Lafayette, La.-based IBERIABANK Corp. on Dec. 20 entered into an agreement with the FDIC for an early termination of its 12 loss-share agreements with the agency.
The loss-share agreements were entered into between 2009 and 2011 and relate to the FDIC-assisted transactions involving Birmingham, Ala.-based CapitalSouth Bank, Sarasota, Fla.-based Century Bank A FSB, and Naples, Fla.-based Orion Bank in 2009; Lantana, Fla.-based Sterling Bank in 2010; and Georgia Commerce Bank's acquisitions of Woodstock, Ga.-based CreekSide Bank, and Cumming, Ga.-based Patriot Bank of Georgia in 2011. IBERIABANK acquired Atlanta-based Georgia Commerce in 2015.
The FDIC made a $6.5 million net payment to the company as consideration for the early termination of the loss-share agreements.
The termination is expected to result in immediate earnings improvement beginning in the first quarter of 2017, company President and CEO Daryl Byrd stated in a news release. "[W]e estimate this transaction will have an earn-back period of less than 20 months and result in an internal rate of return in excess of 40%," Byrd said. In addition, IBERIABANK Corp. expects to record a non-core, after-tax charge of approximately $11.2 million, or 26 cents per fully diluted common share, during the fourth quarter. This stems primarily from the net of the write-offs of the remaining FDIC indemnification asset and net loss-share receivable and the payment received from the FDIC, net of expenses.
As of Sept. 30, the FDIC indemnification asset was $24.4 million, the net loss share receivable was $3.7 million, while assets covered under loss-share agreements included $202.2 million in loans and $900,000 in other real estate owned. Assets that were previously covered under the loss-share agreements will be reclassified as non-covered acquired loans at Dec. 31.