A Louisiana banking company sees the worst rash of bank failures in two decades as fertile ground to expand well beyond the state line.
Two Florida banks recently acquired by Iberiabank Corp. may be only the start for the Lafayette-based company. Analysts say the takeovers _ which doubled Iberiabank's asset base _ will likely be emulated by other companies as smaller banks fail and megabanks reduce their loan exposure in states with real estate problems.
So far this year, there have been 123 U.S. bank closures.
"What you're going to have is a void of decent size banks that can loan," said Michael Rose, industry analyst for Raymond James.
On Nov. 13, after the Federal Deposit Insurance Corp. shuttered Naples, Fla.-based Orion Bank and Sarasota, Fla.-based Century Bank, Iberiabank assumed $3.1 billion in assets, $2.5 billion in loans and $2.5 billion in deposits, along with 34 banking offices in six Florida metropolitan areas. Loss-share agreement with the FDIC put the company's maximum exposure at $252 million. Overnight, the company with the Louisiana name became Florida's 20th-largest bank in deposits.
During a conference call with analysts after the takeover, Iberiabank chief executive Daryl Byrd said the "right time, price and risk structure" paved the way for his company to step into Florida.
"They got to grow about 45 percent overnight. In essence, the FDIC is going to pay them to clean up these banks. It's a low-risk proposition for shareholders," said Peyton Green, banking analyst with Sterne, Agee & Leach.
Rose said that despite recent crises with residential and commercial loans that helped sink Orion and Century Bank, Florida is likely to be a banking profit center after the recession, provided a company has capital and patience.
"Florida is a deposit-rich state," Rose said. "Demographic forecasts see larger numbers of people moving in. That could be a couple of years away, but it will be a good place to be if you are well capitalized and have good people in place."
The Florida deals, which did not require Iberiabank to raise additional capital, followed the Aug. 21 assumption of all the deposits and some of the assets of Birmingham, Ala.-based CapitalSouth Bank, which was closed by regulators. That brought 10 additional offices into the Iberiabank fold.
Established in 1887 as the Iberia Building Association, the company went public as ISB Financial Corp. in 1995 before becoming Iberiabank Corp. in 2000. Iberiabank broke out of its Louisiana roots in 2006 with the acquisition of two Arkansas banking companies _ Little Rock-based Pulaski Investment Corp. and Jonesboro-based Pocahontas Bancorp Inc.
Iberiabank now has 135 banking offices in Louisiana, Arkansas, Tennessee, Alabama, Texas and Florida, in addition to 26 title offices in Louisiana and Arkansas and mortgage representatives in 11 states.
In March, Iberiabank drew attention when it became the first bank to give back federal money from a program designed to stimulate lending during the credit crisis, saying the funding came with too many federal strings attached. The company took a $2.2 million charge to redeem preferred stock that had been issued to the U.S. Treasury in exchange for the $90 million.
Since then, 24 other U.S. banking companies have returned the money.
With $273.5 million from two stock offerings over the last year, Iberiabank is watchful for other acquisitions, though company officials have refused to speculate on specifics since the FDIC doles out assumptions on a bid basis.
Green said he expected more action to come from Iberiabank after settling into Florida.
"I think Iberiabank will continue," Green said. "It will be a temporary resting point until they get the people in place. But I think they will continue to be an active player."