UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
Commission File Number 0-25756
IBERIABANK Corporation
(Exact name of registrant as specified in its charter)
Louisiana 72-1280718
------------ ---------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1101 East Admiral Doyle Drive
New Iberia, Louisiana 70560
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (337) 267-4458
Securities registered pursuant of Section 12(b) of the Act: Not Applicable
Securities registered pursuant of Section 12(g) of the Act
Common Stock (par value $1.00 per share)
----------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant of
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [ ]
As of March 14, 2002, the aggregate market value of the 5,658,936
shares of Common Stock of the Registrant issued and outstanding on such date,
which excludes 336,224 shares held by all directors and executive officers of
the Registrant as a group, was approximately $191.6 million. This figure is
based on the closing sale price of $33.850 per share of the Registrant's Common
Stock on March 14, 2002.
Number of shares of Common Stock outstanding as of March 14, 2002: 5,995,160
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents incorporated by reference and
the Part of the Form 10-K into which the document is incorporated: (1) portions
of the Annual Report to Stockholders for the fiscal year ended December 31, 2001
are incorporated into Part II, Items 5 through 8 of this Form 10-K; (2) portions
of the definitive proxy statement for the 2002 Annual Meeting of Stockholders to
be filed within 120 days of Registrant's fiscal year end are incorporated into
Part III, Items 9 through 13 of this Form 10-K.
PART 1.
Item 1. Business.
General
IBERIABANK Corporation, formerly ISB Financial Corporation (the
"Company"), is the bank holding company for IBERIABANK, a Louisiana chartered
commercial bank (the "Bank"). The only significant assets of the Company are the
capital stock of the Bank, the Company's loan to an employee stock ownership
plan and cash. To date, the business of the Company has consisted of the
business of the Bank. The Company's common stock trades on the NASDAQ Stock
Market under the symbol "IBKC." At December 31, 2001, the Company had total
assets of $1.4 billion, total deposits of $1.2 billion and shareholders' equity
of $134.4 million.
The Bank conducts business from its main office located in New Iberia,
Louisiana and 42 branch offices located in New Iberia, Lafayette, Jeanerette,
Morgan City, Crowley, Rayne, Kaplan, St. Martinville, Abbeville, Scott,
Carencro, Ruston, Monroe, West Monroe, Gretna, Marrero, River Ridge, New
Orleans, and Metairie, all of which are in Louisiana. The Bank's deposits are
insured by the Federal Deposit Insurance Corporation ("FDIC"), within applicable
limits.
The Company is primarily engaged in attracting deposits from the
general public and using those funds to originate loans. Previous to 1996, the
Company's primary lending emphasis was loans secured by first and second liens
on single-family (one-to-four units) residences located in the Company's primary
market area. At December 31, 2001, such loans amounted to $198.4 million, or
20.8% of the Company's gross loan portfolio. The Company's emphasis is on the
origination of consumer, commercial real estate and commercial business loans.
Consumer loans consist of home equity loans, home equity lines of credit,
automobile loans, indirect automobile loans, loans secured by deposit accounts
and other consumer loans. At December 31, 2001, $405.9 million, or 42.5%, of the
Company's gross loans were consumer loans. Of that amount $220.7 million, or
23.1% of gross loans, were indirect automobile loans. Commercial loans consist
of commercial real estate loans and commercial business loans. At December 31,
2001, $228.3 million, or 23.9% of gross loans, were secured by commercial real
estate and $117.5 million, or 12.3%, were commercial business loans. The Company
also originates loans for the purpose of constructing residential 1-4 family
units. At December 31, 2001, $5.9 million, or 0.6% of the Company's loans, were
construction loans.
The Bank offers discount brokerage services through its wholly owned
subsidiary, Iberia Financial Services, LLC. The brokerage services are provided
through ProEquities, Inc.
In January 2001, the Bank formed a new company, IBERIABANK Insurance
Services, LLC to provide insurance services to its clients. The new company is a
joint venture between the Bank and Burch, Marcus, Pool, Krupp, Daniel and
Babineaux, a local insurance agency and one of Louisiana's largest agent-owned
independent insurance agencies.
The Company, as a bank holding company, is subject to regulation and
supervision by the Board of Governors of the Federal Reserve System ("FRB"). The
Bank is subject to examination and comprehensive regulation by the Office of
Financial Institutions of the State of Louisiana ("OFI"), which is the Bank's
chartering authority and primary regulator. The Bank is also subject to
regulation by the FDIC and to certain reserve requirements established by the
FRB. The Bank is a member of the Federal Home Loan Bank ("FHLB") of Dallas,
which is one of the 12 regional banks comprising the FHLB System.
In addition to its deposit gathering and lending activities, the
Company invests in mortgage-backed securities, substantially all of which are
issued or guaranteed by U.S. Government agencies and government sponsored
enterprises, as well as U.S. Treasury and federal government agency obligations
and other investment securities. At December 31, 2001, the Company's investment
securities totaled $321.9 million, or 22.6% of total assets. Mortgage-backed
securities amounted to $181.2 million, or 12.7% of total assets, U.S. government
and federal agency securities amounted to $69.0 million, or 4.8% of total
assets, asset-backed securities amounted to $25.8 million, or 1.8% of total
assets, state and municipal securities amounted to $21.0 million, or 1.5% of
total assets and other securities amounted to $24.9 million, or 1.8% of total
assets. A total of $219.8 million, or 68.3% of total investment securities, were
classified as available for sale at December 31, 2001.
2
Lending Activities
Loan Portfolio Composition. The following table sets forth the
composition of the Company's loans held in portfolio at the dates indicated. (1)
December 31,
-----------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
------------------- ------------------ -------------------- -------------------- ------------------
(dollars in thousands) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
- ------------------------------------------------------------- --------------------- -------- ---------------------------------------
Mortgage loans:
Residential 1-4 family $ 198,403 20.75% $ 279,193 29.68% $ 266,161 31.58% $ 299,987 39.05% $ 370,055 56.06%
Construction 5,915 0.62 7,482 0.80 6,381 0.76 7,402 0.96 7,890 1.20
--------- ------ ---------- ------ --------- ------ --------- ------ --------- ------
Total mortgage loans 204,318 21.37 286,675 30.48 272,542 32.34 307,389 40.01 377,945 57.26
--------- ------ ---------- ------ --------- ------ --------- ------ --------- ------
Commercial loans:
Real estate 228,284 23.88 196,479 20.89 157,248 18.65 117,768 15.33 50,462 7.64
Business 117,530 12.29 78,986 8.40 82,485 9.79 83,237 10.83 57,620 8.73
--------- ------ ---------- ------ --------- ------ --------- ------ --------- ------
Total commercial loans 345,814 36.17 275,465 29.29 239,733 28.44 201,005 26.16 108,082 16.37
--------- ------ ---------- ------ --------- ------ --------- ------ --------- ------
Consumer loans:
Indirect automobile 220,698 23.09 205,143 21.81 179,350 21.28 118,529 15.43 94,282 14.28
Home equity 114,056 11.93 108,070 11.49 91,531 10.86 73,185 9.53 34,192 5.18
Automobile 28,793 3.01 25,297 2.69 23,432 2.78 24,631 3.21 9,434 1.43
Credit card 10,403 1.09 9,559 1.02 6,436 0.76 4,584 0.60 4,150 0.63
Other 31,933 3.34 30,316 3.22 29,854 3.54 38,912 5.06 31,978 4.85
--------- ------ ---------- ------ --------- ------ --------- ------ --------- ------
Total consumer loans 405,883 42.46 378,385 40.23 330,603 39.22 259,841 33.83 174,036 26.37
--------- ------ ---------- ------ --------- ------ --------- ------ --------- ------
Total loans receivable $ 956,015 100.00% $ 940,525 100.00% $ 842,878 100.00% $ 768,235 100.00% $ 660,063 100.00%
========= ====== ========== ====== ========= ====== ========= ====== ========= ======
____________
(1) This schedule does not include loans held for sale of $15.9 million, $3.3
million, $4.8 million, $18.4 million and $4.4 million at December 31, 2001,
2000, 1999, 1998 and 1997, respectively.
3
Contractual Maturities. The following table sets forth the scheduled
contractual maturities of the Company's loans held to maturity at December 31,
2001. Demand loans, loans having no stated schedule of repayments and no stated
maturity and overdraft loans are reported as due in one year or less. The
amounts shown for each period do not take into account loan prepayments and
normal amortization of the Company's loan portfolio held to maturity.
Commercial
---------------------------
(dollars in thousands) Construction Real Estate Business Total
- ------------------------------------------------------------------------------------------------
Amounts due in:
One year or less $ -- $ 59,547 $ 58,609 $118,156
After one year through five years -- 134,684 43,319 178,003
After five years 5,915 34,053 15,602 55,570
-------- -------- -------- --------
Total $ 5,915 $228,284 $117,530 $351,729
======== ======== ======== ========
Interest rate terms on amounts
Due after one year:
Fixed rate $ 5,005 $127,350 $ 40,026 $172,381
Adjustable rate 910 41,387 18,895 61,192
-------- -------- -------- --------
Total $ 5,915 $168,737 $ 58,921 $233,573
======== ======== ======== ========
Scheduled contractual amortization of loans does not reflect the
expected term of the Company's loan portfolio. The average life of loans is
substantially less than their contractual terms because of prepayments.
The lending activities of the Company are subject to written
underwriting standards established by the Board of Directors and management. The
Company provides centralized underwriting of all residential mortgage,
construction and consumer loans. The commercial credit department, in
conjunction with senior lending personnel, ensures appropriate underwriting of
all commercial business and commercial real estate loans. Established loan
origination procedures include obtaining appropriate documentation, such as
credit reports. For loans secured by real property, the Company generally
requires property appraisals, title insurance or a title opinion, hazard
insurance and flood insurance, where appropriate.
Residential 1-4 Family Loans. Substantially all of the Company's
residential 1-4 family mortgage loans consist of conventional loans. The vast
majority of the Company's residential 1-4 family mortgage loan portfolio is
secured by properties located in its market area and are originated under terms
and documentation which permit their sale in the secondary market. Since 1996,
the Company has decided to sell, or hold for sale in the secondary market, the
majority of all conforming fixed rate loan originations and retain adjustable
rate loan originations in its portfolio.
At December 31, 2001, $97.1 million, or 47.5%, of the Company's
residential 1-4 family mortgage and construction loans were fixed rate loans and
$107.2 million, or 52.5%, were adjustable rate loans.
Commercial Real Estate Loans. The Company has increased its investment
in commercial real estate loans from $50.5 million, or 7.6% of the total loan
portfolio, as of December 31, 1997, to $228.3 million, or 23.9% of the total
loan portfolio, as of December 31, 2001. The increase in commercial real estate
loans reflects, in part, the Company's focused efforts to originate such loans
in its market area. The Company intends to continue to expand its involvement in
commercial real estate lending and to increase moderately the amount of such
loans in the Company's portfolio. The properties securing the Company's
commercial real estate loans are generally located in the Company's market area,
and include strip shopping centers, professional office buildings, small retail
establishments and warehouses. As of December 31, 2001, the Company's largest
commercial real estate loan had a balance of $7.4 million. The loan is secured
by real estate in the Company's market area and is performing in accordance with
its terms.
4
The Company's commercial real estate loans may bear a variable interest
rate based upon the Prime Rate, as quoted in The Wall Street Journal, or may
bear a fixed rate of interest. Generally, interest rates are fixed for no more
than three years. Fees of 50 basis points to 2% of the principal loan balance
are generally charged to the borrower upon closing. The Company's underwriting
standards generally provide for loan terms of three to five years, with
amortization schedules of no more than twenty years. Loan-to-value ratios are
generally limited to no more than 80%. As a rule, the Company obtains personal
guarantees of the principals as additional security for any commercial real
estate loan.
Commercial Business Loans. The Company originates commercial business
loans on a secured and, to a lesser extent, unsecured basis. As of December 31,
2001, the Company's commercial business loans amounted to $117.5 million, or
12.3% of the Company's gross loan portfolio. The Company's commercial business
loans may be structured as term loans or revolving lines of credit. Term loans
are generally structured with terms of no more than three to five years, with
amortization schedules of no more than seven years. The Company's commercial
business term loans are generally secured by equipment, machinery, real property
or other corporate assets. The Company also provides for revolving lines of
credit generally structured as advances upon perfected security interests in
accounts receivable and inventory. Revolving lines of credit generally have an
annual maturity. As a rule, the Company obtains personal guarantees of the
principals as additional security for any commercial business loan. The interest
rates on commercial business loans may be either fixed for the term of the loan
or variable. Variable rates are generally based upon the Prime Rate of interest,
as quoted in the Wall Street Journal. As of December 31, 2001, the Company's
largest commercial business loan had a principal balance of $7.1 million. The
loan has performed in accordance with its terms since origination.
Commercial real estate and commercial business loans generally have
higher yields and shorter repayment periods than residential 1-4 family loans.
Consumer Loans. The Company offers consumer loans in order to provide a
full range of retail financial services to its customers. At December 31, 2001,
$405.9 million, or 42.5% of the Company's total loan portfolio, was comprised of
consumer loans. The Company originates substantially all of such loans in its
primary market area.
The largest component of the Company's consumer loan portfolio consists
of indirect automobile loans. These loans are originated by the automobile
dealerships and applications are facsimiled to Company personnel for approval or
denial. The Company relies on the dealerships, in part, for loan qualifying
information. To that extent, there is risk inherent in indirect automobile loans
apart from the ability of the consumer to repay the loan, that being fraud
perpetrated by the automobile dealership. To limit its exposure, the Company
emphasizes dealing with automobile dealerships which have demonstrated reputable
behavior. At December 31, 2001, $220.7 million, or 23.1% of the Company's total
loan portfolio, were indirect automobile loans.
At December 31, 2001, the Company's remaining consumer loan portfolio
was comprised of home equity loans, educational loans, loans secured by deposits
at the Company, direct automobile loans, credit card loans and other consumer
loans. At December 31, 2001, $114.1 million, or 11.9% of the Company's total
loan portfolio, were home equity loans. At December 31, 2001, the Company's
direct automobile loans amounted to $28.8 million, or 3.0% of the Company's
total loan portfolio. The Company's VISA and MasterCard credit card loans
totaled $10.4 million, or 1.1% of the Company's total loan portfolio at such
date. The Company's other personal consumer loans amounted to $31.9 million, or
3.3% of the Company's total loan portfolio at December 31, 2001. See Note 4 to
the Consolidated Financial Statements for more information.
Asset Quality
General. All loans of the Company are periodically reviewed through a
loan review process. The Company utilizes an asset classification system as part
of its efforts to improve commercial asset quality. Commercial loans with
adverse classifications are reviewed by the Loan Committee of the Board of
Directors on at least a quarterly basis.
The Company monitors the payment performance on all loans and late
charges are assessed on past due accounts. A centralized department collects
delinquent consumer, residential mortgage and construction loans. Every effort
is made to minimize any potential loss, including instituting legal proceedings,
as necessary.
5
Loans are placed on nonaccrual status when, in the judgment of
management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual. When a loan is placed on nonaccrual
status, previously accrued but unpaid interest is deducted from interest income.
See Note 4 of the Notes to Consolidated Financial Statements.
Real estate acquired by the Company as a result of foreclosure or by
deed-in-lieu of foreclosure are classified as real estate owned until sold, and
are carried at the balance of the loan at the time of acquisition or at
estimated fair value less estimated costs to sell, whichever is less.
Under Generally Accepted Accounting Principles, the Company is required
to account for certain loan modifications or restructurings as "troubled debt
restructurings." In general, the modification or restructuring of a debt
constitutes a troubled debt restructuring if the Company for economic or legal
reasons related to the borrower's financial difficulties grants a concession to
the borrower that the Company would not otherwise consider under current market
conditions. Debt restructurings or loan modifications for a borrower do not
necessarily always constitute troubled debt restructurings, however, and
troubled debt restructurings do not necessarily result in nonaccrual loans. The
Company had no troubled debt restructuring as of December 31, 2001. See the
table below under "Nonperforming Assets and Troubled Debt Restructurings."
At December 31, 2001, impaired loans amounted to $5.6 million, a
decrease of 4.6% from December 31, 2000. The valuation allowance related to
these loans was $1.3 million at December 31, 2001.
Nonperforming Assets and Troubled Debt Restructurings. The following
table sets forth information relating to the Company's nonperforming assets and
troubled debt restructurings at the dates indicated.
December 31,
------------------------------------------------------------
(dollars in thousands) 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------
Nonaccrual loans:
Commercial, financial and agricultural $ 4,088 $ 5,169 $ 1,293 $ 259 $ 30
Mortgage 122 137 208 481 1,698
Loans to individuals 1,053 161 429 439 419
------- ------- ------- ------- -------
Total nonaccrual loans 5,263 5,467 1,930 1,179 2,147
Accruing loans 90 days or more past due 1,691 2,074 1,203 4,558 3
------- ------- ------- ------- -------
Total nonperforming loans (1) 6,954 7,541 3,133 5,737 2,150
Foreclosed property 6,009 421 185 384 473
------- ------- ------- ------- -------
Total nonperforming assets (1) 12,963 7,962 3,318 6,121 2,623
Performing troubled debt restructurings -- -- -- -- --
------- ------- ------- ------- -------
Total nonperforming assets and
Troubled debt restructurings (1) $12,963 $ 7,962 $ 3,318 $ 6,121 $ 2,623
======= ======= ======= ======= =======
Nonperforming loans to total loans (1) 0.73% 0.80% 0.37% 0.75% 0.33%
Nonperforming assets to total assets (1) 0.91% 0.57% 0.24% 0.44% 0.28%
Nonperforming assets and troubled
debt restructurings to total assets (1) 0.91% 0.57% 0.24% 0.44% 0.28%
- ----------------
(1) Nonperforming loans and assets include accruing loans 90 days or more past
due.
Other Classified Assets. Federal regulations require that the Company
classify its commercial assets on a regular basis. In addition, in connection
with examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them. There are three
classifications for problem assets: "substandard," "doubtful" and "loss."
Substandard assets have one or more defined weaknesses and are characterized by
6
the distinct possibility that the insured institution will sustain some loss if
the deficiencies are not corrected. Doubtful assets have the weaknesses of
substandard assets with the additional characteristic that the weaknesses make
collection or liquidation in full, on the basis of currently existing facts,
conditions and values questionable, and there is a high possibility of loss. An
asset classified loss is considered uncollectible and of such little value that
continuance as an asset of the institution is not warranted.
At December 31, 2001, the Company had $5.1 million of assets classified
substandard, $262,000 of assets classified doubtful, and no assets classified
loss. At such date, the aggregate of the Company's classified assets amounted to
0.38% of total assets.
Allowance For Loan Losses. The Company's policy is to establish
reserves for estimated losses on delinquent loans when it determines that losses
are expected to be incurred on such loans and leases. The allowance for losses
on loans is maintained at a level believed adequate by management to absorb
potential losses in the portfolio. Management's determination of the adequacy of
the allowance is based on an evaluation of the portfolio, past loss experience,
current economic conditions, volume, growth, composition of the portfolio and
other relevant factors. The allowance is increased by provisions for loan
losses, which are charged against income. As shown in the table below, at
December 31, 2001, the Company's allowance for loan losses amounted to 159.9%
and 1.2% of the Company's nonperforming loans and gross loans receivable,
respectively.
The following table sets forth the activity in the Company's allowance
for loan losses during the periods indicated.
Year Ended December 31,
-------------------------------------------------------------------
(dollars in thousands) 2001 2000 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
Allowance at beginning of period $ 10,239 $ 8,749 $ 7,135 $ 5,258 $ 4,615
Allowance from acquisition -- -- -- 1,392 --
Provisions 5,046 3,861 2,836 903 1,097
Charge-offs:
Commercial, financial and agricultural 1,861 1,174 140 43 191
Mortgage 15 37 71 2 50
Loans to individuals 2,797 1,654 1,460 818 562
-------- -------- -------- -------- --------
Total charge-offs 4,673 2,865 1,671 863 803
-------- -------- -------- -------- --------
Recoveries:
Commercial, financial and agricultural 110 52 86 175 55
Mortgage 17 22 37 36 79
Loans to individuals 378 420 326 234 215
-------- -------- -------- -------- --------
Total recoveries 505 494 449 445 349
-------- -------- -------- -------- --------
Net charge-offs (4,168) (2,371) (1,222) (418) (454)
-------- -------- -------- -------- --------
Allowance at end of period $ 11,117 $ 10,239 $ 8,749 $ 7,135 $ 5,258
======== ======== ======== ======== ========
Allowance for loan losses to total
loans at end of period 1.16% 1.09% 1.04% 0.93% 0.80%
Net charge-offs to average loans 0.44% 0.26% 0.15% 0.06% 0.07%
Management of the Company presently believes that its allowance for
loan losses is adequate to cover any potential losses in the Company's loan
portfolio. However, future adjustments to this allowance may be necessary, and
the Company's results of operations could be adversely affected if circumstances
differ substantially from the assumptions used by management in making its
determinations in this regard.
7
The following table presents the allocation of the allowance for loan
losses to the total amount of loans in each category listed at the dates
indicated.
December 31,
-------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
-----------------------------------------------------------------------------------------------
(dollars in thousands) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial, financial
and agricultural $ 5,066 36% $ 4,152 29% $ 3,484 29% $ 2,714 26% $ 1,921 17%
Real estate - mortgage 555 21 763 30 773 31 1,303 39 1,589 56
Real estate - construction 17 1 21 1 18 1 32 1 38 1
Loans to individuals 5,000 42 4,616 40 3,828 39 2,412 34 1,710 26
Unallocated 479 N/A 687 N/A 646 N/A 674 N/A -- N/A
------- --- ------- --- ------- --- ------- --- ------- ---
Total allowance for loan losses $11,117 100% $10,239 100% $ 8,749 100% $ 7,135 100% $ 5,258 100%
======= === ======= === ======= === ======= === ======= ===
8
Investment Securities
The Company's investment securities consist primarily of securities
issued by the U.S. Government and federal agency obligations and mortgage-backed
securities. As of December 31, 2001, the Company's investment securities
available for sale amounted to $219.8 million, which includes a pre-tax net
unrealized gain of $1.1 million, and its investment securities held to maturity
amounted to $102.1 million with a pre-tax net unrealized gain of $34,000. At
such date, investment securities available for sale consisted of $126.6 million
of mortgage-backed securities, $34.8 million of U.S. Government and Federal
agency obligations, and $38.5 million of other debt securities. The remaining
balance of $19.9 million was composed of U.S. treasury securities, obligations
of state and political subdivisions and other marketable equity securities. At
December 31, 2001, investment securities held to maturity consisted of $54.6
million of mortgage-backed securities and $34.2 million of U.S. Government and
Federal agency obligations. The remaining balance of $13.3 million was primarily
composed of obligations of state and political subdivisions. See Note 3 to the
Consolidated Financial Statements.
The Company attempts to maintain a high degree of liquidity in its
investment securities portfolio and generally does not invest in securities with
terms exceeding five years. The following table sets forth information regarding
the Company's investment securities at the dates indicated. The weighted average
yield is not calculated on a taxable equivalent basis.
December 31, 2001
--------------------------------------------------------
Securities Available Securities Held to
for Sale Maturity
------------------------- -------------------------
Weighted
Average Amortized Fair Amortized Fair
(dollars in thousands) Yield Cost Value Cost Value
- ---------------------------------------------------------------------------------------------------------
Within one year or less 6.29% $ 5,849 $ 5,959 $ 50 $ 50
One through five years 5.04 54,243 55,012 34,248 33,815
After five through ten years 5.03 57,765 57,775 1,195 1,093
Over ten years 5.46 93,747 94,007 66,589 67,158
Marketable equity securities 3.75 7,084 7,072 -- --
---- -------- -------- -------- --------
Totals 5.24% $218,688 $219,825 $102,082 $102,116
==== ======== ======== ======== ========
Sources of Funds
General. The Company's principal source of funds for use in lending and
for other general business purposes has traditionally come from deposits
obtained through the Company's branch offices. The Company also derives funds
from short-term and long-term borrowings, amortization and prepayments of
outstanding loans and mortgage-related securities, and from maturing investment
securities. Loan repayments are a relatively stable source of funds, while
deposit inflows and outflows are significantly influenced by general interest
rates and money market conditions.
Deposits. The Company's current deposit products include savings
accounts, NOW accounts, MMDA, certificates of deposit ranging in terms from 30
days to seven years and noninterest-bearing personal and business checking
accounts. The Company's deposit products also include certificates for
Individual Retirement Accounts ("IRA") and qualified retirement plans.
Deposits are obtained primarily from residents in its primary market
area. The Company attracts local deposit accounts by offering a wide variety of
accounts, competitive interest rates, and convenient branch office locations and
service hours. The acquisition of Bank of Lafayette in 1996 helped the Company
double its market share in the greater Lafayette market. The acquisition of
Jefferson Federal Saving Bank in 1996 established the Company in a new market,
the greater New Orleans area. The purchase of 17 branches from First Commerce
Corp. subsidiaries in September of 1998 helped the Company gain the number two
market share in the greater Lafayette market and established the Company, with a
9
number two market share, in a new market, the greater Monroe area. The Company
utilizes traditional marketing methods to attract new customers and savings
deposits, including print and broadcast advertising and increased calling
efforts. However, the Company does not solicit funds through deposit brokers nor
does it pay any brokerage fees if it accepts such deposits. The Company
participates in several ATM networks, including Cirrus, Pulse, Maestro, VISA and
MasterCard.
The Company has been competitive in the types of accounts and in
interest rates it has offered on its deposit products but does not necessarily
seek to match the highest rates paid by competing institutions. With the
significant decline in interest rates paid on deposit products, the Company in
prior years has experienced disintermediation of deposits into competing
investment products. Also, in prior years, the Company experienced runoff of
some of the higher priced deposits assumed in the acquisitions as it was
unwilling to pay up to retain the deposits. In the year 2001, the Company's
deposits grew by $94.2 million, or 8.2%. The increase in deposits continues to
reflect relatively balanced growth across all markets and deposit categories.
The Company believes it to be the result of several factors including the
development of customer relationships, opportunities in the public funds arena
and clients shifting out of equity markets. Additional information regarding
deposits is provided in Note 7 to the Consolidated Financial Statements.
The following table sets forth certain information relating to the
Company's deposits at the dates indicated.
December 31,
------------------------------------------------------------------------------
2001 2000 1999
------------------------------------------------------------------------------
Average Average Average
Average Rate Average Rate Average Rate
(dollars in thousands) Balance Paid Balance Paid Balance Paid
- -------------------------------------------------------------------------------------------------------------------------
NOW account deposits $ 207,851 1.67% $ 179,746 1.98% $ 192,528 1.94%
Savings and money market accounts 291,009 2.68 251,834 3.53 218,624 2.40
Certificates of deposit 572,532 5.39 575,828 5.58 618,582 5.10
---------- ---------- ----------
Total interest bearing deposits 1,071,392 3.93 1,007,408 4.42 1,029,734 3.93
Noninterest-bearing demand deposits 140,393 0.00 121,494 0.00 116,097 0.00
---------- ---------- ----------
Total deposits $1,211,785 3.48% $1,128,902 3.95% $1,145,831 3.53%
========== ========== ==========
The following table shows large-denomination ($100,000 and over)
certificates of deposit by remaining maturities.
December 31,
-----------------------------------
(dollars in thousands) 2001 2000 1999
- -------------------------------------------------------------------
Certificates of deposit:
3 months or less $ 46,846 $ 18,431 $ 23,963
Over 3-12 months 73,735 88,419 69,885
Over 12-36 months 25,134 31,120 28,982
More than 36 months 8,233 3,120 1,708
-------- -------- --------
Total $153,948 $141,090 $124,538
======== ======== ========
10
Borrowings. The Company may obtain advances from the FHLB of Dallas
upon the security of the common stock it owns in that bank and certain of its
residential mortgage loans and securities held to maturity, provided certain
standards related to creditworthiness have been met. Such advances are made
pursuant to several credit programs, each of which has its own interest rate and
range of maturities.
The Company's short-term borrowings at December 31, 2001 were comprised
of $8.1 million of securities sold under agreements to repurchase and $4.2
million outstanding on a $15.0 million line of credit with a correspondent bank.
The weighted average rate on short-term borrowings was 2.57% at December 31,
2001. The average amount of short-term borrowings in 2001 was $13.5 million. See
Note 8 to the Consolidated Financial Statements.
At December 31, 2001, the Company's long-term borrowings were comprised
of fixed rate advances from the FHLB of Dallas. Long-term borrowings decreased
$29.4 million, or 48.3%, to $31.4 million at December 31, 2001 compared to $60.8
million at December 31, 2000. The Union Planters Bank line of credit, which
amounted to $9.2 million at the end of the year 2000, was paid off during 2001.
The remaining debt, which is composed of FHLB long-term advances, cannot be paid
off without incurring substantial prepayment penalties. Normal amortization
payments on this debt accounted for the remaining decrease. See Note 9 to the
Consolidated Financial Statements.
Segments
The Company has evaluated its potential operating segments against the
criteria specified in Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information, and has
determined that no operating segment disclosures are required in 2001, 2000 or
1999 because of the aggregation concepts in the statement.
Subsidiaries
The Bank has only one active, wholly owned subsidiary, Iberia Financial
Services, LLC. ("Iberia Services"). At December 31, 2001, the Bank's equity
investment in Iberia Services was $1.9 million, and Iberia Services had total
assets of $1.9 million. For the years ended December 31, 2001 and 2000, Iberia
Services had total revenues of $709,000 and $1.0 million, respectively, and net
income of $142,000 and $294,000, respectively. See Note 1 to the Consolidated
Financial Statements. The business of Iberia Services consists of acting as a
broker for the sale of annuities and certain other securities to the general
public.
Competition
The Company faces strong competition both in attracting deposits and
originating loans. Its most direct competition for deposits has historically
come from other commercial banks, savings institutions and credit unions located
in its market areas, including many large financial institutions that have
greater financial and marketing resources available to them. In addition, during
times of high interest rates, the Company has faced additional significant
competition for investors' funds from short-term money market securities, mutual
funds and other corporate and government securities. The ability of the Company
to attract and retain savings deposits depends on its ability to generally
provide a rate of return, liquidity and risk comparable to that offered by
competing investment opportunities.
The Company experiences strong competition for loan originations
principally from other commercial banks, savings institutions and mortgage
banking companies. The Company competes for loans principally through the
interest rates and loan fees it charges, the efficiency and quality of services
it provides borrowers and the convenient locations of its branch office network.
Competition may increase as a result of the continuing reduction of restrictions
on the interstate operations of financial institutions.
11
Employees
The Company had 417 full-time employees and 75 part-time employees as
of December 31, 2001. None of these employees is represented by a collective
bargaining agreement. The Company believes that it enjoys excellent relations
with its personnel.
Supervision and Regulation
General. The banking industry is extensively regulated under both
federal and state law. The Company is subject to regulation under the Bank
Holding Company Act of 1956 ("BHCA") and to supervision by the FRB. The BHCA
requires the Company to obtain the prior approval of the FRB for bank and
non-bank acquisitions and prescribes certain limitations in connection with
acquisitions and the non-banking activities of the Company. The Company is
subject to regulation and examination by the OFI and by the FDIC and also
subject to certain requirements established by the FRB.
The banking industry is affected by the monetary and fiscal policies of
the FRB. An important function of the FRB is to regulate the national supply of
bank credit to moderate recessions and to curb inflation. Among the instruments
of monetary policy used by the FRB to implement its objectives are: open-market
operations in U.S. Government securities, changes in the discount rate and the
federal funds rate (which is the rate banks charge each other for overnight
borrowings) and changes in reserve requirements on bank deposits.
Financial Modernization Legislation. The Gramm-Leach-Bliley Act of 1999
(the "GLB Act") includes a number of provisions intended to modernize and to
increase competition in the American financial services industry, including
authority for bank holding companies to engage in a wider range of nonbanking
activities. Under the GLB Act, a bank holding company that elects to become a
financial holding company may engage in any activity that the FRB, in
consultation with the Secretary of the Treasury, determines by regulation or
order is (i) financial in nature, (ii) incidental to any such financial
activity, or (iii) complementary to any such financial activity and does not
pose a substantial risk to the safety or soundness of depository institutions or
the financial system generally. The GLB Act specifies certain activities that
are deemed to be financial in nature, including lending, exchanging,
transferring, investing for others, or safeguarding money or securities;
underwriting and selling insurance; providing financial, investment, or economic
advisory services; underwriting, dealing in or making a market in, securities;
and any activity currently permitted for bank holding companies by the FRB. A
bank holding company may elect to be treated as a financial holding company only
if all depository institution subsidiaries of the holding company are and
continue to be well-capitalized and well-managed and have at least a
satisfactory rating under the Community Reinvestment Act.
National banks and state banks with requisite investment authority
under applicable state law are also authorized by the GLB Act to engage, through
"financial subsidiaries," in any activity that is permissible for a financial
holding company (as described above) and any activity that the Secretary of the
Treasury, in consultation with the FRB, determines is financial in nature or
incidental to any such financial activity, except (i) insurance underwriting,
(ii) real estate development or real estate investment activities (unless
otherwise permitted by law), (iii) insurance company portfolio investments and
(iv) merchant banking. The authority of a bank to invest in a financial
subsidiary is subject to a number of conditions, including, among other things,
requirements that the bank must be well-managed and well-capitalized (after
deducting from capital the bank's outstanding investments in financial
subsidiaries).
The GLB Act also adopts a number of consumer protections, including
provisions intended to protect privacy of bank customers' financial information
and provisions requiring disclosure of ATM fees imposed by banks on customers of
other banks.
At this time, the Company has not determined whether it will become a
financial holding company in order to utilize the expanded powers offered by the
GLB Act. The Bank believes that the GLB Act's financial subsidiary provisions
and consumer protections have not had a material impact on its operations.
12
Federal Taxation
The Company and the Bank are subject to the generally applicable
corporate tax provisions of the Internal Revenue Code (the "Code"), and the Bank
is subject to certain additional provisions of the Code which apply to financial
institutions. The Company, the Bank and all subsidiaries file a consolidated
federal income tax return on the basis of a fiscal year ending on December 31.
Retained earnings at December 31, 2001 and 2000 included approximately
$14.8 million accumulated prior to January 1, 1987 for which no provision for
federal income taxes has been made. If this portion of retained earnings is used
in the future for any purpose other than to absorb bad debts, it will be added
to future taxable income.
The net deferred tax asset at December 31, 2001 includes $10,060,000 of
future deductible temporary differences. Included is $9,051,000 related to book
deductions for the bad debt reserve that have not been deducted for tax
purposes.
State Taxation
Louisiana does not permit the filing of consolidated income tax
returns. The Company is subject to the Louisiana Corporation Income Tax based on
its separate Louisiana taxable income, as well as a corporate franchise tax. The
Bank is not subject to the Louisiana income or franchise taxes. However, the
Bank is subject to the Louisiana Shares Tax which is imposed on the assessed
value of its stock. The formula for deriving the assessed value is to calculate
15% of the sum of (a) 20% of the Company's capitalized earnings, plus (b) 80% of
the Company's taxable stockholders' equity, and to subtract from that figure 50%
of the Company's real and personal property assessment. Various items may also
be subtracted in calculating a company's capitalized earnings. The Louisiana
shares tax expense is included in noninterest expenses.
Item 2. Properties.
The Company, through IBERIABANK, operates 42 offices in 3 areas of
Louisiana. A total of 25 offices are owned and 17 are leased. During 2001, one
facility in Gretna was sold. The Company felt it was in its best interest to
dispose of the facility and lease back the portion necessary for the Bank. A
gain of $251,000 was recognized on the sale of this property in 2001.
The Company and the Bank consider all facilities, both owned and
leased, to be suitable and adequate for their intended purposes.
Item 3. Legal Proceedings.
The Company is subject to certain claims and litigation arising in the
ordinary course of business. In the opinion of management, after consultation
with legal counsel, the ultimate disposition of these matters is not expected to
have a material effect on the consolidated financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers
Set forth below is information with respect to the executive officers
of the Company and principal occupations and positions held for periods
including the last five years.
13
DARYL G. BYRD, age 47, serves as President and Chief Executive Officer
of the Company and the Bank. He has served in this capacity since July 1999,
with the exception of Chief Executive Officer of the Company to which position
he was promoted in July 2000. Prior to joining the Company, Mr. Byrd was
President and Chief Executive Officer of Bank One New Orleans Region from 1998
to 1999. Mr. Byrd was Executive Vice President of First Commerce Corporation in
charge of the commercial bank and mortgage banking groups from 1992 to 1998.
MICHAEL J. BROWN, age 38, serves as Senior Executive Vice President and
Chief Credit Officer of the Company and the Bank, positions he has held since
January 2001. Mr. Brown also serves as New Orleans Market President and
Commercial Segment Leader for the Bank. Mr. Brown was hired as Executive Vice
President in December 1999. Prior to joining the Company, Mr. Brown served in
several senior roles with Bank One Louisiana, including Chief Credit Officer
from 1998 to 1999. From 1996 to 1998, Mr. Brown served as Senior Vice President,
Manager of Credit and Client Services of First Commerce Corporation. Mr. Brown
is also a Chartered Financial Analyst.
JOHN R. DAVIS, age 41, serves as Senior Executive Vice President of
Finance and Retail Strategy of the Company and the Bank, positions he has held
since January 2001. Mr. Davis was hired as Executive Vice President and Chief
Strategic Officer in December 1999. Prior to joining the Company, Mr. Davis
served as Corporate Senior Vice President of Crestar Financial Corporation of
Virginia from 1997 to June 1999. From 1993 to 1997, Mr. Davis served as Senior
Vice President of First Commerce Corporation. Mr. Davis is also a Chartered
Financial Analyst.
GEORGE J. BECKER III, age 61, serves as Executive Vice President of
Corporate Operations and Corporate Secretary of the Company and the Bank,
positions he has held since March 2002. Mr. Becker was hired as Executive Vice
President and Northeast Louisiana Market President in December 1999. Prior to
joining the Company, Mr. Becker worked on special projects for Bank One
Corporation from 1998 to 1999. From 1991 to 1998, Mr. Becker served as Senior
Vice President of First Commerce Corporation. Mr. Becker is also a Certified
Public Accountant.
MARILYN W. BURCH, age 51, serves as Executive Vice President and Chief
Financial Officer of the Company and the Bank, positions she has held since
January 2001. Ms. Burch was hired as Senior Vice President and Controller in
October 1999. Prior to joining the Company, Ms. Burch served as Sr. Vice
President and Controller of First National Bank of Lafayette, a subsidiary of
First Commerce Corporation, from 1985 to 1997. Ms. Burch is also a Certified
Public Accountant.
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The information required herein, to the extent applicable, is
incorporated by reference on the inside back cover page of the Registrant's 2001
Annual Report to Stockholders (the "Annual Report").
Item 6. Selected Financial Data.
The information required herein is incorporated by reference from pages
16 and 17 of the Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The information required herein is incorporated by reference from pages
18 through 32 of the Annual Report.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
The information required herein is incorporated by reference from pages
29 through 31 of the Annual Report.
14
Item 8. Financial Statements and Supplementary Data.
The information required herein is incorporated by reference from pages
33 through 60 of the Annual Report.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
Not Applicable.
PART III.
Item 10. Directors and Executive Officers of the Registrant.
The information required herein is incorporated by reference from the
Registrant's definitive proxy statement for the 2002 Annual Meeting of
Stockholders (the "Proxy Statement").
Item 11. Executive Compensation.
The information required herein is incorporated by reference from the
Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required herein is incorporated by reference from the
Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
The information required herein is incorporated by reference from the
Proxy Statement.
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Documents Filed as Part of this Report.
(1) The following financial statements are incorporated by reference
from Item 8 hereof (see Exhibit No. 13):
Report of Independent Auditors.
Consolidated Balance Sheets as of December 31, 2001 and 2000.
Consolidated Statements of Income for the Years Ended December 31,
2001, 2000 and 1999.
Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 2001, 2000 and 1999.
Consolidated Statements of Cash Flows for the Years Ended December
31, 2001, 2000 and 1999.
Notes to Consolidated Financial Statements.
(2) All schedules for which provision is made in the applicable
accounting regulation of the SEC are omitted because of the
absence of conditions under which they are required or because the
required information is included in the consolidated financial
statements and related notes thereto.
(3) The following exhibits are filed as part of this Form 10-K, and
this list includes the Exhibit Index.
15
Exhibit Index
Exhibit No. 3.1 Articles of Incorporation, as amended.
Exhibit No. 3.2 Bylaws of the Company, as amended - incorporated herein by reference to Exhibit 3.1
to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2001.
Exhibit No. 4.1 Stock Certificate - incorporated herein by reference to Registration Statement on
Form S-8 (File No. 33-93210).
Exhibit No. 10.1 Employee Stock Ownership Plan - incorporated herein by reference to Registration
Statement on Form S-1 (File No. 33-96598).
Exhibit No. 10.2 Profit Sharing Plan and Trust - incorporated herein by reference to Registration
Statement on Form S-8 (File No. 33-93210).
Exhibit No. 10.3 Employment Agreement with Larrey G. Mouton - incorporated herein by reference to
Exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.
Exhibit No. 10.4 Employment Agreement with Daryl G. Byrd, as amended and restated.
Exhibit No. 10.5 Indemnification Agreements with Daryl G. Byrd and Michael J. Brown - incorporated
herein by reference to Exhibit 10.5 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.
Exhibit No. 10.6 Severance Agreement with Michael J. Brown and John R. Davis - incorporated herein by
reference to Exhibit 10.6 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.
Exhibit No. 10.7 Severance Agreement with Marilyn W. Burch and George J. Becker III - incorporated
herein by reference to Exhibit 10.7 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.
Exhibit No. 10.8 1996 Stock Option Plan - incorporated herein by reference to Exhibit 10.1 to
Registration Statement on Form S-8 (File No. 333-28859).
Exhibit No. 10.9 1999 Stock Option Plan - incorporated herein by reference to Registrant's definitive
proxy statement dated March 19, 1999.
Exhibit No. 10.10 Recognition and Retention Plan - incorporated herein by reference to Registrant's
definitive proxy statement dated April 16, 1996.
Exhibit No. 10.11 Supplemental Stock Option Plan - incorporated herein by reference to Exhibit 10.10 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31,
1999.
Exhibit No. 10.12 2001 Incentive Compensation Plan - incorporated herein by reference to Exhibit 10.1
to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2001.
Exhibit No. 13 2001 Annual Report to Stockholders - Except for those portions of the Annual Report
to Stockholders for the year ended December 31, 2001, which are expressly
incorporated herein by reference, such Annual Report is furnished for the information
of the Commission and is not to be deemed "filed" as part of this Report.
Exhibit No. 21 Subsidiaries of the Registrant - reference is made to "Item 1. Business" for the
required information.
Exhibit No. 23 Consent of Castaing, Hussey & Lolan, LLC.
Exhibit No. 99 Audit Committee Charter - incorporated herein by reference to Registrant's definitive
proxy statement dated April 6, 2001.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
IBERIABANK CORPORATION
Date: March 29, 2002 By: /s/ Daryl G. Byrd
------------------
Daryl G. Byrd
President/CEO and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dated indicated.
Name Title Date
---- ----- ----
/s/ Daryl G. Byrd President, Chief Executive Officer and March 29, 2002
- ----------------- Director
Daryl G. Byrd
(Principal Executive Officer)
/s/ Marilyn W. Burch Executive Vice President and Chief Financial March 29, 2002
- -------------------- Officer
Marilyn W. Burch
(Principal Financial and Accounting
Officer)
/s/ Elaine D. Abell Director March 29, 2002
- -------------------
Elaine D. Abell
/s/ Harry V. Barton, Jr. Director March 29, 2002
- ------------------------
Harry V. Barton, Jr.
/s/ Ernest P. Breaux, Jr. Director March 29, 2002
- -------------------------
Ernest P. Breaux, Jr.
/s/ Cecil C. Broussard Director March 29, 2002
- ----------------------
Cecil C. Broussard
/s/ John N. Casbon Director March 29, 2002
- ------------------
John N. Casbon
/s/ William H. Fenstermaker Director March 29, 2002
- ---------------------------
William H. Fenstermaker
/s/ Larrey G. Mouton Director March 29, 2002
- --------------------
Larrey G. Mouton
/s/ Jefferson G. Parker Director March 29, 2002
- -----------------------
Jefferson G. Parker
/s/ E. Stewart Shea III Director March 29, 2002
- -----------------------
E. Stewart Shea III
17