-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M1foFy2aVEmLu5is/Z/mYz09vyaRC244jUuEc/8J7nlmgUdyAOqaSZM7+bxamxSK w3/DlQ99/TSHlkWLq+uURA== 0000899243-02-003057.txt : 20021127 0000899243-02-003057.hdr.sgml : 20021127 20021127141313 ACCESSION NUMBER: 0000899243-02-003057 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20021127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IBERIABANK CORP CENTRAL INDEX KEY: 0000933141 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 721280718 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-101529 FILM NUMBER: 02843168 BUSINESS ADDRESS: STREET 1: 1101 E ADMIRAL DOYLE DR CITY: NEW IBERIA STATE: LA ZIP: 70560 BUSINESS PHONE: 3183652361 MAIL ADDRESS: STREET 1: 1101 EAST ADMIRAL DOYLE DR CITY: NEW IBERIA STATE: LA ZIP: 70560 FORMER COMPANY: FORMER CONFORMED NAME: ISB FINANCIAL CORP/LA DATE OF NAME CHANGE: 19941123 S-4 1 ds4.txt FORM S-4 As filed with the Securities and Exchange Commission on November 27, 2002 Registration No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------- IBERIABANK Corporation (Exact name of registrant as specified in its charter) Louisiana 6711 72-1280718 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or organization) Classification Code Number) Identification Number)
1101 East Admiral Doyle Drive New Iberia, Louisiana 70560 (337) 365-2361 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Copy to: DARYL G. BYRD Copy to: ANTHONY J. CORRERO, III 1101 East Admiral Doyle Drive RAYMOND A. TIERNAN Correro Fishman Haygood Phelps New Iberia, Louisiana 70560 Elias, Matz, Tiernan & Herrick, L.L.P. Walmsley & Casteix, L.L.P. (337) 521-4003 735 15th Street, N.W. 46th Floor, 201 St. Charles Avenue (Name, address, including zip code, 12th Floor New Orleans, Louisiana 70170-4600 and telephone number, including Washington, D.C. 20005 area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon the date of the shareholders' meeting of Acadiana Bancshares, Inc. described in this registration statement. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] CALCULATION OF REGISTRATION FEE - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------- Proposed Proposed Amount Maximum Maximum Title of each Class of To Be Offering Price Aggregate Amount of Securities to be registered Registered Per Share(1) Offering Price(1) Registration Fee - ---------------------------------------------------------------------------------------- Common Stock........ 1,152,528 $38.00 $36,783,786 $3,384.11 - ----------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- (1) Calculated pursuant to Rule 457(f)(1) and (3) on the basis of the market value of the shares to be acquired less the cash price to be paid by registrant. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ ACADIANA BANCSHARES, INC. 200 West Congress Street Lafayette, LA 70501 , 2002 Dear Shareholder: We are having a special meeting of our shareholders on , 2002 at :00 a.m., local time, at , Lafayette, Louisiana. The official notice of the meeting is on the following page. At the meeting we will ask you to approve an agreement that will result in the merger of our company into a wholly owned subsidiary of IBERIABANK Corporation, whose stock trades on the NASDAQ Stock Market under the symbol IBKC. Our subsidiary, LBA Savings Bank, will also merge into IBERIABANK, a wholly owned subsidiary of IBKC. If the merger takes place, each outstanding share of common stock of Acadiana will be converted into a combination of $7.88 cash and $31.50 in IBKC common stock based on the average closing price during a specified measurement period, except that the number of shares of IBKC common stock you receive for each of your shares of your company will not be less than .6848 shares and not more than .9265 shares of IBKC common stock, subject to possible adjustments. Your board of directors approved the agreement and believes it is in the best interests of shareholders. As a result of the proposed merger, you, as a new shareholder of IBKC, will own common stock in a bank holding company whose stock is publicly traded on the NASDAQ Stock Market. The board of directors recommends that you vote for the agreement and urges you to execute the enclosed proxy and return it promptly in the accompanying envelope. Very truly yours, [SIGNATURE OF GERALD G. REAUX, JR. APPEARS HERE] ______________________________________ Chairman of the Board, President and Chief Executive Officer ACADIANA BANCSHARES, INC. 200 WEST CONGRESS STREET LAFAYETTE, LOUISIANA 70501 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS Lafayette, Louisiana , 2002 A special meeting of shareholders of Acadiana Bancshares, Inc. will be held on , 2002 at 9:00 a.m., local time, at , Lafayette, Louisiana, to vote upon the following matters: 1. A proposal to approve an Agreement and Plan of Merger pursuant to which, among other things, Acadiana will merge into IBERIABANK Acquisition Corporation, a wholly owned subsidiary of IBERIABANK Corporation, and on the effective date of the merger each outstanding share of common stock of Acadiana will be converted into the right to receive $7.88 in cash and $31.50 in IBKC common stock based on the average closing price during a specified measurement period, but not less than .6848 nor more than .9265 shares of IBKC common stock, subject to adjustment as determined in accordance with the terms of the Plan; 2. A proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the merger agreement; and 3. Such other matters as may properly come before the meeting or any adjournments thereof. Only shareholders of record at the close of business on , 2002, are entitled to notice of and to vote at the meeting. Dissenting shareholders who comply with the procedural requirements of the Business Corporation Law of Louisiana will be entitled to receive payment of the fair cash value of their shares if the Plan is effected upon approval by less than eighty percent of the total voting power of Acadiana. Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the meeting, please mark, date and sign the enclosed proxy and return it promptly in the enclosed stamped envelope. Your proxy may be revoked by appropriate notice to Acadiana's Secretary at any time prior to the voting thereof. By Order of the Board of Directors [SIGNATURE OF GERALD G. REAUX, JR. APPEARS HERE] ______________________________________ Gerald G. Reaux, Jr., Chairman of the Board, President and Chief Executive Officer No person has been authorized to give any information or to make any representations other than those contained here. All information concerning IBKC has been furnished by IBKC and all information herein concerning Acadiana has been furnished by Acadiana. IBKC has represented and warranted to Acadiana, and Acadiana has represented and warranted to IBKC, that the particular information each has provided is true and complete. ACADIANA BANCSHARES, INC. PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD , 2002 IBERIABANK CORPORATION PROSPECTUS COMMON STOCK IBERIABANK Corporation is registering up to 1,152,528 shares of its common stock which may be issued in connection with a proposed merger of Acadiana Bancshares, Inc. into IBERIABANK Acquisition Corporation, a wholly owned subsidiary of IBKC. This document is both a proxy statement of Acadiana in connection with the transactions and a prospectus of IBKC with respect to the shares of IBKC common stock to be issued if the merger is consummated. On the date of the merger, each outstanding share of common stock of Acadiana will be converted into the right to receive $7.88 cash and $31.50 in IBKC common stock based on the average closing price during a specified investment period, but not less than .6848 nor more than .9265 shares of IBKC common stock, subject to adjustment as described in this document. IBKC common stock is listed on the NASDAQ Stock Market under trading symbol IBKC. On , 2002, the closing sales price of a share of IBKC common stock on the NASDAQ Stock Market was $ and, based on that price, and assuming none of the possible adjustments applies, you would receive shares of IBKC common stock and $7.88 cash for each of your shares of Acadiana. There can be no assurance as to the market value of IBKC common stock on the date the proposed merger is consummated. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OF IBKC OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This proxy statement and prospectus was first mailed to shareholders of Acadiana on approximately , 2002. THIS PROXY STATEMENT AND PROSPECTUS IS DATED , 2002. TABLE OF CONTENTS
Page ---- SUMMARY............................................................... 1 INTRODUCTORY STATEMENT................................................ 8 General............................................................ 8 Purpose of the Meeting............................................. 8 Shares Entitled to Vote; Quorum; Vote Required..................... 8 Solicitation, Voting and Revocation of Proxies..................... 9 THE PLAN.............................................................. 9 Background of and Reasons for the Plan............................. 9 Opinion of Acadiana's Financial Advisor............................ 11 Conversion of Acadiana Common Stock................................ 19 Effective Date..................................................... 20 Procedure for Exchanging Certificates.............................. 20 Treatment of Acadiana Stock Options................................ 20 Conditions to the Merger........................................... 20 Conduct of Business Prior to the Effective Date.................... 22 Waiver, Amendment and Termination.................................. 23 Interests of Certain Persons....................................... 24 Indemnification and Insurance.................................. 24 Consulting Agreement........................................... 24 Severance Payments............................................. 25 Stock Options.................................................. 25 Directors' and Officers' Commitments........................... 25 Employee Benefits.............................................. 25 Expenses........................................................... 25 Status Under Federal Securities Laws; Restrictions on Resales...... 26 THE STOCK OPTION AGREEMENT............................................ 26 FEDERAL INCOME TAX CONSEQUENCES....................................... 27 DISSENTERS' RIGHTS.................................................... 28 INFORMATION ABOUT ACADIANA............................................ 29 INFORMATION ABOUT IBKC................................................ 30 ADJOURNMENT OF THE SPECIAL MEETING.................................... 30 LEGAL MATTERS......................................................... 30 EXPERTS............................................................... 30 OTHER MATTERS......................................................... 31 WHERE YOU CAN FIND MORE INFORMATION................................... 31 SHAREHOLDER PROPOSALS FOR THE ACADIANA 2003 ANNUAL MEETING............ 32 IBERIABANK CORPORATION AND ACADIANA BANCSHARES, INC. PRO FORMA COMBINED FINANCIAL INFORMATION...................................... F-1 Appendix A--Fairness Opinion of Triangle Capital Partners, LLC........ A-1
SUMMARY This summary highlights selected information from this document and may not contain all of the information that is important to you. To understand the merger fully and for a more complete description of the legal terms of the merger, you should read carefully this entire document, including the merger agreement and the other documents to which we have referred you. See "Where You Can Find More Information" beginning on page 31. Page references are included in this summary to direct you to a more complete description of the topics. Throughout this document, "Acadiana," "we" and "our" refers to Acadiana Bancshares, Inc., "LBA Savings Bank" refers to our banking subsidiary, LBA Savings Bank, "IBKC" refers to IBERIABANK Corporation and "IBERIABANK" refers to IBERIABANK, IBKC's banking subsidiary. Also, we refer to the merger between Acadiana and IBKC as the "merger," the merger between LBA Savings Bank and IBERIABANK as the "bank merger" and the Agreement and Plan of Merger, dated as of September 22, 2002, between Acadiana and IBKC as the "Plan." The Companies IBKC, a Louisiana corporation, is a bank holding company that owns all of the outstanding stock of IBERIABANK. IBKC's principal executive offices are at 1101 East Admiral Doyle Drive, New Iberia, Louisiana 70560, and its telephone number is (337) 365-2361. Acadiana, a Louisiana corporation, is a bank holding company that owns all of the outstanding stock of LBA Savings Bank. Acadiana's principal executive offices are at 200 West Congress Street, Lafayette, Louisiana 70501, and its telephone number is (337) 232-4631. For where you can find more information about IBKC and Acadiana, please see "Where You Can Find More Information" beginning on page 31. The Meeting Date; Voting. A special meeting of shareholders of Acadiana will be held on , 2002 as described in the accompanying Notice of Special Meeting of Shareholders. Only record holders of the common stock of Acadiana on , 2002 are entitled to notice of and to vote at the meeting. On that date there were shares of Acadiana common stock outstanding, each of which is entitled to one vote on each matter properly to come before the meeting. Purpose (page 8) The purpose of the meeting is to vote upon a proposal to approve an Agreement and Plan of Merger that will merge Acadiana into a wholly owned subsidiary of IBKC. Shareholders of Acadiana will receive $7.88 cash and $31.50 in IBKC common stock, subject to adjustment, as described below under "Conversion of Acadiana common stock." Vote Required. The Plan must be approved by a two-thirds vote of the Acadiana common stock present at the Meeting. Directors and executive officers of Acadiana who own an aggregate of 460,202 shares, or approximately 33%, of the outstanding Acadiana common stock have agreed, subject to certain conditions, to vote in favor of the Plan. The Plan (page 9) Board Recommendation. The financial and other terms of the Plan were arrived at through arm's length negotiations between representatives of the companies. The board of directors of Acadiana believes that the Plan is in the best interests of shareholders and has, by unanimous vote, approved it and recommended its approval to shareholders. 1 Opinion of Acadiana's Financial Advisor (page 11) Triangle Capital Partners, LLC (referred to as "Triangle"), financial advisor to Acadiana, has delivered its written opinion to the Board of Directors of Acadiana that, as of September 22, 2002, the date the Plan was entered into, and as of , 2002, the date of this proxy statement and prospectus, based on and subject to the various assumptions made, the factors considered, the review undertaken and the limitations stated in the opinion, the merger consideration, consisting of $7.88 per share in cash and IBKC common stock in the exchange ratio ranging from .6848 to .9265 (subject to adjustment) for Acadiana common stock, was fair to the holders of Acadiana common stock from a financial point of view. Triangle's opinion and presentation to the Acadiana Board of Directors were among the many factors taken into consideration by the Acadiana Board in making its determination to approve and to recommend that Acadiana shareholders approve the merger. Triangle's written opinion to the Acadiana Board is attached as Appendix A to this proxy statement and prospectus. The opinion sets forth assumptions, limitations and matters considered in the review undertaken in connection with the opinion. The opinion does not constitute a recommendation by Triangle to you as to whether or not you should vote in favor of the merger or as to any other matter relating to the merger. You should read the opinion, which is attached as Appendix A, carefully and in its entirety. Conversion of Acadiana Common Stock (page 19) On the date the Plan becomes effective, each outstanding share of Acadiana common stock will be converted into the right to receive $7.88 cash and $31.50 of IBKC common stock determined on the average closing price of IBKC during the first 10 trading days of the month in which the merger is completed, but not less than .6848 and not more than .9265 shares of IBKC common stock, subject to adjustment. Assuming none of the adjustments applies, the number of shares of IBKC you will receive in exchange for your shares of Acadiana common stock will be based on the average closing price of IBKC common stock over a ten day trading period shortly before the closing of the merger as follows:
If the average closing price is: Then the exchange ratio will be: -------------------------------- ------------------------------------------- $46.00 or more 0.6848 Less than $46.00 but more than $34.00 $31.50 divided by the average closing price $34.00 or less 0.9265
On , 2002, IBKC common stock closed at $ . If this were the average closing price of IBKC common stock during the measurement period, then, you would receive shares of IBKC common stock ($31.50 divided by $ ) plus $7.88 in cash for each share of Acadiana common stock. The amount of cash and/or stock that you receive may be adjusted in two situations: First, the total amount of shares of IBKC issued to Acadiana shareholders in the merger cannot exceed 19.9% of the outstanding shares of IBKC immediately before the merger. Rather than exceed the 19.9% threshold, the number of shares of IBKC which would be issued under the exchange ratio will be reduced and the $7.88 per share cash consideration will be increased proportionately. Second, if Acadiana's legal fees in connection with the merger exceed $180,000, the total amount of cash will be reduced by the excess. If the average closing price is less than $30.00, Acadiana has the right to terminate the Plan unless IBKC elects to increase the amount of cash to be issued to Acadiana shareholders in the merger. Instead of issuing any fractional share of IBKC common stock, each shareholder of Acadiana who would otherwise be entitled to a fractional share will receive a cash payment (without interest) equal to the fraction multiplied by the market value of a share of IBKC common stock, as defined in the Plan. 2 Procedure for Exchanging Certificates (page 20) Promptly after completion of the merger, a letter of transmittal, together with instructions for the exchange of Acadiana common stock certificates for IBKC common stock certificates and cash will be mailed to each shareholder of record of Acadiana on the effective date of the merger. You should not send in your stock certificates until you have received the letter of transmittal. IBKC common stock certificates and the cash payment will be sent as promptly as practicable after receipt of a properly completed letter of transmittal accompanied by the appropriate Acadiana common stock certificates. Conditions to the Merger (page 20) In addition to approval by the shareholders of the companies, consummation of the Plan is conditioned upon, among other things: (i) receipt of required regulatory approvals, and the expiration of all applicable waiting periods, (ii) receipt by the companies of an opinion as to the tax implications of the Merger, and (iii) certain other conditions customary for agreements of this sort, such as the accuracy of representations and warranties and the compliance with all agreements. The companies intend to consummate the Plan as soon as practicable after all of the conditions have been met or waived. IBKC has filed an application seeking the required regulatory approval and expects to receive it by February 7, 2003. The approval may not be obtained, by then or ever, and the other conditions to consummation of the Plan also may not be satisfied by such date or at all. Waiver, Amendment and Termination (page 23) Each of the companies may waive any of the conditions to its obligation to consummate the Plan other than shareholder and regulatory approvals. The Plan may also be amended at any time before or after shareholder approval by mutual agreement, but no amendment made after shareholder approval may alter the amount or type of shares into which Acadiana common stock will be converted or alter the Plan in a manner that would adversely affect any shareholder of Acadiana. The Plan may be terminated at any time before the merger is completed by mutual consent, or by either party: (i) if the other party breaches any representation, warranty or covenant in the Plan which cannot be cured within 30 days after written notice of such breach; (ii) by March 31, 2003 if the merger has not occurred, although that date may be extended to June 30, 2003, under certain circumstances; (iii) if any person or group acquires more than 25% of the outstanding shares of common stock of the other party; (iv) upon the occurrence of an event that causes or is likely to cause a material adverse effect (as defined in the Plan) to either party; or (v) on the basis of certain other grounds specified in the Plan. Interests of Certain Persons in the Merger (page 24) Indemnification and Insurance (page 24) IBKC has agreed to allow Acadiana to purchase a continuation of its current officers and directors liability insurance for premiums not to exceed $50,000, and for a period no longer than 3 years. IBKC has also agreed to indemnify Acadiana's and LBA Savings Bank's officers, directors 3 and controlling persons against expenses and liabilities arising out of alleged misstatements or omissions in this document or the registration statement of which it is a part. Management Contracts (page 24) On the effective date, Gerald G. Reaux, Jr., President and Chief Executive Officer and a director of Acadiana and LBA Savings Bank, will become a consultant to IBKC. Also, IBKC has agreed to perform the obligations of Acadiana under the employment and severance contracts of seven employees. Stock Options (page 25) All of the unexercised options to purchase its common stock that are outstanding on the effective date of the merger will be cancelled. As consideration, option holders will receive a cash payment equal to the amount the option holder would have received in the merger, less the exercise price. Directors' and Executive Officers' Commitments (page 25) Each director and executive officer of Acadiana has agreed, among other things, to vote as a shareholder in favor of the Plan and against any other proposal that would prevent the Merger. Employee Benefits (page 25) Subject to certain limitations, IBKC will provide employees of Acadiana or LBA Savings Bank who become employees of IBKC or remain employees of LBA Savings Bank the same employee benefits as are provided by IBKC to its employees. IBKC has also agreed to provide certain additional benefits under plans of Acadiana and LBA Savings Bank. The Stock Option Agreement (page 26) In connection with the Plan, Acadiana granted IBERIABANK Corporation an option to purchase new issued shares of Acadiana common stock up to 4.9% of its currently outstanding common stock at an exercise price of $23.76 per share. IBERIABANK Corporation can exercise the option only if specific events take place. These events generally relate to a competing transaction involving a merger, business combination or other acquisition of Acadiana or its stock or assets. As of the date of this document, neither IBERIABANK Corporation nor Acadiana is aware of any such event. The stock option agreement is intended to increase the likelihood that the merger will occur and may have the effect of discouraging other companies that might be interested in acquiring Acadiana. Federal Income Tax Consequences (page 27) Completion of the Plan is conditioned upon receipt by the companies of an opinion from Castaing, Hussey & Lolan, LLC, to the effect that, among other things, each Acadiana shareholder will not recognize gain or loss for the merger consideration received except with respect to the receipt of cash. BECAUSE OF THE COMPLEXITY OF THE TAX LAWS, EACH SHAREHOLDER SHOULD CONSULT HIS TAX ADVISOR CONCERNING THE APPLICABLE FEDERAL, STATE AND LOCAL INCOME TAX CONSEQUENCES OF THE MERGER. Dissenters' Rights (page 28) Under certain conditions, and by complying with the specific procedures required by statute, shareholders of Acadiana will have the right to dissent from the Plan. If the Plan is consummated, any dissenters may be entitled to receive in cash the fair value of their shares of Acadiana common stock. Selected Financial Data of Acadiana Selected financial data with respect to each of the years in the five-year period ended December 31, 2001 is set forth below and should be read in conjunction with Acadiana's 2001 Annual Report to Stockholders and Acadiana's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002. 4 Selected Historical Financial Data of Acadiana Bancshares, Inc.
Nine Months Ended September 30, ---------------------- 2002 2001 ---------- ---------- (Unaudited) Selected Operating Data: Total interest and dividend income............. $ 14,609 $ 17,466 Total interest expense......................... 7,653 10,534 Net interest income............................ 6,956 6,932 Provision (credit) for loan losses............. -- (173) Net interest income after loan loss provision.. 6,956 7,105 Total noninterest income excluding trading account gains (losses)........................ 1,610 1,277 Trading account gains (losses)................. -- 32 Total noninterest expense...................... 6,157 5,744 Income tax expense............................. 842 968 Net income..................................... 1,567 1,702 Per Share Data: Earnings per share--basic...................... $ 1.49 $ 1.53 Earnings per share--diluted.................... 1.38 1.45 Dividends declared per share................... 0.45 0.45 Other Information: Average number of shares outstanding: basic......................................... 1,053,208 1,113,232 diluted....................................... 1,139,248 1,173,048 At September 30, ---------------------- 2002 2001 ---------- ---------- (Unaudited) Selected Financial Condition Data: Total assets................................... $ 308,906 $ 314,647 Investment securities.......................... 54,363 29,898 Loans receivable, net.......................... 207,027 247,587 Deposits....................................... 208,419 214,108 Borrowings..................................... 69,816 72,101 Stockholders' equity........................... 28,825 26,299 Book value per share........................... $ 24.42 $ 22.22 Nine Months Ended September 30, ---------------------- 2002 2001 ---------- ---------- (Unaudited) Performance Ratios: Return on average assets(1).................... 0.67 % 0.71 % Return on average stockholders' equity(1)...... 7.60 8.18 Net interest margin............................ 3.16 3.00 Efficiency ratio............................... 71.88 69.70 Dividend payout ratio.......................... 30.76 29.73 Asset Quality Ratios: Net charge-offs (recoveries) to average loans, net(1)........................................ 0.19 % 0.02 % Non-performing assets to total assets.......... 0.01 0.29 Allowance for loan losses to total loans....... 1.10 0.99 Allowance for loan losses to non-performing loans and troubled debt restructuring......... 289.24 229.03 Liquidity and Capital Ratios: Average stockholders' equity to average assets........................................ 8.87 % 8.65 % Average loans to average deposits.............. 104.90 116.80 Tier 1 risk-based capital...................... 15.39 13.80 Total risk-based capital....................... 16.62 15.00 Tier 1 leverage................................ 9.09 8.40
Year Ended December 31, ------------------------------------------------------------- 2001 2000 1999 1998 1997 ---------- ---------- ---------- ----------- ---------- (In thousands except per share data and ratios) Selected Operating Data: Total interest and dividend income............. $ 22,968 $ 24,101 $ 21,407 $ 21,553 $ 20,464 Total interest expense......................... 13,476 14,896 12,195 11,935 10,860 Net interest income............................ 9,492 9,205 9,212 9,618 9,604 Provision (credit) for loan losses............. 20 (83) -- 90 180 Net interest income after loan loss provision.. 9,472 9,288 9,212 9,528 9,424 Total noninterest income excluding trading account gains (losses)........................ 1,816 1,163 1,002 1,170 896 Trading account gains (losses)................. 32 25 (8) (111) 137 Total noninterest expense...................... 7,685 7,045 6,771 6,655 5,878 Income tax expense............................. 1,317 1,207 1,229 1,427 1,632 Net income..................................... 2,318 2,224 2,206 2,505 2,947 Per Share Data: Earnings per share--basic...................... $ 2.12 $ 1.80 $ 1.60 $ 1.20 $ 1.22 Earnings per share--diluted.................... 2.00 1.78 1.55 1.17 1.20 Dividends declared per share................... 0.60 0.60 0.52 0.44 0.38 Other Information: Average number of shares outstanding: basic......................................... 1,094,846 1,235,521 1,377,635 2,088,775 2,408,779 diluted....................................... 1,158,207 1,247,602 1,422,555 2,149,224 2,463,026 At December 31, ------------------------------------------------------------- 2001 2000 1999 1998 1997 ---------- ---------- ---------- ----------- ---------- (In thousands except per share data) Selected Financial Condition Data: Total assets................................... $ 315,505 $ 324,467 $ 305,696 $ 282,089 $ 277,066 Investment securities.......................... 51,701 35,912 37,981 38,764 41,696 Loans receivable, net.......................... 229,891 264,805 244,996 225,752 212,840 Deposits....................................... 215,569 224,531 213,212 201,654 195,043 Borrowings..................................... 71,729 69,756 63,850 47,228 36,628 Stockholders' equity........................... 26,812 28,782 27,750 32,174 44,562 Book value per share........................... $ 22.65 $ 20.52 $ 18.57 $ 17.67 $ 17.26 Year Ended December 31, ------------------------------------------------------------- 2001 2000 1999 1998 1997 ---------- ---------- ---------- ----------- ---------- (In thousands except per share data and ratios) Performance Ratios: Return on average assets(1).................... 0.73 % 0.70 % 0.76 % 0.87 % 1.10 % Return on average stockholders' equity(1)...... 8.58 7.99 7.57 6.05 6.38 Net interest margin............................ 3.11 3.00 3.28 3.41 3.66 Efficiency ratio............................... 67.77 67.79 66.34 62.33 55.26 Dividend payout ratio.......................... 28.73 34.40 33.27 37.05 31.76 Asset Quality Ratios: Net charge-offs (recoveries) to average loans, net(1)........................................ 0.01 % (0.02)% (0.01)% 0.06 % 0.01 % Non-performing assets to total assets.......... 0.21 0.07 0.03 0.07 0.22 Allowance for loan losses to total loans....... 1.15 1.01 1.08 1.16 1.25 Allowance for loan losses to non-performing loans and troubled debt restructuring......... 586.58 441.30 496.75 396.80 297.09 Liquidity and Capital Ratios: Average stockholders' equity to average assets........................................ 8.50 % 8.76 % 10.03 % 14.35 % 17.23 % Average loans to average deposits.............. 116.66 118.46 110.68 109.86 102.51 Tier 1 risk-based capital...................... 14.50 15.30 16.30 19.60 30.10 Total risk-based capital....................... 15.80 16.60 17.50 20.90 31.40 Tier 1 leverage................................ 8.40 8.80 9.20 11.30 16.00
- -------- (1) All ratios are annualized where appropriate. 5 Selected Financial Data of IBKC Selected financial data with respect to each of the years in the five-year period ended December 31, 2001 is set forth below and should be read in conjunction with IBKC's 2001 Report on Form 10-K and IBKC's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002. Selected Historical Financial Data of IBERIABANK CORPORATION
Nine Months Ended September 30, Year Ended December 31, ---------------------- -------------------------------------------------------- 2002 2001 2001 2000 1999 1998 1997 ---------- ---------- ---------- ---------- ---------- ---------- -------- (In thousands, except share data) - --------------------------------- (unaudited) Income Statement Data: Total interest income....................... $ 65,910 $ 76,808 $ 100,368 $ 103,966 $ 95,029 $ 79,224 $ 69,607 Total interest expense...................... 21,511 36,970 46,018 52,730 45,380 38,458 36,050 Net interest income......................... 44,399 39,838 54,350 51,236 49,649 40,766 33,557 Provision for loan losses................... 4,498 2,698 5,046 3,861 2,836 903 1,097 Net interest income after loan loss provision.................................. 39,901 37,140 49,304 47,375 46,813 39,863 32,460 Total noninterest income excluding security gains (losses)............................. 13,303 10,547 15,025 14,577 13,735 10,211 5,398 Security gains (losses)..................... (41) 118 119 (1,759) -- 3 266 Total noninterest expense................... 32,815 30,780 41,711 39,704 44,881 33,758 29,001 Income tax expense.......................... 6,612 6,283 8,229 7,514 6,138 6,182 3,780 Net income.................................. 13,736 10,742 14,508 12,975 9,529 10,137 5,343 Per Share Data: Net income.................................. 2.23 1.74 2.36 2.12 1.53 1.56 0.83 Cash dividends.............................. 0.56 0.52 0.70 0.66 0.63 0.57 0.45 Book value.................................. 24.71 22.74 23.03 20.99 18.62 18.91 17.75 Other Information: Average shares outstanding, diluted......... 6,161 6,184 6,143 6,114 6,241 6,503 6,459 Statement of Condition Data (Period End): Total assets................................ $1,460,047 $1,481,507 $1,426,825 $1,396,162 $1,363,578 $1,401,630 $947,282 Securities.................................. 317,088 317,921 321,907 344,545 384,881 377,556 192,442 Loans, net of unearned income............... 1,003,103 959,251 956,015 940,525 842,878 768,235 660,063 Total deposits.............................. 1,212,509 1,234,587 1,237,394 1,143,187 1,100,014 1,220,594 786,864 Long-term debt.............................. 37,919 46,684 31,437 60,843 52,053 45,639 46,728 Stockholders' equity........................ 143,031 135,394 134,417 127,042 117,189 123,967 115,564 Performance Ratios: Return on average assets(1)................. 1.27 % 1.02% 1.02% 0.94 % 0.70% 0.93 % 0.57% Return on average stockholders' equity(1)... 13.07 10.77 10.83 10.75 7.84 8.47 4.66 Net interest margin(TE)..................... 4.53 4.03 4.11 3.95 3.96 4.03 3.63 Efficiency(2)............................... 56.91 60.95 60.02 61.99 70.81 66.22 73.94 Dividend payout............................. 23.73 29.08 28.71 31.42 41.88 36.56 54.41 Asset Quality Ratios: Net charge-offs to average loans, net of unearned income(1)......................... 0.43 % 0.41% 0.44% 0.26 % 0.15% 0.06 % 0.07% Problem assets to net loans and other real estate(3)............................. 0.64 1.06 1.17 0.63 0.25 0.20 0.40 Nonperforming assets to net loans and other real estate(4)............................. 0.78 1.21 1.35 0.85 0.39 0.80 0.40 Allowance for loan losses to loans, net of unearned income............................ 1.25 1.05 1.16 1.09 1.04 0.93 0.80 Allowance for loan losses to nonperforming assets(4).................................. 159.73 86.45 85.76 128.60 263.68 116.57 200.46 Liquidity and Capital Ratios: Average stockholders' equity to average assets..................................... 9.73 % 9.46% 9.44% 8.72 % 8.95% 11.02 % 12.14% Average loans to average deposits........... 78.75 78.35 78.24 80.67 69.19 79.67 80.59 Tier 1 risk-based capital(5)................ 10.33 9.83 9.96 10.05 9.42 9.89 18.52 Total risk-based capital(5)................. 11.55 10.85 11.09 11.19 10.43 10.80 19.50 Tier 1 leverage(5).......................... 7.53 6.92 6.95 6.67 6.26 5.81 10.54
- -------- (1) Interim period ratios are annualized. (2) Noninterest expense divided by the sum of net interest income and noninterest income. (3) Problem assets include loans on a nonaccrual basis, restructured loans and foreclosed properties. (4) Nonperforming assets include loans on a nonaccrual basis, restructured loans, loans 90 days or more past due and foreclosed properties. (5) The required minimum Tier 1 and total capital ratios are 4% and 8%, respectively. The minimum leverage ratio of Tier 1 capital to total assets is 3% to 5%. 6 Comparative Per Share Data (Unaudited) The following table presents certain information for IBKC and Acadiana as of September 30, 2002 on an historical, unaudited pro forma combined and unaudited pro forma equivalent basis. The unaudited pro forma combined information is based upon the historical financial condition and results of operations of the companies and adjustments directly attributable to the Plan based on estimates derived from information currently available. They do not purport to be indicative of the results that would actually have been obtained if the Plan had been consummated on the date or for the periods indicated below, or the results that may be obtained in the future. COMPARATIVE PER SHARE DATA (unaudited)
Nine Months Ended September 30, 2002 Year Ended December 31, 2001 ------------------------------------ --------------------------------- Historical Historical ------------------------ ---------------------- IBERIABANK Acadiana Pro IBERIABANK Acadiana Pro Corporation Bancshares Forma Corporation Bancshares Forma ----------- ---------- ---------- ----------- ---------- ---------- (In thousands, except per share data) - ------------------------------------- Summary of Income Net interest income........... $ 44,399 $ 6,956 $ 52,544 $ 54,350 $ 9,492 $ 65,400 Provision for loan losses...... 4,498 -- 4,498 5,046 20 5,066 Noninterest income............ 13,262 1,610 14,872 15,144 1,848 16,992 Noninterest expense........... 32,815 6,157 39,699 41,711 7,685 50,362 Net income.................... 13,736 1,567 15,603 14,508 2,318 17,211 Per Common Share Basic......................... $ 2.41 $ 1.49 $ 2.33 $ 2.48 $ 2.12 $ 2.66 Diluted....................... 2.23 1.38 2.18 $ 2.36 $ 2.00 $ 2.41 Average Shares Outstanding Basic......................... 5,707,570 1,053,208 6,695,799 5,843,861 1,094,846 6,832,090 Diluted....................... 6,160,767 1,139,248 7,148,996 6,142,958 1,158,207 7,131,187
Recent Market Prices On September 20, 2002, the first business day before the public announcement that the companies entered into the Plan, the closing sales price for a share of IBKC common stock, as quoted on the NASDAQ Stock Market, was $ 38.40. On , 2002, the closing sales price for a share of IBKC common stock was $ , and, based on that price, you would receive for each of your shares of Acadiana $7.88 in cash and shares of IBKC common stock. No assurance can be given as to the sales price of a share of IBKC common stock on the effective date of the merger. On September 20, 2002, the first business day before the public announcement that the companies entered into the Plan, the closing sales price for a share of Acadiana common stock, as quoted on the American Stock Exchange, was $ 23.76. On , 2002, the closing sales price for a share of Acadiana common stock was $ . 7 INTRODUCTORY STATEMENT General This proxy statement and prospectus is furnished to the shareholders of Acadiana Bancshares, Inc. in connection with the solicitation of proxies on behalf of Acadiana's board of directors for use at a special meeting of shareholders of Acadiana to be held on the date and at the time and place specified in the accompanying notice. Acadiana and IBKC have each supplied all information with respect to it and its consolidated subsidiaries. Unless the context otherwise requires, Acadiana and LBA Savings Bank, its wholly owned bank subsidiary, are collectively referred to herein as "Acadiana," and IBKC and its subsidiaries are collectively referred to herein as "IBKC." Purpose of the Meeting The purpose of the meeting is to consider and vote upon a proposal to approve an Agreement and Plan of Merger between IBKC and Acadiana, pursuant to which, among other things, Acadiana will merge into a wholly owned subsidiary of IBKC and promptly thereafter LBA Savings Bank will merge into IBERIABANK, a wholly owned banking subsidiary of IBKC, and each outstanding share of common stock of Acadiana will be converted into the right to receive $7.88 cash and $31.50 in shares of common stock of IBKC, subject to adjustment, as described under the heading "Conversion of Acadiana common stock." At the meeting, shareholders will also consider and vote upon a proposal to adjourn the meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the meeting to approve the Plan and to consider any other matters that may be properly submitted for a vote at the meeting. Shares Entitled to Vote; Quorum: Vote Required Only holders of record of Acadiana common stock at the close of business on , 2002 are entitled to notice of and to vote at the meeting. On that date, there were shares of Acadiana common stock outstanding, each of which is entitled to one vote on each matter properly brought before the meeting. The presence at the meeting, in person or by proxy, of the holders of a majority of the outstanding shares of common stock of Acadiana is necessary to constitute a quorum. The Plan must be approved by the affirmative vote of the holders of at least two-thirds of the Acadiana common stock present at the meeting. An abstention will have the effect of a vote against the Plan and will cause an Acadiana shareholder otherwise entitled to dissenters' rights to forfeit any claim to such rights. A broker non-vote will be counted for purposes of determining a quorum but will not be counted in determining the voting power present with respect to the vote on the Plan and thus will have no effect on the vote. The affirmative vote of a majority of the votes cast on the matter at the meeting is required to approve the proposal to adjourn the meeting if necessary to permit further solicitation of proxies on the proposal to approve the Plan and any other matter properly submitted to shareholders for their consideration at the special meeting. Because of the vote required for the proposal to adjourn the special meeting, abstentions and broker "non-votes" will have no effect on this proposal. Directors and executive officers of Acadiana beneficially owning an aggregate of 460,202 shares, or approximately 33%, of the outstanding Acadiana common stock, have agreed to vote in favor of the Plan. 8 Solicitation, Voting and Revocation of Proxies In addition to soliciting proxies by mail, directors, officers and employees of Acadiana and IBKC, without receiving additional compensation, may solicit proxies by telephone, fax, e-mail and in person. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of shares of Acadiana common stock, and Acadiana will reimburse such parties for reasonable out-of-pocket expenses incurred. The cost of soliciting proxies is being paid by Acadiana. The form of proxy that accompanies this proxy statement and prospectus permits each holder of record of Acadiana common stock on the record date to vote on all matters that properly come before the meeting. Where a shareholder specifies his choice on the accompanying form of proxy with respect to the proposal to approve the Plan, the shares represented by the proxy will be voted in accordance with that specification. If no specification is made, the shares will be voted in favor of the Plan and to adjourn the meeting, if necessary. If an Acadiana shareholder does not sign and return a proxy and specify on the proxy an instruction to vote against the Plan, he will not be able to exercise dissenters' rights unless he attends the meeting in person and votes against the Plan and gives written notice of his dissent from the Plan at or prior to the meeting. A proxy may be revoked at any time before it is voted by: (i) giving written notice of revocation at any time before its exercise to the Secretary of Acadiana, and (ii) executing and delivering to the Secretary at any time before its exercise a later dated proxy or (iii) attending the meeting and voting in person. THE PLAN The following brief description does not purport to be complete. Background of and Reasons for the Plan The Acadiana board periodically has reviewed the company's performance, compared its performance with that of certain relatively comparable publicly traded institutions in the banking and thrift industries, reviewed market activity in Acadiana's common stock, considered various business opportunities and strategies available to Acadiana and discussed the general economic, regulatory, competitive and business pressures affecting Acadiana and LBA Savings Bank. In addition, the Acadiana board, on an informal basis and during strategic planning sessions, would periodically review merger and acquisition activity in the thrift and banking industry. In November 2001, Daryl Byrd, President and Chief Executive Officer of IBKC, approached Jerry Reaux, Chairman, President and Chief Executive Officer of Acadiana, and inquired as to Acadiana's interest in a possible merger transaction with IBKC. The parties entered into confidentiality agreements and exchanged certain preliminary information. Approximately two weeks later, Acadiana terminated these discussions when the parties could not agree, on a preliminary basis, as to merger consideration and other terms. In late August 2002, conversations between Acadiana and IBKC resumed as it appeared that IBKC was in a position to significantly increase the amount of merger consideration from the amount previously indicated. During the first week of September 2002, Jerry Reaux, Chairman, President and Chief Executive Officer of Acadiana informed the members of his Board that conversations with IBKC had resumed. IBKC presented Acadiana with a written indication of interest, dated September 9, 2002, outlining the terms of a potential merger with consideration of $7.88 in cash plus shares of IBKC common stock with a value of approximately $31.50, with certain collars, for each share of Acadiana common stock. The board of directors of Acadiana authorized management to proceed with discussions with IBKC based upon the terms outlined in the indication of interest and authorized due diligence review of IBKC. Concurrently, the parties with the assistance of their respective financial advisors and legal counsel, negotiated the terms of the merger agreement. 9 The Acadiana board met again on September 22, 2002 and reviewed the background of the proposed merger and the status of the negotiations to date. The Acadiana board carefully reviewed and considered, with the assistance of its financial advisor and legal counsel, the financial and legal aspects of the proposed merger agreement with IBKC. The Acadiana board also carefully considered the terms of the proposed stock option agreement and other related agreements. After its review, the Acadiana board authorized execution of the merger agreement, the stock option agreement and the other related agreements and documents. Each director of Acadiana also entered into a support agreement with IBKC obligating them to vote their shares in favor of the merger agreement with IBKC and against any other transaction. The Acadiana board has determined that the terms of the merger, the Plan, and the proposed issuance of IBKC common stock and cash in connection with the merger are advisable and fair to and in the best interest of, Acadiana and its shareholders. In reaching its determination, the Acadiana board considered a number of factors. The Acadiana board did not assign any specific or relative weights to the factors considered, and individual directors may have given different weights to different factors. The material factors considered were as follows: . Information concerning the business, earnings, operations, financial condition, prospects, capital levels and asset quality of IBKC, individually and as combined with Acadiana. . The written opinion rendered to the Acadiana board by Acadiana's financial advisor that, as of the date of the opinion, and subject to the various assumptions made and limitations stated in the opinion, the merger consideration consisting of $7.88 per share in cash and IBKC common stock in the exchange ratio ranging from .6848 to .9265 (subject to adjustment) for Acadiana common stock was fair, from a financial point of view, to holders of Acadiana common stock. The opinion of Acadiana's financial advisor is attached as Appendix A and should be reviewed for the assumptions made in connection with, and limitations on, such opinion. . The terms of the merger agreement, the stock option agreement and other documents executed in connection with the merger. . The current and prospective economic, competitive and regulatory environment facing each institution and financial institutions generally. . The results of the due diligence investigation conducted by the management of Acadiana, including assessment of credit policies, asset quality, interest rate risk, litigation and adequacy of loan loss reserves. . The Acadiana board's familiarity with and review of IBKC's business, operations, earnings, prospects, financial condition, asset quality and capital levels. . The opportunities for expense reductions, operating efficiencies and revenue enhancements in the combined entity. . The nature of, and likelihood of obtaining, the regulatory approvals that would be required for the merger. . The additional liquidity provided by IBKC's common stock compared to Acadiana's common stock. . The historical market prices of Acadiana's common stock and the fact that the proposed $39.38 per share merger consideration represented a 66% premium over the per share closing price of Acadiana's common stock on the business day before the merger was announced. . Results that could be expected to be obtained by Acadiana if it continued to operate independently, and the likely benefits to stockholders of such course, as compared with the value of the merger consideration being offered by IBKC. Acadiana's board of directors unanimously recommends that the holders of Acadiana common stock vote "FOR" adoption of the Agreement and Plan of Merger. 10 Opinion of Acadiana's Financial Advisor Acadiana retained Triangle Capital Partners, L.L.C. to act as its financial advisor in connection with analyzing its strategic alternatives, including a possible merger and related matters. As part of its engagement, Triangle agreed, if requested by Acadiana, to render an opinion with respect to the fairness, from a financial point of view, to the holders of Acadiana common stock, of the merger consideration. Triangle is regularly engaged in evaluations of businesses and their securities and in advising financial institutions and other companies with regard to mergers and acquisitions. Acadiana selected Triangle as its financial advisor based upon Triangle's qualifications, expertise and reputation in that capacity. Triangle delivered its written opinion to the board of Acadiana dated September 22, 2002 that, based upon and subject to the assumptions and limitations described in the opinion, the merger consideration to be paid by IBKC was fair to Acadiana shareholders, from a financial point of view, as of the date of the opinion. Triangle updated its opinion as of the date of this document. As used in this section, "merger consideration" refers to the conversion into cash in the amount of $7.88 per share of the common stock of Acadiana, and common stock in an exchange ratio ranging from 0.6848 to 0.9265 shares of IBKC common stock (subject to adjustment as set forth in the Plan) proposed to be received by the holders of shares of common stock of Acadiana (other than any such shares held by IBKC or its affiliates). No limitations were imposed by Acadiana on Triangle with respect to the investigations made or the procedures followed in rendering its opinion. The full text of Triangle's written opinion to the Acadiana board, dated as of the date of this document, which sets forth the assumptions made, matters considered and extent of review by Triangle, is attached as Appendix A and is incorporated herein by reference. You should read the fairness opinion carefully and in its entirety. The following summary of Triangle's opinion is qualified in its entirety by reference to the full text of the opinion. Triangle's opinion is directed to the Acadiana board and does not constitute a recommendation to any shareholder of Acadiana as to how a shareholder should vote with regard to the merger at the Acadiana special meeting described in this document. The opinion addresses only the financial fairness of the consideration to be received by the holders of Acadiana common stock. The opinion does not address the relative merits of the merger or any alternatives to the merger, the underlying decision of the Acadiana board to approve or proceed with or effect the merger, or any other aspect of the merger. Triangle, in connection with rendering its original opinion: . reviewed Acadiana's Annual Reports to Shareholders, proxy statements and annual reports on Form 10-K for the three calendar years ended December 31, 2001, 2000 and 1999, including the audited financial statements contained therein, and Acadiana's quarterly reports on Form 10-Q for the calendar quarters ended September 30, 2002, June 30, 2002 and March 31, 2002; . reviewed IBKC's Annual Reports to Shareholders, proxy statements and annual reports on Form 10-K for the three calendar years ended December 31, 2001, 2000 and 1999, including the audited financial statements contained therein, and IBKC's quarterly reports on Form 10-Q for the calendar quarters ended September 30, 2003, June 30, 2002 and March 31, 2002; . reviewed internal financial information and financial forecasts relating to the business, earnings, cash flows, assets and prospects of the respective companies established by management and furnished to Triangle by Acadiana and IBKC, respectively, along with certain additional publicly-available financial information; . held discussions with members of senior management of Acadiana and IBKC and with their respective representatives, including without limitation, their outside accountants, financial and legal advisors and others, concerning the past and current results of operations of Acadiana and IBKC, their respective current financial condition and managements' opinion of their respective future prospects; 11 . reviewed the historical record of reported prices, trading activity and dividend payments for both Acadiana and IBKC; . compared the reported financial terms of selected recent business combinations in the banking industry with the financial terms of the proposed merger; . reviewed the merger agreement and certain related documents; and . performed other analyses as Triangle deemed appropriate under the circumstances. The written opinion provided by Triangle to Acadiana (as of September 22, 2002 and as of the date of this document) was necessarily based upon economic, monetary, financial market and other relevant conditions as of the date the opinion was rendered. Accordingly, it was understood that although subsequent developments may affect its opinion, Triangle does not have any obligation to further update, revise or reaffirm its opinion. In connection with its review and arriving at its opinion, with the consent of the Board of Acadiana, Triangle assumed and relied upon the accuracy and completeness of the financial information and other pertinent information provided by Acadiana and IBKC to Triangle for purposes of rendering its opinion. Triangle did not assume any obligation to independently verify any of the information listed above, including, without limitation, information from published sources, as being complete and accurate. With regard to the financial information, including forecasts we received from Acadiana and IBKC, as well as projections of cost savings, Triangle assumed that this information reflects the best available estimates and good faith judgments of Acadiana and IBKC as to the future performance of the separate and combined entities and that the forecasts and projections provided a reasonable basis upon which Triangle could formulate its opinion. Neither Acadiana nor IBKC publicly discloses internal management forecasts or projections of the type utilized by Triangle in connection with Triangle's role as financial advisor to Acadiana, and those forecasts and projections were not prepared with a view towards public disclosure. The forecasts and projections were based upon numerous variables and assumptions that are inherently uncertain, including, among others, factors relative to the general economic and competitive conditions facing Acadiana and IBKC. Accordingly, actual results could vary significantly from those set forth in the respective forecasts and projections. Triangle does not purport to be expert in the evaluation of loan portfolios or the allowance for loan losses with respect to loan portfolios and, accordingly, assumes that those allowances by Acadiana and IBKC are adequate to cover any losses. In addition, Triangle has not reviewed and does not assume any responsibility for any individual credit files and did not make an independent evaluation, appraisal or physical inspection of the assets or liabilities, contingent or otherwise, or individual properties of Acadiana or IBKC, nor was Triangle provided with any such appraisals. In addition, for the purposes of rendering its written opinion, Triangle assumed that (i) the merger will be consummated in accordance with the terms set forth in the agreement, without any waiver of any of its material terms or conditions, and that obtaining the necessary approvals for the merger will not have an adverse effect on either separate institution or the combined entity, and (ii) the merger will be consummated in a manner that complies in all respects with the applicable provisions of the Securities Act, the Exchange Act and all other applicable federal and state statutes, rules and regulations. Triangle also assumed that the fee adjustment amount (as defined in the agreement), if any, will not exceed $3 million. In addition, for purposes of its written opinion, Triangle relied on advice of counsel and independent accountants to Acadiana and IBKC as to all legal and financial reporting matters with respect to Acadiana and IBKC, the merger and the Plan. No opinion was expressed by Triangle as to whether any alternative transaction might produce consideration for the holders of Acadiana common stock in an amount in excess of that contemplated in the merger. In each analysis described below that involves per share data for Acadiana, Triangle adjusted the data for the dilutive effects of stock options using the treasury method. In connection with rendering its opinion to Acadiana's board, Triangle performed a variety of financial and comparative analyses, which are briefly summarized below. Such a summary of those analyses does not purport 12 to be a complete description of the analyses performed by Triangle. Moreover, Triangle believes that the analyses must be considered as a whole and that selecting portions of the analyses and the factors considered, including information presented in tabular form, without considering all of the analyses and factors, could create an incomplete understanding of the process underlying the analyses and, more importantly, a misleading or incomplete view of the written opinion as to fairness from a financial point of view that is based on those analyses. The preparation of a financial advisor's opinion is a complex process involving subjective judgments and is not readily susceptible to partial analyses or a summary description of such analyses. In its full analysis, Triangle also included assumptions with respect to general economic, financial market and other financial conditions. Furthermore, Triangle drew from its past experience in similar transactions, as well as its experience in the valuation of securities and its general knowledge of the banking industry as a whole. Any estimates in Triangle's analyses are not necessarily indicative of actual future results or values, which may significantly diverge more or less favorably from those estimates. Estimates of company valuations do not purport to be appraisals or to necessarily reflect the prices at which companies or their respective securities actually may be sold. None of the individual analyses performed by Triangle were assigned a greater significance by Triangle than any other in forming its written opinion. Accretion/Dilution Analysis: On the basis of financial projections established by management, and estimates of on-going cost savings accruing to the combined companies, as well as estimated one-time costs related to the transaction, Triangle compared pro forma equivalent earnings per share, cash earnings per share, book value, tangible book value and cash dividends to the stand-alone projections of Acadiana and IBKC. No assumptions were made regarding revenue enhancements following the completion of the transaction. The accretion/dilution analysis was based on the premise, for purposes of analysis only, that shares of Acadiana common stock were to be exchanged 100% for shares of IBKC common stock, or alternatively stated, that any cash received by Acadiana shareholders would be reinvested in IBKC common stock at the market price used to establish the exchange ratio, without regard to taxes and brokerage fees. The accretion/dilution analysis indicated, among other things, that, based on the information taken into account for purposes of the analysis, the merger could result in: . Sixty-eight percent (68%) accretion to earnings per share and seventy-nine percent (79%) accretion to cash earnings per share for Acadiana shareholders in the first year of combined operations, increasing over the period of the analysis; . Two percent (2%) accretion to earnings per share and seven percent (7%) accretion to cash earnings per share for IBKC shareholders in the first year of combined operations; . A thirty-four percent (34%) increase in cash dividends for Acadiana shareholders, assuming IBKC maintains its current dividend policy; . Ten percent (10%) accretion to book value and twenty-nine percent (29%) dilution to tangible book value for Acadiana shareholders; and . Nine percent (9%) accretion to book value and seven percent (7%) dilution to tangible book value for IBKC shareholders. 13 Contribution Analysis: Triangle compared the contribution of Acadiana to the combined companies relative to the approximate ownership of the combined companies. The analysis indicated that Acadiana shareholders would own approximately 13.5% of the pro forma shares of IBKC. Acadiana's approximate contributions are listed below by category:
Acadiana Contribution ------------ Assets............................................. 17.9% Loans.............................................. 18.5% Deposits........................................... 15.0% Tangible equity.................................... 20.4% Last twelve months earnings(1) without cost savings 12.3% Projected year 1 earnings without cost savings..... 9.9% Projected year 2 earnings without cost savings..... 10.0% Projected year 1 earnings with cost savings........ 15.2% Projected year 2 earnings with cost savings........ 18.1% Pro Forma Ownership................................ 13.5% -----
- -------- (1) Twelve months ended June 30, 2002 Comparable Transaction Analysis: Triangle reviewed and compared financial performance and pricing information for groups of bank and thrift merger transactions announced in the twenty-four months ended September 18, 2002 that it deemed pertinent to an analysis of the merger. Triangle did not include every transaction that could be deemed to have occurred in the relevant industries. The pricing ratios for the merger were compared to the median ratios of (1) price to tangible book value, (2) price to last twelve months reported earnings, (3) price to last twelve months core earnings, (4) tangible book value premium to core deposits, and (5) premium to trading price, for each of the following comparable transaction groups: . all thrift acquisitions in the United States in the preceding 24 months (referred to in the table below as "Last 24 Months"); . all thrift acquisitions announced in the preceding 90 days (referred to in the table below as "Last 90 Days"); . all Louisiana thrift acquisitions (referred to in the table below as "Louisiana Thrifts"); . all thrift acquisitions in the United States involving acquired thrifts with assets of $200 million - $400 million (referred to in the table below as "Assets $200-$400 Million"); . all thrift acquisitions in the United States involving acquired thrifts with returns on average equity of 7%-10% (referred to in the table below as "ROAE 7%-10%"); 14 Triangle also selected eleven bank and thrift acquisitions announced since September 2000 that Triangle deemed most comparable to Acadiana in terms of asset size, tangible capital and profitability (referred to in the table below as "Guideline Transactions"); Acquirer Target -------- ------ United Community Bancorp, NC Community Bancshares, Inc., NC Colonial BancGroup Inc., AL Palm Beach National Holding Co., FL Capital Bank Corporation, NC High Street Corporation, NC Synovus Financial Community Financial Group, Corporation, GA Inc., TN MB Financial Inc., IL First Lincolnwood Corporation, IL Whitney Holding Corporation, LA Redstone Financial, Inc., TX Norway Bancorp, ME First Coastal Corporation, ME Promistar Financial Corporation, PA FNH Corporation, PA NBT Bancorp Inc., NY First National Bancorp Inc., NY Community Banks Inc., PA Glen Rock State Bank, PA Financial Institutions Inc., NY Bath National Corporation, NY The following table represents a summary analysis of the transactions deemed comparable that were analyzed by Triangle based on the announced transaction values:
Tangible Price/ Price/ Price/ Book Number Tangible LTM LTM Premium/ Premium/ of Book Reported Core Core Trading Deals Value Earnings(1) Earnings(2) Deposits(3) Price ------ -------- ----------- ----------- ----------- -------- Last 24 Months................ 109 137% 19.5x 19.3x 7.0% 37% Last 90 Days.................. 16 132% 24.0x 26.2x 8.7% 31% Louisiana Thrifts............. 2 165% 18.3x 18.3x 8.1% 89% Assets $200-$400 Million...... 20 144% 22.6x 22.8x 8.6% 44% ROAE 7%-10%................... 14 132% 17.3x 15.6x 6.4% 47% Guideline Transactions(4)..... 11 177% 22.6x 28.5x (5) 9.0% 41% Acadiana(6)................... 186% 22.4x 23.5x 14.3% 66%
- -------- (1) Last 12 months fully-diluted reported earnings per share. (2) Last 12 months fully-diluted core earnings per share (excludes non-recurring revenue and expenses). (3) Premium over tangible book value as a percentage of core deposits (total deposits less "jumbo" time deposits). (4) Guideline Transactions are the eleven merger transactions listed above. (5) Price to last twelve months core earnings was not available for nine of the eleven Guideline Transactions; therefore the median shown may not be indicative of the true price to core earnings for this group of transactions. (6) Acadiana pricing data based on per share consideration of $39.38 (fully-diluted using the treasury method) assuming each share of Acadiana common stock is exchanged for $7.88 of cash and $31.50 of IBKC common stock and the market price of IBKC common stock is between $34.00 and $46.00 per share, all of which amounts are subject to adjustment. The analysis indicated that the value of the proposed merger fell within the range of multiples of trailing twelve months earnings represented by the groups of transactions deemed comparable. The price to tangible book value, tangible book value premium to core deposits and premium to trading price ratios for the proposed merger were generally higher than the median ratios for the comparable groups. Discounted Cash Flow Analysis: Triangle prepared a discounted cash flow analysis with regard to Acadiana's estimated acquisition values. This analysis utilized a range of discount rates of 12% to 18% and a 15 range of earnings terminal multiples of 10.0x to 15.0x. The analyses resulted in a range of present values of between $27.75 and $46.70 per share. This analysis was based on assumptions used by Triangle in estimating Acadiana's acquisition value, and is not necessarily indicative of actual values or actual future results and does not purport to reflect the prices at which any securities may trade at the present or at any time in the future. Triangle noted that the discounted cash flow analysis was included because it is a widely used valuation methodology, but that the results of the methodology are not conclusive and are highly dependent upon the numerous assumptions that must be made, including earnings growth rates, discount rates, terminal multiples and cost savings. Comparable Company Trading Analysis of IBKC: Triangle reviewed and compared stock market data and selected pricing multiples for IBKC as of September 18, 2002 with corresponding median multiples for publicly-traded banks possessing financial and performance characteristics deemed similar to IBKC. Triangle did not include every company that could be deemed to be a participant in the same industry. The selected comparable publicly-traded companies differ in size, profitability and growth outlook and thus provide imprecise valuation indications. In addition, market-based valuation relies on public information and thus may not reflect undisclosed company-specific opportunities or capabilities. The comparison banks were grouped according to the criteria listed below:
Price/ Price/ LTM Price/ LTM Price/ Tangible Number of Reported Core 2002E Book Dividend Companies Earnings Earnings(1) Earnings Value Yield --------- -------- ----------- -------- -------- -------- All U.S. Banks.......... 691 14.5x 14.6x 13.5x 168% 2.6% Louisiana Banks......... 6 13.8x 13.4x 12.7x 176% 2.8% Assets $1-$2 billion.... 74 14.8x 14.9x 13.9x 202% 2.4% Return on Equity 14%-18% 115 13.7x 13.9x 13.4x 163% 2.7% Guideline Companies(2).. 10 15.0x 15.2x 13.9x 203% 2.3% IBERIABANK(3)........... 14.5x 14.7x 13.2x 213% 1.8%
- -------- (1) Core earnings exclude non-recurring revenue and expenses, tax-adjusted at a 35% rate. (2) Consists of ten actively-traded banks of similar asset size, tangible capital levels, and return on equity as IBERIABANK: Commonwealth Bancorp, PA; First Bancorp, NC; First National Corporation, SC; Hills Bancorp, IA; OceanFirst Financial Corp, NJ; PennFed Financial Services, NJ; Second Bancorp, OH; State Bancorp, NY; Union Bankshares, VA; and West Coast Bancorp, OR. (3) At or for the twelve months ended June 30, 2002, unless otherwise noted. The analysis indicated that IBKC common stock traded at similar price to earnings multiples as the market for bank stocks taken as a whole, and IBKC common stock traded at slightly lower price to earnings multiples than the median multiples for the ten guideline companies. However, the analysis indicated that IBKC common stock was trading at a slight premium on price to tangible book value compared to the median multiples exhibited by the comparable groups. Due to a lower dividend payout ratio, IBKC common stock had a lower dividend yield than the comparable groups. 16 Comparable Company Trading Analysis of Acadiana: Triangle reviewed and compared stock market data and selected pricing multiples for Acadiana as of September 18, 2002 with corresponding median multiples for publicly-traded thrift institutions possessing financial and performance characteristics deemed similar to Acadiana. Triangle did not include every company that could be deemed to be a participant in the same industry. The selected comparable publicly-traded companies differ in size, profitability and growth outlook and thus provide imprecise valuation indications. In addition, market-based valuation relies on public information and thus may not reflect undisclosed company-specific opportunities or capabilities. The comparison companies were grouped according to the criteria listed below:
Price/ Price/ Price/ Number LTM LTM Price/ Tangible of Reported Core 2002E Book Dividend Companies Earnings Earnings(1) Earnings Value Yield --------- -------- ----------- -------- -------- -------- All U.S. Thrifts........ 315 13.7x 14.0x 12.6x 119% 2.5% Louisiana Thrifts....... 9 11.6x 14.9x 9.0x 80% 2.1% Assets $200-$400 million 69 13.4x 13.5x 12.5x 110% 2.5% Return on Equity 7%-10%. 73 13.2x 14.0x 13.9x 115% 2.5% Guideline Companies(2).. 8 13.6x 14.8x 11.6x (3) 108% 2.6% Acadiana(4)............. 11.6x 12.2x NA (5) 100% 2.5%
- -------- (1) Core earnings exclude non-recurring revenue and expenses, tax-adjusted at a 35% rate. (2) Consists of eight traded banks and thrifts of similar asset size, tangible capital levels, and return on equity as Acadiana: ChoiceOne Financial Services, MI; Community Central Bank Corp., MI; EvergreenBancorp, WA; First Bancshares, MO; HFB Financial Corp., KY; Patapsco Bancorp, MD; Peoples National Bank, VA; Slades Ferry Bancorp, MA. (3) Only one of the Guideline Companies had a price to 2002E earnings ratio; therefore the median shown may not be indicative of the true price to core earnings for this group of companies. (4) At or for the twelve months ended June 30, 2002, unless otherwise noted. (5) Not available--there are no published earnings estimates for Acadiana for 2002. The analysis indicated that Acadiana common stock generally traded at lower price to earnings multiples than the median multiples for the comparison groups shown in the table above. In addition, Acadiana common stock was trading at a discount on a price to tangible book value basis compared to all of the comparison groups shown, with the exception of the Louisiana thrift median. Acadiana common stock had a dividend yield similar to the comparable groups. It should be noted that Acadiana common stock generally trades infrequently and there is relatively low trading volume in the stock. The ratios shown for Acadiana could be influenced by the relative lack of liquidity in the stock. No company used as a comparison in the above analyses is identical to Acadiana, IBKC or the combined entity and no other transaction is identical to the merger. Accordingly, an analysis of the results of the foregoing is not purely mathematical; rather, such analyses involve complex considerations and judgments concerning differences in financial, market and operating characteristics of the companies and other factors that could affect the public trading value of the companies to which Acadiana, IBKC and the combined entity were compared. In connection with the delivery of its written opinion dated as of the date of this document,Triangle performed procedures to update, as it deemed necessary, some of the analyses described above and reviewed the assumptions on which the analyses described above were based and the factors considered in connection with those analyses. Triangle did not perform any analyses in addition to those described above in updating its written opinion. Acadiana has agreed to pay Triangle a fee equal to a percentage of the merger consideration as compensation for financial advisory services rendered in connection with the proposed merger. Assuming merger 17 consideration of $39.38 per share of Acadiana common stock ($7.88 of cash and $31.50 of IBKC common stock as described above), Triangle's total fee would be approximately $557,000. Triangle has received $50,000 in fees to date, a portion of which was contingent upon the rendering of our written opinion as to fairness from a financial point of view of the merger consideration proposed to be paid to the holders of Acadiana common stock. The remainder is payable upon consummation of the proposed merger. The Acadiana board was aware of this fee structure and took it into account in considering Triangle's fairness opinion and in approving the merger. In addition, Acadiana has agreed to reimburse Triangle for all reasonable expenses incurred by it on Acadiana's behalf, and to indemnify Triangle against some liabilities, including liabilities which may arise under the federal securities laws. As noted above, the discussion in this section is merely a summary of the analyses and examinations that Triangle considered to be material to its opinion. It is not a comprehensive description of all analyses and examinations actually conducted by Triangle. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that the analysis was given greater weight than any other analysis. Accordingly, the ranges of valuations resulting from any particular analysis described above should not be taken to be Triangle's view of the actual value of Acadiana. In performing its analyses, Triangle made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Acadiana and IBKC. The analyses performed by Triangle are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those suggested by those analyses. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, those analyses and estimates are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, and Triangle does not assume any responsibility if future results are materially different from those projected. As described above, Triangle's opinion and presentation to the Acadiana board were among the many factors taken into consideration by the Acadiana board in making its determination to approve, and to recommend that Acadiana's stockholders approve, the merger. 18 Conversion of Acadiana Common Stock On the day the merger becomes effective each share of Acadiana common stock outstanding will be converted into the right to receive $7.88 in cash plus a number of shares of IBKC common stock with a value of $31.50 (based upon the average closing price during the first ten trading days of the month in which the merger is completed), provided, however, that not less than 0.6848 shares nor more than 0.9265 shares of IBKC common stock will be issued for each share of Acadiana common stock exchanged in the merger. If the average closing price of IBKC during the ten day measurement period is less than $46.00 per share but more than $34.00 per share, the number of shares of IBKC common stock which will be issued in exchange for each share of Acadiana common stock will be determined by an exchange ratio calculated by dividing $31.50 by the average closing price of IBKC common stock. The table below illustrates the operation of the exchange ratio at various selected average closing prices. If the average closing Then the exchange ratio price is: will be: ---------------------- ----------------------- $46.00 or more 0.6848 45.00 0.7000 44.00 0.7159 43.00 0.7326 42.00 0.7500 41.00 0.7683 40.00 0.7875 39.00 0.8077 38.00 0.8289 37.00 0.8514 36.00 0.8750 35.00 0.9000 34.00 or less 0.9265 The amount of cash and/or stock that you receive in the merger may be adjusted for various matters as provided in the Plan, which are described below. . The total amount of shares of IBKC issued to Acadiana shareholders in the merger cannot exceed 19.9% of the outstanding shares of IBKC immediately prior to the merger. Rather than exceed the 19.9% threshold, the number of shares of IBKC which would be issued under the exchange ratio will be reduced and the $7.88 per share cash consideration will be increased proportionately. IBKC has indicated that it does not anticipate that there will be any adjustment as a result of this provision. . If the average closing price of IBKC stock is less than $30.00, Acadiana has the right to terminate the merger agreement unless IBKC elects to increase the amount of cash to be issued to Acadiana shareholders in the merger. . The total cash consideration to be paid to Acadiana shareholders may be reduced, in which event, the $7.88 per share cash consideration will be reduced on a proportional basis, in the event that Acadiana's legal expenses incurred in connection with the merger exceed $180,000. Acadiana has indicated that it does not anticipate that there will be any adjustment as a result of this provision. Shareholders who perfect dissenters' rights will not receive IBKC common stock but instead will be entitled to receive the "fair cash value" of their shares as determined under Section 131 of the Louisiana Business Corporation Law. See, "Dissenter's Rights" on page 28. Instead of issuing any fractional shares of IBKC common stock, each shareholder of Acadiana who would otherwise be entitled thereto will receive a cash payment (without interest) equal to such fractional share multiplied by the market value of the fraction. 19 Effective Date An Agreement of Merger will be recorded with the Louisiana Secretary of State as soon as practicable after shareholder and regulatory approval of the Plan is obtained and all other conditions to the completion of the merger have been satisfied or waived. The merger will be effective when the agreement is filed by the Louisiana Secretary of State. Procedure for Exchanging Certificates On the effective date of the merger, each Acadiana shareholder will cease to have any rights as a shareholder of Acadiana, and his sole rights will be to receive cash and IBKC common stock into which his shares of Acadiana common stock have been converted pursuant to the Plan, except for any Acadiana shareholder who exercises statutory dissenters' rights. Promptly after consummation of the Plan, a letter of transmittal, together with instructions for the exchange of certificates representing shares of Acadiana common stock for cash and certificates representing shares of IBKC common stock, will be mailed to each person who was a shareholder of record of Acadiana on the effective date of the merger. Shareholders are requested not to send in their Acadiana common stock certificates until they have received a letter of transmittal and further written instructions. IBKC common stock certificates and cash payments will be sent as promptly as practicable after receipt of a properly completed letter of transmittal accompanied by the appropriate Acadiana common stock certificates. IBKC, at its option, may decline to pay former shareholders of Acadiana who become holders of IBKC common stock pursuant to the Plan any dividends or other distributions that may have become payable to holders of record of IBKC common stock following the effective date until they have surrendered their certificates for Acadiana common stock. Any dividends not paid after one year from the date they first became payable will revert in full ownership to IBKC, and IBKC will have no further obligation to pay such dividends. Treatment of Acadiana Stock Options At the effective time of the merger, each option to purchase Acadiana common stock issued pursuant to Acadiana's stock option plan, whether or not vested or exercisable before the merger is completed, will be canceled and the holder of the unexercised stock option will be entitled to receive a cash payment equal to the value of the consideration received by Acadiana shareholders in the merger for a share of Acadiana common stock, less the exercise price per share of the stock option, multiplied by the number of shares of Acadiana common stock subject to the stock option. Conditions to the Merger The respective obligations of Acadiana and IBKC to complete the merger are subject to the satisfaction or waiver of the following conditions specified in the merger agreement: . from the date of the merger agreement to the closing of the merger, the representations and warranties set forth in the Plan remain true and correct, except for any representation or warranty made as of a specified date, which was true and correct as of such date or except as contemplated or permitted by the merger agreement; . the performance of all agreements and covenants required by the Plan prior to the closing of the merger; . the delivery of certain certificates of the chief executive officers and chief financial officers of Acadiana and IBKC; . approval of the Plan by the shareholders of Acadiana; 20 . the receipt of all required regulatory approvals or authorizations, provided that none of such approvals contain any non-standard term or condition which would have material adverse effect, subject to certain exceptions; . the absence of any order, decree or injunction which enjoins or prohibits completion of any of the transactions contemplated by the Plan; . the receipt of customary letters from each of Acadiana's and IBKC's independent public accountants prior to the proxy statement mailing and the closing; . the receipt of a tax opinion substantially to the effect that: a. for federal income tax purposes, the merger will be treated as a reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code; b. neither Acadiana nor IBKC will recognize gain or loss as a result of the merger; c. shareholders of Acadiana will recognize gain, but not loss, to the extent of the lesser of (1) the excess, if any, of the sum of the aggregate fair market value of the IBKC common stock received plus cash received over the aggregate tax basis of the Acadiana common stock exchanged and (2) the amount of cash received; d. the aggregate tax basis of the IBKC common stock received by Acadiana shareholders will equal the aggregate tax basis in the Acadiana common stock exchanged less cash received, including cash for fractional shares, and increased by taxable gain recognized in the merger; and e. the holding period for the IBKC common stock received will include the holding period of the Acadiana common stock exchanged provided such shares were held as capital assets at the time of closing of the merger. . the registration statement of IBKC of which this document is a part must have become effective under the Securities Act of 1933, and no stop order suspending the effectiveness of the registration statement shall have been issued and no proceedings for such purpose shall be pending before or threatened by the Securities and Exchange Commission; . the execution of all documents and all such other action being taken as is necessary to effectuate the merger, along with irrevocable instructions to file the merger agreement with the Secretary of State of the State of Louisiana; and . the receipt of standard legal opinions from counsel for Acadiana and IBKC. There can be no assurance that the conditions to consummation of the merger will be satisfied or waived. The merger will become effective when the certificate of merger is filed with the Secretary of State of the State of Louisiana. It is currently anticipated that the effective time of the merger will occur during the first quarter of 2003. In addition to Acadiana shareholder approval, consummation of the Merger will require the approval of the Board of Governors of the Federal Reserve System ("Federal Reserve Board"). IBKC has filed an application seeking the required approval and expects to receive it by February 7, 2003; however, there can be no assurance that the approval will be obtained by that time or at all. The obligations of the parties to consummate the Merger are also subject to customary conditions for transactions of this sort and, in addition, to the receipt of an opinion of Castaing, Hussey & Lolan, LLC as to certain tax aspects of the merger. The companies intend to complete the merger as soon as practicable after all of the conditions to the Plan have been met or waived; however, there can be no assurance that the conditions will be satisfied. 21 Conduct of Business Prior to the Effective Date Acadiana has agreed that until the earlier of the effective date or the termination of the Plan, it will conduct its business in the ordinary course unless it receives prior written consent of the chief executive officer or other duly authorized officer of IBKC. Acadiana has also agreed that until the earlier of the effective date or the termination of the Plan, it will not declare or pay any dividend or other distribution to its shareholders except regular quarterly cash dividends on the shares of Acadiana common stock, at a rate not in excess of $.15 per share. Acadiana has further agreed that neither it nor LBA Savings Bank will (except as may, in the written opinion of its counsel promptly delivered to IBKC, be required by fiduciary duty) solicit, initiate, encourage or knowingly facilitate any inquiry or the making of any proposal relating to an acquisition transaction or a potential acquisition transaction involving it. Acadiana will use its reasonable best efforts to inform its directors, officers, key employees, agents, and other representatives of the foregoing prohibitions. Conduct of Business Prior to the Completion of the Merger and Certain Covenants The Plan provides that until the effective time of the merger, except as otherwise consented to by IBERIABANK Corporation in writing, Acadiana shall not: . amend its articles of incorporation or bylaws; . permit any material lien, charge or encumbrance to be imposed on any share of stock held by Acadiana or any subsidiary of Acadiana; . repurchase, redeem, or otherwise acquire or exchange, directly or indirectly, any shares of Acadiana capital stock or any securities convertible into any shares of Acadiana capital stock, except as permitted or contemplated by the Plan; . acquire direct or indirect control over any corporation, association, firm or organization, except as contemplated in the Plan or previously disclosed; . sell or otherwise dispose of any shares of Acadiana common stock or any substantial part of its assets or any other assets other than in the ordinary course of business, except as previously disclosed or pursuant to Acadiana's stock option plan; . incur any additional material debt obligation or other material obligation for borrowed money other than in the ordinary course of business consistent with past practices or except as previously disclosed; . with certain exceptions, grant any increase in compensation or benefits to Acadiana's officers or employees, pay any bonus not previously contemplated or disclosed, enter into any severance agreements with any of its directors or officers, grant any increase in fees or other increases in compensation or other benefits to any of its present or former directors, or effect any change in retirement benefits for any class of its employees or officers that would increase the retirement benefit liabilities Acadiana; . amend any existing employment, severance or similar contract (unless such amendment is required by law) or enter into any new contract with any person except as contemplated by the Plan or as previously disclosed; or . adopt any new employee benefit plan or make any material change in or to any existing employee benefit plan other than as previously disclosed or required by law or in the opinion of counsel, is necessary or advisable to maintain the tax qualified status of any such plan. The Plan further provides that, except as otherwise contemplated by the Plan, previously disclosed or consented to by either Acadiana or IBERIABANK Corporation in writing, each party shall operate its business only in the ordinary course of business consistent with past practices, to preserve intact its business 22 organizations and assets and maintain its rights and franchises. In addition, both Acadiana and IBERIABANK Corporation have agreed to take no action which would adversely affect either Company's ability to obtain any necessary regulatory approvals or its ability to perform its obligations under the Plan and the stock option agreement, or that would cause the representations or warranties contained in the merger agreement not to be true prior to the completion of the merger. Regulatory Approvals Consummation of the merger is subject to prior receipt of all required approvals and consents of the merger by all applicable federal and state regulatory authorities. Federal Reserve Board. The merger is subject to the prior approval of or waiver from the Federal Reserve Board under Section 3 of the Bank Holding Company Act of 1956, as amended. Pursuant to the Bank Holding Company Act, the Federal Reserve Board may not approve the merger if: . such transaction would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any part of the United States; or . the effect of such transaction, in any section of the country, may be to substantially lessen competition, or tend to create a monopoly, or in any manner restrain trade, unless in each case the Federal Reserve Board finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the communities to be served. In every case, the Federal Reserve Board is required to consider the financial and managerial resources and future prospects of the bank holding company or companies and the banks concerned and the convenience and needs of the communities to be served. Under the Community Reinvestment Act of 1977, the Federal Reserve Board also must take into account the record of performance of each participating bank holding company in meeting the credit needs of the entire community, including low and moderate-income neighborhoods, served by each bank holding company and its subsidiaries. In addition, the Bank Holding Company Act requires that the Federal Reserve Board take into account the record of compliance of each bank holding company with applicable state community reinvestment laws. Applicable regulations require publication of notice of an application for approval of the merger and an opportunity for the public to comment on the application in writing and to request a hearing. Any transaction approved by the Federal Reserve Board may not be completed until 30 days after such approval, during which time the U.S. Department of Justice may challenge such transaction on antitrust grounds and seek divesture of certain assets and liabilities. With the approval of the Federal Reserve Board and the U.S. Department of Justice, the waiting period may be reduced to 15 days. Representations and Warranties of the Parties Pursuant to the Plan, Acadiana and IBERIABANK Corporation made certain customary representations and warranties relating to their respective companies, subsidiaries, businesses and matters related to the merger. The representations and warranties generally must remain accurate through the completion of the merger unless the fact or facts that caused a breach of a representation and warranty has not had or is not reasonably likely to have a material adverse effect on the party making the representation and warranty. See "Conditions to the Merger" beginning on page 20. Waiver, Amendment and Termination The parties may waive in writing any of the conditions to their respective obligations to consummate the Plan other than the receipt of necessary regulatory and shareholder approvals. The Plan, including all related agreements, may also be amended or modified at any time, before or after its approval by the shareholders of 23 Acadiana, by mutual agreement, except that any amendment made after shareholder approval may not alter the amount or type of shares into which Acadiana common stock will be converted or alter any term or condition of the Plan in a manner that would adversely affect any shareholder of IBKC or Acadiana, without the additional approval of shareholders. The Plan may be terminated at any time prior to the effective date by mutual consent, or by either of the companies if: (i) there is a material breach by the other company of any representation, warranty or covenant by it contained in the Plan which cannot be cured by the earlier of 30 days after written notice of such breach, (ii) all conditions to completing the merger have not been met or waived, cannot be met, or the merger has not occurred, by March 31, 2003, although that date may be extended to June 30, 2003 under certain circumstances (iii) any person or group acquires beneficial ownership of 25% or more of the common stock of the other company; (iv) required regulatory applications are denied or the shareholders of Acadiana fail to approve the Plan by the requisite vote at the meeting; or (v) the other company has experienced a material adverse effect, as defined in the Plan, that is uncured after 30 days notice. The board of directors of Acadiana may terminate the Plan if all or a portion of the shares of Acadiana common stock issued pursuant to the exercise of the stock option granted by the Stock Option Agreement would not be cancelled by virtue of the merger. The board of directors of IBKC may terminate the Plan if Acadiana's board of directors resolves to withdraw, modify or change its recommendation to Acadiana's shareholders of the Plan, or recommends any acquisition of Acadiana other than the merger, and Acadiana may terminate the Plan within 30 days of notice to it by IBKC that its common stock has been converted into or exchanged for securities of another issuer. Interests of Certain Persons Indemnification and Insurance. IBKC has agreed to indemnify and hold harmless Acadiana and LBA Savings Bank, and each of their respective directors and officers, and each controlling person of Acadiana within the meaning of the Securities Act of 1933, against any claims, and any related losses, that arise out of or are based upon an untrue statement or omission of a material fact made in this proxy statement and prospectus or the registration statement. IBKC will reimburse each such person promptly as incurred for legal and other expenses reasonably incurred in connection with investigating or defending any such claims; provided, that IBKC will not be liable to the extent that any such claim arises out of or is based upon any such untrue statement or omission made in reliance on information furnished to IBKC by Acadiana or LBA Savings Bank or, with respect to any indemnified person, by that person. Acadiana may purchase, if available, a continuation of its officers' and directors' liability insurance in respect of acts or omissions of officers and directors of Acadiana and LBA Savings Bank occurring prior to the effective date, including but not limited to the transactions contemplated by the Plan, covering each such person currently covered by Acadiana's officers' and directors' liability insurance policy, or who becomes covered by such policy prior to the effective date; provided that the continuation be for no longer than three years and the premiums are not in excess of $50,000. Consulting Agreement. IBKC has entered into a Consulting Agreement with Gerald G. Reaux, Jr. The agreement will have a one year term beginning on the effective date of the merger, provide for a $10,000 per month consulting fee, and restrict Mr. Reaux from competing with IBKC for one year in the Parishes of Lafayette, Iberia, Acadia, Vermillion and St. Martin. 24 Severance Payments. IBKC has agreed to fulfill Acadiana's obligations under seven employment and severance contracts with certain of its officers. These seven contracts are with Gerald G. Reaux, Jr., Emile E. Soulier, III, Allen Wayne Bares, Thomas F. Debaillon, Gregory E. King, James J. Montelaro, and Mary Anne Bertrand. Payments due upon the merger under these agreements range from $116,000 to $682,992. In addition, Mr. Lawrence Ganderdorff's consulting agreement will be terminated for a payment of $48,000. Stock Options. The Plan provides that unexercised options to purchase its common stock outstanding on the effective date will be cancelled. As consideration, option holders will receive a cash payment equal to the amount the option-holder would have received in the merger for the shares of Acadiana common stock covered by the options, less the exercise price. Directors' and Officers' Commitments. Each Acadiana director and executive officer has agreed, solely in his or her capacity as an owner of shares of Acadiana common stock and not in his or her capacity as a director or officer of Acadiana: (i) to vote in favor of the Plan and against any other proposal that would prevent or impede the merger, unless compliance with this provision would be a breach of fiduciary duty as a director or officer of Acadiana, (ii) not to transfer any of his or her Acadiana common stock, or grant any proxy or other rights with respect thereto not approved by IBKC, except for transfers by operation of law or transfers in connection with which the transferee agrees to be bound by the agreement. Employee Benefits. At or prior to the effective date, all contributions to be made to the Acadiana Employee Stock Ownership Plan and LBA Savings Bank's 401(k) Plan on behalf of participants in such plans for periods prior to the effective date will be made, and all participants in such plans will at the effective date have a fully vested and nonforfeitable interest in their account balances. No contributions will be made to such plans for periods after the effective date. As soon as possible after the effective date, Acadiana will take all actions that may be necessary or required to terminate the ESOP and make available to participants distributions from the ESOP in accordance with the terms of the ESOP and applicable law, and to the extent that the ESOP does not provide for distributions to a participant prior to the participant's termination of employment, IBKC will amend the ESOP to permit distributions to the extent permitted by law. To the extent applicable, employees of Acadiana and LBA Savings Bank will be given credit under each employee benefit plan, policy, program and arrangement maintained by IBKC after the effective date for their service with Acadiana or LBA Savings Bank prior to the effective date for all purposes other than benefit accrual under a defined benefit plan (as defined in section 3(35) of the Employee Retirement Income Security Act), including eligibility to participate, vesting, satisfying any waiting periods, evidence of insurability requirements, seniority or the application of any pre-existing condition limitations. Expenses The Plan provides generally that expenses incurred in connection with the Plan and the transactions contemplated thereby will be borne by the party that has incurred them. However, a party must pay all of the costs and expenses incurred by the other party in connection with the Plan, including fees and expenses of such Reimbursed Party's financial or other consultants, investment bankers, accountants and counsel, up to $250,000 if: (a) (i) the Plan is terminated by reason of a material breach by the Expense Paying Party, (ii) the Reimbursed Party was the party who terminated it, and (iii) the Expense Paying Party is, at the time of the termination, not also entitled to terminate the Plan by reason of a material breach by the Reimbursed Party; or 25 (b) a Purchase Event (as defined below under the caption "The Stock Option Agreement") occurs with respect to the Stock Option Agreement if Acadiana is the Expense Paying Party and the merger has not been, or thereafter is not, consummated for any reason other than a termination because of a material breach by the Reimbursed Party. Status Under Federal Securities Laws; Restrictions on Resales The shares of IBKC common stock to be issued pursuant to the Plan have been registered under the Securities Act of 1933, allowing those shares to be freely traded without restriction by persons who will not be "affiliates" of IBKC or who were not "affiliates" of Acadiana, as that term is defined in Rule 405 under the Securities Act. Directors and certain officers of Acadiana may be deemed to be "affiliates" of Acadiana. These people will not be able to resell the IBKC common stock received by them unless such stock is registered for resale under the Securities Act or an exemption from the registration requirements of the Securities Act is available. All affiliates have entered into agreements not to sell shares of IBKC common stock received by them in violation of the Securities Act and the rules and regulations thereunder. THE STOCK OPTION AGREEMENT As an inducement to IBKC to enter into the Plan, Acadiana granted an option to IBKC to acquire Acadiana common stock. One effect of the Stock Option Agreement is to increase the likelihood that the merger will be consummated by making it more difficult and more expensive for another party to obtain control of or acquire Acadiana. The following description does not purport to be complete. The Stock Option Agreement provides for the purchase by IBKC of up to shares of Acadiana common stock at an exercise price of $23.76 per share, subject to adjustment, payable in cash. The option shares, if issued, would represent approximately 4.9% of the Acadiana common stock outstanding. The number of option shares will be increased to the extent that additional shares of Acadiana common stock are issued or otherwise become outstanding (otherwise than pursuant to an exercise of the option) such that, after such issuance, the number of option shares will continue to equal 4.9% of the Acadiana common stock then outstanding without giving any effect to the issuance of any Acadiana common stock subject to the option. The number of shares of Acadiana common stock subject to the option, and the applicable exercise price per option share, also will be appropriately adjusted in the event of any stock dividends, split-ups, mergers, recapitalizations, combinations, subdivisions, conversions, exchanges of shares, or the like, relating to Acadiana. Unless IBKC shall have breached in any material respect any covenant or agreement contained in the Plan and it has not been cured after notice from Acadiana, IBKC may exercise the option, in whole or in part, subject to regulatory approval, at any time after a purchase event (as defined below) shall have occurred prior to termination of the option. A "purchase event" is the occurrence of any of the following: (a) any person (other than IBKC) shall have commenced a bona fide tender or exchange offer to purchase shares of Acadiana common stock such that upon consummation of such offer such person would own or control 20% or more of the outstanding shares of Acadiana common stock; (b) Acadiana or LBA Savings Bank, without having received IBKC's prior written consent, shall have entered into an agreement with any person (other than IBKC), or any person other than IBKC shall have filed an application or notice with the Federal Reserve Board or any other federal or state regulatory agency for clearance or approval to: (i) merge or consolidate, or enter into any similar transaction with Acadiana or LBA Savings Bank, 26 (ii) purchase, lease, or otherwise acquire any substantial portion of the assets of Acadiana or LBA Savings Bank, or (iii) purchase or otherwise acquire (including by way of merger, consolidation, share exchange, or any similar transaction) securities representing 20% or more of the voting power of Acadiana or LBA Savings Bank; (c) any person (other than IBKC, any IBKC subsidiary, or LBA Savings Bank in a fiduciary capacity) shall have acquired beneficial ownership or the right to acquire beneficial ownership of 20% or more of the outstanding shares of Acadiana common stock or common stock of LBA Savings Bank, excluding shares beneficially owned prior to September 22, 2002; (d) any person (other than IBKC or any IBKC subsidiary) shall have made a bona fide proposal to Acadiana by public announcement or written communication that is or becomes the subject of public disclosure to (i) acquire Acadiana or LBA Savings Bank by merger, consolidation, share exchange, purchase of all or substantially all of its assets or any other similar transaction or (ii) make an offer described in clauses (a) or (b), above; or (e) Any person shall have solicited proxies in a proxy solicitation subject to Regulation 14A under the Securities Exchange Act of 1934 in opposition to approval of the Plan by Acadiana's shareholders. Upon the occurrence of a purchase event that occurs prior to the termination of the option, IBKC may demand, while the option is exercisable, that the option (or part thereof) and the related option shares (or part thereof) be registered under the Securities Act at Acadiana's expense. Upon receipt of such notice, Acadiana must promptly effect such registration, subject to certain exceptions. IBKC is entitled to a second such registration at IBKC's expense. FEDERAL INCOME TAX CONSEQUENCES The following is a summary of the opinion of Castaing, Hussey & Lolan, LLC which the companies expect to receive concerning the material federal income tax consequences to holders of Acadiana common stock resulting from the Plan. Consummation of the merger is conditioned upon receipt by the companies of such opinion dated the date set for consummation of the Plan. The following is based upon applicable federal law and judicial and administrative interpretations on the date hereof, any of which is subject to change at any time: (a) The merger qualifies as a reorganization under Section 368(a)(1)(A) of the Internal Revenue Code, and Acadiana and IBKC each will be a "party to a reorganization" within the meaning of Section 368(b) of the Code. (b) No gain or loss will be recognized by Acadiana or IBKC as a result of the merger. (c) a shareholder of Acadiana who receives both IBKC common stock and cash consideration in exchange for all of his or her shares of Acadiana common stock generally will recognize gain, but not loss, to the extent of the lesser of: (1) the excess, if any, of (a) the sum of the aggregate fair market value of the cash and IBKC common stock received over (b) the shareholder's tax basis in Acadiana common stock; and 27 (2) the amount of cash received; (d) the aggregated tax basis of the IBKC common stock received by shareholders of Acadiana who exchange all of their Acadiana common stock in the merger will equal such shareholder's aggregate tax basis in the shares of Acadiana common stock being exchanged, reduced by any amount allocable to a fractioned share interest of IBKC common stock for which cash is received and by the amount of any cash consideration received, and increased by the amount of taxable gain, if any recognized by such shareholder in the merger, (e) the holding period of the shares of IBKC common stock received in the merger will include the period during which the shares of Acadiana common stock surrendered in exchange therefor were held, provided such shares of Acadiana common stock were held as capital assets at the effective time of the merger. The opinion of Castaing, Hussey & Lolan, LLC is not binding on the Internal Revenue Service, which could take positions contrary to the conclusions in such opinion. AS A RESULT OF THE COMPLEXITY OF THE TAX LAWS, AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR SHAREHOLDER MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, IT IS RECOMMENDED THAT EACH SHAREHOLDER CONSULT HIS PERSONAL TAX ADVISOR CONCERNING THE APPLICABLE FEDERAL, STATE AND LOCAL INCOME TAX CONSEQUENCES OF THE PLAN. DISSENTERS' RIGHTS Unless the Plan is approved by the holders of at least 80% of its outstanding common stock, Section 131 of the LBCL allows a shareholder of Acadiana who objects to the Plan and who complies with the provisions of that section to dissent from the Plan and to have paid to him in cash the fair cash value of his shares of Acadiana common stock as of the day before the meeting, as determined by agreement between the shareholder and IBKC or by the Civil District Court for the Parish of Lafayette if the shareholder and IBKC are unable to agree. Shareholders of IBKC are not entitled to dissenters' rights. To exercise the right of dissent, an Acadiana shareholder (i) must file with Acadiana a written objection to the Plan prior to or at the meeting and (ii) must also vote his shares (in person or by proxy) against the Plan at such meeting. Neither a vote against the Plan nor a specification in a proxy to vote against the Plan will in and of itself constitute the necessary written objection to the Plan. Moreover, by voting in favor of, or abstaining from voting on, the Plan, or by returning the enclosed proxy without instructing the proxy holders to vote against the Plan, a shareholder waives his rights under Section 131. The right to dissent may be exercised only by the record owners of the shares and not by persons who hold shares only beneficially. Beneficial owners who wish to dissent to the Plan should have the record ownership of the shares transferred to their names or instruct the record owner to follow the Section 131 procedure on their behalf. If the Plan is approved by less than 80% of the total number of shares of Acadiana common stock outstanding, then promptly after the effective date written notice of the consummation of the Plan will be given by IBKC by registered mail to each former shareholder of Acadiana who filed a written objection to the Plan and voted against it at such shareholder's last address on Acadiana's records. Within 20 days after the mailing of such notice, the shareholder must file with IBKC a written demand for payment for his shares at their fair cash value as of the day before the Acadiana meeting and must state the amount demanded and a post office address to which IBKC may reply. He must also deposit the certificates formerly representing his shares of Acadiana 28 common stock in escrow with a bank or trust company located in Lafayette Parish, Louisiana. The certificates must be duly endorsed and transferred to IBKC upon the sole condition that they be delivered to IBKC upon payment of the value of the shares in accordance with Section 131. With the above-mentioned demand, the shareholder must also deliver to IBKC the written acknowledgment of such bank or trust company that it holds the certificate(s), duly endorsed as described above. Unless the shareholder objects to and votes against the Plan, demands payment, endorses and deposits his certificates and delivers the required acknowledgment in accordance with the procedures and within the time periods set forth above, the shareholder will conclusively be presumed to have acquiesced to the Plan and will forfeit any right to seek payment pursuant to Section 131. If IBKC does not agree to the amount demanded by the shareholder, or does not agree that payment is due, it will, within 20 days after receipt of such demand and acknowledgment, notify such shareholder in writing at the designated post office address of either (i) the amount it will agree to pay or (ii) its belief that no payment is due. In this regard, shareholders should be aware that opinions of investment banking firms as to fairness from a financial point of view (including the opinion of Triangle Capital Partners, LLC described in this proxy statement and prospectus) are not opinions as to "fair value" under Louisiana law, and a determination of the fair cash value of the shares could be less than the consideration to be paid by IBKC in the merger. If the shareholder does not agree to accept the offered amount, or disagrees with IBKC's assertion that no payment is due, he must, within 60 days after receipt of such notice, file suit against IBKC in the Civil District Court for the Parish of Lafayette for a judicial determination of the fair cash value of the shares. Any shareholder entitled to file such suit may, within such 60-day period but not thereafter, intervene as a plaintiff in any suit filed against IBKC by another former shareholder for a judicial determination of the fair cash value of such other shareholder's shares. If a shareholder fails to bring or to intervene in such a suit within the applicable 60-day period, he will be deemed to have consented to accept IBKC's statement that no payment is due or, if IBKC does not contend that no payment is due, to accept the amount specified by IBKC in its notice of disagreement. If, upon the filing of any such suit or intervention, IBKC deposits with the court the amount, if any, which it specified in its notice of disagreement, and if in that notice IBKC offered to pay such amount to the shareholder on demand, then the costs (not including legal fees) of the suit or intervention will be taxed against the shareholder if the amount finally awarded to him, exclusive of interest and costs, is equal to or less than the amount so deposited; otherwise, the costs (not including legal fees) will be taxed against IBKC. Upon filing a demand for the value of his shares, a shareholder ceases to have any rights of a shareholder except the rights created by Section 131. The shareholder's demand may be withdrawn voluntarily at any time before IBKC gives its notice of disagreement, but thereafter only with the written consent of IBKC. If his demand is properly withdrawn, or if the shareholder otherwise loses his dissenters' rights, he will be restored to his rights as a shareholder as of the time of filing of his demand for fair cash value. Until the effective date, dissenting shareholders of Acadiana should send any communications regarding their rights to Donna H. Domec, Corporate Secretary, Acadiana Bancshares, Inc., 200 West Congress Street, Lafayette, Louisiana 70501. After the effective date of the merger, dissenting shareholders should send any communications regarding their rights to George J. Becker, Secretary, IBERIABANK Corporation, 1011 East Admiral Doyle Drive, New Iberia, Louisiana 70560. All such communications should be signed by or on behalf of the dissenting shareholder in the form in which his shares are registered on the books of Acadiana. INFORMATION ABOUT ACADIANA Acadiana Bancshares, Inc. is a Louisiana-chartered bank holding company with its headquarters at 200 West Congress Street, Lafayette, Louisiana 70501. Its banking subsidiary, LBA Savings Bank, is a Louisiana chartered savings bank which operates five full-service branches in Lafayette and New Iberia and a loan production office in Eunice, Louisiana. 29 Copies of Acadiana's Annual Report to Stockholders and Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 accompany this proxy statement and prospectus and should be read in conjunction herewith. In addition, the following documents have been filed by Acadiana with the Commission and are incorporated by reference into this proxy statement and prospectus: Acadiana's Annual Report on Form 10-K for the year ended December 31, 2001, Acadiana's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002, June 30, 2002 and September 30, 2002, and Acadiana's Report on Form 8-K filed on October 11, 2002. See "Where You Can Find More Information" for information with respect to securing copies of documents incorporated by reference in this proxy statement and prospectus. INFORMATION ABOUT IBKC IBKC is the parent holding company for IBERIABANK, a Louisiana state full service bank with operations throughout Louisiana. The following documents, or the indicated portions thereof, have been filed by IBKC with the Commission, and are incorporated by reference into this proxy statement and prospectus: IBKC's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002, June 30, 2002 and September 30, 2002, and Reports on Form 8-K filed on July 15, 2002, September 23, 2002, and November 25, 2002. Any statement contained in a document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded to the extent that a statement contained herein or in any other document subsequently filed and incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this proxy statement and prospectus. ADJOURNMENT OF THE SPECIAL MEETING In the event that there are not sufficient votes to constitute a quorum or to approve the adoption of the Plan at the time of the special meeting, the Plan could not be approved unless the meeting was adjourned to a later date or dates in order to permit further solicitation of proxies. In order to allow proxies that have been received by Acadiana at the time of the special meeting to be voted for an adjournment, if necessary, Acadiana has submitted the question of adjournment to its shareholders as a separate matter for their consideration. The board of directors of Acadiana unanimously recommends that shareholders vote "FOR" the adjournment proposal. If it is necessary to adjourn the special meeting, no notice of the adjourned meeting is required to be given to shareholders, other than an announcement at the special meeting of the place, date and time to which the special meeting is adjourned, if the special meeting is adjourned for 30 days or less. LEGAL MATTERS Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P., New Orleans, Louisiana, has rendered its opinion that the shares of IBKC common stock to be issued in connection with the Plan have been duly authorized and, if and when issued pursuant to the terms of the Plan, will be validly issued, fully paid and non-assessable. EXPERTS The 2001 consolidated financial statements of Acadiana incorporated in this proxy statement and prospectus by reference from Acadiana's Annual Report to Stockholders for the year ended December 31, 2001 have been audited by Castaing, Hussey & Lolan, LLC, independent auditors, as stated in their report, which has been incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 30 The audited consolidated financial statements of IBKC and its subsidiaries incorporated by reference herein have been audited by Castaing, Hussey & Lolan, LLC, independent public accountants, as indicated in their report with respect thereto, and have been so incorporated by reference in reliance upon the authority of such firm as experts in accounting and auditing. OTHER MATTERS At the time of the preparation of this proxy statement and prospectus, neither Acadiana nor IBKC had been informed of any matters to be presented for action at the meeting other than consideration of approval of the Plan. If any other matters come before the meeting or any adjournment thereof, the persons named in the enclosed proxy will vote on such matters according to their best judgment. WHERE YOU CAN FIND MORE INFORMATION Each of IBKC and Acadiana files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any of those filings at the SEC's public reference room in Washington D.C., which is located at the following address: Public Reference Room, Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the SEC's public reference rooms. The filings are also available to the public from document retrieval services and at the SEC's Internet website (http://www.sec.gov). IBKC has filed with the SEC a registration statement on Form S-4 and this document is part of that registration statement. As permitted by the SEC's rules, this document does not contain all of the information you can find in the registration statement. The registration statement is available for inspection and copying as set forth above. The SEC allows IBKC and Acadiana to "incorporate by reference" into this document, which means that they can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this document, except for any information superseded by information contained in later filed documents incorporated by reference in this document. Each of IBKC and Acadiana incorporates by reference the respective documents filed by them with the SEC listed below and any future filings made by it with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the meeting date. IBKC SEC Filings (File No. 000-25756) Period/Date ---------------------- ----------- Annual Report on Form 10-K Year ended December 31, 2001 Quarterly Report on Form Three Months and Nine 10-Q Months Ended September 30, 2002 Current Reports on Form Filed on January 23, 8-K 2002, July 15, 2002, September 15 and 23, 2002, October 21, 2002, and November 25, 2002 Acadiana SEC Filings (File No. 001-14364) Period/Date -------------------- ----------- Annual Report on Form 10-K Year ended December 31, 2001 Quarterly Report on Form Three Months and Nine 10-Q Months Ended September 30, 2002 Current Reports on Form Filed on October 11, 2002 8-K 31 In addition, as permitted by the SEC's rules, the Agreement and Plan of Merger is incorporated by reference into this document. You may request a copy of the Agreement and Plan of Merger and all other documents incorporated by reference in this document but not otherwise accompanying this document, at no cost, by writing or telephoning the appropriate company at the following addresses: IBERIABANK Corporation Acadiana Bancshares, Inc. 1101 East Admiral Doyle Drive 200 West Congress Street New Iberia, Louisiana 70560 Lafayette, Louisiana 70501 Attention: Daryl G. Byrd Attention: Gerald G. Reaux, Jr. (337) 521-4003 (337) 232-4631
To obtain timely delivery, you should request desired information no later than five business days before the date of the meeting, or by , 2002. You should rely only on the information contained or incorporated by reference in this document. Neither IBKC nor Acadiana has authorized anyone else to provide you with information that is different from that which is contained in this document. Moreover, neither IBKC nor Acadiana is making an offer to sell or soliciting an offer to buy any securities other than the IBKC common stock to be issued by IBKC in the merger, and neither IBKC nor Acadiana is making an offer of such securities in any state where the offer is not permitted. The information contained in this document speaks only as of its date unless the information specifically indicates that another date applies. SHAREHOLDER PROPOSALS FOR THE ACADIANA 2003 ANNUAL MEETING Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, the deadline for the submission of proposals by shareholders for inclusion in the proxy statement and form of proxy to be used by Acadiana in connection with the next annual meeting of shareholders of Acadiana, which will be held only if the merger is not consummated before the time of such meeting, was November 23, 2002. In addition, Acadiana's Articles of Incorporation provide that any director nominations and proposals submitted by shareholders must be received by Acadiana no later than 90 days prior to the anniversary date of the immediately proceeding annual meeting of shareholders, or January 25, 2003. Acadiana's Articles of Incorporation also require that director nominations and proposals submitted by shareholders contain certain information about the nomination or the proposals and about the shareholder making the submission. Any director nominations or proposals should be mailed to: Corporate Secretary, Acadiana Bancshares, Inc., 200 West Congress Street, Lafayette, Louisiana 70501. Shareholders are urged to sign the enclosed proxy and return it at once in the enclosed envelope. 32 IBERIABANK CORPORATION AND ACADIANA BANCSHARES, INC. PRO FORMA COMBINED FINANCIAL INFORMATION (unaudited) The following unaudited pro forma combined financial statements were prepared in connection with IBKC's offer to exchange each outstanding share of Acadiana common stock for $7.88 cash and between .6848 and .9265 shares of IBKC common stock, subject to adjustment, and give effect to the purchase accounting adjustments and other assumptions described in the accompanying notes. The unaudited pro forma combined balance sheet is based upon the unaudited consolidated balance sheets of IBKC and Acadiana as of September 30, 2002. The unaudited pro forma combined statement of income are based on the consolidated statements of income of IBKC and Acadiana for the nine-month period ended September 30, 2002 (unaudited) and the year ended December 31, 2001. The pro forma combined financial statements do not give effect to the anticipated cost savings or the disposition of certain yet-to-be identified assets. The resolution of the pending matters pertaining to the assets and liabilities of Acadiana described above, as well as the operations of Acadiana subsequent to September 30, 2002, will affect the allocation of the purchase price. In addition, changes to the adjustments already included in the unaudited pro forma combined financial statements are expected as valuations of assets and liabilities are completed and as additional information becomes available. An increase in the unallocated portion of the purchase price remaining after fair value adjustments will result in a greater final allocation to goodwill which will have a corresponding reduction in tangible common equity. A decrease in the unallocated portion of the purchase price remaining after fair value adjustments will have the opposite effect. Accordingly, the final pro forma combined amounts will differ from those set forth in the unaudited pro forma combined financial statements. The information shown below should be read in conjunction with the consolidated historical financial statements of IBKC and Acadiana, including the respective notes, which are incorporated by reference in this prospectus and the unaudited pro forma combined per share financial information which appear elsewhere in this prospectus. The pro forma data are presented for comparative purposes only and are not necessarily indicative of the combined financial position or results of operations in the future. The pro forma data are also not necessarily indicative of the combined financial position or results of operations which would have been realized had the merger been consummated during the periods or as of the dates for which the pro forma financial statements are presented. The pro forma financial statements are based on an .8371 exchange ratio. F-1 IBERIABANK CORPORATION AND ACADIANA BANCSHARES, INC PRO FORMA COMBINED BALANCE SHEET SEPTEMBER 30, 2002 (unaudited)
Historical --------------------- IBERIABANK Acadiana Pro Forma Pro Forma Corporation Bancshares Adjustments Combined ----------- ---------- ----------- ---------- (in thousands) ASSETS Cash and due from banks....................... $ 46,159 $ 23,190 $ (15,763) (a) $ 53,586 Investment securities......................... 317,088 54,363 151 (b) 371,602 Mortgage loans held for sale.................. 7,827 3,272 11,099 Loans......................................... 1,003,103 209,419 4,013 (b) 1,216,535 Allowance for loan loss....................... (12,518) (2,392) (14,910) ---------- -------- ---------- ---------- Net loans.................................. 990,585 207,027 4,013 1,201,625 ---------- -------- ---------- ---------- Goodwill...................................... 35,401 -- 24,809 (c) 60,210 Other assets.................................. 62,987 21,054 4,853 (b) 88,894 ---------- -------- ---------- ---------- Total assets............................... $1,460,047 $308,906 $ 18,063 $1,787,016 ========== ======== ========== ========== LIABILITIES Noninterest-bearing deposits.................. $ 151,078 $ 14,546 $ 165,624 Interest-bearing deposits..................... 1,061,431 193,873 3,758 (b) 1,259,062 ---------- -------- ---------- ---------- Total deposits............................. 1,212,509 208,419 3,758 1,424,686 Short-term borrowings......................... 47,296 1,605 48,901 Long-term debt................................ 37,919 68,211 5,943 (b)(d) 112,073 Other liabilities............................. 19,292 1,846 21,138 ---------- -------- ---------- ---------- Total liabilities.......................... 1,317,016 280,081 9,701 1,606,798 ---------- -------- ---------- ---------- SHAREHOLDERS' EQUITY Preferred stock............................... -- -- -- Common stock.................................. 7,381 27 961 8,369 Additional paid-in-capital.................... 71,739 32,986 3,213 107,938 Retained earnings............................. 98,783 26,602 (26,602) 98,783 Other......................................... (1,403) (542) 542 (1,403) Less: Treasury stock.......................... (33,469) (30,248) 30,248 (33,469) ---------- -------- ---------- ---------- Total shareholders' equity................. 143,031 28,825 8,362 (e) 180,218 ---------- -------- ---------- ---------- Total liabilities and shareholders' equity. $1,460,047 $308,906 $ 18,063 $1,787,016 ========== ======== ========== ==========
- -------- (a) $9.3 million for payment of $7.88 cash per Acadiana share and $6.5 million for after-tax cost of one-time expenses and cash-out of Acadiana options (b) Fair value adjustments, including $3.2 million of core deposit intangibles in other assets (c) Goodwill resulting from merger (d) Cancellation of Acadiana ESOP debt resulting in a $1.2 million reduction in liability (e) Elimination of Acadiana equity and issuance of 988,229 shares of IBKC stock, based on value of IBKC stock as of September 30, 2002, at a Fair Market Value of $37.2 million See notes to pro forma combined financial statements. F-2 IBERIABANK CORPORATION AND ACADIANA BANCSHARES, INC PRO FORMA COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2001 (unaudited)
Historical ---------------------- IBERIABANK Acadiana Pro Forma Pro Forma Corporation Bancshares Adjustments Combined ----------- ---------- ----------- --------- (in thousands, except per share data) Interest and Dividend Income Investment securities.............................. $ 17,833 $ 2,085 $ (15)(a) $ 19,903 Loans.............................................. 79,947 20,232 (951)(b) 99,228 Other.............................................. 2,588 651 (323)(c) 2,916 -------- ------- -------- -------- Total interest and dividend income.............. 100,368 22,968 (1,289) 122,047 -------- ------- -------- -------- Interest Expense Deposits........................................... 42,127 9,467 (1,756)(d) 49,838 Short-term borrowings.............................. 617 56 673 Long-term debt..................................... 3,274 3,953 (1,091)(e) 6,136 -------- ------- -------- -------- Total interest expense.......................... 46,018 13,476 (2,847) 56,647 -------- ------- -------- -------- Net Interest Income................................ 54,350 9,492 1,558 65,400 Provision for loan losses.......................... 5,046 20 5,066 -------- ------- -------- -------- Net interest income after provision for loan losses 49,304 9,472 1,558 60,334 -------- ------- -------- -------- Noninterest Income Service charges on deposit accounts................ 8,054 918 8,972 Gain on sale of loans, net......................... 2,234 720 2,954 Other.............................................. 4,856 210 5,066 -------- ------- -------- -------- Total noninterest income........................ 15,144 1,848 -- 16,992 -------- ------- -------- -------- Noninterest Expense Salaries and employee benefits..................... 21,187 4,243 25,430 Occupancy and equipment............................ 5,439 643 51 (f) 6,133 Amortization of acquisition intangibles............ 3,151 -- 915 (g) 4,066 Communication and delivery......................... 2,510 297 2,807 Other.............................................. 9,424 2,502 11,926 -------- ------- -------- -------- Total noninterest expense....................... 41,711 7,685 966 50,362 -------- ------- -------- -------- Income Before Income Taxes......................... 22,737 3,635 592 26,964 Income tax expense................................. 8,229 1,317 207 (h) 9,753 -------- ------- -------- -------- Net Income......................................... $ 14,508 $ 2,318 $ 385 $ 17,211 ======== ======= ======== ======== Earnings per share--basic.......................... $ 2.48 $ 2.12 $ 2.66 ======== ======= ======== Earnings per share--diluted........................ $ 2.36 $ 2.00 $ 2.41 ======== ======= ========
- -------- (a) Amortization of premium recorded on securities (b) Amortization of premium recorded on loans (c) Adjustment for lost interest on cash paid (d) Amortization of premium recorded on deposits (e) Amortization of premium recorded on FHLB borrowings (f) Depreciation of fair value adjustment to fixed assets (g) Amortization of core deposit intangible and mortgage servicing rights (h) Tax effect of all other adjustments at 35% See notes to pro forma combined financial statements. F-3 IBERIABANK CORPORATION AND ACADIANA BANCSHARES, INC. PRO FORMA COMBINED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (unaudited)
Historical ---------------------- IBERIABANK Acadiana Pro Forma Pro Forma Corporation Bancshares Adjustments Combined ----------- ---------- ----------- --------- (in thousands, except per share data) Interest and Dividend Income Investment securities.............................. $ 11,634 $ 1,935 $ (11)(a) $ 13,558 Loans.............................................. 53,687 12,382 (718)(b) 65,351 Other.............................................. 589 292 (242)(c) 639 -------- ------- ------- -------- Total interest and dividend income.............. 65,910 14,609 (971) 79,548 -------- ------- ------- -------- Interest Expense Deposits........................................... 19,225 4,717 (1,333)(d) 22,609 Short-term borrowings.............................. 368 30 398 Long-term debt..................................... 1,918 2,906 (827)(e) 3,997 -------- ------- ------- -------- Total interest expense.......................... 21,511 7,653 (2,160) 27,004 -------- ------- ------- -------- Net Interest Income................................ 44,399 6,956 1,189 52,544 Provision for loan losses.......................... 4,498 -- 4,498 -------- ------- ------- -------- Net interest income after provision for loan losses 39,901 6,956 1,189 48,046 -------- ------- ------- -------- Noninterest Income Service charges on deposit accounts................ 7,334 590 7,924 Gain on sale of loans, net......................... 1,406 525 1,931 Other.............................................. 4,522 495 5,017 -------- ------- ------- -------- Total noninterest income........................ 13,262 1,610 -- 14,872 -------- ------- ------- -------- Noninterest Expense Salaries and employee benefits..................... 17,238 3,483 20,721 Occupancy and equipment............................ 4,088 513 39(f) 4,640 Amortization of acquisition intangibles............ 224 -- 688(g) 912 Communication and delivery......................... 1,894 244 2,138 Other.............................................. 9,371 1,917 11,288 -------- ------- ------- -------- Total noninterest expense....................... 32,815 6,157 727 39,699 -------- ------- ------- -------- Income Before Income Taxes......................... 20,348 2,409 462 23,219 Income tax expense................................. 6,612 842 162(h) 7,616 -------- ------- ------- -------- Net Income......................................... $13,736 $ 1,567 $ 300 $15,603 ======== ======= ======= ======== Earnings per share--basic.......................... $ 2.41 $ 1.49 $ 2.33 ======== ======= ======== Earnings per share--diluted........................ $ 2.23 $ 1.38 $ 2.18 ======== ======= ========
- -------- (a) Amortization of premium recorded on securities (b) Amortization of premium recorded on loans (c) Adjustment for lost interest on cash paid (d) Amortization of premium recorded on deposits (e) Amortization of premium recorded on FHLB borrowings (f) Depreciation of fair value adjustment to fixed assets (g) Amortization of core deposit intangible and mortgage servicing rights (h) Tax effect of all other adjustments at 35% See notes to pro forma combined financial statements. F-4 IBERIABANK CORPORATION AND ACADIANA BANCSHARES, INC. NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (unaudited) NOTE 1--BASIS OF PRESENTATION The unaudited pro forma combined balance sheet combines the historical consolidated balance sheets of IBKC and Acadiana as if the merger had been effective on September 30, 2002. The pro forma combined statements of income for the nine month period ended September 30, 2002 and the year ended December 31, 2001 combine the historical consolidated statements of income of IBKC and Acadiana as if the merger is effective on January 1/st/ of each of the periods presented. Certain amounts in the historical financial statements of Acadiana have been reclassified in the unaudited pro forma combined financial statements to conform to IBKC's historical financial statements. The merger is accounted for as a purchase. In accordance with Financial Accounting Standards Board Statements No. 141 and No. 142, assets and liabilities of Acadiana are adjusted to their estimated fair value and combined with the recorded values of the assets and liabilities of IBKC. Applicable income tax effects of such adjustments are included as a component of IBKC's net deferred tax asset. Adjustments are made to reflect the recording of intangibles as well as to eliminate any intangible balances previously recorded by Acadiana in accordance with the purchase method of accounting. Determination of the fair value of Acadiana's assets and liabilities has been estimated based on best available information. Purchase accounting adjustments are subject to change as new information becomes available. NOTE 2--PURCHASE PRICE The purchase price is based on exchanging $7.88 in cash and .8371 shares of IBKC common stock for each outstanding Acadiana share at the closing price per share of IBKC common stock on September 30, 2002, the date of the pro forma balance sheet. Exercise of Acadiana's stock options are not included in the number of outstanding shares of Acadiana on the assumption that all options will be cashed out on the closing date at a price equal to the fair market value of IBKC stock to be issued less the exercise price of the option. Based upon values as of September 30, 2002, the total market value of the IBKC common stock to be issued in connection with the merger is calculated as follows (in thousands): Acadiana's common shares outstanding on September 30, 2002....... 1,180 Exchange ratio................................................... .8371 ------- IBKC common stock to be issued................................... 988 Market price per share of IBKC common stock at September 30, 2002 $ 37.63 ------- Total market value of IBKC common stock to be issued............. $37,187 =======
In addition to the above market value of the IBKC common stock to be issued, the total purchase price will include other direct merger costs of IBKC, such as legal, investment banking and other professional fees. F-5 IBERIABANK CORPORATION AND ACADIANA BANCSHARES, INC. NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued) (unaudited) NOTE 3--ALLOCATION OF PURCHASE PRICE Certain matters are still pending that will have an effect on the ultimate allocation of the purchase price. Accordingly, the allocation of the purchase price has not been finalized and the portion of the purchase price allocated to goodwill and the identifiable intangibles (discussed below) is subject to change. All amounts are based on best available information as of September 30, 2002, including the amount assigned to core deposit intangibles, which will be determined through a core deposit study at a later date. The purchase price has been allocated as described in the table below (in thousands): Historical net assets applicable to Acadiana's common stock at September 30, 2002..... $28,825 After tax merger related charges, severance payments and data processing contract termination costs................................................................... (3,080) Payment in settlement of Acadiana's outstanding stock options, net of tax............. (3,380) Increase (decrease) to Acadiana's net asset value at September 30, 2002 as a result of estimated fair value adjustments: Investment Securities.............................................................. $ 151 Loans.............................................................................. 4,013 Fixed Assets....................................................................... 1,565 Core Deposit Intangibles........................................................... 3,163 Other Assets....................................................................... (325) Deposits........................................................................... (3,758) FHLB Borrowings.................................................................... (7,143) Unearned ESOP liability............................................................ 1,200 Deferred taxes on fair value adjustments........................................... 450 ------- Net estimated fair value adjustments........................................... (684) Elimination of Acadiana's existing goodwill and identifiable intangibles.............. 0 ------- Total preliminary allocation of purchase price..................................... 21,681 Goodwill due to the merger............................................................ 24,809 ------- Total purchase price............................................................... $46,490 =======
It is expected that approximately $5.6 million of costs related to premises, severance and other restructuring charges will be incurred in connection with the merger. To the extent that this amount includes costs related to Acadiana's premises, employees and operations, they will affect the final amount of goodwill as of the consummation of the merger. The remaining costs related to IBKC's premises, employees and operations as well as all costs relating to systems conversions and other indirect, integration costs will be expensed, either upon consummation of the merger or as incurred. NOTE 4--TRANSACTION FUNDING For purposes of these statements, funding for the transaction has been assumed to come out of interest-bearing cash currently invested as of September 30, 2002 at 2.05%. Alternative funding sources for this transaction and other liquidity requirements include borrowings or the issuance of trust preferred stock. F-6 IBERIABANK CORPORATION AND ACADIANA BANCSHARES, INC. NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued) (unaudited) NOTE 5--AVERAGE SHARES OUTSTANDING The pro forma weighted average shares outstanding for each of the periods presented is based on the historical IBKC weighted average shares outstanding plus the shares of common stock to be issued to Acadiana shareholders. Based on the price of IBKC stock at September 30, 2002, a total of 988,229 shares would be issued in the merger. NOTE 6--PURCHASE ADJUSTMENT AMORTIZATION PERIOD The following assumptions were utilized for purposes of determining the pro forma effect of the Acadiana acquisition on the statement of income:
Amortization Method of Amortization or Category of Purchase Adjustment Period Accretion - ------------------------------- ------------ ------------------------- Investment securities (held to maturity) 10 years Straight line Mortgage loans.......................... 7 years Interest method Other loans............................. 3 years Straight line Buildings............................... 35 years Straight line Core deposit intangibles................ 7 years Sum of the Years Digits Deposits................................ 2.8 years Interest method Long-term debt.......................... 6.5 years Interest method
F-7 APPENDIX A FAIRNESS OPINION OF TRIANGLE CAPITAL PARTNERS, LLC Board of Directors Acadiana Bancshares, Inc. 200 West Congress Street Lafayette, LA 70501 Members of the Board of Directors: You have requested our opinion as to the fairness, from a financial point of view, to the holders ("Holders") of the common stock (the "Shares") of Acadiana Banchares, Inc. ("ANA") of the Merger Consideration to be paid by IBERIABANK Corporation ("IBKC") in connection with the proposed merger (the "Merger") between ANA and IBKC. The Merger will be completed pursuant to the Agreement and Plan of Merger dated September 22, 2002 (the "Agreement") by and between ANA and IBKC. Pursuant to the Agreement, ANA will be merged into a wholly owned subsidiary of IBKC. Under the terms of the Agreement, at the Effective Time, each of the outstanding Shares, other than certain shares specified in the Agreement, will be converted into cash in the amount of $7.88 per share and common stock in an exchange ratio ranging from 0.6848 to 0.9265 shares of IBKC common stock (subject to adjustment under certain defined circumstances) (such cash and common stock proposed to be received by the Holders (other than any Shares held by IBKC or their affiliates) being referred to herein as the "Merger Consideration"). Once the exchange ratio has been fixed, based on a valuation period that will conclude in the month in which the transaction is completed, the market value of the stock portion of the Merger Consideration to be paid by IBKC will fluctuate from that point forward with changes in IBKC's stock price. The Merger Agreement may be terminated prior to the Effective Time by the board of directors of ANA if the Market Value (as defined in the Agreement) is less than $30.00, subject to IBKC's right to increase the cash portion of the Merger Consideration. In arriving at our fairness opinion, we have reviewed certain publicly available business, financial and stockholder information relating to IBKC and its subsidiaries and to ANA and its subsidiaries. In addition, we have reviewed certain financial information provided to us by both IBKC and ANA pertaining to their respective business plans and projections. In connection with the foregoing, we have (i) reviewed the Agreement, (ii) IBKC's Annual Report, Proxy Statement, and Form 10-K for the three calendar years ended December 31, 2001, 2000 and 1999, and IBKC's quarterly reports on Form 10-Q for the trailing three calendar quarters through September 30, 2002, (iii) ANA's Annual Report, Proxy Statement, and Form 10-K for the three calendar years ended December 31, 2001, 2000 and 1999, and ANA's quarterly reports on Form 10-Q for the trailing three calendar quarters through September 30, 2002. In addition, with respect to both IBKC and ANA, we have reviewed certain internal financial information and financial forecasts relating to the business, earnings, cash flows, assets and prospects of the respective companies furnished to us by IBKC and ANA, have held discussions with members of senior management of ANA and IBKC, including without limitation, their respective outside accountants, legal advisors and others concerning the past and current results of operations of ANA and IBKC, their respective current financial condition and managements' opinion of their respective future prospects. We have also reviewed the historical record of reported prices, trading activity and dividend payments for both IBKC and ANA. We have compared the reported financial terms of selected recent business combinations in the banking industry and performed such other studies and analyses as we considered appropriate under the circumstances. For purposes of this opinion, we have assumed and relied on, without independent verification, the accuracy and completeness of the material furnished to us by ANA and IBKC and the material otherwise made available to us, including information from published sources, and we have not independently verified such data. With A-1 respect to the financial information, including forecasts we received from IBKC and ANA, we assumed (with your consent) that they had been reasonably prepared reflecting the best currently available estimates and good faith judgment of the management of IBKC and ANA. In addition, we have not made or obtained any independent appraisals or valuations of the assets or liabilities, and potential and/or contingent liabilities of IBKC or ANA. We have further relied on the assurances of management of IBKC and ANA that they are not aware of any facts that would make such information inaccurate or misleading. We express no opinion on matters of a legal, regulatory, tax or accounting nature or the ability of the Merger, as set forth in the Agreement, to be consummated. No opinion is expressed as to whether any alternative transaction might produce Merger Consideration for ANA or its Holders in an amount in excess of that contemplated in the Merger (and ANA has informed us that no alternative transaction is, and we are not otherwise aware of any alternative transaction that is, currently being contemplated by ANA). In rendering our opinion, we have assumed that the Merger will be consummated on the terms described in the Agreement. We have also assumed that the Fee Adjustment Amount (as defined in the Agreement), if any, will not exceed $3 million. We were not requested to and did not solicit any expressions of interest from any other parties with respect to the actions contemplated in connection with the Merger. In rendering our opinion, we have assumed that in the course of obtaining the necessary approvals for the Merger, no restrictions or conditions will be imposed that would have a material adverse effect on the contemplated benefits of the Merger to IBKC or the ability to consummate the Merger. Our opinion is based on the market, economic and other relevant considerations as they exist and have been evaluated by us on the date hereof. We have acted as financial advisor to ANA in connection with the Merger and will receive a fee for such services, including a fee that is contingent upon rendering this opinion and a fee which is contingent upon consummation of the Merger. In addition, ANA has agreed to indemnify us for certain liabilities arising out of our engagement by ANA in connection with the Merger. This opinion may not be disclosed, communicated, reproduced, disseminated, quoted or referred to at any time (in whole or part), to any third party or in any manner of for any purpose whatsoever without our prior written consent, although this opinion may be (i) furnished to IBKC for inspection purposes only, provided however, that such consent to provide IBKC with a copy of this opinion is based on the condition that each of ANA and IBKC have acknowledged and agreed that IBKC is not authorized to and shall not rely on this opinion, and (ii) included in its entirety in the proxy statement/prospectus of ANA used to solicit stockholder approval of the Merger so long as any description of or reference to us or this opinion and the related analysis in such filing is in a form reasonably acceptable to us and our counsel. It should be understood that subsequent developments may affect this opinion and we do not have any obligation to revise or reaffirm this opinion. The opinion does not in any matter address the prices at which the capital stock of ANA or IBKC or any of their respective affiliates has traded in the past or at which such stock of IBKC or any of its affiliates may trade after the Merger. It is understood that this letter is directed to the Board of Directors of ANA in its consideration of the Agreement, and is not intended to be and does not constitute a recommendation to any Holder as to how such Holder should vote with respect to the Merger. Based upon and subject to the foregoing, including the various assumptions and limitations set forth herein, and based on such other matters as we considered relevant, it is our opinion that as of the date hereof, the Merger Consideration to be paid by IBKC in the Merger is fair, from a financial point of view, to the Holders of ANA. Very truly yours, TRIANGLE CAPITAL PARTNERS, LLC A-2 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. Indemnification of Directors and Officers Section 83 of the Louisiana Business Corporation Law permits a corporation to indemnify its directors and officers against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any action, suit or proceeding to which he is or was a party or is threatened to be made a party (including any action by or in the right of the corporation) if such action arises out of the fact that he is or was a director, officer, employee or agent of the corporation and he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The indemnification provisions of Section 83 are not exclusive, but no corporation may indemnify any person for willful or intentional misconduct. A corporation has the power to obtain and maintain insurance, or to create a form of self-insurance on behalf of any person who is or was acting for the corporation, regardless of whether the corporation has the legal authority to indemnify the insured person against such liability. Article 8 of IBKC's articles of incorporation provides for mandatory indemnification for current and former directors and officers to the full extent permitted by Louisiana law. IBKC maintains an insurance policy covering the liability of its directors and officers for actions taken in their official capacity. Item 21. Exhibits and Financial Statement Schedules (a) Exhibits The following Exhibits are filed as part of this Registration Statement:
Exhibit No. Description - ----------- ----------- 2.1 Agreement and Plan of Merger (incorporated by reference to Exhibit 2.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002) 2.2 Stock Option Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002) 3.1 Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001) 3.2 Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2001) 5 Opinion of Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P. 8 Form of Opinion of Castaing Hussey & Lolan, LLC on certain tax matters 23.1 Consent of Castaing, Hussey & Lolan, LLC. 23.2 Consent of Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P. (included in Exhibit 5) 23.3 Consent of Triangle Capital Partners, LLC 23.4 Consent of Independent Auditors 23.5 Consent of Independent Auditors 24 Powers of Attorney of directors of IBKC (See Signature Page) 99.1 Form of Proxy of Acadiana 99.2 Acadiana's 2001 Annual Report to Stockholders 99.3 Acadiana's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 (incorporated by reference)
II-1 Item 22. Undertakings The undersigned Registrant hereby undertakes as follows: (1) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4 within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. (2) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. (3) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (4) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (6) That, for the purpose of determining any liability under the Securities Act of 1933 each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement related to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (7) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the Registrant undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. (8) That every prospectus (i) that is filed pursuant to paragraph (4) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment is effective, and that, for purposes of determining any II-2 liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (9) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in response to Item 20 of this Registration Statement, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New Iberia, State of Louisiana on the 25th day of November, 2002. IBERIABANK CORPORATION By: /s/ DARYL G. BYRD ------------------------- Daryl G. Byrd President and Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints each of Daryl G. Byrd, Marilyn W. Burch and Joyce L. Schenewerk, his true and lawful attorney-in-fact, each acting alone, with full power of substitution and for him and in his name, place and stead, in any and all capacities to sign any and all amendments including post-effective amendments to this registration statement and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact or their substitutes, each acting alone, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ DARYL G. BYRD Chief Executive Officer and November 25, 2002 - ---------------------------- Director Daryl G. Byrd /s/ MARILYN W. BURCH Chief Financial Officer and November 25, 2002 - ---------------------------- Principal Accounting Officer Marilyn W. Burch /s/ WILLIAM H. FENSTERMAKER Chairman of the Board and November 25, 2002 - ---------------------------- Director William H. Fenstermaker /s/ ELAINE D. ABELL Director November 25, 2002 - ---------------------------- Elaine D. Abell /s/ HARRY V. BARTON, JR. Director November 25, 2002 - ---------------------------- Harry V. Barton, Jr. /s/ ERNEST P. BREAUX, JR. Director November 25, 2002 - ---------------------------- Ernest P. Breaux, Jr. /s/ CECIL C. BROUSSARD Director November 25, 2002 - ---------------------------- Cecil C. Broussard /s/ JOHN N. CASBON Director November 25, 2002 - ---------------------------- John N. Casbon
S-1
Signature Title Date --------- ----- ---- /s/ LARREY G. MOUTON Director November 25, 2002 - ------------------------ Larrey G. Mouton /s/ JEFFERSON G. PARKER Director November 25, 2002 - ------------------------ Jefferson G. Parker /s/ E. STEWART SHEA III Director November 25, 2002 - ------------------------ E. Stewart Shea III
S-2 The following Exhibits are filed as part of this Registration Statement:
Exhibit No. Description - ----------- ----------- 2.1 Agreement and Plan of Merger (incorporated by reference to Exhibit 2.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002) 2.2 Stock Option Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002) 3.1 Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001) 3.2 Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2001) 5 Opinion of Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P. 8 Form of Opinion of Castaing Hussey & Lolan, LLC on certain tax matters 23.1 Consent of Castaing, Hussey & Lolan, LLC. 23.2 Consent of Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P.(included in Exhibit 5) 23.3 Consent of Triangle Capital Partners, LLC 23.4 Consent of Independent Auditors 23.5 Consent of Independent Auditors 24 Powers of Attorney of directors of IBKC (See Signature Page) 99.1 Form of Proxy of Acadiana 99.2 Acadiana's 2001 Annual Report to Stockholders 99.3 Acadiana's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 (incorporated by reference)
E-1 EX-5 3 dex5.txt OPINION OF CORRERO FISHMAN HAYGOOD PHELPS Exhibit 5 November 26, 2002 File No. 1527-012 IBERIABANK Corporation 1101 East Admiral Doyle Drive New Iberia, LA 70560 Ladies and Gentlemen: We have acted as counsel for IBERIABANK Corporation, a Louisiana corporation (the "Company"), in connection with the filing, with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), of the Company's registration statement on Form S-4 (the "Registration Statement") covering up to 1,152,528 shares of the common stock of the Company (the "Shares") which the Company proposes to issue to shareholders of Acadiana Bancshares, Inc., ("Acadiana") in accordance with the Agreement and Plan of Merger (the "Plan"), dated as of September 22, 2002, between the Company and Acadiana pursuant to which, among other things, Acadiana will merge into IBERIABANK Acquisition Corporation, a wholly owned subsidiary of the Company. For the purposes of the opinions expressed below, we have examined the Registration Statement, the Plan, the Articles of Incorporation, as amended, and By-laws, as amended, of the Company, and such other documents and sources of law as we considered necessary to render the opinions hereinafter expressed. Based upon the foregoing, and upon our examination of such matters as we deem necessary in order to furnish this opinion, we are of the opinion that the Shares registered pursuant to the Registration Statement, when issued in accordance with the terms of the Plan, will be duly authorized, validly issued, fully paid and non-assessable. This opinion letter is limited to the matters expressly stated herein and no opinion is implied or may be inferred beyond the matters expressly stated. We hereby consent (i) to be named in the Registration Statement under the heading "Legal Matters" as counsel for the Company and (ii) to the filing of this opinion as an exhibit to the Registration Statement. In so doing we do not admit that we are "experts" within the meaning of the Securities Act of 1933. Sincerely, /s/ Anthony J. Correro, III Anthony J. Correro, III EX-8 4 dex8.txt OPINION OF CASTAING, HUSSEY & LOLAN, LLC Exhibit 8 DRAFT TAX OPINION OF CASTAING, HUSSEY & LOLAN, LLC [LETTERHEAD OF CASTAING, HUSSEY & LOLAN, LLC APPEARS HERE] , 2003 IBERIABANK Corporation 1101 East Admiral Doyle Drive New Iberia, LA 70560 Acadiana Bancshares, Inc. 200 West Congress Street Lafayette, LA 70502 Dear Sir or Madam: This letter is in response to your request that we provide you with our opinion concerning certain federal income tax consequences which would arise from consummation of the proposed merger of Acadiana Bancshares, Inc. ("Acadiana") with and into a wholly-owned subsidiary of IBERIABANK Corporation ("IBKC") (the "Merger"). We have examined the law and such papers, including the Agreement and Plan of Merger dated September 22, 2002 (the "Agreement"), the registration statement on Form S-4 and additional documents as deemed necessary to render this opinion. As to questions of fact material to our opinion we have relied upon representations of IBKC and Acadiana contained in letters addressed to us, without undertaking to verify the same by independent investigation; upon representations set forth in the Agreement (including the Exhibits); and upon such other documents pertaining to the merger as we have deemed appropriate and necessary. In our examination we have assumed that (i) the Merger will be consummated in accordance with the terms of the Agreement; (ii) each entity that is a party to the documents described in the preceding paragraphs has been duly organized under the laws of its state or country of organization, is validly existing and in good standing under such laws, and is duly qualified and in good standing in each jurisdiction in which it is required to be qualified to engage in the transactions contemplated by the documents (iii) each such entity has full power, authority, capacity, and legal right to enter into and perform the terms of the Agreement and the transactions contemplated thereby; (iv) the copies or originals of the documents furnished to us are authentic (if originals) or accurate (if copies), those that are contracts or instruments are enforceable and effective in accordance with their terms against all parties thereto, and all signatures are genuine; (v) any representations made in the documents are, and will continue to be, true and complete, and no default exists under any of the documents; (vi) the business and affairs of each of the entities that is a party to any of the documents will be conducted in accordance with the documents and all relevant laws; (vii) no actions will be taken, no change in any of the documents will occur, and no other events will occur, after the date hereof, that would have the effect of altering the facts, documents, or assumptions upon which this opinion is based; and (viii) the business reasons for the merger will constitute valid business purposes, within the meaning of Treasury Regulation Section 1.368-1(b) and (c), for the Merger. The opinion rendered herein is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Department proposed, temporary, and final regulations, judicial decisions, and rulings and administrative interpretations of the Internal Revenue Service, as each of the foregoing exists on the date hereof. The opinion rendered below is not binding on the Internal Revenue Service or a court of law, and no assurance can be given that legislative or administrative action or judicial decisions that differ from the opinion rendered below will not be forthcoming. Any such differences could be retroactive to transactions or business operations prior to such action or decisions. We express no opinion as to the federal income tax consequences of the Merger other than that described below, as to the effect of the Merger on prior transactions, or as to any state, local, or foreign income or other tax consequences with respect to the Merger. Based on the foregoing, we are of the opinion, as of the date hereof and, under existing law, that: (a) the Merger qualifies as a reorganization under Section 368(a)(1)(A) of the Internal Revenue Code, and Acadiana and IBKC each will be a "party to a reorganization" within the meaning of Section 368(b) of the Code. (b) no gain or loss will be recognized by Acadiana or IBKC as a result of the Merger. (c) a shareholder of Acadiana who receives both IBKC common stock and cash consideration in exchange for all of his or her shares of Acadiana common stock generally will recognize gain, but not loss, to the extent of the lesser of: (1) the excess, if any, of (a) the sum of the aggregate fair market value of the cash and IBKC common stock received over (b) the shareholder's tax basis in Acadiana common stock; and (2) the amount of cash received; (d) the aggregate tax basis of the IBKC common stock received by shareholders of Acadiana who exchange all of their Acadiana common stock in the Merger will equal such shareholder's aggregate tax basis in the shares of Acadiana common stock being exchanged, reduced by any amount allocable to a fractional share interest of IBKC common stock for which cash is received and by the amount of any cash consideration received, and increased by the amount of taxable gain, if any, recognized by such shareholder in the Merger, (e) the holding period of the shares of IBKC common stock received in the Merger will include the period during which the shares of Acadiana common stock surrendered in exchange therefor were held, provided such shares of Acadiana common stock were held as capital assets at the effective time of the Merger. We are furnishing this letter to you solely for filing with the Securities and Exchange Commission as an exhibit to the Registration Statement and for description of the opinion therein. This letter is not to be used, circulated, quoted, or otherwise referred to for any other purpose without our prior written consent. We undertake no responsibility to update or supplement this letter. Sincerely, CASTAING, HUSSEY & LOLAN, LLC EX-23.1 5 dex231.txt CONSENT OF CASTAING, HUSSEY & LOLAN, LLC Exhibit 23.1 CONSENT OF CASTAING HUSSEY & LOLAN, LLC We hereby consent; (i) to the use of our name under the heading "Federal Income Tax Consequences" in IBKC's registration statement on Form S-4 (the "Registration Statement") and, (ii) to the filing of our tax opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement for the registration of 1,152,528 shares of its common stock. /s/ Castaing Hussey & Lolan, LLC New Iberia, Louisiana November 26, 2002 EX-23.3 6 dex233.txt CONSENT OF TRIANGLE CAPITAL PARTNERS, LLC Exhibit 23.3 CONSENT OF TRIANGLE CAPITAL PARTNERS, LLC We hereby consent: (i) to the use of our firm's name under the heading "Opinion of Acadiana's Financial Advisor" in IBKC's registration statement on Form S-4 (the "Registration Statement") and, (ii) to the filing of our fairness opinion with the Securities and Exchange Commission as Appendix A to the prospectus included in the Registration Statement. /s/ TRIANGLE CAPITAL PARTNERS, LLC Raleigh, North Carolina November 26, 2002 EX-23.4 7 dex234.txt CONSENT OF CASTAING HUSSLEY RE 02/04/02 REPORT Exhibit 23.4 CONSENT OF INDEPENDENT AUDITORS We consent to reference to our firm under the caption "Experts" and to the use of our report dated February 4, 2002, with respect to the December 31, 2001 financial statements of IBERIABANK Corporation, incorporated by reference in the proxy statement/prospectus that is made a part of IBERIABANK Corporation's Registration Statement on Form S-4 for the registration of 1,152,528 shares of this common stock. /s/ Castaing Hussey & Lolan, LLC New Iberia, Louisiana November 26, 2002 EX-23.5 8 dex235.txt CONSENT OF CASTAING HUSSLEY RE 01/25/02 REPORT Exhibit 23.5 CONSENT OF INDEPENDENT AUDITORS We consent to reference to our firm under the caption "Experts" and to the use of our report January 25, 2002, with respect to the December 31, 2001 financial statements of Acadiana Bancshares Inc., incorporated by references in the proxy statement/prospectus that is made a part of IBERIABANK Corporation's Registration Statement on Form S-4 for the registration of 1,152,528 shares of its common stock. /s/ Castaing Hussey & Lolan, LLC New Iberia, Louisiana November 26, 2002 EX-99.1 9 dex991.txt FORM OF PROXY EXHIBIT 99.1 ACADIANA BANCSHARES, INC. 200 West Congress Street Lafayette, Louisiana 70501 Special Meeting of Shareholders , 2002 This Proxy is solicited on behalf of the Board of Directors. The undersigned, hereby appoints Gerald G. Reaux, Jr. and Emile E. Sculier, III, and each of them, as proxies of the undersigned, each with the full power to appoint his or her substitute to vote as designated on the reverse of this card all of the shares of Acadiana Bancshares, Inc. ("Acadiana") common stock which the undersigned is entitled to vote at the special meeting of shareholders to be held at Lafayette, Louisiana on , , 2002, at :00 a.m., Central Time, or any adjournment or postponement thereof. This Proxy may be revoked at any time before it is exercised. Shares of Acadiana common stock will be voted as specified. Unless otherwise specified, this Proxy will be voted "FOR" the proposal to approve an Agreement and Plan of Merger, dated as of September 22, 2002, between IBERIABANK Corporation and Acadiana and "FOR" the proposal to adjourn the special meeting if necessary to permit further solicitation of proxies on the proposal to approve the merger agreement. If any other matter is properly presented at the special meeting of shareholders, the Proxy will be voted in accordance with the judgment of the persons appointed as Proxies. A shareholder wishing to vote in accordance with the Board of Directors' recommendations need only sign and date this proxy and return it in the enclosed envelope. Shares cannot be voted by the Proxies unless this Proxy Card is signed and returned. IMPORTANT: PLEASE DATE AND SIGN THE PROXY ON REVERSE SIDE. - -------------------------------------------------------------------------------- (Continued from other side) THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS. 1. Proposal to approve and adopt an Agreement and Plan of Merger, dated as of September 22, 2002, between IBERIABANK Corporation ("IBKC") and Acadiana Bancshares, Inc. ("Acadiana") pursuant to which, among other things, Acadiana will merge into IBERIABANK Acquisition Corporation, a wholly owned subsidiary of IBKC, and on the effective date of the merger each outstanding share of common stock of Acadiana will be converted into the right to receive $7.88 in cash and $31.50 in IBKC common stock based on the average closing price during a specified measurement period, but not less than .6848 nor more than .9265 shares of IBKC common stock, subject to adjustment as determined in accordance with the terms of the Agreement and Plan of Merger. FOR AGAINST ABSTAIN [_] [_] [_] 2. Proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the merger agreement. FOR AGAINST ABSTAIN [_] [_] [_] 3. In their discretion, upon any other matter that may properly come before the special meeting of shareholders or any postponement or adjournment thereof. The Board of Directors of Acadiana unanimously recommends a vote "FOR" approval of the merger agreement and "FOR" the proposal to adjourn the special meeting if necessary to permit further solicitation of proxies on the proposal to approve the merger agreement. Such votes are hereby solicited by the Board of Directors. Dated: ----------------------------- Signature ----------------------------- Signature ----------------------------- (print name) Important: Please sign your name exactly as it appears on thestock certificate. When shares are held as joint tenants, eithermay sign. When signing as an attorney, executor,administrator, trustee or guardian, add such title to yoursignature. Note: If you receive more than one proxy card, please dateand sign each card and return all proxy cards in the enclosedenvelope. EX-99.2 10 dex992.txt ACADIANA'S ANNUAL REPORT EXHIBIT 99.2 2001 A New Era Acadiana Bancshares, Inc. 2001 Annual Report Letter to shareholders 2 Dedication to Mr. Lawrence Gankendorff 4 Selected consolidated financial information 6 Management's discussion and analysis 7 Independent auditors' report 18 Consolidated balance sheets 19 Consolidated income statements 20 Consolidated statements of stockholders' equity 21 Consolidated statements of cash flows 22 Notes to consolidated financial statements 23 About the company 38 A New Era Dear Fellow Shareholders: On behalf of the directors, management and staff of our Company, we are pleased to provide you with our 2001 Annual Report. It is with great pride that we dedicate this report to our outgoing Chairman, Lawrence Gankendorff, in honor of his 60 years of dedicated service to our Company. "There are few organizations in the history of our community which have been more profoundly influenced by the efforts of one man. His vision and commitment to excellence will always serve as a catalyst for the core values of our Company." RETURN ON CAPITAL During 2001, we successfully increased our return on average equity from 7.99% to 8.58% in addition to paying aggregate dividends of $.60 per share. In July of 2001, we celebrated the fifth anniversary of our initial public offering. We are pleased to report our stock out-performed the S & P 500 during our first five years as a public company. EMPLOYEE OWNERSHIP CULTURE As of December 31, 2001, our Employee Stock Ownership Plan Trust ("ESOP") owns 17.29% of the outstanding shares of our Company. This partnership has successfully aligned the interests of all employees with those of our shareholders. This environment supports a culture of performance-driven goals and objectives that is focused on enhancing shareholder value. [PHOTO OF JERRY REAUX APPEARS HERE] Jerry Reaux Chairman, President and Chief Executive Officer MAIN OFFICE RELOCATION The relocation of our main office facility was successfully completed in March of 2001 with minimal impact to earnings. We remain confident that this facility will provide a platform for future growth and expansion which has significant potential for our organization. CAPITAL MANAGEMENT PLAN The Company remained committed to enhancing shareholder value through stock repurchases during 2001. Since our initial public offering, the Company has acquired 1,547,529 shares of treasury stock. These transactions have contributed significantly to achieving our fourth consecutive year of double-digit earnings per share growth. 2 COMMERCIAL BANKING Commercial loans assets increased 24.24% during 2001 as we continued expanding our people and products to facilitate continued growth. This strategy remains a key element of our commercial banking transition. ASSET QUALITY Management remains committed to maintaining prudent underwriting standards in managing the credit risks associated with our lending activities. At year-end, our non-performing assets were .21% of total assets, well below peer group comparatives. MORTGAGE LENDING In 2001, we remained focused on generating fee income from mortgage loan production as a result of dramatic changes in the yield curve environment. The total gain on sale of mortgage loans was $720,000 during the 2001 calendar year. This strategy continues to improve the mix of our earning assets while reducing our historical dependence on mortgage loans. TECHNOLOGY During 2001, our Company made the decision to upgrade and expand our core operating systems by joining a cooperative data processing center, owned by its customers, Financial Institutions Service Corporation. Our data processing systems are expected to be converted in May of 2002 to a platform which will provide expanded system functionality. RETAIL BANKING While overall deposits contracted 3.99% during 2001, the mix of deposits improved significantly as evidenced by a 31.71% increase in noninterest-bearing deposits. Consumer loans grew by 3.78% for the year despite significant prepayments associated with mortgage refinancing activity. THE YEAR AHEAD We remain dedicated to transitioning our traditional thrift institution into a full-service commercial bank. The upcoming year will present a technologically challenging operating environment as we prepare to convert our data processing systems to Financial Institutions Service Corporation. We will work diligently to navigate this transition with minimal impact to the clients we serve. Thank you for your confidence in our Company. We look forward to reporting continued success in the future. Sincerely, /s/ Jerry Reaux - ------------------------------------------------------------------------------- Jerry Reaux Chairman, President and Chief Executive Officer Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report SELECTED CONSOLIDATED FINANCIAL INFORMATION - -------------------------------------------------------------------------------- The following selected consolidated financial and other data of the Company does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed financial information, including the Consolidated Financial Statements of the Company and Notes thereto, contained elsewhere herein. (Dollars In Thousands, except per share data)
At December 31, 2001 2000 1999 1998 1997 - -------------------------------------------------------------------------------------------------------- Selected Financial Condition Data: Total assets $315,505 $324,467 $305,696 $282,089 $277,066 Cash and cash equivalents 11,295 8,467 11,922 7,578 14,157 Loans receivable, net 229,891 264,805 244,996 225,752 212,840 Investment securities 51,701 35,912 37,981 38,764 41,696 Deposit accounts 215,569 224,531 213,212 201,654 195,043 Borrowings 71,729 69,756 63,850 47,228 36,628 Stockholders' Equity 26,812 28,782 27,750 32,174 44,562 Year Ended December 31, 2001 2000 1999 1998 1997 - -------------------------------------------------------------------------------------------------------- Selected Operating Data: Interest income $ 22,968 $ 24,101 $ 21,407 $ 21,553 $ 20,464 Interest expense 13,476 14,896 12,195 11,935 10,860 - -------------------------------------------------------------------------------------------------------- Net interest income 9,492 9,205 9,212 9,618 9,604 Provision (credit) for loan losses 20 (83) -- 90 180 - -------------------------------------------------------------------------------------------------------- Net Interest income after provision for loan losses 9,472 9,288 9,212 9,528 9,424 Non-interest income 1,848 1,188 994 1,059 1,033 Non-interest expense (1) (7,685) (7,045) (6,771) (6,655) (5,878) - -------------------------------------------------------------------------------------------------------- Income before taxes 3,635 3,431 3,435 3,932 4,579 Income tax expense 1,317 1,207 1,229 1,427 1,632 - -------------------------------------------------------------------------------------------------------- Net income $ 2,318 $ 2,224 $ 2,206 $ 2,505 $ 2,947 ======================================================================================================== Earnings per share - basic $ 2.12 $ 1.80 $ 1.60 $ 1.20 $ 1.22 Earnings per share - diluted $ 2.00 $ 1.78 $ 1.55 $ 1.17 $ 1.20 Dividends declared per share $ 0.60 $ 0.60 $ 0.52 $ 0.44 $ 0.38 Dividend payout ratio 28.73% 34.40% 33.27% 37.05% 31.76% At or For the Year Ended December 31, 2001 2000 1999 1998 1997 - -------------------------------------------------------------------------------------------------------- Other Data: Profitability: Return on average assets 0.73% 0.70% 0.76% 0.87% 1.10% Return on average equity 8.58 7.99 7.57 6.05 6.38 Interest rate spread for period (2) 2.65 2.48 2.72 2.59 2.69 Net interest margin (3) 3.11 3.00 3.28 3.41 3.66 Efficiency ratio (4) 67.77 67.79 66.34 62.33 55.26 Other expenses to average assets 2.42 2.22 2.33 2.31 2.19 Capital Ratios: Average equity to average assets 8.50 8.76 10.03 14.35 17.23 Total capital to risk-weighted assets 15.78 16.59 17.51 20.86 31.39 Asset Quality: Non-performing assets to total assets (5) 0.21 0.07 0.03 0.07 0.22 Allowance for loan losses to total loans 1.15 1.01 1.08 1.16 1.25 Allowance for loan losses to non-performing loans and troubled debt restructuring 586.58 441.30 496.75 396.80 297.09
(1) With respect to 1997, includes $436,000 recovery of net foreclosed assets. (2) The interest rate spread represents the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities. (3) The net interest margin represents net interest income divided by average interest-earning assets. (4) The efficiency ratio is non-interest expense divided by the sum of net interest income plus non-interest Income. (5) Non-performing assets include nonaccrual loans, accruing loans delinquent 90 days or more and foreclosed assets. 6 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report [LOGO] A New Era Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis is intended to assist readers in understanding the financial condition and results of operations of Acadiana Bancshares, Inc. (the "Company") and its subsidiaries, LBA Savings Bank (the "Bank") and Acadiana Holdings, L.L.C. ("Holdings") at December 31, 2000 and 2001 and for the years ended December 31, 1999 through 2001. This review should be read in conjunction with the audited consolidated financial statements, accompanying footnotes and supplemental financial data included herein. PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT In addition to historical information, this Annual Report includes certain "forward-looking statements," as defined in the Securities Act of 1933 and the Securities Exchange Act of 1934, based on current management expectations. The Company's actual results could differ materially from those management expectations. Such forward-looking statements include statements regarding our intentions, beliefs or current expectations as well as the assumptions on which such statements are based. Stockholders and potential stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of the Company's loan and investment portfolios, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and fees. The Company undertakes no obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. OVERVIEW This overview is intended to summarize important information that should be considered when reading this report. One of management's goals has been to increase earnings per share and return on average equity by changing the mix of the Company's loan portfolio by lessening its historical dependence on interest income from residential loans and growing its commercial and consumer loan portfolios, while prudently managing the Company's changing exposure to credit risk and interest rate risk. The acquisition of a new main office facility on May 12, 2000 greatly enhanced the commercial banking transition and provided a significant boost with respect to the Company's image and its service delivery capabilities. Relocation to the new facility was completed during March 2001 and it has provided a platform for growth and expansion necessary to achieve management's goals. Measured by changes in average loan portfolio balances, commercial loans grew 17.6% in 2000 and 28.3% in 2001 while consumer loans grew 16.1% in 2000 and 9.8% in 2001 and residential loans grew 10.2% in 2000 and decreased 10.3% in 2001. At December 31, 2001, residential mortgage loans represented 61.7% of total loans outstanding compared to 77.6% at the beginning of 1999, evidencing progress toward a transition of the Company's loan portfolio mix. The Company sold $8.6 million, $4.4 million, and $56.0 million of residential loans during the years ended December 31, 1999, 2000 and 2001, respectively. The loan sales in 1999 occurred during the first half of the year and the sales in 2000 occurred primarily during the last quarter of that year. Loan sales occurred throughout the 2001 year. The Company's interest income from its residential loan portfolio actually grew $1.4 million during 2000 compared to 1999 and decreased $1.2 million during 2001 compared to 2000. The Company's combined growth in interest income from the commercial and consumer loan portfolios was $1.0 million during 2000 compared to 1999 and $752,000 during 2001 compared to 2000. During these years the Company's asset quality has remained well above peer group comparatives. For the three years ended December 31, 2001 the Company's net income has remained fairly stable, yet the Company reported significant increases each year in earnings per share. The Company's repurchases of its common stock, amounting to 638,771 shares over the last three years, have contributed significantly to such increases. The use of capital towards making these purchases has also significantly helped the improvement reported in return on average equity. 7 Acadiana Bancshares, Inc. and Subsidiaries 2001 Annual Report FINANCIAL CONDITION ASSETS - -------------------------------------------------------------------------------- General - Total assets of the Company decreased $9.0 million, or 2.8% from $324.5 million at December 31, 2000, to $315.5 million at December 31, 2001. Reflecting the effects of selling substantially all new single family loan production together with significant prepayments on the existing loan portfolio, the Company's net loans receivable decreased $34.9 million, or 13.2%, from $264.8 million at December 31, 2000, to $229.9 million at December 31, 2001. Securities held to maturity increased $20.3 million, from $11.7 million at December 31, 2000, to $32.0 million at December 31, 2001. Premises and equipment, net, increased $1.3 million, from $5.0 million at December 31, 2000, to $6.3 million at December 31, 2001, due primarily to the improvements and remodeling costs associated with the Company's new corporate headquarters and Bank main office location. The decrease in assets corresponded to a decrease of $9.0 million in deposits. The Company repurchased $4.6 million of its own common stock on the open market during the year ended December 31, 2001, increasing its common shares held in treasury from 1,328,929 at December 31, 2000, to 1,547,529 shares at December 31, 2001. Retained earnings increased $1.7 million, or 6.9%, from $23.9 million at December 31, 2000, to $25.5 million at December 31, 2001. Cash and Cash Equivalents - Cash and cash equivalents, which consist of interest-bearing and noninterest-bearing demand deposits, time deposits in other banks that mature within 90 days, and cash on hand, increased by $2.8 million, or 33.4%, to $11.3 million at December 31, 2001, compared to $8.5 million at December 31, 2000. The increase in cash and cash equivalents occurred near the end of the year. At December 31, 2000, cash and cash equivalents amounted to 2.6% of total assets, and at December 31, 2001, cash and cash equivalents amounted to 3.6% of total assets. Time Deposits in Other Banks - At December 31, 2001, the Company held time deposits in other banks of $3.0 million, purchased late in the third quarter of the year, as earning opportunities in overnight cash investments diminished. Time deposits in other banks amounted to 1.0% of total assets at December 31, 2001. Securities Available for Sale - Securities available for sale decreased $4.5 million, or 18.6%, to $19.7 million at December 31, 2001, compared to $24.2 million at December 31, 2000. Securities available for sale include U.S. Treasury notes and bonds, federal agency bonds, mortgage-backed securities issued by the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), and certain equity securities. Unrealized gains and losses on securities available for sale are excluded from earnings and reported, net of applicable income taxes, as other comprehensive income. At December 31, 2001, securities available for sale amounted to 6.2% of total assets. Note 3 to the Consolidated Financial Statements provides further information regarding the Company's securities available for sale. Securities Held to Maturity - Securities held to maturity increased $20.3 million, or 173.8%, to $32.0 million at December 31, 2001, compared to $11.7 million at December 31, 2000. The securities held to maturity portfolio includes $18.3 million of variable rate securities and $13.7 million of fixed rate securities. The increase in securities held to maturity occurred primarily to provide income and to help balance the Company's sensitivity to interest rate risk and cash flows. Securities held to maturity include mortgage-backed securities issued by GNMA, FNMA, and FHLMC. At December 31, 2001, securities held to maturity amounted to 10.1% of total assets. Note 3 to the Consolidated Financial Statements provides further information regarding the Company's securities held to maturity. Federal Home Loan Bank Stock - Federal Home Loan Bank ("FHLB") stock represents an equity interest in the FHLB that does not have a readily determinable fair value (for purposes of Federal Accounting Standards Board Statement No. 115) because its ownership is restricted and it lacks a market. It can be sold only to the FHLB or to another member institution. It is carried at cost, which is also equal to the par value of the stock. Both cash and stock dividends are received on FHLB stock and are reported as income. The stock dividends are redeemable at par value. At December 31, 2001, Federal Home Loan Bank Stock amounted to 1.4% of total assets. Loans Held for Sale - Loans held for sale of $4.8 million include those loans originated for sale, and consist entirely of single-family residential loans. These loans are carried at the lower of cost or market value. The Company's current practice is to sell substantially all of its new single family loan production. At December 31, 2001, loans held for sale amounted to 1.5% of total assets. Loans Receivable, Net - Loans receivable, net, decreased $34.9 million, or 13.2%, to $229.9 million at December 31, 2001, compared to $264.8 million at December 31, 2000. Single-family residential loans decreased $48.4 million, or 25.7%, from $188.1 million at December 31, 2000, to $139.7 million at December 31, 2001. Construction loans increased $2.2 million, from $3.9 million at December 31, 2000 to $6.1 million at December 31, 2001. Commercial real estate loans increased $11.3 million, or 39.1%, from $28.9 million at December 31, 2000, to $40.1 million at December 31, 2001. Equity lines of credit increased $194,000, or 4.6%, from $4.2 million at December 31, 2000, to $4.4 million at December 31, 2001. Commercial business loans increased $766,000, or 3.9%, from $19.7 million at December 31, 2000, to $20.5 million at December 31, 2001. Consumer loans increased $889,000, or 3.6%, from $24.4 million at December 31, 2000, to $25.3 million at December 31, 2001. Total gross loans decreased $33.3 million, or 12.3%, from $269.6 million at December 31, 2000, to $236.3 million at December 31, 2001. Loans receivable, net, amounted to 72.9% of total assets at December 31, 2001, compared to 81.6% of total assets at December 31, 2000. Note 4 to the Consolidated Financial Statements provides further information regarding the Company's loans. 8 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------- General - The Company's primary funding sources include deposits, borrowings from other banks and the FHLB and stockholders' equity. The discussion that follows focuses on the major changes in this mix during the 2001 year. Deposits - The Company's deposits decreased by $9.0 million, or 4.0%, to $215.6 million at December 31, 2001, from $224.5 million at December 31, 2000. Interest-bearing deposits decreased $12.4 million, or 5.8%, and noninterest-bearing deposits increased $3.5 million, or 31.7%. Certificates of deposit, comprising the largest portion of interest-bearing deposits, amounted to $152.7 million at December 31, 2001. The Company's pricing strategy for certificates of deposit during 2001 resulted in a net decrease in certificates of deposit of $12.5 million, or 7.6%, from $165.2 million at December 31, 2000 to $152.7 million at December 31, 2001. Certificates of deposit maturing in more than one year were 39.6% of total certificates of deposit at December 31, 2001, compared to 22.5% at December 31, 2000. Certificates of deposit funded 48.4% of total assets at December 31, 2001, compared to 50.9% at December 31, 2000. Total deposits funded 68.3% of total assets at December 31, 2001, compared to 69.2% at December 31, 2000. Additional information regarding certificates of deposit is provided in Note 8 to the Consolidated Financial Statements. Securities sold under agreements to repurchase - Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one business day from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. To date, the Company has restricted this product offering to certain of its depositors. The collateral furnished to secure these borrowings is held in safekeeping by the FHLB of Dallas. Borrowings - The Company's borrowings include both short-term debt (amounts maturing in one year or less from date of inception) and long-term debt (amounts maturing more than one year from date of inception). The Company had no short-term debt at December 31, 2001 or at December 31, 2000. Long-term debt decreased $657,000, or 0.9%, from $69.6 million at December 31, 2000, to $69.0 million at December 31, 2001. Such borrowings at December 31, 2001, funded 21.9% of total assets compared to 21.5% at December 31, 2000. Borrowings, consisting primarily of advances from the FHLB, have been and are expected to continue to be, an important source of funding for both existing assets and new asset growth. Additional information regarding borrowings is provided in Note 10 to the Consolidated Financial Statements. Stockholders' Equity - Stockholders' equity provides a source of permanent funding, allows for future growth, and provides the Company with a cushion to withstand unforeseen, adverse developments. At December 31, 2001, stockholders' equity totaled $26.8 million, a decrease of $2.0 million, or 6.8%, compared to $28.8 million at December 31, 2000. The decrease was primarily attributable to $4.6 million of repurchases of common stock for the treasury, together with $666,000 of dividends declared on the Company's common stock, all of which was partially offset by net income for the year ended December 31, 2001, of $2.3 million, common stock released by the Company's Employee Stock Ownership Plan Trust (the "ESOP") of $459,000, common stock earned by participants in the Company's Recognition and Retention Plan Trust (the "RRP") of $335,000 and a $150,000 increase in unrealized gain (loss) on securities available for sale, net of deferred taxes. Stockholders' equity funded 8.5% of assets at December 31, 2001, compared to 8.9% at December 31, 2000. Additional information regarding stockholders' equity is included in the Consolidated Statements of Stockholders' Equity and Note 13 to the Consolidated Financial Statements. Federal regulations impose minimum regulatory capital requirements on all financial institutions with deposits insured by the Federal Deposit Insurance Corporation (the "FDIC"), which requirements directly affect the minimum capital levels at the Bank. The Board of Governors of the Federal Reserve System (the "FRB") also imposes minimum regulatory capital requirements, which directly affect the minimum capital levels of the Company. At December 31, 2001, the capital of the Bank and the capital of the Company exceeded all minimum regulatory requirements as shown in Note 13 to the Consolidated Financial Statements. 9 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report RESULTS OF OPERATIONS General - The Company reported net income of $2.3 million, $2.2 million and $2.2 million for the years ended December 31, 2001, 2000 and 1999, respectively. Net interest income was $9.5 million, $9.2 million and $9.2 million for the years ended December 31, 2001, 2000 and 1999, respectively. The Company made a provision for loan losses of $20,000 for the year ended December 31, 2001, and it recovered $83,000 of prior provisions for loan losses for the year ended December 31, 2000; the Company made no provision for loan losses during the year ended December 31, 1999. Net interest income after provision for loan losses was $9.5 million, $9.3 million and $9.2 million for the years ended December 31, 2001, 2000 and 1999, respectively. The Company reported non-interest income of $1.8 million, $1.2 million and $1.0 million, for the years ended December 31, 2001, 2000 and 1999, respectively, while non-interest expense for the same periods were $7.7 million, $7.0 million, and $6.8 million respectively. The Company reported income before taxes of $3.6 million, $3.4 million and $3.4 million for the years ended December 31, 2001, 2000 and 1999. Income tax expense was $1.3 million, $1.2 million and $1.2 million for the years ended December 31, 2001, 2000 and 1999, respectively. The Company reported earnings per share available to common shareholders of $2.12, $1.80 and $1.60, basic, and $2.00, $1.78 and $1.55 diluted, for the years ended December 31, 2001, 2000 and 1999, respectively. The double digit growth in earnings per share, while net income was relatively stable, relates primarily to a smaller number of shares outstanding during each successive period, as detailed in Note 12 to the Consolidated Financial Statements. Net Interest Income - Net interval income is determined by the combined effects of interest rate spread (i.e., the difference between the yields earned on interest-earning assets and the rates paid on interest-bearing liabilities) and changes in the average amounts of interest-earning assets and interest-bearing liabilities. The Company's average interest rate spread was 2.65%, 2.48% and 2.72%, during the years ended December 31, 2001, 2000 and 1999, respectively. Both rates (average yield on interest-earning assets and average cost of interest-bearing liabilities) and volumes (the average balances on interest-earning assets and average balances of interest-bearing liabilities) influence net interest margin. The Company's interest rate margin (i.e., the difference between interest income and interest expense divided by average earning assets) was 3.11%, 3.00% and 3.28%, during the years ended December 31, 2001, 2000 and 1999, respectively. The Company's net interest income increased $287,000 for the year ended December 31, 2001 compared to the year ended December 31, 2000. The improvement in net interest margin in 2001 compared to 2000 was primarily the result of the decreased costs on the Company's average rates paid on deposits and borrowings and decreased average balances on deposits and borrowings, which was partially offset by decreased yields earned on loans, investments and other earning assets together with a decrease in the average interest-earning assets. The declining net interest margin in 2000 compared to 1999 was primarily the result of increased costs on the Company's average rates paid on deposits and borrowings and increased average balances of deposits and borrowings, which was partially offset by increased yields earned on loans, investments, and other earning assets together with increased average balances of loans and investments. For the years ended December 31, 2000 and 1999, the Company's net interest income decreased slightly, by $7,000, remaining relatively stable at $9.2 million each year. The Company's largest group of interest-earning assets is residential mortgage loans, comprising 55.6%, 61.6%, and 61.0% of total average interest-earning assets for the years ended December 31, 2001, 2000 and 1999, respectively. Market rates on residential mortgage loans are heavily influenced by competition and on the rates of interest on longer term U.S. Treasury Bonds, such as the 10-year and 30-year bonds. Significant changes in longer term U.S. Treasury Bond rates typically translate to similar changes in offering rates for residential mortgage loans. The Company's largest source of funds is certificates of deposit, which accounted for 57.6%, 57.4% and 58.5% of total average interest-bearing liabilities for the years ended December 31, 2001, 2000 and 1999, respectively. Market rates on certificates of deposit are heavily influenced by competition and by shorter term U.S. Treasury Notes and Bonds. Significant changes in shorter terns U.S. Treasury Notes and Bonds may translate into somewhat similar changes in offering rates for certificates of deposit. If longer term U.S. Treasury Bond rates fall, and during the same time period, shorter term U.S. Treasury Notes and Bond rates rise, the Company's net interest margin will likely decrease. The change in net interest margin is influenced partly by the effect of changes in market interest rates throughout much of the year as such changes influence the Company's pricing of new and renewing interest-earning assets and interest-bearing liabilities and partly by the increased leverage of the Company's assets during the year. The Company increased its leverage by decreasing average stockholders' equity as a result of stock repurchases. The Company's average interest-earning assets decreased $1.8 million, or 0.6%, from $306.7 million at December 31, 2000 to $304.9 million at December 31, 2001. The Company's average interest-bearing liabilities decreased from $276.8 million for the year ended December 31, 2000 to $276.0 million for the year ended December 31, 2001, while average stockholders' equity decreased from $29.1 million to $27.8 million and $27.0 million at December 31, 1999, 2000 and 2001, respectively. During the year ended December 31, 2001 compared to the year ended December 31, 2000, net interest income increased $20,000 related to the net changes in volumes of average interest-earning assets and average interest-bearing liabilities, and by $463,000 related to the effects of changes in market interest rates, all of which was partially offset by a decrease in net interest income related to changes in both rate and volume of $196,000, resulting in a net increase of $287,000 in net interest income. During the year ended December 31, 2000 compared to the year ended December 31, 1999, net interest income increased $501,000 related to the net increases in volumes of average interest-earning assets and average interest-bearing liabilities, but was more than offset by a decrease in net interest income of $390,000 related to the declining interest rate margin due primarily to changes in market interest rates, together with a decrease in net interest income related to changes in both rate and volume of $118,000, all of which resulted in a net decrease of $7,000 in net interest income. 10 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report Interest and Dividend Income - Interest and dividend income totaled $23.0 million for the year ended December 31, 2001, compared to $24.1 million for the year ended December 31, 2000, a decrease of $1.1 million, or 4.7%. This decrease was mainly due to a 33 basis point (with 100 basis points being equal to 1%) decrease in the average yield earned, together with a decrease in the Company's average interest-earning assets of $1.8 million, or 0.6%. Interest earned on loans decreased $487,000, or 2.4%, from $20.7 million for the year ended December 31, 2000, to $20.2 million for the year ended December 31, 2001. This decrease was due to a decrease in the Company's average balance of loans for the year ended December 31, 2001, of $4.7 million, or 1.8%, together with a four basis point decrease in the average yield earned. Interest and dividends earned on investment securities decreased $663,000, or 22.7%, from $2.9 million for the year ended December 31, 2000, to $2.3 million for the year ended December 31, 2001. This decrease was due to a 132 basis point decrease in the Company's average yield earned on investment securities for the year ended December 31, 2001, together with a decrease in the Company's average balance of investment securities of $2.1 million, or 5.1%. Interest earned on other earning assets increased $17,000, or 3.7%, from $459,000 for the year ended December 31, 2000, to $476,000 for the year ended December 31, 2001. This increase was due to an increase in the average balance of other earning assets of $5.0 million, or 65.4%, from $7.7 million to $12.7 million for the year ended December 31, 2001, which was partially offset by a 223 basis point decrease in the Company's average yield on other earning assets. Interest and dividend income totaled $24.1 million for the year ended December 31, 2000, compared to $21.4 million for the year ended December 31, 1999, an increase of $2.7 million, or 12.6%. This increase was mainly due to an increase in the Company's average balance of interest-earning assets of $25.6 million, or 9.1%, together with a 24 basis point increase in the average yield earned. Interest earned on loans increased $2.4 million, or 13.3%, from $18.3 million for the year ended December 31, 1999, to $20.7 million for the year ended December 31, 2000. This increase was due to an increase in the Company's average balance of loans for the year ended December 31, 2000, of $27.5 million, or 11.9%, together with a 10 basis point increase in the average yield earned. Interest and dividends earned on investment securities increased $256,000, or 9.6%, from $2.7 million for the year ended December 31, 1999, to $2.9 million for the year ended December 31, 2000. This increase was due to a 61 basis point increase in the Company's average yield earned on investment securities for the year ended December 31, 2000, together with an increase in the Company's average balance of investment securities of $134,000. Interest earned on other earning assets increased $7,000, or 1.5%, from $452,000 for the year ended December 31, 1999, to $459,000 for the year ended December 31, 2000. This increase was due to a 130 basis point increase in the Company's average yield earned on other earning assets, which was partially offset by a decrease in the Company's average balance of other earning assets of $2.0 million, or 20.5%, from $9.6 million for the year ended December 31, 1999, to $7.7 million for the year ended December 31, 2000. Interest Expense - Interest expense decreased $1.4 million, or 9.5%, from $14.9 million for the year ended December 31, 2000, to $13.5 million for the year ended December 31, 2001. This decrease was mainly due to a decrease in the average cost of such liabilities together with a decrease in the average interest-bearing balance of liabilities. The cost of such interest-bearing liabilities decreased 50 basis points, from 5.38% to 4.88%, and the average balance of interest-bearing liabilities decreased $835,000, or 0.3%, from $276.8 million for the year ended December 31, 2000, to $276.0 million for the year ended December 31, 2001. The reasons for such a decrease in costs relate primarily to the Company aggressively lowering offering prices on shorter-term certificates of deposit together with a decrease in average costs to obtain new borrowed funds for the year ended December 31, 2001. Interest expense increased $2.7 million, or 22.1%, from $12.2 million for the year ended December 31, 1999, to $14.9 million for the year ended December 31, 2000. This increase was mainly due to an increase in the average balance of interest-bearing liabilities, together with an increase in the average cost of such liabilities. The average balance of interest-bearing liabilities increased $27.8 million, or 11.2%, from $249.0 million for the year ended December 31, 1999, to $276.8 million for the year ended December 31, 2000, and the average cost of such interest-bearing liabilities increased 48 basis points, from 4.90% to 5.38%. The reasons for such an increase in costs relate primarily to the Company's more aggressive pricing policy on shorter-term certificates of deposit together with it rise in average costs to obtain new borrowed funds for the year ended December 31, 2000. Interest expense on deposits decreased $1.4 million, or 13.0%, from $10.9 million for the year ended December 31, 2000, to $9.5 million for the year ended December 31, 2001. The decrease was primarily due to a decrease in the average balance of interest-bearing deposits, together with a decrease in the average cost of such deposits. The average balance of interest-bearing deposits decreased $1.9 million, or 0.9%, from $206.8 million at December 31, 2000, to $204.9 million at December 31, 2001, and the average cost of interest-bearing deposits decreased 64 basis points. Interest expense on borrowings decreased slightly, by $56,000, or 1.4%, remaining at $4.0 million for the years ended December 31, 2000 and 2001. The reason for the decrease was a $903,000 decrease in the average balance of borrowings. Interest expense on deposits increased $1.4 million, or 14.7%, from $9.5 million for the year ended December 31, 1999, to $10.9 million for the year ended December 31, 2000. The increase was primarily due to an increase in the average balance of interest-bearing deposits, together with an increase in the average cost of such deposits. The average balance of interest-bearing deposits increased $9.2 million, or 4.7%, from $197.6 million at December 31, 1999, to $206.8 million at December 31, 2000, and the average cost interest-bearing deposits increased 46 basis points. Interest expense on borrowings increased $1.3 million, or 48.1%, from $2.7 million for the year ended December 31, 1999, to $4.0 million for the year ended December 31, 2000. The primary reasons for the increase were an $18.5 million increase in the average balance of borrowings, and an increase in the average cost of borrowing of 47 basis points. 11 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report Average Balances, Net Interest Income, and Yields Earned and Rates Paid - The following table sets forth, for the periods indicated, information regarding (i) the dollar amount of interest income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant cost; (iii) net interest income; (iv) interest rate spread; and (v) net interest margin. Nonaccrual loans have been included in the appropriate average balance loan category, but interest on nonaccrual loans has been included for purposes of determining interest income only to the extent that cash payments were actually received.
(Dollars in Thousands) Year Ended December 31, 2001 2000 - ----------------------------------------------------------------------------------------------------------- Average Average Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost - ----------------------------------------------------------------------------------------------------------- Interest-earning assets: Loans receivable: Residential mortgage loans (1) $169,549 $13,158 7.76% $188,928 $14,397 7.62% Commercial business loans 54,668 4,545 8.31 42,602 3,910 9.18 Consumer and other loans 29,061 2,529 8.70 26,462 2,412 9.11 - ----------------------------------------------------------------------------------------------------------- Total loans 253,278 20,232 7.99 257,992 20,719 8.03 Investment securities (2) 38,987 2,260 5.80 41,071 2,923 7.12 Other earning assets 12,668 476 3.76 7,660 459 5.99 - ----------------------------------------------------------------------------------------------------------- Total interest-earning assets 304,933 22,968 7.53 306,723 24,101 7.86 - ----------------------------------------------------------------------------------------------------------- Noninterest-earning assets 12,761 11,029 - ----------------------------------------------------------------------------------------------------------- Total Assets $317,694 $317,752 =========================================================================================================== Interest-bearing liabilities: Deposits: Demand deposits $ 33,806 804 2.38 $ 35,025 1,383 3.95 Savings deposits 12,230 174 1.42 13,021 261 2.00 Certificates of deposit 158,861 8,489 5.34 158,786 9,242 5.82 - ----------------------------------------------------------------------------------------------------------- Total deposits 204,897 9,467 4.62 206,832 10,886 5.26 Securities Sold Under Repurchase Agreements 2,021 56 2.77 18 1 5.56 Borrowings 69,046 3,953 5.73 69,949 4,009 5.73 - ----------------------------------------------------------------------------------------------------------- Total Interest-bearing liabilities 275,964 13,476 4.88 276,799 14,896 5.38 - ----------------------------------------------------------------------------------------------------------- Noninterest-bearing demand deposits 12,220 10,962 Other noninterest-bearing liabilities 2,500 2,142 - ----------------------------------------------------------------------------------------------------------- Total liabilities 290,684 289,903 Stockholders' equity 27,010 27,849 - ----------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $317,694 $317,752 =========================================================================================================== Net interest-earning assets $ 28,969 $ 29,924 =========================================================================================================== Net interest income/interest rate spread $ 9,492 2.65% $ 9,205 2.48% =========================================================================================================== Net interest margin 3.11% 3.00% =========================================================================================================== Ratio of average interest-earning assets to average interest-bearing liabilities 110.50% 110.81% =========================================================================================================== (Dollars in Thousands) Year Ended December 31, 1999 - --------------------------------------------------------------------------- Average Average Yield/ Balance Interest Cost - --------------------------------------------------------------------------- Interest-earning assets: Loans receivable: Residential mortgage loans (1) $171,516 $12,976 7.57% Commercial business loans 36,220 3,168 8.75 Consumer and other loans 22,792 2,144 9.41 - --------------------------------------------------------------------------- Total loans 230,528 18,288 7.93 Investment securities (2) 40,937 2,667 6.51 Other earning assets 9,634 452 4.69 - --------------------------------------------------------------------------- Total interest-earning assets 281,099 21,407 7.62 - --------------------------------------------------------------------------- Noninterest-earning assets 9,375 - --------------------------------------------------------------------------- Total Assets $290,474 =========================================================================== Interest-bearing liabilities: Deposits: Demand deposits $ 34,777 1,198 3.44 Savings deposits 17,207 300 1.74 Certificates of deposit 145,613 7,990 5.49 - --------------------------------------------------------------------------- Total deposits 197,597 9,488 4.80 Securities Sold Under Repurchase Agreements -- -- -- Borrowings 51,430 2,707 5.26 - --------------------------------------------------------------------------- Total Interest-bearing liabilities 249,027 12,195 4.90 - --------------------------------------------------------------------------- Noninterest-bearing demand deposits 10,677 Other noninterest-bearing liabilities 1,627 - --------------------------------------------------------------------------- Total liabilities 261,331 Stockholders' equity 29,143 - --------------------------------------------------------------------------- Total liabilities and stockholders' equity $290,474 =========================================================================== Net interest-earning assets $ 32,072 =========================================================================== Net interest income/interest rate spread $ 9,212 2.72% =========================================================================== Net interest margin 3.28% =========================================================================== Ratio of average interest-earning assets to average interest-bearing liabilities 112.88% ===========================================================================
(1) Includes loans held for sale. (2) Includes FHLB stock. 12 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report Rate/Volume Analysis - The following table sets forth the effects of changing rates and volumes on net interest income of the Company. Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate); (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) changes in rate/volume (change in rate multiplied by change in volume).
(Dollars in thousands) Year Ended December 31, 2001 compared to 2000 2000 compared to 1999 - ------------------------------------------------------------------------------------------------------------------- Increase (decrease) due to Increase (decrease) due to Total Total Rate/ Increase Rate/ Increase Volume Rate Volume (Decrease) Volume Rate Volume (Decrease) - ------------------------------------------------------------------------------------------------------------------- Interest-earning assets: Loans receivable: Residential mortgage loans $(1,477) $ 265 $ (27) $(1,239) $1,317 $ 94 $ 10 $1,421 Commercial business loans 1,107 (368) (104) 635 558 156 28 742 Consumer and other loans 237 (109) (11) 117 345 (67) (10) 268 - ------------------------------------------------------------------------------------------------------------------- Total loans (133) (212) (142) (487) 2,220 183 28 2,431 Investment securities (148) (542) 27 (663) 9 246 1 256 Other earning assets 300 (171) (112) 17 (93) 126 (26) 7 - ------------------------------------------------------------------------------------------------------------------- Total net change in income on interest-earning assets 19 (925) (227) (1,133) 2,136 555 3 2,694 - ------------------------------------------------------------------------------------------------------------------- Interest-bearing liabilities: Deposits: Demand deposits (48) (550) 19 (579) 9 175 1 185 Savings deposits (16) (76) 5 (87) (73) 45 (11) (39) Certificates of deposit 4 (757) -- (753) 723 485 44 1,252 - ------------------------------------------------------------------------------------------------------------------- Total deposits (60) (1,383) 24 (1,419) 659 705 34 1,398 Securities Sold Under Repurchase Agreements 111 (1) (55) 55 -- -- 1 1 Borrowings (52) (4) -- (56) 976 240 86 1,302 - ------------------------------------------------------------------------------------------------------------------- Total net change in expense on interest-bearing liabilities (1) (1,388) (31) (1,420) 1,635 945 121 2,701 - ------------------------------------------------------------------------------------------------------------------- Net change in net Interest income $ 20 $ 463 $(196) $ 287 $ 501 $(390) $(118) $ (7) ===================================================================================================================
Provision for Loan Losses - Provisions for loan losses are charged to earnings in order to bring the total allowance for loan losses to a level considered appropriate by management based on methodology implemented by the Company, which is designed to assess, among other things, historical loan loss experience, the volume and type of lending conducted by the Company, the amount of the Company's classified assets, the status of past due principal and interest payments, loan-to-value ratios of loans in the portfolio, general economic conditions, particularly as they relate to the Company's market area, and any other factors related to the collectibility of the Company's loan portfolio. Management of the Company assesses the allowance for loan losses on at least a quarterly basis and makes provisions for loan losses as deemed appropriate in order to maintain the adequacy of the allowance for loan losses. The Company made a $20,000 provision for loan losses during 2001, recorded a credit of $83,000 in the provision for loan losses during 2000, and made no provision for loan losses in 1999. At December 31, 2001, the Company's allowance for loan losses amounted to $2.7 million, or 1.1% of total loans and 586.6% of non-performing loans and troubled debt restructurings. At December 31, 2000, the Company's allowance for loan losses amounted to $2.7 million, or 1.0% of total loans and 441.3% of non-performing loans and troubled debt restructurings. At December 31, 1999, the Company's allowance for loan losses amounted to $2.7 million, or 1.1%, of total loans and 496.8% of non-performing loans and troubled debt restructurings. 13 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report Non-Interest Income - For the year ended December 31, 2001, the Company reported non-interest income of $1.8 million, an increase of $660,000 from 2000. The primary reasons for the increase were a $692,000 increase in the gain on sale of loans, a $25,000 increase in customer service fees, an increase in trading account gains of $7,000 and a $60,000 increase in income from investment in a limited liability company. These increases were partially offset by a $117,000 decrease in other income and a $7,000 decrease in loan servicing fees. The gain on sale of loans is a significant portion of total non-interest income, and for 2001 compared to 2000, this source of income provided the most growth in non-interest income. The Company expects to continue selling residential loans to the extent that it can maintain net interest income while selling originated loans, and to the extent that local market conditions relating to new residential loans allow the Company an opportunity to maintain its origination and sales volumes. The Company does not expect to originate loans outside of its market. For the year ended December 31, 2000, the Company reported non-interest income of $1.2 million, an increase of $194,000 from 1999. The primary reasons for the increase were a decrease in losses from investment in a limited liability company of $136,000, a $33,000 increase in trading account gains, and an increase in other income of $115,000. These increases were partially offset by a $61,000 decrease in net gains on sale of loans, a $21,000 decrease in customer service fees, and an $8,000 decrease in loan servicing fees. Non-Interest Expense - Non-interest expense includes salaries and employee benefits, occupancy, depreciation, data processing, net costs related to foreclosed assets, deposit insurance premiums, advertising and marketing, bank shares and franchise tax, impairment losses on long-lived assets, and other expense items. Non-interest expense amounted to $7.7 million for the year ended December 31, 2001, an increase of $640,000, or 9.1%, compared to $7.0 million for the year ended December 31, 2000. The primary reasons for the $640,000 increase were a $368,000, or 9.5%, increase in salaries and employee benefits, a $33,000 increase in depreciation, a $101,000 increase in the net cost of foreclosed assets, and a $286,000 increase in other expenses. All of such increases were partially offset by a $50,000, or 14.6%, decrease in occupancy expenses, a $7,000, or 2.2% decrease in data processing expenses, a $2,000 decrease in deposit insurance premiums, a decrease of $2,000 in advertising, a decrease of $3,000 in bank shares and franchise tax expense, and a decrease of $84,000 in impairment losses on long-lived assets. Non-interest expense amounted to $7.0 million for the year ended December 31, 2000, an increase of $274,000, or 4.0%, compared to $6.8 million for the year ended December 31, 1999. The primary reasons for the $274,000 increase were a $354,000, or 10.1 %, increase in salaries and employee benefits, a $5,000, or 1.5%, increase in occupancy expenses, a $74,000, or 30.0%, increase in data processing expenses, a $32,000, or 18.5%, increase in advertising expenses, and an $85,000 impairment loss on long-lived assets. All of such increases were partially offset by a decrease of $47,000 in depreciation, a decrease of $83,000 in the net cost of foreclosed assets, a decrease of $76,000 in deposit insurance premiums, a decrease of $26,000 in bank shares and franchise tax expense, and a decrease of $44,000 in other expenses. Income Taxes - For the years ended December 31, 2001, 2000 and 1999, the Company incurred income tax expense of $1.3 million, $1.2 million and $1.2 million, respectively. The Company's effective tax rate amounted to 36.2%, 35.2% and 35.8% during 2001, 2000 and 1999, respectively. The difference between the effective rate and the statutory tax rate is primarily related to variances in the items that are either non-taxable or non-deductible. For more information on income taxes, refer to Note 11 to the Consolidated Financial Statements. LIQUIDITY AND CAPITAL RESOURCES The Company's primary liquidity, represented by cash and cash equivalents, is a product of its operating, investing and financing activities. Excess liquidity includes the Company's securities available for sale portfolio. The Company's primary sources of funds are deposits, borrowings, proceeds from sale of stock, amortization, prepayments and maturities from its loan portfolio and its securities held to maturity portfolio, and other funds provided from operations. While scheduled payments from the amortization of loans and securities and maturing investment securities are relatively predictable sources of funds, deposit flows, loan prepayments, and securities prepayments are greatly influenced by general interest rates, economic conditions and competition. Liquidity management is both a daily and long-term function of business management. The Company uses its primary liquidity to meet its ongoing commitments, to pay maturing certificates of deposit and deposit withdrawals, and to fund loan commitments. The Company's excess liquidity and borrowing capacity provide added readiness to meet ongoing commitments and growth. At December 31, 2001, the total approved commitments to extend credit amounted to $22.4 million. The Company is a guarantor in the amount of $500,000 in connection with its investment in a limited liability company as detailed in Note 6 to the Consolidated Financial Statements. Certificates of deposit scheduled to mature in one year or less at the same date totaled $92.3 million. Management believes that a significant portion of maturing deposits will remain with the Company, The Company anticipates it will continue to have sufficient funds together with available borrowings to meet its current commitments. The Company has the ability to borrow an additional $55.6 million from the FHLB through its subsidiary Bank. We have not used, and have no intention to use, any significant off-balance sheet financing arrangements for liquidity purposes. Our financial instruments with off-balance sheet risk are limited to obligations to fund loans to customers pursuant to existing commitments. In addition, we have not had, and have no intention to have, any significant transactions, arrangements or other relationships with any unconsolidated, limited purpose entities that would materially affect our liquidity position or capital resources. We have not traded in, and do not intend to trade in, commodity contracts. 14 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report IMPACT OF INFLATION AND CHANGING PRICES The Consolidated Financial Statements and related financial data presented herein have been prepared in accordance with U.S. generally accepted accounting principles, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, virtually all of the Company's assets and liabilities are monetary in nature. Consequently, interest rates generally have a more significant impact on the Company's performance than does the effect of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, since such prices are affected by inflation to a larger extent than interest rates. MARKET RISK Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates or prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. The Company's primary market risk exposure is interest rate risk. The ongoing monitoring and management of this risk is an important component of the Company's asset/liability management process, which is governed by policies established by its Board of Directors that are reviewed and approved annually. The Company's actions with respect to interest rate risk and its asset/liability gap management are taken under guidance of the Finance Committee of the Board of Directors of the Bank, which is composed of Messrs. Beacham, DeJean, and Saloom, and the Asset/Liability Management Committee ("ALCO"), which is composed of seven officers of the Bank. The Finance Committee meets jointly with the ALCO quarterly to set interest rate risk targets and review the Company's current composition of assets and liabilities in light of the prevailing interest rate environment. The committee assesses its interest rate risk strategy quarterly, which is then reviewed by the full Board of Directors. The Board of Directors delegates responsibility for carrying out the asset/liability management policies to the ALCO. In its capacity, the ALCO develops guidelines and strategies affecting the Company's asset/liability management related activities based upon estimated market risk sensitivity, policy limits, and overall market interest rate levels and trends. INTEREST RATE RISK Interest rate risk represents the sensitivity of earnings to changes in market interest rates. As interest rates change, the interest income and interest expense streams associated with the Company's financial instruments also change, thereby affecting net interest income ("NII"), which is the primary component of the Company's earnings. The ability to maximize net interest income is largely dependent upon the achievement of a positive interest-rate spread that can be sustained during fluctuations of interest rates. Interest rate sensitivity is a measure of the difference between amounts of interest-earning assets and interest-bearing liabilities that either reprice or mature within a given period. The difference, or the interest-rate repricing "gap," provides an indication of the extent to which an institution's interest rate spread will be affected by changes in interest rates. A gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-rate sensitive liabilities, and is considered negative when the amount of interest-rate sensitive liabilities exceeds the amount of interest-rate sensitive assets, in a given period. Generally, during a period of rising interest rates, a negative gap within shorter maturities would adversely affect net interest income, while a positive gap within shorter maturities would result in an increase in net interest income. During a period of falling interest rates, a negative gap within shorter maturities would result in an increase in net interest income while a positive gap within shorter maturities would have the opposite effect. As of December 31, 2001, the amount of the Company's interest-sensitive assets, that were estimated to mature or reprice within one year, exceeded the Company's interest-sensitive liabilities with the same characteristics by $5.0 million, or 1.6%, of the Company's total assets. The following table summarizes the anticipated maturities or repricing of the Company's interest-rate sensitive assets and interest-rate sensitive liabilities as of December 31, 2001, based upon the information and assumptions set forth: 15 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report
(Dollars in Thousands) More Than More Than Three Months More Than Three Years Within Three to Twelve One Year to to Five Over Five Months Months Three Years Years Years Total - ------------------------------------------------------------------------------------------------------------------------------ Interest-sensitive assets(1): Loans receivable(2)(4) $43,369 $57,174 $69,810 $31,347 $ 32,556 $234,256 Investment securities(3)(4) 13,566 4,791 18,794 13,374 8,545 59,070 Interest-bearing demand deposits 8,198 -- -- -- -- 8,198 - ------------------------------------------------------------------------------------------------------------------------------ Total 65,133 61,965 88,604 44,721 41,101 301,524 - ------------------------------------------------------------------------------------------------------------------------------ Interest-sensitive liabilities: Deposits: Demand accounts(5) -- -- -- -- 12,367 12,367 Savings accounts(5) -- 49 -- -- 12,674 12,723 Money market deposit accounts(5) 23,362 -- -- -- -- 23,362 Certificates of deposit 29,596 62,693 58,567 1,693 173 152,722 Borrowings 6,379 -- 3,100 250 62,000 71,729 - ------------------------------------------------------------------------------------------------------------------------------ Total 59,337 62,742 61,667 1,943 87,214 272,903 ============================================================================================================================== Excess (deficiency) of interest-sensitive assets over interest-bearing liabilities $ 5,796 $ (777) $26,937 $42,778 $(46,113) $ 28,621 ============================================================================================================================== Cumulative excess of interest-sensitive assets over interest-sensitive liabilities $ 5,796 $ 5,019 $31,956 $74,734 $ 28,621 ============================================================================================================================== Cumulative excess of interest-sensitive assets over interest-sensitive liabilities as a percent of total assets 1.84% 1.59% 10.13% 23.69% 9.07% ==============================================================================================================================
(1) Adjustable-rate assets are included in the period in which interest rates are next scheduled to adjust rather than in the period in which they are due, and fixed-rate assets are included in the periods in which they are scheduled to be repaid, based on scheduled amortization, in each case as adjusted to take into account estimated prepayments. The Company has estimated the prepayments based upon its experience in the interest rate environment prevailing at December 31, 2001. (2) Balances have been reduced for non-performing loans, which amounted to $462,000 at December 31, 2001. (3) Includes FHLB stock (4) Reflects estimated prepayments in the current interest rate environment. (5) Although the Company's demand accounts and savings accounts are generally subject to immediate withdrawal, management considers substantially all of such accounts to be core deposits having significantly longer effective maturities. The Company generally has retained a relatively consistent amount of such deposits under widely varying interest rate environments. If all of the Company's demand accounts and savings accounts had been assumed to be subject to repricing within one year, interest-bearing liabilities, which were estimated to mature or reprice within one year, would have exceeded interest-sensitive assets with comparable characteristics by $20.0 million, or 6.35% of total assets. 16 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report The ALCO utilizes the results of a detailed and dynamic simulation model to quantify the estimated exposure to NII to sustained interest rate changes. While the ALCO routinely monitors simulated NII sensitivity over a rolling two-year horizon, it also utilizes additional tools to monitor potential longer-term rate risk. The simulation model captures the impact of changing interest rates on the interest income received and the interest expense paid on all assets and liabilities reflected on the Company's Statement of Condition. This sensitivity analysis is compared to ALCO policy limits that specify a maximum tolerance level for NII exposure over a one-year horizon, assuming no balance sheet growth, given both a 200 basis point upward and downward shift in interest rates. A parallel and pro rata shift in rates over a 12-month period is assumed. The following reflects the Company's NII sensitivity analysis as of December 31, 2001: Estimated NII Rate Change Sensitivity - -------------------------------------------------------------------------------- + 200 basis points -0.92% - - 200 basis points -1.42% The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including, but not limited to, the nature and timing of interest rate levels and yield curve shapes, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, and reinvestment and replacement of asset and liability cash flows. While assumptions are developed based upon perceived current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change. Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to prepayment and refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes and other internal and external variables. Furthermore, the sensitivity analysis does not reflect actions that the ALCO might take in responding to or anticipating changes in interest rates. RECENT ACCOUNTING PRONOUNCEMENTS In June of 2001 the Financial Accounting Standards Board ("FASB") issued Statement No.141, Business Combinations, It supersedes APB Opinion No.16 of the same name. FAS 141 requires that all business combinations be accounted for by a single method - the purchase method. Use of the pooling of interests method of accounting is no longer permissible. FAS 141 also establishes criteria for the identification of acquired intangibles separate from goodwill and adds additional disclosure requirements. The provisions of this Statement apply to all business transactions initiated after September 30, 2001. This Statement also applied to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001 or later. In June of 2001, the FASB also issued Statement No.142, Goodwill and Other Intangible Assets. This Statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes ABP Opinion 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. The Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. Goodwill and intangible assets that have indefinite useful lives will not be amortized but rather will be tested at least annually for impairment. Intangible assets that have finite useful lives will continue to be amortized over their useful lives. Specific guidance for determining impairment is provided. Goodwill will be tested for impairment at least annually using a two-step process that begins with an estimation of the fair value of a reporting unit. Additional disclosures are also required under the Statement. The provisions of FAS 142 are required to be applied starting with fiscal years beginning after December 15, 2001. The Statement is required to be applied at the beginning of an entity's fiscal year, and to be applied to all goodwill and other intangible assets recognized in its financial statements at that date. The Company is required to apply FAS 142 effective January 1, 2002. The Company currently has no goodwill or other intangible assets, with the exception of an immaterial amount of mortgage servicing rights, and does not expect application of this Statement to have a significant effect on the Company's financial position or results of operations. In August of 2001, the FASB issued Statement No.144, Accounting for the Impairment or Disposal of Long-Lived Assets. It supersedes FAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of, and the accounting and reporting provisions of APB Opinion No.30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business (as previously defined in that Opinion). This Statement also amends ARB No.51, Consolidated Financial Statements, to eliminate exception to consolidation for a subsidiary for which control is likely to be temporary. The provisions of this Statement are effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years, with early application encouraged. The Statement requires that one accounting model be used for long-lived assets to be disposed of, whether previously held and used or newly acquired, and applies to discontinued operations. The adoption of this Statement is not expected to have a material effect on the Company's financial position or results of operations. 17 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- [LOGO] Castaing Samuel R. Lolan, CPA Hussey & Lori D. Percle, CPA Lolan, LLC Debbie B. Taylor, CPA -- Certified Public Accountants Katherine H. Armentor, CPA - -------------------------------------------------------------------------------- Charles E. Castaing, CPA, Retired Robin G. Freyou, CPA Roger E. Hussey, CPA, Retired Dawn K. Gonsoulin, CPA Shalee M. Landry, CPA To the Board of Directors Acadiana Bancshares, Inc. Lafayette, Louisiana We have audited the accompanying consolidated balance sheets Acadiana Bancshares, Inc., and Subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Acadiana Bancshares, Inc., and Subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with U. S. generally accepted accounting principles. /s/ Castaing, Hussey & Lolan. LLC - ----------------------------------- New Iberia, Louisiana January 25, 2002 525 Weeks Street - P. O. Box 14240 . New Iberia, Louisiana 70562 - 4240 Ph.: 337-364-7221 . Fax: 337-364-7235 . email: info@chlcpa.com Members of American Institute of Certified Public Accountants . Society of Louisiana Certified Public Accountants 18 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report ACADIANA BANCSHARES, INC., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2001 and December 31, 2000 (in Thousands, except share data)
2001 2000 - ------------------------------------------------------------------------------------------- Assets Cash and Cash Equivalents: Cash and Amounts Due from Banks $ 3,097 $ 2,950 Interest-Bearing Demand Deposits 8,198 5,517 - ------------------------------------------------------------------------------------------- Total Cash and Cash Equivalents 11,295 8,467 Time Deposits in Other Banks 3,048 -- Trading Securities -- 162 Securities Available for Sale, at Fair Value 19,712 24,230 Securities Held to Maturity (Fair value of $32,048 and $11,814, respectively) 31,989 11,682 Federal Home Loan Bank Stock, at Cost 4,321 4,147 Loans Held for Sale 4,827 1,852 Loans Receivable, Net of Allowance for Loan Losses of $2,710 and $2,714, respectively 229,891 264,805 Investment in Limited Liability Company 833 792 Premises and Equipment, Net 6,303 5,019 Accrued Interest Receivable 1,398 1,708 Other Assets 1,888 1,603 - ------------------------------------------------------------------------------------------- Total Assets $315,505 $324,467 =========================================================================================== Liabilities and Stockholders' Equity Deposits: Non-interest Bearing $ 14,395 $ 10,929 Interest Bearing 201,174 213,602 - ------------------------------------------------------------------------------------------- Total Deposits 215,569 224,531 Securities Sold Under Agreements to Repurchase 2,758 128 Accrued Interest Payable 524 593 Long-Term Debt 68,971 69,628 Accrued and Other Liabilities 671 805 - ------------------------------------------------------------------------------------------- Total Liabilities 288,693 295,685 =========================================================================================== Stockholders' Equity: Preferred Stock of $.01 Par Value; 5,000,000 shares authorized, -0- shares issued or outstanding -- -- Common Stock of $.01 Par Value; 20,000,000 shares authorized, 2,731,250 shares issued 27 27 Additional Paid-in Capital 32,626 32,410 Retained Earnings 25,515 23,863 Unearned Common Stock Held by ESOP Trust (1,177) (1,440) Unearned Common Stock Held by RRP Trust (434) (749) Accumulated Other Comprehensive Income 99 (51) Treasury Stock, at Cost; 1,547,529 and 1,328,929 Shares, respectively (29,844) (25,278) - ------------------------------------------------------------------------------------------- Total Stockholders' Equity 26,812 28,782 - ------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $315,505 $324,467 ===========================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these Financial Statements. 19 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report ACADIANA BANCSHARES, INC., AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS
Years Ended December 31, 2001, 2000 and 1999 (In Thousands, except per share data) 2001 2000 1999 - ------------------------------------------------------------------------------------------- Interest and Dividend Income: Loans, including fees $20,232 $20,719 $18,288 Debt Securities 2,082 2,600 2,491 Dividends 175 312 167 Trading Account Securities 3 11 9 Interest Bearing Deposits 476 459 452 - ------------------------------------------------------------------------------------------- Total Interest and Dividend Income 22,968 24,101 21,407 - ------------------------------------------------------------------------------------------- Interest Expense: Deposits 9,467 10,886 9,488 Securities Sold Under Agreements to Repurchase 56 1 -- Borrowings 3,953 4,009 2,707 - ------------------------------------------------------------------------------------------- Total interest Expense 13,476 14,896 12,195 - ------------------------------------------------------------------------------------------- Net Interest Income 9,492 9,205 9,212 Provision (credit) for Loan Losses 20 (83) -- - ------------------------------------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 9,472 9,288 9,212 - ------------------------------------------------------------------------------------------- Non-Interest Income: Customer Service Fees 918 893 914 Loan Servicing Fees 43 50 58 Gain on Sale of Loans, Net 720 28 89 Trading Account Gains (Losses), Net 32 25 (8) Income (Loss) from Investment in Limited Liability Company 41 (19) (155) Other 94 211 96 - ------------------------------------------------------------------------------------------- Total Non-interest Income 1,848 1,188 994 - ------------------------------------------------------------------------------------------- Non-Interest Expense: Salaries and Employee Benefits 4,243 3,875 3,521 Occupancy 292 342 337 Depreciation 351 318 365 Data Processing 314 321 247 Foreclosed Assets, Net 44 (57) 26 Deposit Insurance Premium 42 44 120 Advertising 203 205 173 Bank Shares and Franchise Tax Expense 320 323 349 Impairment Loss on Long-Lived Assets 1 85 -- Other 1,875 1,589 1,633 - ------------------------------------------------------------------------------------------- Total Non-Interest Expense 7,685 7,045 6,771 - ------------------------------------------------------------------------------------------- Income Before Income Taxes 3,635 3,431 3,435 Income Tax Expense 1,317 1,207 1,229 - ------------------------------------------------------------------------------------------- Net Income $ 2,318 $ 2,224 $ 2,206 =========================================================================================== Earnings Per Share - basic $ 2.12 $ 1.80 $ 1.60 =========================================================================================== Earnings Per Share - diluted $ 2.00 $ 1.78 $ 1.55 ===========================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these Financial Statements. 20 Acadiana Bancshares, Inc. and Subsidiaries 2001 Annual Report ACADIANA BANCSHARES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended December 31, 2001, 2000 and 1999 (In Thousands, except share data)
Unearned Common Additional Stock Held Common Paid-In Retained BY ESOP Stock Capital Earnings Trust - ----------------------------------------------------------------------------------------- Balance, January 1, 1999 $27 $32,192 $20,932 $(1,965) Comprehensive Income: Net Income 2,206 Change in Unrealized Gain (Loss) on Securities Available for Sale, Net of Deferred Taxes - ---------------------------------------------------------------------------------------- Total Comprehensive Income Common Stock Released by ESOP Trust 146 262 Common Stock Earned by Participants of Recognition and Retention Plan Trust 3 Common Stock issued (2,000 shares) (19) Purchase of Treasury Stock (327,969 shares) Cash Dividends Declared ($.52 per share) (734) - ---------------------------------------------------------------------------------------- Balance, December 31,1999 $27 $32,322 $22,404 $(1,703) ======================================================================================== Balance, January 1, 2000 $27 $32,322 $22,404 $(1,703) Comprehensive Income: Net Income 2,224 Change in Unrealized Gain (Loss) on Securities Available for Sale, Net of Deferred Taxes - ---------------------------------------------------------------------------------------- Total Comprehensive Income Common Stock Released by ESOP Trust 83 263 Common Stock Earned by Participants of Recognition and Retention Plan Trust 5 Purchase of Treasury Stock (92,202 shares) Cash Dividends Declared ($.60 per share) (765) - ---------------------------------------------------------------------------------------- Balance, December 31, 2000 $27 $32,410 $23,863 $(1,440) ======================================================================================== Balance, January 1, 2001 $27 $32,410 $23,863 $(1,440) Comprehensive Income: Net Income 2,318 Change in Unrealized Gain (Loss) on Securities Available for Sale, Net of Deferred Taxes - ---------------------------------------------------------------------------------------- Total Comprehensive Income Common Stock Released by ESOP Trust 196 263 Common Stock Earned by Participants of Recognition and Retention Plan Trust 20 Purchase of Treasury Stock (218,600 shares) Cash Dividends Declared ($.60 per share) (666) - ---------------------------------------------------------------------------------------- Balance, December 31, 2001 $27 $32,626 $25,515 $(1,177) ======================================================================================== Unearned Common Accumulated Total Stock Other Stock- Held By Comprehensive Treasury holder's RRP Trust Income Stock Equity - --------------------------------------------------------------------------------------------- Balance, January 1,1999 $(1,335) $ 258 $(17,935) $32,174 Comprehensive Income: Net Income 2,206 Change in Unrealized Gain (Loss) on Securities Available for Sale, Net of Deferred Taxes (622) (622) - --------------------------------------------------------------------------------------------- Total Comprehensive Income 1,584 Common Stock Released by ESOP Trust 408 Common Stock Earned by Participants of Recognition and Retention Plan Trust 287 290 Common Stock issued (2,000 shares) 39 20 Purchase of Treasury Stock (327,969 shares) (5,992) (5,992) Cash Dividends Declared ($.52 per share) (734) - --------------------------------------------------------------------------------------------- Balance, December 31,1999 $(1,048) $(364) $(23,888) $27,750 ============================================================================================= Balance, January 1, 2000 $(1,048) $(364) $(23,888) 27,750 Comprehensive Income: Net Income 2,224 Change in Unrealized Gain (Loss) on Securities Available for Sale, Net of Deferred Taxes 313 313 - --------------------------------------------------------------------------------------------- Total Comprehensive Income 2,537 Common Stock Released by ESOP Trust 346 Common Stock Earned by Participants of Recognition and Retention Plan Trust 299 304 Purchase of Treasury Stock (92,202 shares) (1,390) (1,390) Cash Dividends Declared ($5.60, per share) (765) - --------------------------------------------------------------------------------------------- Balance, December 31, 2000 $ (749) $ (51) $(25,278) $28,782 ============================================================================================= Balance, January 1, 2001 $ (749) $ (51) $(25,278) $28,782 Comprehensive Income: Net Income 2,318 Change in Unrealized Gain (Loss) on Securities Available for Sale, Net of Deferred Taxes 150 150 - --------------------------------------------------------------------------------------------- Total Comprehensive Income 2,468 Common Stock Released by ESOP Trust 459 Common Stock Earned by Participants of Recognition and Retention Plan Trust 315 335 Purchase of Treasury Stock (218,600 shares) (4,566) (4,566) Cash Dividends Declared ($.60 per share) (666) - --------------------------------------------------------------------------------------------- Balance, December 31, 2001 $ (434) $ 99 $(29,844) $26,812 =============================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part of these Financial Statements. 21 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report ACADIANA BANCSHARES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2001, 2000 and 1999 (In Thousands)
2001 2000 1999 - -------------------------------------------------------------------------------------------------------- Cash Flows from Operating Activities: Net Income $ 2,318 $ 2,224 $ 2,206 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 372 338 387 Provision for Deferred Income Taxes 69 151 33 Provision for Losses on Loans 20 (83) -- Noncash Compensation Expenses 766 634 679 Other (gains) losses, net 10 (111) (40) (Income) Loss from Investment in Limited Liability Company (41) 19 155 Accretion of Discounts, Net of Premium Amortization on Securities 36 (2) (7) Amortization of Deferred Revenues and Unearned income on Loans (66) 88 116 FHLB Stock Dividend Received (174) (311) (166) Net Changes In: Securities Classified as Trading 162 123 290 Loans Held for Sale (2,975) (1,852) -- Accrued Interest Receivable 310 (165) (176) Other Assets (235) (144) (164) Other Liabilities 54 514 (123) - -------------------------------------------------------------------------------------------------------- Total Adjustments (1,692) (801) 984 - -------------------------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 626 1,423 3,190 - -------------------------------------------------------------------------------------------------------- Cash Flows from investing Activities: Activity in Available for Sale Securities: Proceeds from Calls, Maturities and Prepayments 12,877 2,311 24,887 Purchases (8,139) -- (25,470) Activity in Held to Maturity Securities: Proceeds from Calls, Maturities and Prepayments 915 233 431 Purchases (21,250) -- -- Purchase of Certificates of Deposit (3,048) -- -- Purchase of FHLB stock -- (147) (603) Net Repayments (Advances) on Loans 35,143 (21,338) (19,548) Proceeds from Sale of Premises and Equipment 2 949 -- Purchase of Premises and Equipment (1,660) (3,589) (240) Proceeds from Sale of Foreclosed Assets 66 172 238 Capital Costs Incurred on Foreclosed Assets 1 (5) (8) - -------------------------------------------------------------------------------------------------------- Net Cash Provided by (Used in) Investing Activities 14,907 (21,414) (20,313) - -------------------------------------------------------------------------------------------------------- Cash Flows from Financing Activities: Net Change in Deposits (8,962) 11,319 11,558 Net Change in Repurchase Agreements 2,630 128 -- Net Change in Short-term Debt -- (6,000) (1,500) Proceeds from Long-term Debt 4,770 13,240 37,500 Repayment of Long-term Debt (5,882) (12) (19,378) Proceeds from Issuance of Common Stock -- -- 20 Dividends Paid to Shareholders (695) (749) (741) Purchase of Treasury Stock (4,566) (1,390) (5,992) - -------------------------------------------------------------------------------------------------------- Net Cash (Used in) Provided by Financing Activities (12,705) 16,536 21,467 - -------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Cash and Cash Equivalents 2,828 (3,455) 4,344 Cash and Cash Equivalents Beginning of Year 8,467 11,922 7,578 - -------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents, End of Year $ 11,295 $ 8,467 $ 11,922 ======================================================================================================== Supplemental Schedule of Noncash Activities: Acquisition of Foreclosed Assets in Settlement of Loans $ 272 $ 74 $ 188 Supplemental Disclosures: Cash Paid For: Interest on Deposits and Borrowings $ 13,545 $ 14,648 $ 12,154 Income Taxes $ 1,000 $ 1,086 $ 1,203
The accompanying Notes to Consolidated Financial Statements are an integral part of these Financial Statements. 22 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report ACADIANA BANCSHARES, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: - -------------------------------------------------------------------------------- NATURE OF BUSINESS Acadiana Bancshares, Inc. (the "Company") is a Louisiana corporation organized in February 1996 for the purpose of becoming the bank holding company for LBA Savings Bank (the "Bank"). The Board of Directors of the Bank adopted the Plan of Conversion pursuant to which the Bank converted from a Louisiana chartered mutual savings bank to a Louisiana chartered stock savings bank. The Company completed its subscription and community offering in July 1996, and with a portion of the net proceeds, acquired the capital stock of the Bank. The Company also owns Acadiana Holdings, L.L.C. ("Holdings"), which was formed in May 2000 for the purposes of acquiring a new facility for the Company headquarters and the Bank main office. The Company provides a variety of financial services primarily to individuals, but also to commercial business customers through its four full-service branches in Lafayette, Louisiana, its full service branch in New Iberia, Louisiana, and its loan production office in Eunice, Louisiana. The Bank's primary deposit products are interest-bearing checking accounts and certificates of deposit. Its primary lending products are single-family residential loans, commercial loans and consumer loans. BASIS OF CONSOLIDATION The Consolidated Financial Statements include the accounts of Acadiana Bancshares, Inc. and its wholly owned subsidiaries, LBA Savings Bank and Acadiana Holdings, L.L.C. All significant intercompany balances and transactions have been eliminated in consolidation. USE OF ESTIMATES The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates, that are particularly susceptible to significant change, relate to the determination of the allowance for losses on loans and the valuation of assets acquired in connection with foreclosures or in satisfaction of loans. CONCENTRATION OF CREDIT RISK All of the Company's loans, commitments and letters of credit have been granted to customers in the Company's market area. The concentration of credit by type of loan is set forth in Note 4. The distribution of commitments to extend credit approximates the distribution of loans outstanding. A majority of the Company's loan portfolio consists of single-family residential loans in the Lafayette area. The regional economy has demonstrated heavy dependence on the oil and gas industry, which was in severe economic decline in the 1980's. Real estate prices in this market were substantially depressed. Future downturns in the oil and gas industry could result in an adverse impact on the Company's loan portfolio. CASH AND CASH EQUIVALENTS The Company considers all cash and amounts due from depository institutions, interest-bearing demand deposits, and time deposits in other banks which mature within 90 days, to be cash equivalents for purposes of the consolidated statements of cash flows. TRADING SECURITIES Investment securities that are held principally for resale in the near term are classified as trading securities and carried at fair value, with changes in fair value recorded in earnings. Quoted market prices are used to determine fair value. INVESTMENT SECURITIES Debt securities that management has the positive intent and ability to hold to maturity, are classified as held to maturity and carried at cost, adjusted for amortization of premiums and accretion of discounts using methods approximating the interest method. Investment Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values, are classified as available for sale and are carried at fair value. Unrealized gains and losses on securities available for sale are recognized in other comprehensive income net of applicable income taxes. The cost of securities sold is recognized using the specific identification method. The Bank is required, as a member of the Federal Home Loan Bank ("FHLB") of Dallas, to maintain an amount of stock equal to the greater of one percent of the Bank's outstanding home mortgage-related assets or five percent of its outstanding advances from the FHLB. Any stock held in excess of required amounts is redeemable at par. At December 31, 2001 and 2000, the Bank held the required amount of stock. LOANS HELD FOR SALE Loans originated and intended for sale in the secondary market are carried at the lower of cost or market value determined on an aggregate basis. Net unrealized losses, if any, are recognized in a valuation allowance through charges to income. Gains and losses on the sale of loans held for sale are determined using the specific identification method. LOANS RECEIVABLE The Company grants home mortgage, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans in the parish of Lafayette, Louisiana and the several surrounding parishes in southwest Louisiana. The ability of the Company's debtors to honor their contracts is dependent upon the real estate and general economic conditions in this area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, are generally stated at unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans, and unearned discounts. Loan origination fees and certain direct loan origination costs are deferred and amortized as an adjustment to the related loan's yield using the interest method. Interest on loans is recognized using the simple interest method. 23 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer, residential, and small business loans for impairment disclosures. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Other personal loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans (including impaired loans) that are placed on nonaccrual or charged off is reversed against interest income. Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of cash payments received. The interest on these loans is accounted for on the cash-basis method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance is increased by a provision for loan losses, which is charged to expense, and reduced by charge-offs, net of recoveries. The allowance for loan losses is maintained at a level, which, in management's judgment, is adequate to absorb credit losses inherent in the loan portfolio. The amount of the allowance is evaluated on a regular basis by management and is based upon management's periodic review and evaluation of various factors, including the collectibility of the loan portfolio, the nature of the portfolio, credit concentrations and trends in historical loss experience, specific impaired loans and prevailing economic conditions that may adversely affect the borrower's ability to repay, and the estimated value of any underlying collateral. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows using the loan's effective interest rate. LOAN SERVICING Loan servicing rights are recognized on loans sold when the institution has retained the servicing rights on the loan. The cost of servicing rights is amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment of servicing rights is assessed based on the fair value of those rights. Fair values are estimated using discounted cash flows based on a current market interest rate. PREMISES AND EQUIPMENT Land is carried at cost. Buildings and equipment are carried at cost, less accumulated depreciation computed on either the straight-line method or declining balance method. Depreciation is provided over the estimated useful lives of the respective assets, 15 to 40 years for buildings and 3 to 15 years for furniture, fixtures and equipment. FORECLOSED ASSETS Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, management periodically performs valuations and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expense from operations and changes in the valuation allowance are included in net expenses from foreclosed assets. TRANSFERS OF FINANCIAL ASSETS Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. INCOME TAXES The Company and its subsidiaries file a consolidated federal income tax return on a calendar year basis. Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statements carrying amounts and the tax bases of existing assets and liabilities. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, more likely than not will be unrealized. STOCK COMPENSATION PLANS Statement of Financial Accounting Standards ("FAS") No. 123, Accounting for Stock-Based Compensation, encourages all entities to adopt a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, whereby compensation cost is the excess, 24 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire the stock. Stock options issued under the Company's stock option plan have no intrinsic value at the grant date, and under Opinion No. 25 no compensation cost is recognized for them. The Company has elected to continue with the accounting methodology in Opinion No. 25 and, as a result, has provided proforma disclosures of net income and earnings per share and other disclosures, as if the fair value based method of accounting had been applied. EARNINGS PER COMMON SHARE Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and unvested restricted stock, and are determined using the treasury stock method. COMPREHENSIVE INCOME Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. OPERATING SEGMENT DISCLOSURE FAS No. 131, Disclosures About Segments of an Enterprise and Related Information, was effective for 1998. This Statement established standards for reporting information about a company's operating segments using a "management approach." The Statement requires that reportable segments be identified based upon those revenue-producing components for which separate financial information is produced internally and are subject to evaluation by the chief operating decision maker in deciding how to allocate resources to segments. The Company has evaluated its potential operating segments against the criteria specified in the statement and has determined that no operating segment disclosures are required in 2001, 2000 or 1999 because of the aggregation concepts specified in the statement. RECENT ACCOUNTING PRONOUNCEMENTS In June of 2001 the Financial Accounting Standards Board ("FASB") issued Statement No. 141, Business Combinations. It supersedes APB Opinion No. 16 of the same name. FAS 141 requires that all business combinations be accounted for by a single method - the purchase method. Use of the pooling of interests method of accounting is no longer permissible. FAS 141 also establishes criteria for the identification of acquired intangibles separate from goodwill, and adds additional disclosure requirements. The provisions of this Statement apply to all business transactions initiated after September 30, 2001. This Statement also applies to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001, or later. In June of 2001 the FASB also issued Statement No. 142, Goodwill and Other Intangible Assets. This Statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion 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. The Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. Goodwill and intangible assets that have indefinite useful lives will not be amortized but rather will be tested at least annually for impairment. Intangible assets that have finite useful lives will continue to be amortized over their useful lives. Specific guidance for determining impairment is provided. Goodwill will be tested for impairment at least annually using a two-step process that begins with an estimation of the fair value of a reporting unit. Additional disclosures are also required under the Statement. The provisions of FAS 142 are required to be applied starting with fiscal years beginning after December 15, 2001. The Statement is required to be applied at the beginning of an entity's fiscal year, and to be applied to all goodwill and other intangible assets recognized in its financial statements at that date. The Company will be required to apply FAS 142 effective January 1, 2002. The Company currently has no goodwill or other intangible assets, with the exception of an immaterial amount of mortgage servicing rights, and does not expect application of this Statement to have a significant effect on the Company's financial position or results of operations. In August of 2001 the FASB issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. It supersedes FAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business (as previously defined in that Opinion). This Statement also amends ARB No. 51, Consolidated Financial Statements, to eliminate exception to consolidation for a subsidiary for which control is likely to be temporary. The provisions of this Statement are effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years, with early application encouraged. The Statement requires that one accounting model be used for long-lived assets to be disposed of, whether previously held and used or newly acquired, and applies to discontinued operations. The adoption of this Statement is not expected to have a material effect on the Company's financial position or results of operations. RECLASSIFICATIONS Certain reclassifications have been made to the 2000 and 1999 Consolidated Financial Statements in order to conform to the classifications adopted for reporting in 2001. NOTE 2 - CASH AND AMOUNTS DUE FROM BANKS: - -------------------------------------------------------------------------------- The Company is required by the Federal Reserve Bank to maintain a reserve of vault cash or cash on deposit based on a percentage of deposits. The amount of the reserve balance required at December 31, 2001 and 2000 was approximately $530,000 and $429,000, respectively, and the Company satisfied its reserve requirements at both dates. 25 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report NOTE 3 - INVESTMENT SECURITIES: - -------------------------------------------------------------------------------- Securities available for sale consist of the following (in thousands):
December 31, 2001 December 31, 2000 - ---------------------------------------------------------------------------------------------------------------------------- Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gains Losses Value Cost Gains Losses Value - ---------------------------------------------------------------------------------------------------------------------------- Debt securities: U.S. Government and Federal Agencies $ 497 $ 22 $ -- $ 519 $10,495 $ 35 $ (22) $10,508 Corporate Bonds 2,009 33 -- 2,042 -- -- -- -- Mortgage-backed 17,051 191 (143) 17,099 13,809 124 (266) 13,667 - ---------------------------------------------------------------------------------------------------------------------------- Total debt securities 19,557 246 (143) 19,660 24,304 159 (288) 24,175 Marketable equity securities 5 47 -- 52 5 50 -- 55 - ---------------------------------------------------------------------------------------------------------------------------- Total $19,562 $293 $(143) $19,712 $24,309 $209 $(288) $24,230 ============================================================================================================================
Securities held to maturity consist of the following (in thousands):
December 31, 2001 December 31, 2000 - ---------------------------------------------------------------------------------------------------------------------------- Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gains Losses Value Cost Gains Losses Value - ---------------------------------------------------------------------------------------------------------------------------- Mortgage-backed $31,989 $129 $(70) $32,048 $11,682 $191 $(59) $11,814 - ---------------------------------------------------------------------------------------------------------------------------- Total $31,989 $129 $(70) $32,048 $11,682 $191 $(59) $11,814 ============================================================================================================================
The amortized cost and fair value of debt securities by contractual maturity at December 31, 2001 follows (in thousands): Available for Sale Held to Maturity - -------------------------------------------------------------------------------- Amortized Fair Amortized Fair Cost Value Cost Value - -------------------------------------------------------------------------------- Over 1 year through 5 years $ 2,506 $ 2,561 $ -- $ -- - -------------------------------------------------------------------------------- 2,506 2,561 -- -- Mortgage-backed securities 17,051 17,099 31,989 32,048 - -------------------------------------------------------------------------------- Total Debt Securities $19,557 $19,660 $31,989 $32,048 ================================================================================ Securities other than mortgage-backed securities are classified according to their contractual maturity without consideration of call features. Accordingly, actual maturities may differ from contractual maturities. During 2001, 2000 and 1999, proceeds from calls and maturities of securities available for sale were approximately $10,000,000, $0 and $19,925,000, respectively, resulting in no realized gain or loss. During 2001, 2000 and 1999, no securities available for sale were sold. Investment securities with a carrying value of approximately $4,850,000 and $7,584,000 at December 31, 2001 and 2000, respectively, were pledged to secure deposits, repurchase agreements, and for other purposes as required or permitted by law. Additionally, at December 31, 2001 and 2000, investment securities with a carrying value of $12,994,000 and $19,346,000, respectively, were included under a blanket lien that provides security for advances from the Federal Home Loan Bank of Dallas. 26 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report NOTE 4 - LOANS RECEIVABLE: - -------------------------------------------------------------------------------- Loans Receivable at December 31, 2001 and 2000 are summarized as follows (in thousands): 2001 2000 - ------------------------------------------------------------------------------- Mortgage Loans: Single-Family Residential $139,739 $188,133 Construction 6,093 3,912 Multi-Family Residential 166 346 Commercial Real Estate 40,119 28,851 Equity Lines of Credit 4,421 4,227 - ------------------------------------------------------------------------------- Total Mortgage Loans 190,538 225,469 Commercial Business Loans 20,468 19,702 Consumer Loans 25,287 24,398 - ------------------------------------------------------------------------------- Total Loans 236,293 269,569 Less: Allowance for Loan Losses (2,710) (2,714) Net Deferred Loan Fees (161) (197) Unadvanced Loan Funds (3,531) (1,853) - ------------------------------------------------------------------------------- Loans, Net $229,891 $264,805 =============================================================================== At December 31, 2001 and 2000, the Company's loan portfolio included $99,217,000 and $111,617,000 in adjustable-rate loans, respectively. At December 31, 2001 and 2000, single-family residential mortgage loans in the aggregate amounts of $108,541,000 and $112,376,000, respectively, were included under a blanket lien that provides security for advances from the Federal Home Loan Bank of Dallas. The following is an analysis of the allowance for possible loan losses for the years ended December 31, 2001, 2000 and 1999 (in thousands): 2001 2000 1999 - ------------------------------------------------------------------------------- Balance, Beginning $2,714 $2,747 $2,726 Provision Charged (Credited) to Income 20 (83) -- Loans Charged Off (243) (170) (185) Loans Recovered 219 220 206 - ------------------------------------------------------------------------------- Balance, Ending $2,710 $2,714 $2,747 =============================================================================== The following is a summary of information pertaining to impaired loans (in thousands): December 31, 2001 2000 - -------------------------------------------------------------------------------- Impaired loans without a valuation allowance $ -- $ -- Impaired loans with a valuation allowance 720 397 - -------------------------------------------------------------------------------- Total impaired loans $720 $397 ================================================================================ Valuation allowance related to impaired loans $342 $ 64 ================================================================================ For the Years Ended December 31, 2001 2000 1999 - -------------------------------------------------------------------------------- Average investment in impaired loans $526 $313 $-- ================================================================================ Interest income recognized on impaired loans $ 9 $ 26 $-- ================================================================================ Interest income recognized on a cash basis on impaired loans $ 9 $ 30 $-- ================================================================================ NOTE 5 - LOAN SERVICING: - -------------------------------------------------------------------------------- Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others were $13,662,000 and $17,937,000 at December 31, 2001 and 2000, respectively. Custodial escrow balances maintained in connection with the foregoing loan servicing were approximately $196,000 and $184,000 at December 31, 2001 and 2000, respectively. No loan servicing rights were capitalized in 2001 or 2000. Amortization of loan servicing rights was $19,000, $20,000 and $22,000, in 2001, 2000 and 1999, respectively, and the balance of loan servicing rights at December 31, 2001 and 2000 was $47,000 and $66,000, respectively. NOTE 6 - INVESTMENT IN LIMITED LIABILITY COMPANY: - -------------------------------------------------------------------------------- The Company owns a 40 percent investment in Cadence Holdings, LLC ("Cadence"), an affiliate in the financial services industry, which is accounted for under the equity method. A limited liability company ("LLC") is a legal form of doing business that combines partnership and corporate attributes. The Company is a guarantor in the amount of $500,000 for a $750,000 bank line of credit to Cadence, which is dated August, 2001. NOTE 7 - PREMISES AND EQUIPMENT: - -------------------------------------------------------------------------------- Premises and equipment at December 31, 2001 and 2000 are as follows (in thousands): 2001 2000 - ------------------------------------------------------------------------------- Land $1,907 $1,871 Office Buildings 4,086 3,205 Furniture, Fixtures and Equipment 2,576 2,648 Transportation Equipment 110 104 - ------------------------------------------------------------------------------- 8,679 7,828 Accumulated Depreciation (2,376) (2,809) - ------------------------------------------------------------------------------- Premises and Equipment, Net $6,303 $5,019 =============================================================================== Since the acquisition of a new office building in May of 2000, the Company actively engages in leasing office space that it has available. Leases have different terms ranging from monthly rental to seven years. At December 31, 2001, the monthly lease income was $54,000 per month. Total lease income for 2001 and 2000 was $638,000 and $300,000, respectively. Income from leases was reported as a reduction in occupancy expenses. The income from such leases, and the land and building at the Company headquarters, are pledged to a third party to secure debt. The carrying amount of the land and building held for lease at December 31, 2001 and 2000 were $2,971,000 and $2,240,000, respectively, which amounts exclude the approximately 30% used by the Company for its operations. Relative to its main office location, the Bank executed an operating lease with Holdings which provides for an annual base rental of $455,000, or approximately $38,000 per month, from the Bank to Holdings. The initial term is 10 years, which began March 2001. This transaction is eliminated in the preparation of consolidated financial statements because the Company owns the Bank and Holdings. 27 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report NOTE 8 - DEPOSITS: - -------------------------------------------------------------------------------- Certificates of deposit with a balance of $100,000 or more at December 31, 2001 and 2000 were $42,994,000 and $46,967,000, respectively. At December 31, 2001, scheduled maturities of certificates of deposit accounts were as follows (in thousands): 2002 $ 92,289 2003 27,277 2004 31,290 2005 1,211 2006 482 Thereafter 173 - -------------------------------------------------------------------------------- $152,722 ================================================================================ NOTE 9 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE: - -------------------------------------------------------------------------------- Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one day from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities. NOTE 10 - LONG-TERM DEBT: - -------------------------------------------------------------------------------- The Company's fixed rate long-term debt consisted entirely of Federal Home Loan Bank advances. Such advances totaled $65,350,000 and $67,850,000 as of December 31, 2001 and 2000, respectively, and are secured by residential mortgage loans and certain investment securities (held by the FHLB in safekeeping) under an existing blanket collateral agreement and by FHLB stock. Interest rates on these advances ranged from 4.93% to 8.70% at December 31, 2001 and 2000. No payments are scheduled prior to maturity; however, a significant portion of the advances contain a quarterly call feature beginning between one and three years after the date of issuance, therefore, actual repayments could vary from contractual maturities. The Company has the ability to borrow additional advances of $55,773,000 from the FHLB, which would also be secured by the existing blanket collateral agreement and by FHLB stock. The Company, through its subsidiary, Holdings, has a long-term loan in the amount of $3,184,000, at a rate fluctuating with prime (4.75% at December 31, 2001) which amortizes monthly over a 30-year amortization with a 10-year balloon. The Bank acquired a 31.25% participation in this loan resulting in a net long-term debt of $2,189,000 after eliminations for preparation of Consolidated Financial Statements. Land and an office building, and a pledge and assignment of rents, secure the debt. Additionally, the Company has a prime rate long-term loan in the amount of $1,432,000 at a rate fluctuating with prime rate (4.75% at December 31, 2001), due in quarterly payments through June, 2006. This debt is ESOP debt and under SOP 93-6 is shown as Company debt. This debt is secured by unallocated shares of Company stock in the Employee Stock Ownership Plan. Contractual maturities of long-term debt are as follows (in thousands): December 31, 2001 2000 - -------------------------------------------------------------------------------- Fixed Floating Rate Rate Total Total - -------------------------------------------------------------------------------- Due in 2001 $ -- $ -- $ -- $ 2,893 Due in 2002 -- 366 366 11 Due in 2003 3,100 384 3,484 3,112 Due in 2004 -- 402 402 13 Due in 2005 250 422 672 265 Due in 2006 -- 163 163 16 Due in 2007 -- 70 70 17 Due in 2008 17,000 74 17,074 17,018 Due in 2009 35,000 78 35,078 35,021 Due in 2010 10,000 81 10,081 11,262 Due in 2011 -- 1,581 1,581 -- - -------------------------------------------------------------------------------- Total $65,350 $3,621 $68,971 $69,628 ================================================================================ The Company's floating-rate, long-term debt of $3,621,000 at December 31, 2001 matures through 2011 and is tied to prime rate. At December 31, 2001 and 2000, the interest rate on floating-rate, long-term debt was 4.75% and 9.50%, respectively. NOTE 11 - INCOME TAXES: - -------------------------------------------------------------------------------- The provision for Income Tax Expense is as follows for the years ended December 31, 2001, 2000 and 1999 (in thousands): 2001 2000 1999 - -------------------------------------------------------------------------------- Current Tax Provision $1,248 $1,056 $1,196 Deferred Tax Provision 69 151 33 - -------------------------------------------------------------------------------- Total Income Tax Expense $1,317 $1,207 $1,229 ================================================================================ There was an income tax payable of $157,000 and an income tax receivable of $63,000 at December 31, 2001 and 2000, respectively. The total provision for federal income taxes differs from that computed by applying statutory corporate tax rates, as follows for the years ended December 31, 2001, 2000 and 1999: 2001 2000 1999 - ------------------------------------------------------------------------------- Statutory Federal Income Tax Rate 34.0% 34.0% 34.0% Increase in Taxes Resulting From: Nondeductible ESOP 1.8 0.8 1.5 Other Items 0.4 0.4 0.3 - ------------------------------------------------------------------------------- Effective Tax Rate 36.2% 35.2% 35.8% =============================================================================== 28 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report The tax effects of principal temporary differences at December 31, 2001 and 2000 are as follows (in thousands): 2001 2000 - -------------------------------------------------------------------------------- Deferred Tax Assets: Deferred loan fees $ 59 $ 58 Losses on loans 922 929 Loans held for sale 29 -- Depreciable property basis differences -- 4 Compensation expenses 170 166 Unrealized losses on Trading Securities -- 11 Unrealized losses on Securities Available for Sale -- 27 Capital loss carryover 7 7 Other 22 30 - -------------------------------------------------------------------------------- Subtotal 1,209 1,232 - -------------------------------------------------------------------------------- Deferred Tax Liabilities: FHLB stock 559 500 Depreciable property basis differences 10 -- Unrealized gain on Securities Available for Sale 51 -- Acquisition Costs 11 7 - -------------------------------------------------------------------------------- Subtotal 631 507 - -------------------------------------------------------------------------------- Net Deferred Tax Asset $ 578 $ 725 ================================================================================ The likelihood of realization of the entire amount of the deferred tax asset is considered to be more likely than not; therefore, no valuation allowance has been provided for 2001 or 2000. Retained earnings at December 31, 2001 and 2000 included approximately $7,073,000 accumulated prior to January 1, 1987 for which no provision for federal income taxes has been made. If this portion of retained earnings is used in the future for any purpose other than to absorb bad debts, it will be added to future taxable income. NOTE 12 - EARNINGS PER COMMON SHARE: - -------------------------------------------------------------------------------- Weighted average shares of common stock outstanding for basic EPS excludes the weighted average shares unreleased by the Employee Stock Ownership Plan ("ESOP") Trust (108,957, 130,872 and 152,726 shares at December 31, 2001, 2000 and 1999 respectively) and the weighted average unvested shares in the Recognition and Retention Plan ("RRP") Trust (45,486, 63,462, and 80,110 shares at December 31, 2001, 2000 and 1999, respectively). The following is a reconcilement of the numerator and denominator for basic and diluted Earnings Per Share:
For the Years Ended December 31, 2001 2000 1999 - ------------------------------------------------------------------------------------ Numerator: Income Applicable to Common Shares $2,318,000 $2,224,000 $2,206,000 - ------------------------------------------------------------------------------------ Denominator: Weighted Average Common Shares Outstanding 1,094,846 1,235,251 1,377,635 Effect of Dilutive Securities: Stock Options Outstanding 52,755 4,071 12,584 RRP Grants 10,606 8,280 32,336 - ------------------------------------------------------------------------------------ Weighted Average Common Shares Outstanding Assuming Dilution 1,158,207 1,247,602 1,422,555 ==================================================================================== Earnings per Share $ 2.12 $ 1.80 $ 1.60 ==================================================================================== Earnings per Share - Assuming Dilution $ 2.00 $ 1.78 $ 1.55 ====================================================================================
29 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report NOTE 13 - REGULATORY MATTERS: - -------------------------------------------------------------------------------- The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's or the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 Capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 Capital (as defined) to average assets (as defined). Management believes, as of December 31, 2001 and 2000, that the Company and the Bank met all capital adequacy requirements to which they are subject. As of December 31, 2001, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank's category. The Company's and the Bank's actual capital amounts and ratios as of December 31, 2001 and 2000 are also presented in the table.
(Dollars in Thousands) Minimum to be Minimum Well Capitalized Under Capital Prompt Corrective Actual Requirement Action Provisions - ---------------------------------------------------------------------------------------------------- December 31, 2001 Amount Ratio Amount Ratio Amount Ratio - ---------------------------------------------------------------------------------------------------- Total Capital to Risk Weighted Assets: Acadiana Bancshares, Inc. $28,986 15.8% $14,696 8.0% $ N/A N/A% LBA Savings Bank 27,825 15.5% 14,374 8.0% 17,968 10.0% Tier 1 Capital to Risk Weighted Assets: Acadiana Bancshares, Inc. 26,713 14.5% 7,348 4.0% N/A N/A% LBA Savings Bank 25,552 14.2% 7,187 4.0% 10,781 6.0% Tier 1 Capital To Average Assets: Acadiana Bancshares, Inc. 26,713 8.4% 12,654 4.0% N/A N/A% LBA Savings Bank 25,552 8.2% 12,483 4.0% 15,604 5.0% December 31, 2000 - ---------------------------------------------------------------------------------------------------- Total Capital to Risk Weighted Assets: Acadiana Bancshares, Inc. $31,152 16.6% $15,018 8.0% $ N/A N/A% LBA Savings Bank 27,325 14.8% 14,748 8.0% 18,435 10.0% Tier 1 Capital to Risk Weighted Assets: Acadiana Bancshares, Inc. 28,779 15.3% 7,509 4.0% N/A N/A% LBA Savings Bank 24,994 13.6% 7,374 4.0% 11,061 6.0% Tier 1 Capital to Average Assets: Acadiana Bancshares, Inc. 28,779 8.8% 13,020 4.0% N/A N/A% LBA Savings Bank 24,994 7.8% 12,763 4.0% 15,954 5.0%
30 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report NOTE 14 - EMPLOYEE BENEFITS: - -------------------------------------------------------------------------------- 401(K) PLAN The Company maintains a 401(k) Profit Sharing Plan to provide retirement benefits for substantially all employees. Eligible employees may defer up to ten percent of compensation. All employees are eligible after completing one year of service and attaining age 21. No contributions to the plan were due, and no contributions were made by the Company for the three years ended December 31, 2001. EMPLOYEE STOCK OWNERSHIP PLAN The Company established an Employee Stock Ownership Plan Trust ("ESOP") for the benefit of employees of the Company and the Bank. Full-time employees of the Company and the Bank who have been credited with at least 1,000 hours of service during a 12-month period and who have attained age 21 are eligible to participate in the ESOP. The ESOP is a leveraged ESOP and shares purchased by the ESOP with the proceeds of a loan are held in a suspense account and released on a pro rata basis as debt service payments are made. Continuing its practice, the Company anticipates that contributions will be made to the plan in amounts necessary to amortize the debt to the Company over a period of ten years, finally maturing in June 2006. Shares released are allocated among participants on the basis of compensation. Participants vest in their right to receive their account balances within the ESOP at the rate of 20 percent per year starting after one year of service. In the case of a "change of control," as defined in the plan, participants will become immediately and fully vested in their account balances. Under SOP 93-6, unearned ESOP shares are not considered outstanding and the cost of which are shown as a reduction of stockholders' equity. Dividends on unallocated ESOP shares are considered to be compensation expense. The Company recognizes compensation cost equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the Company's ESOP shares differs from the cost of such shares, this differential is credited to equity. The Company receives a tax deduction equal to the cost of the shares released. During 2001, the ESOP refinanced the loan previously financed by the Company, which continues to be secured by the unallocated shares in the trust. The leveraged ESOP is accounted for in accordance with AICPA SOP 93-6, Employers' Accounting for Employee Stock Ownership Plans, and accordingly, prior to the external refinancing, the loan receivable from the ESOP to the Company was not shown as an asset and the debt of the ESOP was not shown as a Company liability. Compensation cost of the ESOP for the year ended December 31, 2001, was $459,000 based on the release of 21,894 shares. Compensation cost of the ESOP for the year ended December 31, 2000, was $346,000 based on the release of 21,892 shares. For the year ended December 31, 1999, compensation cost of the ESOP was $408,000 based on the release of 21,892 shares. There were 106,515, 91,099, and 73,423 allocated shares and 98,092, 119,986 and 141,878 shares held in suspense by the ESOP for the years ended December 31, 2001, 2000 and 1999, respectively. The fair value of the unearned ESOP shares at December 31, 2001 and 2000, using the quoted market closing price per share, was approximately $2,276,000 and $2,160,000, respectively. RECOGNITION AND RETENTION PLAN The Company established the Recognition and Retention Plan Trust ("RRP") for certain officers and directors on January 22, 1997. During 1997, the Company fully funded the trust with the purchase of 109,250 shares. The cost of the shares of restricted stock awarded under these plans is recorded as unearned compensation, a contra equity account. The fair value of the shares on the date of award is recognized ratably as compensation expense over the vesting period, which is five years. The grantees of the restricted stock have the right to vote the shares awarded. Dividends on unvested shares are held in trust and distributed when the related shares vest. For the years ended December 31, 2001, 2000 and 1999, the Recognition and Retention Plan Expense was $307,000, $288,000 and $271,000, respectively. The weighted-average grant-date fair value of the restricted stock granted under the RRP during the years ended December 31, 2001, 2000 and 1999 was $21.52, $16.50, and $20.50, respectively. A summary of the changes in restricted stock follows: Unawarded Awarded Shares Shares - ------------------------------------------------------------------------------- Balance, January 1, 1999 25,748 68,863 Granted (7,000) 7,000 Forfeited -- -- Earned and Issued -- (17,223) - ------------------------------------------------------------------------------- Balance, December 31, 1999 18,748 58,640 Granted (1,000) 1,000 Forfeited -- -- Earned and Issued -- (17,818) - ------------------------------------------------------------------------------- Balance, December 31, 2000 17,748 41,822 Granted (14,277) 14,277 Forfeited -- -- Earned and Issued -- (18,223) - ------------------------------------------------------------------------------- Balance, December 31, 2001 3,471 37,876 =============================================================================== STOCK OPTION PLAN In 1997, the Company adopted a stock option plan for the benefit of directors and officers. The number of shares of common stock reserved for issuance under the stock option plan was equal to 273,125 shares. The option exercise price cannot be less than the fair value of the underlying common stock as of the date of the option grant and the maximum option term cannot exceed ten years. The stock options granted to directors and officers are subject to 20 percent vesting per year and are exercisable upon vesting. Under APB No. 25, because the exercise price of the Company's stock options equals the market price of the underlying stock on the date of grant, the Company recognizes no compensation expense. 31 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report The following table summarizes the activity related to stock options: Weighted Average Available Options Exercise for Grant Outstanding Price - -------------------------------------------------------------------------------- Balance, January 1, 1999 14,424 258,701 $15.75 Granted (10,000) 10,000 $20.05 Canceled 2,000 (2,000) $15.50 Exercised -- (7,000) $15.50 - -------------------------------------------------------------------------------- Balance, December 31, 1999 6,424 259,701 $16.05 Granted (2,000) 2,000 $16.50 Canceled -- -- Exercised -- -- - -------------------------------------------------------------------------------- Balance, December 31, 2000 4,424 261,701 $16.05 Granted (4,549) 4,549 $22.50 Canceled 2,000 (2,000) $18.25 Exercised -- -- - -------------------------------------------------------------------------------- Balance, December 31, 2001 1,875 264,250 $16.28 ================================================================================ Exercisable at December 31, 1999 89,279 $15.72 ================================================================================ Exercisable at December 31, 2000 141,222 $15.84 ================================================================================ Exercisable at December 31, 2001 192,762 $15.89 ================================================================================ The weighted-average remaining life of the outstanding options at December 31, 2001 is 5.4 years. The exercise prices of the outstanding options range from $15.50 to $22.50. The weighted-average grant-date fair value of options granted during the years ended December 31, 2001, 2000 and 1999 was $4.24, $4.83 and $3.91, respectively. In October 1995 the FASB issued FAS 123, Accounting for Stock-Based Compensation. FAS 123 requires disclosure of the compensation cost for stock-based incentives granted after January 31, 1995 based on the fair value at grant date for awards. Applying FAS 123 would result in pro forma net income and earnings per share amounts as follows (in thousands, except per share data): 2001 2000 1999 - -------------------------------------------------------------------------------- Net Income As reported $2,318 $2,224 $2,206 Pro forma 2,102 2,006 2,003 Earnings per share As reported - Basic $ 2.12 $ 1.80 $ 1.60 Diluted 2.00 1.78 1.55 Pro forma - Basic 1.92 1.62 1.45 Diluted 1.82 1.61 1.41 The fair value of each option is estimated on the date of grant using an option-pricing model with the following weighted-average assumptions used for 2001, 2000 and 1999 grants: dividend yields of 2.88, 3.80 and 2.79 percent, respectively; expected volatility of 14.43, 30.65 and 11.26 percent, respectively; risk-free interest rate of 5.16, 6.32 and 5.90 percent, respectively; and expected lives of 7.5 years for all options. NOTE 15 - RELATED PARTY TRANSACTIONS: - -------------------------------------------------------------------------------- In the ordinary course of business, the Bank has granted loans to principal officers and directors and their affiliates amounting to $757,000 at December 31, 2001 and $850,000 at December 31, 2000. During the year ended December 31, 2001, total principal additions were $589,000 and total principal payments were $682,000. Deposits from related parties held by the Bank at December 31, 2001 amounted to $2,129,000. The Company has an employment agreement with an executive officer under which the Company agreed to pay compensation of $130,000 annually (plus merit increases) through October 31, 2002. The Company has also entered into severance agreements with seven officers. The total commitments under the severance agreements at December 31, 2001 were $1,116,000. NOTE 16 - COMMITMENTS AND CONTINGENT LIABILITIES: - -------------------------------------------------------------------------------- The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. Based on information presently available and advice received from legal counsel representing the Company in connection with such claims and lawsuits, it is the opinion of management that the disposition or ultimate determination of such claims and lawsuits will not have a material adverse effect on the consolidated financial condition or results of operations of the Company. The Company is obligated in connection with a contract for data processing services, beginning May 2002, for 60 months, which is currently expected to cost approximately $20,000 per month. NOTE 17 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: - -------------------------------------------------------------------------------- The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheets. The contract or notional amounts of those instruments reflect the extent of the Company's involvement in particular classes of financial instruments. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. As of December 31, 2001, financial instruments for which the contract amounts were as follows represent credit risk: Contract or Notional Amount (in thousands) - -------------------------------------------------------------------------------- Unadvanced Loan Funds $ 3,531 Commitments to Extend Credit $18,711 Standby Letters of Credit $ 115 32 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report Unadvanced loan funds represent portions of loans not yet disbursed to the borrower. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the counter party. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are issued primarily to support public and private borrowing arrangements, including commercial paper, bonding, financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. NOTE 18 - RESTRICTIONS ON DIVIDENDS, LOANS AND ADVANCES: - -------------------------------------------------------------------------------- Federal and state banking regulations place certain restrictions on dividends paid and loans or advances made by the Bank to the Company. The total amount of dividends that may be paid at any date is generally limited to the retained earnings of the Bank, and loans or advances are limited to 10% of the Bank's capital stock and surplus on a secured basis. Currently, the Bank is restricted under applicable laws in the payment of dividends to an amount equal to current year earnings plus undistributed earnings for the immediately preceding year, unless prior permission is received from the Commissioner of Financial Institutions for the State of Louisiana. Dividends payable without permission by the Bank in 2002 will be limited to 2002 earnings plus $68,000. In addition, dividends paid by the Bank to the Company would be prohibited if the effect thereof would cause the Bank's capital to be reduced below applicable minimum capital requirements. Accordingly, at January 1, 2002, $25,584,000 of the Company's equity in the net assets of the Bank was restricted. Funds available for loans on advances by the Bank to the Company amounted to $2,828,000. NOTE 19 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS: - -------------------------------------------------------------------------------- FAS 107, Disclosures about Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the Consolidated Balance Sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. FAS 107 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The Company, in estimating its fair value disclosures for financial instruments, used the following methods and assumptions: Cash and cash equivalents: The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents approximate those assets' fair values. Time deposits in other banks: The fair values for time deposits in other banks are estimated using a discounted cash flow calculation that applies interest rates currently being offered on time deposits to a schedule of aggregated contractual maturities on such time deposits. Trading securities: Trading securities are carried at fair value, using quoted market prices. Investment securities (including equity securities and mortgage-backed securities): Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Federal Home Loan Bank Stock: The carrying value of FHLB stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank. Loans: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying amounts. The fair values for other loans (for example, fixed rate commercial real estate and mortgage loans) are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. Deposits: The fair value disclosed for demand deposits (for example, interest-bearing checking accounts and savings accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated contractual maturities on such time deposits. Securities Sold Under Agreements to Repurchase: The carrying amounts of securities sold under agreements to repurchase approximate fair value. Borrowings: The fair values of the Company's long-term debt is estimated using discounted cash flows analyses based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. Accrued Interest: The carrying amounts of accrued interest approximate fair value. Off-Balance Sheet Items: The Company has outstanding commitments to extend credit and stand-by letters of credit. These off-balance-sheet financial instruments are generally exerciseable at the market rate prevailing at the date the underlying transaction will be completed and, therefore, have no current value. 33 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report The estimated fair value of the Company's financial instruments as of December 31, 2001 and 2000 is as follows (in thousands):
2001 2000 - --------------------------------------------------------------------------------------------- Estimated Recorded Estimated Recorded Fair Book Fair Book Value Value Value Value - --------------------------------------------------------------------------------------------- Assets Cash and Cash Equivalents $ 11,295 $ 11,295 $ 8,467 $ 8,467 Time Deposits in Other Banks 3,035 3,048 -- -- Trading Securities -- -- 162 162 Investment Securities 51,760 51,701 36,044 35,912 Federal Home Loan Bank Stock 4,321 4,321 4,147 4,147 Loans and Loans Held for Sale 242,267 234,718 270,070 266,657 Accrued Interest Receivable 1,398 1,398 1,708 1,708 Liabilities Deposits 216,497 215,569 224,827 224,531 Securities Sold Under Agreements to Repurchase 2,758 2,758 128 128 Borrowings 73,840 68,971 68,623 69,628 Accrued Interest Payable 524 524 593 593
NOTE 20 - COMPREHENSIVE INCOME: - ------------------------------------------------------------------------------- The following is a summary of the components of other comprehensive income (in thousands): For the Years Ended December 31, 2001 2000 1999 - ------------------------------------------------------------------------------- Unrealized Gain (Loss) on Securities Available for Sale, Net $228 $ 473 $(942) Reclassification Adjustments for Net Gains Realized in Net Income -- -- -- - ------------------------------------------------------------------------------- Other Comprehensive Income 228 473 (942) Income Tax (Expense) Benefit Related to Other Comprehensive Income (78) (160) 320 - ------------------------------------------------------------------------------- Other Comprehensive Income, Net of Income Taxes $150 $ 313 $(622) =============================================================================== 34 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report NOTE 21 - CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS: - -------------------------------------------------------------------------------- Condensed financial statements of Acadiana Bancshares, Inc., (parent only) are shown below. The parent company has no significant operating activities. Condensed Balance Sheets (In Thousands) December 31, December 31, 2001 2000 - -------------------------------------------------------------------------------- Assets Cash and Cash Equivalents $ 440 $ 2,648 Trading Securities -- 162 Investment in Subsidiaries 27,013 25,133 Investment in Limited Liability Company 833 792 Other Assets 281 383 - ----------------------------------------------------------------------------- Total Assets $28,567 $29,118 ============================================================================= Liabilities and Stockholders' Equity Other Liabilities $ 323 $ 336 Long term Debt 1,432 -- - ----------------------------------------------------------------------------- Total Liabilities 1,755 336 Stockholders' Equity 26,812 28,782 - ----------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $28,567 $29,118 ============================================================================= Condensed Income Statements (In Thousands) For the Years Ended December 31, 2001 2000 1999 - ------------------------------------------------------------------------------- Operating Income: Dividends from Subsidiary Bank $2,544 $2,600 $2,270 Interest and Dividend Income 75 197 211 Trading Account Gains (Losses) 32 25 (8) Other Gains (Losses) 41 3 (155) - ------------------------------------------------------------------------------- Total Operating income 2,692 2,825 2,318 Operating Expenses 524 470 421 - ------------------------------------------------------------------------------- Income Before Income Tax Expense and Increase (Decrease) in Equity in Undistributed Earnings of Subsidiaries 2,168 2,355 1,897 Income Tax (Benefit) Expense (123) (85) (127) - ------------------------------------------------------------------------------- Income Before Increase (Decrease) in Equity in Undistributed Earnings of Subsidiaries 2,291 2,440 2,024 Increase (Decrease) in Equity in Undistributed Earnings of Subsidiaries 27 (216) 182 - ------------------------------------------------------------------------------- Net Income $2,318 $2,224 $2,206 =============================================================================== 35 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report Condensed Statement of Cash Flows (In Thousands)
For the Years Ended December 31, 2001 2000 1999 - -------------------------------------------------------------------------------------- Cash Flows from Operating Activities: Net Income $ 2,318 $ 2,224 $ 2,206 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: (Increase) Decrease in Equity in Net Income of Subsidiaries (27) 216 (182) Provision (Credit) for Deferred Income Taxes 15 (1) 15 Amortization 2 3 2 (Income) Loss from Investment in Limited Liability Company (41) 19 155 Net change in Securities Classified as Trading 162 123 290 Decrease (Increase) in Other Assets 25 (137) (135) Increase (Decrease) in Other Liabilities 76 146 (177) - -------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 2,530 2,593 2,174 - -------------------------------------------------------------------------------------- Cash Flows from Investing Activities: Proceeds from Calls and Maturities of Securities Available for Sale -- -- 15,970 Purchase of Securities Available for Sale -- -- (9,978) - -------------------------------------------------------------------------------------- Net Cash Provided by Investing Activities -- -- 5,992 Cash Flows from Financing Activities: Capital Contributed to Subsidiaries (1,288) (435) (84) Payments Received From ESOP Trust 379 388 388 Proceeds from Long-term Debt 1,570 -- -- Repayment of Long-term Debt (138) -- -- Proceeds from Issuance of Common Stock -- -- 20 Dividends Paid to Shareholders (695) (749) (741) Repurchase of Common Stock (4,566) (1,390) (5,992) - -------------------------------------------------------------------------------------- Net Cash Used in Financing Activities (4,738) (2,186) (6,409) - -------------------------------------------------------------------------------------- Net (Decrease) Increase in Cash and Cash Equivalents (2,208) 407 1,757 Cash and Cash Equivalents, Beginning of Year 2,648 2,241 484 - -------------------------------------------------------------------------------------- Cash and Cash Equivalents, End of Year $ 440 $ 2,648 $ 2,241 ======================================================================================
36 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report NOTE 22 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED): - -------------------------------------------------------------------------------- (In thousands, except per share data) Year Ended December 31, 2001 First Second Third Fourth Quarter Quarter Quarter Quarter - ------------------------------------------------------------------------------- Interest and Dividend Income $6,062 $5,830 $5,581 $5,495 Interest Expense 3,749 3,556 3,229 2,942 - ------------------------------------------------------------------------------- Net Interest Income 2,313 2,274 2,352 2,553 (Credit) Provision for Loan Losses (131) (45) 3 193 - ------------------------------------------------------------------------------- Net Interest Income after Provision for Loan Losses 2,444 2,319 2,349 2,360 Non-Interest Income 534 393 387 534 Non-Interest Expenses 1,933 1,993 1,830 1,929 - ------------------------------------------------------------------------------- Income Before Income Taxes 1,045 719 906 965 Income Tax Expense 371 265 332 349 - ------------------------------------------------------------------------------- Net Income $ 674 $ 454 $ 574 $ 616 =============================================================================== Earnings per Share - basic $ 0.55 $ 0.42 $ 0.56 $ 0.59 =============================================================================== Earnings per Share - diluted $ 0.54 $ 0.40 $ 0.52 $ 0.55 =============================================================================== Year Ended December 31, 2000 First Second Third Fourth Quarter Quarter Quarter Quarter - ------------------------------------------------------------------------------- Interest and Dividend Income $5,712 $6,015 $6,142 $ 6,232 Interest Expense 3,425 3,692 3,866 3,913 - ------------------------------------------------------------------------------- Net Interest Income 2,287 2,323 2,276 2,319 (Credit) Provision for Loan Losses -- -- -- (83) - ------------------------------------------------------------------------------- Net Interest Income after Provision for Loan Losses 2,287 2,323 2,276 2,402 Non-Interest Income 234 254 383 317 Non-Interest Expense 1,685 2,056 1,753 1,551 - ------------------------------------------------------------------------------- Income Before Income Taxes 836 521 906 1,168 Income Tax Expense 295 188 319 405 - ------------------------------------------------------------------------------- Net Income $ 541 $ 333 $ 587 $ 763 =============================================================================== Earnings per Share - basic $ 0.43 $ 0.27 $ 0.48 $ 0.62 =============================================================================== Earnings per Share - diluted $ 0.42 $ 0.27 $ 0.48 $ 0.61 =============================================================================== 37 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report ABOUT THE COMPANY Acadiana Bancshares, Inc., (the "Company") is a Louisiana-chartered financial holding company with headquarters at 200 West Congress Street, Lafayette, Louisiana 70501. Its banking subsidiary, LBA Savings Bank (the "Bank"), operates five full-service branches in Lafayette and New Iberia and a loan production office in Eunice, Louisiana. Addresses of LBA Savings Bank branches are: Main Office Branch 200 West Congress Street Lafayette, Louisiana 70501 Northside Branch 2601 Moss Street Lafayette, Louisiana 70501 Southside Branch 3701 Johnston Street Lafayette, Louisiana 70503 Broadmoor Branch 5301 Johnston Street Lafayette, Louisiana 70503 New Iberia Branch 230 West Main Street New Iberia, Louisiana 70560 Eunice Loan Production Office 136 South 3rd Street Eunice, Louisiana 70535 38 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report DIRECTORS Al W. Beacham, M.D. President Beacham Urology Group, Inc. John H. DeJean Retired Lawrence Gankendorff Vice Chairman of the Board, Acadiana Bancshares, Inc., and LBA Savings Bank James J. Montelaro Executive Vice President-Mortgage Banking LBA Savings Bank Don J. O'Rourke, Sr. President Don J. O'Rourke & Associates, Ltd. In Memory of [PHOTO] William H. Mouton Director 1949 - 2002 - -------------------------------------- Faithful friend and trusted colleague. We are forever indented for your many years of service. - -------------------------------------- Thomas S. Ortego Self-employed Accountant Jerry Reaux Chairman, President and Chief Executive Officer, Acadiana Bancshares, Inc., and LBA Savings Bank Kaliste J. Saloom, Jr. Of Counsel, Saloom & Saloom, Attorneys-at-Law EXECUTIVE OFFICERS Jerry Reaux Chairman, President and Chief Executive Officer of the Company and the Bank Lawrence Gankendorff Vice Chairman of the Board of the Company and the Bank James J. Montelaro Executive Vice President - Mortgage Lending* Gregory King Executive Vice President - Chief Operating Officer of the Company and the Bank Wayne Bares Executive Vice President - Commercial Banking* Mary Anne S. Bertrand Senior Vice President - Retail Banking* Emile E. Soulier, III Senior Vice President and Chief Financial Officer of the Company and the Bank Thomas Debaillon Senior Vice President - Banking Operations* *Oficers of the Bank only 39 Acadiana Bancshares, Inc., and Subsidiaries 2001 Annual Report NOTICE OF ANNUAL MEETING OF SHAREHOLDERS - -------------------------------------------------------------------------------- The Annual Meeting of Shareholders of Acadiana Bancshares, Inc., will be held at 2:00 p.m. (Central Time) Wednesday, April 24, 2002, at`a la carte, 301 Heymann Boulevard, Lafayette, Louisiana 70503. STOCK LISTING The common stock of Acadiana Bancshares, Inc., is traded on the American Stock Exchange under the symbol "ANA." Price and other column information are listed under the "ANA" symbol in The Wall Street Journal and under similar designations in other daily news sources. At December 31, 2001 there were 406 registered shareholders of record, not including the number of persons or entities whose stock is held in nominee or "street" name through various brokerage firms or banks. Below is a table showing the high and low sales prices of the common stock and cash dividends declared during each quarter of 2001 and 2000: 2001 Quarter Ended High Low Dividends Declared - -------------------------------------------------------------------------------- March 31, 2001 $19.250 $17.750 $0.15 June 30, 2001 $23.100 $18.750 $0.15 September 30, 2001 $23.900 $20.620 $0.15 December 31,2001 $23.200 $20.750 $0.15 2000 Quarter Ended High Low Dividends Declared - -------------------------------------------------------------------------------- March 31, 2000 $19.125 $13.750 $0.15 June 30, 2000 $18.500 $14.000 $0.15 September 30,2000 $16.000 $15.000 $0.15 December 31, 2000 $18.000 $15.750 $0.15 REGISTRAR AND TRANSFER AGENT Shareholders requesting a change of name, address, or ownership of stock, or to report a lost stock certificate should contact the transfer agent: Registrar and Transfer Company 10 Commerce Drive Cranford, New Jersey 07016 Toll-free (800) 368-5948 INVESTOR INFORMATION Shareholders, prospective shareholders, analysts or other interested parties seeking copies of the Company's annual report, Form 10-K (which the Company will furnish to shareholders upon request without charge), Form 10-Q, quarterly earnings reports or other financial information should contact: Jerry Reaux, Chairman, President & CEO, or Emile E. Soulier, III, Senior Vice President & CFO Phone: (337) 232-4631 Fax: (337)269-6233 Website: www.acadianabancshares.com INDEPENDENT AUDITORS Casting, Hussey, & Lolan, LLC 525 Weeks Street New Iberia, Louisiana 70560 SPECIAL COUNSEL Elias, Matz, Tiernan & Herrick L.L.P 734 15th Street N.W. Washington, D.C. 20005 GENERAL COUNSEL Mark Andrus, Esq. Davidson, Meaux, Sonnier & McElligott 810 South Buchanan Street Lafayette, Louisiana 70501 40 -----END PRIVACY-ENHANCED MESSAGE-----