-----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, GNPDM0N40GBF3+JEAE9Z9gvRn1pBZsw83SlQlfO9fNGCsR3HasH6gyl/LNyUCmmo BqavRQbKl7lSxjyOVO65Ow== 0000916641-02-000838.txt : 20020515 0000916641-02-000838.hdr.sgml : 20020515 20020515140433 ACCESSION NUMBER: 0000916641-02-000838 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25756 FILM NUMBER: 02650654 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 10-Q 1 d10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 Commission File Number 0-25756 IBERIABANK Corporation - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Louisiana 72-1280718 - ------------------------------------------------------- --------------------------------------------------- (State or other jurisdiction of incorporation or (I.R.S. Employer organization) Identification Number) 1101 East Admiral Doyle Drive New Iberia, Louisiana 70560 - ---------------------------------------------------- --------------------------------------------------- (Address of principal executive office) (Zip Code)
(337) 267-4458 ---------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: The Registrant had 6,007,124 shares of common stock, $1.00 par value, which were issued and outstanding as of May 13, 2002. IBERIABANK CORPORATION AND SUBSIDIARY TABLE OF CONTENTS
Part I. Financial Information Page - ------- --------------------- ---- Item 1. Financial Statements Consolidated Balance Sheets 2 (As of March 31, 2002 and December 31, 2001) Consolidated Statements of Income 3 (For the three months ended March 31, 2002 and 2001) Consolidated Statements of Shareholders' Equity 4 (For the three months ended March 31, 2002 and 2001) Consolidated Statements of Cash Flows 5 (For the three months ended March 31, 2002 and 2001) Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 Part II. Other Information - -------- ----------------- Item 1. Legal Proceedings 15 Item 2. Changes in Securities and Use of Proceeds 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16
1 PART I. FINANCIAL INFORMATION Item 1. Financial Statements IBERIABANK CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (unaudited) (dollars in thousands)
March 31, December 31, 2002 2001 ----------------- ------------------ Assets Cash and due from banks $ 22,009 $ 35,945 Interest-bearing deposits in banks 87,960 15,736 ----------------- ------------------ Total cash and cash equivalents 109,969 51,681 Investment securities: Available for sale, at fair value 239,658 219,825 Held to maturity, fair values of $95,022 and $102,116, respectively 94,826 102,082 Federal Home Loan Bank stock, at cost 5,642 5,600 Mortgage loans held for sale 4,359 15,867 Loans, net of unearned income 934,299 956,015 Allowance for loan losses (11,454) (11,117) ----------------- ------------------ Loans, net 922,845 944,898 Premises and equipment, net 19,010 19,455 Goodwill and acquisition intangibles 35,562 35,644 Other assets 38,941 31,773 ----------------- ------------------ Total Assets $ 1,470,812 $1,426,825 ================= ================== Liabilities and Shareholders' Equity Liabilities: Deposits: Noninterest-bearing $ 153,398 $ 154,580 Interest-bearing 1,098,628 1,082,814 ----------------- ------------------ Total deposits 1,252,026 1,237,394 Short-term borrowings 16,268 12,339 Long-term debt 43,186 31,437 Other liabilities 21,402 11,238 ----------------- ------------------ Total Liabilities 1,332,882 1,292,408 ----------------- ------------------ Shareholders' Equity: Preferred stock, $1 par value - 5,000,000 shares authorized - - Common stock, $1 par value - 25,000,000 shares authorized; 7,380,671 shares issued 7,381 7,381 Additional paid-in capital 70,852 70,477 Retained earnings 91,641 88,306 Unearned compensation (3,431) (3,683) Accumulated other comprehensive income 172 739 Treasury stock at cost - 1,384,676 and 1,392,626 shares (28,685) (28,803) ----------------- ------------------ Total Shareholders' Equity 137,930 134,417 ----------------- ------------------ Total Liabilities and Shareholders' Equity $ 1,470,812 $1,426,825 ================= ==================
See Notes to Consolidated Financial Statements 2 IBERIABANK CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (unaudited) (dollars in thousands, except per share data)
For the Three Months Ended March 31, ------------------------------------ 2002 2001 ---------------- ---------------- Interest and Dividend Income: Loans, including fees $ 17,940 $ 20,180 Mortgage loans held for sale, including fees 98 63 Investment securities: Taxable interest 3,586 4,996 Tax-exempt interest 248 40 Federal Home Loan Bank dividends 41 111 Interest-bearing demand deposits 261 372 ---------------- ---------------- Total interest and dividend income 22,174 25,762 ---------------- ---------------- Interest Expense: Deposits 7,020 11,743 Short-term borrowings 90 340 Long-term debt 613 947 ---------------- ---------------- Total interest expense 7,723 13,030 ---------------- ---------------- Net interest income 14,451 12,732 Provision for loan losses 1,200 714 ---------------- ---------------- Net interest income after provision for loan losses 13,251 12,018 ---------------- ---------------- Noninterest Income: Service charges on deposit accounts 1,959 1,969 ATM fee income 368 350 Gain on sale of loans, net 365 267 Gain on sale of assets 10 - Gain (loss) on sale of investments, net 5 (8) Other income 880 670 ---------------- ---------------- Total noninterest income 3,587 3,248 ---------------- ---------------- Noninterest Expense: Salaries and employee benefits 5,668 4,830 Occupancy and equipment 1,363 1,376 Amortization of acquisition intangibles 82 798 Franchise and shares tax 373 278 Communication and delivery 634 616 Marketing and business development 242 228 Data processing 335 305 Printing, stationery and supplies 196 205 Other expenses 1,428 1,083 ---------------- ---------------- Total noninterest expense 10,321 9,719 ---------------- ---------------- Income before income tax expense 6,517 5,547 Income tax expense 2,130 2,056 ---------------- ---------------- Net Income $ 4,387 $ 3,491 ================ ================ Earnings per share - basic $ 0.77 $ 0.59 ================ ================ Earnings per share - diluted $ 0.72 $ 0.57 ================ ================
See Notes to Consolidated Financial Statements 3 IBERIABANK CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited) (dollars in thousands)
Accumulated Additional Other Common Paid-In Retained Unearned Comprehensive Treasury Stock Capital Earnings Compensation Income Stock Total ----------- ------------ ------------ ----------------------------- ----------- ---------- Balance, December 31, 2000 $ 7,381 $ 69,231 $ 77,963 $ (4,654) $ (2,293) $(20,586) $127,042 Comprehensive income: Net income 3,491 3,491 Change in unrealized loss on securities available for sale, net of deferred taxes 2,694 2,694 ---------- Total comprehensive income 6,185 Cash dividends declared, $.17 per share (1,030) (1,030) Reissuance of treasury stock under stock option plan 5 34 39 Common stock released by ESOP trust 188 139 327 Common stock earned by participants of recognition and retention plan trust, including tax benefit 11 105 116 ----------- ------------ ------------ -------------- ------------- ----------- ---------- Balance, March 31, 2001 $ 7,381 $ 69,435 $ 80,424 $ (4,410) $ 401 $(20,552) $132,679 =========== ============ ============ ============== ============= =========== ========== Balance, December 31, 2001 $ 7,381 $ 70,477 $ 88,306 $ (3,683) $ 739 $(28,803) $134,417 Comprehensive income: Net income 4,387 4,387 Change in unrealized gain on securities available for sale, net of deferred taxes (659) (659) Change in accumulated net gains on cash flow hedges, net of deferred taxes 92 92 ---------- Total comprehensive income 3,820 Cash dividends declared, $.18 per share (1,052) (1,052) Reissuance of treasury stock under stock option plan 72 118 190 Common stock released by ESOP trust 275 130 405 Common stock earned by participants of recognition and retention plan trust, including tax benefit 28 122 150 ----------- ------------ ------------ -------------- ------------- ----------- ---------- Balance, March 31, 2002 $ 7,381 $ 70,852 $ 91,641 $ (3,431) $ 172 $(28,685) $137,930 =========== ============ ============ ============== ============= =========== ==========
See Notes to Consolidated Financial Statements 4 IBERIABANK CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (dollars in thousands)
For the Three Months Ended March 31, -------------------------------- 2002 2001 ------------ ------------ Cash Flows from Operating Activities: Net income $ 4,387 $ 3,491 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 865 1,626 Provision for loan losses 1,200 714 Noncash compensation expense 500 385 Loss on sale of assets 7 6 (Gain) Loss on sale of investments (5) 8 Amortization of premium/discount on investments 435 (284) Current provision for deferred income taxes - 349 FHLB stock dividends (41) (111) Net change in loans held for sale 11,508 (3,349) Other, net 2,480 1,697 ------------- ------------- Net Cash Provided by Operating Activities 21,336 4,532 ------------- ------------- Cash Flows from Investing Activities: Activity in available for sale securities: Sales 11,011 75,973 Maturities, prepayments and calls 30,204 5,847 Purchases (62,321) - Activity in held to maturity securities: Maturities, prepayments and calls 7,777 3,237 Purchases (635) (9,120) Decrease in loans receivable, net 20,574 1,841 Purchases of premises and equipment (151) (148) Proceeds from disposition of real estate owned 986 515 ------------- ------------- Net Cash Provided by Investing Activities 7,445 78,145 ------------- ------------- Cash Flows from Financing Activities: Increase in deposits 14,632 53,074 Net change in short-term borrowings 3,929 (48,202) Proceeds from long-term debt 12,000 - Repayments of long-term debt (251) (13,678) Dividends paid to shareholders (992) (1,022) Proceeds from sale of treasury stock for stock options exercised 189 39 ------------- ------------- Net Cash Provided by (Used in) Financing Activities 29,507 (9,789) ------------- ------------- Net Increase In Cash and Cash Equivalents 58,288 72,888 Cash and Cash Equivalents at Beginning of Period 51,681 34,541 ------------- ------------- Cash and Cash Equivalents at End of Period $ 109,969 $ 107,429 ============= ============= Supplemental Schedule of Noncash Activities: Acquisition of real estate in settlement of loans $ 280 $ 341 ============= ============= Supplemental Disclosures: Cash paid (received) for: Interest on deposits and borrowings $ 8,109 $ 15,007 ============= ============= Income taxes, net $ 300 $ 300 ============= =============
See Notes to Consolidated Financial Statements 5 IBERIABANK CORPORATION AND SUBSIDIARY Notes to Consolidated Financial Statements (unaudited) 1. Summary of Significant Accounting Policies Basis of Financial Statement Presentation The accompanying consolidated financial statements were prepared in accordance with the instructions to Form 10-Q, and therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. All normal, recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the financial statements, have been included. These interim financial statements should be read in conjunction with the audited financial statements and note disclosures for IBERIABANK Corporation (the "Company") previously filed with the Securities and Exchange Commission in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. Business The principal business of the Company is conducted through its wholly owned subsidiary, IBERIABANK (the "Bank"), headquartered in New Iberia, Louisiana. The Bank operates 42 offices in its market areas located in south central Louisiana, north Louisiana and the greater New Orleans area. The Bank provides a variety of financial services to individuals and businesses throughout its service area. Primary deposit products are checking, savings and certificate of deposit accounts and primary lending products are consumer, commercial and mortgage loans. The Bank offers discount brokerage services through its wholly owned subsidiary, Iberia Financial Services, LLC. The Bank also provides insurance services to its clients through IBERIABANK Insurance Services, LLC, a joint venture between the Bank and Burch, Marcus, Pool, Krupp, Daniel & Babineaux, Inc. The Bank is subject to examination and regulation by the Office of Financial Institutions of the State of Louisiana, which is the Bank's chartering authority and primary regulator. The Bank is also subject to regulation by the Federal Deposit Insurance Corporation ("FDIC") and to certain reserve requirements established by the Federal Reserve Board ("FRB"). As a Louisiana chartered commercial bank, the FDIC insures deposits to the maximum extent permitted by law. The Bank is a member of the Federal Home Loan Bank of Dallas ("FHLB"). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, IBERIABANK, as well as all of the Bank's subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 2. Recent Accounting Pronouncements In April 2002, the Financial Accounting Standards Board ("FASB") issued Statement No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections. The statement updates, clarifies and simplifies existing accounting pronouncements on several specific, specialized matters, including extinguishments of debt and sale-leaseback transactions. The adoption of this statement is not expected to have a material effect on the Company's financial position or results of operations. 6 3. Loans Receivable Loans receivable at March 31, 2002 and December 31, 2001 consisted of the following:
March 31, December 31, (dollars in thousands) 2002 2001 ----------------------------------------------------------------------------------------------------- Residential mortgage loans: Residential 1-4 family $ 184,481 $ 198,403 Construction 7,627 5,915 --------- ---------- Total residential mortgage loans 192,108 204,318 --------- ---------- Commercial loans: Real estate 238,315 228,284 Business 107,367 117,530 Lease financing receivables 2,274 - --------- ---------- Total commercial loans 347,956 345,814 --------- ---------- Consumer loans: Indirect automobile 211,619 220,698 Home equity 115,011 114,056 Other 67,605 71,129 --------- ---------- Total consumer loans 394,235 405,883 --------- ---------- Total loans receivable $ 934,299 $ 956,015 ========= ==========
4. Earnings Per Share For the three months ended March 31, 2002, basic earnings per share were based on 5,688,884 weighted average shares outstanding and diluted earnings per share were based on 6,075,969 weighted average shares outstanding. For the same period, the calculations for both basic and diluted shares outstanding exclude: (a) the weighted average unreleased shares owned by the Employee Stock Ownership Plan ("ESOP") of 145,604; (b) the weighted average shares owned by the Management Recognition Plan and Trust ("MRP") of 157,177; and (c) the weighted average shares purchased in Treasury Stock of 1,389,006. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This Form 10-Q may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of the Company that are subject to various factors which would cause actual results to differ materially from the estimates. These factors include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting the Company's operations, pricing, products and services. The following discussion and analysis describes the major changes in the Company's financial condition and results of operations during the first three months of the year. FINANCIAL CONDITION Earning Assets Earning assets are composed of any interest or dividend-bearing asset, including loans, securities, short-term investments and loans held for 7 sale. Interest income associated with earning assets is the Company's primary source of income. At March 31, 2002, the total consolidated earning assets of the Company amounted to $1.4 billion, an increase of $52.6 million, or 4.0%, from December 31, 2001. Loans and Allowance for Possible Loan Losses -- Loans, net of unearned income, decreased $21.7 million, or 2.3%, to $934.3 million at March 31, 2002, compared to $956.0 million at December 31, 2001. The Company's loan to deposit ratio at March 31, 2002 was 74.6% compared to 77.3% at December 31, 2001. The decrease in loans was primarily due to a reduction in residential mortgage loans of $12.2 million, or 6.0%, resulting from loans refinancing at fixed rates in the lower rate environment and normal mortgage paydowns. It is currently the Company's posture that it is preferable to sell fixed rate mortgage loans and recognize the attendant up front income rather than assume the rate risk associated with a longer term asset at the current rates. A decrease was also reflected in indirect automobile loans that were down $9.1 million, or 4.1%, during the first quarter of 2002. Indirect financing has slowed considerably over the last two quarters as a result of competitive factors. The Company continues to focus on prime indirect paper. Additionally, over time, the company has implemented several portfolio management policies and procedures to identify credit exposures that do not meet risk profile guidelines. During the quarter, several of these credits were transitioned to other banks resulting in a reduction in the commercial loan portfolio. This will be an ongoing process as changes occur within credits and relative risk is reassessed. The New Orleans market generated the majority of the commercial loan growth offsetting this decrease. Commercial loans in this market were up 27.1% during the first quarter of this year with no one customer representing a disproportionate percentage of the increase. Nonperforming assets, defined as nonaccrual loans, accruing loans past due 90 days or more and foreclosed property, amounted to $11.8 million, or 0.81% of total assets at March 31, 2002, compared to $13.0 million, or 0.91% of total assets at December 31, 2001. Based on the Company's normal loan loss reserve analysis, the Company is adequately reserved for the risk of loss in the loan portfolio at this time. The allowance for loan losses amounted to $11.5 million, or 1.23% and 174.8% of total loans and total nonperforming loans, respectively, at March 31, 2002 compared to 1.16% and 159.9%, respectively, at December 31, 2001. The allowance for loan losses is maintained at an appropriate level based on management's analysis of the potential risk in the loan portfolio. This is the result of various factors, including historical experience, the volume and type of lending conducted by the Company, the amount of the Company's classified assets, seasoning of the loan portfolio, the status of past due principal and interest payments, general economic conditions, particularly as they relate to the Company's market area and other elements related to the collectibility of the Company's loan portfolio. Although management of the Company believes that the Company's allowance for loan losses was adequate at March 31, 2002 based on facts and circumstances available, there can be no assurances that additions to such allowance will not be necessary in future periods, which would adversely affect the Company's results of operations. Investment Securities -- The Company's investment securities available for sale increased $19.8 million, or 9.0%, to $239.7 million at March 31, 2002, compared to $219.8 million at December 31, 2001. The increase was due primarily to purchases of investment securities of $62.3 million, which was partially offset by sales of $11.0 million, prepayments and maturities totaling $30.2 million, and a decrease of $659,000 in the market value of the portfolio. The Company's investment securities held to maturity decreased $7.3 million, or 7.1%, to $94.8 million at March 31, 2002, compared to $102.1 million at December 31, 2001. This decrease was due primarily to prepayments and maturities of $7.8 million, which was partially offset by purchases of investment securities of $635,000. Short-term Investments -- Excess overnight funds are currently invested in an interest-bearing deposit account at the Federal Home Loan Bank ("FHLB") of Dallas, the total balance of which earns interest at the ending FHLB discount rate. As a result of increased liquidity, the balance in 8 interest-bearing deposits at other institutions increased $72.2 million to $88.0 million at March 31, 2002, compared to $15.7 million at December 31, 2001. Increased liquidity was the result of several factors including deposit growth, the impact of mortgage loan sales and investment security cash flows. Loans Held for Sale -- Loans held for sale decreased $11.5 million, or 72.5%, to $4.4 million at March 31, 2002 compared to $15.9 million at December 31, 2001. This group of loans has primarily been fixed rate single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans in this category are sold within thirty days. Funding Sources The primary source of funding for the Company continues to be deposits. Our focus continues to be increasing core deposits through the development of long-term relationships. Other funding sources include short-term and long-term borrowings and shareholders' equity. The following discussion highlights the major changes in the mix during the first three months of the year. Deposits -- Deposits increased $14.6 million, or 1.2%, to $1.3 billion at March 31, 2002, compared to $1.2 billion at December 31, 2001. The increase in deposits reflects relatively balanced growth across all markets. The Company believes it to be the result of several factors including the development of customer relationships and continued calling efforts. Deposit growth consisted of a $14.2 million increase in interest-bearing checking accounts and an $18.9 million increase in savings and money market accounts. These increases were partially offset by a $17.3 million decrease in time deposits and a $1.2 million decrease in noninterest-bearing checking accounts. Short-term Borrowings -- The Company's short-term borrowings at March 31, 2002 were comprised of $12.5 million of securities sold under agreements to repurchase and $3.8 million outstanding on a $15.0 million line of credit with a correspondent bank. Short-term borrowings increased $3.9 million, or 31.8%, to $16.3 million at March 31, 3002, compared to $12.3 million at December 31, 2001. Long-term Borrowings -- At March 31, 2002, the Company's long-term borrowings were comprised of fixed rate advances from FHLB of Dallas. Long-term borrowings increased $11.7 million, or 37.4%, to $43.2 million at March 31, 2002, compared to $31.4 million at December 31, 2001. This increase was due primarily to borrowings of $12.0 million, which was partially offset by normal amortization payments. The remaining debt, which is composed of FHLB long-term advances, cannot be paid off without incurring substantial prepayment penalties. Shareholders' Equity -- Shareholders' equity provides a source of permanent funding, allows for future growth and provides the Company with a cushion to withstand unforeseen adverse developments. Total shareholders' equity increased $3.5 million, or 2.6%, to $137.9 million at March 31, 2002, compared to $134.4 million at December 31, 2001. The increase in shareholders' equity was the result of the Company's net income of $4.4 million, $405,000 of common stock released by the Company's Employee Stock Ownership Plan ("ESOP") trust, $150,000 of common stock earned by participants in the Company's Recognition and Retention Plan trust, and $190,000 from the reissuance of treasury stock for stock options exercised. Such increases were partially offset by cash dividends declared on the Company's common stock of $1.1 million and a $567,000 decrease in accumulated other comprehensive income after taxes. RESULTS OF OPERATIONS The Company reported net income of $4.4 million for the three months ended March 31, 2002, compared to $3.5 million earned during the three months ended March 31, 2001, an increase of $896,000, or 25.7%. The Company's net interest income increased $1.7 million, noninterest income increased $339,000, the provision for loan losses increased $486,000, noninterest expense increased $602,000, and income tax expense increased $74,000 during the three months ended March 31, 2002 compared to the first quarter of 2001. Net Interest Income -- Net interest income is the difference between interest realized on earning assets net of interest paid on 9 interest-bearing liabilities. The Company's average interest rate spread, which is the difference between the yields earned on earning assets and the rates paid on interest-bearing liabilities, was 4.02% during the three months ended March 31, 2002, compared to 3.30% for the comparable period in 2001. The Company's net interest margin on a taxable equivalent basis, which is net interest income as a percentage of average earning assets, was 4.41% during the three months ended March 31, 2002, compared to 3.96%, for the comparable period in 2001. Net interest income increased $1.7 million, or 13.5%, to $14.5 million for the three months ended March 31, 2002, compared to $12.7 million for the three months ended March 31, 2001. The increase was due to a $5.3 million, or 40.7%, decrease in interest expense, which was partially offset by a decrease of $3.6 million in interest income. The decrease in interest income was the result of a 130 basis point decrease in the yield earned on earning assets, which was partially offset by a $50.2 million, or 3.9% increase in the average balance of earning assets. The decrease in interest expense was the result of a 202 basis point decrease in the cost of interest-bearing liabilities, which was partially offset by a $35.4 million, or 3.2%, increase in the average balance of interest-bearing liabilities. Management believes that the Company is not significantly affected by changes in interest rates over an extended period of time; however, the Company is moderately asset sensitive in the 30-day period. As a result, interest rate reductions by the FRB have exerted downward pressure on net interest income. Over time, the Company expects that loan volume and redeployment of a portion of these funds into investment securities will improve this sensitivity. The Company will continue to monitor investment opportunities and weigh the associated risk/return. The Company has also engaged in an interest rate swap, which is a form of a derivative financial instrument, to modify its indicated net interest sensitivity to levels deemed to be appropriate. Through this instrument, interest rate risk is managed by hedging with an interest rate swap contract designed to pay fixed and receive floating interest. Downward repricing of the maturing certificate of deposit portfolio in the current low rate environment has allowed the Company to reduce funding costs and thereby offset the negative impact of FRB rate reductions. It is believed that any potential run off in this category as a result of lowered rates will not adversely impact short-term funding needs of the Company. Table 1 presents average balance sheets, net interest income and average interest rates for the three-month periods ended March 31, 2002 and 2001. 10 TABLE 1: Average Balances, Net Interest Income and Interest Yields / Rates The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest income of the Company from earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rate, (iii) net interest income; (iv) net interest spread; and (v) net interest margin. Information is based on average daily balances during the indicated periods. Tax equivalent (TE) yields are calculated using a marginal tax rate of 35%.
Three Months Ended March 31, ---------------------------------------------------------------------- 2002 2001 --------------------------------- -------------------------------- Average Average Average Yield/ Average Yield/ (dollars in thousands) Balance Interest Rate(1) Balance Interest Rate(1) - ---------------------------------------------------------------------------------------- -------------------------------- Earning assets: Loans receivable: Mortgage loans $ 198,810 $ 3,871 7.79% $ 283,034 $ 5,556 7.85% Commercial loans (TE) 348,106 5,688 6.72 275,082 6,111 8.93 Consumer and other loans 398,324 8,381 8.53 376,713 8,513 9.16 Lease Financing Receivable 101 0 0.00 0 0 ------------ --------- ------------ --------- Total loans 945,341 17,940 7.71 934,829 20,180 8.70 ------------ --------- ------------ --------- Loans held for sale 5,982 98 6.55 3,663 63 6.88 Investment securities (TE) 314,865 3,834 5.04 312,611 5,036 6.47 Federal Home Loan Bank stock 5,602 41 2.97 8,000 111 5.63 Other earning assets 66,681 261 1.59 29,180 372 5.17 ------------ --------- ------------ --------- Total earning assets 1,338,471 22,174 6.75 1,288,283 25,762 8.05 --------- --------- Allowance for loan losses (11,140) (10,191) Nonearning assets 122,844 99,860 ------------ ------------ Total assets $ 1,450,175 $ 1,377,952 ============ ============ Interest-bearing liabilities: Deposits: NOW accounts $ 251,669 791 1.27 $ 182,981 866 1.92 Savings and money market accounts 316,456 1,180 1.51 275,090 2,457 3.62 Certificates of deposit 525,684 5,049 3.90 576,876 8,420 5.92 ------------ --------- ------------ --------- Total deposits 1,093,809 7,020 2.60 1,034,947 11,743 4.60 Borrowings 41,679 641 6.15 74,722 1,260 6.75 Securities sold under agreements to repurchase 11,536 62 2.15 1,964 27 5.50 ------------ --------- ------------ --------- Total interest-bearing liabilities 1,147,024 7,723 2.73 1,111,633 13,030 4.75 --------- --------- Noninterest-bearing demand deposits 147,435 126,046 Noninterest-bearing liabilities 18,794 10,058 ------------ ------------ Total liabilities 1,313,253 1,247,737 Shareholders' Equity 136,922 130,215 ------------ ------------ Total liabilities and shareholders' equity $ 1,450,175 $ 1,377,952 ============ ============ Net earning assets $ 191,447 $ 176,650 ============ ============ Net interest spread $ 14,451 4.02% $12,732 3.30% ========= ======= ========= ========= Net interest margin (TE) 4.41% 3.96% ======= ========= Ratio of earning assets to interest-bearing liabilities 116.69% 115.89% ============ ============
- ---------------------------------- (1) Annualized. 11 Interest Income -- The Company's total interest income was $22.2 million for the three months ended March 31, 2002, compared to $25.8 million for the three months ended March 31, 2001. The reasons for the $3.6 million decrease in interest income were a $2.2 million, or 11.1%, decrease in interest income from loans, a $1.3 million, or 24.7%, decrease in interest and dividend income on investment securities, and a $111,000 or 29.8%, decrease in interest on deposits held at other institutions. Such decreases were partially offset by an increase of $35,000, or 55.6% in interest income on loans held for sale. The decrease in interest income from loans was the result of a 99 basis point decrease in the loan yield earned thereon, which was partially offset by a $10.5 million, or 1.1%, increase in the average balance of loans. The decrease in interest and dividend income from investment securities was the result of a $144,000 decrease in the average balance of investment securities, together with a 409 basis point decrease in the yield earned thereon. The decrease in interest from deposits at other institutions was the result of a 358 basis point decrease in the yield earned thereon, which was partially offset by a $37.5 million, or 128.5%, increase in the average balance of deposits at other institutions. The increase in interest income from loans held for sale was the result of a $2.3 million, or 63.3%, increase in the average balance of loans held for sale, which was partially offset by a 33 basis point decrease in the yield earned thereon. Interest Expense -- The Company's total interest expense was $7.7 million for the three months ended March 31, 2002, compared to $13.0 million for the three months ended March 31, 2001. The reasons for the $5.3 million, or 40.7%, decrease in total interest expense was due to a $4.7 million, or 40.2%, decrease in interest expense on deposits as a result of a 200 basis point decrease in the cost of such deposits, a $250,000 or 73.5% decrease in short-term borrowings, and a $334,000 or 35.3%, decrease in long-term borrowings as a result of a $33.0 million, or 44.2%, decrease in the average balance on borrowings, together with a 60 basis point decrease in the cost of such borrowings. Provision For Loan Losses -- Provisions for loan losses are charged to earnings to bring the total allowance for loan losses to a level considered appropriate by management. Management of the Company assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as deemed appropriate in order to maintain the adequacy of the allowance for loan losses. For the three months ended March 31, 2002, the provision for loan losses was $1.2 million as compared to $714,000 for the same period in 2001. The higher provision is primarily attributable to loan growth and changes in the mix of loans from period to period. The allowance for loan losses as a percentage of outstanding loans, net of unearned income, was 1.23% at March 31, 2002, compared to 1.10% at March 31, 2001. Noninterest Income -- The Company's total noninterest income was $3.6 million for the three months ended March 31, 2002, compared to $3.2 million for the same period in 2001. Noninterest income increased $339,000, or 10.4%, for the three months ended March 31, 2002, compared to the same period in 2001. The increase was due primarily to a $98,000 increase in gains on the sale of mortgage loans in the secondary market and a $263,000 increase in earnings and cash surrender value of bank owned life insurance. All other net noninterest income decreased $45,000. Additionally, the first quarter of 2002 included a $10,000 gain on the sale of assets and a $5,000 gain on the sale of investment securities, compared to an $8,000 loss on the sale of investment securities in the first quarter of 2001. Noninterest Expense -- Noninterest expense includes costs related to salary and employee benefits, occupancy and equipment, communication and delivery, marketing and business development, amortization of acquisition intangibles and other expenses. Noninterest expense increased $602,000, or 6.2%, for the three months ended March 31, 2002, to $10.3 million, compared to $9.7 million for the three months ended March 31, 2001. This increase is due in part to an $838,000 increase in salaries and employee benefits. Included in this increase were $477,000 in salary expense partially attributable to improving overall staffing across the state as opportunities arose, a $280,000 increase in hospitalization expense, and an $81,000 increase in the ESOP retirement contribution expense caused by the increase in the average fair market value of the Company's common stock. Other increases included $95,000 in the franchise and share tax assessment and $30,000 in data processing. Other noninterest expenses increased by $355,000, including increases of $63,000 for net cost of OREO property and $62,000 for credit and loan related expenses. Such increases 12 were partially offset by a pre-tax decrease of $716,000 from non-amortization of goodwill as a result of adopting FAS 142. Income Tax Expense -- Income tax expense increased $74,000, or 3.6%, for the three months ended March 31, 2002 to $2.1 million as compared to the three months ended March 31, 2001. The increase in income tax expense was due primarily to the increase in income before income taxes. The effective tax rate for the three months ended March 31, 2002 and 2001 was 32.7% and 37.1%, respectively. The difference between the effective tax rate and the statutory tax rate primarily relate to variances in the items that are either nontaxable or non-deductible, mainly the non-deductible portion of the ESOP compensation expense and the nontaxable portion of municipal investments. Additionally, prior to adoption of FAS 142 on January 1, 2002, a portion of the acquisition intangible amortization was non-deductible. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity, represented by cash and cash equivalents, is a product of its operating, investing and financing activities. The Company's primary sources of funds are deposits, amortization, prepayments and maturities of outstanding loans, investment securities and other short-term investments and funds provided from operations. While scheduled payments from the amortization of loans, maturing investment securities, and short-term investments are relatively predictable sources of funds, deposit flows and loan and investment security prepayments are greatly influenced by general interest rates, economic conditions and competition. In addition, the Company obtains additional funds through borrowings, which provide liquidity to meet lending requirements. The Bank has been able to generate sufficient cash through its deposits as well as borrowings. At March 31, 2002, the Company had $43.2 million in outstanding advances from the Federal Home Loan Bank of Dallas. Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments such as overnight deposits. On a longer-term basis, the Company maintains a strategy of investing in various lending products. The Company uses its sources of funds primarily to meet its ongoing commitments and fund loan commitments. At March 31, 2002, the total approved loan commitments outstanding amounted to $43.5 million. At the same time, commitments under unused lines of credit, including credit card lines, amounted to $159.2 million. Certificates of deposit scheduled to mature in twelve months or less at March 31, 2002 totaled $405.0 million. Based on past experience, management believes that a significant portion of maturing deposits will remain with the Company. The Company anticipates it will continue to have sufficient funds to meet its liquidity requirements. At March 31, 2002, the Company and the Bank had regulatory capital that was in excess of regulatory requirements. The Company's actual levels and current requirements as of March 31, 2002 are detailed below (dollars in thousands): Actual Capital Required Capital -------------- ---------------- Amount Percent Amount Percent ------ ------- ------ ------- Tier 1 Leverage $102,165 7.22% $56,584 4.00% Tier 1 Risk-Based $102,165 10.35% $39,489 4.00% Total Risk-Based $113,619 11.51% $78,978 8.00% 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk Quantitative and qualitative disclosures about market risk are presented at December 31, 2001 in Item 7A of the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2002. Management believes there have been no material changes in the Company's market risk since December 31, 2001. 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- Not Applicable Item 2. Changes in Securities and Use of Proceeds ----------------------------------------- Not Applicable Item 3. Defaults Upon Senior Securities ------------------------------- Not Applicable Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- Not Applicable Item 5. Other Information ----------------- On May 2, 2002, the Company announced the following: o At the 2002 Annual Meeting of Stockholders held on May 1, 2002, the following directors were re-elected, each for a three-year term: Harry V. Barton, Jr., E. Stewart Shea III and Daryl G. Byrd. o Management has narrowed the earnings per share comfort range for the year 2002 to $2.93 to $2.98, including the favorable impact on the Company of FAS 142. o The Bank has reached an agreement with an investor to sell an oilfield service loan placed on nonaccrual status during 2001. A substantial reserve was previously created to cover the credit. The reserve is adequate to address the charge-off associated with the note sale. Item 6. Exhibits and Reports on Form 8-K --------------------------------- (a) Exhibits Not Applicable (b) Reports on Form 8-K Current Report on Form 8-K dated January 22, 2002, reporting (i) under Item 5, the issuance of a press release dated January 22, 2002, announcing earnings for the fourth quarter and fiscal year ended December 31, 2001 (the "Press Release"); (ii) under Item 7, a copy of the Press Release; and (iii) under Item 9, confirmation of comfort with the Company's previously stated range of $2.60 to $2.70 per share for 2002 fully diluted EPS, excluding the effect of FAS 142, estimated to be $0.32 to $0.33 per share annually. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IBERIABANK Corporation Date: May 15, 2002 By: /s/ Daryl G. Byrd ------------ ------------------------ Daryl G. Byrd President and Chief Executive Officer Date: May 15, 2002 By: /s/ Marilyn W. Burch ------------ -------------------------- Marilyn W. Burch Executive Vice President and Chief Financial Officer 16 -----END PRIVACY-ENHANCED MESSAGE-----