Lafayette, Louisiana August 5, 2013 PUBLIC DISCLOSURE. August 5, 2013 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION

Transcription

1 Iberia CRA Public Evaluation Lafayette, Louisiana August 5, 2013 PUBLIC DISCLOSURE August 5, 2013 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION IBERIABANK RSSD ID NUMBER: Lafayette, Louisiana FEDERAL RESERVE BANK OF ATLANTA 1000 Peachtree Street, N.E. Atlanta, Georgia NOTE: This document is an evaluation of this institution s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of this institution. The rating assigned to the institution does not represent an analysis, conclusion or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution.

2 Table of Contents Institution Rating Institution Institution s CRA Rating Table of Performance Test Ratings. 1 Summary of Major Factors Supporting Rating Description of Institution Scope of Examination... 3 Conclusions With Respect to Performance Tests State of Louisiana Summary State Rating Scope of Examination Description of Operations 13 Conclusions With Respect to Performance Tests 13 New Orleans Metropolitan Area (Full Review) Description of Operations 16 Conclusions With Respect to Performance Tests 27 Lafayette Metropolitan Area (Full Review) Description of Operations 33 Conclusions With Respect to Performance Tests 42 Metropolitan Areas (Limited Review) Nonmetropolitan Areas (Limited Review) State of Arkansas Summary State Rating Scope of Examination.. 53 Description of Operations 53 Conclusions With Respect to Performance Tests 53 i

3 Table of Contents Little Rock Metropolitan Area (Full Review) Description of Operations 56 Conclusions With Respect to Performance Tests 64 Fayetteville Metropolitan Area (Full Review) Description of Operations 70 Conclusions With Respect to Performance Tests 78 Metropolitan Areas (Limited Review) Nonmetropolitan Areas (Limited Review) State of Florida Summary State Rating Scope of Examination Description of Operations 86 Conclusions With Respect to Performance Tests 86 Sarasota Metropolitan Area (Full Review) Description of Operations 89 Conclusions With Respect to Performance Tests 98 Naples Metropolitan Area (Full Review) Description of Operations 103 Conclusions With Respect to Performance Tests 112 Metropolitan Areas (Limited Review) Nonmetropolitan Areas (Limited Review) State of Alabama Summary State Rating Scope of Examination Description of Operations 120 Conclusions With Respect to Performance Tests 120 ii

4 Table of Contents State of Texas Birmingham Metropolitan Area (Full Review) Description of Operations 123 Conclusions With Respect to Performance Tests 131 Metropolitan Areas (Limited Review) Nonmetropolitan Areas (Limited Review) Summary State Rating Scope of Examination Description of Operations 140 Conclusions With Respect to Performance Tests 140 Houston Metropolitan Area (Full Review) State of Tennessee Appendices Summary Description of Operations 142 Conclusions With Respect to Performance Tests 151 State Rating Scope of Examination Description of Operations. 158 Conclusions With Respect to Performance Tests. 158 Memphis Metropolitan Area (Full Review) Description of Operations 160 Conclusions With Respect to Performance Tests 170 Appendix A: Scope of Examination. 175 Appendix B: Summary of State Ratings Appendix C: CRA Abbreviations and Definitions Appendix D: Glossary iii

5 Table of Contents Appendix E: General Information Appendix F: Institution Tables Appendix G: 2011 Full Scope Lending Tables Appendix H: 2012 Full Scope Lending Tables. 217 Appendix I: 2011 Limited Scope Tables Appendix J: 2012 Limited Scope Tables Appendix K: Qualified Investments and Contributions iv

6 Institution INSTITUTION'S CRA RATING: SATISFACTORY The following table indicates the performance level of IBERIABANK with respect to the lending, investment, and service tests. IBERIABANK PERFORMANCE LEVELS PERFORMANCE TESTS Lending Test* Investment Test Service Test Outstanding High Satisfactory X X X Low Satisfactory Needs to Improve Substantial Noncompliance *Note: The lending test is weighted more heavily than the investment and service tests when arriving at an overall rating. Major factors supporting the institution s rating include: The geographic distribution of loans reflects adequate penetration throughout the assessment areas; The distribution of HMDA 1 lending among borrowers reflects adequate penetration among customers of different income levels; The distribution of small business lending reflects adequate penetration among businesses of different revenue sizes; The bank makes a relatively high level of community development loans; The bank has a good level of qualified investments; Retail delivery systems are reasonably accessible to the bank s geographies and to individuals of different income levels in its assessment areas; The bank s record of opening and closing branches has not adversely affected the accessibility of its delivery systems, particularly in low- and moderate-income geographies and to low- and moderateincome individuals; and The bank provides an excellent level of community development services. 1 Home mortgage loans are reported by institutions on the Home Mortgage Disclosure Act (HMDA) Loan Application Register (LAR). The register includes home purchase, refinance, home improvement, and multi-family loans originated and purchased by the institution. 1

7 Institution DESCRIPTION OF INSTITUTION IBERIABANK is a multi-state commercial bank headquartered in Lafayette, Louisiana. The bank operates 182 branch offices in Alabama, Arkansas, Florida, Louisiana, Tennessee, and Texas. As of December 31, 2012, IBERIABANK had total assets of $13.1 billion. The bank received a Satisfactory rating at its previous evaluation dated June 13, No known legal impediments exist that would restrain the bank from meeting the credit needs of its assessment areas. For this examination, 27 assessment areas were reviewed. Total deposits for the 27 assessment areas as of June 30, 2012, were $9.4 billion. Descriptions of the full-scope assessment areas can be found in the applicable state sections of this report. Business Structure IBERIABANK Corporation, headquartered in Lafayette, Louisiana, is a one-bank, financial holding company with $13.1 billion in consolidated assets as of December 31, IBERIABANK Corporation is the parent company for IBERIABANK, which is a state member bank and a full-service provider of deposit, credit, trust, and investment services to a broad range of retail, business, and institutional clients. IBERIABANK operates and wholly owns a mortgage affiliate, IBERIABANK Mortgage, which is headquartered in Little Rock, Arkansas, and does the majority of the bank s HMDA lending. Other non-bank subsidiaries include: Lenders Title Company, a title insurance and closing services agency headquartered in Little Rock, Arkansas; IBERIA Wealth Advisors (IWA); and IBERIA Capital Partners, a corporate finance services firm in New Orleans. IBERIABANK Corporation is also the parent of IBERIA CDE, LLC, which was created for the purpose of investing in tax credits. IBERIABANK has more than doubled in size over the past five years primarily from the acquisition of problem banks (some via the Federal Deposit Insurance Corporation (FDIC) loss-share program). IBERIABANK s legacy loan portfolio did not experience the significant losses experienced by other banks that had concentrations in commercial real estate during the recent recession. The acquired banks were quickly integrated into IBERIABANK s operations, and a division was created to specifically manage the assets covered by the FDIC loss-share program. In 2011, IBERIABANK completed the merger with the company s IBERIABANKfsb subsidiary (with a presence in Arkansas and Tennessee) and completed the acquisitions of OMNI BANCSHARES, Inc., and Cameron Bancshares, Inc. In addition, the bank purchased certain assets of Florida Trust Company, a whollyowned subsidiary of the of Florida Corporation. In 2012, IBERIABANK acquired Florida Gulf Bancorp, Inc., and its wholly owned subsidiary, Florida Gulf, headquartered in Fort Myers, Florida. As a result of these acquisitions, the bank has significantly expanded its presence in Florida, and Louisiana, and added Tennessee and Arkansas to the geographic footprint. Credit Products and Loan Portfolio IBERIABANK offers a variety of consumer, residential real estate, and commercial loan products to fulfill the credit needs of the residents and businesses in its assessment areas. Consumer loan products include credit cards, personal lines of credit, installment loans, home equity loans, mortgage loans and auto loans. The bank also offers construction lending. Commercial loan products include loans and lines of credit, business credit cards, and real estate loans. IBERIABANK does not offer Small Business Administration (SBA) loans directly but has a partnership with an external vendor that allows the bank to refer customers across the bank s entire footprint for possible SBA loans. 2

8 Institution The following table shows the distribution of IBERIABANK s loan portfolio as of March 31, 2013, and December 31, 2012, and Loans secured by nonfarm, nonresidential real estate comprised the greatest percentage by dollar volume of IBERIABANK s loan portfolio each of the three years. The next highest volume by dollar amount was loans secured by one- to four-family dwellings, followed by commercial and industrial loans, loans to individuals, and construction and development loans. As the table depicts, small farm loans accounted for less than 1 percent of the bank s loan portfolio during the review period. COMPOSITION OF LOAN PORTFOLIO 3/31/ /31/ /31/2011 Loan Type $ (000s) Percent $ (000s) Percent $ (000s) Percent Construction and Development 565, % 554, % 559, % Secured by One- to Four- Family Dwellings 2,213, % 2,294, % 2,043, % Other Real Estate: Farmland 40, % 41, % 36, % Multifamily 216, % 222, % 194, % Nonfarm nonresidential 2,544, % 2,598, % 2,235, % Commercial and Industrial 2,176, % 2,124, % 1,713, % Loans to Individuals 610, % 559, % 458, % Agricultural Loans 15, % 16, % 19, % Total $8,381, % $8,412, % $7,260, % * This table does not include the entire loan portfolio. Specifically, it excludes loans to depository institutions, bankers acceptances, lease financing receivables, obligations of state and political subdivisions, and other loans that do not meet any other category. Contra assets are also not included in this table. SCOPE OF EXAMINATION All assessment areas for IBERIABANK were evaluated for lending, investment, and service performance. Fullscope reviews were conducted for 9 of the bank s 27 assessment areas. The assessment areas were selected for full-scope reviews based on the volume of lending, number of branches, percentage of total deposits, amount of community development activity, length of time since the last full-scope evaluation, and other nonfinancial considerations. The bank is an interstate bank; therefore, the scope of the evaluation includes a full-scope review of at least one assessment area in each state where the bank has offices. Arkansas and Tennessee were added to the bank s geographic footprint during the review period, so this is the first time the bank s performance in these states has been evaluated. Assessment areas receiving full-scope reviews were New Orleans and Lafayette in the state of Louisiana; Little Rock and Fayetteville in the state of Arkansas; Sarasota and Naples in the state of Florida; Birmingham in the state of Alabama; Houston, in the state of Texas; and Memphis, in the state of Tennessee. The remaining assessment areas received limited-scope reviews. The state of Louisiana had the greatest number of branches and largest concentration of lending and deposit activity. Therefore, performance in Louisiana had the greatest weight in determining the overall rating for the institution, followed by the remaining states in the order in which they are presented in the evaluation. Within each state, the full-scope assessment areas are presented in the order of their relative weight on the performance rating for that state. A description of each full-scope assessment area is included in the applicable assessment area sections of this report. Examination Review Period and Products Reviewed The lending test performance was based upon loan data for the period January 1, 2011, through December 31, HMDA-reportable loans and CRA-reportable small business loans were the major products included in the evaluation. HMDA loans from both IBERIABANK and IBERIABANK Mortgage were considered for the lending analysis. CRA-reportable small farm loans and HMDA-reportable multi-family loans were generally not considered in the overall assessment due to limited activity and volume. Additionally, the analysis did not include other types of consumer loans, credit cards, or commercial loans. 3

9 Institution Community development loans and investments funded by the bank from January 1, 2011, through March 31, 2013, were reviewed for the lending and investment tests. In addition, the bank s community development services for the same time period were evaluated for the service test. Examination Analysis The evaluation of the bank s record of lending in the individual assessment areas includes the use of and comparison to demographic characteristics. The primary sources for the demographic information are the 2000 and 2010 U.S. Census and Dunn & Bradstreet data. Demographic characteristics of a particular assessment area are useful in analyzing the bank s record of lending since they provide a means of estimating loan demand and identifying lending opportunities. To understand small business loan demand, self-reported data of revenue size and geographical location from business entities are collected and published by Dunn & Bradstreet. The demographic data should not be construed as defining an expected level of lending in a particular area or to a particular group of borrowers. In addition to demographic data, general housing and economic conditions are also considered in order to understand the bank s performance context and to evaluate the bank appropriately. Loans are evaluated to determine the lending activity inside the bank s assessment area. In addition, loans inside the assessment area are evaluated using the geographic and borrower income distribution for each assessment area. The bank s geographic distribution with respect to HMDA loans is assessed by comparing the percentage of loans made in each geography type (low-, moderate-, middle-, and upper-income) to the percentage of owner-occupied units in each geography type. Small business loans are compared to the percentage of small businesses within each geographic income category. The bank s borrower income distribution with respect to HMDA loans is assessed by comparing the percentage of loans made to borrowers in each income category (low-, moderate-, middle-, and upper-income) to the percentage of families in each income category. The bank s borrower income distribution with respect to small business loans is assessed by comparing the percentage of loans made to businesses in each revenue category (less than or equal to $1 million or greater than $1 million) to the percentage of total businesses in each revenue category. The bank s lending performance is also compared to the performance of aggregate lenders. Aggregate lenders include all lenders required to report HMDA and CRA data within the respective assessment areas. The bank s market share of deposits and lending is discussed to provide an understanding of how IBERIABANK ranks within the respective assessment areas. Community development activities were reviewed to determine if they have community development as a primary purpose and meet the geographic requirements of the regulation. Qualified community development activities were analyzed from both the quantitative and qualitative perspectives to understand the volume of activity impacting a particular assessment area, the innovativeness of those activities and their responsiveness to local community development and credit needs. When appropriate, peer comparisons were conducted using annualized performance metrics to gauge the relative performance of the institution in a particular assessment area. In order to understand community development and community credit needs in the respective assessment areas, several sources are used. These sources include contacts with community representatives familiar with affordable housing and/or small business and community development; review of publically accessible data; and analysis of documents and plans that describe the community development environment in local markets. The community contacts are located throughout the bank s assessment areas and include representatives of community-based organizations, municipalities, and quasi-government agencies. 4

10 Institution Certain comments concerning the local economies were consistent throughout the assessment areas. The recent recession has had a major impact on many of the bank s assessment areas leading to job losses and foreclosures. Community contacts agreed that the recovery was underway in most markets but the lingering effects of the housing and economic crisis were still evident, particularly in low- and moderate-income communities. Many contacts also noted that the jobs lost during the recession were being replaced by new jobs in lower wage sectors. Therefore, despite the recovery, many lower-income households are still struggling. Based on discussions with the community contacts, common needs identified in all assessment areas that could provide opportunities for bank participation included affordable housing, small business lending, and investment in community development organizations, financial education, and household financial stability. 5

11 Institution CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS Lending Test IBERIABANK s overall lending test rating is High Satisfactory. The overall lending performance is good in four states (Alabama, Arkansas, Louisiana, and Texas) while performance is adequate in two states (Florida and Tennessee). The bank s geographic distribution of loans reflects adequate distribution throughout the assessment areas. The bank s penetration of loans among borrowers of different income levels and businesses of different sizes is adequate. The bank made a relatively high level of community development loans during the review period. References are made throughout the report to IBERIABANK s lending distribution by geography and borrower income, as described in the preceding section. Detailed information about the bank s HMDA- and CRAreportable loans in the full scope assessment areas can be found in Appendices G and H while details of lending in limited scope assessment areas can be found in Appendices I-J. In some assessment area and product discussions, specific numbers are quoted from these tables to support relevant points; otherwise, general references are made comparing performance and the reader should refer to the tables for specific data. The following table summarizes IBERIABANK s lending activity from January 1, 2011, through December 31, As shown, the bank originated more HMDA loans than small business loans by number during the review period so HMDA loans were weighted more heavily in deriving the final lending ratings. In addition, the bank s overall lending activity increased by almost 40 percent between 2011 and While loans in both 2011 and 2012 were evaluated, due to the bank s significant growth and expansion over the review period, the bank s performance in 2012 was weighted slightly more than the performance in 2011 in determining the final lending rating. A breakdown of the bank s lending activity for 2011 and 2012 can be found in Appendix F. Detailed information about the bank s lending activity can be found in the state sections of this report. Summary of Lending Activity Loan Type # % $(000s) % Total Consumer related Home Improvement 1, $17, Home Purchase 8, $582, Multi-Family Housing $53, Refinancing 7, $558, Total HMDA related 16, $1,212, Small Business 5, $534, Total Small Business related 5, $534, Small Farm $19, Total Small Farm related $19,135 1 TO TAL LO ANS 23, $1,765, IBERIABANK offers several programs with the specific purpose of helping to meet housing-related needs of low- and moderate-income individuals and communities. Notably, the bank created the IBERIABANK Subsidy Program in 2012 to provide up to $4,000 in down payment or closing cost assistance for the purchase or refinance of loans for low- and moderate-income borrowers. The bank has pledged to provide up to $1.0 million in assistance over the next three years. The bank also created a new home improvement loan product, which is an unsecured loan that can be used for improving or renovating a borrower s primary residence. The product was designed to assist homeowners who lacked the equity in their homes to secure a traditional home improvement loan to complete needed home improvements or repairs. In addition, IBERIABANK leverages 6

12 Institution funding from the Federal Home Loan of Dallas to provide additional down payment and closing cost assistance grants and subsidized financing for affordable housing projects. Finally, across the bank s entire footprint, mortgage lenders originate loans utilizing many different down payment assistance and other subsidy programs for low- and moderate borrowers. All of these actions contributed to the increase in the bank s lending to low- and moderate-income borrowers during the review period. The table below shows the distribution of IBERIABANK s lending inside and outside its assessment area. Affiliate loan data, in accordance with the CRA, is not included in the assessment area concentration performance review. IBERIABANK originated a substantial majority of its loans within its assessment areas, reflecting excellent assessment area penetration. Lending Inside and Outside the Assessment Area Loan Types Inside Outside # % $(000s) % # % $(000s) % Home Improvement 1, % $29, % % $5, % Home Purchase - Conventional % $166, % % $48, % Home Purchase - FHA % $22, % 0 0.0% $0 0.0% Home Purchase - VA % $2, % 0 0.0% $0 0.0% Multi-Family Housing % $104, % % $25, % Refinancing 1, % $291, % % $51, % Total HMDA related 3, % $617, % % $130, % Small Business 5, % $1,043, % % $181, % Total Small Bus. related 5, % $1,043, % % $181, % Small Farm % $32, % % $5, % Total Small Farm related % $32, % % $5, % TOTAL LOANS 9, % $1,694, % 1, % $318, % Note: Affiliate loans not included Geographic Distribution and Distribution by Borrower Income and Business Revenue Size The overall geographic distribution of HMDA and small business lending reflects adequate penetration in lowand moderate-income geographies. Two of the nine full-scope assessment areas are considered good, five are considered adequate, and two are considered poor for overall geographic distribution. The overall distribution among borrowers of different income levels and businesses of different sizes is adequate. Eight of the nine fullscope assessment areas are considered adequate and one is considered poor for borrower distribution. 7

13 Institution Community Development Lending IBERIABANK made a high level of community development loans during the review period. The bank originated or renewed 81 community development loans totaling more than $258.3 million during the review period. The largest concentration of community development loans by state was in Louisiana with $118.5 million, accounting for nearly 46 percent of bank-wide community development lending. The performance in Louisiana was driven by the amount of community development lending in the New Orleans assessment area. Texas accounted for approximately 16 percent of the Loan Purpose Affordable Housing Community Services Economic Development Revitalize & Stabilize Total # $('000s) 101,793 65,358 7,403 83, ,338 community development lending, followed by Arkansas, and Florida with about 15 percent each of the activity. The community development loans originated or renewed during the evaluation period were for a variety of purposes, including the financing of affordable housing for low- and moderate-income individuals; promoting economic development by financing small businesses that resulted in job creation and/or retention; revitalizing and/or stabilizing targeted low- and moderate-income census tracts or other qualified geographies; and community services targeted to low- and moderate-income individuals. During the review period, the bank provided over $22 million in financing to support the development of 3 Low Income Housing Tax Credit (LIHTC) projects providing over 230 units of new affordable housing for low- and moderate-income individuals. Investment Test IBERIABANK s investment performance is rated High Satisfactory based on the overall level of qualified community development investments and contributions provided in the various assessment areas and across the bank s footprint. Specifically, the bank s performance is excellent in one state (Louisiana), while performance is good in three states (Alabama, Arkansas, and Texas), and adequate in two states (Florida and Tennessee). By assessment area, the bank had excellent performance in one full-scope assessment area while performance was good in five full-scope assessment areas, and adequate in three full-scope assessment areas. IBERIABANK had qualified investments totaling approximately $97.2 million within its assessment areas, including $57.1 million in investments made during the review period. Most of the bank s investments (by dollar) support affordable housing through the purchase of securities backed by government-guaranteed mortgages to qualified low- and moderate-income borrowers. The bank also invested in several Low-Income Housing Tax Credit (LIHTC) projects that provide affordable rental housing primarily for individuals earning less than 60 percent of the area median income. Finally, the bank provided support for community revitalization and stabilization by purchasing New Market Tax Investment Purpose # $('000s) Affordable Housing 271 $57,637 Community Services 0 $0 Economic Development 1 $1,000 Revitalize & Stabilize 10 $38,554 Total 282 $97,191 Credits which provided equity capital for projects in low- and moderate-income communities or designated disaster areas. The bank was very involved with recovery efforts in New Orleans and across the Gulf Coast 8

14 Institution after Hurricane Katrina, and through the NMTC program, invested over $38.6 million in equity capital for projects that helped stabilize and revitalize low-income communities and those that were impacted by the hurricane. IBERIABANK made 591 qualified grants totaling $2.5 million to organizations with a purpose of community development within the assessment areas. The majority of the donations provided support for organizations engaged in community Contribution Purpose Affordable Housing # 221 $('000s) $910 services for low- and moderate-income individuals or Community Services 341 $1,457 communities, including but not limited to financial counseling; youth and family programs; education and charter schools; emergency assistance including food and housing; job training; and mental health services. The bank also provided significant financial support for affordable housing, including almost $650,000 in mortgage grants through the IBERIABANK Subsidy Program to help low- and moderate-income borrowers Economic Development Revitalize & Stabilize Total $122 $23 $2,512 with downpayment and closing cost assistance. The grants were provided in partnership with nonprofit organizations in the local communities. A summary of the bank s investments and contributions can be found in Appendix K; additional detail regarding specific investments and contributions can be found in the state and full-scope assessment area sections. Service Test IBERIABANK s performance under the service test is rated High Satisfactory. IBERIABANK s performance is considered good in four states (Arkansas, Florida, Louisiana, and Tennessee) and adequate in two states (Alabama and Texas). Under the service test, both retail and community development services are considered. During the review period, the bank expanded its geographic coverage significantly and added a number of new branches. Therefore, retail services were weighted slightly more than community development services in developing the final service test rating. Specific details of the service performance are discussed in the respective full scope assessment area sections of this report. Retail Services Retail delivery systems are reasonably accessible to geographies and individuals of different income levels. During the exam period of January 1, 2011, through December 31, 2012, IBERIABANK opened 20 de novo branches, including 5 new branches within low- and moderate-income census tracts. The bank closed 17 branches and relocated 5 branches; 4 of the branches closed were in moderate-income census tracts. Three of the closures in moderate-income tracts were the result of the bank s exit from the Jacksonville, Florida market. A specific listing of the branches opened or closed during the period may be obtained by accessing IBERIABANK s CRA public file, which is available at any IBERIABANK branch. IBERIABANK s record of opening and closing of branches has not adversely affected the accessibility of banking services to low- and moderate-income geographies. In addition, banking services and business hours do not vary in a way that inconveniences any portion of IBERIABANK s assessment areas, particularly lowand moderate-income geographies and individuals. The bank does not offer weekend or extended hours in many markets but in those where extended hours are offered, they are also offered at some branches in low- and moderate-income geographies. Branches located in low-income census tracts are in New Orleans market only; however, in the Little Rock and Sarasota assessment areas, the bank has a relatively high number of branches in moderate-income geographies. 9

15 Institution In an effort to expand access to retail banking services, IBERIABANK offers several retail products to meet the financial needs of lower-income customers and small businesses. For instance, the bank offers free business banking and a free checking account for consumers with a low opening deposit requirement assuming the client receives $500 in direct deposits each month. In addition, the bank introduced the IBERIABANK credit builder product during the examination period, which is a CD-secured loan to assist borrowers with little or no credit establish or improve their credit profile. The bank also participates in organized programs and other outreach efforts across its footprint to expand banking access to low- and moderate-income consumers. The geographic distribution of IBERIABANK s branches as of December 31, 2012, is found in the table below. This distribution is based on 2010 census tracts. The bank s branch distribution as of December 31, 2011, which is based on the 2000 census can be found in Appendix F. The bank s branch distribution changed during the review period due to branching activity and the realignment of census tracts as a result of the 2010 census. Specifically, the percentage of branches in moderate income census tracts increased from 7.6 percent to 17.6 percent of all branches, while the share of branches in middle-income census tracts declined from 49.1 percent to 39.6 percent. While branch distribution for both time frames was taken into account in the service test analysis, emphasis was placed on branch distribution as of December 31, Geographic Distribution of Branches & ATMS Branches ATMs Demographics Tract Category Community Development Services IBERIABANK provides an excellent level of community development services throughout its assessment areas with 10,030 hours of community development services through 345 service activities during the review period. Community development services were excellent in Arkansas, Florida, Louisiana, and Tennessee, and good in Alabama and Texas. IBERIABANK s directors, officers, and staff members are involved in numerous organizations and activities that promote or facilitate affordable housing for low- and moderate-income individuals, services for low- and moderate-income individuals, economic development, and revitalization of low- and moderate-income areas. representatives are also involved with financial education outreach efforts in every assessment area. Notably, board service hours represent the majority of service hours reported in most of the full scope assessment areas, indicating that the bank has an ongoing commitment to individual communities. Also, an IBERIABANK team provided extensive loss mitigation services to low- and moderate- Total Branches Extended end Census Tracts Week- Total ATMs Full Service ATMs Cash only ATMs Drive thrus O pen Closed Hours Hours O pen Closed O pen Closed # % # # # # # # % # % # # # % # # # % Low 3 1.6% Total 5 2.4% 4 2.1% % 0 0 DTO SA % Moderate % Total % % % 0 0 DTO SA Middle % Total % % % 0 2 DTO SA Upper % Total % % % 0 0 DTO SA Unknown 0 0.0% Total 0 0.0% 0 0.0% % 0 0 DTO SA Total % Total % % % 0 2 DTO SA Closed branches/atms are not included in the totals. SA = Stand Alone ATM; a subset of total ATMs DTO - Drive thru only is a subset of total branches % % % % 3, % 10

16 Institution income homebuyers facing foreclosure, primarily in Alabama, and Florida. Finally, several bank representatives provided hundreds of hours in technical assistance to nonprofit organizations, including a community development financial institution, and many hours of one-on-one credit and financial counseling for low- and moderate-income individuals. FAIR LENDING OR OTHER ILLEGAL CREDIT PRACTICES REVIEW Pursuant to 12 CFR (c) in determining a bank s CRA rating, the Federal Reserve System considers evidence of discriminatory or other illegal credit practices in any geography by the bank, or in any assessment area by an affiliate whose loans have been considered as a part of the bank s lending performance. The Federal Reserve of Atlanta did not identify evidence of discriminatory or other illegal credit practices with respect to this institution. Further, section 1025 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L ) assigns to the Consumer Financial Protection Bureau (CFPB) exclusive examination authority, and primary enforcement authority, to ensure compliance by banks with Federal consumer financial laws, if the bank has more than $10 billion in assets. The CFPB has not provided the Federal Reserve of Atlanta with any information about, or other evidence of, discriminatory or other illegal credit practices relative to this institution with respect to the Federal consumer financial laws. 11

17 Louisiana CRA RATING FOR LOUISANA: Satisfactory The Lending Test is rated: The Investment Test is rated: The Service Test is rated: High Satisfactory Outstanding High Satisfactory Major factors supporting the rating include the following: The geographic distribution of loans reflects adequate penetration throughout the assessment areas. In addition, the distribution of borrowers reflects adequate penetration among customers of different income levels and businesses of different revenue sizes. The bank is a leader in making community development loans within the assessment areas. The bank provides an excellent level of qualified community development investments and grants that are responsive to several identified community development needs of the assessment areas. Retail services are accessible to the bank s geographies and individuals of different income levels in the assessment areas. The bank is a leader in providing community development services throughout the assessment areas. 12

18 Louisiana SCOPE OF EXAMINATION A full scope review was conducted for two assessment area in the State of Louisiana: Lafayette New Orleans Limited scope reviews were conducted for the remaining nine assessment areas: Acadiana Lincoln Allen Monroe Baton Rouge Morehouse Houma Shreveport Lake Charles The time period, products, and affiliates evaluated for these assessment areas are consistent with the scope discussed in the institution section of this report. DESCRIPTION OF INSTITUTION S OPERATIONS IN LOUISIANA Lending activity in Louisiana accounted for 51.5 percent of the bank s total lending activity. HMDA-reportable lending in Louisiana represented 47.7 percent of the bank s total HMDA-reportable lending, while small business and small farm lending represented 63.6 percent of the bank s total small business and small farm lending. As of June 30, 2012, the bank had $5.2 billion in deposits in Louisiana accounting for 54.8 percent of IBERIABANK s total deposits. IBERIABANK ranks 5 th out of 158 insured institutions in the state with 5.8 percent of total deposits. As of December 31, 2012, IBERIABANK operated 81 branch offices in Louisiana representing 44.3 percent of the bank s total branches. CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS Lending Test The lending test rating in the state of Louisiana is High Satisfactory. IBERIABANK is both a HMDA and small business lender; HMDA lending was given greater consideration in determining the lending test rating for Louisiana because the bank originated more HMDA loans by number than small business loans. Additionally, the New Orleans assessment area received slightly greater consideration when determining the state rating because it holds a greater percentage of the bank s deposits, loans, and branches in the state of Louisiana than the Lafayette assessment area. The full-scope areas selected together represent 53.9 percent of the deposits in the assessment areas in Louisiana as well as 43.2 percent of the branches. The full-scope assessment areas represent 49.8 percent of the HMDA loans and 51.4 percent of the small business loans in the state. Lastly, 74.9 percent of community development loans occurred in the two full scope assessment areas. Thus, the two full-scope assessment areas represent a majority of the branches, deposits and lending in the state of Louisiana. IBERIABANK originated a relatively low number of small farm loans in Louisiana during the review period (50); therefore, no detailed discussion of these loans is included in this section of the report. IBERIABANK offers several programs with the specific purpose of helping to meet housing-related needs of low- and moderate-income individuals and communities in Louisiana. Most notably, IBERIABANK partners with Southern Mutual Financial Services, Inc., a community development financial institution (CDFI) to originate flexible mortgage products for low- and moderate-income borrowers throughout the state of 13

19 Louisiana Louisiana. Over the exam period, IBERIABANK purchased 49 loans totaling over $3.8 million to qualified homeowners. The bank is also very involved with this organization from a community development service perspective, with a bank representative serving on the loan committee and providing hundreds of hours in technical assistance. The following table shows lending activity from January 1, 2011, through December 31, Statewide Summary of Lending Activity Assessment Areas Located in Louisiana Loan Type # % $ (000s) % HMDA Home Purchase 3, % $607, % HMDA Refinance 3, % $720, % HMDA Home Improvement % $18, % HMDA Multi-Family % $44, % Total HMDA 7, % $1,391, % Total Small Business 3, % $639, % Total Farm % $2, % TOTAL LOANS 11, % $2,033, % Originations and Purchases Details of the bank s HMDA and small business lending and information regarding lending by peers in the full scope assessment areas can be found in Appendices F-H while details on lending in the limited scope assessment areas can be found in Appendices I-J. Geographic and Borrower Distribution The geographic distribution of IBERIABANK s HMDA and small business loans is adequate. The geographic distribution of loans was adequate in both full scope assessment areas. Additionally, the distribution of loans by borrower income and business revenue size is adequate. The borrower distribution is considered adequate in both full scope assessment areas. A detailed discussion of the geographic and borrower distribution of lending for the full scope assessment areas is included in the next section of this report. Community Development Lending IBERIABANK is a leader in making community development loans in Louisiana. The bank made 33 community development loans totaling $118.5 million across the state during the review period. Loans primarily supported the revitalization and stabilization of low-income and designated disaster areas and affordable housing. More information on community development lending can be found in each full-scope assessment area section. Investment Test The investment test rating for Louisiana is Outstanding. The bank made excellent use of qualified investments and contributions with total investments of $58.1 million and contributions of $1.4 million in the state. The bank exhibited excellent responsiveness to the credit and community development needs through its investment activities in the New Orleans assessment area while performance in Lafayette was good. Altogether, almost 83 percent of the total investments and contributions were made in the two full scope assessment areas. 14

20 Louisiana Additionally, the bank had several statewide contributions to support affordable housing and economic development initiatives that benefitted all of the bank s assessment areas in Louisiana. As discussed earlier, the IBERIABANK has a longstanding partnership with the Southern Mutual Help Association and its financing affiliate, Southern Mutual Financial Services in the Acadiana assessment area. The bank has committed to multi-year support totaling $250,000 to help the organization provide homeownership and financial counseling, as well as assistance with new affordable housing development. The bank has also partnered with the organization to provide down-payment and closing cost assistance grants to low- and moderate-income homebuyers and by purchasing first mortgages from the organization in order to create new loan capital for the CDFI. A summary of the bank s investments and contributions for full scope and limited scope assessment areas can be found in Appendix K; additional details regarding specific investments and contributions can be found in the full-scope assessment area sections. Service Test The service test rating for Louisiana is High Satisfactory. Retail Services Delivery systems, including ATMs and branch office locations, are accessible to the bank s geographies and individuals of different income levels in the assessment areas. Overall, banking services and hours of operation do not vary in a way that inconveniences the assessment areas, including low- and moderate-income geographies or low- and moderate-income individuals. The bank s record of opening and closing of offices has not affected the accessibility of its delivery systems, including to low- and moderate-income geographies and/or low- and moderate-income individuals. Community Development Services The bank is a leader in providing community development services that benefit residents and small businesses in Louisiana. The bank s community development services were excellent in both full scope assessment areas in the state. Notably, IBERIABANK reported a significant number of community development board service hours indicating local bank employees are engaged in markets across the state. For example, a bank employee has given hundreds of hours providing technical assistance and serving on the loan review committee for a statewide CDFI. Additional details regarding specific community development services can be found in the full-scope assessment area sections. 15

21 New Orleans, Louisiana METROPOLITAN AREA (Full Scope Review) DESCRIPTION OF INSTITUION S OPERATIONS IN THE NEW ORLEANS, LOUISIANA ASSESSMENT AREA The New Orleans assessment area includes Jefferson, Orleans, St. John the Baptist, and St. Tammany. Parishes and is part of the seven-parish New Orleans-Metairie MSA. IBERIABANK operates 23 branches in the assessment area, including one in a low-income census tract and 3 in moderate-income census tracts; 11 branches are in Jefferson Parish, 7 branches in Orleans Parish, 4 branches in St. Tammany Parish, and one branch in St. John the Baptist Parish. Population and Income Characteristics New Orleans, located in Orleans Parish, is the principal city within the assessment area. Hurricane Katrina led to dramatic population loss across the entire MSA, but over the past eight years, the region has slowly recovered. According to the Greater New Orleans Data Community Data Center, as of July 2012, the U.S. Census Bureau estimated New Orleans population at 369,250, or 76 percent of its 2000 population of 484,674. The metro area, with 1.2 million residents, has 92 percent of its 2000 population of 1.3 million. 2 The demographics of the New Orleans metro area have changed since Katrina. While the city of New Orleans is still majority African-American, the percentage of African-American residents has declined from 67 percent in 2000 to 59 percent in The region has become much more diverse due to a significant increase in the Hispanic population. For purposes of classifying borrower income, this evaluation uses the Department of Housing and Urban Development s (HUD) estimated median family income for the relevant area. The following table sets forth the estimated median family income for 2011 and 2012 for the New Orleans-Metairie, LA MSA and also provides a breakdown of the estimated annual family income for each income category (low, moderate, middle, and upper). The table indicates that the HUD estimated median family income for New Orleans increased slightly from $61,100 in 2011 to $61,900 in Borrower Income Levels New Orleans-Metairie-Kenner, LA MSA HUD Estimated Median Family Income Low Moderate Middle Upper % 50% % 80% % 120% - & above 2011 $61, $30,549 $30,550 - $48,879 $48,880 - $73,319 $73,320 - & above 2012 $61, $30,949 $30,950 - $49,519 $49,520 - $74,279 $74,280 - & above Demographic Characteristics by Census Tract The following tables based on 2000 and 2010 U.S. Census and 2012 Dun & Bradstreet data present key demographic and business information used to help develop a performance context for the assessment area. 2 Greater New Orleans Community Data Center. Facts for Features: Hurricane Katrina Recovery. August 28, (accessed on November 4, 2013); available at: 16

22 New Orleans, Louisiana The first table presents 2000 census data that is used for the 2011 lending analysis and the second table presents the 2010 census data that is used for the 2012 lending analysis. The data shows the substantial changes that have occurred in the region as a result of Hurricane Katrina in Overall, the assessment area lost five census tracts between 2000 and The number of low-income tracts remained constant but the percentage of low-income tracts declined slightly from 16.6 to 16.3 percent. The percentage of moderate income tracts increased slightly from 24.6 percent to 25.9 percent. U.S. Census data indicates that there were 453,985 housing units in the assessment area in 2010, of which 53.0 percent were owner-occupied, 29.8 percent were rental units, and 17.2 percent were vacant. In low-income tracts, 24.8 percent of housing units are owner-occupied and in moderate-income tracts, 38.5 percent of units were owner-occupied. The median age of the housing units in low-and moderate-income tracts is significantly higher than the median age for the assessment area overall. The total number of housing units in the assessment area declined by 7.1 percent between 2000 and 2010, but the loss of units was even more pronounced low-income tracts, where the number of units fell by 20 percent while the number of vacant housing units increased by 72 percent. While low- and moderate-income neighborhoods have always struggled with housing vacancy, as a result of Hurricane Katrina, 28.6 percent of all housing units in low-income census tracts and 22.9 percent of units in moderate-income census tracts are vacant. The loss of housing units in low-income tracts, the high concentration of vacant housing units and age of the housing stock indicate that lending opportunities in the low- and moderate-income tracts may be limited. 17