Safe and Sound

Iberiabank

Lafayette, LA
4
Star Rating
Iberiabank is a Lafayette, LA-based, FDIC-insured bank that opened its doors in 1887. The bank holds equity of $3.61 billion on assets of $27.82 billion, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 3,295 full-time employees in 217 offices in multiple states, the bank currently holds loans and leases worth $20.08 billion, including $14.41 billion worth of real estate loans. The bank currently holds $21.64 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Iberiabank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is valuable. It works as a bulwark against losses and affords protection for accountholders when a bank is experiencing financial trouble. When looking at safety and soundness, more capital is preferred.

On our test to measure capital adequacy, Iberiabank received a score of 8 out of a possible 30 points, coming in below the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Iberiabank's Tier 1 capital ratio was 10.86 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, Iberiabank held equity amounting to 12.97 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these types of assets could eventually be required to use capital to absorb losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and increasing the risk of a future failure.

Iberiabank scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.75 percent of Iberiabank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Iberiabank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's test of earnings, Iberiabank scored 10 out of a possible 30, less than the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. Iberiabank's most recent annualized quarterly return on equity was 5.29 percent, below the national average of 8.10 percent.

The bank earned net income of $160.2 million on total equity of $3.61 billion for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.66 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.