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September 2, 2010 |
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| July 26, 2010 |
By: Wayne Tompkins |
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beriabank, a 123-year-old institution from Louisiana’s Cajun country, has become one of the federal government’s favorite partners in the acquisition of failed banks in South Florida.
The Lafayette, Louisiana, bank expanded its South Florida footprint Friday evening following its acquisition of Lantana-based Sterling Bank, a troubled institution that had been under regulatory orders to raise capital or be acquired.
It was Iberiabank’s fifth acquisition through the Federal Deposition Insurance Corp. in a little more than two years, including its November takeover of Orion Bank’s South Florida branches.
Sterling Bank was seized by the Florida Office of Financial Regulation, which appointed the FDIC as receiver. The FDIC immediately entered into a purchase-and-assumption agreement with Iberiabank to assume all of Sterling’s deposits.
According to a Monday story in the Daily Business Review, which went to press before the acquisition, Sterling had the third-worst Texas ratio among South Florida banks. The Texas ratio, a gauge of a bank’s health, is calculated by dividing the dollar value of bad assets by good ones. Regulators and industry use it to measure a bank’s healthy and it’s an indicator of the likelihood of failure.
“This acquisition is an excellent fit for our company, providing a nice complement to our current franchise in Broward and Palm Beach counties,” said Daryl Byrd, Iberiabank’s president and chief executive.
Sterling Bank’s six branches reopened Monday as branches of Iberiabank.
As of March 31, Sterling Bank had about $407.9 million in total assets and $372.4 million in total deposits.
Iberiabank did not pay the FDIC a premium for Sterling’s deposits. In addition to assuming all of the deposits of the failed bank, Iberiabank agreed to purchase essentially all of the assets.
The FDIC and Iberiabank entered into a loss-share agreement on $244.3 million of Sterling Bank’s assets. Iberiabank will share in the losses on the asset pools covered under the loss-share agreement. The loss sharing is projected to maximize returns on the assets covered by keeping them in the private sector and is also expected to minimize disruptions for loan customers.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $45.5 million. Sterling Bank was the 97th FDIC-insured institution to fail in the nation this year, and the 18th in Florida. Two other South Florida-based banks, Metro Bank of Dade County and Turnberry Bank, were closed on July 16 and immediately reopened under new ownership.
The Federal Reserve Bank on June 10 gave the “significantly undercapitalized” Sterling Bank and its holding company 30 days to raise capital through either a sale of shares or acquisition by another institution. The bank lost $5.5 million in the first quarter of this year and $19 million for the year in 2009, while total equity capital, which stood at $28 million as of March 31, 2009, had fallen to $5.1 million a year later. Just more than $30 million in loans were reported as noncurrent.
“Our losses the past two years are directly related to the unprecedented real estate crash that was beyond the control of Sterling Bank,” David Albright, the bank’s chief executive, said last month.
Iberiabank is a unit of Iberiabank Corp., a multibank financial holding company. With the Sterling transaction, the company will have 220 combined offices, including 140 bank branch offices in Louisiana, Arkansas, Tennessee, Alabama, Texas and Florida, 26 title insurance offices in Arkansas and Louisiana, and mortgage representatives in 54 locations in 12 states.
Wayne Tompkins can be reached at (305) 347-6645.
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