Iberiabank in Lafayette, La., has exited loss-share agreements tied to several failed banks it bought after the financial crisis.
The $20.7-billion asset company said in a press release Wednesday that it entered an agreement with the Federal Deposit Insurance Corp. to end 12 loss-share agreements. The FDIC paid Iberiabank $6.5 million as part of the termination.
Iberiabank, however, will incur expenses tied to net writeoffs on the remaining $24.4 million of the FDIC indemnification asset and a $3.7 million net loss share receivable. As a result, the company said it expects to record a noncore, after-tax charge of about $11.2 million, or 26 cents a share, during the fourth quarter.
At Sept. 30, assets covered under the now-terminated loss-share agreements included $202 million in loans and $900,000 in other owned real estate.
Iberiabank entered the loss-share agreements with the FDIC between 2009 and 2011. Additionally, Iberiabank assumed two agreements tied to last year's purchase of Georgia Commerce Bank in Atlanta.
"Termination of these agreements will eliminate potential future clawbacks and shared recoveries, will simplify our accounting results and will reduce downside volatility associated with loss share accounting," Daryl Byrd, Iberiabank's president and CEO, said in the release.
Byrd added that Iberiabank expects termination of the loss-share agreements will have an earnback period of less than 20 months and will result in an internal rate of return exceeding 40% starting in the first quarter.
DD&F Consulting Group advised Iberiabank Corp. in the transaction with the FDIC.