NOTE 6 – LOANS RECEIVABLE

Loans receivable at March 31, 2013 and December 31, 2012 consist of the following:


(Dollars in thousands)	March 31, 2013		December 31, 2012

Residential mortgage loans:
Residential 1-4 family	$	473,503	$	471,183
Construction/ Owner Occupied		5,114		6,021

Total residential mortgage loans		478,617		477,204

Commercial loans:
Real estate		3,587,692		3,631,543
Business		2,621,644		2,537,718

Total commercial loans		6,209,336		6,169,261

Consumer and other loans:
Indirect automobile		342,117		327,985
Home equity		1,261,171		1,251,125
Other		303,734		273,005

Total consumer and other loans		1,907,022		1,852,115

Total loans receivable	$	8,594,975	$	8,498,580

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, 80% of losses that exceed contractual thresholds for Sterling Bank, and 95% of losses that exceed contractual 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.”

Deferred loan origination fees were $14,082,000 and $14,040,000 and deferred loan expenses were $5,626,000 and $5,270,000 at March 31, 2013 and December 31, 2012, respectively. In addition to loans issued in the normal course of business, the Company considers overdrafts on customer deposit accounts to be loans and reclassifies these overdrafts as loans in its consolidated balance sheets. At March 31, 2013 and December 31, 2012, overdrafts of $2,411,000 and $3,231,000, respectively, have been reclassified to loans receivable.

Loans with carrying values of $2,262,625,000 and $1,504,512,000 were pledged to secure public deposits and other borrowings at March 31, 2013 and December 31, 2012, respectively.

Non-covered Loans

The following is a summary of the major categories of non-covered loans outstanding as of March 31, 2013 and December 31, 2012:


(Dollars in thousands)	March 31, 2013		December 31, 2012
Non-covered Loans:
Residential mortgage loans:
Residential 1-4 family	$	296,175	$	284,019
Construction/ Owner Occupied		5,114		6,021

Total residential mortgage loans		301,289		290,040

Commercial loans:
Real estate		3,020,071		2,990,700
Business		2,534,612		2,450,667

Total commercial loans		5,554,683		5,441,367

Consumer and other loans:
Indirect automobile		342,117		327,985
Home equity		1,092,693		1,076,913
Other		300,020		269,519

Total consumer and other loans		1,734,830		1,674,417

Total non-covered loans receivable	$	7,590,802	$	7,405,824

The following tables provide an analysis of the aging of non-covered loans as of March 31, 2013 and December 31, 2012. Because of the difference in the accounting for acquired loans, the tables below further segregate the Company’s non-covered loans receivable between loans acquired from Florida Gulf in 2012, as well as those acquired in 2011, and loans originated by the Company. For purposes of the following tables, subprime mortgage loans are defined as the Company’s mortgage loans that have FICO scores that are less than 620 at the time of origination or were purchased outside of a business combination.


	Non-covered loans excluding acquired loans
(Dollars in thousands)
	Past Due⁽¹⁾
March 31, 2013	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Total non- covered loans, net of unearned income		Recorded investment > 90 days and accruing

Residential
Prime	$	876	$	1,570	$	9,425	$	11,871	$	176,807	$	188,678	$	1,266
Subprime		—		7		—		7		88,799		88,806		—
Commercial
Real Estate - Construction		224		—		5,939		6,163		322,703		328,866		—
Real Estate - Other		1,141		266		22,514		23,921		2,247,219		2,271,140		519
Commercial Business		550		386		1,937		2,873		2,464,508		2,467,381		7
Consumer and Other
Indirect Automobile		1,068		186		982		2,236		335,953		338,189		—
Home Equity		882		705		6,966		8,553		1,016,663		1,025,216		158
Credit Card		158		93		403		654		50,169		50,823		—
Other		261		135		349		745		231,139		231,884		—

Total	$	5,160	$	3,348	$	48,515	$	57,023	$	6,933,960	$	6,990,983	$	1,950


	Non-covered loans excluding acquired loans
(Dollars in thousands)
	Past Due⁽¹⁾
December 31, 2012	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Total non- covered loans, net of unearned income		Recorded investment > 90 days and accruing

Residential
Prime	$	662	$	1,156	$	9,168	$	10,986	$	185,843	$	196,829	$	801
Subprime		—		—		—		—		60,454		60,454		—
Commercial
Real Estate - Construction		60		—		5,479		5,539		288,137		293,676		—
Real Estate - Other		3,590		—		23,559		27,149		2,224,495		2,251,644		83
Commercial Business		1,430		13		3,687		5,130		2,362,304		2,367,434		329
Consumer and Other
Indirect Automobile		1,624		326		868		2,818		320,148		322,966		—
Home Equity		2,283		796		5,793		8,872		991,766		1,000,638		158
Credit Card		130		51		424		605		51,117		51,722		—
Other		566		105		310		981		201,161		202,142		—

Total	$	10,345	$	2,447	$	49,288	$	62,080	$	6,685,425	$	6,747,505	$	1,371

(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.


(Dollars in thousands)	Non-covered acquired loans
	Past Due⁽¹⁾
March 31, 2013	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Discount			Total non- covered loans, net of unearned income		Recorded investment > 90 days and accruing⁽¹⁾

Residential
Prime	$	—	$	—	$	779	$	779	$	24,228	$	(1,202	)	$	23,805	$	779
Subprime		—		—		—		—		—		—			—		—
Commercial
Real Estate - Construction		570		447		3,920		4,937		27,091		(4,154	)		27,874		3,920
Real Estate - Other		5,301		2,145		37,389		44,835		405,796		(58,440	)		392,191		37,389
Commercial Business		845		112		2,684		3,641		70,777		(7,187	)		67,231		2,684
Consumer and Other
Indirect Automobile		67		22		123		212		3,716		—			3,928		123
Home Equity		916		269		5,510		6,695		68,305		(7,523	)		67,477		5,510
Credit Card		—		—		—		—		—		—			—		—
Other		194		524		520		1,238		17,631		(1,556	)		17,313		520

Total	$	7,893	$	3,519	$	50,925	$	62,337	$	617,544	$	(80,062	)	$	599,819	$	50,925


(Dollars in thousands)	Non-covered acquired loans
	Past Due⁽¹⁾
December 31, 2012	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Discount			Total non- covered loans, net of unearned income		Recorded investment > 90 days and accruing⁽¹⁾

Residential
Prime	$	—	$	—	$	779	$	779	$	30,663	$	1,315		$	32,757	$	779
Subprime		—		—		—		—		—		—			—		—
Commercial
Real Estate - Construction		369		—		4,067		4,436		29,098		(3,968	)		29,566		4,067
Real Estate - Other		5,971		1,572		38,987		46,530		426,339		(57,055	)		415,814		38,987
Commercial Business		1,410		524		3,953		5,887		89,490		(12,144	)		83,233		3,953
Consumer and Other
Indirect Automobile		171		4		146		321		4,698		—			5,019		146
Home Equity		2,379		382		4,354		7,115		73,658		(4,498	)		76,275		4,354
Credit Card		—		—		—		—		—		—			—		—
Other		202		17		495		714		21,746		(6,805	)		15,655		495

Total	$	10,502	$	2,499	$	52,781	$	65,782	$	675,692	$	(83,155	)	$	658,319	$	52,781

⁽¹⁾	Past due information includes loans acquired from OMNI, Cameron, and Florida Gulf at the gross loan balance, prior to application of discounts, at March 31, 2013 and December 31, 2012.

Nonaccrual Loans

The following table provides the recorded investment of non-covered loans on nonaccrual status at March 31, 2013 and December 31, 2012. Nonaccrual loans in the table exclude loans acquired.


(Dollars in thousands)
	March 31, 2013		December 31, 2012

Residential
Prime	$	8,159	$	8,367
Subprime		—		—
Commercial
Real Estate - Construction		5,939		5,479
Real Estate - Other		21,995		23,475
Business		1,930		3,358
Consumer and Other
Indirect Automobile		982		868
Home Equity		6,808		5,635
Credit Card		403		424
Other		349		310

Total	$	46,565	$	47,916

Covered Loans

The carrying amount of the acquired covered loans at March 31, 2013 and December 31, 2012 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.


(Dollars in thousands)	March 31, 2013
Covered loans	Acquired Impaired Loans		Acquired Performing Loans		Total Covered Loans

Residential mortgage loans:
Residential 1-4 family	$	18,388	$	158,940	$	177,328

Total residential mortgage loans		18,388		158,940		177,328

Commercial loans:
Real estate		146,932		420,689		567,621
Business		2,832		84,200		87,032

Total commercial loans		149,764		504,889		654,653

Consumer and other loans:
Home equity		21,917		146,561		168,478
Other		768		2,946		3,714

Total consumer and other loans		22,685		149,507		172,192

Total covered loans receivable	$	190,837	$	813,336	$	1,004,173


(Dollars in thousands)	December 31, 2012
Covered loans	Acquired Impaired Loans		Acquired Performing Loans		Total Covered Loans

Residential mortgage loans:
Residential 1-4 family	$	20,232	$	166,932	$	187,164

Total residential mortgage loans		20,232		166,932		187,164

Commercial loans:
Real estate		167,742		473,101		640,843
Business		2,757		84,294		87,051

Total commercial loans		170,499		557,395		727,894

Consumer and other loans:
Home equity		22,094		152,117		174,211
Other		820		2,667		3,487

Total consumer and other loans		22,914		154,784		177,698

Total covered loans receivable	$	213,645	$	879,111	$	1,092,756

FDIC loss share receivables

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


(Dollars in thousands)	Three Months Ended March 31,
	2013			2012

Balance, beginning of period	$	423,069		$	591,844
Change due to (reversal of) credit loss provision recorded on FDIC covered loans		(45,414	)		684
Amortization		(27,702	)		(27,927	)
Submission of reimbursable losses to the FDIC		(30,491	)		(28,418	)
Impairment		(31,813	)		—
Changes due to a change in cash flow assumptions on OREO		(3,178	)		1,265

Balance, end of period	$	284,471		$	537,448

Impairment of FDIC loss share receivables

Based on improving economic trends, their impact on the amount and timing of expected future cash flows, and delays in the foreclosure process, the Company concluded that certain previously expected losses are probable of not being collected from the FDIC because such projected losses are no longer anticipated to occur or will occur beyond the reimbursable periods of the loss share agreements. The reimbursable loss period of the CapitalSouth loss share agreements ends in the third quarter of 2014 for non-single family residential loans (with the recovery period ending in the third quarter of 2017) and the third quarter of 2019 for single family residential loans. The reimbursable loss periods for the loans acquired from Century and Orion end during the fourth quarter of 2014 for non-single family residential loans (with the recovery period ending in the fourth quarter of 2017) and during the fourth quarter of 2019 for single family residential loans. For the loans acquired from Sterling, the reimbursable loss period of the loss share agreements ends during the third quarter of 2015 for non-single family residential loans (with the recovery period ending in the third quarter of 2018) and during the third quarter of 2020 for single family residential loans.

On April 10, 2013, the Audit Committee and the Board of Directors concluded that an impairment charge was required under generally accepted accounting principles applicable to the Company and should be recognized in the Company’s unaudited consolidated financial statements for the three-month period ended March 31, 2013. Therefore, the Company recognized a valuation allowance against the indemnification assets in the amount of $31,813,000 through a charge to net income.

Generally accepted accounting principles require that the tax effects of unusual or infrequent items, such as impairment of the indemnification assets, be recognized in the interim period in which they occur. Recognition of the tax effect of the indemnification asset impairment contributed to the $4,876,000 tax benefit presented in the unaudited consolidated statement of comprehensive income for the three months ended March 31, 2013 and resulted in an effective tax rate for that period that is not customary of the Company’s effective tax rate without recognition of this infrequent item.

The Company does not anticipate owing any consideration previously received under indemnification agreements to the FDIC under the “clawback” provisions of these agreements. Of the three agreements with the FDIC that contain clawback provisions, cumulative losses to date under two of these agreements have exceeded the calculated loss amounts which would result in clawback if not incurred. The sum of the historical and remaining projected losses under the remaining agreement is in excess of the clawback amount stated in that agreement. However, the future performance of the remaining covered assets (namely improvements in the forms of recoveries and/or reduced losses) for each of the three agreements beyond each agreement’s respective collection period could require the Company to be subject to the clawback provisions for that agreement. The clawback provisions generally stipulate that in the event of not meeting certain thresholds of loss, the Company is required to pay the FDIC a percentage as defined in the respective agreements.

ASC 310-30 loans

The Company acquired loans (both covered and non-covered) through previous acquisitions which are subject to ASC Topic 310-30.

The following is a summary of changes in the accretable yields of acquired loans during the three months ended March 31, 2013 and 2012.


(Dollars in thousands)
March 31, 2013	Acquired Impaired Loans			Acquired Performing Loans			Total Acquired Loan Portfolio

Balance, beginning of period	$	76,623		$	279,770		$	356,393
Transfers from nonaccretable difference to accretable yield		2,042			16,480			18,522
Accretion		(6,499	)		(45,281	)		(51,780	)
Changes in expected cash flows not affecting nonaccretable differences⁽¹⁾		8,973			64,500			73,473

Balance, end of period	$	81,139		$	315,469		$	396,608


(Dollars in thousands)
March 31, 2012	Acquired Impaired Loans			Acquired Performing Loans			Total Acquired Loan Portfolio

Balance, beginning of period	$	83,834		$	386,977		$	470,811
Transfers from nonaccretable difference to accretable yield		943			3,437			4,380
Changes in expected cash flows not affecting nonaccretable difference⁽¹⁾		(3,014	)		23,769			20,755
Accretion		(6,275	)		(55,697	)		(61,972	)

Balance, end of period	$	75,488		$	358,486		$	433,974

(1)	Includes changes in cash flows expected to be collected due to the impact of changes in actual or expected timing of liquidation events, loan modifications, changes in interest rates and changes in prepayment assumptions.

Accretable yield during the first quarter of 2013 increased primarily as a result of changes in expected cash flows not impacting the nonaccretable difference. Accretable yield during the first quarter of 2013 and 2012 decreased primarily as a result of the accretion recognized.

Troubled Debt Restructurings

Information about the Company’s TDRs at March 31, 2013 and 2012 is presented in the following tables. The Company excludes as TDRs modifications of loans that are accounted for within a pool under Subtopic 310-30, which include the covered loans above, as well as the loans acquired in the OMNI and Cameron acquisitions completed during 2011 and those acquired from Florida Gulf in 2012. Accordingly, such modifications do not result in the removal of those loans from the pool, even if the modification of those loans would otherwise be considered a TDR. As a result, all covered loans and loans acquired from OMNI, Cameron, and Florida Gulf that would otherwise meet the criteria for classification as a troubled debt restructuring are excluded from the tables below.


	Total TDRs
(Dollars in thousands)	Accruing Loans
	Current		Past Due Greater than 30 Days		Nonaccrual TDRs		Total TDRs
March 31, 2013
Residential
Prime	$	—	$	—	$	—	$	—
Commercial
Real Estate		843		207		15,677		16,727
Business		1,188		—		281		1,469
Consumer and Other
Indirect Automobile		—		—		—		—
Home Equity		92		—		220		312
Credit Card		—		—		—		—
Other		—		—		—		—

Total	$	2,123	$	207	$	16,178	$	18,508

March 31, 2012
Residential
Prime	$	—	$	—	$	—	$	—
Commercial
Real Estate		650		—		24,477		25,127
Business		26		—		1,957		1,983
Consumer and Other
Indirect Automobile		—		—		—		—
Home Equity		—		—		229		229
Credit Card		—		—		—		—
Other		—		—		—		—

Total	$	676	$	—	$	26,663	$	27,339

Of the $18,508,000 in total TDRs, $1,545,000 occurred during the current three-month period through modification of the original loan terms. Total TDRs of $27,339,000 at March 31, 2012 included $4,061,000 of TDRs that occurred during the three-month period ended March 31, 2012. The following table provides information on how the TDRs were modified during the three months ended March 31, 2013 and 2012.


(Dollars in thousands)	2013		2012

Extended maturities	$	—	$	441
Interest rate adjustment		—		489
Maturity and interest rate adjustment		1,545		2,509
Movement to or extension of interest-rate only payments		—		622
Forbearance		—		—
Covenant modifications		—		—
Other concession(s)⁽¹⁾		—		—

Total	$	1,545	$	4,061

(1)	Other concessions include concessions or a combination of concessions that do not consist of maturity extensions, interest rate adjustments, forbearance, and covenant modifications.

Information about the Company’s non-covered TDRs occurring in these periods, as well as non-covered TDRs that subsequently defaulted during the previous twelve months, is presented in the following tables. The Company has defined a default as any loan with a loan payment that is currently past due greater than 30 days, or was past due greater than 30 days at any point during the previous twelve months, or since the date of modification, whichever is shorter.


	March 31, 2013						March 31, 2012
(In thousands, except number of loans)	Number of Loans		Pre- modification Outstanding Recorded Investment		Post- modification Outstanding Recorded Investment⁽¹⁾		Number of Loans		Pre- modification Outstanding Recorded Investment		Post- modification Outstanding Recorded Investment⁽¹⁾
TDRs occurring during the three-month period
Residential
Prime		—	$	—	$	—		—	$	—	$	—
Commercial
Real Estate		1		1,545		1,545		11		4,036		3,773
Business		—		—		—		1		27		—
Consumer and Other
Indirect Automobile		—		—		—		—		—		—
Home Equity		—		—		—		—		—		—
Credit Card		—		—		—		—		—		—
Other		—		—		—		1		—		—

Total		1	$	1,545	$	1,545		13	$	4,063	$	3,773



	March 31, 2013				March 31, 2012
Total TDRs that subsequently defaulted in the past 12 months	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
Residential
Prime		—	$	—		—	$	—
Commercial
Real Estate		48		15,147		40		24,053
Business		8		1,469		6		1,866
Consumer and Other
Indirect Automobile		—		—		—		—
Home Equity		1		51		—		—
Credit Card		—		—		—		—
Other		1		—		1		—

Total		58	$	16,667		47	$	25,919

(1)	Recorded investment includes any allowance for credit losses recorded on the TDRs at the dates indicated.