Iberiabank Corp. of Lafayette, La., is wasting no time beefing up in Arkansas.
Less than two weeks after announcing what would be its first bank acquisition there, the $3 billion-asset Iberiabank said Wednesday that it has another deal, for Pulaski Investment Corp. in Little Rock.
The Pulaski deal and the one announced July 27 for Pocahontas Bancorp Inc. of Jonesboro would give Iberiabank more than $1.2 billion of assets in Arkansas and make it 11th in market share there, according to Federal Deposit Insurance Corp. data.
The acquisitions would also open the door to expansion into other states. The $483 million-asset Pulaski has one branch and one under construction in the Memphis area and has mortgage production offices in Mississippi, Missouri, Oklahoma, and Texas. Pocahontas' subsidiary, First Community Bank, has a federal thrift charter that Iberiabank plans to retain and use to branch into other states.
Daryl G. Byrd, Iberiabank's president and chief executive, said it is not trying to become a regional player. Its expansion strategy is to identify markets "where there are attractive dynamics," he said in an interview.
The Little Rock area fits the bill. In its presentation for investors, Iberiabank said that according to Moody's Investors Service, only Chicago has a more diverse economy than Little Rock.
According to the U.S. Census Bureau, the Arkansas metropolitan statistical area has an average household income of $53,101, against $45,140 for Louisiana, $42,041 for Mississippi, and about $44,000 for Memphis.
Pulaski has 11 branches in the Little Rock area. It also has a $126 million-asset trust operation, a network of 20 title insurance office in Arkansas, and a nationwide credit card business that had $31 million of receivables and just 0.39% delinquencies at the end of the second quarter.
In a news release announcing the $130 million cash and stock deal, Mr. Byrd also touted Pulaski's expertise in construction lending, which Iberiabank is ramping up as south Louisiana begins to rebuild from the destruction of Hurricane Katrina.
Adam C. Barkstrom, an analyst with Stifel Nicolaus & Co. Inc. in St. Louis, said the Pulaski deal "makes the Arkansas expansion more viable."
Analysts were mildly critical of the deal for Pocahontas because it is a thrift that has had asset quality problems and is in weaker markets. Pulaski, Mr. Barkstrom said, would give Iberiabank a foothold in a stronger area of the state.
The differences between the two sellers are reflected in the sale prices. Iberiabank is paying more than 3.2 times book value for Pulaski and 1.48 times book, or $76.3 million, for the $733 million-asset Pocahontas. Both deals are to close next quarter.
"On one hand you bought a thrift with much lower performance numbers," Mr. Barkstrom said. "On the other hand you bought a higher-performing commercial bank in arguably better markets."
He said there would be some investor concern about Iberiabank's ability to integrate two acquisitions it is making at roughly the same time. But he said that management, which has been looking at out-of-state acquisition opportunities for years, has to take advantage of opportunities as they arise.
"When a particular company wants to sell, you have to operate on their timeline and that is out of … [Iberiabank's] control," Mr. Barkstrom said.
In a conference call, Mr. Byrd said Iberiabank was not done buying.
Iberiabank's stock closed at $57.48 Wednesday, down 1.9% from Tuesday's close.
