premises and equipment (784) (1,919)
Proceeds from FHLB Stock redemption 0 4,853
Purchases of FHLB Stock (594) (590)
Proceeds from disposition of real estate owned & property 1,065 840
--------- ---------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (59,924) (92,252)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in deposits 31,254 (120,194)
Net change in short term borrowings (11,100) 73,873
Issuance of long term debt 15,000 5,575
Repayments of long term debt (6,162) 0
Dividends paid to shareholders (2,857) (2,950)
Proceeds from sale of treasury stock for stock options exercised 0 16
Payments to repurchase common stock (879) (7,045)
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 25,256 (50,725)
--------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (14,676) (110,184)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 47,713 145,871
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 33,037 $ 35,687
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Acquisition of real estate in settlement of loans $ 969 $ 769
========= =========
SUPPLEMENTAL DISCLOSURES:
Cash paid (received) for:
Interest on deposits and borrowings $ 40,871 $ 34,967
========= =========
Income taxes $ 4,810 $ 4,673
========= =========
Income tax refunds $ -- $ 9
========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
IBERIABANK CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements were 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 (formerly ISB Financial Corporation), previously filed with
the Securities and Exchange Commission in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.
BUSINESS
The principal business of IBERIABANK Corporation (the "Company") is
conducted through its wholly owned subsidiary, IBERIABANK (the "Bank"),
headquartered in New Iberia, Louisiana. The Bank operates 40 full service
offices in its market areas located in south central Louisiana, northeast
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, mortgage and
commercial loans. The Bank also offers discount brokerage services through
it's wholly owned subsidiary, Iberia Financial Services, LLC.
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
regulation by the FDIC and to certain reserve requirements established by
the Federal Reserve Board ("FRB"). As a Louisiana chartered commercial
bank, deposits are insured by the Federal Deposit Insurance Corporation
("FDIC") to the maximum extent permitted by law. The Bank is a member of
the Federal Home Loan Bank of Dallas ("FHLB").
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
the Bank and the Bank's wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2000, the FASB issued FAS Statement No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities. The new
statement addresses a limited number of issues causing implementation
difficulties for a large number of entities getting ready to apply FAS
Statement 133. There are no conflicts with or modifications to the basic
model of Statement 133, and there is no delay in the effective date of
Statement 133. FAS 138 is effective for fiscal quarters of all fiscal
years beginning after June 15, 2000. Implementation of this standard is
not expected to have a material impact on financial position or results of
operations.
7
In September 2000, the FASB issued FAS Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities. The statement replaces FASB Statement No. 125 of the same
name. It revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures, but it carries over most of Statement 125's provisions
without reconsideration. The statement is effective generally for
transactions occurring after March 31, 2001. Disclosures are effective for
years ending after December 15, 2000. Implementation of this standard is
not expected to have a material impact on financial position or results of
operations.
3. LOANS RECEIVABLE
Loans receivable at September 30, 2000 and December 31, 1999 consisted of
the following:
September 30, December 31,
($000) 2000 1999
--------------------------------------------------------------
Residential mortgage loans:
Residential 1-4 family $ 289,257 $ 266,161
Construction 7,816 6,381
--------- ---------
Total residential mortgage loans 297,073 272,542
Commercial loans:
Business 77,935 82,485
Real estate 195,092 157,248
--------- ---------
Total commercial loans 273,027 239,733
Consumer loans:
Home equity 105,990 91,531
Automobile 25,639 23,432
Indirect automobile 202,599 179,350
Credit card loans 8,525 6,436
Other 30,259 29,854
--------- ---------
Total consumer loans 373,012 330,603
--------- ---------
Total loans receivable 943,112 842,878
Allowance for loan losses (9,626) (8,749)
--------- ---------
Loans receivable, net $ 933,486 $ 834,129
========= =========
4. EARNINGS PER SHARE
Basic earnings per share were based on 6,073,402 weighted average shares
outstanding during the three month period ended September 30, 2000.
Diluted earnings per share were based on 6,152,823 weighted average shares
outstanding during the three month period ended September 30, 2000. For
the three months ended September 30, 2000, the weighted average number of
common shares outstanding excludes (a) the weighted average unreleased
shares owned by the Employee Stock Ownership Plan ("ESOP") of 228,113; (b)
the weighted average shares owned by the Management Recognition Plan and
Trust of 194,721 and (c) the weighted average shares purchased in Treasury
Stock of 884,434.
For the nine months ended September 30, 2000, basic earnings per share
were based on 6,080,113 weighted average shares outstanding and diluted
earnings per share were based on 6,111,622 weighted average shares
outstanding. For the nine months ended September 30, 2000, the weighted
average number of common shares outstanding excludes (a) the weighted
average unreleased shares owned by the ESOP of 242,727; (b) the weighted
average shares owned by the Management Recognition Plan and Trust of
201,575 and (c) the weighted average shares purchased in Treasury Stock of
856,179.
8
5. SUBSEQUENT EVENTS
A $4.5 million commercial real estate loan was placed on nonaccrual status
during November of this year. The loan was underwritten in the second
quarter of 1999. At the end of the third quarter 2000, the loan was
current. Issues have arisen recently, which have caused bank management to
reevaluate the status of the loan. After evaluation, IBERIABANK
Corporation began foreclosure proceedings on the loan collateral. Current
information available to IBERIABANK Corporation management indicates that
issues relative to this loan are isolated and do not reflect a broad
deterioration in the loan portfolio.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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.
CHANGES IN FINANCIAL CONDITION
------------------------------
At September 30, 2000, the consolidated assets of the Company totaled
$1.40 billion, an increase of $37.3 million, or 2.7%, from December 31,
1999.
Loans, net of unearned income, less allowance for loan losses, increased
by $99.4 million, or 11.9%, to $933.5 million at September 30, 2000
compared to $834.1 million at December 31, 1999. Such increase was
primarily the result of a $42.4 million, or 12.8%, increase in consumer
loans, reflecting growth of $23.2 million in indirect automobile loans,
$14.5 million in home equity loans, and an increase in remaining consumer
loans of $4.7 million. Other loan increases consisted of growth in
commercial loans of $33.3 million, or 13.9%, and mortgage loans of $24.5
million, or 9.0%. The Company's loan to deposit ratio at September 30,
2000 was 82.5% compared to 75.8% at December 31, 1999.
Loans held for sale decreased $3.2 million, or 67.1%, to $1.6 million
compared to $4.8 million at December 31, 1999. This group of loans has
normally been fixed rate single-family residential mortgages held for sale
in the secondary market. The decrease was largely attributable to reduced
demand by consumers for fixed rate loans in the rising rate environment at
the beginning of the year. As rates have stabilized, so has consumer
demand. In most cases loans in this category are sold within thirty days.
Interest-bearing deposits at other institutions decreased $3.8 million, or
46.2%, to $4.5 million at September 30, 2000, compared to $8.3 million at
December 31, 1999.
The Company's investment securities available for sale decreased $30.9
million, or 10.3%, to $268.5 million at September 30, 2000, compared to
$299.4 million at December 31, 1999. Such decrease was primarily the
result of prepayments and maturities totaling $31.4 million, which was
partially offset by an additional increase of $494,000 in the market value
of such securities. During the third quarter of 2000, the Company
completed the restructuring of a significant portion of its long-term
investment portfolio. Approximately $45.5 million of fixed rate debt
securities were sold at a pre-tax loss of $1.8 million. The proceeds of
the sale, or approximately $43.7 million, were reinvested in higher
yielding, more liquid, fixed-rate debt securities with an average maturity
comparable to those securities that were sold.
The Company's investment securities held to maturity decreased $6.6
million, or 7.7%, to $78.9 million at September 30, 2000, compared to
$85.5 million at December 31, 1999. This decrease was the result of
prepayments and maturities.
9
Deposits increased $31.3 million, or 2.8%, to $1.13 billion at September
30, 2000, compared to $1.10 billion at December 31, 1999. The increase in
deposits was primarily the result of a $40.2 million increase in savings
account balances as a result of promotional pricing and a $1.4 million
increase in time deposits. This was partially offset by a $13.0 million
decrease in interest-bearing checking accounts cyclically down from
year-end balances.
Federal Home Loan Bank short-term borrowings decreased $9.0 million, or
10.8%, to $74.0 million at September 30, 2000, compared to $83.0 million
at December 31, 1999. The net decrease in advances was in short term
advances with a duration of one month or less. The decrease in advances
was primarily the result of deposit growth and investment security
reductions, offset by funding requirements for loan growth.
Long-term debt increased $1.3 million, or 2.4%, to $53.3 million at
September 30, 2000, compared to $52.1 million at December 31, 1999. The
increase in long-term debt was due to duration match funding on larger
commercial loans, offset by prepayments and maturities of long-term debt.
Total shareholders' equity increased $7.0 million, or 6.0%, to $124.2
million at September 30, 2000, compared to $117.2 million at December 31,
1999. The increase was the result of the Company's net income of $9.5
million, $655,000 of common stock released by the ESOP, $456,000 of common
stock earned by participants in the Recognition and Retention Plan,
$49,000 of compensation expense recognized on stock option plans and
$321,000 of accumulated other comprehensive income, after taxes. All of
the above were partially offset by treasury stock acquisitions of $879,000
and cash dividends of $3.1 million declared on common stock.
RESULTS OF OPERATIONS
---------------------
The Company reported net income of $3.4 million for the three months ended
September 30, 2000, compared to $2.8 million earned during the three
months ended September 30, 1999, or an increase of 22.9%. The Company's
net interest income increased $1.2 million and noninterest income
decreased $378,000 for the same period. The provision for loan losses
increased by $523,000, noninterest expense decreased $581,000 and income
tax expense increased $285,000 during the three months ended September 30,
2000 compared to the third quarter of 1999.
For the nine months ended September 30, 2000, the Company earned $9.5
million compared to $8.5 million for the same period of 1999, or an
increase of 12.1%. The Company's net interest income increased $1.4
million and noninterest income decreased $307,000 during the nine months
ended September 30, 2000 compared to the first nine months of 1999. The
provision for loan losses increased by $973,000, noninterest expense
decreased $1.3 million and income tax expense increased $346,000 when
comparing the first nine months of 2000 to the same period of 1999.
NET INTEREST INCOME
Net interest income increased $1.2 million, or 10.5%, to $13.1 million for
the three months ended September 30, 2000, compared to $11.9 million for
the three months ended September 30, 1999. The increase was due to a $3.5
million, or 14.9% increase in interest income, which was offset by a $2.2
million, or 19.5% increase in interest expense. The increase in interest
income was the result of a $79.6 million, or 6.4%, increase in the average
balance of earning assets, together with a 61 basis point increase in the
yield earned on earning assets. The increase in interest expense was the
result of a $37.8 million, or 3.4%, increase in the average balance of
interest-bearing liabilities, together with a 60 basis point increase in
the cost thereof. The Company's interest rate spread and net interest
margin amounted to 3.42% and 3.97%, respectively, during the three months
ended September 30, 2000, compared to 3.40% and 3.84%, respectively, for
the comparable period in 1999.
For the nine months ended September 30, 2000, net interest income
increased $1.4 million, or 3.7%, to $38.5 million, compared to $37.1
million for the first nine months of 1999. The increase was due to a $6.7
million, or 9.5% increase in interest income, which was offset by a $5.3
million, or 15.8% increase in interest
10
expense. The increase in interest income was the result of a $48.4
million, or 3.9%, increase in the average balance of earning assets,
together with a 43 basis point increase in the yield earned on earning
assets. The increase in interest expense was the result of a $20.3
million, or 1.8%, increase in the average balance of interest-bearing
liabilities, together with a 55 basis point increase in the cost thereof.
The Company's interest rate spread and net interest margin amounted to
3.40% and 3.95%, respectively, during the nine months ended September 30,
2000, compared to 3.53% and 3.96%, respectively, for the comparable period
in 1999.
Table 1 presents average balance sheets, net interest income and interest
rates for the quarterly and nine-month periods ended September 30, 2000
and 1999.
INTEREST INCOME
The Company's total interest income was $26.8 million for the three months
ended September 30, 2000, compared to $23.4 million for the three months
ended September 30, 1999. The reason for the $3.5 million, or 14.9%,
increase in interest income was a $4.0 million, or 23.8%, increase in
interest income from loans and a $75,000, or 937.5%, increase in interest
on deposits held at other institutions, which was partially offset by a
$603,000, or 9.3%, decrease in interest and dividends on investment
securities. The increase in interest income from loans was the result of a
$131.4 million, or 16.2%, increase in the average balance of loans,
together with a 48 basis point increase in the yield earned thereon. The
decrease in interest income from investment securities was the result of a
$55.8 million, or 13.1%, decrease in the average balance of investment
securities, which was partially offset by a 27 basis point increase in the
yield earned thereon. The increase in interest from deposits at other
institutions was the result of a $4.0 million, or 322.4%, increase in the
average balance of deposits at other institutions, together with a 371
basis point increase in the yield earned thereon.
For the nine months ended September 30, 2000, total interest income was
$77.3 million, compared to $70.6 million for the same period in 1999. The
reason for the $6.7 million, or 9.5%, increase in interest income was a
$8.4 million, or 16.7%, increase in interest income from loans, which was
partially offset by a $956,000, or 5.0%, decrease in interest and
dividends on investment securities and a $772,000, or 78.3%, decrease in
interest on deposits held at other institutions. The increase in interest
income from loans was the result of a $107.6 million, or 13.5%, increase
in the average balance of loans, together with a 23 basis point increase
in the yield on loans. The decrease in interest income from investment
securities was the result of a $33.6 million, or 8.0%, decrease in the
average balance of investment securities, which was partially offset by a
21 basis point increase in the yield on investment securities. The
decrease in interest from deposits at other institutions was the result of
a $25.6 million, or 83.5%, decrease in the average balance of deposits at
other institutions, which was partially offset by a 137 basis point
increase in the yield on deposits at other institutions.
INTEREST EXPENSE
The Company's total interest expense was $13.7 million during the three
months ended September 30, 2000, compared to $11.5 million for the three
months ended September 30, 1999. The reasons for the $2.2 million, or
19.5%, increase in total interest expense were a $934,000, or 64.5%,
increase in interest expense on borrowings due to a $45.4 million, or
48.9%, increase in the average balance of borrowings, together with a 58
basis point increase in the cost of such borrowings and a $1.3 million, or
13.0%, increase in interest expense on deposits due to a 51 basis point
increase in the cost of such deposits, which was partially offset by a
$7.6 million, or 0.7%, decrease in the average balance of interest-bearing
deposits.
For the nine months ended September 30, 2000, the Company's total interest
expense was $38.9 million, compared to $33.6 million for the same period
in 1999. The reasons for the $5.3 million, or 15.8%, increase in total
interest expense were a $3.0 million, or 95.3%, increase in interest
expense on borrowings due to a $55.1 million, or 81.8%, increase in the
average balance of borrowings, together with a 45 basis point increase in
the cost of such borrowings and a $2.4 million, or 7.7%, increase in
interest expense on deposits due to a 45 basis point increase in the cost
of such deposits, which was partially offset by $34.8 million, or 3.3%,
decrease in the average balance of interest-bearing deposits.
11
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.
Three Months Ended September 30,
-----------------------------------------------------------------
2000 1999
------------------------------- -----------------------------
Average Average
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate(1) Balance Interest Rate(1)
- ---------------------------------------------------------------------- ----------------------------
Interest-earning assets:
Loans receivable:
Mortgage loans $298,632 $5,871 7.86 % $281,714 $5,160 7.33 %
Commercial loans 273,109 6,640 9.51 225,189 5,120 8.99
Consumer and other loans 369,965 8,348 8.98 303,440 6,570 8.68
---------- ------ ---------- ------
Total Loans 941,706 20,859 8.78 810,343 16,850 8.30
---------- ------ ---------- ------
Investment securities 368,720 5,898 6.40 424,522 6,501 6.13
Other earning assets 5,242 83 6.30 1,241 8 2.59
---------- ------ ---------- ------
Total earning assets 1,315,668 26,840 8.16 1,236,106 23,359 7.55
------ ------
Nonearning assets 85,920 113,431
---------- ----------
Total assets $1,401,588 $1,349,537
========== ==========
Interest-bearing liabilities:
Deposits:
Demand deposits $245,764 1,442 2.33 $273,547 1,603 2.35
Savings deposits 178,682 1,581 3.52 132,358 687 2.08
Certificates of deposits 582,350 8,291 5.66 608,480 7,721 5.09
---------- ------ ---------- ------
Total deposits 1,006,796 11,314 4.47 1,014,385 10,011 3.96
Borrowings 138,311 2,381 6.74 92,877 1,447 6.16
---------- ------ ---------- ------
Total interest-bearing
liabilities 1,145,107 13,695 4.74 1,107,262 11,458 4.14
------ ------
Noninterest - bearing demand deposits 121,898 112,081
Noninterest - bearing liabilities 11,594 10,831
---------- ----------
Total liabilities 1,278,599 1,230,174
Shareholders' Equity 122,989 119,363
---------- ----------
Total liabilities and
shareholders' equity $1,401,588 $1,349,537
========== ==========
Net earning assets $170,561 $128,844
========== ==========
Net interest spread $13,145 3.42 % $11,901 3.40 %
======== ===== ======= =====
Net interest margin 3.97 % 3.84 %
===== =====
Ratio of average earning
assets to
average interest-bearing
liabilities 114.89% 111.64%
======= =======
- ----------------------------------
(1) Annualized.
12
[TABLE CONTINUED FROM ABOVE]
Nine Months Ended September 30,
--------------------------------------------------------------
2000 1999
--------------------------- ------------------------------
Average Average
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate(1) Balance Interest Rate(1)
- ------------------------------------ --------------------------- ------------------------------
Interest-earning assets:
Loans receivable:
Mortgage loans $287,828 $16,944 7.85 % $297,475 $17,678 7.92 %
Commercial loans 258,224 18,448 9.39 216,536 14,393 8.73
Consumer and other loans 356,352 23,433 8.78 280,768 18,331 8.70
---------- ------- ---------- -------
Total Loans 902,404 58,825 8.66 794,779 50,402 8.43
---------- ------- ---------- -------
Investment securities 383,902 18,299 6.36 417,507 19,255 6.15
Other earning assets 5,050 214 5.66 30,626 986 4.29
---------- ------- ---------- -------
Total earning assets 1,291,356 77,338 7.99 1,242,912 70,643 7.56
------- -------
Nonearning assets 88,355 114,454
---------- ----------
Total assets $1,379,711 $1,357,366
========== ==========
Interest-bearing liabilities:
Deposits:
Demand deposits $249,347 4,324 2.31 $284,633 4,763 2.23
Savings deposits 181,882 4,886 3.59 129,740 1,847 1.90
Certificates of deposits 575,958 23,585 5.47 627,617 23,833 5.06
---------- ------- ---------- -------
Total deposits 1,007,187 32,795 4.35 1,041,990 30,443 3.90
Borrowings 122,488 6,067 6.51 67,379 3,107 6.06
---------- ------- ---------- -------
Total interest-bearing
liabilities 1,129,675 38,862 4.58 1,109,369 33,550 4.03
------ ------
Noninterest - bearing demand deposits 120,149 114,213
Noninterest - bearing liabilities 11,001 11,902
---------- ----------
Total liabilities 1,260,825 1,235,484
Shareholders' Equity 118,886 121,882
---------- ----------
Total liabilities and
shareholders' equity $1,379,711 $1,357,366
========== ==========
Net earning assets $161,681 $133,543
========== ==========
Net interest spread $38,476 3.40 % $37,093 3.53 %
======= ==== ======= ====
Net interest margin 3.95 % 3.96 %
==== ====
Ratio of average earning
assets to
average interest-bearing
liabilities 114.31% 112.04%
======= =======
- ----------------------------------
(1) Annualized.
13
PROVISION FOR LOAN LOSSES
The provision for loan losses was $811,000 for the three months ended
September 30, 2000 as compared to $288,000 for the same period in 1999.
For the nine months ended September 30, 2000 the provision for loan losses
was $1.9 million as compared to $923,000 for the first nine months of
1999. The increased provision reflects growth in loans of $112.7 million,
or 13.5%, over the last twelve months.
Nonperforming assets, consisting of nonaccruing loans, accruing loans more
than 90 days past due and foreclosed property, amounted to $3.6 million,
or 0.26% of total assets at September 30, 2000, compared to $3.3 million,
or 0.24% of total assets at December 31, 1999. As of September 30, 2000,
the ratio of the Company's allowance for loan losses to nonperforming
loans was 278.3%, compared to 279.3% at December 31, 1999.
NONINTEREST INCOME
Noninterest income decreased $378,000, or 10.5%, to $3.2 million for the
three months ended September 30, 2000, compared to $3.6 million for the
three months ended September 30, 1999. The decrease was due primarily to a
$1.8 million loss on the sale of investment securities as a result of the
restructuring of a significant portion of the long-term investment
portfolio, a $476,000, or 83.1%, decrease in gains on the sale of mortgage
loans in the secondary market, and a $38,000, or 5.7%, decrease in other
income, all of which were partially offset by a $5,000, or 0.2%, increase
in service charges on deposit accounts and a $46,000, or 16.3%, increase
in ATM fee income. Also included in noninterest income for the three
months ended September 30, 2000 is a $1.8 million increase in gain on sale
of fixed assets as a result of the sale of an office building in
Lafayette, Louisiana. The proceeds from the sale of the property were
approximately $3.0 million dollars, which resulted in a pre-tax gain of
$2.0 million. IBERIABANK will continue to operate a full service branch at
this location. The sale of the property will not impact customers of
IBERIABANK.
For the nine months ended September 30, 2000, noninterest income decreased
$307,000, or 3.1%, to $9.5 million, compared to $9.8 million for the first
nine months of 1999. Such decrease was due primarily to a $1.8 million
loss on the sale of investment securities as a result of the restructuring
of a significant portion of the long-term investment portfolio and a
$901,000, or 85.3%, decrease in gains on the sale of mortgage loans in the
secondary market, all of which were partially offset by a $235,000, or
4.1%, increase in service charges on deposits accounts, a $179,000, or
22.9%, increase in ATM fee income and a $92,000, or 4.4%, increase in
other income. Included in noninterest income for the nine months ended
September 30, 2000 is the gain on sale of property referenced above.
The increase in other income is attributable to increases in commission
income and other sources of income.
NONINTEREST EXPENSE
Noninterest expense decreased $581,000, or 5.4%, for the three months
ended September 30, 2000, to $10.1 million, compared to $10.7 million for
the three months ended September 30, 1999. Such decrease was due in part
to a $64,000 decrease in the ESOP retirement contribution expense caused
by the decrease in the average fair market value of Company stock.
Reclassification of deposits according to use for reserve purposes later
in 1999 resulted in quarterly savings of FDIC insurance of $51,000.
Additional decreases of $472,000 in salaries and employee benefits,
$27,000 in employee development, $46,000 in printing, stationery and
supplies, $40,000 in occupancy and equipment, $88,000 in marketing and
business development, and $42,000 in miscellaneous other expenses reflects
Management's emphasis on controlling discretionary expenses. These
decreases were offset in part by increases of $24,000 in the cost
associated with other real estate owned, net of gains on sale of property,
$51,000 in professional fees, $140,000 in the cost of computer related
expenses and $34,000 in the share tax assessment.
14
For the nine months ended September 30, 2000, noninterest expense
decreased $1.3 million, or 3.9%, to $30.9 million compared to $32.2
million for the same period in 1999. This decrease was due in part to a
$333,000 reduction in the ESOP retirement contribution expense caused by
the decrease in the average fair market value of Company stock for the
nine-month period as compared to the same period last year.
Reclassification of deposits according to use for reserve purposes later
in 1999 resulted in savings of FDIC insurance of $183,000. Additional
decreases of $911,000 in salaries and employee benefits, $129,000 in
employee development, $109,000 in printing, stationery and supplies,
$8,000 in marketing and business development and $379,000 in miscellaneous
other expenses reflects Management's emphasis on controlling discretionary
expenses. These decreases were offset in part by increases of $9,000 in
the cost associated with other real estate owned, net of gains on sale of
property, $23,000 in occupancy and equipment, $256,000 in professional
fees, $317,000 in the cost of computer related expenses and $177,000 in
the share tax assessment.
INCOME TAX EXPENSE
Income tax expense increased $285,000, or 16.3%, for the three months
ended September 30, 2000 to $2.0 million, compared to $1.8 million for the
three months ended September 30, 1999. The increase in income tax expense
was due primarily to the increase in income before income taxes.
For the nine months ended September 30, 2000, income tax expense increased
$346,000, or 6.5%, to $5.6 million, compared to $5.3 million for the same
period in 1999. The increase in income tax expense was due primarily to
the increase in income before income taxes.
The effective tax rate for the quarters ended September 30, 2000 and 1999
was 37.3% and 38.6%, respectively. The effective tax rate for the nine
month periods as of the same dates was 37.3 % and 38.5%, respectively.
15
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 Bank has been
able to generate sufficient cash through its deposits as well as
borrowings. At September 30, 2000, the Company had $127.3 million in
outstanding advances from the FHLB of Dallas and $5.5 million in
outstanding debt from Union Planters Bank, N.A.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term
investments such as over night 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 September 30, 2000, the total
approved loan commitments outstanding amounted to $31.1 million. At the
same time, commitments under unused lines of credit, including credit card
lines, amounted to $144.6 million. Certificates of deposit scheduled to
mature in twelve months or less at September 30, 2000 totaled $355.8
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 September 30, 2000, the Company and its subsidiary had regulatory
capital which was in excess of regulatory requirements. The current
requirements and the Company's actual levels as of September 30, 2000 are
detailed below (dollars in thousands):
Required Capital Actual Capital
-------------------- ------------------
Amount Percent Amount Percent
------ ------- ------ -------
Tier 1 Leverage $54,479 4.00% $91,350 6.71%
Tier 1 Risk-Based $36,496 4.00% $91,350 10.01%
Total Risk-Based $72,992 8.00% $100,976 11.07%
16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosures about market risk are presented
at December 31, 1999 in Item 7A of the Company's Annual Report on Form
10-K, filed with the Securities and Exchange Commission on March 31, 2000.
Management believes there have been no material changes in the Company's
market risk since December 31, 1999.
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
---------------------------------------------------
Not Applicable
Item 5. Other Information
-----------------
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
---------------------------------
Exhibit 27 - Financial Data Schedule (SEC Use Only)
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: November 13, 2000 By: /s/ Daryl G. Byrd
------------------- -------------------------------
Daryl G. Byrd
President
Date: November 13, 2000 By: /s/ Marilyn W. Burch
------------------- -------------------------------
Marilyn W. Burch
Senior Vice President and Controller
19