LAFAYETTE, La., Oct. 4, 2017 /PRNewswire/ -- IBERIABANK
Corporation (NASDAQ: IBKC), holding Company of the 130-year-old
IBERIABANK (www.iberiabank.com), provides updates on a number of
key topics, including the impact of recent Hurricanes Harvey and
Irma, the previously disclosed Department of Housing and Urban
Development ("HUD") lawsuit, its energy portfolio, and Sabadell
United Bank acquisition costs.
Daryl G. Byrd, President and
Chief Executive Officer of IBERIABANK Corporation, commented, "In
order to provide greater transparency into a number of key issues
impacting this quarter's financial results, we are disclosing
preliminary information on the massive weather events that recently
impacted our region, an update on the HUD lawsuit, a brief update
on the resolution of our energy portfolio, and details regarding
our merger and severance-related expenses for the Sabadell
acquisition."
Byrd continued, "As always, we want to keep our shareholders
abreast of the changing dynamics of the matters that affect our
business."
Hurricanes Harvey and Irma
Hurricane Harvey made landfall on August 25,
2017, and stalled over the greater Houston area for several days producing record
amounts of rainfall that led to catastrophic flooding.
IBERIABANK operates eight branches in the greater Houston area and has $2.6 billion in total loan commitments with
$1.7 billion in loans
outstanding.
Hurricane Irma made initial landfall in the Florida Keys and a
second landfall just south of Naples,
Florida, as a Category 4 hurricane on September 10, 2017, and proceeded northward along
the western side of the Florida Peninsula. As a result
of localized flooding, high wind gusts and the interruption of
power services, IBERIABANK operations were impacted for a short
period of time. IBERIABANK, including the recent acquisition
of Sabadell United Bank, has $9.1
billion in total loan commitments with $7.7 billion in loans outstanding in Florida.
IBERIABANK (including acquired Sabadell United Bank locations)
suffered minimal damage and incremental expense related to its
physical infrastructure as a result of these storms. All
IBERIABANK offices have returned to normal business
operations. A decline in business activity is expected
in the short term; however, long-term activity could benefit as a
result of rebuilding efforts. IBERIABANK's expectation is
that deposit volumes and business economic activity may increase
beyond historical norms as the recovery process begins based on
experience from Hurricanes Katrina and Rita along with the major
flooding event in south central Louisiana in August
2016.
Based on initial assessments of the potential credit impact,
IBERIABANK expects to accrue $8.5
million of incremental provision for credit losses tied to
these two named storms during the third quarter of 2017.
U. S. Department of Housing and Urban Development / Department
of Justice Legal Matter
In the third quarter of 2016, the Company disclosed that it had
been served with a subpoena from the Department of Housing and
Urban Development's Office of Inspector General pertaining to its
origination and quality control practices for loans insured by the
Federal Housing Administration. The Company learned earlier
this year that it was a defendant in a qui tam lawsuit filed in a
United States District Court in Arkansas brought by two former associates of
IBERIABANK Mortgage Company. When the Company concluded a
probable loss was reasonably estimable, it disclosed in the second
quarter of 2017 a potential exposure between $6 million to $17 million. At that time,
the Company accrued $6 million.
The Company has recently negotiated a settlement amount
of $11.7 million that counsel for the United States are recommending for
approval by the appropriate government decision makers, which
remains subject to final review and approval by the Department of
Justice. The Company expects to accrue the remaining $5.7 million for this matter in the third quarter
of 2017. The Company hopes to fully resolve this matter by the end
of October 2017. As previously
disclosed, the Company plans to pursue insurance coverage.
Energy Portfolio Update
Significant progress on the resolution of non-accruals in the
energy portfolio occurred during the third quarter of 2017.
Several of the remaining energy companies with non-accrual loans
outstanding were successful in negotiating pre-packaged
bankruptcies. As a result of these pre-packaged
bankruptcies, $17.0 million of
energy-related loan net charge-offs are expected during the
third quarter of 2017. Of the $17.0
million, $7.8 million had been
previously provided for in prior quarters with $9.2 million expected to be provided for during
the third quarter. The $9.2
million in expected charge-offs is at the lower-end of the
previously provided range of $10 million to
$15 million potentially required to resolve troubled
energy-related credits.
The expected impact is as follows:
- A decline in energy-related non-accrual loans of $32.6 million, or 34%;
- Energy-related non-accrual loan portfolio balance of
$62.4 million;
- Remaining allowance for credit losses on energy-related
non-accrual loans equal to $13.4
million; and,
- The allowance for credit losses to non-performing asset ratio
for energy-related loans equal to 21.5%.
The remaining $62.4 million of the
non-accrual energy-related loan portfolio consists of 10 credits,
which the Company believes is adequately collateralized and has
appropriate reserves. The Company does not expect to have
additional provisioning tied to the remaining energy-related loan
portfolio. In addition, no material impact is currently expected to
the clients within the energy-related loan portfolio from
Hurricanes Harvey and Irma.
On an overall basis for the legacy IBERIABANK portfolio, net
charge-offs for the third quarter, inclusive of the additional
energy-related loan charge-offs mentioned above and a
$6 million charge-off for a single
non-energy commercial credit, are not expected to exceed
$29 million. Consolidated
provision for credit losses in the third quarter is expected
to be $19 million.
Sabadell United Bank Acquisition Merger-Related Expenses
As previously announced, IBERIABANK Corporation acquired Sabadell
United Bank on July 31, 2017.
For the three month period ended September
30, 2017, IBERIABANK Corporation expects to report merger
and severance-related expenses of $30
million and branch closure expenses of $3 million.
The Company will provide its comprehensive earnings release as
previously announced after the market closes on October 19, 2017, with a scheduled conference
call to discuss results of the third quarter on October 20, 2017 at 8:30am
Central Time.
IBERIABANK Corporation
IBERIABANK Corporation is a
financial holding Company with 335 combined offices, including 228
bank branch offices and one loan production office in Louisiana, Arkansas, Tennessee, Alabama, Texas, Florida, Georgia, and South
Carolina, 24 title insurance offices in Arkansas and Louisiana, and mortgage representatives in 68
locations in 10 states. The Company has 13 locations with
representatives of IBERIA Wealth
Advisors in four states, and one IBERIA Capital Partners, L.L.C. office in
New Orleans.
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, 2016, 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. 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.
View original
content:http://www.prnewswire.com/news-releases/iberiabank-corporation-provides-updates-on-key-topics-hurricanes-harvey-and-irma-hud-lawsuit-energy-portfolio-and-sabadell-united-bank-acquisition-related-expense-300531451.html
SOURCE IBERIABANK Corporation