90 million approved for health Louisiana bank from financial bailout ??
12-03-2008, 10:30 PM
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90 million approved for health Louisiana bank from financial bailout ??
IberiaBank gets OK for bailout
$90 million meant to spur lending
Wednesday, December 03, 2008
By Jen DeGregorio
IberiaBank Corp. is poised to gain $90 million from the Treasury Department as part of the government's bailout of the financial system, making it the second Louisiana bank to qualify for federal money.
The publicly traded bank, which is based in Lafayette, announced Tuesday that it had qualified for as much as $115 million from the Capital Purchase Program. The $250 billion Treasury Department initiative aims to unclog credit markets by injecting cash into stronger financial institutions in a position to make loans. In return for the cash, the Treasury Department gets an ownership stake in approved banks in the form of preferred stock and warrants for common stock.
More than 50 banks have signed up for the program so far, according the latest list on the Treasury Department Web site. Aside from IberiaBank, Whitney Holding Corp., the publicly traded parent of New Orleans' Whitney National Bank, is the only other Louisiana-based institution to have publicized plans to participate in the program.
Whitney announced last week that the Treasury Department approved it to receive $301 million from the Capital Purchase Program. However, shareholders must first agree to amend Whitney's charter to allow the company to issue preferred stock. The matter will be put to a vote at a Dec. 17 meeting.
IberiaBank did not require shareholder approval to join the Capital Purchase Program.
Although IberiaBank received approval for $115 million, executives thought it would be wiser to take only $90 million.
"It's a big decision," said Daryl Byrd, IberiaBank's president and chief executive. "By having this money, we will have protected our shareholders."
The Capital Purchase Program allows banks to receive funds worth between 1 percent and 3 percent of their risk-weighted assets. The $90 million represents 2.3 percent of IberiaBank's risk-weighted assets. The bank expects to receive the cash in the next four to 10 days.
The Treasury Department has said that it is targeting stronger banks in the hopes that cash injections will free up money for commercial lending and encourage the acquisition of weaker banks. Byrd said IberiaBank would consider buying failed institutions with the federal funds.
Peyton Green, a banking analyst with FTN Midwest Securities of Nashville, said IberiaBank's concentration in Louisiana makes it an ideal candidate for the program. Home prices in the state have remained relatively steady, even as the real estate crash in states such as Florida has caused pain for banks that invested there during the bubble. IberiaBank also has branches in Arkansas and Tennessee.
"Iberia has had fairly good credit quality," Green said. "They are looking to grow."
Still, IberiaBank has had its share of troubles in recent months. Third-quarter earnings fell 27 percent from the same period last year, largely due to IberiaBank's acquisition earlier this year of ANB Financial, an Arkansas bank that was shut down by the Federal Deposit Insurance Corp.
During the three-month period that ended Sept. 30, the bank reported earnings of $8.8 million, compared with $12.1 million during the same period in 2007.
Whitney, which has a portfolio of loans tied to Florida's crumbling real estate market, has seen steeper declines. The bank's earnings fell 85 percent in the past year, to $7 million during the third quarter, compared with a net income of $48.8 million during the same period in 2007.
http://www.nola.com/business/t-p/ind...350.xml&coll=1
this does not seem like the original intention of the bailout to me, this bank did not need the money, and will be using it to expand and grow....:nono: comments?
$90 million meant to spur lending
Wednesday, December 03, 2008
By Jen DeGregorio
IberiaBank Corp. is poised to gain $90 million from the Treasury Department as part of the government's bailout of the financial system, making it the second Louisiana bank to qualify for federal money.
The publicly traded bank, which is based in Lafayette, announced Tuesday that it had qualified for as much as $115 million from the Capital Purchase Program. The $250 billion Treasury Department initiative aims to unclog credit markets by injecting cash into stronger financial institutions in a position to make loans. In return for the cash, the Treasury Department gets an ownership stake in approved banks in the form of preferred stock and warrants for common stock.
More than 50 banks have signed up for the program so far, according the latest list on the Treasury Department Web site. Aside from IberiaBank, Whitney Holding Corp., the publicly traded parent of New Orleans' Whitney National Bank, is the only other Louisiana-based institution to have publicized plans to participate in the program.
Whitney announced last week that the Treasury Department approved it to receive $301 million from the Capital Purchase Program. However, shareholders must first agree to amend Whitney's charter to allow the company to issue preferred stock. The matter will be put to a vote at a Dec. 17 meeting.
IberiaBank did not require shareholder approval to join the Capital Purchase Program.
Although IberiaBank received approval for $115 million, executives thought it would be wiser to take only $90 million.
"It's a big decision," said Daryl Byrd, IberiaBank's president and chief executive. "By having this money, we will have protected our shareholders."
The Capital Purchase Program allows banks to receive funds worth between 1 percent and 3 percent of their risk-weighted assets. The $90 million represents 2.3 percent of IberiaBank's risk-weighted assets. The bank expects to receive the cash in the next four to 10 days.
The Treasury Department has said that it is targeting stronger banks in the hopes that cash injections will free up money for commercial lending and encourage the acquisition of weaker banks. Byrd said IberiaBank would consider buying failed institutions with the federal funds.
Peyton Green, a banking analyst with FTN Midwest Securities of Nashville, said IberiaBank's concentration in Louisiana makes it an ideal candidate for the program. Home prices in the state have remained relatively steady, even as the real estate crash in states such as Florida has caused pain for banks that invested there during the bubble. IberiaBank also has branches in Arkansas and Tennessee.
"Iberia has had fairly good credit quality," Green said. "They are looking to grow."
Still, IberiaBank has had its share of troubles in recent months. Third-quarter earnings fell 27 percent from the same period last year, largely due to IberiaBank's acquisition earlier this year of ANB Financial, an Arkansas bank that was shut down by the Federal Deposit Insurance Corp.
During the three-month period that ended Sept. 30, the bank reported earnings of $8.8 million, compared with $12.1 million during the same period in 2007.
Whitney, which has a portfolio of loans tied to Florida's crumbling real estate market, has seen steeper declines. The bank's earnings fell 85 percent in the past year, to $7 million during the third quarter, compared with a net income of $48.8 million during the same period in 2007.
http://www.nola.com/business/t-p/ind...350.xml&coll=1
this does not seem like the original intention of the bailout to me, this bank did not need the money, and will be using it to expand and grow....:nono: comments?
