Iberiabank plans to close underperforming branches and trim elsewhere after acquisition-related costs rose in the second quarter, executives said Thursday.
The serial bank buyer in Lafayette, La., saw its profits double to $12.6 million year over year, but they fell 35% from the previous quarter. Most of the decrease came from higher costs for pending and completed bank acquisitions as well as a higher provision for loan losses. Iberiabank's executives are embarking on an aggressive expense-reduction strategy in response, they said.
Iberiabank is focusing on putting branches in markets with growth potential and closing 10 branches in weak markets. It will shut seven branches in Florida, two in Louisiana and one in Arkansas. It was the first step among many to improve Iberiabank's efficiency ratio, executives said.
"This is an ongoing and multifaceted company-wide undertaking that entails significant internal and external resources," Iberiabank's president and chief executive, Daryl Byrd, said in a news release late Wednesday. "We believe the improved revenues and contained costs are reflective of an improvement in our core operating efficiency during the second quarter."
Revenues rose $6 million from the first quarter. But a $4 million increase in expenses - excluding acquisition costs - threw off the bottom line income. The company attributed the higher expenses mostly to mortgage commissions from higher volumes.
"We continue to see tremendous client and balance sheet growth, and our fee businesses are progressing very well, as we expected," Byrd said. "We are very pleased with our margin stability, exceptional loan growth and the relatively low-risk posture of our balance sheet."
Iberiabank is projecting another $3 million in onetime costs in the third and fourth quarters related to its greater efficiency initiatives. Management's goal is to produce about $5 million in pre-tax annual earnings, or $0.11 per share, next year. The company's second quarter earnings per share of 43 cents was off 24 cents from the consensus Wall Street estimate.