| || |
Supply Chain Management of IBERIABANK Corporation -
January 10th, 2011
IBERIABANK Corporation has 25 branches in the New Iberia/Lafayette area of south central Louisiana, ten in northeast Louisiana, and eight in New Orleans and its environs. Strictly a savings and loan for much of its long history, IBERIABANK maintains its primary focus on single-family residential loans, but at all of its offices it offers a full range of banking services, including commercial loans, personal and commercial checking accounts, passbook and NOW accounts, certificates of deposit, and IRAs and Keogh accounts. Through Iberia Financial Services, LLC, IBERIABANK's wholly owned subsidiary, IBERIABANK Corporation offers securities and other financial products to meet its clients' investment needs. Iberia Financial's own subsidiary, Finesco, LLC, offers insurance premium financing to retailers and other commercial customers.
1887--1987: One Hundred Years of Stability and Conservative Banking
The grandsire of IBERIABANK, the principal subsidiary of IBERIABANK Corporation, was founded as Iberia Building Association, which opened its doors on March 12, 1887, in New Iberia, Louisiana. At the time, New Iberia was a farming community of about 3,000 inhabitants located in Iberia Parish, in the heartland of the Acadiana region of Louisiana. Its principal cash crops, then as now, were sugar cane and rice. The region's oil reserves, which would later spur New Iberia's population and economic growth, had yet to be discovered.
Although the Association was the first lending institution in the area, and one of only a handful in the entire state, it had a very unassuming start. It shared an office with William Robinson, one of its directors, and boasted assets of only $4,341. Like the sleepy Bayou Teche on whose banks New Iberia was located, the new thrift's business flowed serenely and slowly. It was a few weeks before it even made its initial loan, issuing a $600 mortgage. Its first officers were Fred Gates, president; J.W. Callahan, vice-president; and E.F. Millard, bank manager. According to Millard, the association was created to be 'the wage earner's friend' in keeping with the stated aims of the association's first directors, which were 'to help families in financing the purchase of homes and to encourage thrift.' Those aims would remain in place for the next 100 years, during which the Association remained remarkably stable.
That stability was generally credited to two key figures: William G. Weeks and John W. Trotter. Weeks was a young lawyer when, in the summer of 1888, he was elected secretary of the Association. It was a post he held for the next 59 years. Trotter joined the bank in January 1947, serving as its managing officer for 30 years. He was succeeded by Emile J. Plaisance, Jr., who was president of the Association when, in 1987, it had its centennial celebration. By then its name had been changed to Iberia Savings & Loan Association (ISLA), and its assets had reached $294.6 million, up almost $100 million over the assets it had held in 1978. Its first mortgages and other loans totaled about $248.4 million. It also had branches in six locations and served not only New Iberia but also Jeanerette, Franklin, and Morgan City.
It was only a couple of years before ISLA reached its 100th year that regulatory agencies relaxed restrictions on savings and loan associations that had prohibited them from making business loans. Because the regulations had prevented the bank from lending money to oil companies and oil-related businesses, ISLA did not suffer the setback some Louisiana banks experienced when the oil boom ended and the state went into a fairly deep recession. ISLA had kept its focus on consumer-oriented services, following the philosophy of its founders. For years it had been providing loans for homes, automobiles, appliances, and such personal needs as college tuition. In 1987, when explaining ISLA's financial stability, Plaisance said, 'We have been profitable for many, many years because we run a very conservative type of operation.' He added, 'And I don't see that philosophy changing, at least not in the next few years.'
1988--1996: IBERIABANK Begins Significant Growth and Restructures under ISB Financial, a Holding Company
Considering what happened in the next ten years, one might suspect that Plaisance had his tongue wedged firmly in his cheek. Although only on a small scale, ISLA had already started to grow. State restrictions on thrifts opening branches in more than one parish were dropped in 1985, allowing ISLA to open offices in Morgan City and Franklin, both in St. Mary Parish, to the south of Iberia Parish.
To grow significantly, ISLA had to cross more parish lines. Although Iberia Parish covered an area of 575 square miles, it remained fairly sparsely populated, despite the region's tremendous oil-industry growth in the second half of the 20th century. Even by 1995 it had only reached an estimated population of 70,742, considerably less than the population of Lafayette, a small but rapidly growing city some 20 miles to the north.
ISLA changed its name to Iberia Savings Bank in 1988, and in the next year it gained another toehold outside of Iberia Parish when it assumed the deposits of Acadia Savings & Loan, giving Iberia Savings branches in two more parishes-Acadia and Lafayette. Its new offices were located in the city of Lafayette as well as in the smaller towns of Crowley, Rayne, and Kaplan. Over the next two years it assumed additional deposits of troubled banks, first of First Federal Savings & Loan in September 1990, then of one branch of Louisiana Savings in October 1991. These mergers gave Iberia Savings additional branches in New Iberia, Lafayette, and Kaplan. They also moved the bank into St. Martinville in St. Martin Parish. Although eddying its way into parishes adjacent to Iberia Parish, the bank had not yet leapfrogged into other regions of Louisiana.
The regulatory changes made in 1985 had also permitted Louisiana-chartered, commercial bank holding companies to open branches anywhere in the state. By 1992, it also appeared that additional regulatory changes would soon permit Louisiana savings and loan banks to reorganize and convert to state-chartered commercial banks. Under the leadership of Larrey G. Mouton, who had succeeded Plaisance as president, Iberia Savings began preparations for the change, laying the groundwork for forming a holding company to facilitate the transition and thereafter manage the business of Iberia Savings Bank, its wholly owned subsidiary. By then, too, Iberia Savings had begun broadening its services. For example, in 1992 it had organized Finesco, LLC as an affiliate of Iberia Financial Services, LLC, a subsidiary of Iberia Savings. Finesco was created to offer competitive rates on financing both commercial and personal insurance premiums.
In 1995, ISB Financial Corporation, the new holding company for Iberia Savings Bank, was formed and incorporated. Its immediate aim was to acquire all of Iberia Savings' capital stock issued by the bank in April of 1995 in its conversion to stock form. Iberia Savings then became the sole, wholly owned subsidiary of ISB Financial. Two years later, in December 1997, Iberia Savings was converted to a Louisiana-chartered commercial bank and renamed IBERIABANK.
In the interim, under the holding company's auspices, Iberia Savings continued to grow via further mergers and acquisitions. On May 3, 1996, through a multistep cash merger costing $9.1 million, ISB Financial acquired Royal Bankgroup of Acadiana, Inc. and the two branches of its Louisiana-chartered commercial bank and wholly owned subsidiary, Bank of Lafayette. The two offices in Lafayette continued to operate as branches of Iberia Savings. Next, on October 18, 1996, after entering into a complex interim agreement the previous May, ISB Financial completed a $47 million acquisition of Jefferson Bancorp, Inc. and its subsidiary, Jefferson Federal Savings Bank. Jefferson Federal was converted into a Louisiana-chartered stock savings bank operating as Jefferson Bank, which temporarily remained a separate subsidiary of ISB Financial. Jefferson was based in Gretna, Louisiana, and had six full-service branches in the greater metropolitan area of New Orleans. At the close of 1996, bolstered by these acquisitions, ISB Financial had total assets of $929.3 million and deposits of $760.3 million. It had also finally leapfrogged into another area of the state.
1997--2000: Becoming a Major Louisiana Company
With its 1997 renaming and conversion into a Louisiana-chartered, full-service commercial bank, IBERIABANK set out both to tap into new Louisiana markets and to increase and diversify its services. Even before the name change, Jefferson Bank was merged with and into Iberia Savings Bank. Thereafter, its offices became branches of IBERIABANK and began operating under that name. In addition to increasing operational efficiency, the move enhanced the bank's image. It both implied the bank's conversion into a commercial bank and removed any stigma of localism previously associated with 'Iberia.' With total assets closing in on $1 billion, IBERIABANK had become much more than a regional institution; it had become a Louisiana bank.
That fact was made abundantly clear in 1998 when ISB Financial acquired 17 branch offices from select subsidiaries of the former First Commerce Corporation. The purchase opened up another market for IBERIABANK, giving it ten branch offices in the Monroe area of northeast Louisiana and a presence in a total of ten parishes. The acquisition also boosted the bank's assets to $1.4 billion and its total number of employees to 545.
In the next year, ISB Financial also hired former First Commerce executive Daryl G. Byrd as its president, succeeding Larrey Mouton. Although Mouton did retain his post as CEO of ISB Financial, he passed operational control of the converted bank to Byrd because of Byrd's extensive commercial banking experience. Byrd had been with First Commerce since 1985 and had served in various executive positions. He had been in charge of commercial lending at the First National Bank in Lafayette, had served as president and CEO of Rapides Bank and Trust Co., and, in 1992, had been appointed executive vice-president in charge of the commerce and mortgage banking groups at the First National Bank of Commerce. After First Commerce was bought out by Bank One in 1998, he was named president and CEO of Bank One's Louisiana's New Orleans region.
Byrd immediately had to attend to some problems resulting from the company's aggressive acquisitions and Iberia Savings' conversion into a commercial bank, including what analyst Martin Friedman of Friedman, Billings, Ramsey & Co. of Arlington, Virginia, said was 'the market's tendency to react negatively toward companies announcing restructurings.' Fine-tuning in 1999 reduced ISB Financial's year-end assets from $1.40 billion to $1.36 billion and its net income from $10.1 million to $9.5 million. It began making further adjustments in 2000, adding $1.6 million to its loan loss reserves and releasing 22 employees. It also made $190 million in securities available for sale instead of holding them to maturity, which reduced its equity by $4 million. Byrd claimed that these restructuring changes would result in savings of about $2 million starting in 2001.
IBERIABANK's make-over as a commercial bank involved providing new, up-to-date services designed to attract a wide range of customers, both private and commercial. Through 1998 and 1999, it added PlusSavings (accounts paying premium interest rates on high balances), PlusPay (an Internet bill-paying service), PlusBanking (an account management service via the Internet), Ideal Business Checking (a checking product for small businesses with few monthly transactions), 50Basic & 50Plus (checking accounts for people 50 or older), BusinessLine & PlusLine (two lines of credit for businesses), and PlusAccount (an interest-bearing checking account). Although such services were common enough in established commercial banks, to older customers of what was once Iberia Savings Bank they may have seemed nothing short of revolutionary. The conservative heritage of the old Iberia Savings & Loan Bank was fading fast, however. In fact, its last vestiges may have been expunged in 2000, when ISB Financial Corporation removed the 'S' for Savings in its new name, IBERIABANK Corporation. That name change was made not to repudiate the past, of course; it was made to reflect where the corporation was and where it planned on going in the new century.
Principal Subsidiaries: IBERIABANK; Iberia Financial Services, LLC.
Principal Competitors: Acadiana Bancshares, Inc.; Bank One Corporation; Hancock Holding Company; Hibernia Corporation; Whitney Holding Corporation.