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IBERIABANK Corporation Reports Third Quarter Results

LAFAYETTE, La., Oct. 19, 2018 /PRNewswire/ -- IBERIABANK Corporation (IBKC), holding company of the 131-year-old IBERIABANK (www.iberiabank.com), reported financial results for the third quarter ended September 30, 2018. For the quarter, the Company reported net income available to common shareholders of $97.9 million, or $1.73 diluted earnings per common share ("EPS"). On a non-GAAP basis, EPS excluding non-core revenues and non-core expenses ("Core EPS") in the third quarter of 2018 was $1.74 per common share, compared to $1.00 in the year-ago period, an increase of 74% (refer to press release supplemental tables for a reconciliation of GAAP to non-GAAP metrics). Excluding quarters where we had bargain purchase gains, Core EPS
was a record in the third quarter of 2018.

Daryl G. Byrd, President and Chief Executive Officer, commented, "We are pleased to report another quarter of solid financial performance driven by loan growth, increased revenues, and a reduced expense base. Today, we are providing initial financial guidance for 2019.  Our focus on delivering sustainable, profitable returns to our shareholders is reflected in our guidance as we continue to work toward achieving our 2020 Strategic Goals, which we expect to attain in 2019."

Highlights for the third quarter of 2018 and at September 30, 2018:


For the three months ended


GAAP


Non-GAAP Core


3Q18

2Q18


3Q18

2Q18

Earnings Per Common Share

$

1.73


$

1.30



$

1.74


$

1.71


Return on Average Assets

1.34

%

1.01

%


1.35

%

1.32

%

Return on Average Common Equity

10.21

%

7.87

%


10.27

%

10.30

%

Return on Average Tangible Common Equity

N/A

N/A


16.34

%

16.70

%

Efficiency Ratio

54.2

%

63.5

%


54.0

%

56.6

%

Tangible Efficiency Ratio (TE)

N/A

N/A


52.0

%

54.3

%

 

  • On a linked quarter basis, both GAAP and Core EPS improved driven by loan growth, margin stability and expense reduction. 
  • Revenue growth and declining expense produced positive operating leverage in the quarter.
  • Solid returns in 3Q18 allowed the company to achieve previously announced 2020 Strategic Goals for the second consecutive quarter.
  • The Company's reported and cash net interest margins declined 2 basis points on a linked quarter basis, to 3.74% and 3.47%, respectively.
  • Non-interest expense declined $27.5 million on a linked quarter basis. On a core basis, non-interest expense decreased $6.8 million.
  • Total loan growth was $268.1 million, or 5% annualized.
  • Total deposits decreased $237.0 million, or -4% annualized. As of September, 30, 2018, total non-interest bearing deposits represented 28% of total deposits. Third quarter deposits were significantly influenced by several large commercial deposit outflows, which were expected.
  • Credit metrics remained stable. Classified assets are down 20% from the same time a year ago.
  • As previously announced, during 3Q18 the Company closed 22 retail branches and expects to realize $2 million in operating expense savings per quarter.
  • During 3Q18, the Company repurchased 363,210 common shares at a weighted average price of $83.63 per common share.
  • The Company announced a third quarter cash dividend equal to $0.39 per common share, a 3% increase compared to the common dividend declared in June 2018.
  • On October 19, 2018, the Company announced a fourth quarter cash dividend equal to $0.41 per common share, payable on January 25, 2019, to shareholders of record on December 31, 2018.  This equates to a 5% increase to the third quarter common dividend. This announcement marks the third common dividend increase in 2018.

4Q18 Special Items

In connection with filing its 2017 income tax returns, the Company anticipates recognizing a non-core, permanent net income tax benefit of approximately $55 million in the fourth quarter of 2018. This anticipated benefit is based on the repricing of  its current and deferred income tax position associated with the Tax Cuts and Jobs Act of 2017 following the filing of the Company's remaining state income tax returns and the receipt of written consent from the IRS on a tax accounting method change.  The Company expects these items to be finalized in the fourth quarter of 2018.

2019 Financial Guidance

The Company is providing initial financial guidance for 2019 as listed below:

2019 Guidance

Average Earning Assets

$28.6B ~ $28.9B

Consolidated Loan Growth

5% ~ 7%

Consolidated Deposit Growth

5% ~ 7%

Provision Expense

$35MM ~ $49MM

Non-Interest Income (Core Basis)

$215MM ~ $225MM

Non-Interest Expense (Core Basis)

$685MM ~ $700MM

Net Interest Margin

3.60% ~ 3.70%

Tax Rate

22.5% ~ 23.5%

Preferred Dividend & Unrestricted Shares

$12.5 ~ $13.5

Share Repurchase Activity

$135MM ~ $150MM

Credit Quality

Stable

 

  • Guidance includes two interest rate increases in 2019.
  • Impact of deployment alternatives related to the $55 million non-core permanent tax in 2018 are not included in the guidance at this time. Once received, management and the Board of Directors will evaluate deployment alternatives, which may include increased dividends, additional share repurchases, and/or balance sheet management strategies.

 

Table A - Summary Financial Results

(Dollars in thousands, except per share data)













For the Three Months Ended


9/30/2018



6/30/2018


% Change


9/30/2017


% Change

GAAP BASIS:











Income available to common shareholders

$

97,866




$

74,175



31.9



$

26,046



275.7


Earnings per common share - diluted

1.73




1.30



33.1



0.49



253.1













Average loans and leases, net of unearned income

$

22,162,373




$

21,830,720



1.5



$

18,341,154



20.8


Average total deposits

23,241,529




23,155,871



0.4



19,785,328



17.5


Net interest margin (TE) (1)

3.74


%


3.76


%



3.64


%













Total revenues (2)

$

312,312




$

310,053



0.7



$

267,726



16.7


Total non-interest expense (2)

169,349




196,877



(14.0)



200,762



(15.6)


Efficiency ratio (2)

54.2


%


63.5


%



75.0


%


Return on average assets

1.34




1.01





0.45




Return on average common equity

10.21




7.87





2.92















NON-GAAP BASIS (3):











Core revenues (2)

$

312,311




$

310,050



0.7



$

267,968



16.5


Core non-interest expense (2)

168,649




175,445



(3.9)



161,462



4.5


Core earnings per common share - diluted

1.74




1.71



1.8



1.00



74.0


Core tangible efficiency ratio (TE) (1) (2) (4)

52.0


%


54.3


%



57.9


%


Core return on average assets

1.35




1.32





0.87




Core return on average common equity

10.27




10.30





5.99




Core return on average tangible common equity

16.34




16.70





8.95




Net interest margin (TE) - cash basis (1)

3.47




3.49





3.30
















(1)  Fully taxable equivalent (TE) calculations include the tax benefit associated with related income sources that are tax-exempt using a rate of 21% for 2018 and a rate of 35% for 2017.

(2)  Certain prior period amounts have been reclassified to conform to the net presentation requirements of ASU No. 2014-09, Revenue from Contracts with Customers, which was adopted effective January 1, 2018. The adoption resulted in a reduction of non-interest income and non-interest expense of approximately $2.2 million and had no impact on net income.

(3)  See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

(4)  Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis where applicable.


Operating Results

The Company's reported and cash net interest margins declined 2 basis points on a linked quarter basis, to 3.74% and 3.47%, respectively. The Company realized $1.1 million less in recoveries on acquired impaired loans compared to 2Q18.

Net interest income increased $3.1 million, or 1%, on a linked quarter basis. Average loans increased $331.7 million, or 6% annualized, and the associated taxable-equivalent yield increased 11 basis points. All other average earning assets decreased by $52.1 million from the linked quarter. The yield on total earning assets was 11 basis points higher at 4.57% compared to 4.46% in the linked quarter.

Average interest-bearing deposits increased $197.2 million, or 5% annualized, and the average cost of interest-bearing deposits rose 17 basis points to 106 basis points on a linked quarter basis. Total average interest-bearing liabilities increased by $355.3 million, or 8% annualized, and the average cost of interest-bearing liabilities rose 18 basis points to 120 basis points. The total cost of interest-bearing liabilities rose primarily due to an upward repricing of deposits, brokered wholesale CD issuances, and increases in the average rate paid on short-term and long-term FHLB advances. The total cost of funding in 3Q18 was 89 basis points, compared to 75 basis points in 2Q18.

The Company's provision for loan losses increased to $11.1 million on a linked quarter basis and covered net charge-offs in 3Q18 by 124%. The overall increase in provision was mainly attributable to a $741.7 million increase in legacy loans.

In 3Q18, non-interest income decreased $0.9 million, or 2%, compared to 2Q18 primarily as a result of seasonal declines in the Company's fee income businesses. Non-interest income on a linked quarter basis included a decrease of $1.0 million in mortgage income, a decrease of $0.6 million in title revenue, and a decrease of $0.5 million in ATM/debit card fee income. These decreases were offset by an increase of $1.1 million in client derivative activity and $0.6 million in service charges on deposit accounts.

Non-interest expense decreased $27.5 million, or 14%, on a linked quarter basis, primarily due to decreased merger and conversion-related expenses and reduced salaries and employee benefits expenses. During 3Q18, non-interest expense included $3.3 million in branch closure and other impairment expenses, a $2.7 million gain on the early termination of loss share agreements, $1.1 million in compensation-related expenses, and $1.0 million in merger and conversion-related expenses that are considered non-core items by management.

Excluding these items, core non-interest expense decreased $6.8 million, or 4%, primarily driven by decreases of $1.4 million in salary and employee benefits expenses, $1.4 million in occupancy and equipment expenses, $1.3 million in the accrual for mortgage loan repurchase reserves, $1.3 million in professional services expenses, and $0.8 million in marketing and business development expenses.

Branch closure expenses were partially offset by gains on sales of branches previously closed and gains on the termination of loss share agreements acquired in the Sabadell United Bank acquisition and made up the majority of the variance between GAAP and Core EPS.

On a linked quarter basis, the efficiency ratio improved to 54.2% from 63.5%, while the non-GAAP core tangible efficiency ratio improved to 52.0% from 54.3%. The Company continues to focus on cost containment and revenue enhancement efforts to deliver positive operating leverage. Refer to Table A for a summary of financial results on both a GAAP and non-GAAP basis.

Table B - Summary Financial Condition Results

(Dollars in thousands, except per share data)

















As of and For the Three Months Ended



9/30/2018


6/30/2018


% Change


9/30/2017


% Change

PERIOD-END BALANCES:














Total loans and leases, net of unearned income

$

22,343,906




$

22,075,783




1.2



$

19,795,085




12.9



Total deposits

23,193,446




23,430,458




(1.0)



21,334,271




8.7
















ASSET QUALITY RATIOS:














Loans 30-89 days past due and still accruing as a percentage of total loans (1)

0.32

%



0.20

%





0.29

%





Loans 90 days or more past due and still accruing as a percentage of total loans (1)

0.06




0.04






0.01






Non-performing assets to total assets (1)(2)

0.63




0.54






0.63






Classified assets to total assets (3)

1.09




1.26






1.47



















CAPITAL RATIOS:














Tangible common equity ratio (Non-GAAP) (4) (5)

8.69

%



8.56

%





8.68

%





Tier 1 leverage ratio (6)

9.65




9.54






10.17






Total risk-based capital ratio (6)

12.42




12.37






12.78



















PER COMMON SHARE DATA:














Book value

$

68.03




$

67.06




1.4



$

66.74




1.9



Tangible book value (Non-GAAP) (4) (5)

44.72




43.75




2.2



43.04




3.9



Closing stock price

81.35




75.80




7.3



82.15




(1.0)



Cash dividends

0.39




0.38




2.6



0.37




5.4

















(1)

Past due and non-accrual loan amounts exclude acquired impaired loans, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans.

(2)

Non-performing assets consist of non-accruing loans, accruing loans 90 days or more past due and other real estate owned, including repossessed assets. Refer to Table 5 for further detail.

(3)

Classified assets include commercial loans rated substandard or worse and non-performing mortgage and consumer loans and include acquired impaired loans accounted for under ASC 310-30. Classified assets were $328 million, $379 million and $410 million at September 30, 2018, June 30, 2018, and September 30, 2017, respectively.

(4)

See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

(5)

Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis where applicable.

(6)

Regulatory capital ratios as of September 30, 2018 are preliminary.


Loans and Other Assets

Total loans increased $268.1 million, or 5% annualized, to $22.3 billion at September 30, 2018. Period-end loan growth during 3Q18 was strongest in the Energy Group (reserve-based lending), South Florida Commercial, Corporate Asset Finance Group (equipment financing business), and the Birmingham, Tampa and Dallas markets. The Company believes it is well-positioned for diversified loan growth based on our strategic presence in significant MSAs in the Southeastern United States.

Table C - Period-End Loans

(Dollars in thousands)



















As of and For the Three Months Ended








Linked Qtr Change


Year/Year Change


Mix


9/30/2018


6/30/2018


9/30/2017


$

%


Annualized


$

%


9/30/2018

6/30/2018

Legacy loans:

















Commercial(1)

$

11,971,771



$

11,500,907



$

10,295,455



470,864


4.1



16.2

%


1,676,316


16.3



73.2

%

73.7

%

Residential mortgage

1,836,119



1,534,294



1,040,990



301,825


19.7



78.0

%


795,129


76.4



11.2

%

9.8

%

Consumer

2,543,872



2,574,834



2,496,701



(30,962)


(1.2)



(4.8)

%


47,171


1.9



15.6

%

16.5

%

Total legacy loans

16,351,762



15,610,035



13,833,146



741,727


4.8



18.9

%


2,518,616


18.2



100.0

%

100.0

%


















Acquired loans:

















Balance at beginning of period

6,465,748



6,792,168



2,062,606



(326,420)


(4.8)





4,403,142


213.5





Loans acquired during the period





4,026,020








(4,026,020)


N/M




Net paydown activity

(473,604)



(326,420)



(126,687)



(147,184)


45.1





(346,917)


273.8





Total acquired loans

5,992,144



6,465,748



5,961,939



(473,604)


(7.3)





30,205


0.5





Total loans

$

22,343,906



$

22,075,783



$

19,795,085



268,123


1.2





2,548,821


12.9







(1) Includes equipment financing leases.

N/M= not meaningful

On an average balance and linked quarter basis, the investment portfolio increased $37.9 million, or 3% annualized, to $4.9 billion, mainly due to purchases of additional investment securities. Approximately 96% of the Company's investment portfolio is in available-for-sale securities, which experience unrealized losses as interest rates rise. On a period-end basis, the investment portfolio equated to $4.8 billion, or 16% of total assets at September 30, 2018. The investment portfolio had an effective duration of 4.0 years at September 30, 2018, up from 3.9 years at June 30, 2018, and a $181.1 million unrealized loss at September 30, 2018, up from an $151.4 million loss at June 30, 2018. The average yield on investment securities increased 1 basis point to 2.43% in 3Q18. The Company holds in its investment portfolio primarily government agency securities. Municipal securities comprised 8% of total investments at September 30, 2018.

Deposits and Funding

Total deposits decreased $237.0 million, or 1%, to $23.2 billion at September 30, 2018. Deposit growth during 3Q18 was strongest in the Dallas, Baton Rouge and New York markets. Third quarter deposits were significantly influenced by several large commercial deposit outflows, which were expected. During the quarter, the Company had continued growth in its number of deposit
accounts, and expects positive deposit trends to resume moving forward. Periodic lumpy inflows and outflows are not unusual given the commercial nature of our franchise.

Table D - Period-End Deposits

(Dollars in thousands)








Linked Qtr Change


Year/Year Change


Mix


9/30/2018


6/30/2018


9/30/2017


$

%

Annualized


$

%


9/30/2018

6/30/2018

Non-interest-bearing

$

6,544,926



$

6,814,441



$

5,963,943



(269,515)


(4.0)


(15.9)

%


580,983


9.7



28.2

%

29.1

%

NOW accounts

4,247,533



4,453,152



3,547,761



(205,619)


(4.6)


(18.3)

%


699,772


19.7



18.3

%

19.0

%

Money market accounts

8,338,682



8,467,906



8,321,755



(129,224)


(1.5)


(6.0)

%


16,927


0.2



36.0

%

36.1

%

Savings accounts

820,354



850,425



843,662



(30,071)


(3.5)


(13.9)

%


(23,308)


(2.8)



3.5

%

3.6

%

Time deposits

3,241,951



2,844,534



2,657,150



397,417


14.0


55.5

%


584,801


22.0



14.0

%

12.2

%

Total deposits

$

23,193,446



$

23,430,458



$

21,334,271



(237,012)


(1.0)


(4.0)

%


1,859,175


8.7



100.0

%

100.0

%

Asset Quality

Credit quality remains stable and reflects strength in the economy.  On a linked quarter basis, classified assets decreased $51.6 million and were down $82.9 million, or 20%, from the same time a year ago. The Company's classified assets to total assets were 1.09% in 3Q18, down from 1.26% at 2Q18 and 1.47% at 3Q17.

Refer to Table 5 - Loans and Asset Quality Data for further information.

Capital Position

At September 30, 2018, the Company reported a non-GAAP tangible common equity ratio of 8.69%, up 13 basis points compared to June 30, 2018, and the preliminary Tier 1 leverage ratio was 9.65%, up 11 basis points compared to June 30, 2018. The Company's preliminary calculation of its total risk-based capital ratio at September 30, 2018, was 12.42%, up 5 basis points compared to June 30, 2018.

At September 30, 2018, book value per common share was $68.03, up $0.97 per share, compared to June 30, 2018. Tangible book value per common share was $44.72, up $0.97 per share, compared to June 30, 2018. Based on the closing stock price of the Company's common stock of $75.30 per share on October 18, 2018, this price equated to 1.11 times September 30, 2018 book value per common share and 1.68 times September 30, 2018 tangible book value per common share.

Dividends On Capital Stock. The declaration of dividends is at the discretion of the Board of Directors. The following details the recent dividend declarations:

Common Stock. On August 2, 2018, the Company declared a quarterly cash dividend of $0.39 per common share, a 3% increase compared to the common dividend declared in June 2018. The dividend is payable on October 26, 2018, to shareholders of record as of September 28, 2018.

On October 19, 2018, the Company announced a quarterly cash dividend equal to $0.41 per common share, payable on January 25, 2019, to shareholders of record on December 31, 2018.  This equated to a 5% increase to the common dividend declared in August 2018. This announcement marks the third common dividend increase in 2018.

Preferred Stock. On July 6, 2018, the Company declared a semi-annual cash dividend of $0.8281 per depositary share of Series B Preferred Stock that was paid on August 1, 2018. On August 2, 2018, the Company declared a quarterly cash dividend of $0.4125 per depositary share of Series C Preferred Stock that is payable on November 1, 2018.

Common Stock Repurchase Program. On May 10, 2018, the Board of Directors authorized the repurchase of up to 1,137,500 shares of the Company's common stock. This repurchase authorization equated to approximately 2% of total common shares outstanding. Stock repurchases under this program will be made from time to time, on the open market or in privately negotiated transactions at the discretion of the management of the Company. The timing of these repurchases will depend on market conditions and other requirements. The Company anticipates executing an active quarterly share repurchase. During 3Q18, the Company repurchased 363,210 common shares, at a weighted average price of $83.63 per common share. At September 30, 2018, there were approximately 709,290 remaining shares that may be repurchased under the current Board-approved plan.

IBERIABANK Corporation

IBERIABANK Corporation is a financial holding company with locations in Louisiana, Arkansas, Tennessee, Alabama, Texas, Florida, Georgia, South Carolina, North Carolina, Mississippi, Missouri, and New York offering commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, mortgage, and title insurance services.

The Company's common stock trades on the NASDAQ Global Select Market under the symbol "IBKC". The Company's Series B Preferred Stock and Series C Preferred Stock also trade on the NASDAQ Global Select Market under the symbols "IBKCP" and "IBKCO", respectively.  The Company's common stock market capitalization was approximately $4.2 billion, based on the NASDAQ Global Select Market closing stock price on October 18, 2018.

The following 10 investment firms currently provide equity research coverage on the Company:

  • Bank of America Merrill Lynch
  • FIG Partners, LLC
  • Hovde Group, LLC
  • Jefferies & Co., Inc.
  • Keefe, Bruyette & Woods, Inc.
  • Piper Jaffray & Co.
  • Raymond James & Associates, Inc.
  • Sandler O'Neill + Partners, L.P.
  • Stephens, Inc.
  • SunTrust Robinson-Humphrey

Conference Call

In association with this earnings release, the Company will host a live conference call to discuss the financial results for the quarter just completed. The telephone conference call will be held on Friday, October 19, 2018, beginning at 8:00 a.m. Central Time by dialing 1-888-317-6003. The confirmation code for the call is 9041078. A replay of the call will be available until midnight Central Time on October 26, 2018 by dialing 1-877-344-7529. The confirmation code for the replay is 10124103. The Company has prepared a PowerPoint presentation that supplements information contained in this press release. The PowerPoint presentation may be accessed on the Company's web site, www.iberiabank.com, under "Investor Relations" and then "Financial Information" and "Presentations."

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance.  Non-GAAP measures in this press release include, but are not limited to, descriptions such as core, tangible, and pre-tax pre-provision.  These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that in management's opinion can distort period-to-period comparisons of the Company's performance. Transactions that are typically excluded from non-GAAP performance measures include realized and unrealized gains/losses on former bank owned real estate, realized gains/losses on securities, income tax gains/losses, merger-related charges and recoveries, litigation charges and recoveries, debt repayment penalties, and gains, losses, and impairment charges on long-lived assets. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.  Reconciliations of GAAP to non-GAAP disclosures are presented in the supplemental tables at the end of this release.  Please refer to the supplemental tables for these reconciliations.

Caution About Forward-Looking Statements

This press release contains "forward-looking statements," which may include forecasts of our financial results and condition, expectations for our operations and businesses, and our assumptions for those forecasts and expectations. Do not place undue reliance on forward-looking statements. Due to various factors, actual results may differ materially from our forward-looking statements. Factors that could cause our actual results to differ materially from our forward-looking statements are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors" and "Regulation and Supervision" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and in other documents subsequently filed by the Company with the Securities and Exchange Commission, available at the SEC's website, https://www.sec.gov, and the Company's website, https://www.iberiabank.com. To the extent that statements in this press release relate to future plans, objectives, financial results or performance by the Company, these statements are deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are generally identified by use of words such as "may," "believe," "expect," "anticipate," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology.

Forward-looking statements represent management's beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements. All information is as of the date of this press release. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.


Table 1 - IBERIABANK CORPORATION

FINANCIAL HIGHLIGHTS

(Dollars in thousands, except per share data)

















As of and For the Three Months Ended

INCOME DATA:

9/30/2018


6/30/2018


% Change


9/30/2017


% Change


Net interest income

$

259,225




$

256,113




1.2



$

216,883




19.5



Net interest income (TE) (1)

260,727




257,562




1.2



219,463




18.8



Total revenues (2)

312,312




310,053




0.7



267,726




16.7



Provision for loan losses

11,097




7,595




46.1



18,514




(40.1)



Non-interest expense (2)

169,349




196,877




(14.0)



200,762




(15.6)



Net income available to common shareholders

97,866




74,175




31.9



26,046




275.7
















PER COMMON SHARE DATA:














Earnings available to common shareholders - basic

$

1.74




$

1.31




32.8



$

0.49




255.1



Earnings available to common shareholders - diluted

1.73




1.30




33.1



0.49




253.1



Core earnings (Non-GAAP) (3)

1.74




1.71




1.8



1.00




74.0



Book value

68.03




67.06




1.4



66.74




1.9



Tangible book value (Non-GAAP) (3) (4)

44.72




43.75




2.2



43.04




3.9



Closing stock price

81.35




75.80




7.3



82.15




(1.0)



Cash dividends

0.39




0.38




2.6



0.37




5.4
















KEY RATIOS AND OTHER DATA (7):










Net interest margin (TE) (1)

3.74

%



3.76

%





3.64

%





Efficiency ratio (2)

54.2




63.5






75.0






Core tangible efficiency ratio (TE) (Non-GAAP) (1) (2) (3) (4)

52.0




54.3






57.9






Return on average assets

1.34




1.01






0.45






Return on average common equity

10.21




7.87






2.92






Core return on average tangible common equity (Non-GAAP) (3)(4)

16.34




16.70






8.95






Effective tax rate

23.1




28.8






38.8






Full-time equivalent employees

3,429




3,543






3,646



















CAPITAL RATIOS:














Tangible common equity ratio (Non-GAAP) (3) (4)

8.69

%



8.56

%





8.68

%





Tangible common equity to risk-weighted assets (4)

10.17




10.18






10.56






Tier 1 leverage ratio (5)

9.65




9.54






10.17






Common equity Tier 1 (CET 1) ratio (5)

10.79




10.72






10.93






Tier 1 capital ratio (5)

11.33




11.27






11.53






Total risk-based capital ratio (5)

12.42




12.37






12.78






Common stock dividend payout ratio

21.8




28.9






76.5






Classified assets to Tier 1 capital (8)

11.7




13.9






16.2



















ASSET QUALITY RATIOS:










Non-performing assets to total assets (6)

0.63

%



0.54

%





0.63

%





ALLL to total loans and leases

0.61




0.62






0.69






Net charge-offs to average loans (annualized)

0.16




0.21






0.62






Non-performing assets to total loans and OREO (6)

0.84




0.74






0.89




















(1)

Fully taxable equivalent (TE) calculations include the tax benefit associated with related income sources that are tax-exempt using a rate of 21% for 2018 and a rate of 35% for 2017.

(2)

Certain prior period amounts have been reclassified to conform to the net presentation requirements of ASU No. 2014-09, Revenue from Contracts with Customers, which was adopted effective January 1, 2018. The adoption resulted in a reduction of non-interest income and non-interest expense of approximately $2.2 million and had no impact on net income.

(3)

See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

(4)

Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis where applicable.

(5)

Regulatory capital ratios as of September 30, 2018 are preliminary.

(6)

Non-performing assets consist of non-accruing loans, accruing loans 90 days or more past due and other real estate owned, including repossessed assets. For purposes of this table, past due and non-accrual loan amounts exclude acquired impaired loans, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans.

(7)

All ratios are calculated on an annualized basis for the periods indicated.

(8)

Classified assets include commercial loans rated substandard or worse and non-performing mortgage and consumer loans and include acquired impaired loans accounted for under ASC 310-30.

 


Table 2 - IBERIABANK CORPORATION

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share data)


















For the Three Months Ended






Linked Qtr
Change








Year/Year
Change


9/30/2018


6/30/2018


$

%


3/31/2018


12/31/2017


9/30/2017


$

%

Interest income

$

317,067



$

303,823



13,244


4.4



$

270,543



$

269,703



$

246,972



70,095


28.4


Interest expense

57,842



47,710



10,132


21.2



37,654



34,201



30,089



27,753


92.2


Net interest income

259,225



256,113



3,112


1.2



232,889



235,502



216,883



42,342


19.5


Provision for loan losses

11,097



7,595



3,502


46.1



7,986



14,393



18,514



(7,417)


(40.1)


Net interest income after provision for loan losses

248,128



248,518



(390)


(0.2)



224,903



221,109



198,369



49,759


25.1


Mortgage income

12,732



13,721



(989)


(7.2)



9,595



13,675



16,050



(3,318)


(20.7)


Service charges on deposit accounts

13,520



12,950



570


4.4



12,908



12,581



12,534



986


7.9


Title revenue

6,280



6,846



(566)


(8.3)



5,027



5,398



5,643



637


11.3


Broker commissions(1)

2,627



2,396



231


9.6



2,221



1,958



2,094



533


25.5


ATM/debit card fee income(1)

2,470



2,925



(455)


(15.6)



2,633



2,583



2,486



(16)


(0.6)


Income from bank owned life insurance

1,744



1,261



483


38.3



1,282



1,267



1,263



481


38.1


Gain (loss) on sale of available-for-sale securities



3



(3)


(100.0)



(59)



35



(242)



242


100.0


Trust department income

3,993



4,243



(250)


(5.9)



3,426



3,081



2,686



1,307


48.7


Other non-interest income(1)

9,721



9,595



126


1.3



7,533



11,764



8,329



1,392


16.7


Total non-interest income(1)

53,087



53,940



(853)


(1.6)



44,566



52,342



50,843



2,244


4.4


Salaries and employee benefits

101,159



107,445



(6,286)


(5.9)



104,586



104,387



106,970



(5,811)


(5.4)


Occupancy and equipment

18,889



19,931



(1,042)


(5.2)



20,047



19,211



19,139



(250)


(1.3)


Amortization of acquisition intangibles

5,382



6,111



(729)


(11.9)



5,102



4,642



4,527



855


18.9


Data processing(1)

9,036



9,309



(273)


(2.9)



12,393



11,416



12,300



(3,264)


(26.5)


Professional services

5,519



7,160



(1,641)


(22.9)



7,391



9,441



22,550



(17,031)


(75.5)


Credit and other loan related expense

5,117



5,190



(73)


(1.4)



4,618



3,170



7,532



(2,415)


(32.1)


Other non-interest expense(1)

24,247



41,731



(17,484)


(41.9)



34,159



29,798



27,744



(3,497)


(12.6)


Total non-interest expense(1)

169,349



196,877



(27,528)


(14.0)



188,296



182,065



200,762



(31,413)


(15.6)


Income before income taxes

131,866



105,581



26,285


24.9



81,173



91,386



48,450



83,416


172.2


Income tax expense

30,401



30,457



(56)


(0.2)



17,552



81,108



18,806



11,595


61.7


Net income

101,465



75,124



26,341


35.1



63,621



10,278



29,644



71,821


242.3


Less: Preferred stock dividends

3,599



949



2,650


279.2



3,598



949



3,598



1



Net income available to common shareholders

$

97,866



$

74,175



23,691


31.9



$

60,023



$

9,329



$

26,046



71,820


275.7


















Income available to common shareholders - basic

$

97,866



$

74,175



23,691


31.9



$

60,023



$

9,329



$

26,046



71,820


275.7


Less: Earnings allocated to unvested restricted stock

908



767



141


18.4



639



101



283



625


220.8


Earnings allocated to common shareholders

$

96,958



$

73,408



23,550


32.1



$

59,384



$

9,228



$

25,763



71,195


276.3


















Earnings per common share - basic

$

1.74



$

1.31



0.43


32.8



$

1.11



$

0.17



$

0.49



1.25


255.1


















Earnings per common share - diluted

1.73



1.30



0.43


33.1



1.10



0.17



0.49



1.24


253.1


Impact of non-core items (Non-GAAP) (2)

0.01



0.41



(0.40)


(97.6)



0.27



1.16



0.51



(0.50)


(98.0)


Earnings per share - diluted, excluding non-core items (Non-GAAP) (2)

$

1.74



$

1.71



0.03


1.8



$

1.37



$

1.33



$

1.00



0.74


74.0


















NUMBER OF COMMON SHARES OUTSTANDING (in thousands)
















Weighted average common shares outstanding - basic

55,571



55,931



(360)


(0.6)



53,616



53,287



52,424



3,147


6.0


Weighted average common shares outstanding - diluted

55,945



56,287



(342)


(0.6)



53,967



53,621



52,770



3,175


6.0


Book value shares (period end)

56,007



56,390



(383)


(0.7)



56,779



53,872



53,864



2,143


4.0



















(1)  Certain prior period amounts have been reclassified to conform to the net presentation requirements of ASU No. 2014-09, Revenue from Contracts with Customers, which was adopted effective January 1, 2018. On average, the adoption resulted in a reduction of non-interest income and non-interest expense of approximately $2.3 million on a quarterly basis, and had no impact on net income.

(2)  See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

 


Table 3 - IBERIABANK CORPORATION

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share data)









For the Nine Months Ended






Change


9/30/2018


9/30/2017


$

%

Interest income

$

891,433



$

644,080



247,353


38.4


Interest expense

143,206



70,736



72,470


102.5


Net interest income

748,227



573,344



174,883


30.5


Provision for loan losses

26,678



36,718



(10,040)


(27.3)


Net interest income after provision for loan losses

721,549



536,626



184,923


34.5


Mortgage income

36,048



49,895



(13,847)


(27.8)


Service charges on deposit accounts

39,378



35,097



4,281


12.2


Title revenue

18,153



16,574



1,579


9.5


Broker commissions (1)

7,244



7,203



41


0.6


ATM/debit card fee income (1)

8,028



7,615



413


5.4


Income from bank owned life insurance

4,287



3,815



472


12.4


(Loss) gain on sale of available-for-sale securities

(56)



(183)



127


69.4


Trust department income

11,662



6,625



5,037


76.0


Other non-interest income (1)

26,849



23,164



3,685


15.9


Total non-interest income (1)

151,593



149,805



1,788


1.2


Salaries and employee benefits

313,190



275,140



38,050


13.8


Occupancy and equipment

58,867



51,452



7,415


14.4


Amortization of acquisition intangibles

16,595



7,948



8,647


108.8


Data processing (1)

30,738



25,374



5,364


21.1


Professional services

20,070



39,104



(19,034)


(48.7)


Credit and other loan related expense

14,925



15,838



(913)


(5.8)


Other non-interest expense (1)

100,137



70,082



30,055


42.9


Total non-interest expense (1)

554,522



484,938



69,584


14.3


Income before income taxes

318,620



201,493



117,127


58.1


Income tax expense

78,410



69,358



9,052


13.1


Net income

240,210



132,135



108,075


81.8


Less: Preferred stock dividends

8,146



8,146





Net income available to common shareholders

$

232,064



$

123,989



108,075


87.2









Income available to common shareholders - basic

$

232,064



$

123,989



108,075


87.2


Less: Earnings allocated to unvested restricted stock

2,341



1,052



1,289


122.5


Earnings allocated to common shareholders

$

229,723



$

122,937



106,786


86.9









Earnings per common share - basic

$

4.17



$

2.47



1.70


68.8









Earnings per common share - diluted

4.14



2.45



1.69


68.9


Impact of non-core items (Non-GAAP) (2)

0.69



0.68



0.01


1.5


Earnings per share - diluted, excluding non-core items (Non-GAAP) (2)

$

4.83



$

3.13



1.70


54.3









NUMBER OF COMMON SHARES OUTSTANDING (in thousands)







Weighted average common shares outstanding - basic

55,047



49,749



5,298


10.6


Weighted average common shares outstanding - diluted

55,407



50,106



5,301


10.6


Book value shares (period end)

56,007



53,864



2,143


4.0










(1)  Certain prior period amounts have been reclassified to conform to the net presentation requirements of ASU No. 2014-09, Revenue from Contracts with Customers, which was adopted effective January 1, 2018. The adoption resulted in a reduction of non-interest income and non-interest expense of approximately $6.6 million and had no impact on net income.

(2)  See Table 9 and Table 10 for GAAP to Non-GAAP reconciliations.

 


TABLE 4 - IBERIABANK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)
















PERIOD-END BALANCES




Linked Qtr Change








Year/Year Change

ASSETS

9/30/2018


6/30/2018


$


%


3/31/2018


12/31/2017


9/30/2017


$


%

Cash and due from banks

$

291,083



$

299,268



(8,185)



(2.7)



$

253,527



$

319,156



$

298,173



(7,090)



(2.4)


Interest-bearing deposits in other banks

184,852



428,120



(243,268)



(56.8)



310,565



306,568



583,043



(398,191)



(68.3)


Total cash and cash equivalents

475,935



727,388



(251,453)



(34.6)



564,092



625,724



881,216



(405,281)



(46.0)


Investment securities available for sale

4,634,124



4,650,915



(16,791)



(0.4)



4,542,486



4,590,062



4,736,339



(102,215)



(2.2)


Investment securities held to maturity

213,561



221,030



(7,469)



(3.4)



224,241



227,318



175,906



37,655



21.4


Total investment securities

4,847,685



4,871,945



(24,260)



(0.5)



4,766,727



4,817,380



4,912,245



(64,560)



(1.3)


Mortgage loans held for sale

42,976



78,843



(35,867)



(45.5)



110,348



134,916



141,218



(98,242)



(69.6)


Loans and leases, net of unearned income

22,343,906



22,075,783



268,123



1.2



21,706,090



20,078,181



19,795,085



2,548,821



12.9


Allowance for loan and lease losses

(136,950)



(136,576)



(374)



0.3



(144,527)



(140,891)



(136,628)



(322)



0.2


Loans and leases, net

22,206,956



21,939,207



267,749



1.2



21,561,563



19,937,290



19,658,457



2,548,499



13.0


Premises and equipment, net

304,605



326,213



(21,608)



(6.6)



329,454



331,413



330,800



(26,195)



(7.9)


Goodwill and other intangible assets

1,313,478



1,320,664



(7,186)



(0.5)



1,338,573



1,277,464



1,281,479



31,999



2.5


Other assets

926,752



861,902



64,850



7.5



801,880



779,942



771,220



155,532



20.2


Total assets

$

30,118,387



$

30,126,162



(7,775)





$

29,472,637



$

27,904,129



$

27,976,635



2,141,752



7.7




















LIABILITIES AND SHAREHOLDERS' EQUITY













Non-interest-bearing deposits

$

6,544,926



$

6,814,441



(269,515)



(4.0)



$

6,595,495



$

6,209,925



$

5,963,943



580,983



9.7


NOW accounts

4,247,533



4,453,152



(205,619)



(4.6)



4,500,181



4,348,939



3,547,761



699,772



19.7


Savings and money market accounts

9,159,036



9,318,331



(159,295)



(1.7)



9,146,710



8,520,365



9,165,417



(6,381)



(0.1)


Time deposits

3,241,951



2,844,534



397,417



14.0



2,728,806



2,387,488



2,657,150



584,801



22.0


Total deposits

23,193,446



23,430,458



(237,012)



(1.0)



22,971,192



21,466,717



21,334,271



1,859,175



8.7


Short-term borrowings

790,000



595,000



195,000



32.8



375,000



475,000



975,008



(185,008)



(19.0)


Securities sold under agreements to repurchase

452,719



459,213



(6,494)



(1.4)



525,496



516,297



548,696



(95,977)



(17.5)


Trust preferred securities

120,110



120,110







120,110



120,110



120,110






Other long-term debt

1,346,700



1,318,504



28,196



2.1



1,329,192



1,375,725



1,007,474



339,226



33.7


Other liabilities

273,051



289,468



(16,417)



(5.7)



250,740



253,489



264,302



8,749



3.3


Total liabilities

26,176,026



26,212,753



(36,727)



(0.1)



25,571,730



24,207,338



24,249,861



1,926,165



7.9


Total shareholders' equity

3,942,361



3,913,409



28,952



0.7



3,900,907



3,696,791



3,726,774



215,587



5.8


Total liabilities and shareholders' equity

$

30,118,387



$

30,126,162



(7,775)





$

29,472,637



$

27,904,129



$

27,976,635



2,141,752



7.7


 

TABLE 4 Continued - IBERIABANK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



















AVERAGE BALANCES


Linked Qtr Change








Year/Year Change

ASSETS

9/30/2018


6/30/2018


$


%


3/31/2018


12/31/2017


9/30/2017


$


%

Cash and due from banks

$

279,918



$

296,907



(16,989)



(5.7)



$

308,319



$

307,328



$

277,968



1,950



0.7


Interest-bearing deposits in other banks

259,455



392,906



(133,451)



(34.0)



486,298



538,733



615,445



(355,990)



(57.8)


Total cash and cash equivalents

539,373



689,813



(150,440)



(21.8)



794,617



846,061



893,413



(354,040)



(39.6)


Investment securities available for sale

4,673,454



4,629,177



44,277



1.0



4,544,836



4,674,496



4,593,798



79,656



1.7


Investment securities held to maturity

216,419



222,764



(6,345)



(2.8)



226,229



191,067



114,895



101,524



88.4


Total investment securities

4,889,873



4,851,941



37,932



0.8



4,771,065



4,865,563



4,708,693



181,180



3.8


Mortgage loans held for sale

87,823



72,917



14,906



20.4



109,027



126,216



132,309



(44,486)



(33.6)


Loans and leases, net of unearned income

22,162,373



21,830,720



331,653



1.5



20,181,390



19,941,500



18,341,154



3,821,219



20.8


Allowance for loan and lease losses

(139,075)



(145,565)



6,490



(4.5)



(144,295)



(138,927)



(147,046)



7,971



(5.4)


Loans and leases, net

22,023,298



21,685,155



338,143



1.6



20,037,095



19,802,573



18,194,108



3,829,190



21.0


Premises and equipment, net

315,259



327,686



(12,427)



(3.8)



331,640



329,957



327,917



(12,658)



(3.9)


Goodwill and other intangible assets

1,316,527



1,338,420



(21,893)



(1.6)



1,281,598



1,277,293



1,047,355



269,172



25.7


Other assets

874,078



804,920



69,158



8.6



807,177



787,400



793,126



80,952



10.2


Total assets

$

30,046,231



$

29,770,852



275,379



0.9



$

28,132,219



$

28,035,063



$

26,096,921



3,949,310



15.1




















LIABILITIES AND SHAREHOLDERS' EQUITY













Non-interest-bearing deposits

$

6,684,343



$

6,795,878



(111,535)



(1.6)



$

6,278,507



$

6,176,347



$

5,601,071



1,083,272



19.3


NOW accounts

4,296,392



4,494,064



(197,672)



(4.4)



4,363,557



3,987,908



3,203,657



1,092,735



34.1


Savings and money market accounts

9,237,614



9,146,302



91,312



1.0



8,664,085



8,769,464



8,566,873



670,741



7.8


Time deposits

3,023,180



2,719,627



303,553



11.2



2,471,485



2,444,403



2,413,727



609,453



25.2


Total deposits

23,241,529



23,155,871



85,658



0.4



21,777,634



21,378,122



19,785,328



3,456,201



17.5


Short-term borrowings

820,087



609,965



210,122



34.4



506,056



729,111



1,180,165



(360,078)



(30.5)


Securities sold under agreements to repurchase

376,078



427,508



(51,430)



(12.0)



477,862



494,757



439,077



(62,999)



(14.3)


Trust preferred securities

120,110



120,110







120,110



120,110



120,110






Other long-term debt

1,260,900



1,261,515



(615)





1,257,213



1,300,114



622,655



638,245



102.5


Other liabilities

292,445



281,820



10,625



3.8



275,869



264,790



273,163



19,282



7.1


Total liabilities

26,111,149



25,856,789



254,360



1.0



24,414,744



24,287,004



22,420,498



3,690,651



16.5


Total shareholders' equity

3,935,082



3,914,063



21,019


...