IBERIABANK Corporation Reports Record Operating Results

LAFAYETTE, La., Jan. 27, 2016 /PRNewswire/ -- IBERIABANK Corporation (NASDAQ: IBKC), holding company of the 128-year-old IBERIABANK (www.iberiabank.com), reported operating results for the fourth quarter ended December 31, 2015.  For the quarter, the Company reported income available to common shareholders of $44.4 million, or $1.08 fully diluted earnings per common share ("EPS").  In the fourth quarter of 2015, the Company incurred non-operating expenses net of non-operating revenue and income taxes equal to $1.0 million, or $0.03 per common share.  Excluding non-operating items, operating EPS in the fourth quarter of 2015 was $1.11 per common share on a non-GAAP operating basis (refer to press release supplemental table.)  The $1.11 operating EPS results in the fourth quarter of 2015 were within management's guidance range, equated to a 4% improvement on a linked quarter basis, and was a record level of quarterly operating EPS for the Company.

Daryl G. Byrd, President and Chief Executive Officer, commented, "This was a very busy and productive quarter for our Company.  Our net interest margin expanded considerably in the final quarter of the year, though much of the positive impact of the recent increase in short-term interest rates will occur in the first quarter of 2016.  We increased operating revenues and reduced operating expenses, resulting in our lowest operating efficiency ratio in at least 27 quarters.  I am pleased with the progress we achieved toward our targeted efficiency ratio of 60% and our improved bottom-line profitability. We continue to execute on our revenue and efficiency improvement initiatives. Overall, I'm very pleased with the progress we have achieved this quarter and our sustained focus."

Byrd continued, "For the full year of 2015, we achieved record operating EPS of $4.18, up 12% compared to 2014.  In addition, in 2015 we attained record levels of annual total revenues, loan originations, mortgage production and sales, title insurance income, retail brokerage income, treasury management income, and many other measures.  I'm very pleased with our achievements this past year, our continued client growth, strength in asset quality and capital, and enhanced operating leverage, efficiency, and profitability.  We anticipate continued progress in 2016 toward attaining our strategic goals, despite the economic and commodity price headwinds we face."

Byrd continued, "The unprecedented rapid and sustained decline in commodity prices has unsettled the financial condition of those individuals, businesses, and communities whose financial well-being are tied to those commodities.  While the vast majority of our franchise continues to have no exposure to these concerns, we remain vigilant in our actions to mitigate the risks in our current environment.  Our Company's historical focus on sound client selection, conservative credit underwriting, and proactive portfolio management, and market and business diversification continue to serve our Company and shareholders well.  Our strategic decisions to expand into larger markets across the southeast allow us to continue to drive growth and profitability to offset our risk-off positions in impacted energy segments of business."

Highlights for the fourth quarter of 2015 and at December 31, 2015:

• Energy-related loans declined $39 million, or 5%, between September 30, 2015 and December 31, 2015, and equated to 4.8% of total loans at December 31, 2015. At December 31, 2015, $8.4 million in energy loans were on non-accrual status (1.2% of total energy loans). The Company had approximately $27 million in aggregate reserves for energy-related loans and unfunded commitments, an increase of $8 million, or 41%, since September 30, 2015. At year-end, energy-related reserves equated to 3.9% of energy loans outstanding.
• The Company's net interest margin increased 14 basis points on a linked quarter basis to 3.64%, which was well above management's expectations. The Company's cash margin improved seven basis points on a linked quarter basis.
• On a linked quarter basis, the Company's operating revenues increased $3.1 million, or 1%, while its operating expenses decreased $6.4 million, or 5%. The tangible efficiency ratio improved from 64.8% to 61.1% on a linked quarter basis.
• During 2015, the Company closed or consolidated 11 bank branches, acquired 36 branches, and opened five branches. An additional 19 branches are scheduled to be closed or consolidated in the first quarter of 2016, resulting in projected annual net run-rate savings of at least $1 million per quarter starting in the second quarter of 2016. The Company incurred $3.4 million in pre-tax non-operating expenses in the fourth quarter of 2015 associated with branch closures. An additional $2.7 million in pre-tax non-operating expenses is estimated to be incurred in the first quarter of 2016. The estimated pay-back period associated with the branch closures and consolidations in 2016 is approximately two years.
• Total loan growth was $210 million, or 1%, between September 30, 2015 and December 31, 2015. Legacy loan growth, which excludes all assets covered under FDIC loss share agreements and other non-covered acquired assets (collectively, "Acquired Assets"), increased $411 million, or 4% (15% annualized rate), on a period-end basis and $377 million, or 4% (14% annualized rate), on an average balance basis.
• Total deposits decreased $124 million, or less than 1%, between quarter-ends, and decreased $77 million, or less than 1%, on an average balance basis. Non-interest-bearing deposits decreased $41 million, or 1%, between quarter-ends and increased $194 million, or 5%, on an average balance basis. The Company's loan-to-deposit ratio was 89% at year-end 2015, down from 91% one year prior.

 

Operating Results

On a linked quarter basis, average loan volume (including the FDIC loss share receivable) increased $170 million, or 1%, and the associated yield increased eight basis points.  Over that period, average legacy loans increased $377 million, or 4%, with an increase in yield of two basis points, and acquired loans (including the FDIC loss share receivable) decreased $208 million, or 6%, and the yield increased 38 basis points due to pool closings, ongoing recoveries, and other factors.  All other average earning assets, including investment securities, mortgage loans held for sale, and interest-bearing deposits in other institutions, decreased a total of $193 million, or 5%.

On a linked quarter basis, average earning assets decreased $24 million, or less than 1%, and the average earning asset yield increased 13 basis points. Average interest-bearing liabilities decreased $295 million, or 2%, and the cost of interest-bearing liabilities decreased one basis point.  As a result, the net interest spread and margin each increased 14 basis points.  On a linked quarter basis, tax-equivalent net interest income increased $6 million, or 4%, primarily due to the net interest margin improvement.

In the fourth quarter of 2015, non-interest income decreased $5.0 million, or 9%, compared to the third quarter of 2015.  Non-operating non-interest income totaled $0.2 million in the fourth quarter of 2015.  Operating non-interest income decreased $2.9 million, or 5%, on a linked quarter basis.  The primary changes in operating non-interest income due to seasonal influences on a linked quarter basis included:

• Decreased mortgage income of $3.6 million, or 17%; and
• Decreased title revenues of $1.2 million, or 18%; partially offset by
• Increased COLI income of $1.4 million (partially offset by increased COLI expense of $1.2 million).

In the fourth quarter of 2015, the Company originated $558 million in residential mortgage loans, down $162 million, or 22%, on a linked quarter basis.  Client loan refinancing opportunities accounted for approximately 23% of mortgage loan applications in the fourth quarter of 2015, compared to 19% in the third quarter of 2015.  The Company sold $597 million in mortgage loans during the fourth quarter of 2015, down $129 million, or 18%, on a linked quarter basis.  Loans held for sale declined from $202 million at September 30, 2015, to $166 million at December 31, 2015.  The mortgage origination locked pipeline decreased $56 million, or 20%, between September 30, 2015, and December 31, 2015, to $227 million at quarter-end, but up $90 million, or 66%, over the comparable period last year.  At January 22, 2016, the locked pipeline was $252 million, up $25 million, or 11%, compared to December 31, 2015.  The mortgage loan origination business primarily focuses on retail mortgage loans originated by the Company.

Assets under management at IBERIA Wealth Advisors ("IWA") were $1.4 billion at December 31, 2015, up 1% compared to September 30, 2015.  Revenues for IWA were unchanged on a linked quarter basis, and were up 11% compared to the fourth quarter of 2014.  IBERIA Financial Services revenues increased 4% on a linked quarter basis, and were up 45% compared to the fourth quarter of 2014.  IBERIA Capital Partners revenues increased 24% on a linked quarter basis, and were down 49% compared to the fourth quarter of 2014.

Non-interest expense decreased $6.0 million, or 4%, on a linked quarter basis, while operating expense decreased $6.4 million, or 5%.  Operating expense changes included the following on a linked-quarter basis:

• Decreased mortgage origination commissions of $1.8 million, or 26%;
• Decreased provision for unfunded commitments of $1.7 million;
• Decreased occupancy and equipment expense of $1.0 million, or 5%;
• Decreased marketing and business development expenses of $1.0 million, or 31%; and
• Decreased professional services expense of $1.0 million, or 19%.

The Company's operating tangible efficiency ratio in the fourth quarter of 2015 was 61.1%, down from 64.8% in the third quarter of 2015.  The Company continues to work expense savings and revenue enhancement initiatives intended to achieve the targeted operating tangible efficiency ratio of 60% by the fourth quarter of 2016.

In the fourth quarter of 2015, the Company recorded $2.0 million in tax benefits associated with amended prior tax returns and other tax matters.  Similar to $3.0 million in tax benefits recorded in the fourth quarter of 2014, the Company considers the tax benefits in 2015 to be non-operating in nature.  

 

Loans

Total loans increased $210 million, or 1%, between September 30, 2015, and December 31, 2015.  Over that period, the acquired loan portfolio decreased $201 million, or 6%, and legacy loans increased $411 million, or 4% (15% annualized rate), including a decline in energy-related loans of $39 million, or 5%, and a decline in indirect automobile loans of $35 million, or 13%.  During the fourth quarter, legacy commercial loans increased $318 million, or 4% (which included $56 million in small business loan growth, up 5%, or 14% annualized rate), legacy consumer loans increased $60 million, or 3% (10% annualized rate), and legacy mortgage loans increased $33 million, or 5% (20% annualized rate).  Period-end loan growth during the fourth quarter of 2015 was strongest in the Dallas, Naples, Southeast Florida, Houston, and Birmingham markets.  Funded loan origination and renewal mix in the fourth quarter of 2015 was 39% fixed rate and 61% floating rate, and total loans outstanding (excluding non-accruals) were 46% fixed and 54% floating.  Loans and commitments originated and/or renewed during the fourth quarter of 2015 totaled $1.5 billion (up 14% on a linked quarter basis).  At December 31, 2015, the Company's commercial loan pipeline was approximately $700 million.  

 

Energy-related loans outstanding totaled $681 million at December 31, 2015, down $39 million, or 5%, compared to September 30, 2015, and equated to approximately 4.8% of total loans.  Loans to exploration and production companies accounted for 46% of energy loans outstanding and 56% of energy loan commitments at December 31, 2015.  Midstream companies accounted for 17% of energy loans and 16% of energy loan commitments, and service companies accounted for 37% of energy loans and 29% of energy loan commitments.  At December 31, 2015, $8.4 million in energy loans were on non-accrual status (compared to $4.9 million at September 30, 2015) and $15,000 was past due greater than 30 days at quarter-end (compared to $0.5 million at September 30, 2015).  At December 31, 2015,  approximately 12% of energy loans were classified and 22% were criticized.  To date, the Company has experienced no energy-related charge-offs.  Additional information regarding the Company's energy loan and commitment exposure is provided in the supplemental investor presentation.

At December 31, 2015, the Company's indirect automobile lending business had approximately $246 million in loans outstanding, down $35 million, or 13%, compared to September 30, 2015 (1.7% of total loans outstanding compared to 2.0% and 3.5% at September 30, 2015, and December 31, 2014, respectively).  For the year ended December 31, 2015, indirect loans declined $151 million, or 38%, while the volume of loans past due 30 days or more declined over the period.

Deposits

Total deposits decreased $124 million, or less than 1%, from September 30, 2015 to December 31, 2015.  Non-interest-bearing deposits decreased $41 million, or less than 1%, and equated to 27% of total deposits at December 31, 2015.  NOW accounts increased $339 million, or 13%, while money market accounts decreased $264 million, or 4%, between September 30, 2015 and December 31, 2015.  Time deposits decreased $151 million, or 7%, between quarter-ends.  Deposit growth during the fourth quarter of 2015 was strongest in the New Orleans, Florida Keys, Lafayette, Mobile, and Memphis markets.  

 

On an average balance and linked quarter basis, non-interest-bearing deposits increased $194 million, or 5%, and interest-bearing deposits decreased $271 million, or 2%.  The rate on average interest-bearing deposits in the fourth quarter of 2015 was 0.43%, unchanged on a linked quarter basis.

Other Assets And Funding

On a linked quarter basis, the investment portfolio increased $204 million, or 8%, to $2.9 billion on average in the fourth quarter of 2015.  On a period-end basis, the investment portfolio equated to $2.9 billion, or 15% of total assets at December 31, 2015, unchanged compared to September 30, 2015.  The investment portfolio had an effective duration of 3.3 years at December 31, 2015, compared to 3.1 years at September 30, 2015.  The investment portfolio had a $1 million unrealized loss at December 31, 2015.  The average yield on investment securities increased five basis points on a linked quarter basis to 2.21% in the fourth quarter of 2015.  The Company holds in its investment portfolio primarily government agency securities.  Municipal securities comprised only 9% of total investments at December 31, 2015.  The Company holds for investment no sovereign debt, equity securities, trust preferred securities, or derivative exposure to foreign counterparties.

On a linked quarter basis, average short-term borrowings (including repurchase agreements) decreased $22 million, or 8%, and the cost of short-term borrowings declined one basis point.  At December 31, 2015, short-term borrowings (including repurchase agreements) declined $519 million, or 61%, compared to $846 million one year prior.  On a linked quarter basis, average long-term debt decreased $2 million, or less than 1%, and the cost of long-term debt increased three basis points to 3.02%.  The cost of average interest-bearing liabilities was 0.49% in the fourth quarter of 2015, down one basis point on a linked quarter basis.

Asset Quality

Between September 30, 2015 and December 31, 2015, legacy non-performing assets ("NPAs") decreased $2 million, or 3%.  At December 31, 2015, NPAs included $8 million in former bank branches and related real estate, a decrease of 2% compared to September 30, 2015.  At December 31, 2015, legacy NPAs equated to 0.42% of total assets, down from 0.43% at September 30, 2015, and 0.37% of total assets excluding bank-related properties, down from 0.38% at September 30, 2015.  Legacy loans past due 30 days or more (excluding non-accruing loans) increased $3 million, or 20%, and represented 0.19% of total legacy loans at December 31, 2015, compared to 0.16% at September 30, 2015.

Net charge-offs totaled $2.9 million in the fourth quarter of 2015, up $0.5 million, or 19%, compared to the third quarter of 2015.  Annualized net charge-offs equated to 0.08% of average loans in the fourth quarter of 2015, up one basis point on a linked quarter basis.  The Company's provision for loan losses increased $6.6 million, or 131%, on a linked quarter basis to $11.7 million.

Capital Position

At December 31, 2015, the Company reported a tangible common equity ratio of 8.86%, up 11 basis points compared to September 30, 2015, and the preliminary Tier 1 leverage ratio was 9.52%, up 19 basis points compared to September 30, 2015. The Company's preliminary calculation of total risk-based capital ratio at December 31, 2015, was 12.14%, down one basis point compared to September 30, 2015. Beginning on January 1, 2016, the remaining 25% of trust preferred securities included in the Company's Tier 1 capital ratio at year-end 2015 was phased into Tier 2 capital for future periods. As a result, the impact on Tier 1 capital ratios is estimated to be approximately 18 basis points. No impact on the Company's total risk based capital ratio is associated with this change.

At December 31, 2015, book value per common share was $58.87, up $0.38 per share, or 1%, compared to September 30, 2015. Tangible book value per common share was $40.35, up $0.40 per share, or 1%, compared to September 30, 2015.  Based on the closing stock price of the Company's common stock of $44.78 per share on January 27, 2016, this price equated to 0.76 times December 31, 2015 book value and 1.11 times December 31, 2015 tangible book value per common share.

On December 15, 2015, the Company declared a quarterly cash dividend of $0.34 per common share. This common dividend level equated to an annualized dividend rate of $1.36 per common share.  Based on the Company's closing common stock price on January 27, 2016, the indicated dividend yield was 3.04% per common share.

On August 5, 2015, the Company sold 3.2 million depositary shares, each representing a 1/400th interest in a share of non-cumulative perpetual preferred stock. The preferred stock has an initial coupon equal to 6.625% for a period of 10 years, and thereafter floats at a rate of LIBOR plus 426.2 basis points. The Company raised approximately $80 million in gross proceeds ($77 million net proceeds) from the transaction.  On January 4, 2016, the Company declared a semi-annual cash dividend of $0.805 per depositary share that will be payable on February 1, 2016.

IBERIABANK Corporation

IBERIABANK Corporation is a financial holding company with 319 combined offices, including 219 bank branch offices and three loan production offices in Louisiana, Arkansas, Tennessee, Alabama, Texas, Florida, and Georgia, 22 title insurance offices in Arkansas and Louisiana, and mortgage representatives in 68 locations in 10 states.  The Company has seven locations with representatives of IBERIA Wealth Advisors in four states, and one IBERIA Capital Partners, L.L.C. office in New Orleans.

The Company's common stock trades on the NASDAQ Global Select Market under the symbol "IBKC" and its Series B Preferred Stock trades on the NASDAQ Global Select Market under the symbol "IBKCP".  The Company's common stock market capitalization was approximately $1.8 billion, based on the NASDAQ Global Select Market closing stock price on January 27, 2016.

The following 11 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.
• Robert W. Baird & Company
• 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 Thursday, January 28, 2016, beginning at 8:30 a.m. Central Time by dialing 1-888-317-6003. The confirmation code for the call is 4509810.  A replay of the call will be available until midnight Central Time on February 4, 2016 by dialing 1-877-344-7529. The confirmation code for the replay is 10077982.  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 "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. 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. Since the presentation of these GAAP performance measures and their impact differ between companies, 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 included as tables at the end of this release.  Refer to press release supplemental table for this reconciliation.

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, 2014, and in other documents subsequently filed by the Company with the Securities and Exchange Commission, available at the SEC's website, http://www.sec.gov, and the Company's website, http://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.  Factors that could cause or contribute to such differences include, but are not limited to: the level of market volatility, our ability to execute our growth strategy, including the availability of future bank acquisition opportunities, our ability to execute on our revenue and efficiency improvement initiatives, unanticipated losses related to the completion and integration of mergers and acquisitions, refinements to purchase accounting adjustments for acquired businesses and assets and assumed liabilities in these transactions, adjustments of fair values of acquired assets and assumed liabilities and of deferred taxes in acquisitions, actual results deviating from the Company's current estimates and assumptions of timing and amounts of cash flows, credit risk of our customers, resolution of assets subject to loss share agreements with the FDIC within the coverage periods, effects of the on-going correction in residential real estate prices and  levels of home sales, our ability to satisfy new capital and liquidity standards such as those imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act and those adopted by the Basel Committee on Banking Supervision and federal banking regulators, sufficiency of our allowance for loan losses, changes in interest rates, access to funding sources, reliance on the services of executive management, competition for loans, deposits and investment dollars, competition from competitors with greater financial resources than the Company, reputational risk and social factors, changes in government regulations and legislation, increases in FDIC insurance assessments, geographic concentration of our markets, economic and business conditions in our markets or nationally, including the impact of volatility of oil and gas prices, rapid changes in the financial services industry, significant litigation, cyber-security risks including dependence on our operational, technological, and organizational systems and infrastructure and those of third party providers of those services, hurricanes and other adverse weather events, and valuation of intangible assets. All information in this discussion 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE IBERIABANK Corporation