Note 6 – Loans Receivable

Loans receivable at June 30, 2011 and December 31, 2010 consist of the following:


(dollars in thousands)	June 30, 2011		December 31, 2010
Residential mortgage loans:
Residential 1-4 family	$	546,339	$	616,550
Construction/ Owner Occupied		17,694		14,822

Total residential mortgage loans		564,033		631,372

Commercial loans:
Real estate		3,398,830		2,647,107
Business		1,762,719		1,515,856

Total commercial loans		5,161,549		4,162,963

Consumer loans:
Indirect automobile		247,103		255,322
Home equity		1,006,113		834,840
Other		221,848		150,835

Total consumer loans		1,475,064		1,240,997

Total loans receivable	$	7,200,646	$	6,035,332

In 2009, the Company acquired substantially all of the assets and liabilities of CapitalSouth Bank ("CSB"), and certain assets and assumed certain deposit and other liabilities of Orion Bank ("Orion") and Century Bank ("Century"). In 2010, the Company acquired certain assets and assumed certain deposit and other liabilities of Sterling Bank. The loans and foreclosed real estate that were acquired in these transactions are covered by loss share agreements between the FDIC and IBERIABANK, which afford IBERIABANK significant loss protection. Under the loss share agreements, the FDIC will cover 80% of covered loan and foreclosed real estate losses up to certain thresholds for all four acquisitions and 95% of losses that exceed those thresholds for CSB, Orion, and Century only.

Because of the loss protection provided by the FDIC, the risks of the CSB, Orion, Century, and Sterling loans and foreclosed real estate are significantly different from those assets not covered under the loss share agreement. Accordingly, the Company presents loans subject to the loss share agreements as "covered loans" in the information below and loans that are not subject to the loss share agreement as "non-covered loans."

Non-covered Loans

The following is a summary of the major categories of non-covered loans outstanding.


(dollars in thousands) Non-covered Loans:	June 30, 2011		December 31, 2010
Residential mortgage loans:
Residential 1-4 family	$	312,022	$	355,164
Construction/ Owner Occupied		17,694		14,822

Total residential mortgage loans		329,716		369,986

Commercial loans:
Real estate		2,593,066		1,781,744
Business		1,604,259		1,341,352

Total commercial loans		4,197,325		3,123,096

Consumer loans:
Indirect automobile		247,103		255,322
Home equity		742,560		555,749
Other		221,265		148,432

Total consumer loans		1,210,928		959,503

Total non-covered loans receivable	$	5,737,969	$	4,452,585

The following tables provide an analysis of the aging of non-covered loans as of June 30, 2011 and December 31, 2010.


	Past Due⁽¹⁾
(dollars in thousands)	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Discount⁽²⁾			Total non- covered loans, net of unearned income		Recorded investment > 90 days and accruing
June 30, 2011
Residential
Prime	$	284	$	637	$	6,457	$	7,378	$	322,338	$	—		$	329,716	$	540
Subprime		—		—		—		—		—		—			—		—
Commercial
Real Estate – Construction		1,662		244		2,844		4,750		336,300		—			341,050		227

Real Estate – Other		7,068		812		47,378		55,258		2,226,664		(29,906	)		2,252,016		1,424
Commercial Business		11,787		1,008		27,219		40,014		1,564,245		—			1,604,259		509
Consumer
Indirect Automobile		909		220		803		1,932		245,171		—			247,103		—
Home Equity		2,604		687		1,418		4,709		737,851		—			742,560		—
Credit Card		126		60		431		617		43,821		—			44,438		—
Other		281		294		9,784		10,359		166,468		—			176,827		—

Total	$	24,721	$	3,962	$	96,334	$	125,017	$	5,642,858	$	(29,906	)	$	5,737,969	$	2,700

(1)	Past due loans include loans on nonaccrual status as of the period indicated. Nonaccrual loans are presented separately in the "Nonaccrual loans" section below.

(2)

As discussed in Note 4 to these unaudited consolidated financial statements, the fair value of loans acquired from OMNI and Cameron is preliminary and subject to refinement in subsequent periods. Past due information includes loans acquired from OMNI and Cameron at the gross contractual balance outstanding at June 30, 2011. Inclusion of these loans on a gross basis elevates past due balances compared to December 31, 2010 and compared to the actual carrying balance of these loans.

Included in certain loan categories in the table above are troubled debt restructurings of $60,506,000 at June 30, 2011. Of that amount, $33,307,000 were current and $27,199,000 were past due greater than 30 days.

At June 30, 2011, the Company had $54,558,000 in commercial real estate loans, $2,403,000 in commercial business loans, $3,520,000 in home equity loans, and $25,000 in other consumer loans classified as TDRs.


	Past Due
(dollars in thousands)	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Total loans, net of unearned income		Recorded investment > 90 days and accruing
December 31, 2010
Residential
Prime	$	421	$	1,002	$	6,196	$	7,620	$	362,366	$	369,986	$	280
Subprime		—		—		—		—		—		—		—
Commercial

Real Estate – Construction		—		486		9,850		10,336		254,912		265,248		13
Real Estate – Other		3,568		1,975		24,788		30,331		1,486,165		1,516,496		1,018
Commercial Business		406		—		1,993		2,399		1,338,953		1,341,352		144
Consumer
Indirect Automobile		1,002		165		1,046		2,213		253,109		255,322		—
Home Equity		2,464		1,199		986		4,648		551,101		555,749		—
Credit Card		146		94		378		618		42,298		42,916		—
Other		303		80		5,713		6,096		99,420		105,516		—

Total	$	8,310	$	5,001	$	50,950	$	64,261	$	4,388,324	$	4,452,585	$	1,455

Included in certain loan categories in the table above are troubled debt restructurings ("TDRs") of $17,471,000 at December 31, 2010. Of that amount, $10,215,000 were current and $7,257,000 were past due.

All TDRs at December 31, 2010 were commercial loans, including $1,047,000 of construction loans, $16,368,000 of commercial real estate loans, and $56,000 of commercial business loans.

Nonaccrual Loans

Interest income on loans is accrued over the term of the loans based on the principal balance outstanding. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield, using the effective interest method.

The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Mortgage, credit card and other personal loans are typically charged down to net collateral value, less cost to sell, no later than 180 days past due. Past due status is based on the contractual terms of loans. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful.

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. The impairment loss 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 observable market price, or the fair value of the collateral if the loan is collateral dependent.

In general, all interest accrued but not collected for loans that are placed on nonaccrual status or charged off is reversed against interest income. Interest on nonaccrual loans is accounted for on the cash-basis method or cost-recovery method, until qualifying for a return to accrual status. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table provides an analysis of non-covered loans on nonaccrual status. Nonaccrual loans in the table include loans acquired from OMNI and Cameron at their gross contractual balance outstanding at June 30, 2011.


(dollars in thousands)	June 30,		December 31,
	2011		2010

Residential
Prime	$	5,917	$	5,916
Subprime		—		—
Commercial
Real Estate – Construction		2,617		9,837
Real Estate – Other		45,954		23,770
Business		26,711		1,849
Consumer
Indirect Automobile		803		1,046
Home Equity		1,418		986
Credit Card		431		378
Other		9,784		5,714

Total	$	93,635	$	49,496

The nonaccrual loans in the table above include $29,266,000 and $2,504,000 of TDRs on nonaccrual status at June 30, 2011 and December 31, 2010, respectively.

Covered Loans

Loans acquired are recorded at fair value in accordance with the fair value methodology prescribed in ASC Topic 820, exclusive of the shared-loss agreements with the FDIC. The fair value estimates associated with the loans include estimates related to the amount and timing of undiscounted expected principal, interest and other cash flows, as well as the appropriate discount rate. At the time of acquisition, the Company estimated the fair value of the total acquired loan portfolio by segregating the total portfolio into loan pools with similar characteristics, which included:

From these pools, the Company used certain loan information, including outstanding principal balance, estimated expected losses, weighted average maturity, weighted average term to re-price (if a variable rate loan), weighted average margin, and weighted average interest rate to estimate the expected cash flow for each loan pool.

Over the life of the acquired loans, the Company continues to estimate cash flows expected to be collected on each loan pool. The Company evaluates, at least semi-annually, whether the present value of the cash flows from the loan pools, determined using the effective interest rates, has decreased and if so, recognizes a provision for loan loss in its consolidated statement of income. For any increases in cash flows expected to be collected, the Company adjusts the amount of accretable yield recognized on a prospective basis over the loan's or pool's remaining life. During the three and six months ended June 30, 2011, the Company increased its allowance for loan losses to reserve for estimated additional losses in a limited number of loan pools at June 30, 2011. For the three and six months ended June 30, 2011, the increase in the allowance was recorded by a charge to the provision for loan losses of $2,639,000 and $4,409,000 and an increase of $19,922,000 and $26,706,000, respectively, in the indemnification asset for the portion of the losses recoverable from the FDIC in accordance with the loss sharing agreements.

The carrying amount of the acquired covered loans at June 30, 2011 and December 31, 2010 consisted of loans determined to be impaired at the time of acquisition, which are accounted for in accordance with ASC Topic 310-30, and loans that were considered to be performing at the acquisition date, accounted for by analogy to ASC Topic 310-30, as detailed in the following tables.

Included in certain loan categories in the table above are TDRs of $76,910,000 at June 30, 2011. Of that amount, $47,004,000 were current and $29,906,000 were past due greater than 30 days.

At June 30, 2011, the Company had $10,935,000 in mortgage loans, $46,374,000 in commercial real estate loans, $2,276,000 in commercial business loans, $17,314,000 in home equity loans, and $11,000 in other consumer loans classified as TDRs.

The Company acquired certain impaired loans through the CSB, Orion, Century, and other previous acquisitions which are subject to ASC Topic 310-30. The Company's allowance for loan losses for all acquired loans subject to ASC Topic 310-30 would reflect only those losses incurred after acquisition.

The carrying amount of the loans acquired during 2010 are detailed in the following table.

The following is a summary of changes in the accretable yields of acquired loans during the six months ended June 30, 2011 and 2010.

Accretable yield during the first six months of 2011 decreased primarily as a result of a change in prepayment speed assumptions during the first six months of 2011.

The following is a summary of the year to date activity in the FDIC loss share receivable for the periods indicated.