IberiaBank to take $32 million hit on loans

IberiaBank Corp.’s stock dipped 3.6 percent Monday after the company announced its first-quarter earnings will take a $32 million pre-tax hit related to loans acquired along with failed financial institutions.

The Lafayette company’s shares closed at $48.67, down $1.82.

IberiaBank said the charge amounts to 70 cents per share on an after-tax basis. Stock analysts surveyed by Thomson Reuters had predicted IberiaBank would earn 79 cents per share during the first quarter.

IberiaBank acquired CapitalSouth Bank in Alabama and Orion Bank and Century Bank FSB, both in Florida, in 2009 and Sterling Bank in Florida in 2010, along with $1.9 billion in loans. IberiaBank’s losses on those loans are limited by Federal Deposit Insurance Corp.-loss-sharing agreements.

In general, the FDIC covers 80 percent of losses up to a certain level, and the agreements also limit the time the FDIC will make those payments.

Part of the problem, IberiaBank President and Chief Executive Officer Daryl G. Byrd said, is that the failed banks’ customers have unexpectedly begun paying their mortgages on time.

As a result, the FDIC’s payments to IberiaBank have been lower than originally expected, Byrd said. Byrd’s comments came during a Monday conference call with investors and analysts.

FDIC spokesman David Barr said the payments under loss-sharing agreements vary from bank to bank and loan to loan.

Overall, the FDIC’s actual losses on those loans has been lower than the agency’s initial projections, Barr said.

Byrd said the bank acquisitions have been a huge positive for IberiaBank, generating “bargain purchase gains” of $243 million, or $7.60 per share after taxes.

Another plus is that the losses from the failed banks’ loans are $310 million less than originally estimated, Byrd said.

However, there have been unforeseen complications with the loans, including the “unexpected timely payments,” he said. The returns on the loans have also been hampered by delays in property foreclosures.

Slower-than-expected bulk sales of the loans are also affecting the bank’s cash flow, according to IberiaBank.

As a result of those developments and the improving economy, IberiaBank reviewed the FDIC-related loans. The review shows the balance of the FDIC-related assets is around $285 million.

IberiaBank said it expects to collect $127 million of that from the FDIC, $126 million from customers over the normal life of the mortgages and $31 million from other bank-owned real estate, which consists largely of foreclosed properties.

IberiaBank plans to release its first-quarter results on April 25 after the markets close. It has a conference call set for April 26.